SMARTERLANDLORDING

ADVICE FROM EXPERIENCE

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Why Landlords Should Inspect Their Properties

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This is why landlords should inspect their properties. You cannot completely trust the screening process. Some people can look perfectly normal on the outside and in public, but their home life is a complete mess as the linked article demonstrates.

Just because you never hear anything from a particular tenant does not mean that all is perfectly well. Most times it is, but it is best to verify. Do you think the tenant in the story above would have ever called their landlord? It is highly doubtful. They are too embarrassed by their home life to let you in and will likely just vanish one night when no one is watching.

So don’t let this happen to you. Put a clause in your lease like the following that allows you to periodically inspect your property.

Tenant shall be entitled to quiet enjoyment of the use of the property so long as Tenant is not in default of the terms of the Lease. However, upon one day’s notice to Tenant, Manager shall be entitled to access to the Property for the purpose of inspection, repairs or marketing the Property.

Remember, your properties are a huge asset to you, don’t let someone trash them.

 

Subscribe to Smarterlandlording and receive a Free Report: 21 Tenant Screening Red Flags

Have Home Prices Rebounded In Your Area?

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Have home prices rebounded in your area? Check out these maps and graphics from the New York Federal Reserve.

I can say that here in Memphis, TN prices seem to have ticked up a bit, especially in the parts of town I deal in. It also seems to me that there are fewer deals out there and more people chasing them. Are the boom times coming back?

How are things in your part of the country? Are prices up? Deals harder to come by? Please share with your comments.

The SmarterLandlording Podcast – Episode 7 – Understanding and Timing the Multi-Family Market – With Multi-Family Real Estate Broker Steve Woodyard of Woodyard Realty

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The SmarterLandlording Podcast – Episode 7 – Understanding and Timing the Multi-Family Market – With Multi-Family Real Estate Broker Steve Woodyard of Woodyard Realty

 

 

 

 

 

 

 

 

 

 

 

 

Links We Mentioned

Woodyard Realty – Check out Steve’s website for available properties and tons of information on the Memphis market. Plus you can get in contact with Steve if you are thinking of getting into the market here in Memphis.

Steve’s “Memphis Multifamily Market Review” powerpoint presentation can be found here.

Steve’s Office Map. Steve knows Memphis! Call him at 901-767-1998.

 

Like the Intro Music? Check out my good friends in the band Kitchens and Bathrooms (Kind of fits right!). They write and play some awesome, original music from right here in Memphis, TN.

Coming Soon!

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Coming Soon!

Episode 7 of the Smarter Landlording Podcast – Understanding and Timing the Apartment Market

Plus…More on the Anatomy of a Rehab.

And, what happens when you have a major fire.

Stay tuned.

The Top 6 Tenant Secrets

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All of us keep secrets. We do this for a variety of reasons. Some things should in fact be kept a secret as they are personal or you may be breaking a social norm, rule or perhaps even a law.   We may also keep something secret because we feel that we will only get into more trouble by saying something, or we will be perceived as ignorant. All of this just seems to be human nature.

Tenants, being human of course, are no exception. But some of the secrets they keep are from us, their landlords. These secrets can be insignificant or quite harmful. Some secrets are a simple flaunting of the rules. But others are more serious and they can put us, our property and our other tenants at risk.

Over the past dozen years I have uncovered a lot of tenant secrets. There do however seem to be some common themes to the secrets that tenants keep from us landlords. Here are my top 6 “Tenant Secrets.”

1.  My Boyfriend/Girlfriend Has Moved In – This is one of the biggest secrets tenants have and can be one of the most difficult to confirm and control. As a landlord you want everyone who is residing in your property to have gone through your screening process. Otherwise, you really have no idea who is living there. Are they a deadbeat? Do they have a criminal record? Is there something even worse they are hiding? Thing is, you just do not know.

On the flip side, how can you prove that they have actually moved in? Are you there every day to see who comes and goes? And even if you are, a significant other is likely to be around fairly often. How often is too often? Who are you to judge? But if there is evidence, such as a closet full of clothes, two cars or words from another tattle-tale tenant, you should confront your tenant.

Don’t be harsh when you do this, just ask if so and so is living there and remind them that it is a major violation of their lease to have an unauthorized roommate. Offer to get the person approved and on the lease, so there will not need to be anymore secrets. I find that most tenants prefer this option and will come in from the cold.

2.  I Got a New Kitten/Puppy – We more experienced landlords have seen this again and again. We go to do a repair or an inspection and see an animal or evidence of one when none was mentioned at move in. Perhaps the pet is new. Perhaps the pet is one that you do not allow. Perhaps you do not allow pets all together. If the last statement applies to you, you must give the tenant the choice; either you or the pet goes. If you allow pets, offer again to let them come in from the cold, pay the pet fees, meet your requirements and stop keeping secrets.

3.  I’m a Bit of a Slob – Sometimes this is an understatement. I have walked into some tenant’s apartments and wondered when the hurricane came through. Clothes strewn about everywhere, dishes piled up in the sink and on the counters. Frankly I can’t understand how people live like that. The problem is that it is very difficult to tell that someone is a slob on the front end. They can hide it pretty well for the interviews. It is only later when you get calls about a sudden bug or vermin problem that you find out. Needless to say “clean you place up!” letters are sent pretty quickly.

4.  I Like To Party – This is one of the worst kept secrets. There is nothing wrong with a little bit of fun. Having a few beers and friends over from time to time is as American as apple pie. But too much of a good thing gets a little old. Little did you know that you rented to Mr. Popular who likes to have friends over every other evening.

Other tenants can be as quiet as a church mouse, and when you go over to repair and inspect you find out why when you notice the bong sitting out on the coffee table. I realize a lot of people smoke weed, but in most places it is still illegal, so put away the bong when you are done and be a bit more discrete with your smoking habits! And believe it or not that smoke does creep out into the hallway and you are not fooling anyone with your patchouli.

5.  The ______ Is Broken – As landlords, we are responsible for maintaining the property. I actually want to fix things because my property is valuable to me. I want it to last a long time. So PLEASE, PLEASE, do not keep it a secret when something breaks. I have found more leaks that were let go to become major problems when they should not have. I have found heating systems with safety features bypassed. I have found holes in places they should not be like in roofs and floors. Why did the tenant keep these things a secret from me? I have never figured it out. Perhaps it has to do with number 3 or they think they will get in trouble, but who really knows?

6.  I’m Unhappy With ______ – Whatever it happens to be so I am just going to go through the expense and hassle of moving rather than speaking up and resolving the situation. Many tenants, if the feel like their needs are not being attended to or feel in some way hurt, will simply clam up and keep that fact a secret from us. I understand you may not like confrontation, but if you had just talked to us about things, we could have likely worked them out. After all, we are human and make mistakes, plus we are pretty nice people. Let us know when something is wrong. How else can we fix it?

So there you have my top 6 tenant secrets. Every year I see a few of these again and again. I guess it is just part of the business.

What do your tenants keep from you? Please share with your comments.

The Anatomy of a Rehab – Part 3 – Finding Contractors

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In my previous posts I discussed how I went through and assessed what I needed to do to get the property rehabbed by using my Property Inspection Sheet and figuring out the budget. In this post I want to discuss hiring contractors.

Contractors are an essential part of any real estate investor’s team, especially as you grow and expand your business. Sure, it is OK to do some or all of the work yourself when you are starting out (in fact I would recommend this so you get a feel of what is involved in a rehab job), but as you grow your business you will need to spend your time on more important matters, such as finding more properties.

Hiring contractors can be one of the most challenging parts of this business. And when you are just starting out or have little experience it is quite easy to feel lost and out of your element when dealing with contractors.

We all have heard the numerous stories of people being ripped off by contractors, perhaps even someone you know was ripped off once. So the stories are true. Some contractors do rip people off. Dishonest contractors will abscond with prepaid funds, they will use inferior materials or take forever to get the job done.

So how do you find a contractor that will do an honest job, produce a quality finish on time and on budget?

To be honest it is not always easy.

I have found the best resource to be referrals from other investors. Other investors are after all in the same boat you are. They need someone reliable who can offer a good product at a good price. This is why it is so important to get out and network with other investors at your local REIA group. Some of these REIA groups will even have contractors as sponsors. I have found several good contractors in this manner.

Sometimes other investors may not like to share their contractors as they may have enough work to keep them busy. So referrals may be hard to come by. Other times referrals or sponsors can be real duds or so overworked that they just cannot provide you with the level of service you need. At this point you are simply going to have to go out on your own and find them. While this task may seem daunting, it is not as hard as you may think. In fact, you likely pass by numerous contractors every day you just have not been looking for them.

Where?

At your local big box home supply store. This is where the contractors go to get their materials.

If you are like me, you probably go to Home Depot or Lowes just about every day. There is always something you need to maintain your properties. You should start your contractor search when you enter the parking lot. You will see the contractor’s trucks all over the place. They will have placards like “Fred’s Painting” or Ed’s Plumbing.” You get the picture. If you see someone in or near the truck, go up and talk to them. Get their business card or contact info. Same goes when you are inside the store. If you see someone in the plumbing parts section, ask them if they are a plumber. Get their contact info.

Other good sources to find contractors are your neighbors. If you subscribe to a service like Nextdoor.com many people in your neighborhood will post recommendations. If you see someone working at a home in your neighborhood, ask your neighbor about the job and the contractor’s contact info. Better yet, just walk up to the contractor if you see them and get it yourself.

Trust me, if you do all of these things you will collect a lot of business cards. More than you will ever need. And that is OK, because when you go to call these guys later on for estimates, many will not even return the phone call, eliminating them right off the bat.

For those that do call you back (and many will), here is what you need to do:

  • Have a rough assessment of the work outlined for the contractor
  • Ask for a detailed and written estimate
  • Ask for references (and call them!)
  • Ask for liability and workers comp insurance info
  • Ask if you can possibly see an example of their work (they may let you visit one of their current jobs)
  • Do a Google search, see if there is anything good or bad out there
  • Ask how they want to get paid. Beware of anyone who wants large sums up front.
  • Trust your instincts. If something feels wrong move on.

If you follow these simple steps you will soon find a trusted contractor who can get what you need done. You may have to try a few.   You may spend a few dollars doing so and you may even need to fire one or two before you find the right one. But with persistence you will find one that “works” for you.

Next time – Making sure the job gets done on time and within budget.

Rents To Outpace Inflation

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Rents are still going up, up, up!

According to this article, rents will outpace inflation as demand remains strong and supply remains low.

Builders are getting the message and trying to increase supply but that takes time and generally meets a lot of resistance from local residents.

It will be interesting to see how this shakes out in a few years. Will there be a glut of apartments that drive rents down? Will some of these renters be enticed back into the housing market? Seems unlikely right now but time will tell.

The Smarter Landlording Podcast – Episode 6 – Real Estate Titles and Closings What Investors Needs to Know

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The SmarterLandlording Podcast – Episode 6 – Real Estate Titles and Closings

What Investors Needs to Know

With Joe Kirkland of Tri-State Title and Escrow

 

 

 

 

 

 

 

 

 

 

Links We Mentioned

MemphisInvestorsGroup.com – Stop by on the 2nd Thursday of every month for informative real estate presentation and networking opportunities.

Tri State Title and Escrow – Need a real estate attorney in the Memphis area? Give Joe a call today!

Shelby County Register – Do your own title searches here for Memphis and Shelby County for free!

Check out all the podcasts at iTunes on the Smarter Landlording Channel.

Like the Intro Music? Check out my good friends in the band Kitchens and Bathrooms (Kind of fits right!). They write and play some awesome, original music from right here in Memphis, TN.

The Anatomy of a Rehab – Part 2 – Figuring the Costs

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In my last post I discussed how I went through and assessed what I needed to do to get the property rehabbed by using my Property Inspection Sheet.

 

 

 

 

These are the repairs that I wanted done:

  • A New Roof with some Decking
  • Exterior Painting with some Rotten Wood Replacement
  • Yard Cleanup
  • Interior Painting
  • Interior Wood Floors Refinished
  • Kitchen Remodel
  • Bath Remodel
  • HVAC Tune Up
  • Storm Windows.

Now, knowing what I needed done, it was time to figure out what it was going to cost. Putting a cost to some of these items was easy. I know what they are going to cost. Storm windows for example are about $120 each installed. So just multiply that by the number of windows.

Other items like yard clean up and HVAC tune up just costs what it costs. It can take a crew of two or three guys several hours to cut the grass, trim hedges and bushes and pick up layers of leaves. For the HVAC, parts may be needed. I have used the same grass and HVAC companies for years now and their rates are competitive (Yep, I shop around every once in a while.). So whatever it takes to get the place heating and cooling and looking clean is just going to cost what it costs.

Other items I can guesstimate but I like to get a couple of quotes before proceeding. This would include items such as the new roof along with the exterior and interior painting. I like to have professionals look at these jobs because they can see things I might miss.

Kitchens and baths are the most important part of a rental property. These two rooms are the ones that can make or break a deal. Make them look nice and you can get better tenants and likely more rent. Cheap them out and you will end up paying for it later on. That said, I like to work with my contractor here on picking out tile, cabinets, counters and other fixtures. So while I may have a cost idea in my head, it may move a bit as materials are finalized.

Finally, in any rehab budget there is a need for what I call an “oops” factor. This “oops” factor is extra money placed into the rehab budget for unforeseen items or ad ons, and trust me, there are always unforeseen items or add ons. One never knows what they might find once things start getting ripped up. Plus, as work progresses, if I know I have a little wiggle room in the budget I can make changes that will create a better finished project in the end.

Next time I will talk about the process of hiring contractors to get the job done, done right and on time.

Landlord-Tenant Law: A Beginner’s Guide

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Check out the Library of Congresses Beginner’s Guide to Landlord-Tenant Law. It contains a listing of several relevant books and websites relating to something all landlords show know – The Law.