Inside the world of landlords – attitudes, challenges, and fears of investment property owners

Currently, there are 111,532,119 renters in the U.S., with 2,654 new renters every day. But there are also 22,910,370 landlords or rental property owners in the U.S., which means 1 in every 14 or so people are landlords in America. 

While some may think that being a landlord is all sitting back and collecting profit, the reality couldn’t be further from that perception. In fact, landlords exercise a tremendous amount of time, risk, work, their own money, and even legal exposure.

But when done correctly, they ensure the win-win scenario of making a good investment AND providing a safe, comfortable, and nice home for deserving renters.

You’ll find hundreds of blogs about renters and the rental market, so today, we wanted to bring you a profile of landlords, including their attitudes, fears, and challenges with being property owners. I break these down into the categories of Tenant screening, Repairs & maintenance, Landlord stressors, problems, & fears, Profit!, The dreaded “E” word (eviction), and the Damage Deposit.

Landlord stressors, problems, & fears:

The #1 concern for landlords is non-payment of rent.

Only 51% of landlords say that being a landlord is more attractive or lucrative than it was a year ago, a shockingly pessimistic stat.

Even worse, 33% say that it’s less attractive or lucrative to be a landlord now compared to a year ago.

According to surveys, this is what stresses out landlords the most:

22% Loss of income

22% Troublesome tenants

16% Maintenance

13% Tenant evictions

12% Tenant turnover

10% General stress of the role

5% Staying on the right side of the law

A second survey yields similar landlord stressors:

18% High turnover of tenants

12% Tenants not paying rent

10% Keeping up to date with safety checks and

8% Keeping up to date with changes in legislation

5% Finding good tenants

5% Property maintenance

3% Time consuming

But when asked if they’ve ever had to deal with a problem tenant, 51% of landlords surveyed said “yes,” while only 49% had not.

Profit!

88% of property managers were able to increase rental prices in the last year.

In fact, rental properties now generate 31% of the average landlord’s annual income!

Homeownership rates are at a 50-year low, but at the same time, rental inventory is at a 20-year low, causing the average renter to spend 10.4 weeks looking for a new home or apartment!

California is ranked #4 (behind D.C., New York, and Hawaii) for states with the highest percentage of renters. In fact, 43% of California residents now rent.

88% of the property managers they surveyed increased their rental rates over the past year.

Tenant screening:

36% of landlords just “trust their gut” when screening renters, and not all run eviction reports or criminal background checks.

38% didn’t screen a particular potential tenant because they “didn’t raise any red flags.”

13% didn’t want to spend the money to screen tenants properly, and an astounding 21% of landlords just weren’t aware that they could screen tenants online.

But more than 95% of landlords say that tenant screening is beneficial – they just aren’t doing it or doing it right.

When screening prospective tenants, 59% of landlords felt that a steady income was more important than a solid credit history.

Another shocking revelation is that 66% of landlords would overlook a relevant criminal history when accepting a renter.

But only 56% of landlords would take a tenant if their credit was bad!

These days only 38.6% of renters have a credit score of 660 or above.

Unfortunately, many landlords set up their tenants to fail because they accept applications they shouldn’t (costing themselves a lot of money and aggravation in the process.)

For instance, 40% of potential tenants are cost burdened, which means they would be paying more than 50% of their income in rent, which magnifies the risk of late and missed payments.

Repairs & maintenance:

According to data, the most common (and costly!) maintenance problems for landlords include:

·      Smoke detectors

·      Water heaters

·      Getting keys organized

·      Pests like termites, ants, roaches, etc.

·      Furnaces and flues

·      Clogged sink drains and toilets

·      Electrical systems

When it comes to their opinion or renting a tenant with pets, landlords are just about split down the middle, as a pet can cause a lot of damage.

 In fact, 53% of landlords said that they would rent to a tenant with pets compared to 47% would not.

The dreaded “E” word (eviction):

The average eviction now costs landlords $3,500 and takes at least 3-4 weeks (past the month(s) of non-payment. However, if not handled correctly the first time or in extenuating circumstances, there have been cases where evictions cost the landlord up to $10,000!

Interestingly, new eviction filings spike in the summer months, specifically July, August and September every year.

The damage deposit:

54% of rentals have tenant turnover every year.

Landlords commonly have to withhold a tenant’s deposit because of maintenance issues, damage to the property, or other conditions. The common reasons include:

49% State of the garden/lawn/landscaping

15% Damage to fixtures and fittings

13% Cleaning

12% Rent in arrears

1% Damage to furniture

9% Other damage

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If you have any questions about purchasing a rental property, being a landlord, or even how  a property management firm can help you, feel free to contact us.