I had several tenants lose their Minnesota Section 8 voucher in 2007. One tenant had 4 kids with a three bedroom Section 8 voucher and another tenant was a single person with a two bedroom voucher. They lost their voucher for one of the following reasons:

• I evicted one for non-payment of rent. This tenant was only responsible for 20% ($150) of the total rent each month and chose to stop paying the portion and returning my calls.
• One tenant gave me proper notice to move, but I believe that she did not notify and keep in contact with her Section 8 coordinator about the move and the new apartment she signed a lease for. Consequently, she lost almost $900 per month in rent subsidy.
• Another tenant decided to break their lease after only six months (which is not allowed by Section 8). Subsequently, she lost a $1200 per month voucher.

The saddest part of these stories is that there is a 5 year waiting list to get onto Section 8 in Minnesota (and I am not sure that once you lose your voucher that you are even eligible to get back on the program).

The reason for me to write this article is not to educate tenants, but to help Minnesota investment property owners. You can help your tenants (and subsequently yourself), if you know the rules regarding rent subsidy and Section 8. In fact, I have saved several tenant’s vouchers in the past years by stopping them from making these costly mistakes. Consequently, many times, this simple help has in turn saved me from having an unexpected vacant unit or other problems/costs.

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

Being a successful investment real estate owner requires being good at and having a system for rent collection. Unfortunately, I often run into investment property owners that are complaining about how their tenants don’t pay or don’t pay on-time. Despite my best encouragement, they still can’t/won’t take a systematic approach and a tougher stance on collecting rent.

Let me give you an example: Have you ever been late on your mortgage payment for your investment property? The bank doesn’t wait 10 days after the missed payment before they call you. With all the foreclosures these days, they will often call you the first day it is past due (even if that is a weekend). The bank also wants a serious and direct answer as to when you are going to send the payment. They don’t care about [insert any number of 100 excuses tenants give you]. They want their mortgage payment and will continue to call every couple days until they receive it or else. Additionally, they will also charge you a late fee every time the payment is late. Their computer billing system just adds it on.

As a landlord, you need to take the same approach. The goal is not to be a jerk to the tenant (as you want to keep happy tenants), but also not be walked all over with every excuse. Here is the rent collection process that I use. [One note: I do vary this process slightly depending upon the tenant. I have had great tenants that always pay on time lose their jobs. In that circumstance, I work with them to get caught up on rent. Conversely, once a tenant does not live up to their commitment, I follow the policy to the letter.]

• My leases require rent to be paid by the 5th of the month.
• On the night of the 5th, I automatically charge late fees on all outstanding balances (both current month and past months). In some months, I will collect $300 in late fees.
• On the 6th, I review the mail for any rent checks that come in. I enter those and I run an open invoices report in Quickbooks. This report shows me anyone that has an outstanding balance with me.
• That afternoon I call anyone that has a past due amount. Most tenants that owe answer the phone and know exactly why I am calling.
• I ask each tenant to commit to when they are paying their rent. I write those dates and amounts down on my Quickbooks report, which I then tack right above my computer.

Now if it were that easy to collect rent, everyone would do it! Here are some tips on how to insure you actually receive it:

• If a tenant owes a total of one month’s rent on the 15th of the month, start the eviction process. If they do not pay, you should be able to use their damage deposit to pay their back rent and lose only the next month’s income while you are looking for a new tenant.
• One investment property owner that I know, actually drives around to each property and collects rent in person. He says that it insures that he gets the rent and he takes a minute to walk through each unit to see what is happening. If your properties are in the same area, this may help your collection process.
• Require the tenant to send as much as they have immediately and then work on the back rent. I have had a couple situations where the tenant says they are $200 short and are waiting to get the remainder of the rent. When I finally offer to drive over and pick up the partial rent, it turns out the really don’t have any of it. It is better to know that on the 5th of the month than on the 15th-[start eviction now].
• If the tenant is on Section 8 or other subsidy, you may have some additional leverage as an eviction can cause them lose their subsidy. Don’t abuse this leverage, but politely remind them.
• When I get a tenant that doesn’t know when or how they are going to pay rent, I immediately file the eviction paperwork. My history has shown me that if they don’t know where they are getting the rent by the 5th, they are not going to know anymore by the 15th.
• Lastly, maybe your problem is actually that you need to do a better job of screening your prospective tenants before they become tenants. If they had payment problems in the past, it is most likely they will have payment problems with you.

These are just some tips and tricks that I use when collecting rent. You will develop your own style and processes. By standing firm and getting what is yours (the rent), your investment property business will be successful and bring you the goals that you set when you bought that first property.

Bank of America reported Friday that it would buy Countrywide for $4 Billion. This new company would become that largest mortgage company in the US, with almost 25% of all loan under its umbrella, surpassing Wells Fargo. The merger is welcome news for industry watchers as many were worried about the liquidity of Countrywide (who by itself originate about 1 in 6 loans in 2007).

Read the full article here.

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

Joshua Dorkin has once again upped the ante for real estate investing websites with the recent site upgrade of BiggerPockets into a Web 2.0 Social Networking Community. BiggerPockets now boasts a membership of almost 12,000 registered members that network to share their knowledge, make real estate deals, and help each other become successful real estate investors. Additionally, unlike many other real estate investing sites that require users to pay a fee to access services and resources, all of the BiggerPockets site is free!

On January 5, 2008, BiggerPockets launched its next generation platform which includes some great new features:

• Build a personal profile of not just your phone number, email address and website, but also your real estate goals, your investment experience, and even your investing focus, allowing other members to connect with you easier to help you accomplish your goals.
• Invite your business contacts, peers, and friends to join BiggerPockets. Then monitor and track all completed, pending, and rejected invitations.
• Create private notes about other members of the site for help in remembering who gave you great advice, who may have a real estate deal you are interested in, or simply someone you respect.
• Mark other members as colleagues to build your virtual real estate investing team as a quick reference when putting together that next deal or needing advice.
• Find detailed information about other members in their personal profiles and download a VCard to instantly add them to your contact management software.

As a real estate investor, web designer, and one-time Realtor, Joshua started BiggerPockets, in 2004, after being disappointed by the other real estate sites out there. For years members have enjoyed access to:

• Real Estate Forums where members have posted over 61,000 articles on topics ranging from Investor Psychology to Rental Property Questions to Creative Real Estate Financing.
• An Investment Property Analysis Tool that returns a detailed analysis of any property/deal within seconds.
• Landlord and Real Estate Forms and Contracts for free download.
• And dozens of other resources that all real estate investors need!

If you have not yet been to the BiggerPockets site, what are you waiting for? Membership is free and registration takes just seconds. Get started now and see why I and the other 12,000 members believe that BiggerPockets is the best Real Estate Investing website out there.

If you have tenants, you probably have realized that your definition of clean and the tenant’s is probably vastly different! When a tenant would move out, I would often have to go back in and touch up after even “the best” cleaning efforts of the tenant.

I changed my move-out process recently. I decided that just like an employee to employer relationship or a parent to child relationship, I need to tell the other party (my tenants) my expectations up front so as to not be frustrated after the fact. I accomplish this through two steps:

1. About 30 days prior to move-out, I schedule a walk-through of the unit with the tenant. I point out any items that are damaged that they are definitely getting charged for (and if possible, they could repair themselves). We also go through each room and I explain what my cleaning expectations are. We spend the majority of our time in the bathroom and the kitchen.
2. I leave them with a move-out document that lists the cleaning requirements for each room, appliance, and surface.

By having this walk-through and leaving them with something in writing, it allows me to see what repairs I may need to do at turnover, it often results in a much cleaner unit, and it reduces arguments when the tenant is expecting their damage deposit returned in full.

For those of you that have spent anytime cruising the real estate blogosphere, you may have run across a reference to the “Carnival of Real Estate“. The goal of the Carnival, as it is know in the real estate blogging community, is to:

..bring together the best real estate bloggers from around the country (and world) to share information about what we’re all passionate about: real estate. This is intended to be a forum for everyone to participate. Like a potluck, everyone brings something and may the best dishes be recognized each week. [from their website]

The interesting part about the Carnival is that each week it is hosted at a different blog/web site. I am excited to announce that on January 21, this blog, Minnesota Investment Real Estate, will host the Carnival. It will give our readers the chance to experience different blogs, new writers, and interesting articles that they may have not have been exposed to previously.

Mark the date on your calendar!

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own Minnesota investment property. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.