IMHO consider the tenants. That's the biggest variable to being a landlord. A nicer area doesn't guarantee better tenants. You just need to thoroughly (best you can) investigate every potential applicant. How is the rental market in your area?
Not trying to be elitist, classist etc... but have to comment on your above bolded statement. Advertise an apartment for $850/month vs another at $2250 and see the difference in quality in tenant applications. The $850 listing will generally get more of the riff-raff and the $2250 will generally attract more manicured people simply on the basis of actually being able to afford it. Personally, Id rather go for quality vs quantity. I'd rather have 3 units that offer amenities, are located attractively and compare better to their contemporaries than 6 units in the hood. Of course, you have scumbags at every income level but statistically dealing with better quality units should get you better quality tenants.
My advice:
- A good tenant is highly desirable and you should do as much as possible to find quality tenants to do business with. A good tenant that respects your lease, doesnt destroy your property and pays on time makes landlording as close as possible to passive income. Your business success hinges greatly on these 3 things. Responsible tenants keep sending in those timely rent checks and dont overly wear and tear your units. Responsible tenants make running your business easier. A bad tenant will be late with the rent or not pay at all. A bad tenant can introduce vermin. A bad tenant can cause domestic disturbances that make issues with neighbors and have the added effect of driving away other good paying tenants. Even the most pro-landlord jurisdiction won't allow you to simply throw somebody out on the street, you must follow proper and legal eviction procedures. And most of the time, while eviction is underway you can go months without being paid. Therefore, Im very picky about who I get into bed with.
-Vet and thoroughly vet your potentials. Use a tenant back ground screening service. Cal their references, old landlords, current employers. Meet them in person, judge their appearance and get a feel for their character. Look their names up on facebook or other social media and see what kind of person they are. Do they have children, meet them too and see if the kids are little tornadoes or well behaved. If you need to deny somebody, keep records of why you did so. If you dont have a good gut feeling about somebody, find a legal reason to deny and make sure it is believable should it ever go to court.
I know a landlord that has lead presence in his units (old home with old windows and many paint layers). he refuses to rent to families with young children. As a means to protect himself from medical lawsuits. Lead remediation is expensive and he cant do it now. So as a way to mitigate the lead dangers, he doesnt rent to families with kids. Discriminating against familial status is illegal though. Hence he uses a legal excuse as reason for denying. I personally dont like renting to families with teenage to college age children because I believe they will put greater wear and tear on my units. You will be faced with choices that might make better business sense but will be either illegal/immoral etc... You have to figure out how to deal with these dilemmas while keeping your ass out of trouble.
-Cultivate a good relationship with your customers and deliver good customer service. I have landlord friends with adverse relationships with their tenants and I think that is so counterproductive. I beleive that a little bit of customer service and friendliness could prevent that and make both of our lives easier. Of course it's not always reciprocated but it's great when I have tenants who recognize what I'm doing and a mutual respect for each other develops. I look at it beyond the scope of a business transaction. Its not just living space, most people want to feel comfortable and feel at home when living in your property; so its my job to foster this sort of good feeling. And most tenants realize that feeling results from the landlord's work. That's my approach to this and so far I have not regretted. Is something broken? Fix it asap. If you cant do it soon or something is blocking you, have good communication explaining why. Some examples of when this has worked out wonderfully. One tenant of mine worked from home and availed himself when I needed to have a plumber, inspector, etc... visit my property. Doing me a huge favor in the process so I didn't have to travel there, open the place up and be there myself.
-Many tenant / landlord court disputes begin with mis-understandings of the law. Many, far too many, new owners are unfit business owners and ignorant of laws governing income property management. Tenants do have rights. Tenants have far more assistance in terms of legal advocacy groups that will help tenants fight the big bad landlord. These groups will practically fall into a complaining tenants' hands. Landlords will have to foot their own legal bills and do their own research. Get smart. Protect yourself. Learn your tenant's rights, etc... Always and always try to have a strong legal leg to stand on.
Many tenants don't manage their terms as tenants professionally either. They verbally only complain, but don't put their beefs in writing or they don't track discussions with the owners or property managers. Renting is a business deal. Always follow reliable and responsible tenancy procedures. Encourage mutual cooperation with each other and try to solve problems amicably, but professionally at all times. Court and attorneys are both horrendously expensive. Being right or wrong in asserting a "legal position" can be costly.
-Have an ironclad lease that is vetted by an attorney. I developed my leases by spending on evening googling typical tenant lease, picking the clauses I liked the most. I took the rough draft to my attorney brother in law who made further refinements.
-Know when to say no. Dont be a pushover. Tenants will try to push the envelope and see how far they can bend you. I've had numerous tenants plead with me to get a cat, permission to sponge paint the ceiling, park cars on the lawn, use a firepit in the yard etc... Say no if you feel it is the right decision, say no with a smile and explain why. Many times you can reach a compromise. One of my tenants did ask me for a cat. They are early paying, super clean, and give me zero problems. So I was in the mood to compromise and try to keep them happy. So I said they can have a cat but it has to be fixed and declawed so it doesnt scratch the woodwork.. While I dont like the declawing procedure at all for cats and think it is cruel, my suggestion was they go to a shelter and find one already declawed. They agreed to a slight rent increase, and I'll add a pet rider to their lease. They were so happy and I think the compromise was suitable to everyone.
-Dont participate in Section 8, ever. Know how to tactfully and legally decline these tenant applications.
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