All Forum Posts by: Andrew Rees

I forgot to add that constantly following up with the tenant to make sure they pay etc. is a waste of your time. Add a value to your time say $50/hr. Then see how much time you spend every month hassling them for payment say 2 or 4 hours every month.

If you logged all of that time 15mins or 1/2 hour every time you call etc. that adds up.

You might think oh it doesn't cost me anything just my time, then your time isn't valuable and you have undervalued yourself.

Don't let people do that to you! Your time is valuable.

I've been that renter.

Not to go too deep into the situation, but I was young, dumb, and disorganized.

The place I lived at was no nonsense. If you were 30 days late they started eviction right away, if you paid up it would reset the clock until you were again 30 days behind.

I got a note in the mail to say that this was my last chance and if I was late again when I renewed I would be MTM and that meant that I would have resign the lease or initial it every month,rent was $100 more for MTM leases, and if I was late while I was MTM it would not be renewed.

Luckily I got that letter at the same time I got permanent employment with a huge IT Services company.

Having permanent employment instead of working for a few months getting laid off and working again for a couple months fixed the money issue.

You might want to do the same sort of thing.

Raise the rent, make sure they know the rent is being raised because they cannot pay on time, and if they are late again, they will be kicked out even if they pay up. Make sure that paying on time is a requirement in your lease agreement!

If it isn't then I would add it asap for them to sign the next renewal.

In this case you're running a business...

Therefore:

1 - Be professional,

2 - perform excellent customer service!

3 - Your tenants are NOT your friends, they are your customers. (yes that stings sometimes...)

I forgot to add 4 - the customer is NOT always right. Practice saying "no, sorry", "H. No!", and if they still don't get it then "F. NO!". :D

I think you should have stopped by and spoke with her face to face first.
Everything documented, proving the market rate you name it, listing the comps and property features.

Next I would have increased the rent over two years. Starting with the new renewal date. If you're going from $1000 to $1500 then the first renewal would have been $1250, the next year go to $1500.

My PM does most rent increases face to face as well. A few times she has raised rents without consulting me because she knows how I work. I like it when I get told she got a new tenant in and oh btw, I raised the rent $100/mo too!

I have raised rents multiple times.

First I never raise rents more than $100 a year if I am the current owner of the property. If I have just purchased the property and leases are getting renewed then I'll send everyone a personal letter introducing myself, my property manager, and document what the current market rate is for their unit with documentation to prove it. (Just google it.)

In one case which follows closely with your situation, I met with them personally and let them know that I'm their new landlord and this is your property manager. You have lived here for 5+ years and in that time you have never had a rate increase. Your current rent is $550 and the market rate is $800 for a two bedroom apartment. In reality you have a semidetached house with your own driveway Rents for two bedroom houses for this area are $1000 to $1500 depending on features and comps etc. Your rent is going to $900/mo. I simply cannot keep rent that low and your neighbors in the building right next door are all going from $500 to $600. He didn't like it but he is still there as a tenant. He did make a comment to my property manager that he checked around and still could not find a place as nice as where he was staying for less than $1100/mo so he was fine with it even if he didn't like it.

I have two other units that have not had a rent increase for a while because I was pretty sure they can't afford it. (Better to keep a paying tenant than have to find a replacement.) They are $100 to $150 below market rate now and they are going to see $50 increases over the next few renewals.

No problem at all!

Bigger pockets has lots of books available.
I recommend buying and reading them all!

You will see the "1% rule" come up often.

In my rental agreement (lawyer reviewed and approved) it specifically says no smoking or vaping within 20ft of the building and all butts must be left in a coffee can with sand in the bottom and one is already provided in the "smoking area".

Explanations are given for allergies, health, and second hand smoke etc. etc.

I've not had any issues yet.

Quote from @Robert Rixer:

In theory, this should be a tenant paid expense. In practice I'd offer to split costs with the tenant (fixture would remain). If they accept, you know they really wanted it and would appreciate it. If they drop the issue, they were just looking for freebies.

Oooh I like that response. I'll have to keep it in mind if this situation comes up.
Generally I charge $25/hr for anything requested by tenants with a one hour minimum.
My handyman does it. The tenants get to see a friendly face, and he gets a nice tip and I don't have to worry about it.

BTW waterpik makes a nice showerhead with a wand for $40. No need to spend hundreds.

I'd like to introduce you to a simple rule for your initial "Is this a good deal?" question.

It's called the 1% rule.

In essence monthly rents should be equal to 1% of the total purchase price of the property.

So...

If you buy a property for $250K then the monthly rent should be $2.5K quick and simple right?

So if you're looking at this property and the price is $630K then rent at a minimum should be $6300/mo. Your rents are approx $3300/mo.

so umm... yeah NOT EVEN CLOSE! RUN!

BUT, How about an alternate scenario? What if this was a quadriplex all 2 bedrooms with a rent of $1500/mo for a total of $6k/mo then maybe haggle the price down to $570k. Then turn around and raise rents to $2k each or (whatever your local market can stand) and now you're cooking!
$8k/mo will do nicely!

The 1% rule can be run the other way as well. What if I have a quadriplex that I bought for $200k and the rents are now $4k/mo how much is the property worth? Close to $400k depending on my local market.