A Word For Landlords And Investors
The toughest part about owning investment property, especially single family homes and apartment buildings is you are dealing with the general public. I've seen even seasoned landlords let renters get behind on the rent with a promise to catch up later. Many times later never comes. One of the things I tell every tenant is, "this is a business, you are nice people, but if you don't pay the rent on time, I WILL evict you, and I'm an expert at doing it". Though this may seem a little harsh to them, you have set the stage for your promise. I also promise them that if they call me about something that needs fixing, especially an emergency repair, they can count on me getting the job done in a timely manner.
These promises if not backed up by immediate action are worthless, so when rent is late, be there with an eviction notice. Not 25 days after its due, but 2 or 3 days after it's due. That will set the precedence of what they can expect from you, no matter how long they have paid on time. If tenants call me to let me know they are going to be late a couple of days, I still give them a notice in writing followed up with, "well OK Mr. Tenant, I realize you are going to be late, but I always serve notice any time any of my tenants are going to be late, just in case you don't come through, if you pay when you say you are going to, then there is nothing to fear".
Another motivator to paying on time involves late fees. Most states do not allow more than $25. late fee to be charged. Well one good thing you can do which is perfectly legal. Let's say the rent is $700 per month. Typically I write the lease payment amount for $750 per month and give them a $50 discount for paying on or before the first of the month, (or whenever the due date is) plus I write in the lease that the late fee ($25) is due after 3 days of being late. So you see, that is $75. more by the 3rd day after due extra they will have to come up with. That's a good chunk of change extra almost right after it's due.
Developing a good ol' buddy, buddy friendship with your tenant is a poor idea, as well as renting to friends or relatives. Usually they are the hardest ones to get to pay when they get behind. You are more likely to let them slide on the rent with a promise to pay. Plus, do you really want to put yourself in a position of actually having to put your friends or relatives out for non-payment. They won't be your friends after that. So keep a professional distance between you and your tenants. They may be the nicest people in the world, and great people to talk to, but when you are in court facing them, it just makes the eviction process more painful for both parties.
Srceening your prospective tenants is another area I've seen landlords fail to do correctly. Sometimes that looming mortgage payment clouds your judgment. Take the time to talk to your prospective tenants face to face, remember you are interviewing them for a good match for your property, not them selecting you for a place to live. Ask them a little about themselves in a general conversation demeanor. People will quite often reveal things in general conversation about themselves verses firing off a bunch of questions at them. I always tell them that we are trying to find the right tenant for the right property and this is just part of the process. I remember one prospective tenant that looked at one of my rentals told me she would take it and how much did she have to pay to move in. I instructed her she would have to fill out a rental application first and we would consider her application along with the other applicants. She acted as though she already was accepted just because she liked the place and wanted to move in right away. NO..... WE..... SELECT YOU.
Don't forget the most important part of the selection process, the credit check. Generally online you can do a credit check for about $10-$20. If you have a good rapport with your local bank, sometimes you can get a credit report through them. However you will find that very few tenants will have excellent credit. What you are looking for, is that they have a recent history of good credit and some good time on a job. I generally look at the amount of income they have against the amount of payments they have and work out a budget scenario on paper, just to see if they are putting themselves in rental peril before they even move in. Some people just do not know how to calculate a budget for themselves. As odd as that seems, it's true, they just keep adding more bills to their outgo without figuring what's going to happen in an emergency. And believe me, if you are soft about collecting rent, then you will be the safety net for their problems.
Investing in real estate can be quite rewarding both financially and mentally. It seems you never stop learning of new ways to invest and new twists to old ideas. I've spent over 23 years investing in various types of real estate, and am still learning of new ways to make a buck. Some new investors think they are going to make it rich quick in real estate, but the truth of the matter is, real estate is a typically long time investor game. Not say you can't turn some nice quick profits occasionally, but you'll find the most power in investing by going long term, and turning your early profits back into your investment portfolio. It has a tremendous effect later on when you really want the money to grow.
I've helped many first time investors get started in this area, as well as helped existing investors to enhance their direction.
To Be Continued.
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The toughest part about owning investment property, especially single family homes and apartment buildings is you are dealing with the general public. I've seen even seasoned landlords let renters get behind on the rent with a promise to catch up later. Many times later never comes. One of the things I tell every tenant is, "this is a business, you are nice people, but if you don't pay the rent on time, I WILL evict you, and I'm an expert at doing it". Though this may seem a little harsh to them, you have set the stage for your promise. I also promise them that if they call me about something that needs fixing, especially an emergency repair, they can count on me getting the job done in a timely manner.
These promises if not backed up by immediate action are worthless, so when rent is late, be there with an eviction notice. Not 25 days after its due, but 2 or 3 days after it's due. That will set the precedence of what they can expect from you, no matter how long they have paid on time. If tenants call me to let me know they are going to be late a couple of days, I still give them a notice in writing followed up with, "well OK Mr. Tenant, I realize you are going to be late, but I always serve notice any time any of my tenants are going to be late, just in case you don't come through, if you pay when you say you are going to, then there is nothing to fear". Another motivator to paying on time involves late fees. Most states do not allow more than $25. late fee to be charged. Well one good thing you can do which is perfectly legal. Let's say the rent is $700 per month. Typically I write the lease payment amount for $750 per month and give them a $50 discount for paying on or before the first of the month, (or whenever the due date is) plus I write in the lease that the late fee ($25) is due after 3 days of being late. So you see, that is $75. more by the 3rd day after due extra they will have to come up with. That's a good chunk of change extra almost right after it's due. Developing a good ol' buddy, buddy friendship with your tenant is a poor idea, as well as renting to friends or relatives. Usually they are the hardest ones to get to pay when they get behind. You are more likely to let them slide on the rent with a promise to pay. Plus, do you really want to put yourself in a position of actually having to put your friends or relatives out for non-payment. They won't be your friends after that. So keep a professional distance between you and your tenants. They may be the nicest people in the world, and great people to talk to, but when you are in court facing them, it just makes the eviction process more painful for both parties. Srceening your prospective tenants is another area I've seen landlords fail to do correctly. Sometimes that looming mortgage payment clouds your judgment. Take the time to talk to your prospective tenants face to face, remember you are interviewing them for a good match for your property, not them selecting you for a place to live. Ask them a little about themselves in a general conversation demeanor. People will quite often reveal things in general conversation about themselves verses firing off a bunch of questions at them. I always tell them that we are trying to find the right tenant for the right property and this is just part of the process. I remember one prospective tenant that looked at one of my rentals told me she would take it and how much did she have to pay to move in. I instructed her she would have to fill out a rental application first and we would consider her application along with the other applicants. She acted as though she already was accepted just because she liked the place and wanted to move in right away. NO..... WE..... SELECT YOU. Don't forget the most important part of the selection process, the credit check. Generally online you can do a credit check for about $10-$20. If you have a good rapport with your local bank, sometimes you can get a credit report through them. However you will find that very few tenants will have excellent credit. What you are looking for, is that they have a recent history of good credit and some good time on a job. I generally look at the amount of income they have against the amount of payments they have and work out a budget scenario on paper, just to see if they are putting themselves in rental peril before they even move in. Some people just do not know how to calculate a budget for themselves. As odd as that seems, it's true, they just keep adding more bills to their outgo without figuring what's going to happen in an emergency. And believe me, if you are soft about collecting rent, then you will be the safety net for their problems. Investing in real estate can be quite rewarding both financially and mentally. It seems you never stop learning of new ways to invest and new twists to old ideas. I've spent over 23 years investing in various types of real estate, and am still learning of new ways to make a buck. Some new investors think they are going to make it rich quick in real estate, but the truth of the matter is, real estate is a typically long time investor game. Not say you can't turn some nice quick profits occasionally, but you'll find the most power in investing by going long term, and turning your early profits back into your investment portfolio. It has a tremendous effect later on when you really want the money to grow. I've helped many first time investors get started in this area, as well as helped existing investors to enhance their direction. To Be Continued. |