Starting a fixer upper & rental house business is just the first step. Learn how to turn your business or passion into a mico-empire by sharing your knowledge with others.
Archive for the ‘rental houses’ Category
Turn Your Real Estate Business into a Micro-Empire (video)
Thursday, September 30th, 2010Dealing with Problem Tenants
Wednesday, August 11th, 2010
Malcom's Dad
In today’s interview with Mark Wayne of WICH Radio in Norwich, CT, the question came up “What if you want to start a rental house business buy you are leery about dealing with tenants?”‘
My response is that some tenants are real pleasures to work with and you rarely even see them. They go the extra mile to maintain your property and get along beautifully with the neighbors.
On the other hand, other tenants require constant attention and supervision, not unlike my own teenagers who like to push me to the frazzled limits of my sanity .
As the dad observed on Malcom in the Middle, “Let’s face it, teenagers are thoughtless, inconsiderate eating–machines dedicated to putting us through hell and sending us to an early grave.”
Okay, tenants probably aren’t that bad, but that’s a good starting point for discussion purposes.
Some of the common problems that landlords face are:
1. Tenants that pay late or don’t pay
2. Noisy tenants
3. Messy or destructive tenants
Handling difficult situations
If you are using a month-to-month lease, as I strongly suggest, either the tenant or the landlord can cancel the contract by giving the other party one month’s notice. This way, if you need to evict a tenant, you just give them a one month written notice, and they are out the next month.
You don’t even need to have a good reason to remove them.
You are just exercising your right to cancel their monthly contract. It removes the possibility of having to go to court to remove a tenant. Easy as pie.
Here are the steps that I take to remove a bad tenant:
1. Tenant engages in some action that violates the contract, for example, they pay the rent late.
2. Call the tenants to inform them they are in violation of the contract.
3. Follow up immediately with a memo that again tells them of their contract violation, and tell them exactly what I expect them to do. For example, pay the rent at an agreed upon date. Tell them the consequences of not immediately remedying the situation. For example if they don’t pay the rent, I will not renew the month-to-month contract.
4. If they don’t take the appropriate action, of if another violation occurs, send them a form or a memo saying you are cancelling the contract. They must be out in 30 days.
5. If they are not out in 30 days, I can pay to have a deputy sheriff evict them. If they are still behind on their rent when they leave, I keep their security deposit to cover the unpaid rent.
Don’t get the wrong impression, most of my tenants have been good tenants. I have only had one eviction in years that I have operated my business. And the eviction was a fairly easy process because of the month-to month lease.
Upcoming radio interviews
August 17, 7:50 am, Jason Mansmith show, WRPN 1600 am, Ripon, Wisconsin.
August 19, 7:40 am, Gary Sutton, WSBA 910 AM, York, PA.
August 20, 8:30 am, I will be on David Sutton’s show, KSRN 1490 am, Los Alamos, New Mexico.
August 23 at 8:05 am, the Cliff “On-Air” Turner show, KLBN 1450 AM, La Grande, Oregon.
August 25 at 8:08 am, I will be on Jeff Anderson’s show, KSDR 1480 am, Watertown, South Dakota.
August 26 at 11:05 am, the Ron Ross Show, WJBC 1230 am, Bloomington, Illinois.
September 15 at 8:05 am, the Dan Ramey show, WBEX 1490 AM, Chillicothe, Ohio.
Owning a rental house is better than having a pension
Tuesday, June 29th, 2010Owning rental houses far exceeds the benefit of the pension that you may receive from your job. I worked for the state of Arizona for 13 years, and I will one day receive a pension of around $1,000 a month.
But, does that really provide security?
Each year the value of my pension will go down because it is not tied to inflation. So, after 10 years I’ll still receive $1,000 a month but because of inflation, it may be actually only worth $100 dollars a month because the cost of my groceries, my clothes, health care, and other costs have all gone up each year.
Rental houses provide a better pension. If I get $1,000 a month in rent profits, it not only keeps up with inflation, but it exceeds inflation.
Which pension program would your rather have? One that increases in value with the passing years, or one that decreases in value?
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 .
New Fixer Upper and Rental House Class on January 23rd
Friday, January 1st, 2010.
Happy New Year!
For those of you who live in Southern Arizona, I will be teaching a class in Sierra Vista on Saturday, January 23rd, 2010. The Fix em Up Rent em Out class runs from 10 am to noon.
Below is the blurb from the Bulletin of the Sierra Vista Department of Parks and Liesure Services. My class is listed on page 20.
Workshops
Fix ’Em Up, Rent ’Em Out
How to start your own house fix-up and rental
business in your spare time.
Create wealth by buying, repairing, and renting fix-up
houses. This class will teach you how to start your own
house repair and rental business. Some of the topics
covered include: locating, repairing, and renting properties;
why invest in fix-up homes; tax codes; rental
contracts; advertising; keeping records. Terry Sprouse
is the author of the book Fix ’Em Up, Rent ’Em Out.
For more information, or to register, contact the Oscar Yrun Community Center at (520) 458-7922.
I will be teaching the same class again on March 27th.
Breakdown of townhouse purchase costs
Friday, February 13th, 2009.
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Here are the final numbers on the rental property that I purchased.
Price: $106,000
Interest rate: 5.125%
Term: 30 years
Down payment: $21,200
Principal & Interest: $457.37
Taxes & Insurance: $128.87
Total monthly payment: $586.24
Estimated rent: $770
The townhouse is 1100 sq.ft., 2 beds & 2 baths, washer, dryer, carport, and small back yard. It has a great central location and should rent easily. I have another property nearby that is very easy to rent.
It needs some cleanup and repair work in the kitchen, fire alarms, blinds in the windows, new toilet sets, etc. There is nothing big that we have to do to it. With my wife and kids pitching in, we should have it ready to go by the end of the weekend.
Here are a few more photos of the kitchen, the living room, and the back yard.
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