MRLANDLORD.COM MONTHLY TIPS ON MANAGEMENT
FILLING VACANCIES IN THE HOOD
Everyone has their own approach to filling vacancies. This month I want to share with you two approaches to filling vacancies in the “hood”. You will notice that both approaches are somewhat similar and they both offer commentary regarding how to save time and money that could be helpful to other landlords looking to fill their vacancies faster in the hood (especially considering that having vacancies is one of your biggest expenses as a landlord).
Dave’s Approach
1. Paint – I use the same color of Sherwin Williams Property Management paint on everything. It scrubs well, the color matches so close between paint jobs that I only have to roll on the walls once on the high traffic areas.
2. Trash – We pile the tenant leftovers on the porch and in the alley and in two hours a trailer load of stuff disappeared at no charge.
3. Shut-up – The new tenants walk through right after the previous tenant leaves. They asked about a few repairs I planned to do and were happy with a few things I was on the fence about.
4. Organization – I made more of an effort to group similar repairs or repairs that required the same tools for the same day. I also made it a point to make only one trip for supplies per day.
Sid’s Approach
1) I use Wal-Mart’s Glidden satin paint for all walls, except the bathroom/kitchen areas (over those areas I use semi-gloss). I use the same color (light beige) throughout the rental. I also use semi-gloss white on all trim.
2) I only repair/replace things if it’s broken. Most of my houses/complexes are lower income, so I rarely upgrade. Tenants expect it to be clean and functional, which is what I provide. They do not expect a kitchen with the latest, new appliances and granite counter tops, nor do they pay more for it, nor do they take care of it.
3) I hire out the cleaning and the carpet repairs. I pay $80 for a ceiling to floor deep cleaning; $80-$90 for the carpets. I’m also replacing carpets with Allure as I go, so that expense is gradually dropping off the radar.
4) I only do Lock box showings. I can have folks coming in and out all day without missing a beat. Never had a problem with squatters, vandalism, or theft.
Rented all three of my last three vacancies using this method. I had ZERO no shows, ZERO time/gas wasted driving across town, ZERO requests for repeat showings, ZERO prospects missed because my schedule and theirs didn’t match. All three turnovers were less than 2 weeks. One I turned over in ONE DAY! Yummy, yummy rent!
9 TOOLS TO HELP YOU PRICE YOUR RENT
What comparisons, Internet sites or other tools do you use to determine rental rates? Here are suggestions from other rental owners nationwide:
1. Use Craigslist for your area.
2. http://www.rentometer.com
3. “For rent” ads in the paper, call them to advertise your rental properties.
4. Utilize Postlets.com
5. Trulia.com
6.”For Rent” sign in a yard nearby, call them.
7. HUD fair market rents.
8. Connect with other local landlords who meet weekly/monthly for coffee.
TIMID LANDLORDS HAVE SKINNY KIDS
The following exchange took place on my Facebook page (facebook.com/landlordcoach) after I encouraged landlords not to be timid, using one of the quotes from a regular contributor to the popular MrLandlord.com Q&A Forum:
By the way, if there are things the resident points out are things that need to be fixed, (which you, the landlord, would normally be responsible for), I have found that is far better to take care of them at the time of the inspection, 3 to 6 months prior to lease expiring, rather than to have a silent, unhappy resident staying in your property just waiting to move when the lease expires. And if the things they point out are because of the resident’s neglect or poor upkeep, fix them, but charge the resident. Look at it as your way of showing excellent customer service to your truly good residents, and keeping tabs on those who could cost you hundreds (or possibly thousands) in damages if left alone. All the while, you handle everything at a time that was already set-aside and convenient for you. That’s well worth a one hour inspection!
A TRIP TO THE COURTHOUSE — PRICELESS!
You’ve seen the Mastercard Commercials where individuals talk of the high value of various things and they get to something which they can’t put a price tag on, and the only thing that could be said is that it’s “Priceless!” Well the following is not a “trip” to an exotic, romantic location. However a trip to the local courthouse shared by a landlord could only be described as “Priceless.” 🙂
I’ve owned property for about 7 years as a landlord. I’ve never had to evict someone. After a few close calls and after a few 5 day notices, I decided to go to the courthouse to watch eviction trials.
DON’T ACCEPT ANY EXCUSES — OFFER SOLUTIONS!
One of the biggest mistakes new landlords make–and sometimes some of us who should know better–is to accept any excuses for nonpayment of rent. Handle all nonpayment cases the same, whether it’s a good or bad excuse. Do not accept any excuses – offer solutions!
If you start “judging” whether or not a resident’s excuse is worthy of giving them an extended period of time to come up with the money, you will encourage them to come up with worse excuses the next time. In addition, you dig yourself into a deeper and deeper financial hole if they don’t come up with the money after the extended time period, and you have delayed in starting the eviction procedures.
Let your residents know right from the beginning what your procedures are when payment is not received and that there are no exceptions. I even have a list that can be shown to the resident at move-in that gives examples of excuses that residents have tried to use in the past to no avail. This adds a little bit of humor to a very serious discussion, but it also clearly lets the new resident know that there is no need to offer excuses for nonpayment of rent. Then of course you must strictly enforce those procedures.
“But Jeffrey, what do you do, especially in these times? Don’t you want to work with residents in ‘some’ way who are having a hard time? If I took a totally no-excuse approach, I would not have any tenants!”
I hear you and I’m fully prepared to work with residents by offering them several contact names and phones numbers of agencies and churches who may be able to offer them assistance. When doing so, I still start the eviction process and should the resident come up with ALL the money (including court costs, attorney fees, etc.) by the time of the court date, to that extent we will work with them.
I’ll also admit this: If a resident who has paid on time for over a year and otherwise been an excellent resident, and they give me an excuse, I still won’t listen or judge their excuse, or delay the legal proceedings. But I will listen to their proposed plan for getting caught up and offer suggested solutions. AND if they have never lied to me up to that point, I will waive or suspend the late fees and court costs, and get them to sign a promissory note, and work with them.
30 POPULAR EXCUSES FOR UNPAID RENT
“Had to get brother in law out of jail” (And they didn’t even like each other)
“My fiance left me”
“Just use my security deposit”
“I lost my job”
“Car repair”
“Self-employed Hair Stylist – Business has been real slow this month”
“I had a big electric bill because you won’t replace all the windows” (last January – walked into the house and they had the heat set at about 80, only 50 degrees outside)
“Had to buy schoolbooks”
“State garnished my tax refund for back child support”
“I left town because my dad died and I forgot my checkbook.”
“I was supposed to work and didn’t know it, so they suspended me for 3 days.”
“I’ve been too busy to mail it.”
“I got in a fight with my girlfriend, so had to use the rent to buy her flowers, take her out to dinner and make up with her. I am sure being a girl you understand.”
“Maybe if I got a check book I could get my rent paid on time.”
“I got a joint checking account with my boyfriend, then he left me last month and took all the money.”
“Sorry, but needed new tires.”
“I looked at my bank account and it was empty so I guess that means I paid you already, right?”
“I failed to pay taxes in 2008 and the IRS swept my account on the 1st so there was no money there. They were not supposed to do that my attorney is in contact with them.”
“I got bit in the crotch by a brown recluse spider while I was camping at the Renaissance Fair and I had to use the money to go to the ER.”
“I am out of town but my wife said someone has accessed our checking account and there is a hold on the account.”
“Last week, my bank sent the check, but it must’ve gotten lost. I’m not putting a stop payment on it for another week. If you don’t receive it, I’ll send another one. No, I’m not writing another check until I find out what happened to the first check.”
Last Month: “My uncle died and we have to pay for the funeral.”
This Month: “My aunt died……”
“I am out of checks, got to order some.”
“The bank messed up my account, that is why the check bounced.”
“I have lupus and I haven’t been feeling so good.”
“My daughter is just starting college and I had to pay her tuition.”
“I won’t be able to pay my rent on time unless I can get this special loan. In order to get this special loan I need you to sign this form stating that I’m about to be evicted even though my rent is current…it’s ok, the old owner has done it in the past…”
“I got sick and had to buy meds.”
“My ex-wife is trying to get sole custody of the kids and I had to pay a lawyer.”
“My bank froze my checking account because my debit card got hit.”
WHAT’S YOUR “COMEBACK” WHEN RESIDENTS OFFER EXCUSES?
I thought it would be helpful for some landlords to be ready (equipped) with WHAT TO SAY to rental residents who offer excuses as to why the rent has not been paid. Several experienced landlords shared their best or favorite comeback lines when a resident starts making excuses. I encourage you to read these different examples so that you may identify with at least one of these lines and feel comfortable and confident in utilizing it, when the time comes to use it. And as most landlords know, the time will come. Remember to always be professional and businesslike in your communication. So here are some of the best suggested “comeback” lines:
Comeback: “Please understand I have bills, obligations, and collecting is a business decision and a commitment to pay my bills. At the present time I am unable to pay your bills”.
Comeback: “I do understand the financial difficulties that you have encountered. Just as soon as the rent is paid, take the next money you have available after that and buy some food.”
Comeback: “I’m sorry to hear about your situation. Our agreement is that rent is paid by the 1st or you owe the rent and a late fee. We have a mortgage that is due, if we don’t pay then we get a late fee. The mortgage company makes no exceptions. Since I am charged a late fee regardless of circumstances, I really can’t make exceptions either. I’m sure you understand.”
Comeback: “Perhaps you have a friend or family member who will lend you the money until you can pay them back.”
Comeback: “I’m sorry to hear that, I hope everything works out. Regarding the rent, we are required to follow procedure within the timeline allowed by law.”
Comeback: “No, you can not use the deposit. Rent is rent, deposit is damages and I want you to get that back.”
Comeback: “I wish I had a half a dozen tenants like you!” They look at me confused and ask why. I then say, “I have about a dozen like you, I would like a half dozen!” 😉
Comeback: “Sorry but by state law I can’t touch that money until you are actually out of the unit. It’s kept in a separate Landlord Trust Account – it’s not available to me for personal use. That’s to protect YOU.”
Comeback: “What can you pay today?” If they have enough for at least 50% of the rent then we work on some kind of plan that keeps them from ever getting more than 7 days behind. 7 days is when I file papers. If they say zero, then I know for certain they have not done the best they can.
ADVERTISING TO THE MILITARY
I work for the military (civilian) and there is a website that the military use when they are relocated. In many cases, the Dept of Defense pays the landlord direct. It is called AHRN.com and it stands for Automated Housing Rental Network. You can post for free on the network. If you want to get the rental registered with the local military installations, you can call them and get registered with the relocation personnel who help military men and women find suitable housing. I am going through the Department of Defense (DoD) in Michigan. I am having my house walked through by the housing relocation personnel — it adds a positive review among those that are not. Check it out!
This is how I discovered the program and how it has worked for me: Two years ago I took a job in Williamsburg, VA. I called AHRN in Michigan and got absolutely zero results! I ended up coming back to Michigan for lots of reasons (namely, my mother was dying and my job required 24/7 travel 350 days a year). My mother was more important than my new job. In June, I accepted a job with the Dept of Defense (DoD) in Texas. There aren’t many jobs in Michigan. I had to go to nearest military installation to get fingerprinted. While I was at the military base, I mentioned something about wanting to rent my house. The person taking my prints told me to hang on a minute. He came back with a woman that works with military and DoD relocation. She gave me the “details.” I told her my info was on AHRN but nothing happened. She told me that property managers/landlords have to renew the listing every 30 days even though it is on the site. She also put me in touch with her co-worker who handles transfers. I chose to have my house “inspected” because it offers QA to potential residents. During my advertisement, I am going to add a blurb that says “military and DoD house inspected by ….” so other government (non-DoD) personnel see this. It’s another advertisement tag-line.
One other landlord shared his experience with AHRN.com. As a retired military guy and landlord who has used AHRN for about five years. It is like any other marketing website in that sometimes you get great residents and sometimes you don’t. The quality of your renter still depends on how “well” YOU screen them. Military folks may get a paycheck regularly, however they may also not pay rent (unless they are on an autopay plan) and/or damage the property. When I’ve rented to military, the inspections and direct rent payment is coordinated through the base housing referral office.
6 WAYS TO SPEED UP TURNOVER TIME
After a resident moves out (or evicted) you don’t want a property sitting empty for a long time for several reasons. So here are 6 ways to reduce your turnover time:
1) You MUST put aside a portion of your received rents each month so that when the time comes you do have cash to hire the labor. Most businesses call this “retained earnings,” but you can just think of it as your maintenance fund.
2) Do quarterly or semi-annual inspections to make sure the residents are not destroying the place so that there is not as much work to do at time of turnover.
3) Find good, reliable contractors and have them lined up IN ADVANCE. This is essential for doing quick turnovers when there is a bunch of work to be done. If your resident is giving you a 30-day notice, there is no reason you shouldn’t have a list of repair items prepared to be started on the day after they leave.
4) I have all my leases end on the 23rd so that I have a few days to rehab and have a new resident move in at the end of the same month.
5) Prep the curb appeal and start marketing while the helpers finish the inside.
6) I find that “doing it along the way” is the way to go. Every six months or so, I visit my properties, and see what’s “really” needed, and get it done. Then, annually, as Jeffrey Taylor (aka Mr. Landlord) suggests, I offer the residents an “upgrade” of something else that will rehab the place. The idea being that by the time a resident moves out, paint and maybe flooring are all that’s needed.
9 USES OF SMART PHONES FOR LANDLORDS
1. Snap a copy of the driver’s license for my applicants then e-mail it to myself for record keeping.
2. Use the mobile banking app to check balance, deposit checks, transfer funds, and pay bills.
3. Check Facebook for a prospect.
4. Do online checking for credit/background on prospects.
5. Check e-mails from tenants.
6. Check out Craigslist for other LLs in the area with the same type of rentals.
7. Use the note pad app to write down a quick note.
8. Of course, use the phone address book to screen out unwanted calls.
9. Check out the local MLS listing for possible new purchases.
10. Bonus Tips from Two other Landlords: The Mr.Landlord Q&A forum is now mobile friendly! Try it out (to receive landlording advice on-the-go).
11. You can even run credit checks right on the spot with applicants!
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The above tips are shared by regular website contributors to the popular MrLandlord.com Q&A forum. To receive a free sample of Mr. Landlord newsletter, call 1-800-950-2250 or visit their informative Q&A Forum at LandlordingAdvice.com, where you can ask landlording questions and seek the advice of other rental owners 24 hours a day.
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