Landlord Ideas

Are You Leaving Money on the Table?

If you’re new here (and you like what you read), you may want to subscribe to my RSS feed. Thanks for visiting! ScottHow did you decide what to charge for rent in your apartments?  Do you rent them quickly or do you show them to dozens of people only to get a tenant once [...]

How did you decide what to charge for rent in your apartments?  Do you rent them quickly or do you show them to dozens of people only to get a tenant once you lower the rent?  Maybe you need to check what the other comparable properties are renting for in your neighborhood.  Here are a few ideas on how to confirm you are maximizing your rental amounts and minimizing the apartment’s time on the market:

• Drive around the neighborhood and call on some “For Rent” signs.  In fact, introduce yourself, tell them which buildings you own, and give them your phone number.  We all need to help each other as landlords.
• Use Craig’s List to quickly see what landlords are offering their apartments for.  Also check out the “seeking housing” section to see what tenants are willing to pay.
• Ask your existing tenants what they think about the rent amount you are planning to charge. 

Even if you think you have the rent amount correct, watch how quickly or slowly your apartment rents once you start advertising.  If it is taking a long time to rent or you are experiencing a low call volume, lower the rent sightly.  You may also need to change your rent amount based upon the time of the year, changes in the neighborhood, and the condition of the unit while showing it.

Check your rent amounts at least yearly.  Setting your rent amounts correctly will help you rent your apartments quickly which will help you minimize leaving money on the table. 

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single to multi-family. Find his blog at www.minnesotainvestmentrealestate.com and his website can be found at www.mnirea.com

Landlords: Read your Leases!

Landlords, when is the last time you read your standard lease from start to finish?  Should I dare say that some of you have never read it?  Your lease is your contract with tenant.  I assume you spent a considerable amount of time working on your purchase agreement (another contract) for the purchase of that investment [...]

Landlords, when is the last time you read your standard lease from start to finish?  Should I dare say that some of you have never read it?  Your lease is your contract with tenant.  I assume you spent a considerable amount of time working on your purchase agreement (another contract) for the purchase of that investment property.  Why are you now just coasting along with any old lease?

Regardless of whether you buy your leases at an office supply store or you found one on the Internet and print it off your computer, here are some items to put in your leases and some to take out:

• Require at least 60 days written notice for the tenant to vacate the premises even at the end of the lease.  The 60 days notice should start at the beginning of the next month; so you should get a minimum of 2 months notice.
• Rent is due on the 1st, but late on the 6th.  Most tenants look at that as the rent is due on the 5th.  Make sure they understand it is due on the 1st.
• Consider raising your late fee to a large enough amount to make it painful for the tenant to be late (check if your state has a legal limit).
• Put in a clause like the following:  “All drains, waste pipes, and plumbing are accepted as clear by the tenant at the time of occupancy and any material blocking them after occupancy shall be repaired by the tenant except blockages caused by roots or backups from the streets.”  This should put a end to late night blocked toilet calls.  I do recommend, however, supplying a $6 plunger to alleviate any potential problems!
• Remove any automatic 1 year renewal clauses in your lease.  At first it may seem like a good idea, but this clause can backfire on you when the tenant simply refuses to return your calls and the renewal notification window expires, leaving you bound to re-rent to this tenant. 
• Include the following language:  “Payment of rent may be made by personal check until first check is returned unpaid.  Thereafter, tenant will be required to pay using certified funds or cash.”
• Confirm your lease has the following regulation:  “Use of property for business is strictly prohibited”.  What if your tenant opens an auto repair shop in the garage or is using the basement as his warehouse?
• Specify the number of adults, children, pets, and automobiles in the lease and set requirements for notification if the number of any increases. 
• If you accept pets, make sure to have a pet deposit and some of it should be non-refundable for additional wear & tear on the house and/or carpet cleaning.  Also include the type and/or size of the pet (I have seen a tenant start with 3 approved dogs (10 pounds each) and then after a year upgrade to three 50 pound dogs.  They were still in compliance with the lease!
• Consider requiring the tenants to make any repairs under a certain dollar amount, depending upon the type of property you are renting.  You may also make them responsible for some or all pest control costs (depending upon the building).
• Do not allow any move-outs during November to March as these are the most difficult times to lease properties.

Here are a few others that you should consider using in the right market and circumstance:

• Specify the apartment or entire building as smoke free.  Have the tenants initial or sign a “smoke free addendum”.  This will save you some repainting and cleaning costs.
• Require the tenants to call a locksmith at their expense if they get locked out or lose their keys.  At least set a comparable price ($50-75) for you to unlock their apartment. 
• Have all tenants sign a “Non-violence” and “Drug Free living” document with the threat of eviction if violated.

Making these easy changes will make your leases and your position stronger when working to aleviate problems with tenants.  They should also save you money and frustration in the long run.   

(Confirm any of the above changes will work in your state and market.)

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate.  He owns and manages almost 30 investment property units from single to multi-family.  His blog and website can be found at http://www.mnirea.com.

Stop throwing money away at your rental properties!

Do you just write those expense checks every month for your investment properties without thinking about if the bill is correct or could be lower and/or eliminated? Although you typically can only raise rent every 12 months, it is never the wrong time to work on reducing the expenses of your investment properties.
Here are [...]

Do you just write those expense checks every month for your investment properties without thinking about if the bill is correct or could be lower and/or eliminated? Although you typically can only raise rent every 12 months, it is never the wrong time to work on reducing the expenses of your investment properties.

Here are a few areas to explore:

• If you are paying the heat bill, is there any way to install a new furnace or boiler in the other unit(s) to shift the cost to the tenant? Can you install electric baseboard heat for one or more units and shift the expense to the tenant?
• Does the building only have one water heater (that you pay for), but each unit has its own gas meter for cooking? Can you easily install a water heater for each unit and shift the expenses to the tenant?
• When is the last time you really analyzed your water bill? Call your municipality and find out how many gallons a typical household should use per month. If your building is using more than that, check for dripping faucets and running toilets. A dripping faucet can cost $50 per year and a running toilet can cost $100 per month!
• Older buildings that have been converted into apartments often have electrical systems that were not converted properly. Turn off the main breaker to the common areas and see if any tenants complain that they lost power. You could be paying to run your tenant’s television!
• If you live in a colder climate, like Minnesota, make sure the storm windows and inside windows are closed during the winter to minimize heat loss. Consider adding weather stripping to the doors.
• Making sure your boiler/furnace and water heaters are cleaned and tuned up at least every 2 years will not only save money, but will lengthen their life span.
• Are you paying too much for services to mow the grass or take care of the snow? Can you find a teenager in the neighbor that would love to do it (for less)?
• If you have a property manager, are you getting your money’s worth out of them? Can you take on some of the management for a reduced price?

Roll up your sleeves and look at all your expenses for 60 days. See if you can reduce or eliminated any. It will not only bring you more cash flow, it will make your investment property more appealing to a buyer when you sell it.

Minnesota Investor Club Meeting-Sept 12

The next Investor Club meeting will be held on Wednesday, September 12 at 6:30 at the Mendakota Country Club.  At this meeting, Scott Ficek will be presenting on Flipping 101.  
Our investor club meetings are a great opportunity to meet other real estate investors. The meetings last just over an hour and feature experts in the field of investment real estate, [...]

The next Investor Club meeting will be held on Wednesday, September 12 at 6:30 at the Mendakota Country Club.  At this meeting, Scott Ficek will be presenting on Flipping 101.  

Our investor club meetings are a great opportunity to meet other real estate investors. The meetings last just over an hour and feature experts in the field of investment real estate, including special guest speakers at each meeting. These meetings are also great places for new investors to learn how to avoid some of the common pitfalls of investment properties from more experienced investors.

What to do if your tenant won’t leave!

You decide to not renew your tenant’s lease for any number of good reasons (noise complaints, consistently late payments, dirty apartment, etc).  After you notify them of your decision, they stop taking your calls and don’t answer the door when you stop over.  They need to vacate their apartment by the 31st. 
Ultimately, you find a [...]

You decide to not renew your tenant’s lease for any number of good reasons (noise complaints, consistently late payments, dirty apartment, etc).  After you notify them of your decision, they stop taking your calls and don’t answer the door when you stop over.  They need to vacate their apartment by the 31st. 

Ultimately, you find a new tenant, that you are excited about, to move in on the 1st of that next month and sign a lease.  You show up on the 31st at 5pm and are surprised to see that the outgoing tenant is still there, has not packed a box, and says that they are staying.  Now What!

Well, I have some ideas on “Now What!”, but let’s back up and examine the process from the beginning and let me show you how you can put contingency plans in place to reduce your risk of having a “Now What!”

Prior to telling the tenant you are not renewing their lease:

• Tour the unit (apartment) looking for any work that may need to be done for a new tenant coming in.  Painting the entire unit may be tough, but how about fixing all those other items?  This will speed up the turnover and possibly put the existing tenant in a better mood.
• Chat with the tenant informally about their plans to renew the lease.  See if they are thinking about a larger/smaller place, different neighborhood, and such.  Maybe they just need a little coaxing to move on their own.

How to tell the tenant you are not renewing their lease:

• I suggest that you do this verbally first, as it is easier to quickly explain the situation, it is less formal and more personable. 
• Always follow up with something in writing (tell them you are sending it).
• Give 61 days notice.  This should work legally in most states and it is neither too long nor too short.
• Call them back in a week and see how they are coming on finding a new apartment.  If they are not taking your calls, stop by.  If they won’t answer the door, you should start preparing for the worst.

Preparing for the “worst”:

• Work hard to get in and speak to them.  Use your best negotiation skills.
• If you can get them talking and they are telling you directly that they are not going to move, consider giving them an incentive such as all their damage deposit back regardless of the condition of the property (within reason).  Offer to give them $200 toward a U-Haul or moving company of their choice (pay money to movers directly).
• This is going to sound harsh, but consider a pre-emptive strike:  If they are late or past due on their rent or violating any part of the lease, think about evicting them (or threatening to evict them) early.
• Do not lease the apartment to anyone needing to move in immediately after the existing tenant is supposed to leave.  This step will cost you at least one month of lost rent, but will prevent the “Now What!” situation above.
• Have your attorney draft a letter simply reasserting the lease ending date and what will happen if they do not move.
• Research how to evict a “Hold Over” tenant so you are prepared if they stay.
• Typically, the lease that is in place will convert to a month to month lease with the same conditions, rules, and requirements.  Some leases will allow the landlord to raise the rent once the lease expires.  Examine your lease and use it as leverage.
• If the tenant receives any public assistance, contact their coordinator and see if they can provide any help or leverage to get the tenant to move on time.

The morning after (they didn’t move out):

• In every state, tenants have rights.  These rights are to protect the tenant from the landlord simply walking in and moving all the tenants furniture to the curb on the morning after.  If you did your research above, you should know what both your rights and the tenant’s rights are.
• If your lease allows you to change the rent amount, notify the tenant of the new rent amount.  Try to use any other provisions in the lease as leverage.
• Put your “Hold Over” tenant eviction plan into motion.  How long this will take varies by location and even time of the year.  In Minnesota, it can take up to 1 week (and in some cases longer).

Having a tenant refuse to leave once their lease expires can be a stressful event.  There are many unknowns and turns in the road.  By being prepared as early in the process as possible with good contingencies, you should be able to avoid the “What Now!”.