You're about to discover what every landlord should know about property management. Ideally, you're reading this before you have purchased your first rental property because it can save you thousands, if not hundreds of thousands over a lifetime, and can remove many of the hassles and headaches that come along with being a landlord. These principles are incredibly simple once you hear them, but all too often, real estate owners either do not know about them or do not adhere to them, and in either case, the results can be disastrous. Landlording the wrong way can burn out even the most persistent investor and the eviction courts across this country are chock full of these discouraged real estate investors. Save yourself the hassle and the headaches of learning many of those lessons the hard way by carefully listening and most importantly, putting into practice, what you learn in the below video. Here's what every landlord should know about property management:
I hope that what you learn in this blog is going to:
- save you a tremendous amount of money
- it's going to reduce a whole lot of heartache
- hopefully make you much more profitable with your rental units
Most Important Part
Choice of Tenant
Now as a landlord, you can choose your tenant based on their financial qualifications.
- You Can't Discriminate Based On:
- race
- religion
- sex
- You Can Discriminate Based On:
- their credit score
- based on their job
- based on their income
- based on their debt to income ratio
- based on what they did at their last place that they rented from
You can deny their application
Biggest Problem Landlords Experience
They choose unwisely. Why? My argument is because they do a lousy job of marketing for tenants so they don't get very many applications, so they end up choosing from a bad set, from a bad list of potential tenants.
Market Wisely
It starts with good marketing, really getting your property out there so everybody can see and so the entire marketplace knows that your property is for rent.
Price it Right
It also means that you need to price it correctly. If the rent is too high, you get a whole less people looking at it. Assuming you get the right mix of people looking and that boils down to choosing the right tenant. Now, I won't be able to give you all the information on how that works in a video like this. It really is more an art and a skill that you acquire.
How to Choose the Right Tenant
- The Importance of Their Job
My mentor actually owned a payday loan store at some point in his career, and so he knew all about qualified people, but I'll shortcut it for you here and it's this, job. I'll make a little big note there, job. What their job is, is more important than almost anything else. I've definitely seen where some investors think that if you buy homes in nicer areas, higher-priced properties that you get necessary better tenants. I can't find from my testing that that's correct. High income, low income, to me none of that matters. No matter what their come level is, it has more to do with how they create that income.
- Beware of Self-Employed
The worst is self-employed, the worst, because they are the ones that are going to call you up one day and say, "Oh Phil, I'm so, sorry. I can't pay the rent, but you know two months from now Phil, I have this big job coming up and I'll pay you for like 8 months." Uh oh, you don't want self-employed.
The Best Tenants
Nurses are my favorite tenants, because
- They always have got a job, always, no matter what part of the country.
- If they fall behind on payments, which tenants do, when they fall behind, a nurse can pick up extra shifts.
I love nurses. I can't stand self-employed.
Job makes a huge determining factor, but also there is more to it. If you look at their income, their credit score, what's going on and choose the best one. This is an opportunity to choose a good one. Don't choose one just because they have a nice sub-story, uh huh (negative). Choose a good one. Check up their references, call their references, I do. I'll go more into that in just a moment. Okay. Choice of tenant, absolutely huge.
Cash Flow
Next, and this is very obvious, I don't think this is rocket science, cash flow. Properties got to cash flow well. It's got to bring a lot of good money because all kinds of things can go wrong and you need a buffer.
- You need a margin of safety so that you're always bringing in cash even if the hot water breaks down, even if the AC unit breaks.
- You've always got money coming in. If you're just barely breaking even, it's not even worth it. It's not worth it at all, which brings me to this next point of reserves. It's very similar to this but you've got to have reserves that you're going to have real property because things go wrong.
- Mostly what happens if a tenant doesn't pay, then you have to evict them. They don't pay you, so there is two or three months of empty house payments and you have to pay for the attorney, and then when they move out, you've got to pay to fix up the carpet and some other things.
- It's interesting, being a landlord and owning rental property, this is kind of like funny money because you get it but then you may have to give it back. What we do a lot to overcome the reserves problem, is we do what's called a rent-to-own, you can do on your single-family homes anyways.
Rent-To-Own
With a rent-to-own, you get an upfront down payment. It could be 3, 5, $7000 and that usually is reserve, so that's problem solved. They give you $5,000 down to move in and they rent the property. You still want the cash flow but you also have a nice reserve 5,000 in case things go wrong because oftentimes things do go wrong.
Know Your Laws
Speaking of things going wrong, you definitely need to know your local laws. It's interesting because these laws can change dramatically from county to county, not even from state to state. We're talking, it's usually on a county-specific basis. You need to read your landlord and tenant act for your county and you need to make sure you understand all the nuances of it.I mean little things like you may have to put screens on all of the windows, and if you don't then you're not doing the landlord and tenant act correctly.
Where does that become a problem?
When you try to evict somebody. When you try to evict somebody is when they try to find every loophole to ruin your life. That's where you want to make sure that you've got all of your t's crossed and your i's dotted, and that's why you need to know your local laws. That means once you decide you're going to own a rental property before you put a tenant in there, you need to prepare for eviction. You need to prepare for this.
Eviction Attorney
Now certainly part of that preparation is knowing your local laws, but what I would argue is even more important is that you take your list that you're going to use and you bring it to your eviction attorney. If you don't have one, make sure you find a great eviction attorney that does a lot of evictions in that county. The more evictions they do per week or per month in the county that the property is located, the better they are because they have more experience. Take that rental agreement to that eviction attorney and say what needs to be in here to make it easy for you to evict. Then you need to ask him:
- "What else are you going to want from me when I bring a file to you to evict somebody?"
- They may say, "Well, we want to see a copy of their driver's license.
- We want to see a bank account information, credit card."
- They will want to ask for all kinds of stuff, and what that means is get that upfront, and sometimes it's called the honeymoon phase. Before the tenant moves in, you get all the information that that eviction attorney is going to want, because a lot of time what the eviction attorneys are going to do is they're going to charge a small or a reasonably small fee to evict the person.
- Then they're going to go after that person to collect the back rent, and whatever they collect they keep like 30% off.
Be Prepared to Evict Someone
Their goal, of course, is to hunt these people, track them down and the more data you have on person, the easier it is for the eviction attorney to track them down. You may be going, "Oh tracking people down, collecting, oh Phil, I don't want to be that kind of landlord." That brings me to my next point. Preparing for eviction means that you have to be prepared to evict somebody, and if you don't have the stomach for that if you don't want to kick people out of houses, don't own rental property. I know that's pretty strong. Don't do it. It's okay. You don't have to be in a landlord business to be wealthy in real estate.
In fact there are plenty of landlords of like 100-home kind of portfolios that will just beg and plead, "Do not own rental property." There are plenty of landlords that would rather, in fact, a lot of sell off their rental units and get into just flipping houses because they like it better. I'm not saying you have to be in this business. Have the ability to say no to the whole business if you don't want to evict people because that's a rule. If you're going to be a landlord, you need to evict because if you don't, if you let people live in homes and not pay you and take advantage of you as a landlord, you train them. The next place they go, they're going to do the thing and the same thing.
Keep a Strict System
You're doing a disservice to society if you're not evicting people. That's why I say just don't even be a landlord if you don't want to evict someone. If the whole concept of kicking somebody out of a house, because they didn't pay you their rent, is something you can't stomach, then just don't do it. All right. We covered that. Good deal. All right. Evict when someone doesn't pay you, so that means that you keep a strict system. If they don't pay you on the 1st, maybe they have until the 5th and with a late fee to pay you. If they don't pay you on the 5th, start eviction. That's how you make it roll.
You do it like that every time because here is what happens, they learn real quick that you don't give grace periods. You say, "Look, it's due on the 1st, between the 1st and the 5th is a $50 late fee. If you don't pay me on the 5th, on the 6th, the file moves to the attorney, you will not hear from me again and the attorney starts the eviction process. It's that simple." That keeps them in line. Another thing you could do here, and I'm a big fan of this, is to auto-collect payments. Rather than waiting for the check in the mail, what you do is you such the money out of their bank account at the first of the month.
Merchant Account
What you can do is you can setup what's called a merchant account. Now it takes a little bit of money but not much. There are some options these days whether it's PayPal, whether it's Square, easy simple ways to get a merchant account. I think the best merchant account comes from your local bank or the place that you do your business banking at. You could hire a third party firm to do this, but I think it's better for you to have your own merchant account, suck your own payments out of there.
Autopayment
What you can do is you can get their credit card information as well as their bank account information, so if it doesn't come out of the bank, you import from the credit card. If it's done autopilot, here is what's also really nice. They know that it's coming out on the 1st and they know there is no way to stop that. It's going to happen one way or another. They are forced to get the money into their bank account so that that gets pulled out and so they don't get a whole bunch of NSF fees. Does that make sense? I learned this ... By the way, what I'm sharing with you, most of this I learned the hard way.
I discovered that tenants will pay their utility bills simply because it was on auto-draft. When I was asking them for a check or they were mailing a check here, the problem was sometimes the check was late. With auto-collect nothing is ever late, it's always on autopilot. Now, if they don't have the money in their account and you try to get into their credit card and they don't have any money on their credit card, well they literally have until the 5th and if you don't get the money, then you just start the eviction. It's that simple. Auto-collecting payments can make a very big difference in your ability to make this thing automated but ensure you get paid. All right.
Stay Close to Home
Some of you may have already broken this cardinal rule. You may own what they call a turnkey property far away. Maybe you live in Canada and you own a turnkey property in Florida. I think it's so much better to own all of your rental properties very close to home where you can just drive over to them because you want to keep an eye on your real estate. You want to keep an eye on what's going on. Maybe once every six months or every year, you drive over to the property and maybe you have to give a tenant notice, where you drive over to the property and you take a look, so you see what's going on You see if they've got a pet that they say they didn't have before, so you find out what's going on.
Being close to home is so important to keep an eye on your portfolio, on your rental property. If you do have one just internal property, my suggestion is to sell them. Again every situation is a little different, but me personally when I moved from Nashville to Florida, I slowly had to sell all my rental properties. I tried. I tried to keep them and tried to manage them long distance, a great team I had already built in Nashville, nothing replaces you, yourself being there. Nothing replaces it.
Hiring a Property Manager
The last thing I want to touch on, I'm sure a lot of people maybe are asking themselves this question is, what are my thoughts on hiring a property manager? The challenge with a property manager is usually how much they're going to cost. Now, a property manager for say a 150 unit apartment complex is a lot different than a property manager of a single-family home, because there is a lot of economies for scale on a larger apartment building. For a property manager on a, I'm going to say SFR, single-family home, they are going to take 10% of the gross. That's the gross rent coming in.
Gross Rent
Now 10% of gross is usually 50% or more of the net cash flow. You are just turning over a gigantic amount of money for a relatively small responsibility. Now on the other side of the coin, if you have the time in the ingenuity in the initiative, start your property management firm. Property management makes a ton of money over time which you build up a big portfolio because 10% of gross is a ton of money. My big issue with the property manager has to do with how expensive they are because they also usually charge the entire first month's rent or close to it to put a new tenant in there.
Here is another thing, they are not going to advertise and market heavily as much as you would because they've got a lot of stuff going on. They're going to put their ad out, they're going to do a couple of things, but they're going to go heavy the way you would. Typically their choice of tenants is a smaller pool which is less likely to have a great opportunity for an awesome tenant in that small pool. They charge a full month's, first month's rent to fill the property but their choice of tenant usually is never as good as yours would be.
If you already have a great eviction attorney in place, then fantastic that that's pretty much most of the battle. You're auto-collecting your own payments, so you have to hire them for that. If you're like, "Well, I don't really want to mess with it." Wait a minute, what are you really messing with? You've got to ask yourself that question. If 10% of gross is $100 a month, and once every 5 months you've got to talk to the tenant and call them up and say, "Hey, where is your rent money?" Is that worth $500 for one phone call? Yes it is.
Another thing is a property manager usually is going to call a handyman to go fix the property. You could do the same thing. Property managers, usually when they call a handyman they usually get some sort of referral fee from the handyman for setting them the job. Now I'm not saying properties managers are bad, some of them are actually fantastic. In fact, they are just incredibly awesome because they know the local laws real well. They have a great eviction attorney. They auto-collect the payments. They are able to do all things, right, the problem is they are just so damn expensive.
Maybe if you've got a huge portfolio and you can negotiate a better deal on the property management and it's worth it to you, then fantastic. By large, if you follow what I've just shared with you on this video and you do a great job with just these simple principles, there is really no need to hire a property manager, because it's really all about choice of tenant. You auto-collect the payments and if something goes wrong, you just call a handyman. Those are the kind of things and plus here is the other big thing, this goes back to the state close to home.
Keep an Eye on Your Assets
If you just let a property manager handle everything, then you lose sight of your asset and you lose sight of what's going on there. You've got to keep your eye on your assets. It is so critical that you don't just let it all be dealt with somebody else. We're not talking about a ton of work here, so that's why you're meant to drive over the house to see how the contractor did. Did they replace the AC? Okay. That's part of it. Again, if you're bringing in good cash flow, it's worth it. You see all these things wrap back around of each other.
If the cash flow is strong enough, it's worth an extra drive over to the house to make sure the contractor did the work correctly. Or if the tenant is complaining about something really, really bad and you send a handyman over there to take a look, and they call you back and say, "Hey, before I do any work I want to run some things past you." It's just a couple of phone calls and if you have a great tenant, you may literally not hear from them for like two, three years. They just pay the rent, it automatically comes out on autopilot and they are just happy as can be. All you do is once a year or once every six months, you just check out the property to make sure everything's good.
Bonus
I've got one quick bonus principle if you will, a funny story. An individual I knew back in Nashville, he went to set-out. Okay. The set-out, I'm going to put it next to eviction. The set-out is where if the tenant hasn't paid, and he goes through eviction court and then the judge says, "Hey, if you're not out by the 28th, you're going to be evicted." Then the Sheriff along with the set-out company, think of them like a moving company, they're going to show up on the doorstep of the house. The Sheriff is going to knock on the door, and if it's going to be locked, he's going to pick the lock or have a locksmith there.
They are going to open the house up and literally the moving company, if you will, is going to take every piece of furniture and take it out of the house and set it out, set-out, on the front lawn or on the driveway. That's a set-out. They happen, so if you are a landlord it's going to happen at some point. This individual I knew, he wanted to see the set-out because he knew this tenant and he was so just mad about what the tenant did to him and he wanted to watch this. He wanted to kind to relish in the fact that this guy is getting his stuff kicked out.
He is sitting there kind of at a safe distant watching this thing happen. Now he drove there in his Lexus, bad idea. Here is what happens. They start pulling the stuff out of the front door, and they are dragging couches and TV and just everything, and this tenant just storms out the door, goes to his car and he just peels out down the street. Then you hear him go vroom and he stops. He hits reverse, and he kind of turns his car around to be like perpendicular, if you will, to that Lexus.
This is the guy's car and he goes, and he just starts rear driving right back to the side of the car, this Lexus. There is metal flying. Of course, the rear window of the tenant's car is getting just trashed but also that Lexus is getting destroyed too. Anyway, so he had to, of course, get a ride from the Sheriff and call his car insurance company. Point of the story is, don't go to the move-out.
Excellent post! I love to hear this video.
Phil, you are such a trip, I love listening to your videos.
I bought a house with tenants in it. I thought that was great, income right away. They made me lose my home insurance in the first month and I had to scramble to get coverage right away which is much higher now – what a drag. We are in the 3rd month now and they are still not paying “and put the rent money into escrow for their own security, until they have a signed lease” (their words), but they wouldn’t sign the lease after I took over and now the attorney doesn’t want us to sign until they get current with payments. I didn’t want to evict at Christmas time, they have 4 kids, and I wanted to get to know them since I didn’t select them, but at the end of the month the time is up. I also have a PM company with attorney in place who will take care of the eviction. I hope this won’t bite me at the end. Was it a mistake to buy a property with tenants in it?
Awesome vid Phil, thanks a million. I’m a new investor growing quickly. Please advise the best way to take over a new multi unit that was managed by a property mgr. prop mgr has the existing relationship, should I keep them on board temporarily to nurture my new relationship with the tenants?
or just go in head first as new owner/prop mgr?
I’d appreciate any direction given, Thank you!
Thanks Phil. I find you refreshing. Everyone else I have listened to so far always wants money. Don’t get me wrong. I don’t think there is anything wrong with wanting money. Just the way a person goes about getting it. I want to become a full time Rental Property Investor. My biggest problem is funding. As with most people. So, I have to start cheap. Around 20 to $40, 000 range. Would you believe I can’t even get a loan for $35,000? Not because of financial reasons. But because I don’t have Two (2) consecutive W-2s. Private investors want me to borrow more money and or have a reserve I don’t have. I miss the days when I could not only get a job with a hand shake, but also a house. Of course the paper work would come afterward but it was just a formality. I did that once back in the late 70s. A two unit. Up and Down stairs. A great deal until two little kids came along and decided to play with matches and burn my place down. I thought I had it covered with Home Owners Insurance however the insurance agent forget to file with the home office. I had to take them to court to get the money to pay off the loan. That took five (5) years. In the mean time, all my other backers backed out and I lost another $250,000 worth of other income properties that were in the closing stage. Talk about bad luck. Well thanks again Phil. Keep up the good work. Maybe I can help you out some day. Stay healthy, live long and prosper.
You might like this training I just released: 5 Keys to Insurance for Real Estate Investments
This is a really good video
In my state, KY, the landlord must be present at the set out for an eviction. But I enjoyed your story of the tenant crashing the Landlord’s car at the eviction! I agree, the Landlord should not drive a nice vehicle to the eviction.
Hey Phil,
Thanks for the informative videos, they are appreciated. Can you suggest or offer a good Rent to Own Contract template and what percentage of the rent do you generally apply to the purchase? Is it usually a consistent percent or is it relative to the cost of the mortgage and rent?
Shirley
The same rental agreement that is normally used should be used with a Rent to Own. Then, execute a separate Option Agreement. Get a very knowledgable attorney to help you.
Very informative. U got all end covered.
Hey Phil, great video. I can tell a fellow mechanical engineer when I hear one :-).
I’m curious why you don’t do your own evictions? You certainly know the law well. In my state, only an attorney can represent an LLC, so that’s why here, but I’m curious as to your experience.
Alos, in my city, one cannot do their own work, either, unless you live in and own the house, so that’s an issue for some of the commenters above who suggest being your own handyman.
A great eviction attorney plays golf with the judge, their kids play together, etc. A great eviction attorney can do things I could never do.
Good stuff as usual Phil.
Do you have anything with regards to financing. Most people start of requiring a mortgage. So I’m a little unsure if interest only or capital repayment is better. Different schools of thoughts exist heavily opposing the other! What do you think?
Depends on the situation but MOST low fixed rate mortgages are amortized and have a principal and interest component.
Hi Phil,
Great video. I did not know about the merchant account and auto collection and a lot more info you had in the video. I had to go through 2 evictions and learnt a lot from them. Unless one goes through eviction, your Perls of wisdom might not be obvious. I appreciate all the info you had said. Kudos for sharing this info. Thanks a lot.
Phil, Have you ever tried the “Cash for Keys” method of eviction? ( Example: Using some of the reserve to pay for the tenant to move out.) If so, did that work out OK? I’ve heard of the method in theory, but I’ve never heard of anyone actually doing it.
Yes. I call it a friendly eviction. I try it on every non paying tenant I have ever had. It works some of the time.
Hi Phil,
Thank you for the great video! What do you think about getting a home warranty for rentals for approximately $500 a year, which covers air-conditioning and heating, minor roof repairs plus all the standard repairs. I have them on both my rentals, and they have saved me a lot of hassle because all I have to pay is $60 per repair, regardless of the repair. They will put their subcontractors in touch with the tenant and I have no involvement whatsoever getting the repairs done. Yes, it is cutting into my profits, but it is saving me from the anxiety. I am questioning whether this is the best way so I am very interested in your input. Also, what is the minimum ROI that you look for in a rental? Thank you for all you do!
I haven’t found home warranties to be worth the cost and the hassle of slow response and lousy contractors that they use. But maybe your experiences have been different.
Keep up the good work. love the video . Rent is due on /or before the 1st. on the 4th we start the process of eviction. I had a judge grant me eviction on 12/24 . Fair, Firm, and Consistent is very important.
DON’T rent to family and friends. Our latest tenant was difficult to evict because they tried to play on emotions and pull the family and friends card… “Ooooh c’mon man, you know I’m good for it, I’ll pay you on Friday…” One Friday turns into many Fridays later and you still don’t see the rent… yeah.. not fun! Phil is absolutely right.. You can choose your tenants, don’t feel like you owe your family and friends ANYTHING, cause you don’t! They’ll be owing you!!
AMEN.. DO NOT RENT TO FAMILY ! NOT EVEN YOUR KIDS.
Just saw this video – its very good & informative !
I have 2 rentals (just getting started) and would like to give you a suggestion of something I learned from my uncle who had rentals . Take pictures of the place inside & out before anyone moves in along with a list of the property’s condition – have the tenant sign it as it creates a record of the property’s condition if you need to evict & collect for damaged the tenant did.
I have 2 questions for you :
#1 How do I find a great eviction (& lease document) attorney ?
#2 What is the best way to locate a great & reasonably priced handyman ?
Keep up the good work – Looking forward to your other videos .
Most eviction courts do not recognize pictures in their eviction cases. They only reference a signed move in and move out inspection checklist.
The answer to your first question was answered in the training above. You connect with the eviction attorney that is most often listed on the docket each session. The busiest attorney is usually the best one when it comes to evictions.
Finding great handymen, or attorneys, or anyone, requires you to think in terms of where the good ones would be. The best contractors I have ever worked with have been the ones that do turn arounds for apartment buildings.
Love you Phil. Just cracking laughing when you tell story about the car. Anyhow I have rental property overseas and it run
smoothly. Paid advance for a year contract, visited once a year to sign contract again if they want to renew. No headache.
Most of my tenants are executives of the overseas companies and their company paid for their stay.
Great video Phil with very useful tips.
I would like to comment on Landlord/Tenant relationship which in my opinion should remain ‘Businesslike’ but amicable at the same time, but NOT Friendly.
When I started as a Landlord, I treated my Tenants in a very friendly way, occasionally meeting them up over coffees and dinners at my cost (sure they were good paying tenants). The end result was me getting requests on grace periods, rent reduction on renewals, etc.
Since then, I have changed my style and things have worked very well.
And that goes for Buyers and Sellers too.
I had over 50 rentals in class B area and my property manager who is my employee and my own construction company that fixes everything at cost, even though our repairs and maintenance were 20% off gross rents. We sold many dwelling and kept duplexes, triplexes and quads. Single families were only kept as rent to owns. Our R&M expenses decreased by 50% because with rent to own we make tenants responsible for all repairs. We give them 60 days full warranty after they move in and after that they fix everything themselves. Section 8 sucks, unless u r a slam lord. Phil, keep your videos coming. Best of luck to you! The universe will pay you tenfolds for your good deeds!
You shared some true gems of wisdom. Thanks for your comment! Definitely go Rent to Own on single family homes. And as you know, even if you try to get the tenant to pay for all repairs, some things you still have to pay for if they break down, regardless of the lease. For example, Air Conditioning systems MUST be replaced by the owner by law in Davidson County Tennessee, regardless of what the tenant signed in writing.
Excellent Video Phil–Have read (and re-read) How to be a Real Estate Investor–and your many videos such as this one.
My partner and I took a “BIG” hit on our retirement money last year when we attended those “seminars” that took a Big chunk of our IRA money–and the support just was not there. We were blindsided.
You Phil, have remained steadfast in helping so many newbies such as us, and we have learned so much from you. We are in the process of closing on our first rental…Learning , Learning, Learning from Phil! Oh Yes!
Great information, Phil. Question: Do you run all rentals as Lease-to-Own (Land Contracts)? Also, in your experience, what is the percentage of the renter defaulting on the non-refundable option deposit?
Moreover, what do you prefer, a Lease-to-Own agreement or a recordable Land Contract?
Thank you!
(1) For my single family homes, I do Rent to Owns mostly and I avoid a straight rentals because the number of people who exercise their option to purchase is less than 10%.
(2) I only consider a Land Contract when the Tenant Buyer is bringing a huge down payment. The issue with taking a very large option payment is that if the tenant ever took you to court, the judge may invalidate the option and allow the tenant to get the entire amount back.
phil tanks for the info, but where do I find out about the local laws?
Google for the Landlord and Tenant Act for your area. Also you can ask an eviction attorney for the laws on landlords and tenants. AND remember that tenants often know the laws because of an organization called “Legal Aid” that provides free legal service. You could always contact the closest Legal Aid office too.
Thanks for that great video. There was a lot of good info. I pretty much covered most of it. I collect 12 checks up front. If by the 2nd of the month I haven’t able to get the rent I start an N4. They have 15 days, if no payment within the 15 days I proceed with eviction. You are 100% right you need keep in mind that this is a business. I’ve learned that if I give a tenant a chance to pay me back at a later date I always loose. I think that the biggest problem for me as a landlord is not the loss of rent or big repair, from picking a bad tenant. But the headache of listening to the complaints after complaints. I don’t get paid extra for this.
Thanks again Phil for being so giving with valuable info. I’m a big fan, I watch all your video’s.
Good content Phil, I’ve been a landlord for the past 10 yrs.
Just experienced my 1st eviction this past March.
Tenant was a good section 8 renter for 8yrs. then things got
ugly ! For investor in the northern states (Illinois), courts will Not
evict tenants during the winter months ;( tenant lived rent free for
5 months and we lost all late fee charges do to a technicality .
We simply took tenants portion of rent ( $310) and divided it by 30 days to
charge a late fee per day of $10.33. Court stated that it is a violation of tenant
law to have late fee compound to above 15% of total rent !
So stick to your local tenant laws, and definately start eviction process after
tenant has missed grace period for rent due.
Keep the good information coming ! Thanks Dale
Good content Phil, I’ve been a landlord for the past 10 yrs.
Just experienced my 1st eviction this past March.
Tenant was a good section renter for 8yrs. then things got
ugly ! For investor in the northern states (Illinois), courts will Not
evict tenants during the winter months ;( tenant lived rent free for
5 months and we lost all late fee charges do to a technicality .
We simply took tenants portion of rent ( $310) and divided it by 30 days to
charge a late fee per day of $10.33. Court stated that it is a violation of tenant
law to have late fee compound to above 15% of total rent !
So stick to your local tenant laws, and definately start eviction process after
tenant has missed grace period for rent due.
Keep the good information coming ! Thanks Dale
Thx Phil, all good advice
Exellent Video, I am looking to own many rentals I have three now. at what point do you user a property manager. when is it too many for one person.
That depends on each person. The calculation is: How much time did it take to be my own property manager? How much do I earn per hour that I work? When your hourly earning beats your earning per hour as your own property manager, then you hire out.
Great video. Don’t forget large damage deposits!!!!!!!!!!
useful tips!
Phil,
Great video. Thank you.
Keep up the good work
If they have a Church, go to the Pastor and let them know what going on, it worked 4 me. They moved out right away.
Unless the tenant is the pastor of the church! My mentor, who was a Christian, used to say that you have to be very careful of “part time preachers”.
Great video. Came at a perfect time. In the process of purchasing my first rental. Your videos make me a little more motivated.
Phil,
Kick A$$ stuff !!!
Keep it coming !!!
Have a Blessed Day !!!
Your Friendly Neighborhood
Oscar !!!
Announcing my presents
Everthing you told them is true and your audience should take in what you are teaching….however I have a property management company and we are very reliable and reasonable.
This was a great video with important points. I have not seen other RE Mentors advocate taking on a more hands on approach and I applaud you for that. I listened to one of your videos about Section 8 and used that to rent my first buy and hold. It accomplished a lot of the points that you discussed – especially having the rent directly deposited to my business account.
As far as some other items, make sure you conduct a thorough background check and have your prospective tenant sign a consent form for that as part of the application process. You can charge for this as well as long as everything is disclosed up front. In my case, this helped to streamline the amount of “interested” renters to those who were really interested.
Lastly, to your point of scheduling visits – I told my tenant that will be doing a quarterly inspection of the inside and outside of the property. I will use the time to make any necessary minor repairs on the outside. In the inside of the house, I will use a tester to check all of the outlets, providing free access to all of the rooms.
I love the idea of quarterly inspections inside and out but will many tenants want to go along with that? You certainly have an opportunity to see the property and do maintenance if needed-great idea–but I wonder if that alone will scare a lot of potential good tenants away. But I think it is smart landlording.
Write in the quarterly inspection provision into your lease agreement.
The video is great, however in NYC or most metropolitan areas the courts are highly in favor of the tenants which leave us in a very tight spot… any tips
Great eviction attorneys know how to sway the law back into your favor.
I agree with everything that was said. AWESOME video especially the part about the auto pay.
Thanks for the video. I always get antsy and want to lease quickly to get out of the monthly hold costs but have a great wife who always holds out for great renters. Here rule of thumb is 90% of the people in the world are not those we want to rent to. I do need to get more firm on deadlines though. Thanks for the great video
Good information , you hit it right on the head about (some) property managers. For the six months he was managing my duplex I did not see any cash flow. He was billing me for stuff that he did not do not to mention the double billing and lots of other inefficiencies too much to mention. The bottom line is that you HAVE to screen your manager as well as your tenant.
Now that I am doing self manager I can see a profit
PS: This is not to say that all property managers are crooked
Great video Phil. One more tip, and this is for a very small slice of landlords but is worth mentioning. My parents have been landlords for over 40 years and my father is his own handyman for the most part. Do you know how much cash flow he has kept in his pocket because he can change his own sinks, snake drains, replace hot water heaters, do his own basic painting and carpentry, etc.? If you add compounding to all that money over 40 years it must be over $100,000 by now. Most landlords can’t do that because they don’t have the skills or can’t/don’t want to learn that stuff, but my goodness you save a ton of cash. Plumber going to charge $125 just to come snake a pipe? Buy your own snake and do it yourself, pocket that $125 every single time a pipe clogs. If you have enough units, it is absolutely worth it in my opinion and can easily make up for some lost rent due to evictions.
This was a great video. I wish I had of known these things years ago when I owned my rental property. Long story short — The people that rented from me actually wanted me to pay them $5,000.00 to move out of my property without having paid rent for 4 months. The courts backed them because they had children, It was scary
I just spoke to another investor and he suggested I get a hotel/motel/transient business license. Go to your county and look into it. Supposedly, It make the eviction process much swifter.
How do you applying for Hotel or Motel Transient license? Do you need to take classes for that?
It depends on the local area rules and regulations. Google for some answers to that on your local level.
Phil,
I absolutely loved this video! Thank you so much for sharing such vital info!
excellent video. great insight and tips