Tenant of the Month

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Meet Shuyu Li … his friends here know him as Terence. I stopped in while he was having a lunch of Chinese noodles, juice, and a little touch of pop culture on the side … the energy drink! LOL

Born and raised in China, Terence is attending grad school here at IUPUI in furniture design. He was given some scholarship monies to attend.

He responded to my ad on Craig’s List, which I also posted on Postlets. (When you put a property on Postlets, it automatically goes to Zillow, HotPads, Trulia and several other internet sites, all free of charge. Postlets is another excellent marketing tool I use to get the word out about my Indianapolis rental properties.)

I mentioned the proximity of my property to IUPUI in my ad, hoping to attract someone like Terence — a serious student, not a party animal! He lives in one of my duplexes, which is about 100 years old but very sturdy and in great condition, everything updated.

There was one glitch on his application. He wasn’t employed so he volunteered to show me his bank account balance as verification of funds/ability to pay. It was in Chinese. LOL! Anyway, we worked through it and he’s been fantastic. He lives simply … Terence ordered all of his household furnishings on the internet (a bed, a shelving unit, his card table where he’s sitting to eat Chinese noodles in this photo, etc.) and had them delivered. He purchased a bike to commute to school, which is about 1-2 miles from the house.

On school breaks, he travels to California or Hawaii, where he has some relatives. He’s hoping to have his parents come from China to visit sometime this summer. I hope to stop by and meet them while they’re here, although I don’t know if they speak English at all …

Terence has been an excellent tenant — here’s to diversity!  :-)

 

Classy Wall Repair

Bet you’ve never seen anything like this … me neither! My tenants hadn’t been getting along and I told them they’d need to move, or face eviction. So they moved, quickly.

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But not before one of them took their anger issues out on this wall. This was a make-shift storage room off the hallway, adjacent to the attic area, and the walls were thin to begin with. I find it interesting that they made this crazy attempt at “repair” … using the term loosely! A plastic bag, cardboard, duct tape and clear packing tape. Nice.

I don’t put up with disturbances at my multi-family rentals. People deserve to live peacefully, and when I get noise complaints, I give tenants one written warning, period. (“Be nice, or leave!”) I got this place up and running quickly, and now, peace and quiet has returned. Onward and upward!  :-)

 

Kitchen Update

This old kitchen had metal cabinets and an old, heavy porcelain counter and sink. The cabinets were starting to rust through … they were probably over 50 years old. They weren’t closing very well, I’d owned this rental for 15 years, and it was just time to do the update.

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Before and after: notice my pink tool caddy on the counter (LOL) — initially, I had decided I could probably make this last through one more tenant, then I abandoned the idea and ordered the new counter top, sink and cabinets. The counter was a pre-cut granite-look formica from my local Lowe’s store, and the cabinets were also one of their pre-finished, in-stock styles. I picked up the stainless steel sink at a surplus store — it was it great shape. Materials ended up being somewhere around $1100 total. Not bad, right?

As in real estate sales, the kitchen and baths are the prime rooms that “make the sale.” Doing this update made the duplex a lot easier to rent, and I was able to ask a higher price. A win-win situation for me and the tenants as well.

Every time a tenant moves out, I look for updates that could improve the unit — fresh paint, new flooring, light fixtures, or a mini-facelift like the one above can improve the return on your investment and attract quality tenants. Combine that with quality property management, and everyone’s happy!  :-)

 

 

 

Attracting/Keeping Good Tenants

Over the past 20 years as a landlord in Indianapolis, I’ve learned a lot by trial and error … a lot of trial and a lot of error! And one thing I know for sure is that the secret to happy land lording is to attract and keep good tenants. And it all starts with:

  • Curb Appeal — I assume my prospective tenant will do a drive by before meeting me or pursuing an application process. With that in mind, I do as much low-cost/high return sprucing up as possible. (Fresh paint, at least on window trim and front door, minimal landscaping like some perennial flowers or shrubs, mulch, window washing, a door wreath, new lighting, a pot of flowers or hanging flowers on the front porch.) This mini-facelift can make the difference between someone driving on by, or pursuing your rental as their next home.
  • Good Screening — As I’ve mentioned before, I use National Tenant Network as my screening tool. They’re quick and efficient, and after filling in the tenant’s personal and work info, I get a qualification score back immediately through the website. A basic screening costs anywhere from $20-$36, depending on how detailed you want to get. (I go basic.)
  • Quality Workmanship — Your unit must be in good working order and immaculate throughout. Would YOU live there? I always make sure there are no leaks/repairs needed, the entire unit is clean and paint is fresh.
  • Be Attentive — Once your wonderful tenants have signed the lease and moved in, don’t abandon them! Stop by (give them notice, of course) and say hello occasionally. This will also give you the opportunity to see they are taking good care of the place. If repairs come up, take care of them immediately!
  • Reward Good Behavior — When you come across those tenants who are just downright spectacular in every way, i.e. they pay rent in a timely manner, keep the home/yard clean and are a great addition to the neighborhood, give them perks as evidence of your appreciation! A gift certificate to a local restaurant or grocery store, a “coupon” for a dollar amount off their next month of rent, etc. Be creative, and always put a personal note with it expressing your gratitude.

I have people who’ve been with me for years, and I do appreciate them. I try to keep rent prices reasonable, while making a decent living for myself.

The nice side effect of attracting good tenants is that good news travels. Those great tenants (who also appreciate your excellent land lording) tend to spread the word to their friends and relatives, thus bringing more quality people into your rental world. Your good tenants will network on your behalf. Nice (free) perk for you, right?

Onward and upward!  :-)

 

Indy Rental Market Staying Strong

Indianapolis touts one of the most stable real estate markets in the country, in both sales and rental markets. While many of our nation’s cities suffered a 30-50% decline, our real estate market dipped a modest 7% throughout the last recession.

Our rental prices have soared 11+% over the past year. Indeed, real estate is a solid choice in rounding out an investment portfolio. Buying and holding for income and appreciation has been my goal from the start … flipping has always been a popular topic of conversation but is no guarantee of immediate or long-term return.

I like Larry Arth’s explanation of the value in real estate investment. He wholesales properties in several locations, and Indianapolis is one of his favorites. Here’s his take on the concept, as stated in Personal Real Estate Investor Magazine:

“IDEAL is the acronym for the 5 wealth building principles

I (INCOME) positive cash flow

D (DEDUCTIONS) interest, depreciation, repairs, all expense are tax deductible

E (EQUITY) as tenants pay down the mortgage the principle builds up is equity for you

A (APPRECIATION) annual property value growth

L (LEVERAGE) O.P.M. (other people’s money) you gain all the above from borrowed money

There is no other investment available that can fulfill all 5 of these wealth building principles. Most investments will return 1 or 2 of these wealth building principles and only real estate has the ability to return all 5.”

Nice!  :-)

 

 

Rent to Own?

Seller financing, rent to own, land contracts … these are creative ways to achieve homeownership if you can’t qualify for a mortgage. As a real estate investor here in Indy, I’ve sold a few of my rentals this way. It can be a positive route for both the seller and buyer. Laura Agadoni included me as one of her sources in the following Trulia article about seller financing. If you — or someone you know — is in the market for this type of financing, her piece is a good way to get familiar with the process:

http://www.trulia.com/blog/pros-cons-seller-financing/

Personally, I enjoyed giving people the opportunity to become homeowners when they wouldn’t otherwise be able to do so. For the most part, they took excellent care of the properties, knowing the home was “theirs.” I even had one family make multiple repairs and updates as they moved through their contract.

The downside was that occasionally, tragedy strikes. People get sick, lose their jobs, split with their spouses, etc. But as I stated in the article above, they usually just “bow out” gracefully and apologetically, pack up, clean up, and leave. The seller keeps the down payment, and moves on.

Bottom line? As Laura states, seller financing can work well for everyone. The seller earns good interest on the loan, and the buyer achieves the American Dream … home ownership. It’s a win/win. :-)

 

 

 

Don’t Throw it Out!

When one of my tenants moved out of my Indianapolis rental property — it was a bad scenario — he left a filthy apartment behind, including a grease-caked stove top. My handyman suggested I throw it out, but I knew I could save it. Here’s what it looked like half-way through the clean-up:

IMG_2197[1]My handyman was astounded! LOL

Here’s what I used to produce this miracle result: the day I went in there (after the eviction and after the judge had ordered my tenant out) I sprayed the entire stove top with Easy Off (fume free) over cleaner. I also sprayed the outside of the refrigerator with it.

I then proceeded on to some other tasks … painting, small repairs, etc. I didn’t touch the stove again that day.

When I returned the following morning, I sprayed the entire stove top with my trusted Krud Kutter and got to work. I used a flexible, 2″ putty knife. All of that crusted-on grease came right off … no scrubbing! Afterwards, I used a Scotch Brite (dark green) scrub pad to get the remainder and voila!

I get my used appliances cheaply, about $160 for a stove like this. But why spend that money when you don’t have to?

Investing in real estate is an income-producing journey. If I can put more money in my pocket by contributing a little sweat equity, I’ll do it!

Onward and upward …. :-)