So You Want to be a Landlord
March 8, 2012, by Michele Gila
There are many scenarios that can lead to the decision to become a landlord. One could be the situation of having a large home and wanting to share that space. Another is needing help paying the mortgage. Perhaps a family member needs to move in with you, due to their circumstances. Of course there are those who are business minded and who seek this as a full time job or look to real estate as an investment, where profit is the goal. Either way, it’s business. Always put your agreements in writing.
Before making the decision, one thing you should ask yourself is, “What do you like to do with your spare time and money?” Unless you are seeking the career path of a licensed Property Manager, or building your investment portfolio and will be hiring someone to manage your empire for you, this is important to answer. If you’re prepared to take on the responsibility of providing adequate housing to people, the next step is to get a copy of your State’s Landlord Tenant Laws. For Oregon it’s Chapter 90 and you can find it here: http://www.leg.state.or.us/ors/090.html. Making yourself keenly aware of your rights and the rights of your tenants is very important. The Legislature often updates these rules and it is prudent to make it a priority to stay informed.
Another imperative aspect are the Fair Housing Laws. One of the biggest mistakes I see landlords make, even unintentionally, is in how they advertise and how they screen applicants. A great rule of thumb is to simply advertise the home, not the prospective tenant. Put a system in place and stick to it, no matter what. A friend recently needed to get her home rented so she could move on to another project. She did an outstanding job of fixing leaks, applying fresh paint and generally making the home shine to appeal to the renters. However she posted it on Craig’s List saying that it was “ideal for a couple”. That could be. But that is discrimination because it implies that the home is not appropriate for anyone except a couple. Landlords should describe the features of the home and KNOW what the law allows regarding occupancy. The Fair Housing Council of Oregon has a wealth of information to keep you from making a potentially costly mistake. http://www.FHCO.org/.
Portland’s rental vacancy rate sits at about 3% right now, which is very low. Interest rates are at record low prices. It is a great time to consider investing in residential rental property. Also more and more people are still finding themselves underwater with their mortgage payments. One tactic that many consider is to rent their home to someone else and move into a more affordable rental property, or rent out rooms in their home to help off set costs. Both scenarios require a good deal of thought and some basic research. Screening tenants is key and is one step I see the novice landlord skip. Screen all applicants, no matter what. Use a valid contract, even if it’s a roommate. This is a business after all, even if you don’t view it that way. A business that could have huge liability to you if you don’t understand your rights and obligations. Stevens-Ness is a local provider of many types of legal forms, including those for month-to-month tenancy and leases. http://www.stevensness.com/store/. One organization to consider joining is the Metro Multifamily Housing Association. http://www.metromultifamily.com/. They offer education, forms and other resources to keep you operating your business successfully.
An opportunity I have pursued is to transform my rental properties into healthy homes for my tenants. Every opportunity is considered, from energy efficiency to No VOC paints and finishes to native plant landscape. Between vacancies I do as many updates as I can to transform an ordinary residence into a quality home, so that the folks who cannot afford home ownership still have a healthy home. This approach takes a while and a fair amount of money, but in the end it has been worth it. I have found that I attract quality tenants who also have an appreciation for sustainable buildings. I have also noticed that there is less carelessness while they occupy my investment and they genuinely seem interested in caring for the property. I strongly emphasize that they keep me informed of every dripping faucet, water intrusion, running toilets, and so on, so that I can handle problems as they arise and strategize long term to improve the property alongside another maintenance project.
There is a lot to learn in being a landlord. It is not for everyone. If you are considering this possibility for your future, for any of the possible reasons, I’m happy to meet with you to discuss Why & How, and help you make the best possible choice for yourself and your business. In the meantime, here are some other resources you might find helpful.