Posts Tagged ‘managing tenants’

The right way to handle tenants who are moving out

Wednesday, November 7th, 2012

Eventually, tenants experience that “feeling I get when I look to the west, and my spirit is crying for leaving,” which Led Zeppelin describes, and they move away.

When this happens, you will want to make the transition of the tenant out of the house as smooth as possible. The best way to do this is by telling the tenant what you expect from them. We send a letter that clearly spells out the checkout process. This way there are no misunderstandings, we are all on the same page, wavelength, sheet of music, or stairway to heaven.

Move Out Information Letter to Tenants

Some key things that we mention in our letter are:

1.) How much of their security deposit will be returned.

2.) There will need to be a review of their check in sheet (and attach a copy for them).

3.) What you expect in terms of house cleaning.

4.) Reminders to contact the utility companies to disconnect services in their name.

5.) Reminders to cancel newspaper and other subscriptions, and to provide the Postal Service with a change of address form.

6.) Reminders to contact us when they are ready for the final house inspection.

7.) A note that if keys are not returned, they will be charged.

8.) Any costs that we must pay to repair the house will be taken out of their security deposit, and we will refund the money due them within 10 days.

Download a copy of my “move-out” information letter to tenants.

(The link to my letter may not work on Internet Explorer. It seems to work fine with Google Chrome.)

Why be lenient with the damage deposit?

In general, we are pretty lenient when it comes to charging tenants for little things on the checklist. If they move out, and they have been good tenants, we are going return to them most, if not all of their security (or damage) deposit back, barring some obvious big broken item.

Our perspective is that we made a lot of money from the tenants over the years, and we don’t want them to leave on a sour note just because they thought we might have overcharged them on some ticky-tack repair.

 

Men of the World Unite!

John and Todd over at FearlessMen.com are staging a mustache and beard growing contest to help raise funds for charity.

I have confidently signed up to participate in the contest, and I have every intention of winning!

I invite you to join me.

The rules are simple:

1. Starting November 1st, start growing you mustache or beard. In the process they will encourage others who see them as they selflessly promote this great cause, to donate to the selected charities.

2.December 1-16 the contestants will have their photos posted at Fearlessmen.com so everyone can vote on said mustaches and beards. On Dec. 17th, the winner will be announced

3. The winner will receive prizes.

For complete details, charge over and read John’s article:

Fearless Men’s Beard and Mustache Competition | Movember 2012.

 

_____________________

Coming VERY Soon!

How to Turn Your Home into a Rental House, Instead of Selling It
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Some perfectly legal ways to maximize your rental profits

Monday, September 10th, 2012

Most terrifyingly bad movie ever?

In the fixer upper and rental house business there are many perfectly legal ways to maximize your rental profits, which don’t require drawing a gun or subtly displaying the threatening DVD cover of The Clan of the Cave Bear.

Keeping tenants satisfied = more $ for your

Putting the comfort of your tenants first can result in you making more money. Three things happen when you increase the value (or usefulness) of a property:

1.) You attract more and better tenants;

2.) Tenants stay longer; and,

3.) You make more money.

 

Things to do make a property more valuable

Catzilla makes tenants complete

1.) Provide a clothes washer and dryer;

2.) Have a refrigerator;

3.) Add a carport to protect tenant cars from the sun;

4.) Install security doors;

5.) Put a storage shed in the back yard;

6.) Allow pets. Many people consider their pet a member of their family, and in some cases, make their decision on which home to rent based on the likely comfort of their pet.

Maybe pet owners cross the line when they refer to themselves as “mommy” and “daddy,” and maybe pets cross the line when they start marking their territory before you even get a chance to go through the checklist.

But in general, allowing pets is a win-win situation.

These types of things increase the value of a property for tenants, and may set our property apart from other rental properties. They also allow us to charge a higher monthly rent.

The more satisfied a tenant is, the more they are willing to pay a little extra rent.

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7 Reasons to Live in a Fixer-Upper House While You Repair It

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

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Coming Soon!

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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

Share Your Knowledge

“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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Funniest Tenant Screening Stories

Monday, June 4th, 2012

This guest post is from Endre Rex-Kiss, an online marketing, social media and human resource enthusiast. He currently represents FidelisAM, a US based agency providing employment and resident screening services. Follow his occasional guest blogging activities on Twitter.

Tenant screenings is the way to go if you want quality tenants and most landlords come across potential tenants who are either not what they claim to be or have serious behavioral problems. This article takes a look at the funniest screening stories landlords have had and their aftermaths. So sit down, relax or better still grab a cold bottle of beer to nurse while you go through the experiences below.

The Estranged Wife

A couple with no kids moved into a 4 bedroom duplex in the suburbs, the house and environment provided the perfect scenery for the couple but there was only one problem and it was that of meeting up with their mortgage payments. So they decided to put a room up for rent. The necessary adverts were created and finally a prospective client came knocking, he was the perfect tenant for he claimed to be single, had no pets, did not smoke, drink, do drugs and had a well-paying job. This obviously was too good to be true so the couple decided to hire an agent to conduct a little screening on him. After two days, the agent returned to tell the couple that they had been invited to have dinner with the previous landlord of their prospective tenant. On getting there, they were told that the tenant usually preys on sympathetic landlords and if you fall into his trap by renting a room to him, he would move in, behave for some days but a week later a woman who would claim to be his estranged wife would come visiting for some time and then finally move in with a cat. They would then proceed to co-habit like pigs, steal your property and when rent is due, disappear like thieves in the middle of the night.

Ghost Tenants

A couple responded to a landlord’s accommodation advert, they came to see the Landlord and professed that they loved the apartment and would be willing to rent it for the long term. The landlord was convinced that they were the perfect tenants so when the wife came calling the next day without her husband (due to the supposed fact that he works late) to ask for the keys to the apartment so she could look through it, the landlord duly obliged. A day passed, the lady did not return, two passed and she was still missing. The landlord quickly called his agent who conducted a quick search only to find out that the woman and her husband had already moved into the apartment. The police was called and the couple quickly evicted.

Dead beat Prospective Tenant

An agent once recommended a tenant who had the best recommendations ever; he had a good job, perfect credit and good relationships with his previous landlords. A meeting day was fixed and the prospective client shows up with a dead beat car and the attitude of someone who was one step ahead of the law. The landlord who needed to rent his facility out as soon as possible, overlooked this tell-tale signs and had agreed to lease the apartment to the tenant. The recommended signatures had already been traded and an upfront deposit had been made but as luck would have it, a police officer who was driving randomly through the neighborhood spotted the prospective tenant, felt his face was familiar and got down to trade some questions. Suddenly, the tenant bolted and a foot race began. The tenant was finally apprehended and the landlord discovered that the name, details and personal information given by his perfect tenant had nothing in common with the tenant.

The Thief

A couple came with an agent to view a landlords property, after going through it, they decided it was perfect and would be signing the necessary papers the following day but there was just one issue, they needed the house repainted. The landlord obliged, carried the necessary equipment to the house and started painting. He painted into the night and decided to spend the night there instead of returning home late. In the middle of the night, he began to hear strange noises at the side of the house, quickly he got up to investigate and on getting there, he found his prospective tenant trying to detach an A/C unit.

These stories show that conducting an in-depth screening which should include: former landlord credit checks, recommendations and past criminal activities are highly recommended.

Upcoming Speaking Engagement – Terry Sprouse (author of Fix em Up Rent em Out)

I will be making a presentation to the Arizona Network of Real Estate Investors. Mark your calendars.

Where:
Fidelity National Title, 6760 N. Oracle Road, Suite 100, Tucson, AZ

When:
June 7th, 2012

Time:
Meeting begins at 5:30 pm, presentation at 6:00 pm

Title: The 5 Rules on How to Lose Money & Get Your Rental Property Trashed by Tenants

Background Checks for Tenants

Wednesday, December 28th, 2011

This is your way to verify that the impressions you have of your applicants are true. Everyone who wants to rent my house has to fill out an application form. I will select usually the top one or two candidates, based on the processes mentioned above, and then call all the references and former landlords listed on the application form.

Always try to verify the references by telephone. You wouldn’t be the first landlord to be given a fake reference, and people will often give more candid opinions when you speak to them.

I don’t run credit checks, but I do like to see copies of their paychecks. I do a criminal background check by searching county court house records, and I check the sex offender’s registry list.

A high priority for me is that they make enough money to pay the rent. Don’t go by what they say; go by what their paycheck says.

They may say, “So anyway, my wife/girlfriend is going to get a job in a couple of weeks, and we operate a successful E-bay business, so the rental payments won’t be a problem.” Weeks turn into years and all the while they will have trouble making their monthly payments. Someone who has a stable, good paying job is an ideal tenant.

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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.

How to Be a Guest on Radio Shows

Creepy tenants and landlord/tenant rights

Tuesday, August 24th, 2010

Gary Sutton of Newsradio 910 WSBA, York, PA asked me, “What if you have a creepy tenant like the one in the movie Pacific Heights?  What are the rights of tenants?

Michael Keaton in Pacific Heights represented a new landlord’s worst nightmare. He was a master at manipulation of landlords, and pushed the boundaries of the law without actually breaking them.

Laws Favor Tenants

Of course, there is a lot of gratuitous Tinseltown nail-bitting tension in the film, but it does faithfully present one fact that all landlords must face. The laws generally favor the tenant.

Laws may vary from state to state, but in general tenants are required to:

– maintain dewlling units
-dispose of trash
-use in a reasonable manner the electrical , plumbing, heating, AC,
etc., and all appliances
– not destroy, deface, or damage the premises
– not disturb the beighbor
– allow landlord access to the property

Landlords are required to:

-supply a written copy of the lease to the tenants
– comply with all building codes
– make requied repairs so that the property is clean and safe
– maintain in safe working order all electrical plumbing, AC, etc.
– provide recepticles for waste removal

“Practical” vs “Legal” Remedies

As Carlton Casler points out in his book “Arizona Landlord’s Deskbook,” the best remedy to problems with tenants is often by utilizing the “practical” approach rather than the “legal” approach.

For example, instead of incurring all the costs of time and money to legally remove a deadbeat tenant, by telling the tenant that if he is out at the end of the month and the property is reasonably clean that you will refund allow his deposits. Or, if he has no deposits, you give him $100.

Would that solution work for a tenant like Michael Keaton?

He’d probably prefer a fist fight with the landlord or a shootout with the cops.

However, outside of Hollywood the practical solution works pretty well.

Upcoming radio interviews

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.

NEWS FLASH — dealing with tenants a big issue for my class

Tuesday, February 2nd, 2010

Avoid this guy as a tenant

(more…)

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.

New Product Announcement

I am in the process of developing a audio Course entitled “Fixer Upper and Rental Business Starter Kit.”

The course will include 3 audio recordings, electronic copies of forms, a Workbook, and a copy of my book Fix em Up Rent em Out.

I will be providing extensive information to guide you through the process of starting your own business. I will show you the quickest way to reach your goals, and protect you from the pitfalls.

Want to claim a sense of security when the walls of financial security seem to be crumbling all around?

Then this course may be for you!

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Confessions of a fixer-upper-holic

Sunday, December 16th, 2007

As we approach the holiday season, I reflect back on why I enjoy the fixer-upper and rental house business.

My philosophy is to buy houses in need of repair, fix them up, and rent them out, in my spare time. I first began doing it because the economy was shaky and my full time job was looking shaky too. I wanted some security so that even if my job went down the tubes, I would still have enough income coming in to keep floating. And, I wanted some security in retirement since I haven’t socked away much in IRAs and I have little faith in the stock market. I wanted to control my own destiny, rather than letting some distant fund manager decide my financial future for me.

Buying fixer-upper houses allows me to get into a property at a low cost, paying as little money as possible. I try to buy bad houses in good neighborhoods. I make money through monthly rents, appreciation of the house values (5%/year on average), and through tax deductions and tax credits.

Becoming a landlord is the major obstacle most investors face in this business. Tenants can be cause migraines and make life difficult for us. There are two approaches to deal with this drawback. First, remind yourself that you can learn to deal with tenants only by doing it. The more you do it, the better you get., and the financial reward makes it worth it. Secondly, the 1997 Taxpayer Relief Act home tax credit allows you to sell a house you have live in for 3 of 5 years, and pay no federal income tax. In this approach, you never deal with tenants, but you also lose one of the greatest advantages or home ownership – long-term appreciation.

This profession is fun, most of the time. I enjoy repairing properties. I’ve always enjoyed fixing things that are broken, although I never got really good at it until I started buying houses. It gives me a great sense of inner satisfaction to return a broken house to its former glory. And, I have grown a lot as an individual by learning to deal with difficult tenants. It’s one of those cases where, we are forced to do the thing we most dread, but then we wind up learning immensely from the experience, like marriage (yes, my wife rarely reads these blog posts).

Most of the time the fixer-upper business is on auto-pilot. Tenants send their checks in and my major responsibility is to deposit them. After the initial repair work on a newly purchased fixer-upper, the major work comes when there are 1) minor repairs, things like leaky faucets, leaky roofs or washing machine malfunctions, and 2) when tenants move out and my wife and I need to get it ready for the next tenant. We now have it down so well that we can usually have a rental house put back together and the “For Rent” sign in the front yard in 1-3 days. My wife, two boys, and I march into the place like worker ants, each one understanding his/her designated role, and before we know it we’re done.

My tenants have been people that I would normally never have come into contact with. We live in different worlds. In many cases I have enjoyed getting to know them. For those I didn’t enjoy so much, I learned new people skills. Or, perhaps better said, I was forced to learn skills in people management , or I would have gone out of business. I admit that there were several times during the first few years that I was so frustrated that I thought about giving up this dream. But, fortunately, despite the frustration, I kept plowing ahead with fortitude and didn’t throw in the towel. And, of course, when I didn’t have the fortitude to carry on, I used the next best thing – three-and-a-half-titude!

To me, one of the best parts of life involves growing and learning, and my spare time fixer-upper business allows me to do both,. It doesn’t hurt that I make some money as well, and have some security for the future.

Info on Terry’s Book

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