Worst Landlord Mistakes

I’ve made my share of mistakes as a landlord of 20+ years. And I’ve heard others lament their own “dumbass attacks” as well. But that’s often how we learn. The sad thing I often see is people doing the same stupid stuff, again and again, and then complaining about the results they’re getting.

“Insanity is doing the same (dumb) thing over and over, and expecting different results.” Can’t remember who said it, but it’s so true!

Here are some of the biggest mistakes made by landlords:

  • Not having a comprehensive lease that covers all the crazy stuff that can happen at the rental. You have to protect yourself, so that you can evict people who mistreat you, their neighbors or the home.
  • Not following the lease. Even if you have a good lease, if you let people slide, if you let them violate the terms … then why have a lease? Make sure the rules/boundaries of your lease are clear, and stick to them!
  • Being a friend instead of maintaining a respectful business relationship. You have to draw the line between business and friendship. Of course you want to develop trust and a friendly relationship. But if you become emotionally involved, it’s hard to tow the line when things go wrong.
  • Being too quick to fill a vacancy. Yes, this business is about earning income. But filling that vacancy with a less-than-qualified tenant will come back to bite you. Save yourself the headache and wait on a good one.
  • Letting maintenance issues slide at the rental. I’ve seen this happen way too often. Exteriors fade, become a little run down, interiors as well. How can you attract good tenants when the place is looking tired and neglected? It’s not gonna happen!
  • Allowing people to stay too long, not paying. I’ve been guilty of this one, more than I’d like to admit. I’ve gotten better about it over the years. But I know people who have tenants that haven’t paid for 6-8 months. Whaaat? This is an income-producing business … this bullet goes hand in hand with the one on “not following the lease” but deserved a separate mention because it’s so common. Evictions aren’t difficult to file and complete. They’re an unfortunate part of what we do, but sometimes they’re necessary.

The main reason people leave this career is because of tenant management issues. It’s not an easy job. Landlords get burned out and just quit. But if they’d avoid the pitfalls above, maybe they’d find a bit more peace and sanity in their world!

Watch Your Back

Whether you’re a landlord, property manager or real estate broker — I am all of these —  personal safety issues pop up frequently, and we need to be aware and prepared to deal with them before they occur.

Here are a few of my personal guidelines that keep me safe.

  • Never show a property after dark. NO exceptions.
  • Never walk in ahead of the person. Always position yourself between the applicant and an exit.
  • Don’t let them out of your line of sight.
  • Pre-screen them when they call you to set up the appointment. For example, if you find they want to squeeze six people into a two-bedroom rental, or if their income doesn’t qualify, you’ll save everyone time by denying them on the phone.
  • Don’t give out any personal information. (This doesn’t apply for real estate broker situations, of course.)
  • If you carry protection, have it with you.
  • Have 911 programmed into your cell phone. Everyone should do this, but for those of us meeting total strangers to show homes, it’s a good back-up, should all hell break loose.
  • Make sure the entire house, including windows, is locked and secure upon leaving.

Hopefully, you’ll never be put in a precarious situation but it’s like my mom always used to say … “Better safe than sorry.”

Thanks, Mom.  🙂

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!  🙂

 

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!  🙂

 

 

 

Inexpensive Updates

When you’re trying to sell your home, you realize you may have ignored some cosmetic issues, repair issues, decorative updates … lots of things just tend to “slip through the cracks” over the years.

I was helping someone sell their condo recently and she had an excellent idea that would give this 90s kitchen sink area a little facelift, without costing her an arm and a leg. Here’s what she was working with:

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As you can see, the ceramic tile above the sink wasn’t damaged anywhere, but with the thin forest green line of tile, it looked dated. She decided to buy some 12×12 sheets of decorative tile, remove an entire row of the white tile (along with the narrow green strip) and freshen up the area, without replacing the counter top or cabinets.

 

 

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The finished look is fantastic. It updates the entire area, although she spent very little money in the process. The cabinet handles were also dated, so she invested in a couple of contractor 10-pack bronze handles from Home Depot and switched them out. I told her to make sure she took an old one with her to the store, so she could ensure that the holes lined up. (Some are 3″ apart, some 3 1/4 or more.) The hinges were close enough in color, so they could remain.

 

Small changes, nice effect! I’ve also painted older oak cabinets with semi-gloss white paint, for a fresh update. There are lots of options you can choose, aside from a total tear-out (and a total wipe-out of your wallet!)

 

 

 

 

 

 

Fakers and Frauds

How do you spot a fake or a liar?  I’ve had hundreds of people submit rental applications over the years and some of the crap they try to pass off as “truth” is incredible!

So, how to prevent this?  Here are a few tips:

  • Have them show you a photo ID and check the address against the address they put on your application.  Also, make sure the name matches, of course.
  • Have them bring a paycheck stub or proof of income. And then, take a good, hard look at it.  Are there shadowy areas on the paper?  Typos?  Different fonts?  These items can indicate photo-copying and tampering.  Requiring this piece of supporting evidence of income will exclude many scammers.
  • Make sure there’s a spot on the app that asks for names/ages of people to live in the property.  And try to have all of them meet you there before you commit to a rental agreement.  If they’re not willing to do this, I’d be suspicious.
  • Check out the company that employs them; do a Google search.  Addresses and numbers should match what’s written on the app, and on the paycheck stub.
  • Although I don’t do credit checks for my lower income properties, I use National Tenant Network (NTN) for my credit/background checks on all of my middle/higher-end  properties I own or manage for others.   I cover the cost by charging my applicants $35 as a fee for applying.
  • Charging an application fee weeds out people who aren’t serious about renting from you.
  • In addition to the above list, I always try to drive by the place they currently live.  Is it a dump?  Is there trash in the yard and on the porch?  Does it look filthy?  Is the home in decent repair?  I find it funny that, quite often, people say they want to move because they have a slumlord who doesn’t fix things, etc.  Really?  You chose to move into that dump in the first place, right?  Doesn’t make sense …

If you add the above items to your checklist, you’ll be more likely to weed out the frauds and scammers.

Good luck, and happy hunting!  🙂

 

 

Pre-Screening Tenants

I’m — basically — a trusting person.  But this personality trait doesn’t work well in the wacky world of landlording.  I found that out the hard way, early on in my career.  Choosing to think the best in people, I believed what my tenants said.  When they told me the (late) rent would be in my hands “next week,” I believed them.  When that didn’t happen, I waited patiently when they promised it for the following week.

Fortunately, I wised up through the years and I file evictions quickly when rent isn’t being paid, or when someone is trashing the apartment.  But how do you improve your chances of finding a great tenant before they sign on the dotted line?

One great way to do this is to check out the neighborhood they are moving from.  Is the applicant willing to have you stop by and visit their current residence?  If so, take advantage of the invitation!  This visit will speak volumes about how they live and care for their home.  Is it clean and orderly inside?  Even if it’s a bit cluttered, are the floors, appliances, bathrooms clean?  Does it smell funky inside?  If there’s a basement, make sure you check that out as well.  Sometimes, there’s scary stuff going on in basements!

If the applicant isn’t comfortable having you stop by, BEWARE!  This is a red flag.  If they move into your rental, they won’t want you to stop by there, either.  If they give what you feel is a valid reason for refusing, do drive the neighborhood and check out their particular house and yard.  Is there trash in the yard or on the front porch?  Is the home well-kept?  How about the back yard area? Is there trash scattered around?  Are there people “hanging out?”  Do the windows have proper coverings, or tattered sheets hanging up?  What about vehicles?  You can tell a lot about a person by the look of their car(s), inside and out.

Beyond these things, I always observe the personal cleanliness of the applicant/family.  This factor has a bearing on how they’ll treat my rental as well.

Aside from the obvious factors — work history, financial ability to pay, rental history — the above factors are equally important.  A filthy tenant who pays you on time, every time, is still a filthy tenant.  You will lose time and money renting to that person.

So protect yourself.  Go the extra mile … check out their living habits.  It’ll be worth it down the road.

Onward and upward!   🙂

Foster The Change

Many of the rentals I personally own are in the inner city of Indianapolis.  I bought there, back in the 90s, because of a government program called “Weed and Seed.”  Law enforcement was teaming up with community, educational and spiritual leaders to rid blighted areas of drugs, prostitution, gangs and the crimes that accompany them.

Indianapolis (Haughville area, to be exact) had tremendous success with the program, and was used as a national model for “Weed and Seed.”  While there are still issues with poverty and crime, I’ve seen progress.

I’ve tried to carry that progress into my personal journey with my rentals, by carefully choosing tenants, and being a strong, positive presence in the neighborhood.  Part of this is accomplished by putting responsibility and accountability on my tenants.  They’re required to keep the yard and garbage areas clean, and their apartments clean inside. 

I’ve also encouraged other landlords to jump on board by improving their properties and tenant mix.  This is how neighborhoods turn around … I urge my tenants to watch each others’ backs, and to keep an eye on suspicious activity and report it to the police immediately.  When authorities know the residents care, they’re more likely to respond.

Improving my rentals puts a better face on the neighborhood, and when I see others doing the same, I always stop and compliment them on the “facelift” in progress. 

Slowly but surely, as residents feel a sense of pride and community, blighted neighborhoods can make a turnaround.  Be part of the change … the reward may come slowly, but it will come.

Onward and upward! 

May 2014 bring you all good health, happiness and prosperity! 🙂

 

 

Protect Your Investment!

When you own a property, your hope is that it will increase in value over the years.  This is true whether you live in it or use it as a rental.  It’s easier to maintain your own residence because you’re there every day and tend to notice the items that need attention, like a leaky sink or roof, a cracked window, peeling paint, etc.

But when that home is a rental, you have to make a concerted effort to get inside and take a look … for maintenance issues, and tenant cleanliness issues as well.

For my Indianapolis rental properties, I try to do apartment checks after we’ve had a good soaking rain.  Here are some things I always check:

  • Smoke alarms
  • Furnace filters (they should be changed every three months)
  • Ceilings (for leaks)
  • Under every sink (again, for leaks)
  • Floors around toilets and tubs (are they soft? If so, there’s a water leak somewhere)
  • All rooms for cleanliness

I do the same for all of the rentals I manage for other people.  It’s important that your tenants see your face from time to time.  When they know you care, they’re more likely to care!  And of course, there’s a clause in my lease allowing me to evict if they don’t maintain the property.

At some point down the road, whether it’s your own home or a rental, you’ll want to sell.  If you protect that investment now, your efforts will be rewarded in the end, when you plan your exit strategy.

Happy investing!   🙂

The Back Saver…

I spend a lot of time working at my Indianapolis rental properties … not just the ones I own personally, but also those I manage for other people, in and out of state.  I’m always on the look out for products, tools and techniques that save my time prevent wear and tear on my body.  Here’s my latest cool little gadget:

Scooter BoardIt’s made by Champion and it’s called a scooter board.  Schools and other sports programs create fun games for kids using this piece of equipment, with or without a ball in play.

Scrubbing floors, painting baseboards, or doing repairs that require constant bending can really “do a number” on my back after a while, so I decided to try this scooter.

It’s lightweight plastic but it’s very sturdy, has carrying handles and four casters that rotate.  The casters don’t put scuff marks on any type of floor, and I can sit on this thing and roll along quickly as I do whatever floor work needed.  It’s fantastic!  I found it on Amazon for about $20.  Well worth it, I must say.

So, for those of you who do work that takes you down to floor level — whatever it is — think about adding this item to your equipment list.  You (and your body) will be glad you did!