It’s that time of the year again, when a majority of the population begins to review and think about the resolutions they’re going to neglect during the New Year.
Call me cynical, but resolutions are made to be broken. If someone had the willpower or discipline to actually follow through with their resolution, they would have done it by now. That’s why instead of writing an article about resolutions a landlord may want to make for the coming year, I’m going to ask you to reflect on the previous year.
I’m sure you’ve heard at least some variation of the Edmund Burke quote, “Those who don’t know history are destined to repeat it.” And while there are undoubtedly things you’d like to do differently this year, I’m sure there are things you’d like to repeat as well.
What Went Poorly?
Remember, this is a call for reflection, so I don’t want you to just think “I didn’t make enough money!” Try to identify specific instances that you know could have gone better. Did you lose a tenant that, had you done something differently, you might have been able to keep?
Did you relax your rental criteria for a “special circumstance” and end up regretting it? Or perhaps the mistake that jumps out at you is one of inaction. Were you too conservative in your marketing or complacent in dealing with tenants? Now that you’ve thought of some specific instances where you could have done better this year, I want you to write them down or remember them, but resist the urge to resolve to fix them right now.
What Went Well?
Oftentimes, when we’ve handled a situation well, we tend to give ourselves a mental pat on the back and soldier on. I think it’s just as important to dissect the things we’ve done well — not only to repeat them in the future, but also to extrapolate what was effective to other situations that may not seem like they have a lot in common with the original. So instead of thinking, “I really did well by acquiring more property this year,” try to think about why it went well. Was it the locations of the properties? Or is your marketing so effective that you could have filled vacancies anywhere? If you’re having trouble coming up with reasons why things went well, think instead of how the same situations could have gone poorly and reflect on how your actions helped avoid those outcomes.
The reason why I don’t like resolutions is because they set you up for failure. The instant you make a “mistake”, or otherwise don’t live up to your resolution, you’ve failed. Let’s say you want to get in shape, so you resolve to go to the gym three times a week. Inevitably, you’ll only go twice, or less, one week and realize you broke your resolution. Now your motivation is lessened and it doesn’t even bother you the next time you miss a trip to the gym; after all, you’ve already failed. That’s one of the main reasons why the advice you’ll always hear about resolutions is to make them easily attainable. The problem is that no matter how attainable you try to make them, life happens and you experience a temporary setback that, in the black-and-white world of resolutions, causes you to fail. Either that, or you make a resolution so insipid that you might as well not have made one at all.
Here’s where I dazzle you with semantics. Unlike resolutions, goals are something you’re always working towards. Setbacks are not only tolerated, they’re expected. So, returning to the previous example, let’s say you set a goal of going to the gym whenever you have free time before dinner. As long as you pick a time when you are likely to occasionally have free time, you should have ample opportunity to attend the gym. If you’re really busy one week and can’t make it, you won’t feel like you’ve failed and should give up because you’re still within the parameters of your goal. When you inevitably run into a situation where you need to use that free time to do something more important, it’s a matter of prioritizing instead of failure. Goals absorb inconsistencies, resolutions break.
So now that we’ve reflected and managed expectations, it’s time to tie this all together and set some goals for the new year and beyond. Since everyone’s situation will be different depending on what they’ve learned from their reflections, I can’t really give too much insight into what your goals should be. However, I will hit on a few of my pet topics which will hopefully act as a springboard for your own ideas.
Communicate With Your Tenants
I believe communication is something that can be improved upon in every industry by almost everyone. And due to the nature of the business, most landlords probably fear or avoid communication with their tenants. After all, every time they hear from their tenants it’s likely bad news. You can break that cycle by setting a goal to call your tenants every so often. Be proactive and catch those little problems before they become big ones, which is when the tenant is finally going to call. If you don’t have the time or desire to call yourself, you could still hire someone else one day a month (or however often you want) to call for you. It’s a little less personal, but your tenants will still feel like you care and the effect will be largely the same.
Appreciate Your Tenants
I have a very good friend that has some tenants he knows very well and holds an optional “tenant appreciation day” once a month. It may be an outing or a meal or a gift, but he does one thing every month specifically to show his tenants how much he appreciates them. Now, depending on quantity of tenants and the relationships you have them, you may or may not be able to do exactly what my friend does, but there are many ways to show your tenants that you appreciate them. I’ve covered some ideas and this topic in general in a previous article you can read here.
Dealing with tenants isn’t the only thing a landlord does. You need to buy properties, market properties, set rental criteria, write leases, send out notices, protect your assets, make repairs and improvements, know your tax liabilities and deductions, follow fair housing law, and be knowledgeable about a hundred other things. Not being knowledgeable in some of these areas could mean missed opportunities and wealth, while making innocent mistakes in others could mean being sued or possibly even going to jail.
That’s why I believe it’s important to seek as much education as you can and build a team of experts to cover the areas you need help with or don’t want to tackle yourself. You could take classes offered by your local REIA in areas that interest you. Or you can go to their meetings so you can network with other landlords and learn from their experiences. REIAs are also a good place to discover local businesses that have already been vetted by your peers, either as business associates of the REIA or through word of mouth. So consider making a goal to take a class that interests you or to network with other landlords. Conversely, you could make your goal to focus more on what you enjoy about owning rental property and hire businesses or employees to deal with your other responsibilities.
Hopefully you’ve reflected and come up with some goals to pursue in the near future. If you gained anything by reading this article I hope it’s to not become discouraged by setbacks no matter how you approach the New Year. By thinking in terms of “goals” instead of “resolutions”, you can manage your expectations and take pride when you succeed, while adapting when you encounter difficulties. Have a Happy New Year!