All Forum Posts by: Account Closed

THE TENANT PHASE by Nancy Neville

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! 

A Lecture for New Investors by Nancy Neville

Okay, I understand it. I’ve been there. You’re tired of working for somebody else.You want to be your own boss.You want to make money.Houses are still selling rather cheap, depending on the area, and you think, now is the time to become a Landlord! Just buy a house, rent it out and money rolls in, just like that.

I’ve been on Bigger Pockets for several years and I cringe when I read that someone has just bought a house or a duplex, or a 4plex and they are soooooo excited, that they are about to burst, and then they ask the question.“WHAT DO I DO NOW”?

Oh my goodness! You mean they’re asking this question now, AFTER they purchased a home! Yikes!!!!

I see more and more people buying buildings for rentals and don’t have a clue what to do with them once they have them.

Being a Landlord is a very serious business!!!!  I can’t stress this enough.  The life of a landlord can be exciting and challenging, but it is 24/7 and it is a business of people management, and doing things legally and doing things right, and making decisions, bad or good.

This is a business of evictions, of fires, of break in’s, of damages, of being responsible for other people’s lives.What THEY (your tenants) do affects YOU!

There are laws to follow in order to make your building legally rentable. One is to have a C of A(Certificate of Acceptance) this is decided upon by the state, or county or city where you live.They have to approve this home to be a rental.Then you receive a C of O (Certificate of Acceptance) decided upon again by the local or state or county authorities. This states the home has been approved and available to be a rental.And some of these must be applied for every time a tenant moves.So check your state laws.

There are Landlord Tenant Laws, Building Codes, and laws that are not laws at all but based on a Judge’s opinion of whether or not a tenant did wrong or not.For instance, normal wear and tear.Judges have various opinions on what they deem normal wear and tear.

This is an Industry of thinking skills.This is an industry of holding your temper and implementing your lease agreement no matter what.You need to think like a Judge.You need to think reasonably.

You need to be a good listener.You need to be in control.

Once you buy a house you need to know how to keep that house and how to keep your tenants long term.

You need to know how to be all things in order to keep your tenants happy, yet make them know the rules of landlording and how to be good tenants.

I always say that one is only as good as the tools they have.You could be the greatest landlord in the world in mind and action, but if you don’t have the equipment, or the education, or the money to invest in the proper tools to make you successful, then you will never make it in this business.

It takes my breath away to read the stuff on here by new investors.And I understand that how can they know what they do not know?That is why I wish there was a Sticky Note on here for New Investors to post posts like mine (and maybe there is and I just don’t know it) that tells them to Read This First before Investing!!!

My husband and I were very successful in the business. (We are retired now due to his cancer). But we owned a huge house.And every time someone would come over and do work on something on the house, they would ask, “Wow are you a doctor?” and I would say no.And they would ask, “A lawyer?” And I would laugh and say no.I’m just a Landlord.And they would say, “Wow and that’s all that you do?”And I’d laugh again and say, “Yep that’s all that I do”.And they would reply.“Wow, I think I’ll become a landlord too”.

And that is the mindset of a new investor. When I say that’s all that I do, let me tell you what to expect in the life of a landlord and all that they do.

• 3 am Christmas Eve Tenants call-Furnace went out.I get up, phone calls made, emergency call, expensive triple overtime to the Heating Contractor, Tenant has heat. Tenant Happy.Landlord sleepy.
• 2 am Fire Dept. calls.Fire at such and such a place.We get dress. Blizzard outside.Drive to the home.Access the damages.Look at the big hole in the roof from the fire dept.Plan our strategy.Talk to tenants. Get our guys out to put a tarp over the roof.Meet in the morning with everyone to solve the problem, what to do with tenants, whose fault, where to go from here.
• You have tenants parking their cars on the lawn
• Having unauthorized guests
• Doing Drugs
• Having a dog they shouldn’t have
• Hoarders
• Complainers
• (In my case…drive by shootings, bullet holes in rentals, thievery)
• Water abuse
• Dish on roofs when forbidden to have one on the roof
• And so much more
• On top of being ready to take care of emergencies any time night or day, and solving tenant issues. You need to also take care of the following.

• 1.Fixing up a vacant rental so it can be rented out again.
• a.We had handy men to do most of this, but with 40 rentals my husband and I had to pitch in a do the labor ourselves as well.
• b.I would paint the house and garages.
• c.Husband would fix the repairs inside
• 2.I would take care of the tenants.This entailed
• a.Taking care of advertising the homes (usually we had more than one vacancy at a time)
• b.Taking phone calls and screening tenants
• c.Scheduling open houses
• d.Staging the house
• e.Interviewing the applicants
• f.Making sure I double checked their application forms
• i.Criteria
• ii.Employers
• iii.Verifying funds and income
• 3.Typing up the lease and making sure they understood the lease
• 4.Then making sure the Tenants abided by the lease agreement
• 5.Paid their rent on time
• 6.And sent that Notice to Quit for Non Payment of Rent the very first day rent is late.

On top of that I did my own evictions and I never lost a case and I dealt with the 36th District Court in Detroit.I won because I covered my butt by having everything in writing.I documented everything.Every phone call I made to them and every phone call they made to me.

I never complained to a tenant because they called regarding a repair.I listened when they told me they couldn’t pay their rent, but even though I understood their problem, I made them pay their rent anyway.

Landlording is about making tough decision and doing things you don’t like to have to do.

Landlording is a Business.

DO NOT LOVE YOUR HOUSE.I can’t stress this enough.If you don’t know or understand that this is a business of evictions, damages, and injustices, and fixing this house up over and over again, you aren’t going to be happy let alone successful.

How I wish I could be there for every new investor to help them understand what it’s like to be a landlord BEFORE YOU INVEST.But I can’t and that’s really a shame because it something every new investor should dig into before they invest.

One last thing. Yes you need to have an accountant to file your taxes for you at the end of the year. Our industry involves huge sums of money in our rentals and other people's money. An Accountant knows how to get you back more money at the end of the year because they know the tax laws, not you! So please don't be cheap and try doing it yourself.

Nancy Neville

QuickBooks Pro Desktop is good for handling flips  

Nancy Neville

QuickBooks will work for you too Kenneth.  No problem.

Nancy Neville

Actually CPA's use QuickBooks as well, and all you have to do is send them an Accountant's Copy of your data with a simple click of a button.  Send it via E-mail, they import it into their QuickBooks, they fix anything that is wrong and they send it back to you, and all is well. 

Nancy Neville 

QuickBooks Pro Desktop 

Nancy Neville

Move in Fees equals First Months Rent and a Security Deposit.  

Your house is worth tens of thousands of dollars and you are trusting it to complete strangers.  Therefore you want someone who is COLLECTIBLE!  Who can afford first months rent and a Security Deposit (Whatever your state law says you can charge).  

Tenants know this and should not be shocked to be asked to pay such things.  

This is a business of fixing up homes, renting them out, evictions and damages, and then doing it all over again.  We lose a ton of money if we are not careful.  And a ton of money sometimes when we are careful.

Stick to your lease agreement, get the Security Deposit, get co-signers if need be, and always run a credit check.  It will tell you more about this tenant than you know.  

If they can't pay a Security Deposit they can't afford your house!

Nancy Neville

What a shame that most people don't know the actual power of QUICKBOOKS. And yet, if you purchase QuickBooks Pro at Amazon.com, you can most likely purchase it for about $239.00 (Approx) and it's a tax write off.

Today I'm going to show you the things you didn't know QuickBooks can do.

Let's start by QuickBooks allowing YOU to enter in your rental properties, and have it show you all the things you want to know about that property. Let's take a look.

This is in the Fixed Asset Feature of QuickBooks. You can customize this form to show you what you want to see. I wanted to see:

• My rental address
• The date I purchased this property
• What type of dwelling it is
• The year it was built
• How much I paid for it
• How many square feet
• What I sold it for when and if I sell it
• When I received my Certificate of Acceptance
• When I received my Certificate of Occupancy

What would you like to see on your form? Just fill out the form in QuickBooks and your wish is fulfilled.

Let's take a look at it the fixed asset feature even further. The above screen shot is just a Table of Contents for the actual data for this particular property.

When you setup your rental property in QuickBooks in the Fixed Asset Feature, this form will appear and you will fill it out.

You will fill in the name of the rental property, purchase date, cost, etc. Type of rental (asset) location and I like typing in the Notes window the land description, I'm always having to look it up it seems, so I wanted it handy.

The right side of the form is for purchasing a home. The left side is when selling it.

Based on the information entered on this form, I was able to create the first form that I showed you.

Let's take a look at something else I bet you didn't know QuickBooks could do. QuickBooks will show you via colorful graphs where you stand today financially. How much money is owed to you. Expenses, etc.

Let's take a look at another screen shot.

This will show you in colorful details all about your tenants. Who owes you what, if they are past due. Etc.

Let's take a look at some more.

QuickBooks even has a LEAD INFORMATION SHEET for potential customers!!!!

QuickBooks allows you to see all your properties at a glance and how much income they made for you, expenses you dished out and their bottom line.

And QuickBooks will allow you to view each property individually to see how much that property made you in income less expenses equaling your bottom line.

YOU CAN DESIGN YOUR OWN INVOICES.

I DESIGNED AN INVOICE CALLED TENANT BILLING. I designed it to tell me

• the tenants move in date,
• security deposit,
• rental amount,
• and lease type.
• They are easy to designe, however, when you purchase my book you receive my Chart of Accounts, Items List, and Templates (like the one below) free with a proof of purchase of the book sent to me via e-mail.

HERE IS A SECURITY DEPOSIT RECEIPT TEMPLATE I DESIGNED. ONCE AGAIN the tenant and I (the landlord) am able to see at a glance the tenants Move in Date, Security Deposit, Rental Amount and Lease Type. You can even have the Lease Expiration date on here as well if you choose.

I like taking notes about my tenants and things that go on inside my business. So I designed a template called Notes. Just like the sticky notes you see. I type in my notes and print them out and stick them into the tenants physical files, or I just may not print them out until the tenant actually moves and I make their account inactive in QuickBooks. Whatever you choose to do with your notes is up to you.

Frankly, I could go on and on and on as to what QuickBooks can do for you. Some tell me, yea but ya have to customize it to do all this stuff. That's true , but not all the stuff. And if you can fill out a form, you can customize QuickBooks. It's not like you have to be an engineer and sit down with a pencil and paper and plan your design.

So now...you know the rest of the story.

Nancy Neville

You didn't actually buy the property, right?  It fell through, is that correct?  What all did you pay out?  

Treat this as a normal expense account.  

List the people you paid money to in order to assess the property,  as vendors, and pay them as you would any normal vendor via the checks you wrote to them. 

In the memo field just list this expense was to purchase a property at such and such a street, but it didn't pass inspection.

Sometimes we over think ourselves.  (I have a habit of doing that myself) 

Nancy Neville 

QuickBooks Pro is what you need no matter if you have one property or 300.

You will be able to list all your properties that you own

You will be able to list all your Tenants that you have and keep records for them forever and ever if you want to.

You will be able to have a Business Bank Account to put your income into

You will have check writing features to pay your bills and link them to what property caused that expense, including your office.

You will be able to customize QuickBooks to see everything you want to know about your properties, e.g, year it was built, year you purchased it, land description, how many square feet. etc. 

You will be able to customize your Tenants files, so you can see how much of a Security Deposit they gave you at a glance, what their rent is at a glance, when their lease expires, at a glance, and so much more.

You will be able to put your money into escrow accounts or security deposits into an Other Current Liability Account, which keeps track of what tenant paid what for a Security Deposit as well. 

You will be able to run a Profit and Loss Report to see where you stand financially any time you want to know.  It will show your income less expenses giving you your bottom line.

You will be able to run a Balance Sheet any time you want to show you what assets you own, how much your net worth is and so much more.

Most people don't realize the Power of QuickBooks because they never have been told about all that it can do for them  or shown how to do it. 

I highly recommend QuickBooks Pro for you, perhaps you already assumed that I would by now.

Nancy Neville