Terry Sprouse

Sometimes in our fix em up rent em out real estate business we have tenants do unexpected things.

Last 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, food, and a lot of other things for me to haul off. They were having marital problems and money problems, so it was not totally unexpected. But what, I asked myself, could I have done to stop this hasty exit, which left me with a lot of extra cleanup work? Not much, was the answer I came back with, it just goes with the territory. We ran background checks and called references at the beginning, and they came up clean.

My wife and I use the deposit to cover clean up costs, but since we do all the clean-up and repair ourselves, its a matter of us spending more time than normal getting the property ready to go again. A change that I am going to make to the basic contract, for the next tenants, is to charge an extra $25 per month for any pets. Formerly, I had it as a $100 deposit for dogs. One thing that tenants rarely do, in addition to never changing the air filter, is to never completely clean up after their dogs. Another thing that I am getting tired of cleaning up is oil spills in the carport. So, I’m going to state in the contract that any oil spills that we have to clean will result in an automatic $100 charge taken off their deposit.

Beyond the extra time spent to clean up, I do always get a sense of enjoyment and satisfaction in cleaning up and repairing a property between tenants. I have the sense that anything they can break, we can repair. My wife and I have done it frequently enough, these are the third tenants for this property, that its become routine for us to do the repairs. It just took a little longer this time.

On a lighter side, below are five rules NOT to follow to run a successful house rental operation that I have found useful. They are adapted from Andrew Stefanczyk’s posting on Investalist.co.uk.

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

Rule 1
Choose the worst possible area. The location of your investment property will determine the kinds of tenants you will attract, and how much rent you can fairly charge.

Rule 2
Put the very best of everything in when fixing up an investment property. Luxury bathrooms, thick pile carpets, plasma TVs. Never shop at stores that recycle construction supplies. Spare no expense.

Rule 3
Make sure you have absolutely no experience in making basic repairs. Not knowing how to change electrical outlets, unclog drains and toilets, and replace broken windows will cost you quite a bit of money down the road.

Rule 4
Do not screen your tenants. This may be the most important step to making sure you 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.

Rule 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 your tenants. Most states provide online information about tenant and landlord rights so avoid reading these.

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