Archive for the ‘investment property’ Category

“Turn Your Home into a Rental House” to be topic on “The Morning Blend”

Monday, July 8th, 2013

 

“Situations have ended differently than what I expected, but I would never consider that a failure.  A no is just a no for today, it doesn’t have to be a no for tomorrow.”

–Amanda Guralski, I Am Not a Smartie Pants

 

In my never ending (Quijotesque) quest to inform people about how to turn their home into a rental house, Wednesday, July 10th, I will be appearing on the Morning Blend television show, channel 9, sometime between 11:00 am and noon (Tucson time). For those of you not in the Southern Arizona area, the show will archive the interview on their web page.

As we discuss my (and co-author Angy’s) book, Turn Your Home into a Rental House Instead of Selling It!, one topic that will probably be discussed, is the advantages and disadvantages that are an intrinsic part of this business of renting houses.

The upsides to owning rental properties – monthly income and long-term increase in equity – are nice to have, but before jumping in it’s wise to consider the downside of the equation too. Here are some disadvantages that we like to look at as small and manageable issues rather than big obstacles.

 

  • There is work required to prepare your house to rent out;
  • Time must be spent finding and managing tenants;
  • Life is fraught with problems. Even tenants have a few.

 

In truth, these things take time to learn. Like riding a bicycle, you learn to buy, repair and manage properties, by doing it. There were times when we were just beginning our business that Angy and I were so frustrated by tenants that we wanted to throw in the towel. But, we kept on going, and we got better at it.

As Aristotle said,

“We are what we repeatedly do. Exellence is not an act but a habit.”

 

Upcoming Interviews

On Friday, July 13th, at 8:40 a.m. (eastern time) I will be a guest on Mark Wayne’s radio show, WICH 1310 AM, in Norwich, Connecticut.

On Thrusday, July 25th, at 5:08 a.m. (central time) I’ll be on Jeff Anderson’s show, KSDR 14480 AM, Watertown, South Dakota.

Watch this space for information on additional interviews.

Related Articles

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

How I Evicted A Problem Tenant in 4 Steps

When to Hire a House Inspector – Radio Interview with Rich Peterson

Getting Rid of Bad Tenants

“Turn your home into a rental” on Mark Wayne Show

7 Reasons to Live in a Fixer-Upper House While You Repair It

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

Our First Rental House Plunge

10 Most Frequent Problems Found by House Inspectors

5 Steps to Get Your House Ready to Rent by Terry Sprouse

5 Steps to take if your house is flooded

Some perfectly legal ways to maximize your rental profits

Add “Start a Rental House Business” to Your Bucket List

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

Window Repair with #2 Son

Required Roof Maintenance for Fixer Upper Houses

Learn to Repair Your Fixer Upper Houses

How I Got Started In Fixer-Upper Houses

How to learn to operate a fixer upper house business

The Peaceful Warrior and Fixer-Upper Houses

10 Most Frequent Problems Found by House Inspectors

Tuesday, December 11th, 2012

These kids come to me and ask, ‘Hey Arnie, are you God?’. I just laugh and say ‘Nice try, but keep looking.

— Arnold Schwarzenegger

Buying fixer-upper houses, living in them, repairing them, and eventually renting them out is a safe way to generate short-term income and long-term economic security.

Even Arnold Schwarzenegger,  in his new book Total Recall, cites investing in real estate as a valuable step on his road to financial success.

But, how can you be sure that a house is worth what you are offering to pay for it? Based on experience, we can “eyeball” the property and probably be able to make a pretty accurate estimate of its worth, maybe 75% of the time

That’s probably closer to 95% of the time for Arnold, with that Terminator vision of his.

Get a professional inspection

However, that’s not good enough. We need more information than our educated eyeball can provide in order to:

1.) Avoid any surprise defects. After you buy the property, trying to get reimbursed for those defects will be too late.

2.) Negotiate a lower selling price for the house.

I hire a professional inspector to provide me with a complete written inspection report that can be used to negotiate a lower price on the house if it uncovers anything that is in need of repair.

Looks straight to me. Why do you ask?

When having the physical inspection done, you should be aware of the most common house problems.

Ten Most Frequent House Problems

 A survey of U.S. home inspectors resulted in this list of the most frequently encountered problems:

 

1.) Improper Surface Grading/Drainage 
This is responsible for the most common of household maladies: water penetration of the basement or crawl space.

2.) Improper Electrical Wiring 
Includes such situations as insufficient electrical service to the house, inadequate overload protection, and amateur, often dangerous, wiring connections.

3.) Roof Damage 
Involves roof leakage, caused by old or damaged shingles or improper flashing.

4.) Heating Systems
Problems in this category include broken or malfunctioning operation controls, blocked chimneys, and unsafe discharge of exhaust.

5.) Poor Overall Maintenance
Includes signs such as cracked, peeling, or dirty painted surfaces, crumbling masonry, makeshift wiring or plumbing, and broken fixtures or appliances.

6.) Structural Problems
Many houses, as a result of problems in one or more of the other categories, sustain damage to such structural components as foundation walls, floor joists, rafters, window and door frames.

7.) Plumbing 
Problems consist of the existence of old or incompatible piping materials, as well as faulty fixtures and waste lines.

8.) Exteriors 
Flaws in a home’s exterior, including windows, doors, and wall surfaces, are responsible for the discomfort of water and air penetration. Inadequate caulking and/or weather-stripping are the most common culprits.

9.) Poor Ventilation
Perhaps due to overly ambitious efforts to save energy, many home owners have “over-sealed” their homes, resulting in excessive interior moisture. This can cause rotting and premature failure of both structural and non-structural elements.

10.) Miscellaneous
Includes primarily interior components, often cosmetic in nature. May include dents in doors and walls from children’s unsupervised indoor karate practice, or possibly from having Bigfoot (or the Governator) as a former resident. (I inserted those last two examples based on some unfortunate personal experiences I have had.)

A specialist in mold removal or riled up Governator?.

A home inspector’s standard practice typically does not include the following, for which a specific license to inspect and identify is required:

  •  Asbestos
  • Radon Gas
  • Lead Paint
  • Toxic Mold
  • Pest Control

If you suspect the presence of any of these items, you would contract with inspectors in these areas independently.

 

 Related Posts

Remove that Garbarge Disposal Now!

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

How I Evicted A Problem Tenant in 4 Steps

When to Hire a House Inspector – Radio Interview with Rich Peterson

Getting Rid of Bad Tenants

“Turn your home into a rental” on Mark Wayne Show

7 Reasons to Live in a Fixer-Upper House While You Repair It

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

Our First Rental House Plunge

10 Most Frequent Problems Found by House Inspectors

5 Steps to Get Your House Ready to Rent by Terry Sprouse

5 Steps to take if your house is flooded

Some perfectly legal ways to maximize your rental profits

Add “Start a Rental House Business” to Your Bucket List

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

Window Repair with #2 Son

Required Roof Maintenance for Fixer Upper Houses

Learn to Repair Your Fixer Upper Houses

How I Got Started In Fixer-Upper Houses

How to learn to operate a fixer upper house business

The Peaceful Warrior and Fixer-Upper Houses

The right way to handle tenants who are moving out

Wednesday, November 7th, 2012

Eventually, tenants experience that “feeling I get when I look to the west, and my spirit is crying for leaving,” which Led Zeppelin describes, and they move away.

When this happens, you will want to make the transition of the tenant out of the house as smooth as possible. The best way to do this is by telling the tenant what you expect from them. We send a letter that clearly spells out the checkout process. This way there are no misunderstandings, we are all on the same page, wavelength, sheet of music, or stairway to heaven.

Move Out Information Letter to Tenants

Some key things that we mention in our letter are:

1.) How much of their security deposit will be returned.

2.) There will need to be a review of their check in sheet (and attach a copy for them).

3.) What you expect in terms of house cleaning.

4.) Reminders to contact the utility companies to disconnect services in their name.

5.) Reminders to cancel newspaper and other subscriptions, and to provide the Postal Service with a change of address form.

6.) Reminders to contact us when they are ready for the final house inspection.

7.) A note that if keys are not returned, they will be charged.

8.) Any costs that we must pay to repair the house will be taken out of their security deposit, and we will refund the money due them within 10 days.

Download a copy of my “move-out” information letter to tenants.

(The link to my letter may not work on Internet Explorer. It seems to work fine with Google Chrome.)

Why be lenient with the damage deposit?

In general, we are pretty lenient when it comes to charging tenants for little things on the checklist. If they move out, and they have been good tenants, we are going return to them most, if not all of their security (or damage) deposit back, barring some obvious big broken item.

Our perspective is that we made a lot of money from the tenants over the years, and we don’t want them to leave on a sour note just because they thought we might have overcharged them on some ticky-tack repair.

 

Men of the World Unite!

John and Todd over at FearlessMen.com are staging a mustache and beard growing contest to help raise funds for charity.

I have confidently signed up to participate in the contest, and I have every intention of winning!

I invite you to join me.

The rules are simple:

1. Starting November 1st, start growing you mustache or beard. In the process they will encourage others who see them as they selflessly promote this great cause, to donate to the selected charities.

2.December 1-16 the contestants will have their photos posted at Fearlessmen.com so everyone can vote on said mustaches and beards. On Dec. 17th, the winner will be announced

3. The winner will receive prizes.

For complete details, charge over and read John’s article:

Fearless Men’s Beard and Mustache Competition | Movember 2012.

 

_____________________

Coming VERY Soon!

How to Turn Your Home into a Rental House, Instead of Selling It
Related Articles

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

How I Evicted A Problem Tenant in 4 Steps

When to Hire a House Inspector – Radio Interview with Rich Peterson

Getting Rid of Bad Tenants

“Turn your home into a rental” on Mark Wayne Show

7 Reasons to Live in a Fixer-Upper House While You Repair It

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

Our First Rental House Plunge

10 Most Frequent Problems Found by House Inspectors

5 Steps to Get Your House Ready to Rent by Terry Sprouse

5 Steps to take if your house is flooded

Some perfectly legal ways to maximize your rental profits

Add “Start a Rental House Business” to Your Bucket List

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

Window Repair with #2 Son

Required Roof Maintenance for Fixer Upper Houses

Learn to Repair Your Fixer Upper Houses

How I Got Started In Fixer-Upper Houses

How to learn to operate a fixer upper house business

The Peaceful Warrior and Fixer-Upper Houses

5 Steps to take if your house is flooded

Wednesday, October 24th, 2012

I once purchased an investment property that I was sure was going to be an ideal rental house. It was in a location where there was high demand for rentals, and it was nice attractive house.

My Shocking Experience

I decided to check out the property one more time on the day before signing the papers. I was in for a shock. When I opened the door, I was hit in the face with an overpowering dank smell that was so thick that I almost couldn’t get into the house. It was like walking underwater.

I looked down and I saw that the carpets were soaked with water. The walls of the house were black. I quickly discovered that the hot water heater was leaking, and had flooded the house.

I will not scream! I will not scream! I will not Aaaahhhhhhhhh!!

Since all the windows and doors tightly closed,  the mother-of-all steam baths had formed inside the house. If I weren’t already as thin as a rail, I probably could have lost 30 pounds in there in 10 minutes.

I Feel a Scream Coming

While I would have had every right to scream like Jamie Lee Curtis in those old “Halloween” movies, to my credit, I didn’t do that. Plus, my two sons were with me at the time, and it would have ruined the image they had of me as a modern-day James T. Kirk, bold captain of the Sprouse family.

Steady as she goes, Mr. Chekov.

Since I’ve now used up my ‘reservoir’ of metaphors to describe this dire situation, let’s get to the steps to address this issue.

5 Steps to Take if Your House is Flooded

1.) Don’t touch the merchandise.

Don’t touch anything that is electric while standing in water. It may be tempting to want to turn on lights and turn off appliances, but don’t do it. You wouldn’t adjust the radio while you are in a bathtub, and your house is now a giant bathtub. If the electrical outlets near the floor are saturated, you should not be in that house.

If the fuse box is in a dry location, turn off the power.

Have an electrician check the system before turning on the power again.

N 95 Mask

If you plan to be inside the house for any amount time, or if you plan to clean up mold, you should wear a N95 mask to wear while you’re there. (See step #5 before donning your mask).

2.) Remove the water.

Open up the doors and windows and let the house air out for at least 30 minutes before spending any time in the house.

Dry out things that got wet. You basically have between 24 to 48 hours to dry out things that have gotten wet, before irreparable damage sets in.

Once the electricity is back on, having been checked by an electrician, you can use a “wet dry” shop vacuum to remove standing water. Wear rubber boots.

Even after the water is pumped out of the house, you must act quickly to avoid the residual damage in walls and under carpets. The imbedded dampness can permanently weaken carpet fibers and soften sheetrock walls.

The most important thing to worry about is mold and mildew. Mold and mildew spores are always present in the air that we breathe and if we only add a little warmth, darkness, and moisture, they become unwelcome house guests.

3.) Get the humid air out.

Use de-humidifiers and fans to remove the excess humidity. Place fans in doors and windows to blow the air out the window, so as not to circulate mold back into the house.

Do not turn the furnace on to dry out the air. This will only increase the humidity and transport the spores throughout the house.

Have your home heating, ventilating, and air-conditioning (HVAC) system checked and cleaned by a maintenance or service professional who is experienced in mold clean-up before you turn it on.

4.) Get rid of carpet padding.

Usually, even though you haven’t passed the 24-48 hour time limit, disaster recovery experts will remove any soaked padding from beneath the carpet and treat the floor and the underside of the carpet with a mildew inhibitor such as Pine Sol.

5. Let the doctors do their job

Outta my way!

The Nexium commercial (to treat heartburn) says, “You wouldn’t want a doctor doing your job,” and a doctor comes trotting out of the bullpen to be the relief pitcher in a professional baseball game, or operates a jack hammer. This principal applies to you and your flooded house too. Unless you are an expert, you probably shouldn’t tackle this project yourself. Because mold and mildew are such dangerous foes, it’s best to call in the pros to handle flooded houses.

The Happy Conclusion to My Story

In the case of the investment property that I mentioned earlier, the water had been in the house for several days (beyond the 24-48 hour limit) and the owner wisely owner hired a mitigation company. The company had to replace all of the carpeting and most of the drywall.  It was almost like a new house when they finished. They tested the air and the spore count for mold and mildew in the house, and when they were finished, the count was lower than the count outside the house.

Although I had cancelled the sale, I made another offer on the house when it came back on the market, and I wound up purchasing the property after all. It was a better house than the first time I bid on it.

Below is a useful video series about dealing with flooded houses. The emphasis is on pretty drastic flooding (way over the 24-48 hours limit), but it covers many important things to consider.

 

Related Articles

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

How I Evicted A Problem Tenant in 4 Steps

When to Hire a House Inspector – Radio Interview with Rich Peterson

Getting Rid of Bad Tenants

“Turn your home into a rental” on Mark Wayne Show

7 Reasons to Live in a Fixer-Upper House While You Repair It

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

Our First Rental House Plunge

10 Most Frequent Problems Found by House Inspectors

5 Steps to Get Your House Ready to Rent by Terry Sprouse

Some perfectly legal ways to maximize your rental profits

Add “Start a Rental House Business” to Your Bucket List

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

Window Repair with #2 Son

Required Roof Maintenance for Fixer Upper Houses

Learn to Repair Your Fixer Upper Houses

How I Got Started In Fixer-Upper Houses

How to learn to operate a fixer upper house business

The Peaceful Warrior and Fixer-Upper Houses

Claiming a Tax Exemption When Selling a Home That is Now a Rental

Wednesday, October 10th, 2012

I’d like to share with you a recent question that I received from a reader of my blog. The question was:

“I lived in my primary home for two years and now it’s a rental, can I sell it without paying capital gains?”

My “short” answer is:

That depends on how long the house has been a rental.

No need to push when  selling your primary residence

By Way of Background Information

The 1997 Taxpayer Relief Act was a great boost for average people who wanted to sell their home and buy a new one. It was also a great boost for investors. Couples are allowed to exclude up to $500,000 of the capital gain on the sale of their primary residence. Single individuals can exclude up to $250,000.

In other words, the sale of the house is never reported on your federal IRS forms if the capital gain is less than the $500,000 and $250,000 limits.

This exclusion is based on compliance with two requirements:

1.)  The home must have been the primary residence for both spouses during two of the last five years. The two years do not have to be consecutive but if you rent out the primary residence for more than three years you would be required to occupy it again for two years.

 2.)  The exclusion is available only once every two years.

What if you sell you house and your capital gains exceed the established limit?

Capital gains above $250,000 for singles and $500,000 for couples are taxed at the applicable rate.

What if you sell your house before meeting the two year requirement?

If you qualify under one of the “unforeseen events” listed in  Internal Revenue Service Publication 523 Selling Your Home, such as a job change, illness or an unusual hardship, you can still qualify for a prorated exclusion.

The Ideal Strategy for the Pathologically Conservative Investor

Typical conservative investor.

Utilization of this tax exemption is the safest investment strategy for the conservative investor who wants to take few risks. This is the type of investor who wears both suspenders and a belt to hold up his pants. They like to play it really safe.

Under this strategy, the investors can qualify for the least expensive type of  loan, the owner-occupied loan. There is no need to worry about tenants destroying your rental property or not paying the rent. You completely control the investment by living in the property yourself. When you sell, you have the opportunity to make up to $500,000 tax-free profit every two years.

So, following that long-winded, yet surprisingly informative, background spiel, my “final” answer to the question is:

If you have lived in your house 2 of the last 5 years, you are entitled to take the exemption.

 

Coming Soon!

How to Turn Your Home into a Rental House, Instead of Selling It

What to do when your property won’t sell

Wednesday, September 12th, 2012

There are times when even those of us who are using the “fixer upper and rental house” strategy need to sell a house, despite at one point  having sworn that we wouldn’t sell an investment  house till the cows came home.

A Clintastrophy

Sometimes we have to readjust our priorities, and as Clint Eastwood/Dirty Harry famously said, but apparently disregarded at the Republican Convention, “a man’s got to know his limitations.”

Maybe it’s because the location is just not that good, or you can’t get good tenants, or maybe the property requires too much attention in terms of frequent repairs. In my case, I sold one of my properties in 2010 because of all the above.

So, what do you do if you want to sell a property and it just won’t sell?

Here are a four things that I suggest you do to sell your property:

This house might be overpriced regardless of the price

1.) Check comparable properties in the area and make sure that you’re property is not over priced. If you want to sell faster, and we all want to sell faster, put the price slightly below other properties.

2.) Offer your house for sale and for rent at the same time. If the offers that come in are too low, you can keep it as a rental for another year or two until home values rise again.

3.) Hire a well established real estate agent to sell you house. When I first started my rental house business, I wanted to do everything myself, including selling my properties. Now, I realize that some things are best left to the experts, and this is one of them. A good real estate agent has a lot of connections, not only with potential buyers but also with other agents. They can attract a lot more buyers to the property than I could.

4.) Offer seller financing. Many buyers won’t qualify for traditional loans because of strict requirements and large down payments. This should allow you to sell for a premium price and get a higher interest rate. (Thanks to Chuck at Landlordinvestor for this tip.)

Now for my semi-weekly roundup of other articles that I find interesting in the blogosphere:

I liked the tips by landlordinvestor on advertising to find tenants entitled Running an ad in a weekly paper.

Over at Louisville Gals Real Estate Blog is a provocative interview with real estate investor James Vermillion.

Fearless Men have another batch of highly motivational quotes in Fearless Men Quotes/ Volume 2.

Jewel had an inspirational article in 10 Lies that Will Keep Your Dreams on the Shelf – #1. If you liked “The Artist’s Way,”  you’ll like this.

I could relate to Guilt Induced Frugality at Modest Money.

I was educated by Get an Oil Change Without Getting Ripped Off at Blue Collar Workman.

I relished the article Can Introverts Succeed As Leaders And Entrepreneurs: YES! at Untemplater.

Coming Soon!

How to Turn Your Home into a Rental House, Instead of Selling It

Some perfectly legal ways to maximize your rental profits

Monday, September 10th, 2012

Most terrifyingly bad movie ever?

In the fixer upper and rental house business there are many perfectly legal ways to maximize your rental profits, which don’t require drawing a gun or subtly displaying the threatening DVD cover of The Clan of the Cave Bear.

Keeping tenants satisfied = more $ for your

Putting the comfort of your tenants first can result in you making more money. Three things happen when you increase the value (or usefulness) of a property:

1.) You attract more and better tenants;

2.) Tenants stay longer; and,

3.) You make more money.

 

Things to do make a property more valuable

Catzilla makes tenants complete

1.) Provide a clothes washer and dryer;

2.) Have a refrigerator;

3.) Add a carport to protect tenant cars from the sun;

4.) Install security doors;

5.) Put a storage shed in the back yard;

6.) Allow pets. Many people consider their pet a member of their family, and in some cases, make their decision on which home to rent based on the likely comfort of their pet.

Maybe pet owners cross the line when they refer to themselves as “mommy” and “daddy,” and maybe pets cross the line when they start marking their territory before you even get a chance to go through the checklist.

But in general, allowing pets is a win-win situation.

These types of things increase the value of a property for tenants, and may set our property apart from other rental properties. They also allow us to charge a higher monthly rent.

The more satisfied a tenant is, the more they are willing to pay a little extra rent.

 Related Posts

Remove that Garbarge Disposal Now!

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

How I Evicted A Problem Tenant in 4 Steps

When to Hire a House Inspector – Radio Interview with Rich Peterson

Getting Rid of Bad Tenants

“Turn your home into a rental” on Mark Wayne Show

7 Reasons to Live in a Fixer-Upper House While You Repair It

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

Our First Rental House Plunge

10 Most Frequent Problems Found by House Inspectors

5 Steps to Get Your House Ready to Rent by Terry Sprouse

5 Steps to take if your house is flooded

Add “Start a Rental House Business” to Your Bucket List

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

Window Repair with #2 Son

Required Roof Maintenance for Fixer Upper Houses

Learn to Repair Your Fixer Upper Houses

How I Got Started In Fixer-Upper Houses

How to learn to operate a fixer upper house business

The Peaceful Warrior and Fixer-Upper Houses

Coming Soon!

How to Turn Your Home into a Rental House, Instead of Selling It

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

Friday, August 10th, 2012

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.”

 Related Posts

Remove that Garbarge Disposal Now!

Window Repair with #2 Son

Saturday, July 28th, 2012

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Last Saturday I took my 10-year-old son along with me to repair a window in one of our rental houses. I like to take one of my boys along so they can learn a thing or two about how to repair things, as well as so they can see how I deal with tenants, and, mainly so that we spend some time together and have fun together. I always try to make it fun for them. For example, we went to ACE Hardware to get a new window cut, we looked at the stuff he likes to see, like BB guns and rockets, and, I bought him a bag of Boston Baked Beans.

It was really a big help to have #2 son along. He not only does what I ask him to do, unlike his teenage brother “Mr. Cool Guy”, but he also brings an enthusiastic spirit to the endeavor. One of the first things I have to do is to chip out the old putty from around the window. It’s my least favorite part of the job since it involves a lot of tedious work. After I explain what I am going to do, my son responds. “Can I do it?” I say “okay, go at it,” but I’m thinking, “Well, if you really insist!” What is old hat to me is new and exciting to him.

When we arrived back from ACE with the new window, I accidentally broke the window as I took it out of the back seat of my pick-up. I thought it might discourage my son to head back to ACE again to buy another window, but his response was, “I need a refill on the Boston Baked Beans anyway.” After that the broken glass incident became a running gag with comments like “is it time to break the window again?” and “let’s break the window again and get some more Boston Baked Beans.”

I must admit, it’s not nearly as entertaining when I have to do those little repair jobs all by myself.

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How to learn to operate a fixer upper house business

Wednesday, March 28th, 2012

Learn the Ropes

My wife and I didn’t know much about repairing houses before we started our fixer-upper business, but like fine wine, we got better as time went on. One important rule in the fix-up profession is that you must constantly strive to become self-sufficient and learn all aspects of the profession. You must become an expert in your new business, even if you only do it part-time.

You can learn from others, but you have to rely on yourself to get ahead. Like the novice swimmer who is tossed in the pool, sometimes it’s sink or swim. You must learn by doing.

Trust Your Own Judgment

There are times when destiny forces you down a certain path in life. Other times, you make you own destiny by choosing to walk down a difficult path.

My plan when I bought my first fix-up house was that I could learn as I went along. I thought if others had learned to do it, so could I.

When I bought my fist fix-up house, it was like being stranded on a desert island. I was forced to learn new skills to survive, like Robinson Crusoe. The best way to learn new skills is by putting yourself in a situation where you are forced to change and adapt.

Before embarking on his life-transforming mission, the hero in the book Dune was advised, “Unless you change, something inside you sleeps.”

Foreclosure Update

The bank accepted someone else’s bid over mine for the foreclosed property that I bid on. My new target property is a 3 bed, 3 bath townhouse that is being offered for $69,900.

In this market, persistance is the name of the game. You just have to keep looking and keep bidding until you land a property at the price you desire.

 

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