The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants

The Arizona Network of Real Estate invited me to give a presentation to their group about my book “Fix em Up Rent em Out.”

I thought the video might be available to the general public but it looks as though that’s not going to happen.

However, so that no one feels left out, I am going to provide  a summary of the key points that I hit during the presentation. As someone who was regularly picked last for teams in gym class, I’m sensitive to people feeling left out. Casting modesty to the wind, I am also including exclusive photos of the event.

So here are:

The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants (based on an article by Andrew Stefanczyk)

1. Choose the Worst Possible Area

Location will determine the kinds of tenants you will attract, and how much rent you can fairly charge.

Do you want these bearded wonders as tenants?

The best approach is to identify target areas in your city where you would like to focus your purchases. I like to focus on “transition zones” (where there is a mixture of housing types) which are good for investors because we can purchase properties at lower prices, and there is high demand to live in these areas.

2. Put in the very best of things when fixing up  an investment property

Use new and expensive sinks, doors, refrigerators, light fixtures, etc. Never shop at stores that recycle construction supplies. Spare no  expense.

Of course, the problem is that tenants will not take care of our properties as well as we would,

Habitat Store

so we end up with many broken or worn out items. The better alternative is to shop at used building supply stores, and to purchase good, inexpensive, supplies for our rental houses. One such store is the Habitat for Humanity store.

3. Make sure you have absolutely no experience in make basic repairs

Not knowing how to change electrical outlets, unclog drains & toilets, and replace broken windows will cost quite a bit down the road.

The better way is to:

A. Learn as you go, and comply with EPA regulations

B. Take construction classes at junior college

C. Learn from handymen and contractors

D. Take the Zen approach to  house repair learn to do everything yourself

5. Utilize fix-up books, investing books, & YouTube to find answers on how to make house repairs

4. Do not screen your tenants

Being as uninformed as possible about who you rent to may be the best way to lose money as a landlord. Do not ask for or check references. Do not call previous landlords and ask questions like, did they pay rent on time? How was the condition of the house or apartment when they left? Did they ever disturb neighbors with loud music or shouting matches? How often would you have to make special trips for repairs? Being as uninformed as possible about whom you rent to will make a huge difference and will increase the chances that you will get tenants that will trash your property and refuse to pay rent.

However, the better way is to:

A. Use a checklist for tenants. Decide what kind of tenant that you want ahead of time.

B. Look at their paycheck to verify income.

C. Check county records to see what illegal activities they’ve been up to.

D. Know the Fair Housing Act. Never select tenants based strictly on “race, color, national origin, religion, sex, familial status or handicap (disability).”

E. To find new tenants, use Craiglist, put up arrow signs, and host an “open house.”

5. Make sure you have not learned about your rights as a landlord

Be completely unfamiliar with the eviction process to guarantee long, drawn out disputes with tenants. Don’t keep up to date financial records or copies of correspondence with tenants. Most states provide online information about tenant and landlord rights so avoid reading these.

The better way is:

A. Get an authoritative legal guide like  “The Arizona Landlord Deskbook” by Carlton Cassler.

B.  Copy forms and letters from your legal book to send to tenants.

C. Comply with legal ways to deal with bad tenants.

D. Use memos to communicate with tenants so you have a record of correspondence.

E. Use a month to month lease instead of long-term lease to more easily scrape off bad tenants like barnacles.

F. Reward tenants for paying on time by discounting their rent $25.  

G. Send good tenants Target  gift cards for Xmas.

In Conclusion

Share Your Knowledge

“Each of us has cause to think with deep gratitude of those who have lighted the flame within us.”

–Albert Schweitzer

Carve Out Your Niche Update

My award-winning book on self-publishing, Carve Out Your Niche, is now available in Kindle format.

The Midwest Book Review called Carve Out Your Niche,

“Invaluable for anyone seeking to successfully write, publish, and market their own work.”

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23 Responses to “The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants”

  1. […] sheet, requiring them to list previous places they lived, list bank account info, job info, etc. Call all of their references, their bosses, and their old landlords. Verify their salary. You may be able to check county court cases on-line like we can here in Tucson. If so, run a check […]

  2. […] on your progress in preparing to rent our your first house. Don’t get discouraged if it’s rough sledding at first, the first house is the one that […]

  3. […] Searching for the right tenant can be simple or even a challenge sometime, but having an idea of the different types of America’s work force qualities as tenants could help you decide and screen the right and ideal tenant for your property. […]

  4. […] week I had some tenants suddenly move out of a house they were renting from me. They left behind unpaid rent, a messy house full of clothes, magazines, […]

  5. […] to keep a low profile. Always take precautions when doing business with the public. You should have tenants mail monthly rental checks to a post office box instead of to your home residence. You should have […]

  6. […] is a tough job, not for the faint of heart. Yet, its worth the time it takes to be a good landlord for the long-term profit we […]

  7. […] philosophy is more of a “do-it-yourself” approach. I like to cut corners, save money, and not take too many chances with my money. […]

  8. […] can usually see the signs that certain people are going to be “train-wreck” tenants. When they start off paying late right at the beginning of their lease, you know that’s not a […]

  9. […] The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants @ Fix em Up Rent em Out by […]

  10. […] we were a little premature in our celebration, as the deal fell through, and eventually we wound up renting the house out. But, the reward system still […]

  11. […] Fix em Up Rent em Out Fixer upper & rental houses weblog « The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants […]

  12. […] the fixer upper and rental house business, the more that we can make the tenants feel like our rental house is their home, the happier they are. And the happier they are, the longer they stay, and  that makes us happy […]

  13. Just found your blog, but have to comment. Love your sense of humor. We’ve got one rental duplex and would love to get more someday. We’re actually in the middle of publishing a series on how we ended up buying it and some of the horror stories we saw along the way. Check it out – I’d love to hear how Florida foreclosure adventures compare to AZ ones! (Sorry for the shameless plug, but truly would love to compare stories sometime =) )

    • Terry says:

      Mrs. Pop,

      Thanks for the note.

      I enjoyed reading your series on the adventures that you went through in purchasing your duplex. It can really be a long and convoluted road to buy a foreclosed property these days.

      But, as your article demonstrates, perseverance pays off!

  14. […] landlords and owners are required to comply with the Fair Housing Act. The Act prohibits discrimination based on race, creed, color, disability, among other things. We […]

  15. […] costly, legal fights, is to have all of our tenants on a month-to-month lease. This allows us to scrape off bad tenants like barnacles. All we have to do is to notify them that we are canceling the lease, and they have to be out in 30 […]

  16. Georgina says:

    Thank you very much. It is a very good article and I loved it. I can vouch for all you say from having years of experience as a landlord. I only wish I had read your blog twenty years ago because learning from experience is so costly and frustrating. Legal proceedings to evict tenants are so expensive and time consuming.

  17. […] to widespread misconceptions,  the justice system favors the landlord. If a tenant violates the contract, the law is on the side of the landlord. And, not having enough […]

  18. […] The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants […]

  19. […] The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants […]

  20. […] The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants […]

  21. Landlord-tenant laws vary by state. You need to know your state laws because that will dictate what you can legally do when evicting a tenant. These laws will help you plan out how the eviction process should proceed. Beware, however, that you should never try to evict someone without involving the courts because a DIY eviction is not a legal option.