Investing in a rental property can be a great way for anyone to make money. Some tangible benefits of being a landlord include a boost to your net worth, a steady flow of passive income, and a way to continue to make money into retirement. Like any businessperson, the primary goal of a landlord is to maximize their profit margins. It is easy for a landlord to take profit maximization too extremely and inadvertently sacrifice long term success in exchange for high returns in the short run. Let’s take a look at why patience and long term vision are two of the most critical characteristics in a landlord.

The best way for a landlord to achieve stable, long term success is to minimize turnover rates. The most expensive part of owning rental properties is when tenants change, so it is in every landlord’s best business interest to do right by their tenants and give them reasons to stick around for the duration of multiple leases. A key to this is that a good landlord cannot be frugal. Landlords who try to be cheap and save small amounts of money in the short run by finding “quick fixes” to maintenance issues rather than permanent solutions often wind up needing to pay more in the long run because their tenants become more likely to seek out more comfortable living situations and leave. Bad landlords have high turnover rates, which cause expenses to go up at a rate that trumps the perceived short term financial benefits of being stingy.

It is doable for landlords to treat their tenants well and maintain a focus on profitability. Savvy landlords are smart with how they spend their money. For example, allocating funds towards good insurance can drastically reduce unexpected costs if something at a rental property breaks down or becomes unusable. And again, spending money on property maintenance and improvements is a great way to reduce turnover, which guarantees monthly income from rent payments. It is crucial for a landlord to keep their eye on the long run when managing their checkbook.