Archive for the ‘maximize rental profits’ Category

Letter on Selecting Tenants

Monday, August 31st, 2009

Radio Host Mark Maxon Radio Host Mark Maxon

Below is an email that I received from someone who recently signed up for my 7-week informational course based on my book How to Start a House Fix up and Rental Business. I removed the name to protect her privacy.

It was great hearing you on Mark Maxon’s radio program this am. My son is again trying to do what you did. The first one didn’t go well. Can U tell me how U selected your tenants? Also I am in an interest only mortgage & want to get out of it. I applied for a Loan Modification & it’s been dragging on.

Any ideas? It would be greatly appreciated. Thanks again for offering your course to help folks like us.

Sincerely, xxxxx

—————–

My response:

Hi xxxxx,

Thank you for the note.

I think the hardest part of the rental house business is finding good tenants. In many ways, the only way to get good at it is to just do it. You make a few mistakes along the way, but you get better with each passing year.

But, there are also some key things you can do to help get good tenants.

1. Have the tenants fill out an information 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 on their name.

2. Read through the entire contract with them before they sign it. Emphasize the penalties they face if they pay late.

3. Enforce the contract. If they pay late, call them immediately, and require that they pay the penalty (I charge 1% of the total rent per day that they pay late).

4. Get a book that describes landlord rights in your state. These books usually include legal forms that you can mail to bad tenants, to make them comply with your contract, or to evict them.

Sorry, I don’t have any knowledge about getting out of an interest only mortgage, or the loan modification process. There was recently a mortgage broker on Mark Maxon’s show. It might help to contact someone like him.

Best of luck to you and to your son.

Terry Sprouse
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Six Sure Ways to Lose Money with Rental Properties, and Calendar Considerations when Buying

Thursday, April 3rd, 2008

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What are the best techniques to use to lose money with your rental properties? See my Ezinearticles.com piece entitled Six Guaranteed Ways For Landlords To Lose Money And Have Terminator-Type Tenants.

The top two ways to lose money are:

1. Buy a rental property in the worst possible area. The type of tenant you attract will be determined by the location and appearance of your investment property, and it will affect the amount of rent you are able to charge.

2. Buy the best fixtures and appliances for your property. Never by from recycled construction material shops or yard sales. Money is no objective. Trust that your tenants will take good care of you house.

Another article I recommend reading is Calendar Considerations When Buying A Home by Raynor James. Most markets are cyclical in nature. In practical terms, this means there are periods where the market in question is very busy and periods where it is very slow. These cycles also applies to the real estate market.

As Rayor James explains, buying a home in a seller’s market is tough. In contrast, buying during a slow market is an incredible opportunity. You have a chance to get in at or near the bottom floor of prices. If you can keep focused on the future, you can really make a killing. Yes, you might see the value of the home drop a bit more, but the key is to focus on 2010 and beyond. That may seem a long way away, but the real estate market will bounce back and have returned to typical highs by then. This is where millionaires will be made.

Info on Terry’s Book

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Maximize Rental House Profits — Buy Ahead of Time and Install Yourself

Saturday, September 22nd, 2007

When operating a fixer-upper rental house business we must constantly be on the look out for short cuts to reduce our costs.

For example, a good way to buy a home furnace is to keep your eyes open for good-looking used one at yard sales. I came across one for $30 at a yard sale. There were actually two for sale, and I bought the newer, better-looking one. I offered $25 dollars, and when the lady wouldn’t take it I drove off thinking she was too inflexible. But, as I drove away, I came my senses as I asked myself, “where else am I going to get a good-looking furnace for $30?” I immediately turned my truck around and bought the furnace.

I knew I would need one soon for one of my rental houses. Looking back, I probably should have bought them both and kept one for the next time I needed one.

A friend of mine and I installed the furnace ourselves. Its a pretty simple matter to hook up the gas pipe and thermostat wiring. The major cost was about $40 for a guy to make a tin hood that connected the furnace to the duct work in the ceiling. Other parts, connectors, screws, etc., were about $30-40. I had a professional check out the work when we finished and viola! I had a working furnace for a fraction of what it could have cost though normal channels.

Of course, in buying used, you always take the chance of getting a furnace that doesn’t work But, in my experience, it’s worth taking a chance, and many times you hit the jackpot and can save hundreds, if not thousands, of dollars. Keep your eyes open at those yard sales!

The lessons are, in order to maximize profits with your rental properties, to buy things as cheaply as possible, and to install them yourself. You can save a lot of money by buying ahead of time, when things are on sale. Don’t wait until the day the furnace breaks or the toilet kicks the bucket. You can usually see signs of these things sputtering before they finally go out. Take advantage of that knowledge to make a preemptive strike, and to purchase ahead.

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