Tag Archives: Landlords

HACKS FOR THE LANDLORD

They say the path to millionaire status can be obtained by becoming a landlord. “Buy land,” they say. “That’s something they aren’t making any more of.” I have more than a couple of investment properties and I’m far from millionaire status but I’m on my way. Check with me in about 15 years and we’ll see how close I am.

Since my last “Tip Tuesday” blog posting “Hacks for Tenants/Renters,” I thought I would follow up with “Hacks for Landlords.”

READ MY HACKS FOR TENANTS/RENTERS HERE:

https://thefinancialhack.com/2015/10/20/tip-tuesday-hacks-for-tenantsrenters/

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Based on my 10+ years of experience being a Landlord and Property Manager, I’ve learned “what to do” and “what not to do” when it comes to “Landlording.” Just as the tips for tenants proved useful (at least I hope they did,) these hacks should prove useful to the Landlord as well. For all practical purposes, I’ll be speaking to those who own and/or manage Single Family Dwellings.

  1. ALL RENT IS NEGOTIABLE: Just as I mentioned “All Rent is Negotiable” in the Hacks for Tenants/Renters posting, obviously the same goes for Landlords on the flip side of the coin. Some Landlords are firm on their asking price, however, depending on the level of motivation, an Owner may be willing to bend slightly on the rent. When you think about it, if you’re talking about a difference of $50-100, it’s worth it to negotiate and find a middle ground, especially if you think you’ve found the perfect tenant.
  2. NEVER JUMP ON THE FIRST TRAIN SMOKING: This is the biggest mistake I see new Landlords make. The Landlord is so eager to lease the home and because the potential tenant(s) look good on paper, have the deposit and first month’s rent and “appear” to be “really nice,” the Landlord rents to that potential tenant in haste. The rest of the story in some cases is a complete disaster!
  3. POTENTIAL RED FLAGS: These are some of my personal favorites: 1) The potential tenant who has the deposit/first month’s rent, will do the once over of the property, complete the lease application on site, run to 7-Eleven, get a money order for the app fee(s), brings everything back to you within 30 minutes, (this could be on a Monday no doubt,) and expects a Friday move in. WHAT!!!! THOSE VERY ACTIONS SIGNAL TO ME A TENANT THAT IS ABOUT TO SKIP OUT ON PAYING RENT WHERE HE/SHE/THEY CURRENTLY RESIDE. If they’ll skip out on a previous Landlord, they’ll do the same to you. Beware. This is not always the case, but in my experience RUN FOR THE HILLS!!! Nine times out of ten, it is. I require a copy of a Driver’s License/ID Card, Social Security Card, Utility Bill (to verify current address) and the most recent check stub. Some may believe I’m asking for too much information, but this is actually a part of the “weeding out” process. If a potential tenant doesn’t feel it necessary to provide me with the information I require, another one will come along who has no problem doing so. 2) The potential tenant, who after reviewing the Residential Lease Application informs you for the last FIVE YEARS of residential history (which is what I ask for) they lived with a sick relative usually a mother or father. I always find it comical when this happens because I’ll ask them to go back another five years, and I’ll usually get another relative they lived with or another type of excuse. Bad rental history is better than no rental history: It may be shaky, but at least a Landlord knows where an applicant stands.
  4. WHEN SHOWING YOUR PROPERTY TO A POTENTIAL TENANT, TREAT IT AS AN INTERVIEW PROCESS: I hate to say it, but APPEARANCE DOES MATTER. Your potential tenant doesn’t have to dress as if they’re interviewing for a Fortune 500 Company, however, they shouldn’t look like they just rolled out of bed to meet you either. Don’t discount potential tenants because of their looks, but do pay attention. Ask questions and observe their behavior. You can learn a lot just by asking simple questions such as where they work. Ask them to explain what it is they do. Ask about their family (or how many will be occupying the property) especially if a person comes alone to view the property. Also, take notice whether the potential tenant is on time or late. I try to arrive at the property 15-20minutes before the scheduled time to make sure I greet them when they arrive. In some cases, I have had potential tenants arrive at the property before I did even though I arrived early. Nothing looks worse than a Landlord/Property Manager who is late to their own showing. If a tenant hasn’t contacted me to inform me they’re running late, I give them 20 minutes tops, and I lock up and leave. Time is a valuable commodity that is not to be wasted.
  5. ALWAYS PROTECT YOURSELF: If you can, have another person present when you are showing a property. If you are alone, arrive early (you should do that anyway) and wait outside while the potential tenant views the property. I usually have protection (if you know what I mean) whether someone is with me or not, however I still wait outside.
  6. HAVE YOUR TENANT COMPLETE A RESIDENTIAL LEASE APPLICATION: Make sure it includes the necessary questions including bankruptcy, foreclosure, judgements/liens, evictions and my personal favorite: HAVE YOU EVER BROKEN A LEASE FOR ANY REASON? If yes, please explain. The application should have the potential tenant list their social security number, employment history, past rental/purchase history, previous addresses (5 years,) number of occupants, vehicles, you get the picture. Ask them to explain any evictions, judgements/liens and bankruptcies. Some tenants will be forthright with any potential damaging information, others will allow you to find out on your own. The last page of the application is a signature page where the potential tenant attests the info included in the application is factual and correct and their signature authorizes you to access their credit report as well as verify employment/rental history.
  7. ALWAYS PULL A CREDIT REPORT: In a nutshell, a person’s credit (FICO) SCORE will tell me how well they can manage debt. NEVER RELY SOLELY ON A CREDIT SCORE TO DETERMINE WHETHER A POTENTIAL TENANT WILL BE A “DEAL” OR A “DUD.” As I stated in my Hacks for Tenant/Renters posting, my BEST tenant of 8 years (and counting) had an initial credit score of 505 and has NEVER been late on the rent. The tenant was forthright in disclosing her financial situation upon our initial meeting. That spoke volumes on her behalf.
  8. MAKE SURE YOU HAVE A “THOROUGH” LEASE AGREEMENT: The lease agreement should not only protect you the Landlord, but it should also protect the tenant as well. Become familiar with your state laws regarding Landlord/Tenant relationships. If you have certain rules regarding your property (such as no smoking,) it must be expressed, not implied. Stipulate your rules in the lease. If no pets of any kind are allowed on the premises (this includes fish, gerbils, snakes, iguanas llamas, flies, giraffes, gazelles, monkeys, and zebras…Oh and dogs and cats too,) be sure to specify that in the lease as well. Some tenants have to have it spelled out. Be as specific as necessary in order to cover your “assets.” Information regarding rent grace periods, late fees, the eviction process, and even procedures to place a work/repair order must be included as well. Leave no stone unturned.
  9. STRESS TO YOUR NEW TENANT THE IMPORTANCE OF SECURING RENTERS INSURANCE: If the home is destroyed by some catastrophic event, the insurance on the property covers the structure ONLY, not the contents inside. By law, as a Landlord, you can’t insure property that doesn’t belong to you. The cost is relatively inexpensive (apprx. $10-$12 for about $20K of coverage.) It’s always better to be safe than sorry.
  10. NEVER “COMMINGLE” YOUR MONEY WITH THE TENANT’S DEPOSIT: All security deposits should be kept in a separate escrow account.
  11. TAKE PHOTOGRAPHS AND VIDEO OF THE PROPERTY PRIOR TO THE TENANT’S MOVE-IN DATE: Do the same once a tenant vacates the property as well. Make sure the picture and video is date/time stamped. This is a little “insurance policy” in case you have to prove or defend your case in court.
  12. WHEN DEALING WITH REPAIRS, YOUR RESPONSE TIME AS A LANDLORD IS EVERYTHING: A prompt response to the Tenant builds trust between the Landlord/Property Manager and the Tenant. My response time is usually the same day and in most cases the issue is resolved within 24-48 hours. I answered a call while vacationing in Canada for a few days. THAT’S TOP NOTCH CUSTOMER SERVICE!! Always have an “Elite Team” of dependable repairmen (licensed and bonded) that you can contact when necessary. Let the Tenant know SPECIFICALLY the procedure(s) to follow when placing a work order/repair request. Now when I vacation, I inform all Tenants the duration of my vacation and who they are to contact in the case of an emergency.
  13. PREVENTATIVE MAINTENANCE CAN SAVE A LANDLORD COSTLY REPAIRS IN THE LONGRUN: Routine maintenance (HVAC, Electrical, Plumbing, Even Yearly Extermination/Pest Control) can save you money down the road. Just as you schedule routine maintenance on your vehicle, performing routine maintenance on your properties serves the same purpose.
  14. STRESS TO THE TENANT THE IMPORTANCE OF SCHEDULING A “WALK-THROUGH PRIOR TO THEM VACATING THE PREMISES: By doing this, the tenant isn’t caught off guard by deductions taken from the security deposit.
  15. IF RENTING TO FRIENDS/FAMILY MEMBERS LET THEM KNOW IT’S BUSINESS… NOTHING PERSONAL: Beware of friends/family members who may attempt to take advantage of your relationship. Think long and hard if you believe the relationship may be damaged if things go south.
  16. JOIN ORGANIZATIONS SUCH AS THE LPA (LANDLORD PROTECTTION AGENCY): This organization has helpful information for Landlords, sample leases and most importantly, the ability to run credit checks on potential tenants for a nominal fee. It’s wise to take advantage of these types of organizations. A one year membership to the LPA is less than $100. Visit their website at http://www.theLPA.com
  17. If “all of the above” seems like too much of a headache for you, find an “experienced” Property Manager to take away the hassle of “Landlording.” A Property Manager will charge you a monthly fee, which is usually a percentage of the rent collected. MAKE SURE THE PROPRTY MANAGER YOU SELECT IS SOMEONE YOU CAN TRUST TO GET THE JOB DONE. Real estate agencies provide these services as well as independent brokers such as myself. Always do your due diligence when making your selection. Years of experience, number of properties managed and knowledge of the state’s law regarding Landlord/Tenant relationships is a great place to start.

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There are so many additional tips for the Landlord I could have included. Perhaps I’ll save my additional Landlord tips and anecdotal stories for my second book (after I write the first one.) Hopefully these tips will get you started if you’re new to the world of “Landlording.” If you have any questions, or would like additional information, email me at AndreaColeman@TheFinancialHack.com. Feel free to leave your comments and feedback below and as always thank you for reading.
~The Financial Hack (copyright 2015)

THE LANDLORD CHRONICLES: Section 8 Tenant Blues

(Previously Published July 3rd Via Tumblr)

NOTE: The Landlord Chronicles are more lighthearted posts where I tell stories (good and bad) of property management. Hope you enjoy them.

How “SOME” Section 8 Tenants give “GOOD” Section 8 tenants a bad rap…

Now I thought if I slept on this issue, I would be a little less agitated than I was yesterday…. NOPE. DIDN’T WORK. I WOKE UP STILL AGITATED. Plus I had to be at the office by 8am. I drove by and checked on a property that a Section 8 tenant vacated (over the weekend) and once I stepped inside, became frustrated all over again. I hear people say all the time there’s no point in crying over spilled milk, the damage is done and all that BS…. UNLESS IT HAPPENS TO THEM and in my case: UNLESS IT’S COSTING ME MONEY. Before I get to the crux of my frustration, allow me to give you some background on how it began.

I’m a Landlord with 10+ years of property management experience. I’ve seen and heard it all when it comes to tenants but for some reason, seeing what I saw yesterday was like seeing it for the first time.

Case in point….

I have more than a couple of investment properties, and decided to put an additional property on “Section 8.” Don’t get “brand new” on me, but for those who don’t know what Section 8 is, Section 8 offers government assisted housing vouchers to low income families, the elderly and disabled individuals so they too have access to quality, affordable living. For some, the minute you utter the words “Section 8,“ the reaction is “OMG, I’d NEVER put my home on Section 8. I’ve heard too many horror stories.” Truth be told, any Landlord that has been in the business long enough will have tenant horror stories period, Section 8 or not (like one prior tenant who had a roach infestation so severe upon her vacating, after bombing the house TWICE, the only way to rid the home of the infestation was to call my exterminator.)

So let’s get back to why Section 8 Tenants get a bad rap at times. Two years ago, I decided to put another property on Section 8. Of course this meant going through the process of inspection, paperwork, etc., but, been there, done that, got a t-shirt, bumper sticker and shot glass. The property was nice in my opinion (3-2-2) and my philosophy has always been “Just because a tenant is on a Section 8 voucher doesn’t mean they shouldn’t be allowed to live in nice comfortable surroundings.” NO SLUMLORDING HERE. I purchase properties I would live in myself. That’s the difference between a “Landlord” and a “Slumlord.” A Slumlord would NEVER live in the properties they own. At any rate, I went to work. Well the contractors did. They replaced the carpet, painted the walls, retiled the floors, put in new blinds, gutted the bathrooms, the whole nine yards getting it ready for my impending inspection.

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The house passed and I immediately found a tenant. Truth be told, I was hesitant to rent to her. There was something about her presence and the way she handled business that caused me to pause. I should have followed my initial instinct but didn’t and it cost me dearly. What some Landlords have to understand is talking to tenants is similar to an interview. Landlords ask questions. At least I do. I engage them in conversation. The more a Landlord knows about a tenant, the better equipped they are to make an informed decision whether that person may make a good tenant or if the union is a good match. There are always red flags I can spot immediately (however, I’ll save those for a later posting.) When I met this young lady, there was something about her that told me she wouldn’t win my “tidiest tenant” of the year award out of my renters (no, this is not an actual award,) but according to her current apartment manager, she was never late with her rent. She had a 16 year old son and a 9 year old daughter, so that meant no kids with sippy cups spilling Kool Aid on the new carpet or using permanent markers to draw on the freshly painted walls… Or so I thought. What I got was a helluva lot more than I bargained for.

I always offer an alarm system to my clients for their protection, and she “opted out” as I’m assuming the Ozarka drinking water dispenser she had in the house, which I know for a fact is more expensive than maintaining an alarm system, was apparently far more important. Priorities people. But apparently drinking purified spring water trumps being alerted any day of the week that someone is attempting to invade your home, but lets move on. My tenant moved in June 1, 2013 to pretty much a brand new, remodeled home and relinquished possession to me, July 1, 2015, BEAT TO SHIT! That’s the only way I can say it. I always encourage my tenants to schedule a “walk-through” with me before they vacate the premises and turn over the keys so there is no confusion should there be any damages (if any) assessed and deducted from the Tenant’s deposit. Not only did the Tenant not let me know she had vacated the premises 5 days prior to turning over the key, but the property was not secured during that time. Of course you already know who’s responsible for any damages that may have occurred during that period (and Honey, I guarantee you, IT AIN’T ME!) The Tenant was to return ONE front door key, ONE garage door key and ONE garage remote. What I received was ONE front door key and ONE garage opener. The missing key was no big deal. What was a big deal however, is what happened when I had the electricity connected yesterday (thank God for being a “Priority Customer.”) I stopped at the property BEFORE meeting her to pick up the key and the remote she had in her possession, but I couldn’t open the garage using the keypad code OR MY garage remote. WTH? The code worked and I heard the opener moving along the track but why wasn’t the door lifting? I had a hunch but couldn’t confirm until I got inside. On a whim, I check the second garage door. The bay wasn’t even locked so of course the door lifts right up. OH MY SWEET BABY JESUS! Please tell me crackheads have not invaded this property. If they have, this target practice I’ve been getting in at the DFW Gun Range is gonna come in handy CUZ I’M ABOUT TO CLEAR THIS JOINT OUT LIKE THE WALKING DEAD!!!

I step inside, locked and loaded… This is my initial expression:

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Clearly I’m ready to choke somebody out. I’ll give you one guess who.

So before I start to assess the damages, What do I do? Gun in hand I began to clear each room. I didn’t think anyone was inside the home, but I couldn’t leave anything to chance (plus as mad as I am, I’m just looking for a reason to shoot at someone right now.) I’ve got to make sure the house is clear. So I move from room to room, “Bedroom one clear. Closet in Bedroom two clear,” Who the hell was I talking to? It didn’t matter, the house was clear so I pulled the safety latch on my gun. Now I begin to look around and am truly disgusted by what I saw.

She made NO ATTEMPTS to clean up. She didn’t even try. She didn’t vacuum. She didn’t mop. The stove was nasty, The vent hood was hanging from the top of the stove, I wouldn’t even put dirty dishes in that filthy dishwasher and let’s not discuss the bathrooms. After the initial shock wore off, I took out my phone and started taking pictures. I’m so glad I left my purse in the truck. I was already itching and surprised not to find all kinds of infestation. My handyman arrived (I don’t know what I’d do without him,) and began securing the windows THREE of which were unlocked, TWO of which were partially open. Someone tried to remove the peephole from the door leading to the garage, the door handle to that same door was bent severely, the carpet was originally a mauve color when the Tenant moved in, but was now a nice dark shade of smut. There was an area in one of her child’s bedrooms where it looked like someone took a letter opener or something with a sharp point and stabbed the wall several times. Ummm, Errrrm. I don’t recall any of the tenants having mental instability or on medication. The thermostat was hanging from the wall by its screws but thankfully still worked and why was it that every ceiling fan only had ONE working light bulb? That’s not even the half of it. As much as I wanted to cry out “Why Jesus!” and fall to my knees, the house was just simply too filthy to touch the floor or carpet for that matter and I was already itching from the moment I walked in. So I just stood there with a look of contempt.

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Someone tell me how a home goes FROM THIS…..

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TO THIS……

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FROM THIS….

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TO THIS…..

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FROM THIS….

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TO THIS….

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I have but one question……

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HOW!!!! HOW SWAY!!! CUZ YOU DON’T HAVE THE ANSWERS!!! Neither me.

How in a TWO YEAR PERIOD does this level of dirt and filth happen? Clearly this is someone who has NO REGARD and NO RESPECT for other people’s property. I was a renter before purchasing my first starter home back in 2000 and I treated that townhome like I owned it. I kept the yard cut, the grass watered and I kept the house clean and tidy. And when it was time for me to move, I tried to leave it in the SAME CONDITION as it was when I moved in (with the exception of normal wear and tear.) Texas law requires the Landlord to return any deposits/sums due within 30 days of the Tenant vacating the property. When I vacated the townhome, I received my deposit the following week. The ENTIRE deposit. Wondering why? Because I cleaned the townhome from top to bottom BEFORE I moved out. I even rented a rug cleaner and cleaned the carpet. But my tenant did none of that. She put forth no effort whatsoever. If I picked up all the pennies that were strewn on the floor throughout the house, I would have AT LEAST fifty cents in my pocket right now.

After turning over the key and remote (at the 7-Eleven where she chose to meet me,) she had the nerve, the gall and the audacity to text me and ask when could she expect her deposit. I’m professional, so I had to compose myself after all suppressing all the expletives floating in my head before responding. I politely let her know under Texas law I had 30 days to return her deposit minus any fees for repairs and I would send her an invoice citing repairs and amounts due along with any remaining deposit amount. Her only response…“Okay.” What else could she say?

I’m not in the business of robbing my tenants, but I’m also not in the business of being taken advantage of and putting up with any foolishness or shenanigans. She will be assessed damages for what she has done to the property and will hopefully take this as an “each one teach one” moment regarding respecting the property of others.

The day is winding down and the best part about it was I went to the salon for my bi-weekly hair appointment. It was the highlight of my day because I’m loving this “sassy do.” of mine. I think I’ll keep it for a while. But as I look back and reflect on yesterday’s fiasco, This situation is truly sad. THIS is the main reason some Landlords shy away or simply refuse to deal with Section 8 Tenants. For some, it’s too much of a headache to deal with. Me? I believe that there are STILL good tenants out there on Section 8 vouchers who WILL take care of your property and who WILL treat it as if it belongs to them. We as Landlords always roll the dice and take our chances with ALL tenants, and because I have faith, I am preparing the property for my NEXT Section 8 Tenant.

~The Financial Hack ©2015.