All Forum Posts by: Terri Pour-Rastegar

@Steve Babiak, I think that's a GREAT idea! Thanks!!!

Steven Hamilton II,

Ahah! Someone with a recommendation that makes sense! I will absolutely look into this. I'll send this info to my hubby right now so that we can start getting this thing set up. Thanks!!!!

What's the best way to handle lease renewals?

I've been doing this landlord thing for 12 years now, but I'm just not happy with the way lease renewal time plays out.

FYI, My NC rental agreements are all month-to-month, which is fabulous for me, thank you very much. Their language allows for self-renewal every month. However, I like to officially renew yearly anyway, just to keep the paperwork tidy.

My SC leases all run for 1 year, which is fine. MTM versus 12-months is not an issue for me. The 1-year leases self-renew at the end of the 12 months. Again, however, I like to officially renew.

My tenants always want to stay. Any time a tenant has wanted to leave, it's always for relocation or they've bought a house or something, and they always tell me months before renewal. In those cases, I mail a letter outlining our conversation and extending the lease on a MTM basis until a certain date, etc.

In the past, I've simply sent out a letter outlining the renewal terms, and whether or not there is an increase or such. I sign it, and indicate that the tenant has so many business days in which to sign and return it to me in the enclosed SASE.

The problem is that I almost always have to pester the tenant to return the signed document. Even though they want to stay, and even in cases where I haven't increased the rent. These same people continue to pay rent (I collect electronically), even if I've increased the rent on them (I go into the debit system and change the rent--they say nothing about it).

I have half a mind to just send the same letter and state that these are the renewal terms, if you don't respond otherwise in XX days, this goes into effect, etc. But I really prefer that signed document.

So whattaya think?

We are in a similar boat, although my husband is 58, and I'm 42. There is no way his current 401K balance is going to sustain us when he retires. He started it way too late in life, for valid reasons that i won't bore you with.

Several years ago, when the stock market was doing well, I might add, the folks who manage his 401K had a "check-up" meeting with hubby. They showed him all the fabulous things he could do with his 401K and how much he could make. When they were done, he handed them spreadsheets outlining the returns we're making from the real estate investment business (mostly rentals, some flips) that I run. After a few minutes, they looked at my husband and told him to give all the money to me because I was making at least twice what they could ever offer him with their products.

At the time, we did not need to pull the 401K. Now that cash is harder and harder to come by, we've decided to pull all of it out when he turns 59-1/2, thereby avoiding such a loss as was mentioned in previous posts.

I've looked at Roth IRAs, and I just don't think they're a good fit for me. I've never been a big fan of indefinite deferment--just letting my descendents pay the taxes when I die is not a good idea to me. First of all, I cannot afford to be tied down to so many rules and regulations that surround such investment accounts, including not being able to do any work yourself (I do very little myself, but still...). Then you can only pull out the principal? What's the point? I do this to make money. When I'm done with an investment, I want the the option to do whatever I want with the money I've made. Usually, we just turn around and reinvest it (the initial investment AND the profit) into the next properties. But sometimes I want to skim a little off the top for some project on my own house or something else. I want to enjoy SOME of the fruits of my labor now--just a little bit. These other investment options don't give me the freedom I need.

For the same reason, I am not at all interested in 1039 exchanges.

I'm sure I'm missing some important information, as I am far from an expert in things like Roth IRAs and such. I promise, if someone makes the case that they are in fact a viable and healthy option in my situation, I'll jump on the wagon ASAP.

In the meantime, I can't wait to get my hands on that 401K money next year. I can do some serious investing with that. In fact, we've already calculated that, with the # of rentals I can buy with that money, together with the properties we already have, the rents from all of those properties will replace my husband's income 125%. Everything else is cream. He'll be able to retire before he is 60.

That's the plan.

Thanks for the update Kyle. :)

"Monthly statement"? I guess I should save that one for another topic. But I will say this: my tenants already got their monthly statement in the form of a lease. I don't have time to "bill" them.

But as for a log, I use MS Outlook for email, calendar, contacts, etc. So when I get a new tenant, they become a new contact in Outlook. Thereafter, any email between us is automatically logged, and it's attached to their contact file. If there's a phone call or text, I log it as a journal entry, which is also attached to the contact file. If I ever need it, I can retrieve all instances of communication for any given tenant.

I do this from day one because, as mentioned, a great tenant can turn sour at any time. You need to CYA.

I do ask tenants to email or text any non-emergency issues. If they contact me by phone instead, I follow-up with them via email or text, mostly to have a written record of the exchange. And I always follow-up by phone (and then a confirmation email or text) on any issues that were fixed. Mostly, I just want to make sure everything was satisfactory and that my workers were professional and kept things clean and such. Tenants really like that level of care. Trust me, they don't get that from most landlords.

I always get a licensed inspector in on the project the moment it's under contract. I try to use the same inspector--he knows me and knows what I'm doing and what I want. And I am always on-site while he is performing the inspection. That way, I can answer/ask questions, point out specific areas of concern, and get a one-on-one review with the inspector when they're done. Mind you, I don't get in their way. I just make myself available. When they're done is when I review things with them.

Although I've been investing for over 12 years now, I learn something new (or confirm existing knowledge) every time there's an inspection.

I ask for a detailed report because I hand each trade their section of the report and use it as part of the "scope of work." This way, I'm covered when it's time for resale.

If you learn of something during the inspection--something that could be financially catastrophic, or whatnot--you have an opportunity to back out of the deal. Or re-adjust your exit strategy. Whatever you do, don't become one of those people who always uses the inspection to renegotiate. You'll get a bad reputation.

All of the other suggestions were really great too--if you can get a contractor to walk projects with you, you should definitely do it, at least early on. You'll learn a lot this way. You'll learn even more as you get a few houses under your belt. It's a little scary at first, but you're in the right place to help you get started.

I actually just blogged about a related topic--going paperless.

Original receipts are the only thing I keep in hardcopy, as far as accounting matters go. Otherwise, I scan everything. I keep original receipts because stores usually want the original, not a copy. I post the transactions to Quicken, and then stick them in an accordion file sorted by month.

I try to enter my receipts every day, pay bills weekly, and balance accounts monthly. Otherwise, it gets out of hand. Recording your receipts daily is vital when managing a rehab project. You start out with a budget--you must keep track of your spending; otherwise, how do you know if you're on budget?

Otherwise, I'm paperless.

I use ClearNow, which is a direct-draft system, much like your mortgage is probably paid. It's a very small fee to me, but I don't have to think about it. Very easy to set up and use. Also, tenants have the option of having their rental payments reported to a credit bureau, which builds their credit. They can draft their rent from a traditional bank account or a pre-paid debit card and such.

You may decide that the fee is not worth it for just a few tenants, but if you plan on growing, it's nice to have it set up and just build on it.

I am too busy to process a bunch of rent checks every month. Tenants love my system.

I have just one tenant who pays the old-fashioned way. He fell on hard times last year and got rid of his bank accounts. I'm a little worried about him, but he's been OK with the rent. Just late a few days, a few times, and he always calls me ahead of time. It's a hassle to wait on his money order, but I know the details of what he's dealing with right now. He's otherwise a great tenant, so I'm happy to tolerate it.

That's great news! Congratulations! I remember when I gave notice. My boss (a very successful dentist) was not surprised. He predicted that I'd be making more money than he does in just a few short years. Almost there! :)