Enforcing the Lease

When I mentor new investors, I encourage them to create an airtight lease. This is of prime importance, for landlords everywhere. The lease doesn’t have to be 10 pages long, contrary to popular belief. Many of those lengthy contracts contain what I call “legal schmegal” language, and the tenant’s eyes gloss over half way through the first page. It’s ridiculous.

I combined and condensed a couple leases and changed the language into laymen’s terms, and I’m really happy with the results. Of course, I had my real estate attorney take a look, to make sure I’d covered all the necessary bases. He was impressed with the brevity of it, and gave me a thumbs up.  :-)

So, great, right? Well, yeah, but what good is it if I don’t enforce it? When I started out in rental properties two decades ago, I wanted to think the best in everyone. I allowed people to slide on their rent, thinking they’d get it caught up as promised. My trusting attitude and naivete came back to bite me … big time. I was losing money faster than I was collecting it. Terrible!

A lease is a meaningless piece of paper if you don’t follow it. I had an excellent lease but it wasn’t helping me! I had to have a serious talk with myself and get on a better track, or I was going to go under. Now, if a tenant falls behind, we make a plan (in writing) to get caught up quickly. If it doesn’t happen, the tenant is moving or evicted.

And, this isn’t just about late rent. It has to do with every single clause in your lease. Noise violations, police visits, not keeping the apartment/yard clean, etc. Plan your lease carefully, and make sure you’re willing to follow every item in that document. It’s the basis of your rental life — your “burnout prevention plan” is built around that lease and your willingness to be the enforcer!

Surprising Trend

When everything collapsed in the housing market here in 2008, US investors took advantage, knowing the situation wouldn’t last forever. But foreign investors also took note and jumped in.

The surprising player was China, however. Prior to 2010, investment from there was negligible but between 2010 and 2015, Chinese buyers spent around $93 billion on homes, condos and other investment properties! And finally, in 2015, those buyers surpassed Canadians as the predominant purchasers of investment properties here. I was astounded by this fact. (Springer, R. (2016, Sept-Oct.) Staying Power, Think Realty, pp. 12-14).

Interestingly, they tend to buy in our more expensive markets like New York City and California, although Texas and Florida are also high on the radar. And the trend is expected to continue. Why China?

  • I didn’t realize this, but the government there doesn’t allow their people to own homes — they can only “lease” them from the government. (Ugh!)
  • People there with extra monies see our dollar as more stable than their yuan, and also see our social and political landscape as much more stable than theirs.
  • They like the rebound our real estate market has made in the past few years and expect that to continue.

China now has the highest number of billionaires in the world, and is second only to the US in the number of millionaires. They’re sending their children to universities here because they feel the education is superior, and there’s a federal program available (EB-5 Program) whereby a number foreign investors  can immigrate here if they’ve bought real estate. Some of them purchase homes and have their children live in them while attending school.

So, it all makes sense on a number of levels. If you’re a Chinese national, have the extra cash and want to improve your investment portfolio … the US market holds a lot of opportunity.

(P.S. This isn’t a commentary on immigration! I don’t do political stuff on this blog, just real estate related content. Politics drives me crazy, especially right now … )

Tordon!

With 22 rental units in Indianapolis, there’s a lot to take care of, including exterior trimming and cutting. I have my tenants take care of the grass cutting, but two or three times a year,   I go down there and cut back tree limbs, shrubs and weeds that have gotten out of control . It’s not a job I enjoy, but it needs to be done.

In a couple weeks, I’m having a tree guy go to six properties and do some major trimming. I have limbs overhanging roofs and gutters, etc. He’s also going to cut down several mulberry bushes that are growing in fence lines at a few of my properties. Annoying! Mulberries are nuisance bushes that grow like crazy, and the berries attract flies…more annoying!

So when I was talking to him about the mulberries and how to kill them, he suggested I buy a  product called Tordon. The nice thing about it is that you squirt it on. I’ve used Fertilome Stump Killer in the past, and I applied it to the exposed cut surface with a sponge brush, kind of labor intensive.

So after he does his “cut down” and I do mine, I’ll apply Tordon. I bought several quarts of it from http://www.treestuff.com.  It’s also effective on poison ivy, and I have a couple of big vines that I’ll attack with it.

Buy some, and say bye bye to those nuisance trees and bushes!

Flash From the Past

When I began buying rental properties in Indianapolis, cell phones weren’t common. Most people who needed to “be available” at the drop of a hat wore pagers.
All my tenants had my pager number, and contacted me that way when they had a repair or rent issue. There were days when I’d be working at one of my rentals,IMG_8989 and I’d get four or five pages in a four hour period. Here’s a sampling of how that would go:

  • My pager would start beeping while I was in the middle of a project at one of the rentals.
  • I’d put everything down, lock up, hop in my car and head for the closest pay phone.
  • After fishing in my purse for 50 cents, I’d put it in the slot. The pay phone would eat the money, but I wouldn’t get a ring tone. Dead.
  • On to the next closest pay phone.
  • Find another 50 cents, get out and realize the phone cord’s been ripped out.
  • On to the next closest pay phone.
  • Finally, one that works! But my tenant doesn’t pick up. Ugh ….

And imagine the hassle when it’s 10 degrees outside, or pouring down rain. What a blessing it was when I was able to lose the pager and rely on the cell phone. What a luxury to be able to stay put and keep working, while taking care of issues that might arise during the day!

Driving by this old pay phone took me back 15+ years and I just had to stop and take a look at it. Technology can be frustrating at times, but it certainly saves us time and energy.

Oh, and take a closer look at the picture … how about that doorway to nowhere on the second floor of the house in the background? LOL

 

Welcome, Felons?

In a recent phone call from a prospective tenant, Robert’s last question of me was, “So, do you rent to felons?” When I asked what his felony was, he replied, “Strangulation.” I told him I’d have to talk to my owner, and suggested he call me back in a couple days. (I’m the owner, of course, but keeping that fact private has saved me time, stress and hassle through the years.)

HUD Secretary Julian Castro recently released a 10-page statement, warning property managers, agents and landlords they can be held liable for discrimination if they deny tenancy because of criminal records.

He wants to protect the fair housing rights of people who are re-entering the housing market after leaving prison. He claims that colorblind policies — like screening all applicants for criminal background checks — have a discriminatory disparate impact on minorities that are arrested at rates higher than their proportion of the general population.

So, even though barring tenancy to felons serves a nondiscriminatory, legitimate purpose for our neighborhoods, we may be putting ourselves at risk to do so!

And although Robert never called me back, let’s assume I had rented to him, and three months later, he fought with and strangled my tenant on the other side of the double. Was it my responsibility to protect the neighbors? Would that tenant have the right to sue me for negligence?

Although I’ve given second chances to some who’ve had run-ins with the law, I’ve always had a policy of not renting to people with felonies. I’m a single woman, I work alone much of the time, and I care deeply about my neighborhoods and tenants. With this new missive from HUD, maybe a conversation with my real estate attorney is in order …

Another Great Paint Option

IMG_4005

20 years ago, when I began my real estate investing career, I started using Walmart brand paint, satin finish. It was very adequate, covered well and didn’t splatter much. Through the years, it declined in quality and I switched to Behr, after checking out the comparisons in Consumer Reports.

I’ve really enjoyed their product. I don’t go with their top-of-the-line. I’ve used the Premium Plus satin and eggshell finishes and have been very impressed with the durability of each. Nice, thick formula, great coverage, for around $27/gallon. And considering the price of the Walmart paint had gone up to $18/gallon and I was having to recoat rooms and clean up splatters … totally worth the switch! I was frustrated with Walmart brand.

But then I came across a great deal at the Porter paint store near me. Their paints have always ranked highly as well, but I simply can’t justify spending over $40 for a gallon of paint! Then I found out that, if I opened a business account with them, I could purchase a gallon for around $28. What a fantastic deal! Definitely worth a try. So I’ve been using their Hi Hide satin for the past few months.

I’m going to stick with it, for sure. I can call them ahead and they’ll have it mixed and ready to go, and I totally love the paint. I think it more than measures up to Behr, and the friendly service and other great specials they run at their store are an added bonus. As a small business person myself, I seize every opportunity to support other small operations. “Here’s to the the little guy!”

Onward and upward ….  :-)

Best Primer

IMG_4048

I’ve tried many primers through the years — Kilz is probably the best known, and most of the big paint names (Behr, Valspar, Sherwin Williams, Porter, etc.) have their own primer they recommend — but I keep going back to Zinsser Bulls Eye 1-2-3 water base primer.

What I love about it:

  • It is a much thicker base than most primers, so it doesn’t splatter or drip all over the place.
  • It sticks to most surfaces.
  • I use the water-base product, and it’s a great stain blocker, and doesn’t have the toxic odor like the oil base primers do.

For spot treatments, I still prefer the Kilz oil base spray over the Zinsser product. It covers more evenly, and although there’s a definite odor, it dissipates after about an hour.

Happy priming!  :-)

Caulk Gun and Caulk … The Search

Pictures of my best finds, in a caulk gun and water-base caulk:

FullSizeRender copy

FullSizeRender

 

 

 

 

 

 

 

 

I always try to save myself time when working on my rentals, and I’ve bought several caulk guns through the years. They leak caulk — even the ones that claim to be “dripless.” I end up with white caulk on my dark carpet. (Ugh.) They’re heavy, the handle isn’t user friendly, etc. This gun, made by Newborn, is excellent. The handle is ergonomic, allows you to work with the gun for a prolonged period of time if necessary. It’s also very light weight. It has a tip cutter, of course, and it really is dripless. I bought it at my local Porter Paint store (PPG)  for about $14 and it’s been worth every penny!

So while I was there, I decided I’d try their water-base caulk as well. It’s actually cheaper than the cheap Alex or DAP brands I’d been using. It’s called Top Gun 140 acrylic sealant. What a pleasant surprise! It’s a lot stickier consistency, but still went on smoothly and I’m thinking it’ll probably hold up a lot better than the others. It’s the same soap and water clean-up.

As I said, I’m all about making my life easier … hope this tip makes yours easier as well. Onward and upward!  :-)

Rents Are Up …

Across the nation, rent prices took their highest jump (over the past year) since before the recession that started easing up somewhere around 2009. According to a recent Wall Street Journal report, they went up 4.6% last year, to an average of $1,179/month. But — good news for renters — apartment construction is way up, so this may create an oversupply in some urban areas, and those rent prices may even out a bit.

And as you might imagine, given the above statistic, homeownership is down. As of the third quarter of 2015, it was at 63.7% — a 30-year low.  The percentage of first-time buyers is also at a 30-year low.

So, what accounts for the shift? I think there are a couple major factors at work here:

  • The collapse of the housing market in 2008 scared the crap out of everyone. Many potential homeowners are still scared, and expect this may happen again. They imagine buying a home, having the market tank, and finding they owe more than the home is worth.
  • People are much more transient now than ever before. They change jobs frequently, and are transferred with their work more often. They don’t want to be “tied down” by homeownership when they know there’s a good chance they’ll be moving in a year or two.

Personally, I still feel real estate is a good investment. I don’t believe we’ll see another 2008 debacle, and owning real estate — whether you live in it or use it as a rental property — is a great addition to other assets in a balanced portfolio.

 

Cheap and Effective

FullSizeRender 12

I often use Easy Off oven cleaner (fume free) to clean porcelain or fiberglass tubs and showers. I can spray it on and come back the next day to finish up the job. But I’ve also found this product works extremely well, in less time.

The Works can be found pretty much anywhere … Walmart, dollar stores, Menards and other big box stores, etc. The secret is to spray it on and let it sit for five or ten minutes before you clean it off. Make sure you totally coat the surface.

As you can see from the picture above, this tub had a mother load of dirt, soap scum and hard water build-up on it. I was actually able to get most of it off with just a terry cloth rag! For the worst areas, I did use my Scotch Brite dark green scrubber, but didn’t have to use much “elbow grease” at all.

I’m definitely adding The Works to my bag of tricks … I’d suggest you add it to yours as well … less time at work means more time to play.  🙂

Onward and upward!