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!

Another Great Tool

 

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One of my contractors showed me this recent addition to his “bag of tricks” and I immediately ordered one for myself, after checking reviews. When I list a home for sale, I often measure the rooms using a bulky 25′ steel tape measure. It’s accurate but rather time-consuming.

This Bosch digital device is lightweight and super easy to use. All you do is butt the back of it up to one wall, and press the arrow toward the opposite wall. When the red laser beam appears, the readout on the device gives you an exact measurement (i.e. 12’10”). It even gives you fractions of inches where needed. Then, take it to the other wall, without clearing out the first number, and press the arrow again, and you’ll have your total room size, i.e. 12’10” x 14’11 7/8″. It measures to 32nds, and up to 120 ft. So quick, so easy. Takes the hassle out of measurements of all kinds, including ceiling height, volume and area.

I bought mine on Amazon for about $79…money well spent!

 

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!

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

 

Applicants With No Credit

If you’re a landlord and your properties are mid- to high-end, you probable run credit checks on your applicants, as you should!

With my lower income properties, I don’t normally do this, as many of my tenants have never established a credit history … they pay cash for everything. This is unbelievable to many, but makes a lot of sense to some people. They’ve decided they’ll never buy anything until they have the money to purchase! What a novel idea, right? And not a bad one, at that! Others who have had credit in the past have totally trashed it … unpaid bills and credit cards, etc.

But that scenario isn’t limited to lower income folks, believe me. And so we get back to the issue of credit checks on the mid- to higher-income applicants. When you run someone’s credit (I use National Tenant Network — they’re excellent) and it comes back as non-existent, you’ll need to check on a few issues:

  1. Did they record their Social Security number correctly on the app? Have them repeat it back to you for verification. If that can’t be done, raise the red flag!
  2. Maybe they really don’t have ANY credit that’s been established. This is certainly possible, especially with young people who have not used credit cards or had utility bills in their names.
  3. That person may not be included in that reporting bureau’s files. There are three major bureaus — Trans Union, Experian and Equifax. Make sure you recheck that.
  4. Did they mention any credit cards on the application? If so, and there’s no report that comes back, they’re lying. If you have a credit card, you have a credit history.  Recheck the driver’s license, SS number, etc. Something’s not right … get ready to raise that red flag.

Many people present well, and aren’t what they appear. That’s why the application process is another tool we use to help determine qualifications.

On the other hand, I’ve rented places to people with no credit trail, and I’m not afraid to do that. I talk with the employer, verify income, talk with the previous landlord, do a drive-by of the previous residence to check the neighborhood and condition of the property, and assess the applicant personally. And from there, if there are no other parameters to lean on, I go with my gut.

Happy screening!

 

 

Indy Makes the NY Times …

So, the New York Times came out with a list of 52 places to visit in 2014 and, lo and behold, Indianapolis appears on the list, coming in at number 34.  The focus is on our fantastic cultural trail throughout downtown which is so bike-friendly.

Who knew we’d be on a list with the likes of Yorkshire, Dubai and Seychelles?  Since the Super Bowl and before, our growth has been phenomenal … business, housing, a vibrant downtown easily accessible … and an excellent place in which to invest, and raise a family.

There are some interesting  locations on the list; thought I’d share it here.  Enjoy!

http://nyti.ms/19iFvGz


Making Deals With Tenants

Early in my career, new tenants often asked me to “work with them on the deposit.”  In other words, they couldn’t quite pay both the rent and deposit required to move in.  Being a trusting soul, I usually agreed, and we’d make a plan for them to pay it up within a month or so.  What I quickly learned was that something else always seemed to pop up, and the deposit they owed me never quite found its way to the top of their priority list!

So, I stopped allowing that.  But then I got people who wanted to “work off” the deposit.  They were willing to paint, clean, etc.  Thank God, I was smart enough to say no to that proposition!  Here’s why:

I had made the mistake of letting one of my good, long-term tenants paint a couple of rooms at his place, with disastrous results.  He told me he used to work for a paint contractor, so I gave him the go ahead.  He really botched it up — terribly — and I learned my lesson.  I don’t ever allow any of my tenants to do work on my properties.  There’s too much risk involved, not to mention liability issues.  (What if they get hurt while doing work for you?  Not good.)

Here’s the bottom line:  if your applicant doesn’t have the full rent and full deposit, don’t let them move in.  PERIOD.  No exceptions!

Also, if they’re responsible for any of the utilities, make sure they put them in their name prior to moving in.  Don’t just blindly trust they’ll get it done.  Ask them if they’ve made the calls to transfer service and if they say “yes,” call and check.  (Yes, I’ve gotten burned on this as well, by trusting it got done, and then receiving a gas bill a month later.  Totally my fault.  Learning the hard way, once again!)

Between my book and this blog, I’m hoping to save other landlords from making some of the mistakes I made early in my career.  Although I did a lot of reading and networking, there are so many things I had to learn through experience.

After being in this business for over 18 years, you’d think I’ve gotten it totally perfected by now, right?  Unfortunately, not …

Onward and upward!

The Case For Rentals

I’ve owned and managed low and middle income rentals in Indianapolis for over 17 years now, through the good times and the bad.  My goal was to purchase these rental properties for income and long-term investment.  I’ve flipped a few along the way, but that’s never been my model.  Through the years, I added property management to my list of skills … other people’s homes or rental properties.

Why invest in rentals?  There are a couple reasons:

1)  Housing is a universal need.  Regardless of fluctuations in the economy, people need a roof over their head.  And even when everything in the housing market went to hell through 2008 and beyond, my rentals held strong.  Yes, there was more turnover (people were losing their jobs and/or getting laid off more frequently) but I had no trouble filling my vacancies.

2)  There’s a segment of the population that will never be homeowners … those who earn less than $30,000/year will most likely be renters throughout their lives.  And according to the last census, that segment included about 35% of the population.  Furthermore, since the housing collapse, many people have become more wary of buying homes, and even those who can afford it (and get financing) are choosing to rent instead.

Indianapolis is a wonderful city in which to work and raise a family … it didn’t see the horrible downturn in the housing market that some other areas experienced.  Our rental market is strong and will continue to be strong in the foreseeable future.

We landlords and investors are lovin’ it!   🙂