Posted by Anne_ND on May 08, 2007 at 07:48:03:
I have a (non-)payor right now that I’d feel I was lucky if he walked away right now. LOL!
Anne
How 2 deal w/client who feel they can just walk - Posted by Jeff-oh
Posted by Jeff-oh on May 03, 2007 at 13:59:19:
How do you deal with a tennant who thinks they rent and can just walk anytime.
I sold a home last fall and purchased a extra adminities ($500.00 additions) for this tennant. They are now 7 months later saying they want a bigger place… i.e. 4 bed room. They still owe me $360.00 on the improvements and ~$100 in unpaid taxes. I feel they are about to walk to another invester. I am not inclined to let them walk scott free because we also have sold a home to a close friend of theirs in one of my best homes and do not want to train them that this is acceptable behavior. i.e. that the Note has no value/teeth.
Your informed advise is appreciated.
How 2 deal w/client who feel they can just walk - Posted by mike barlow
Posted by mike barlow on May 06, 2007 at 20:28:19:
I read all your posts and the only fresh idea I had was to make sure
what they owed is posted to their credit report.
I’ve done that for the last year only. First Advantage has a Derogatory
Report that you can fill out on tenants, etc that owe us money. Last
month a past tenant called an wanted to come and pay off what he
owed us as he was unable to get into a house or whatever because that
judgment to us showed up on his credit report with the new landlord.
We gladly took his money and released him from his obligation.
(Another guy is paying us monthly that does not live in our park)
We do lease/options but on the one note we did the military guy
skipped and we put the entire amount of the note he owed us on his
credit report but have not heard anything about it from him.
We are going to look into the guaranteed buy back referred to by Anne.
Very interesting idea. Great ideas on here—thanks all.
Thanks for replies… & clairification. - Posted by Jeff-oh
Posted by Jeff-oh on May 04, 2007 at 14:29:25:
Karl, as always you are insiteful.
The real issue I am asking is…
How do you train your clients to honor their commitments and obligations. Also, how do you redirect a shakey client to become more stable and consider following through with their commitments.
I agree if they are already going. There is nothing to do but protect the home as best as possible.
Question: Buy making it easy to just walk, are we really training them that our paperwork means nothing and that they are really on a month to month rental.
As you have read, they left one home without penality because it was left in good shape. Now they know they can just walk at anytime. I am also looking at another home that their niece purchased and want to make sure she is not trained.
Though Steve-WA is being cheeky with his implied “Read the Book” three words post title, he is correct that a good down payment does wonders. p.s. the book does say train the client before they train you…
Again I am realy asking are we training the clients in the wrong way.
Thanks: Jeff
They can just walk - Posted by Karl (Oh)
Posted by Karl (Oh) on May 04, 2007 at 07:08:23:
Jeff,
Your buyers left me a message yesterday, but I won’t work with them. They skipped out on me on another home before they bought yours. So they lose the priveledge of financing with me. However, they left the home clean and in the same shape as when they bought it. I resold it to the next buyer for more than they had originally paid.
Your buyers can just walk if they want. Your remedy is to take legal action per your contract. If you want the make it painful for them, take them to court. File for repossession after they default on the note. Or make that threat to file unless they pay you current on everything before they leave. But really the most important thing is the protect the home for resale.
They probably aren’t really going anywhere. How are they going to find a big 4 bedroom if neither you nor I won’t hand it to them? Their custody issue might disapear before they take any action.
Karl
Two Rules - Posted by Tony Colella
Posted by Tony Colella on May 03, 2007 at 14:39:12:
Rule #1 is that you will NEVER, EVER, EVER, EVER get all the money owed to you.
Once we come to terms with Rule #1 we can sleep through the night.
The reality is they are going to walk regardless of anything that you do. The best bet is to help them move as quickly as possible, leaving the home in the best condition possible with the least amount of down time.
This goes for rentals and Lonnie deals. The reality with Lonnie deals is a majority of them will come back. Once you get comfortable with Rule #1 you find Rule # 2 is your best friend (i.e. that these homes continue to pump out cash time and time again for years to come). The more you get the back the more you make in the long run but yes, it is frustrating in the short term. Just keep telling yourself, more money, better (hopefully) buyer/tenant.
Tony
Re: Thanks for replies… & clairification. - Posted by Tony Colella
Posted by Tony Colella on May 05, 2007 at 08:26:06:
I think it may be more clear if we identify the issues. One is a business issue, the other is a social issue.
We in business need to honor our word and commitments. We would like to think others will do the same but that is out of our control. They are free to do as they choose no matter how self destructive it may be to their credibility.
We in business need to protect our assets which in this case are these homes. We have honored our word and placed these folks in a good home at an affordable price. When they are no longer paying as promissed then we need to take swift action to protect these homes and get them back in business.
We are also targeting a market that has, in most cases, proven for generations to be unable to honor their financial commitments. That is why the Lonnie deal exits. Without this problem, the lonnie solution would be unnecessary. Expecting these folks to change now is in all likelihood, unreasonable. We can hope, counsel, encourage or threaten (legal eviction if they don’t pay) etc. but the reality is we cannot get inside their heads and make the decision for them.
The social issues of why these folks are the way they are is beyond our business model to address. You may feel a desire and need to do so but I suggest you do this outside of this business model.
I have learned long ago that we can only help those that are truly willing to help themselves (not just those who would like to change). If they are not willing to make the effort than their reality will not change. This is no different with folks trying to lose weight than it is with folks trying to change their financial realities.
There is an old saying that implies that the definition of insanity is doing the same thing while expecting a different outcome. If we cater to a low income, affordable housing market that has been left to us because of poor financial decisions and other hardships then would it not be insane to expect them to change now?
There are a number of businesses that cater to these folks such as check cashing stores, payday advance businesses, rent-all type centers, lonnie dealers, mobile home park owners/landlords,buy here pay here car sales, etc.
If this market were to change then would their be a need for us and them? If we expect them to change and get upset when they do not, is this not a bit insane?
Separation of business and social mission are vital to the success of each. If you can create a separate business that addresses your social mission then you have likely found not only a second business but a passion.
Tony
Re: Thanks for replies… & clairification. - Posted by Anne_ND
Posted by Anne_ND on May 05, 2007 at 06:43:41:
I think the point here is that you cannot train someone NOT to be a flake. The FLAKE gene is a site on their DNA that gets activated at 13 and (sometimes) deactivated at around 38.
You can deal with it two ways- screen out those people who have it, or work with them in a way that lets you make money when they go into flake mode.
JeffB has outlined one way to deal with it- it’s what I used to call the “Guaranteed Buy-Back Program”, where after twelve months of on-time payments the people could move up to the next available MH that met their criteria. They also had to put down an additional $250, or pay that extra $250 over the course of the twelve months.
This has been a good program for me because I had a very small but very clean 2 bedroom that was definitely a starter home. I had a few good prospects who just couldn’t afford a large MH, but I could put them into this home and say- I’ll reward you with a larger home when you’ve shown that you are willing/able to earn it. It helps that this home is very clean and cute, even though it was very small. I got a hard-to-sell MH occupied, and they got a place to build equity that they could afford.
If they wanted to move before the 12 months, or they were late even once (and it’s never just once), they could not qualify to move up without paying additional fees.
I used to actively advertise the “Guaranteed Buy-Back Program” until I knew I was leaving ND. It was a great selling point- but basically it was something I would have done for a good payor ANYWAY, and it got me a little extra money up front.
Also- I think what Lonnie and others mean about “train them before they train you” is- when they are late, get on them right away. Serve them, or call them, or whatever, don’t let them think there are no consequences to not paying.
For those who are going to leave anyway, motivate them in whatever way you can to leave the home clean. If they do, consider yourself lucky, and move on to the next buyer and make some more money!
good luck,
Anne
Re: Thanks for replies… & clairification. - Posted by the cheeky one
Posted by the cheeky one on May 04, 2007 at 20:15:57:
geez, jeff - did you even read what i said? The “three words” was the joke., not the two word response.
Read it again.
A buyer has to have some blood in the deal so that they WON’T easily walk away . . . and if they have enough blood in the deal, then who cares if they do?
Are you new at this?
And nowhere did I say “read the book”
Your question is so simple, I wonder if you even did. Get them to solidly commit - and they won’t likely walk. Then you’ll be happy to have the note end.
Or keep taking $500 just to get somebody in there, and get what you deserve.
Sheesh.
Re: Thanks for replies… & clairification. - Posted by JeffB (MI)
Posted by JeffB (MI) on May 04, 2007 at 20:06:06:
Jeff, I think you have a valid point that perhaps some of us train customers the “wrong way” perhaps without realizing it sometimes.
I have a family who bought a 16x80 3/2 from me about 5 months ago and she wrote me tonight to see if she could buy her friend’s 4 bed doublewide that was for sale, even though she was not eligible to leave her home “because she hasn’t been there a year.”
Now what in sam hill does one year have to do with a four year note she signed with me? Nothing. When I sold her the home it was a bit small for them, but I told her about our “trade-up” policy (where we forgive the old note, take home back, and put someone in a larger home after one year if they make payments on time).
What I did not realize, is that she now views the four year loan she signed with me as a one year obligation, ie rental. To make a long story short, I think your point is valid… and we must consider the larger implications of our statements/actions than just what the yield or dollar profit works out to be on a particular deal.
I have found over time that most of my customers know one another despite being spread out over a 700 space park. They even have a contact list they circulate between them in case one of them is ever at the bank on a given month, but can’t remember the account number for the deposit.
Jeff (who often wonders, why is it easier to carry a list of phone numbers than an 8 digit bank account number?)
Re: Thanks for replies… & clairification. - Posted by Kevin - WA
Posted by Kevin - WA on May 04, 2007 at 16:41:35:
Jeff,
If you figure that one out then you have to write the book. “How to Make Flakes Less Flaky.” It is an age-old question.
K
Oh Steve! - Posted by Marty (MO)
Posted by Marty (MO) on May 03, 2007 at 21:15:25:
say those three words that’ll me walk on air…
Re: Two Rules - Posted by Dave Fl.
Posted by Dave Fl. on May 04, 2007 at 05:21:19:
As some of you know I’m involved in buying a 46 lot sub-division. Nine lots sold for cash, 30 are on lease-purchase and 7 remain to be sold.
Every bank I have visited for the financing says its a great opportunity but its outside their box. I have a commitment from one bank but it requires my taking a partner that has an EXISTING RELATIONSHIP with that bank. How many times has Tony and others stressed how important that is.
After getting a no from many banks, one steered me to a community bank that has a reputation of being “creative”. How many times have we heard how thats important.
Now after much calling and visiting I find I have mutual friends with some influential people and the lending climate is getting warmer, faster.
Question is, does Rule #1 hold as true for improved lot contracts as it would for Lonnie deals? I don’t expect all the contracts to go to maturity but I also don’t think people will walk on land contracts as easily.
Thanks
Dave Fl.
Re: Two Rules - Posted by jim paquin (colo)
Posted by jim paquin (colo) on May 03, 2007 at 16:38:23:
Tony:
Your information could not have come at a better time as I am in the process of taking notes on about a dozen rental homes I have in a park.
I was… going to let most of these homes go with very little down but now I am going to get more down thanks to your sharing the fact that I will never never ever get all my money. When the ones that walk, walk I will have a little money to bring these homes back to satisfactory condition for its next sale.
I definitely will sleep better tonight.
Thanks
Wonderful summation, Tony!!! nt - Posted by Phil Brown
Posted by Phil Brown on May 05, 2007 at 09:20:18:
No Text
Re: Thanks for replies… & clairification. - Posted by Ed in Idaho
Posted by Ed in Idaho on May 06, 2007 at 22:54:18:
Anne, you mentioned that yours was a “buy-back program” and Jeff (MI) said his was a “trade-up policy”. It seems that you give a credit for the original home that is applied to the new home. Is this correct and could you give a quick example of what the numbers would look like?
I’m going to ask Jeff (MI) the same thing and try to get a good comparison of this way of doing business, because I think it is a valuable tool to use in this business. Thanks-ED
Re: Thanks for replies… & clairification. - Posted by Jeff-oh
Posted by Jeff-oh on May 07, 2007 at 10:07:01:
Steve,
Your humor in that title was not clear for me when I first read it… in fact I still do not see it…
Tony wrote: Two rules… and put a responce…
You wrote: “Three Words” and then in the post wrote Down Payment. Where is the joke?
I guess I was thrown, also by, Marty (Mo)'s responce
"say those three words that’ll me walk on air… " Though you did not say it… I implied, as I thought marty did also the the three words you were talking about were… “Read the book”…
I admit I jumped to this conclusion… Let’s face it, if you had ment “read the book” it would have been an unhelpful “cheeky” responce. Sorry but I must be dumb here as I still do not see any joke, pun, or play on words.
This is the problem with written only communication. i.e. our own feelings and moods at the time we are reading are placed on the words, and the writer cannot place any inflection to help clairify meaning.
Bottom, line I do respect your opinions and insite. I do not feel the question was “so simple”. But I do agree with your insite on down payment.
Per your question, I have been doing lonnie deals fro roughly 3 years, I have compleated some 20 total deals, moved homes, etc. I have not had to take a client to court yet, and I have taken back homes 4 or so times…
Perhaps I have too much time on my hands to deal with this one client.
So keep your “3” chin up, I’m ok if your ok.
Jeff
Re: Thanks for replies… & clairification. - Posted by Ed in Idaho
Posted by Ed in Idaho on May 06, 2007 at 23:09:28:
Jeff, in this thread you and Anne_ND spoke of kind of similar things. She called hers a “buy-back program” and you have the “trade-up policy”. Could you give a quick example of what the numbers would look like on this.
I am asking Anne_ND the same question and want to get the comparison of the two. Mainly is there a credit to the buyers for the original home that is applied to the new home. Do you consider it just rent if they pay for a year (on time), they upgrade and you forgive the old note and make a new note based on the price of the new home? No down payment or is there? “Buy- Back” and “Trade-Up” could mean the same thing or the complete opposite. Please help a confused dude out! Thanks-ED
Re: Two Rules - Posted by Tony Colella
Posted by Tony Colella on May 04, 2007 at 05:53:49:
I have found that Rule #1 applies in most every business I have tried and in many personal endeavors as well.
It is our job to ensure we receive as much as we can of what we are owed. Rule #1 is not an excuse to let people get behind in rent or note payment. Rule #1 simply allows us to sleep well if we can say that we did what we could to collect and once that proved no longer effective, we cut our losses and had that tenant/buyer removed and another installed in their place (Rule #2).
Tony