Help with Rentals - Posted by Chris Reuman (Maine)

Posted by jp(sc) on March 21, 2006 at 05:54:27:

Thanks, Chris. I needed that.

Help with Rentals - Posted by Chris Reuman (Maine)

Posted by Chris Reuman (Maine) on March 20, 2006 at 22:00:17:

From my experience, rentals become a lot easier if you do a few things first:

  1. When you figure the purchase price you want, include numbers for vacancy, property management, maintenance, lawn care, snow plowing, ect. Anything you would do yourself, put in what it would cost to hire someone else. This does two things: shows you what a real deal looks like and eliminates 95% of the properties being sold.

  2. Become an expert in property and tenant management. Most of the problems we face are due to poor property and tenant management. For instance with property management: don’t patch things, fix them right. If you don’t want to fix toilets, replace them all with new one piece toilets. They cost less than $100 and take around 1 hour to install. All the time, I see landlords that will penny to spend a $1. Also, if you allow your units to run down, you will only get deadbeats. I have found that anyone can paint a wall, lay peel n stick vinyl, and commercial carpet. The items can be inexpensive but still look great and attract good tenants. As for tenant management, check references, run credit reports, check employment, etc… It is funny how the longer the unit stays empty the quicker we are to make exceptions. You have to be able to let the unit stay empty. Have strict rules and get rid of the bad eggs. The only people that don’t like rules are the ones that will break them. These bad apples will initially fight you. Find a way to get rid of them, without them wrecking your place. As I tell people, " lose the battle, win the war". For example, offer them $200 to be out by tomorrow. When they give you the keys, give them the money. Sometimes you have to get firm and take them to court, etc… That is the last option, not the first. Don’t lose focus on the goal: to get them out, and someone better in, paying the rent, paying your mortgage, making you principal. Sure we get mad, so call me or Scott, or Tony, we will talk you away from the shotgun, and back to what is ultimately best for everyone. People have asked me if I stay angry with deadbeat tenants. I tell them that I don’t because their is nothing I can do to hurt them, that they already are doing to themselves. Their lives are horrible and will stay that way. I will get a new tenant and move on.

  3. Don’t do everything. The main difference between a burned out landlord and one that isn’t, is the first one does everything and the second one learns to delegate what he doesn’t like. You don’t like cleaning the units, hire someone. You don’t like to fill the units, then hire someone. Now if you didn’t do #1 then you don’t have the money to do this, big mistake. Some things you like to do, keep doing them. Learn to delegate, manage people, screen people, etc…

  4. Once in a while, use your profits for recreation. Take your spouse out for an expensive meal and mention that so-in-so unit paid for the meal. To many times I see people use their profit to pay their electric bill or car payment. That is not motivating. Now I’m not saying that
    you blow all your profits, but once in a while reward yourself, your spouse, your kids.

With these few pieces of advice, your rental experience will be much better.

Best Investing, Chris

Re: Help with Rentals - Posted by Tony Colella

Posted by Tony Colella on March 21, 2006 at 09:44:34:

Great post Chris and as usual, great advice.

The professional approach to management, the realization that you will never get EVERY dollar out of a property or from a tenant help keep the blood pressure regulated.

Having a graduating system to addressing problems also helps a great deal. Much like you wrote, I take the following type stress controlling actions.

Maintenance issue: Sometimes I fix it. Sometimes I teach someone in the park or a new, unskilled (but cheap) handyman to fix this for future occurances. Sometimes I hire a $10 an hour semi-skilled handyman (knowing the quality will be less and the time longer than a skilled handyman or pro) and lastly I hire the expensive, skilled handyman or pro to get the job done well and quickly (but at much greater cost). Sometimes we have to remind ourselves that faster is actually better if it gets the property rented fast enough to offset the increased expense. Otherwise, I start cheap and work my way up.

Tenants not paying. I start with 10 day pay or quit notices right away. I try and talk them into moving and may resort to a financial incentive. If they show any propensity to remain in denial of the money or living situation, I continue with the court date so that little time is lost. This way they will be leaving one way or the other. Leaving on friendly terms is best but sometimes it takes the threat of the actual eviction to bring reality into focus for some tenants.

As we acquire more and more properties, we simply cannot do everything nor can we always simply write a check to someone esle to do everything. We have to find a graduating medium that keeps us sane.


Thanks Chris - Posted by Lin (NC)

Posted by Lin (NC) on March 21, 2006 at 08:56:17:

Now I don’t feel a bit bad about paying the plumber $20 extra to pull the dead cats out from under the home he was working on. I just hope he doesn’t bill me for his time on top of that. ; ) Even if he does, it’s worth it. Crawling around under a trailer dragging dead cats behind me wasn’t how I envisioned spending my morning.

It’s good to be the boss when there’s money in the bank. ; )


Nice Post Chris! nt - Posted by JeffB (MI)

Posted by JeffB (MI) on March 21, 2006 at 07:27:05: