Buy now? Oh, yeah …

The first quarter of 2012 was the best for housing in the past five years, and sales in the Indianapolis area were up 16% over the same three-month period (ending in April) in 2011.  So, is the housing market on the rebound?  Are we out of the dark?

The answers are “sort of” and “not totally.”  We were lucky here in the midwest, when the you-know-what hit the fan.  We weren’t hit as badly as the east and west coasts, Florida, Illinois, Nevada, Arizona and several other areas of the country.  Yes, our homes lost value that will never be recovered.  But our market didn’t tank as horribly as the aforementioned areas.

And now, Indianapolis-Carmel is being recognized as the most affordable major U.S. housing market in the first quarter of this year.  (National Association of Homebuilders/Wells Fargo Housing Opportunity Index.)  Close to 96% of the homes sold in the area were affordable to those earning the median family income of $66,900.  That fact, along with the good press we’ve been getting from the Super Bowl and other such events, should help our local economy and boost the housing market even more.

So, things are looking good for Indy!  Is it time to buy?  I’d say most definitely.  Interest rates are somewhere around 4% — amazing — and home prices are about 34% lower than they were at the peak in 2006.

Pessimists argue that prices could fall even more, with so many foreclosures in the pipeline.  Yes, maybe that’s true.  But in most markets across the U.S., renting is more expensive than buying.  So, is the American Dream still alive?  Is homeownership still a desirable goal for young people?  I think so, and if I didn’t already own a home, I’d certainly be shopping for one!

So for those of you sitting the fence, go out and get yourself some homeownership!

Onward and upward …   

Month-to-Month Leases

Most of my leases are month-to-month written agreements and I love doing business this way.  Why?  Many reasons:

• People are transient.  They lose jobs, get transferred, etc.  A monthly lease makes it easier on them and the landlord, should their situation change.
• Generally speaking, you can charge a little more in rent for the privilege of using a monthly agreement.
• And my favorite … in a monthly lease, I can terminate the lease, with 30 days’ notice, at any time, for almost any reason, assuming discrimination is not involved.  For example, if my tenant has a bad attitude, is surly and difficult, argumentative, bothers the other tenants, has bad personal hygiene and the apartment smells funky, or whatever else irritates me.  Now, it’s a bit tricky to say these things to a tenant, but you can always say you’re going to do some renovation to the place and need to have them vacate within 30 days.
• If you do give a 30-day notice, the tenant is obligated to continue paying rent for that period.
• Several of my homes are multi-family, and one bad apple can change the whole complexion of the house.  I love for my tenants to get along with each other;  I make them share the grass-cutting chores, etc.  If I had year-long leases, it would be tough getting that bad apple out.
• Month-to-month leases aren’t any more difficult to execute than yearly leases.  They stand up just as well in court if you need to evict someone.

In the high-end rentals I manage, the tenants are all on yearly leases.  It’s more common to see monthly leases in low- and middle-income rentals.  But they work well across the board, so don’t be afraid to use them.

Sex Offenders?

Here’s a new one … I got a call about a rental property the other day and the guy asked some appropriate questions about the unit.  He sounded like a good candidate.  Toward the end of the conversation he asked, “So, do you rent to sex offenders?”  Whaaaat?

I hesitated just a moment and said, “Um, I’d have to check with the owner … may I ask, what was the specific violation?”

Silence, then “Deviant behavior.”  Hmmm … did he have sex with a goat?  Did he expose himself in public?  What?  I decided to let it be …

“Well, I can check with the owner and you can give me a call maybe some time tomorrow …”  He said thanks, and hung up.

First of all, I AM the owner, but I was taken aback and I use this little ploy all the time with my tenants.  Most of them don’t know I’m the owner.  (It protects me.)  Secondly, I’d never been asked that question.

So, do you have to rent to sex offenders?  Is it discrimination if you refuse?

The answer is “No” and “No.”  You can’t discriminate against anyone regarding race, religion, sexual orientation, age or disability.  But you CAN discriminate against people you feel will affect your ability to do business in a profitable manner.  Sex offenders might fall into this category, right?  Others who would?

• People with really loud cars or motorcycles
• People who are dirty
• People who exhibit a nasty attitude toward you
• People who’ve lied on their application or have prior evictions
• People who want to squeeze six people into your two-bedroom house
• People who smoke, do drugs or have pets of any type
• People who have been at their job for a short time

Mr. Sex Offender didn’t call me back.  If he had, I would’ve politely told him no and wished him luck as he moved on. Sexual abuse is a huge issue in this country.  There’s a Sex Offender Registry that many people check out before they move into a neighborhood and renting to a sex offender would negatively affect my ability to do business.  And beyond that, it just wouldn’t feel right.

Onward and upward ……… 

Liars and Cheats

It’s unavoidable.  In every business, you encounter people who lie, cheat or steal.  In my rental property business, I try to weed out the scammers quickly.  Case in point:

Sienna moved in a month ago, paying $260 bi-weekly.  She paid her deposit and first two weeks of rent to get in, and that was the last time I saw money from her.  When I didn’t get the second payment in the mail — I give all my tenants pre-addressed, pre-stamped envelopes — I called to see if she’d sent it.  When she said yes, I asked to see her money order receipt.  When she couldn’t produce it, I told her she’d have to pay up or I’d be filing eviction.

Her court date was yesterday and I was shocked to see her there.  Usually, my tenants don’t show up.  Many times, they leave when they see the writing on the wall.  And then I realized her motive.  She had the audacity to tell the judge that she didn’t pay the rent because I was a slumlord and wouldn’t fix anything.  “I had a ceiling leak and I called her and she didn’t call me back.”  She lied under oath!

Wow … I was shocked.  She was partially correct.  She did have a leak, but I returned her call immediately and got it fixed the same day.  So now, I’ll have to attend another hearing, in July, to discuss this issue.  She probably won’t show, but she should’ve known that a leaky ceiling doesn’t release you from paying the rent.  Sigh ….

Fortunately, the judge ordered her out in the usual time frame, five days.  I just can’t wait to see the condition of the apartment.  She was a slob, so I’ll take pictures to document everything.

In my 18 years in the business, this is the first time someone has tried this trick.  I’ve had several tenants try to scam me, but my bottom line remains the same.  I’m in this to make income, and if you don’t pay, you can’t stay.

Yes, there are cheaters and liars in every business.  It’s part of life.  But I don’t have to put up with it, and I won’t.  Sienna will be out Monday, and I’ll whip her place into shape and find someone who will treat it — and me — better!  Onward and upward, right?

Before and After …

You gotta love Craig’s List … this little kitchen at my rental property needed a major facelift and I didn’t want to spend a ton of money at Lowe’s or Menards on new cabinets.  Here’s the before picture:

The cabinets had been in there forever so it was time to update.  After I got everything out it looked like this … there was old wallpaper behind everything!

So I found used replacements on Craig’s List.  For $450, I got cabinets, a counter top, sink and faucet, three ceiling fans and two light fixtures.  Very cool.  Here’s what it looked like when it was done.  A total transformation:

I was so thrilled with the outcome I decided to look for a small gas stove on Craig’s List as well.  They’re uncommon and very expensive to buy new, but I couldn’t fit a full-size one through the door of this apartment.  I found one and went to check it out.  The seller had it sitting out in his yard and it was rather dirty, but he said it worked very well.  And dirt has never scared me.  He also said he’d deliver it, so he brought it later that day and I paid him.  My handyman came over later and hooked it up, and it was then that we discovered it was a piece of junk that really just didn’t work well at all.  When I called the guy to suggest we return it and get my money back, he said we probably damaged it when we installed it and that’s why it didn’t work.  Ha!  What a joke — a bad joke, I might add.  I was forced to buy a new one, for $450.  Ugh.  Lesson learned: use Craig’s List, but make sure your product works before you pay for it!

I was way too trusting.  So I made money on the cabinets, counter top, etc. and lost money on the gas stove … sigh … onward and upward, right?

Rubber Flooring?

I’m always on the lookout for new ways to prolong the life of flooring in my rentals.  Carpet, laminates, sheet vinyl, ceramic and vinyl tiles . . . they get damaged, wear out, and it seems I’m always replacing them.

I’ve settled on berber carpet for living areas.  It doesn’t mat down, and it cleans well.  I don’t buy solids — dirt and stains show too easily.  There are lots of styles with a fleck pattern in mixed shades of taupe and brown that work beautifully.

But I hadn’t found anything I was thrilled about for my kitchens and baths.  That is, until today.  I’d seen rubber tiles in a couple kitchens and baths in a fourplex in the Chatham Arch area of Indianapolis.  A good friend of mine is buying there . . . the area is fantastic, and attracts young professionals.  These tiles gave the kitchen a funky/retro look and were very comfortable.  I thought the floor came in one piece but on further inspection, I noticed it was 20″ tiles.  Very cool … and so durable!  So I set out to research the product.

Here’s what I found:

This is two tiles, locked together.  The trade name is Flexi-Tile.  As you can see, they fit like puzzle pieces, and all you need to install them is a rubber mallet and a utility knife.  The raised circles in this pattern give it a 3-D effect.   You really can’t tell where one tile stops and another begins.

They come in several colors, as you can see in the photo to the right..    So, you ask, what about price?  They’re not cheap . . . to do a 10×15′ room would cost about $350 in materials.  BUT, you don’t need glue, remember, so installation should be inexpensive, and these things hide minor cracks and bumps in older floors . . . you don’t need to worry about laying a sub-floor in most cases, which is great.  And they come with a 25-year guarantee.

I’m definitely going to give these tiles a try on my next rehab project.  I’ve had too many kitchen and bath floors ruined, and these tiles are nearly indestructible.  Other applications are basements, playrooms, garages, laundry areas . . . I’ll let you know how it goes!

Anger Issues…

I’ve never had a tenant tear up my rental out of resentment or anger toward me.  But something went on here that wasn’t pretty!

Theo had been with me for over five years and I’d never had an issue with him.  But a new girlfriend entered the scene, with a pit bull in tow, and I told Theo it was the dog or him … I’m an animal lover but I don’t allow pets in my rentals.  I’ve made a few exceptions along the way, but this wasn’t going to be one of them.  I gave Theo a second chance and even a third, but he — evidently — couldn’t stand up to the girlfriend, so he had to go.

There must’ve been some wacky stuff going on in there toward the end, because there are holes in many of the walls.  When I took down Theo’s “patch job” here’s what was behind it:

Nothing!  A black hole leading into space under the roof.  (It’s an upstairs apartment.)  Occasionally I come across fist-size holes in walls, but man-size holes?  We’re talking major anger issues here!

Anyway, this happened in a short span of time, and landlords can’t control everything, all of the time.  Even the best tenants can turn bad, quickly.  I made good money on Theo for over five years, and it was time for some cosmetic work on his place anyway.  I just thought it would be Botox, not a major facelift!

I’m just glad I’m a laid back person.  This stuff doesn’t happen often, especially if you do apartment checks.  I’ll whip this place into shape in no time, and hopefully get another long-term renter in there soon.

Onward and upward!  

Squatters!

Carl had been renting from me for five years at my fourplex..  Never missed a payment.  Then, one day when I was at the property to talk to one of my other tenants, I heard a dog barking in his apartment.  And I don’t allow pets.  Hmmm….

I knocked on the door and Carl answered.  The dog, an aggressive pit bull mix, was going crazy behind him.  I calmly told Carl we don’t allow pets and the dog had to go.  “He belongs to my girlfriend.  I told her he can’t be here, but she keeps bringing him.”  I replied, “You need to tell her that if the dog is still here tomorrow, you’ll be evicted.”

I thought that would take care of it.  Carl was apologetic, understanding.  I stopped by the next day and the dog was still there.  Sadly, I told Carl I was filing on him.  I told him that if he could be out before his court date, I’d drop the charges.  And that’s what happened.  Carl moved out.  I’d told him to leave his key on the kitchen counter.

I went to the apartment the other day and, as I put my key in the door, I heard a dog bark!  What?  His girlfriend opened the door … Carl was out, and she was still there!  She said he was coming back for some things that weren’t out yet.  Okay.

I went today, and the dog, the girlfriend and Carl are gone.  But I let myself in and there were two people I’ve never met, one was sleeping on the floor, one was sitting against the wall, texting somone.  Awkward!  (Glad I had my gun in my pocket, just in case.)

I informed them that I’m the landlord and the locks will be changed tomorrow by 4:00 PM.  I told them if they were still there, I’d be calling the police to physically remove them.  I was totally pissed off, but was careful not to show it.  If I’d been disrespectful, God only knows what they’d do to the property, damage-wise.

Bottom line?  I allowed Carl to move out without filing eviction on him, although he belived I was going to do it.  I trusted him and decided I’d save my $82 filing fee.  I knew he’d move out.  He’d been a wonderful tenant who couldn’t stand up to the girlfriend with the dog.  But he — obviously — had a few low-life friends who helped themselves to his property.

I should’ve known better.  I usually file the eviction, regardless, to protect myself in case my tenant doesn’t show good faith and move out.  Carl moved out as promised.  But his low-life friends moved in!  I’ll be smarter next time …

Onward and upward …

Painting Tips!

I could give seminars on painting.  Having been a landlord for over 17 years now, I’ve painted and repainted my rentals, and I’ve learned something new about the process every time.  I try to do things quickly and efficiently, and here are a few things I’d like to pass on to my readers:

• Buy a high quality brush for trimming out around windows, baseboards and doorways.  My favorite is a Purdy or Wooster angled 2 1/2″ brush.  Trying to save money on a paint brush will result in frustration and a crappy paint job.
• I NEVER use masking tape to help with the trimming out process.  It takes a lot of time to apply the tape.  If you have a steady hand, skip it!  Not necessary.
• Buy a lightweight trim cup, so that you don’t have to carry a paint can around with you when you’re trimming out.  You can find a lightweight plastic one at your home improvement store for under $4.
• For walls, use 3/8″ roller sleeves only on very smooth walls.  If the walls have a few defects in them, or if they’re patterned (like some ceilings) use a thicker sleeve, maybe 1/2″ or even 3/4″.  These will apply more paint and disguise defects.
• If you’re doing the walls and trim in two different colors, paint the trim first, and let it come over onto the wall about a half inch or so.  Then, you can “cut in” the wall color last, butting it up to the trim color.
• When you’re trimming out, don’t overload your brush!  If you do, you’ll get a ridge of paint on the edge you’re trimming.
• When you’re rolling a wall, start in the middle and do floor-to-ceiling strokes (in a “W” pattern) with the roller.  Buy a lightweight aluminum handle that you can adjust/lengthen for higher ceilings.
• If your paint job is going to last longer than one session, wrap your roller sleeve and paint brush in a plastic bag to save them for later or even overnight.  If the air doesn’t get to them, they’ll stay fresh for the next painting session.  Roller sleeves are very hard to clean when you’re done with the job.  I buy cheap ones — they work well — and throw them out when I’m done with the project.
• Before recapping the paint can, make sure you run the paint brush around the groove that holds the lid in place.  This will assure a good seal when you recap the can.
• I’m really picky about my paint brushes, since I buy really good ones.  To clean them well, I use a wire brush and run it down the spines of the brush to get all the paint out.  I also tamp the brush hard on the base of the sink to get the paint out of the inside of the brush.  The cardboard container the brush comes in usually wears out, so when it does, I wrap the damp, clean brush in a paper towel so that it doesn’t lose its shape or have any bristles that go awry.

Hope this has been helpful … and here’s to your next paint job!  

R & R!

Many people believe that owning rental properties is like having a ball and chain around your foot.  You can’t get away, you can’t take a break or even a short vacation.  Well, check this out:

This is the view from the balcony at The Royal Cancun, an all-adult all-inclusive resort in Cancun, Mexico.  I just spent a week there.  Beautiful!

And no, I didn’t photo-shop the picture.  The water really IS that unreal turquoise color.  I’ve never seen anything like it.  And I’ll definitely be going back again!  So, how does a landlord do this?  Easy:

• Be organized.  Have your ducks in a row before you go.  If you leave on a vacation with a lot of loose ends, you won’t relax.
• I don’t recommend going in the first week of a month.  That’s when rents are due, and you’re busier at that time.
• Have a good handyman who will cover for you when you’re gone.
• Be availabe while you’re gone, but not TOO available.  I check messages a couple times/day, and if I have repair issues I call my guy to take care of them.  (Some handymen don’t mind getting direct calls from tenants — Craig does, so I respect that.  I wouldn’t want my tenants to abuse the privilege.)
• DON’T have your cell with you all the time.  If you’re going to conduct business 24/7 while you’re away, why go away?

I take several vacations each year.  I work hard and play just as hard.  Be organized and run your business efficiently — the payoff is not just money in your pocket.  It’s free time to enjoy this life and the fruits of your labor.

Cheers!