All Forum Posts by: Account Closed

Chinmay, because what you say is true, "trial and error" basically, is why I wrote this piece.  There was nothing around when I began, and each state is different.  I had an attorney handle my evictions when I first began and he made deals with my tenants that benefited them.  I lost a lot of money and I said heck with that and fired him.  

I began studying the laws of our state, and based on the court hearings I attended during my first year with my attorney, I picked up a lot of stuff!  I then began some real estate courses where they deal with laws of our state and property legal mumbo jumbo, and I began handling my own cases.

The first case I handled by myself I won, but I stuttered a lot.  I took what little knowledge I had and combined it with commen sense and I actually enjoyed it, even though I was scared to death. That first win gave me a lot of confidence and I can proudly say that in the 13 years I was a landlord I never lost a case, and my properties were in Detroit.  

From then on, I constantly studied, but my main focus was on keeping tenants long term.  This way I stayed out of court.  And when you have a lot of tenants, you can't be in court every single day.  But our entire mission of being landlords is to keep tenants long term, not to see how many evictions we can have in a year!  And so I made it a point to learn how to do just that. 

It took a good year for me to not let tenant behavior get to me.  Instead, I became a good listener.  I put myself in their shoes.  I was understanding, but I was firm and I stuck to the Lease Agreement and I took care of my tenants and they appreciated that.  They respected me.  They trusted me, and I returned that repect back to them.  

I am retired now, and I want to help others to learn how to do it too.  Nobody was there for me when I began, but I am here for them now.  It is good that todays investors have somebody to help them, who has been through it all.  

And just because I give tips and write articles on all of this stuff, doesn't mean it will cover every scenario.  Because in this day and age, there are more laws to obey, more lawsuits, and a lot of having to watch our wording in advertising and what we say to people.  Good grief we can't even advertise that our properties are next door to a specific church for fear of discrimination. So at least I am able to help in some way.  The rest is up to just plain common sense and "Trial and error". 

You either have landlording in your blood or you don't.  

I have shown the good and the bad and the ugly of what being a landlord entails.

(I haven't even shown you the photos of damages tenants can do to your properties yet.  Now, that is something that is really scary)

Nancy Neville

When we are little we say to others….”When I grow up I want to be a….”

Then when we grow up, we realize that in order to be all the above we need to have a plan. We just don’t happen to be a whatever- we- want to be just like that. It takes a plan.

Yet in the Landlord Business (our Industry) people don’t view it as a business. The media, courts, tenants, family and friends, feel we are just money hungry people who care nothing about our tenants but only the money. Do they say that about Bankers, Grocery Store Owners, Doctors (well maybe doctors..bad example) plumbers, etc? Not so much. They view these industries as companies, businesses, but….. not us. And even some of us WE DO NOT VIEW OURSELVES AS A BUSINESS!!!

I have people contacting me all the time wanting me to help them solve all their problems because they didn't have a plan. And, I try to help them as much as I can, but there is only so much I can do. Which lead me to writing this blog.

Many investors, see a sale, hear about the landlord business from others, and they get excited and so they buy a house. But they don’t know anything about being a landlord. And...most of us fit into this group, when we first began as well.

So here is my tip for those who need, want it, and glad they have it. ( I wish I could have this posted some place where I wouldn't have to hunt and find it every time someone asks this questions on here, but perhaps the owners of this site might tag it, we will see)

So...here it is.

THIS IS THE PLAN

1.Location, Location, Location .

2. Check out the neighborhood before you buy. Is it a money maker neighborhood, or a bad one?

3. Check the area to see how much rent you can charge for this home in this particular area.

4. As a Realtor, when I sold properties to investors, I would tell them, from my own experience, how much money they could get in rent for this home. In return they would ask me….”Well what if I did this to the house and that to the house (spending thousands of dollars in extra’s to the house), how much could I get in rent then”, and it never ceased to amaze me, how they looked at me when I told them that they would still get $750.00 a month. They wondered how they could still only get $750.00 a month when they spent so much money on extra’s to make the house super special! The answer is this. Location, location, location. What is the market value in that area and neighborhood! It is just like buying a house. What is the market value in that area? What are they selling for?

5. Check your Landlord/Tenant Laws before you even buy a home! Very Important

6. Sit in some Landlord/Tenant Court Sessions to see what goes on.

7. Study the City Ordinances of where your properties are located. If you don’t …..be prepared to receive several tickets for things you didn't know your tenants were supposed to (you really since you are the landlord) do.

8. Get your OFFICE ORGANIZED!! I can’t believe how many investors are so focused on buying and not how to KEEP THEIR PROPERTIES or KEEP TRACK OF THEIR PROFIT AND LOSS. You can't possibly do that if you are not Organized or have an Organized Office!

9. Therefore setup a good filing system

Get a good answering system…Vonage Phone is one good example

Stamps.com is great for keeping track of letters you send your tenants.

QuickBooks is a Landlords best friend. Buy it and learn how to use it.

10. Keep in mind that this is a business of people management. You must get a feel for people and their personalities.

11. Learn what words are Legal to use in advertisements. There are many no no words. (See my blog on What you can say and not say) to avoid discrimination lawsuits.

12. Learn how to setup your properties to have good curb appeal

13. Learn how to do open houses. Plan for them. Makes applicants excited. Competitive

14. Prepare a legal and good application form. Set a criteria for qualifying applicants.

15. Prepare a legal and good Lease Agreement. Take pictures of the home prior to renting it out and have that day's paper somewhere int he picture to depict that the photo's are current.

16. Setup a website Wordpress.com is free to advertise your rentals- generates interest.

17. Learn now to screen your applicants.

18. Learn how to do a credit report and read them

19. Learn how to choose a tenant. Beware of Testers How you speak, words you use, how you choose an applicant will make you or break you. There are testers. Do things right and you won't have to worry.

20. Don’t allow applicants to pay for their application fee by check or money order. They can cancel the checks or money order if they don’t get the place.

21. How much money do you charge for an application fee (Credit Check) $25 per person is what I charged. If they qualified I applied it to their move in fees. If they didn't qualify, it was non-refundable. Have that on your application form.

22. Only accept cash or a Cashier’s Check for credit checks and if you choose them as a tenant, make sure only cash or Cashiers Checks are acceptable, Otherwise they can stop payment on checks and money orders once they move in. PACIFIC HEIGHTS!!!!

23. Don’t allow tenants to move into the property unless they have rent and security deposits PAID IN FULL!! NEVER give anyone the keys until you have all move in fees, money due you in your hands and utilities (if they are to pay them) placed in their names.

24. How much Security Deposit can you charge. Believe it or not, your State has a law for that. Michigan is one month and half plus first month rent. What does your state say?

25. If tenants pay for utilities. make sure they have them placed in their names on the day or prior to the day you sign the lease. Call the day you sign the lease to verify that has been done. If not, DON'T RENT TO THEM, they do not follow instructions.

26. If you are a Property Manager, make sure you are a Broker, or work for a Broker who does Property Management. About 3 states say you can be a Property Manager and not work for a Broker if you a Licensed Property Manager, not a licensed Realtor or Salesperson.

27. If you are a Landlord and have a Property Manager, either let them be a Property Manager 100% or you handle everything yourself, but not do both

28. IMPORTANT: Learn the forms of your STATE !

To be a successful landlord, and maintain that excitement that you had when you first began, before you knew the ropes, you have to have all this in place, and you MUST AT ALL TIMES STICK TO THE RULES OF YOUR CONTRACT, YOUR LEASE AGREEMENT. Stick to the rules, and you will keep that excitement. You will keep not only your tenants happy, but you will be happy, making your family happy, and that’s what makes landlords still be landlords after 30 years in the business.

I wrote this piece a long time ago, but I think it still prevails today.  It's called "The Tenant Phase"

THE TENANT PHASE

THE FIRST MONTH (THE HAPPY PHASE)

During the first month of a rental period, the tenant is happy. They wanted the home, they got the home and everything is fine. THEY ARE VERY HAPPY! You spent a lot of time at the signing of the lease telling them what you expect from them and what they can expect from you. They seemed to be happy and they nodded in understanding.

THE SECOND MONTH

Somehow during the Second Month, when the newness wears off and the happiness falls into a routine, the new Tenants become confused. They seem to forget what the rules are and when rent is due (even though they have a written lease agreement to refer to). If they are one of the few tenants who do not get confused during this time, this means they have jumped from the Second Month phase into the TESTING PHASE which may cause a few problems, but I will talk about that in a few minutes.

To help the Tenants not be confused during the 2ND MONTH PHASE, I always bill my Tenants their rent 10 days before it is due. It's during the 2ND MONTH PHASE that I will answer any questions they may have and not make them put it in writing.

TESTING PHASE (May begin as early as 2nd month):

The TESTING PHASE, is a very crucial phase. Whether the tenants and you get along is determined during the TESTING PHASE. More Tenants than not like to Test the Landlord. If they had gotten away with it with their previous landlord, chances are, they feel, they can get away with it with you.... so they will try. They will pay their rent when they want to, putting you last and live the way they want to regardless of your rules.

It is very important to nip this in the bud during the TESTING PHASE, because if you allow the tenant to get away with things such as paying their rent when they want to and doing what they want, then chances are you will never proceed past the TESTING PHASE.

THE THIRD MONTH:

If you make it to the third month, that is good. But it is also very crucial during this time as well to make sure the tenant stays on course. The Third Month, strengthens your position as to who runs what. During this time you want to make sure that the tenant keeps paying their rent on time and keeps obeying the rules. One little falter on your part can throw the tenant back into the TESTING PHASE. It is very important that you guide them during this time as to what you expect and want. And important that you gain their trust and respect during this time.

THE FOURTH MONTH - THE COMFORT PHASE:

The Fourth Month through the first year, is THE COMFORT PHASE: the tenant becomes accustomed to your rules and is starting to feel comfortable. If you have handled everything correctly, being strong when needed to be, and doing evictions when needed, the Tenant will feel secure because the Tenant will know what is expected of them and will feel comfortable and will want to stay. (Tenants usually feel comfortable with stability and sameness).

AFTER THE FIRST YEAR:

After the first year, the COMFORT PHASE, becomes more stable and each year thereafter. It's just a matter of keeping your Tenant happy, yet, making sure they don't slip into the Testing Phase from time to time. Even old time Tenants will want to go to the Testing Phase if they see their Landlord falter, get too over generous or too understanding.

When that happens the Tenant's stability changes because the rules are changing throwing the tenant into the Testing Phase again, so we don't ever want to falter but always stay strong and in control.

THE MOVING PHASE:

During the moving phase the Tenant, no matter how many years they have been with you, seems to forget everything again. They become babies and they revert back to the TESTING PHASE. Once again they never refer to the Lease and must depend on you for answers.

During the MOVING PHASE, the Tenant can change personalities quickly. It's like they drank a potion that changed them from Jekell into Hyde. They become this fiend, this villain that could destroy you and is probably the hardest phase of all the phases.

It is during the MOVING PHASE, that you must be cool, have all your wits about you and be prepared, yet still be cordial so as not to enraged the monster that seems to be lurking in your Tenant during the MOVING PHASE (as there is NO ANTIDOTE to calm the savage beast once it takes form). If by chance this happens, it is best to not confront the beast but to keep your distance until the courts can set it free!

With time everything will fall into place as long as you treat Landlording as a business!

Rent On!

Nancy Neville

Once you purchase this property, then what?  You sound like you have researched the location and are studying market rents, but do you really understand the role of a Landlord?  

Things to ponder in addition to accessing a property as a rental (and you are thinking multi-family which equals multi responsibilities) is to study your state and City Laws as well as landlord common sense issues, such as the eviction process.

When you become a landlord it is truly a business.  Most people look at us as though we are just mean people who only think of money.  They don't see that we are on call 24/7, which means Christmas, Easter, and every Holiday under the sun.  And believe me, you will be called on those very days for the furnace going out, the lights don't work, or your neighbors are making too much noise. No they see us as sitting back, watching television with a beer, and smiling as we collect the dough. 

Then you have the Eviction Process.  The threats, the damages, the fixing the properties up again and again and again.  

The eviction process is a very emotional and dangerous time as it is, but especially so to someone who is new.  

You will want them out!!!! And you will make many mistakes because you're not getting your rent and they won't move and they are doing damages.!!! This is where a lot of landlords get it wrong.  They try SELF-HELP. 

The Eviction process is long and we must be patient.  We must let the courts do their job.  It's hard to stand by and watch it happen, but if you do one thing wrong, it could mean a lawsuit against you, and some have lost their investments, their properties by doing it their way.

Now, I'm not writing this to scare you, because we all were new once upon time.  But, I write this so that you and others (and perhaps you already know all this) have something to think about.  

The most responses I get from people when they find out that I was a landlord and saw my home, was "are you a doctor, a lawyer", and I would say no I'm just a Landlord, and they would say, "Wow, and that's all you do".  And I would smile and say, Yep that's all I do, because I knew that they had no clue as to what it entails to be a landlord so why even bother. 

Everything I've written about so far, doesn't even cover all the LAWS  that we must obey and follow,  plus the high property taxes we have to pay, and mortgages for those who chose to finance.   There is  lot of pressure on us.  We are responsible for other people's lives, because if our house doesn't cut the mustard, and anything happens to these tenants, we suffer the consequences, if it is caused by our neglect of the building.  Lot's of expenses.  So it is imperative to know how to strike up a good landlord/tenant relationship and keep tenants long term.  We are not on a mission to kick them out over every single thing they do.  But we are also firm when implementing our Lease Agreements which is a legal, binding, contract!!  We have to wear a lot of hats. Therefore, it is imperative we know how to be strong, yet fair.  Make our tenants respect us by us respecting them.  It is a two-way street.  It takes time to perfect it.  

I hope I have helped in some way to add some more knowledge to your  already eager-to-learn mind.  That's a beginning you know.  An eager-to-learn mind.  Be strong, don't give up. But always study, always research and always keep-up-to-date on the laws and the rental market. 

Good luck to you.

Nancy Neville

Whenever in doubt get a CO-SIGNER.  (Do a credit check and qualify them just as you would a tenant).  

Sometimes things happen and you're doomed with bad credit.  Sometimes it's your fault that you are "doomed" and have bad credit.  

I do several methods of screening. 

1.  Credit Check of course

2.  I screen with my eyes (visuals mean a lot.  A long time ago someone wrote a book called "Blink", and it talks about how our first impressions of someone we first meet are usually the correct ones".  

    I watch to see if they park in the driveway, or do they block the next door neighbors driveway.  

     Are the kids wild and run through house.

   Do they try to bring in drinks and chips like they're going to watch a movie?

3.  I also screen with my ears.  I listen to their children when they come to an open house. Believe me, kids can tell you a lot about their parents, and who is going to live in the house with them. 

But the main thing is...are they COLLECTIBLE.. and if there is any doubt in your mind, get a CO-SIGNER.

Nancy Neville

I need to correct the wording:  I meant to say a non-refundable pet FEE not Deposit.  the word "Fee" means all the difference.  Therefore,  Non-refundable carpet cleaning fee, Non-refundable Pet FEE.  Any time you use the word "Deposit"  it is part of the Security Deposit, not in addition to the Security Deposit.  

Thanks Charles, it made me re-read my post and glad I did so that everyone knows that you don't call it a "Deposit" but a "FEE".

Nancy Neville

Charles that is what this site is all about.  I have to give Bigger Pockets a lot of credit for designing this site.  They started a long time ago as a very small webpage, and now look at them.  They are all grown up.  LOL

Nancy Neville

Make sure you have it stipulated as well in your lease agreement.

Nancy Neville

As mentioned above, even though you evict someone, you must send them, in writing, a notice of how you used their Security Deposit and it must be sent within the time limits of your State Laws.  Otherwise, you may have to pay them 2 times or 3 times the amount of their Security Deposit.  So check your state laws !!

Nancy Neville

I charged $25.00 a month per pet.  (2 pet maximum)  plus a $250.00 non-refundable pet deposit.  Now in Michigan any type of a "Deposit" has to be included in the Landlord/tenant requirements of that state.  Our Security Deposit is one month and a half.  This would include a pet deposit.  In order to keep a "deposit", one would need to call it a non-refundable cleaning deposit or non-refundable pet deposit.  But check your state laws because every state has their own view on things. 

Nancy Neville