Pets in Rental Properties?

I’m a big-time pet lover. I grew up with dogs and cats, and my kids grew up with dogs, cats, a snake or two, turtles, fish, bunnies and lizards. But even so, when I began investing in rentals in Indianapolis 25 years ago, I decided I wouldn’t allow pets of any kind in my properties. Why?

— They can cause damage, to floors, window coverings, etc.

— They cause additional wear and tear.

— They can be a potential liability, if they threaten neighbors or other tenants.

Through the years, I realized I was missing out on a lot of really good tenants by not allowing their pets to live with them in my rental. After some checking around, I learned (through Zillow) that over 30% of renters in their database are pet owners. Apartments.com reports that around 70% are pet owners. Conversely, most apartments are advertised as “no pets” homes. So …. the shortage of units available for those who have furry friends creates a fantastic opportunity for me.

It’s always my goal to get my units rented asap, on a turn around. I’ve come to realize that I can charge higher rent (usually $25-40 more/month) for the privilege of having a pet on the premises. Also, it’s typical to charge a non-refundable pet fee, usually around $300-400. Because this amount is non-refundable, don’t ever call it a “pet deposit!” And by the way, tenants are more than happy to pay this amount.

I think the solution is to ask a lot of questions about the pet in your first conversation, and arrange to stop by the applicant’s current residence to do a “meet and greet” with the pet. You’ll learn a LOT about the pet’s (and the owner’s) behavior and cleanliness. After that visit, you’ll have a valid opinion on whether to go forward in the rental process.

Of course, the above comments don’t apply to service dogs. If I’m told the person has a service dog, I’ll ask to see the certification. (One of my daughters has a service dog, and the training is quite extensive. People can buy a $12 “service dog” vest and put it on any animal. Not cool.)

I’m also hearing quite a bit about “emotional support animals” — dogs, cats, hamsters, ferrets, lizards, pigs — and evidently, the owner has to provide a written letter from a physician regarding the support animal. Although I’m a pet lover, I don’t really want a pig in one of my rentals! Hopefully, I won’t be faced with that issue any time soon …

Onward and upward!

No Heat Call (Uh-oh)

I own several rentals in Indianapolis, and I’ve self-managed them for over 24 years. It’s been quite a ride — very eye opening — but I’ve enjoyed it tremendously.

At the end of every month, I write a news letter to all of my tenants, and I deliver them to each home, along with pre-stamped, pre-addressed envelopes for their next month of rent. The reasons I do this?

• Hand delivering these allows me to check out the condition of the outside of the property. If I see messes outside, I talk to the tenant or add a handwritten note to the tenant letter. (And I make a mental note to do an interior walk-through very soon.)
• I’m able to give them reminders re: some of their lease commitments, like keeping noise (music, voices, TV, children) to a low level so as not to disturb neighbors.
• I’m eliminating the “no stamp” and “no envelope” excuses for not sending their payment on time.
• And during cold weather, I can give everyone valuable tips to help them stay warm, keep their pipes from freezing, etc.

But sadly, things don’t always go as planned …

I got a “no heat” call from a duplex tenant, in the dead of the cold, Indianapolis winter. I called my HVAC guy and had him go check it out. The furnace was older, and I hoped it wouldn’t need replacement. Now, there’s one furnace in that duplex, and a thermostat in one of the units that controls the entire house. My repair man walked into the unit and yes, it was really cold in there. The furnace access was in the other side, so he went to check it out.

Amazingly, it was totally warm in there! Whaaatt? There sat the tenant, toasty warm. But when Jim walked into the kitchen, he discovered that the stove top elements AND the oven were turned on “high.” And of course, since it was so hot in there, the thermostat in the dining area wouldn’t kick on.  He and I both had a serious talk with the tenant. Not only is that practice dangerous, the furnace wasn’t kicking on at all. There was nothing wrong with the furnace, only something wrong with the actions of my tenant!

So NOW, when winter approaches, I include the “Never, ever use your stove or oven for heat!” advice in my tenant letter! 🙄

Onward and upward, right?

 

Setting the Tone With Tenants

The first contact with your tenant actually sets the tone for your entire relationship. It occurs when you show them the house … they loved the ad they saw on Zillow or elsewhere, loved the pictures, and the price fit their parameters. When I meet with potential renters, I let all of them know what’s expected of our tenants, mainly:

• We expect you to pay rent in a timely manner
• We strictly enforce late fees and file eviction for lease violations
• We expect you to treat this home with loving care

With those things in mind, if someone moves in and is late with rent, they know we aren’t going to let that slide. Early on, I tended to let things go, and accept late rent with no late fee attached. Tenants caught on to this quickly, of course! Why the urgency to pay on time if there’s no penalty for paying late? I learned the hard way, of course ….

Now, I stick by my lease, which demands a 10% fee if I don’t have the rent by the 6th day of the month. If someone has to pay that late fee one time, they make sure it doesn’t happen again. Those fees can be hefty, especially on higher end rentals.

Moral of the story? Be kind, but be firm and stick to your lease terms. At the end of the day, it’ll create a calmer environment for you AND your tenants!

Keeping Those Great Tenants

It’s all about the golden rule, whether you own rental properties here in Indianapolis or elsewhere — “Do unto others as you would have them do unto you.” Here’s my recipe for keeping my great tenants happy:

• Thank them for tending to the house and keeping it clean.
• Show appreciation for the fact they pay the rent in a timely manner — give them a gift card to a local grocery store or other popular venue, i.e. Target or Walmart.
• When they call with a repair issue, get back with them immediately, not the next day. This shows you care about them and the apartment.
• When they have an issue, even if it isn’t something within your realm of duty (like “The cable’s acting up” or “Our internet’s down, for some reason”, don’t brush them off. Try to offer some options toward a solution.
• When you exceed expectations, your tenants appreciate it. They’ll also share praise of you with other friends/family, often sending you other potential great tenants.

Remember, your reputation is one of your most prized possessions in this business. Providing clean, updated, well-maintained homes is Step 1. Delighting your great tenants is Step 2. And the result? Happy land lording and a happy bank account, of course!

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 … 😌

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!