Posts Tagged ‘learn to make repairs’

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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Part 4 of Serial Home Buyers/Sellers, What properties do serial home buyer/seller buy?

Saturday, January 12th, 2008

Serial home sellers buy houses, live in them for at least 2 years, and then sell them and pay no federal capital gains tax. The key to making a serial home seller business work is to find houses that you can add value to. How do they do this?

They buy houses below market value that need repair

We now know, if we didn’t know it before, that prices don’t continue to rise every year at 5%. In fact, it appears that house prices may continue to drop for several years into the future.

So, that means that we have to add value to the house. We must find houses in need of repair and bring them back to their former glory, to force the value of the house to go up.

I know, you’re saying, “But Terry, your answer to everything it to buy a fix-up house. You have been promoting that forever. That’s the name of your blog, and your book, and probably your dog.”

My response is, how did you find out the name of my dog?

Actually, my response is that this is not merely an improbable coincidence, but it actually is the way to make the system work. You must find the right house in need of repair to buy before you can expect to make any money when you sell.

Key Advantages of Fixer-upper Houses

The three great advantages of buying fix-up houses are:

1.) You buy them for much less than you would pay for
a normal house, so you spend less of your investment money to get in;

2.) Because the price is less, monthly mortgage payments are also lower than if you had bought a traditional house;

3.) After the repairs are completed, the house automatically increases in value, and is valued the same as other houses in the neighborhood. This is a faster and more certain way to add value, rather than having to wait for housing prices to appreciate.

Learn to Make Repairs

Another key to making the serial home buyer/seller approach work is to make your own house repairs, as far a possible, instead of paying someone else to do it.

Never miss an opportunity to do your own repair work. Think of it as part of your educational process. You lose two ways when you hire someone to do your work. First, you lose the chance of a free education, and second you lose the money that you would have saved by doing it yourself. It may take you four hours to change an electrical receptacle or fix a toilet that won’t flush, something a professional could do in minutes. Don’t be concerned, in the long run you have learned a skill to be used for the rest of your life.

To learn more about making repairs, read “So You Want to Learn the Zen of Making House Repairs” that I posted at

Where you find these properties in need of repair? Tune in to the next blog installment.

Serial Home Buyer/Seller Tax Exemption, Part 5 – sources of fix-up houses

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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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