Renters and Social Media

Many employers today turn to Facebook, Instagram. LinkedIn, and Twitter to get the “inside scoop” on applicants. Those social media sites provide a broader view of a person than the bare facts of job history/performance.

Property managers also go to those sites to learn more about potential renters. Facebook, for example, can verify some of the info contained on the rental application. These sites also can provide insight into they type of renter the applicant might be: are there pets not reported on the application? Is the person into throwing wild parties? Are there other lifestyle concerns?

It’s important to know that if you choose to use these sites to help you in your tenant selection, you must use them equally with all applicants, so that you’re not in violation of Fair Housing laws. And another thought — can you be fair about your opinions after you’ve checked out someone on FB or Instagram? It’s very possible their taste/opinions/political or religious beliefs may be drastically different than yours. That doesn’t mean they wouldn’t be fantastic tenants. You have to remain neutral if you decide to use these extra means of screening. If you can’t, maybe just stick with the written application!

I’m pretty open-minded, so I’m going to start using social media as an additional screening tool, if the applicants’ accounts are public. Better screening can help me find better tenants, and I’m all for that!

Onward and upward … 😌

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Major Fail

I do my best on the screening side with my tenants. For my low-income demographic, I don’t run credit checks; many of them either have no credit, or poor credit. But this doesn’t necessarily disqualify them. If someone has a solid job history, a good recommendation from their prior landlord, I generally give them a chance. And I, of course, do apartment checks, to ensure they’re taking care of the place.

But things don’t always work out. I did my first walk through on these people about three weeks after they moved in, and I was NOT pleased. I warned them, in writing, that the situation needed to improve fast, but — fortunately — they neglected to pay rent the following pay period, so I immediately filed eviction. (Here in Indianapolis, the court date is two weeks after filing, and the judge orders them out five days after the court date.)

So, in that three week period, things deteriorated further and the video above shows  what I faced after they moved out. Luckily, this doesn’t happen very often! But when it does, I get to work right away … no tenant = no income. This place was up and running within a week, and my new tenant has been delightful.

Onward and upward!  🙂

 

When That “Friend” or “Cousin” Stays Too Long

We landlords can’t be policing our rentals 24/7. Sometimes our tenants invite unauthorized   people to share the apartment with them, and we have no idea this has happened. Often, the tenant explains it away by telling you, “Oh, they’re just my cousins, visiting me from Chicago for a few days.” And you have no way of knowing the truth …

That extra person — or persons — may have a criminal record, may have no job, may bring other undesirable cronies into the area. Unless the neighbors call you to complain, you may not find out about the situation until something devastating occurs and you get the dreaded phone call at 2 AM.

So, how can we landlords/property managers prevent this? How can we keep a 4-tenant household from growing to 8 or 10 without our knowledge? Here are a few tips:

  • Do a good job of screening your applicants. If your demographic is lower end, you may not be able to do thorough credit checks. But you can certainly do criminal background checks. I use a local site here in Indianapolis, at no cost.
  • On your lease, make sure you have language stating something to this effect: “Only the following people are to live here…” And list their names and ages, including children. The lease protects you and limits them.
  • Also in your lease, include a “Usage” clause, limiting visits to 14 days, and once every 6 months. I also state that no business may be run out of the home.
  • Do apartment checks! If you see unfamiliar faces, ask questions. And then, do a recheck later to make sure those faces are gone!
  • Create good relationships with your neighbors. My neighbors know I’m a dedicated landlord who wants to run a tight ship and take good care of  my homes. I make sure they have my business card, and I encourage them to give me a call if they have any concerns about activities going on at my rentals.

Protect yourself, preserve your investment … use your lease and occasional checks to make sure you don’t have uninvited “guests” camping out for free!

Rental Property Myths

When people ask me about owning and managing my Indianapolis rental properties, I get the same questions/comments again and again. Here are the most frequent  myths I respond to:

  • “I’ll bet you’re always getting calls in the middle of the night!”  No, in my 21+ years of doing this, it’s rarely happened. Yes, I’ve received calls on the weekend and/or in the evening, if someone has an emergency, like if a furnace goes out. But fortunately, I have my trusted contractors to call, and they can take it from there. I’m not making trips to my rentals on those calls. And if it’s something minor (which it sometimes is) I have them wait until the next working day.
  • “Don’t you get tired of your tenants totally trashing the places?”  Well, I’ve had tenants leave trash behind after a move-out, for sure. When I’ve evicted a person, sometimes they take what they need, and leave the rest. This happens more often in the lower economic demographic. But as far as vandalizing/destroying the apartment, out of anger or resentment, no. If you treat your tenants with respect, this doesn’t occur.
  • “I’ll bet you’re making a ton of money!”   Uh, no … When you buy rental properties, you’re buying for income, yes, but also for long-term investment. It’s not a “get rich quick” proposition. If you’re buying with a loan, you want to make sure your rent will cover more than your loan payment and other expenses (i.e. taxes, insurance, utilities, etc.). You can make a “ton of money” if you buy a ton of rentals, for sure. But the commercials you see on TV are totally exaggerated! Don’t buy into that crap!
  • “You’re a slave to those properties…you don’t have a life of your own!”  That depends on a couple things: if you fix them up well in the first place, you shouldn’t have many major repair issues going forward. And also, you have the option of hiring out the management if you don’t have the desire, personality or time to do it yourself. The cost per month is usually 8-10%/monthly rent, plus a percent of the first month’s rent. But beware — good, honest property management is hard to find.

So there you have the comments/questions I get most often — all myths. This business is intricate, demanding, frustrating, and very rewarding. I don’t regret beginning my journey all those years ago, and I do my best to educate others before they jump in. It isn’t for everyone, but for many, it can be part of a smart, long-term investment strategy.

Onward and upward!  :-))

 

Best Landlord Practices

It’s a competitive market out there. How do you attract and — more importantly — keep great tenants? For me, there’s a simple answer: show them you care about them and the home they’re renting. Here are some things I try to do on a regular basis:

  • Make sure every unit is clean and in great, working condition before showing to prospective tenants. I always supply shower curtains, toilet paper, and entry rugs for “starters.”
  • Maintain the exterior of the home. Trim bushes, pull weeds, paint when necessary. When your tenants see you taking care of the outside, they’ll be more likely to take care of the inside!
  • Tell your new tenants about the positive points of the neighborhood — locations of parks, schools, grocery stores, etc.
  • Review all points in the lease and make sure they understand and agree with how you run your business.
  • Be available to the tenants. I respond quickly to every call and text during my waking hours. This sets me apart from other landlords or management companies who are lax about returning calls.
  • Take care of repair issues promptly. Again, I try to get someone on the repair the same day if at all possible, which shows my tenants I care about them.
  • Let them know you appreciate them! Every year at Christmas, I deliver a small (food) treat to each of my tenants, and wish them a wonderful holiday season.

Some of my tenants have been with me for years, and I love it when my good tenants refer other good tenants to me. When you treat people fairly and with kindness (not leniency — there’s a difference!) they often return that favor. The Golden Rule lives on ……

Renting to Friends and Family

As a landlord, how do you feel about keeping your business separate from your personal life? Would you rent your property to a friend or relative? On the surface, it seems like a fantastic idea … you know and like each other, so it makes sense, right? You get to help  someone you care about, and fill a vacancy as well. Perfect, right?

Not so fast! Yes, there are upsides to the situation but let’s think about the possible downsides:

  • What if they feel entitled to special “perks” because of their relationship with you? Asking for upgrades you hadn’t planned on?
  • What if they end up being total slobs who don’t keep the home up to the standards you normally expect and demand of your other tenants?
  • What if they get behind in the rent and expect you’ll “let them slide” indefinitely?
  • A friendship/relationship can end up in ruins over situations like these. Are you willing to chance it?

These are just a few issues that can arise when you rent to friends or relatives. This hasn’t come up in my experience but if it does, I’ll have an honest conversation with them before moving ahead with the tenancy, for sure!

Four Best Rental Upgrades

As finances allow, I try to improve my rental units, adding value where I can. Here are the four best places to put your money, if you’re looking to “up your game:”

  1. Flooring: if you’ve done carpet in your main traffic areas, upgrade to ceramic tile or a sturdy laminate. I prefer ceramic because it’s more durable, if it’s installed correctly. Most of my tenants still prefer carpet in bedrooms (it’s warmer), but I like tile in living areas, kitchens and baths.
  2. Kitchens: if your cabinetry is well built, but just dated, prep it and give it a face lift with some semi-gloss white paint and new hardware/drawer pulls. Cheap but effective! Also, the big box stores sell granite look-alike patterns for replacement counter tops. Nice look, easy on the bank account.
  3. Bathrooms: I’ve been replacing my flimsy tub surrounds with porcelain tile. Longer lasting, nicer looking, and easy to clean. And for $250 or less, you can replace your tired-looking bath vanity and counter top.
  4. Exterior: I probably should’ve put this as number one! If the outside of your unit looks like crap, the better applicants may just drive on by. I’ve been working on sprucing up my exteriors. Installing new windows, washing vinyl siding, planting perennials and some shrubs, painting window trim, etc.

If you improve your rental, you can demand higher rent, and you’ll also attract tenants who are looking for those upgrades. So, you’re getting higher rent, tenants are getting a nicely appointed apartment … everybody’s happy!

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!

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!

Another Nice Upgrade

 

IMG_3416FullSizeRenderMost of my rental properties are 100 years old. The major operating systems (heat, wiring, etc.) have been updated, of course. And with some of them, I replaced cabinetry along with the initial rehab. This duplex had older wooden cabinets that had a few good years left in them. I had ceramic flooring and a new bath installed last year, and after a recent move-out it was time to update the kitchen.

I used stock, pre-finished oak cabinets from my local big box store, and one of the formica “grant lookalike” countertops they keep in stock. I think they look fabulous, and this place should rent quickly.

My investment goal 20 years ago was to buy and hold, for income and long-term investment. And with each improvement I make beyond the initial rehab, Im:

  • Making my rental more attractive to potential tenants, thus drawing a better quality renter.
  • Improving the value of the home itself, thus making it a more attractive purchase to a buyer, when it comes time to jump into my exit strategy.

So, every improvement I make, I keep these points in mind. Is it adding value in the eyes of my next tenant? Is it adding value down the road, when I decide to sell? If so, then go for it!