Tag Archives: Renters

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)

HACKS FOR TENANTS/RENTERS

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People have different reasons for renting. Perhaps they have “graduated” from apartment living and want to get a sense of what they may expect from living in a home before they decide to buy. Perhaps, divorce, foreclosure or some other unforeseen circumstance is the reason behind renting or maybe, just maybe, a person simply has no desire to own a home because they don’t want the responsibility that comes along with home ownership. The list could go on and on.
Having over 10+ years of experience being a Landlord of my own properties and in Property Management, I’ve seen and heard it all. I always watched and paid close attention. This is how I learned. For all practical purposes, my focus in this blog is primarily for “home renters” although these basic tips/principles can be applied to renting an apartment as well. These hacks should prove helpful when renting:
  1. ALL RENT IS NEGOTIABLE: Just because the ad in the newspaper states rent is $1000 doesn’t necessarily mean that amount is firm. How motivated the Landlord/Property Manager/Owner is to lease the property MAY affect your ability to negotiate. NEVER LOWBALL. That’s the fastest way to have your application rejected because you won’t be taken seriously. Suggest an amount that is reasonable and fair, but be prepared to walk away if your counter is rejected.
  2. TAKE INVENTORY OF THE PROPERTY: Upon signing a lease, I give all tenants a checklist similar to what one would receive if renting an apartment. DOCUMENT EVERYTHING. Torn and/or loose carpet, cracked windows, carpet stains, anything other than normal wear and tear that could possibly be used by the Landlord/Property Manager to justify keeping a portion of your security deposit should be well-documented. Videotape your walk-through and take photographs to document the condition of the property prior to moving in. NOTE: Upon vacating the property/returning any keys, remotes etc., schedule a walk-through with the Landlord/Property Manager. One hanger left in a closet or cleaning supplies left under a cabinet can be considered “trash out” which could result in a deduction from your security deposit. 
  3. UNDERSTAND WHAT A SECURITY DEPOSIT REALLY IS: A security deposit is usually equivalent to one month’s rent and it serves TWO purposes: 1) It covers the rent should the tenant decide to “skip out” on paying and 2) It covers any damages (other than normal wear and tear) the tenant may be responsible for. This is why it is necessary to schedule a walkthrough upon vacating the property. Holes in the wall/sheetrock, broken handles/fixtures ruined carpet and infestation are a few examples of deductions that could be taken from your deposit.
  4. DOCUMENT ALL REPAIR/WORK REQUESTS THOROUGHLY: This is for your protection. Did you know a tenant has the right to break a lease for “Landlord breach of contract?” In Texas, a tenant can. For example, if a tenant’s A/C conks out in the middle of the sweltering summer, the tenant made their first and second requests via phone call/text message (with no or slow response,) it has been longer than seven business days and the Landlord/Property Manager is taking longer than what is considered to be a “reasonable amount of time” to make the repair, send him/her a Certified Letter (Returned Receipt Requested of course) stating they have seven business days from receipt of the letter to make the repair. If the repair is not completed on or before the specified time, the tenant has the right to vacate the property and is entitled to ALL security deposits/pro-rated rent paid. NOTE: Rent cannot be withheld while repairs are being made. You are still responsible for paying the rent on time.
  5. BEWARE OF “RENT SCAMMERS” Always request to meet AT THE PROPERTY, not the local Starbucks or nearby cafe. If a Landlord/Property Manager refuses to meet you at the property especially for the initial viewing, an alarm should go off. Request proof of ownership. Explain this is for your protection. Any Landlord/Property Manager worth his salt would welcome the request. I do. This establishes trust between the Tenant and Landlord/Property Manager. If he/she gets angry and/or refuses to honor your request, (even if everything is legitimate,) that’s a sign to move on to the next property.
  6. RED FLAGS TO LOOK FOR WHEN VIEWING A PROPERTY: 1) The outer perimeter of the property is unkempt. If there’s trash in the yard and/or the lawn isn’t manicured (and by manicured I mean cut, edged, shrubs pruned) there may be very little hope to expect any better inside. Curb appeal is everything. 2) The utilities are disconnected. I don’t know about you, but I flip every switch, turn every knob open every door and push every button to make sure everything is  working when “previewing” a property for a client. At the very least, the electricity should be connected. 3) An unkempt interior, signs of possible infestation, foul odors, torn, worn or dirty carpets/walls, holes in the walls, chipping paint, unclean appliances or appliances that don’t work, and bathrooms that aren’t clean are just a few items that should set off red flags. A lot of these are “no brainers.” Beware of the Landlord/Property Manager who makes a promise to repair/replace items and/or paint and replace carpet prior to a tenant moving in. DO NOT give him/her your security deposit let alone sign a lease until the repairs/upgrades have been made, you have viewed the property a second and possibly a third time and are satisfied with the property’s current condition.
  7. NOT ONLY SHOULD YOU ASK QUESTIONS, ASK THE RIGHT QUESTIONS: When is rent due? Is there a grace period? What about late fees? Is the property’s mortgage CURRENT? Is the property currently in foreclosure/pre-foreclosure? NOTE: You have the right to ask this question. There have been so many cases where tenants become displaced because the property owner continued collecting rent knowing foreclosure procedures have, had or are about to commence. Is the property pet-friendly? Is there a weight limit for my pet? Is a pet deposit required? Is the property “smoke free?” What appliances will the owner provide? What utilities am I responsible for? NOTE: Tenants, it is imperative to do your “due diligence” in finding out if registered sex offenders reside in the area or close by.
  8. BE HONEST: If your credit is “less than stellar,” let the Landlord/Property Manager know upfront. I don’t solely use credit scores to determine if I’m going to rent to a Tenant, but I do run credit reports. Case in point: My BEST tenant of EIGHT YEARS (and counting) had a credit score of 505 and has NEVER been late paying rent… EVER. Don’t tell the Landlord/Property Manager only you, your spouse and your young child will be residing at the property when it’s actually you, your spouse, your young child, your two step-children (who come bi-weekly) and your mother-in-law who will actually be living in the home with you. Any misrepresented information on your application could justify means for eviction. It’s easier to just tell the truth.
  9. KNOW HOW MUCH RENT YOU CAN COMFORTABLY AFFORD: Don’t look at homes to rent you know you can’t afford. I wish there was a “pre-qual” letter for potential renters as there is for potential home buyers. This way precious time isn’t being wasted.  As a good rule of thumb, like a mortgage, the amount of rent shouldn’t be more than 28% of your net income.
  10.  ALWAYS REVIEW YOUR LEASE (PREFERABLY WITH THE LANDLORD/PROPERTY MANAGER) BEFORE SIGNING: Ask for clarification on any clauses of the lease you do not understand. The duration of most home leases is one year. Find out procedures for renewing your lease (if applicable,) holdover amount (i.e. month to month) work/repair order procedures and the like. There is no such thing as a dumb question when it comes to understanding your lease and ignorance is no defense.
  11.  SECURE RENTERS INSURANCE: I CANNOT TELL YOU HOW INPORATANT THIS IS. Many tenants assume because the property is insured, their contents are insured as well right? WRONG! If a catastrophic event at one of my rental properties such as a fire (God forbid) were to happen, and everything was completely destroyed, my insurance will cover the replacement cost of the structure ONLY. A Landlord IS NOT responsible for your property/personal effects, so if you have Cantoni furniture and top of the line flat screen televisions/surround sound systems in each room, even if you have your furniture from college, RENTERS INSURANCE is highly recommended. Paying $13/mo for approximately $20K of coverage is worth it. It’s always better to be safe than sorry.
These are just a few important tips any renter should know. Although a Landlord/Property Manager may be knowledgeable,  there’s no reason why you, the tenant can’t be knowledgeable as well. Happy House Hunting!!!
~The Financial Hack