Archive for the ‘month to month lease’ Category

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

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“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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Make Sure You Have a Good Lease for Protection Against Bad Tenants

Tuesday, December 20th, 2011

There are two common types of leases: 1. year-to-year lease and, 2. month-to-month lease. You may think that you are locking in a tenant for a year, in a year to year lease, but you are also locking yourself in, and it is much harder to remove a tenant with a year to year lease.

The Value of a Month to Month Lease

My policy is to use a month-to-month lease whenever possible. This way, if you have a tenant that you want to get rid of, it’s easier to do. These are tenants who are disturbing the neighbors, they don’t take care of the place, or they consistently pay late. Just cancel the contract and the bad tenants must be out in 30 days. No court fights, no mess.

Modify Your Lease

Feel free to modify a lease contract to make the tenants behave the way that you want them to. Nothing is set in stone. It’s your contract. Mold it into something that works.

For example, I found my tenants making oil changes and auto repairs in the driveway of one of my properties. I didn’t want to encourage that type of activity, so before the next tenants move in, I just added a sentence to the lease contract saying that those things are not permitted.

Some of the key components of my lease include:

• tenants are responsible for paying utilities (electricity, gas and water). If the landlord pays any utilities you are encouraging the tenants to be wasteful;
• tenants cannot paint or make any significant changes to the landscaping without permission;
• no smoking is allowed inside the house;
• and, tenants must maintain outdoor plants.

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How to Find Tenants

Thursday, April 8th, 2010


Here is a recent email that I received from someone who is taking my 7-Week email course, and my response:

Dear Terry,

We bought one fixer upper but are having trouble renting it — any ideas of good places to advertise for a tenant?

Thanks in advance,

Jean xxxx

Hi Jean,

Let me suggest a few techniques that that have worked for me:

1. Place several small For Rent signs on all nearby streets, especially the major intersections. If you get a sign with an arrow on it, you can point the arrow in the direction of your house. I buy the signs at Home Depot or Lowe’s.
2. Hold an “open house” on Saturday and Sunday. People driving by can come in and look around.
3. Contact companies that help people find rental properties. Some will list your property for free. These companies usually contact me.
4. Run an ad on craigslist.org. You can upload photos and describe the qualities of your rental property. The ads are free & I usually get a great response.

I hope you find a tenant soon.

Let me know if you come up with a good technique that I haven’t thought of.

Good luck!

Best regards,

Terry Sprouse

Location, Location, …

One thing I didn’t mention in the letter, but which is perhaps the most important consideration of all in attracting good tenants, is the location of your property. Properties located where people really like to rent are called “opportunity zones” (or “transition zones”).  Just as Baskin-Robbins must offer the flavors of ice cream that the public likes, so you must offer rental properties in the areas of town where people want to live.

If your property is located in an area where people don’t like to rent, you will always have trouble finding tenants. For more information about my philosophy on where to invest, check out my EzineArticles.com article The Secret to Increasing Cash Flow – Invest in Opportunity Zones .

Trouble with Bad Tenants? Use a month-to-month contract

Friday, October 16th, 2009


One of the best ways that I have found to protect yourself from bad tenants, and we all know that a few will always slip though our “infallible” screening process, is to use the month-to-month contract.

If you have a tenant that you need to get rid of, for whatever reason (and I can think of a lot of them, such as painting a picture of a human face on the side of an outside wall, but that’s a story for another whole post), take the easy road.

If they have signed a month-to-month contract, you just need to send them a form saying that you are canceling the contract and they must be out by end of the next month. You have to give them a full 30 days to move, maybe more if they pay on the first and you are in mid-month when you notify them. In that case you would give them 45 days to move, at the end of the following month.

But, no matter how you slice it, it sure beats going through an eviction process, particularly if they are inclined to fight it. And, why wouldn’t they fight it since they at this point they have probably developed aggravating us into a science.

So, if there is any doubt in you mind about whether your tenant will go to the tenant dark side at some point, play it safe and have them sign the month-to-month lease.

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