SMARTERLANDLORDING

ADVICE FROM EXPERIENCE

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The Anatomy of a Rehab – Part 1 – Assessing Needs

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As I wrote previously, I am in the process of doing a major rehab on one of my properties.

The first step in any rehab process is to assess what you need to do. What needs to get fixed? Then you can get estimates and figure out costs to develop a rehab budget and hire contractors.

To assess rehab needs, I have a very simple Property Inspection Sheet that I use to make sure I do not over look anything. I use this sheet when I am looking at my own properties in need of rehab and properties I am thinking about purchasing.

My inspection sheet lists the major components of a property with columns labeled, Yes, No, Cost and Comments.  When looking at a property, I examine at each component and then check Yes or No regarding the rehab needs of the component. Then I estimate a cost, total it up and I have the beginnings of a budget.

Upon assessing my property, I determined that I needed the following:

  • 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.

This is a sizable and expensive list for any property. I talk more in future posts about costs, time tables and include some pictures of the process. Until then, feel free to download and use the Property Inspection Sheet I mentioned.

Rents Have Risen For The Last 23 Quarters

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Nationwide, rents now average $1,111 per month according to this article in the Wall Street Journal. Rents are now over 15% higher than they were at the end of 2009. Renters continue to get squeezed by high demand and low supply. This trend shown in the graph below is expected to continue for at least the next year.

 

The Anatomy of a Rehab

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I have a property that I bought several years ago. When I bought it, the property came with tenants. Those tenants were happy to stay in the property and I was happy to let things ride for a while. I knew that whenever those tenants left, some major work would have to be done. Well, those tenants have just moved out and now we get to do a major rehab.

Here are some pictures showing the property’s current condition.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It is a nice 2 bedroom, one bath home in a great rental area, but it has been neglected over the years.   As you can see from the pictures the property needs a new roof, paint inside and out, kitchen and bath upgrades and the hardwood floors refinished among other things.

I thought it would be interesting to go through this rehab here on my blog, talking about timelines, materials, expenses, complications, etc.

Work is now underway. So look for updates in the near future as we go along.  Stay tuned!

Top 25 Tenant Professions

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Who is more likely to be one of your tenants? Interesting question and Ancestry.com did a study of census data stretching back to 1900 in an attempt to answer it.

Dancers, waiters, bartenders and members of the armed services topped the list. While professionals and trades persons like optometrists, dentists and toolmakers were more likely to be homeowners.

Here are the top 25 professions that are most likely to be tenants based on the last 112 years of data:

Dancers and dancing teachers

Motion picture projectionists

Waiters and waitresses

Counter and fountain workers

Members of the armed services

Service workers, except private household

Bartenders

Charwomen and cleaners

Cashiers

Cooks, except private household

Actors and actresses

Attendants, hospital and other institution

Laundry and dry cleaning operatives

Farm laborers, wage workers

Porters

Attendants, auto service and parking

Roofers and slaters

Attendants, professional and personal service*

Attendants, physicians and dentists office

Demonstrators

Bakers

Gardeners, except farm and groundskeepers

Collectors, bill and account

Painters, construction and maintenance

Shoemakers and repairers, except factory

You can see the entire list here.

Does the list match with your experience? Let me now with your comments.

Questions on Ebola, Apartments and Landlords

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I have been watching the recent news about the ebola virus just like everyone else. Amongst all of the news I noticed that the two victims here in the US lived in apartments. Now, I understand the threat that Ebola is and I also understand the need to contain it. Nonetheless, as a landlord certain questions pop into my head when I read headlines like the following:

“Ebola decontamination begins at Dallas apartment of 2nd hospital worker”

Questions like:

Who pays for this hazmat cleanup?

How was the hazmat team allowed in to the apartment? Who gave them permission to remove all of the tenant’s belongings? Was it by court order? Did the family allow them in? Would I as the landlord have to get close to the place and let them in? Should I get one of these?

What about damages to the apartment caused by the hazmat team? Who is responsible for those?

Is the rent still being paid?

When and how does the landlord get possession of their property back? Do they even want it back?

What happens if one of my tenant’s gets ebola or a similar disease? What rights do I or my other tenants have?

These are all interesting and hopefully unique legal questions that I quite frankly do not have the answer to right now. But, I think it would be helpful to know what a landlord’s rights and responsibilities are on the front end of these things just in case.

I will try and get some answers and put them in another blog post.

If anyone out there has any related experience or expertise, please share it.

What other questions might you have as a landlord in a similar situation? Please share with your comments.

Got Ebola?

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File under “You knew this would happen sooner or later.”

Here is the headline:

Landlord Refuses To Rent To African Student Amara Bangura Over Ebola Fears

You can read the story here.

Stay tuned folks, this could get interesting real fast.

The SmarterLandlording Podcast – Episode 5 – The Turnkey Provider

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The SmarterLandlording Podcast – Episode 5 – The Turnkey Provider

“Just getting out there and doing it is the best way to learn!”

 

 

 

 

 

 

 

 

 

 

 

 

 

Links We Mentioned

Mid South Home Buyers – Terry’s turnkey company. If you are thinking of investing in Memphis or want to contact Terry, this is the link for you.

Due Diligence Questions – Click here to see Terry’s 19 due diligence questions that will help you identify the best turnkey sellers.

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

Landlord Locks – A great system of locks that have helped me become more efficient.

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.

Evictions Are Up

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Here is an interesting, although somewhat slanted, article from NYT on the increasing level of evictions in various parts of the country. What this article demonstrates is that it is getting harder out there as rents and price of everything else keep increasing. What the article fails to mention however is that evictions are hard on the landlords as well. I know I try to avoid filing them and I suspect many other landlords do as well. An eviction is an absolute last resort for me as I will try to work with struggling tenants first.

Watch Out For “Professional Tenants”

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I have run across a few “professional tenants” in my time as a landlord trying to rent from me and heard even more horror stories from others who have unfortunately let them into their properties. Trust me, the professional tenant is something you as a landlord want to avoid at all costs. An effective screening process is a good place to start. But also knowing what to look for goes a long way.

 

Richard D. Vetstein, Esq. writing in a real estate column at aol.com has some good advice on what to look for and tips for avoiding the “professional tenant.”

He notes:

“Most tenants are problem-free, yet there is a certain type who make even an experienced landlord cringe with fear: The Professional Tenant.

Let me give you the profile of what I mean by a typical Professional Tenant.”

Read the rest here.

A Quick Guide For The New Landlord

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If you are thinking about buying your first rental property, or perhaps you have somehow ended up with a property and have become a landlord by default, there are a few things you should do to ensure your transition to landlord goes as smooth as possible. Here is a quick guide of 8 essential steps every new landlord should take.

  1. Develop a Solid Lease – Don’t just buy a generic form from Office Depot of cobble one together from the internet. Pay a lawyer to get one together. There are many differing laws out there. A lawyer will likely only cost you a couple of hundred bucks. It is well worth the expense as one misplaced word or one wrong clause may end up costing you days of your time and hundreds more of your hard earned dollars.
  2. Develop Your Tenant Selection Criteria – What type of qualifications does a potential tenant need to have to rent your property? Do they need a job, a decent credit score, a clean criminal record? Will you allow pets or smoking? You need to decide now what those criteria are and WRITE THEM DOWN in case you are ever asked for them. And never base those criteria on the seven federally protected classes which are race, color, national origin, gender, familial status, age and religion.
  3. Develop A Way To Screen Tenants – Tenant screening is perhaps the most important thing a landlord can do. There are professional tenants out there just looking to fleece a novice landlord. Protect yourself by running credit and criminal background checks. There are many screening services out there, choose one that runs both credit and national criminal background check.
  4. Determine The Amount of Rent – How much are you going to charge? How will you determine that? This website may be able to help you. Another possibility is to look for properties similar to yours that are for rent and make some phone calls acting as a prospective tenant.
  5. Determine The Security Deposit – How much of a security deposit will you require? The amount can often vary by local custom and law. Ask around to other landlords or the attorney who crafted your lease what is common in your part of the world.
  6. What Are Your House Rules? – Do you allow grills? Who cuts the grass? What about the playing of music? Such things need to be WRITTEN DOWN and made part of your rental agreement with your tenant.
  7. Figure Out The Best Method Of Advertising – Different areas rely on different methods of advertising their rentals. Some areas still widely use signs because that is how the tenant base finds the property. Other areas are more dependent on internet advertising such as craigslist. Whatever you determine, make your signs and ads look as professional as possible.   You can eliminate a lot of headaches by simply having a professionally made for rent sign or advertisement.
  8. Treat Everyone In A Professional Manner – Landlording is a business, treat it as such. Your relationship with your tenants should be professional and business like. A little respect and courtesy can go a long way in this business.

So there you have it. Follow these 8 tips and you should be well on your way to a successful landlording venture, no matter what your reason is for getting into it.