Posted by Tim (OH) on December 29, 1998 at 12:39:41:
Wanna rent from me? I don’t even raise the rent for at least 3-5 years for tenants that handle the minor, irritating maintenance problems (i.e. washers, plugged toilets, etc.).
Your landlord doesn’t understand the value of a GOOD tenant. I’m always amazed when fellow landlords relate their horror stories to me, but now I think I can understand how that happens.
Good Luck
Tim
“Rent Collection” - Posted by Sandy FL
Posted by Sandy FL on December 29, 1998 at 08:16:44:
Ok, I have been looking at becoming a landlady (gasp!).
Don’t kill me , I just like the idea of income every month.
But this one thing is really bugging me … “rent collection??” In all my years (OK I am not that old) I have never made a landlord come to ME to collect his money, so why are so many (successful) real estate investors doing it that way? It seems the properties with the biggest net cash flow are in lower income areas (but not war zones). But even the President of my local RE Club has properties like this, where he or his buddy go and collect the rent themselves. I have no interest in doing this. I think I can find soemone who would do it for me. But tell me what is involved?
Re: “Rent Collection” - Posted by Carol
Posted by Carol on December 30, 1998 at 12:07:19:
Sandy! Join the ranks…
My 2 cts worth…
Tenant pay rent at my bank or to Bldg. Manager - Posted by Millie I.
Posted by Millie I. on December 30, 1998 at 02:04:43:
Sandy,
1)SFR TENANTS PAY RENT AT MY BANK: I set up a ‘Rent Account’ at my bank. My SFR tenants pay rents at my bank directly to my account. I create a Rent Receipt Form for the tenants to fill out themselves and give it to the teller with the rent. The teller validates the receipt and returns one copy to the tenant. The teller mail me another copy of the receipt. I have SFR tenants in 4 towns, they can pay rent at any of the 5 branches of the bank closest to them. This appoarch eliminates collection, lost in the mail, and maximize cashflow. Your rent money earns interest on the same day the tenants pay rent. This bank deposit system has worked well for me for 9 years.
In most cases, I don’t collect rents, I send late notices, and then eviction warnings. I may investigate the reason for non-payment. Whenever possible, I try to work with the tenants. If the tenant has money for luxury and doesn’t pay rent, they get evicted in 2 weeks with garnishment on their paychecks. If the tenant is unable to pay for a good reason, I may help them apply for temporary rental assistance to get caught up. If things still don’t work out, I’ll advise them to move in with their relatives till their finances are in order. If they don’t move, they get evicted also.
Millie I.
Re: “Rent Collection” - Posted by Laure
Posted by Laure on December 29, 1998 at 22:54:32:
I Never go to a home to collect rent… only to deliver a 5 day notice !! I have 20 rentals and last month I delivered 3. One Tenant was inherited when I bought the home this summer, and previous Landlord went to collect every month. I have better things to do with my time. If I have to give notice two months in a row, I tell them THERE WILL BE NO NEXT TIME ! I will follow through with eviction. Thus, I eliminate chasing after the rent. My homes are all updated, and in our town (pop 200,000) there is only 2 or three three bedrooms for rent at any one time in the paper. They get to like their comfy home pretty quickly and start following the program.
Laure 
Re: “Rent Collection” - Posted by Harvey(DC)
Posted by Harvey(DC) on December 29, 1998 at 19:58:41:
I have been a landlord for about 13 years and have had very little problem with vacancies or collecting rent. I belive that this is as a result of my targeted tenanting. My units are near local law and medical schools where housing is quite expensive and very difficult to locate. My tenants have been exclusively students from those schools. The schools maintain housing directories so I never even need to pay for advertising or rental commissions. I almost always get parental gurantees (for what they are worth). In each case these tenants are required to be in the area for 3 or more years and in the future may have significant income to protect. In addition, before lawyers are admitted to the NY bar they must go before a “character” committee. I make it known that I know about the “dreaded” character committee and make sure they are aware that skipping out on rent or destroying an apartment is not looked upon too kindly by the committee. So far this has worked.
To reduce turnover I offer a sort of rent “De-escalation” lease. I make the rent higher in the first year of the term then modestly decrease it each year for the next two years. By the 3rd year the tenants are paying slightly below below market rent and thus are encouraged to remain even after graduation. When I do have turnover, I turn my tenant into a “leasing” agent by offering them a week’s free rent if they re-lease their unit with no gap in rental. This usually provides them with significant incentive to keep the place clean, show the place and serve as my on site leasing agents. This is critical since I am an absentee landlord…
Re: “Rent Collection” - Posted by Rob FL
Posted by Rob FL on December 29, 1998 at 18:40:48:
A few years ago when I first started landlording I went around and picked up rent on the first of the month. No big deal. This is simple when the properties are nearby and you only have two or three tenants.
I decided about 2 years ago not to go pick up the rent anymore (except for one fellow who has been renting for several years). The reason I don’t go out to the properties anymore is:
Difficulty in scheduling. I used to go and pick it up after work at 5:30 pm on the 1st. Only problem was sometimes the 1st is on weekends and sometimes it is New Years Day. It becomes very inconveient for both me and the tenant to go chasing people around for the rent money even if they know of the set date and time. Not too hard with 2 or 3 tenants. I am currently up to 8 and it is a real hassle.
Security. I don’t like carrying hundreds of dollars (checks or cash) around. Especially if 2 or 3 tenants pay in cash. I could hire somebody for security or bring a dog or a gun but this gets back to the hassle idea again.
My system is that tenants have 2 options: 1) mail it to my PO Box, or 2) deliever it to me in person at MY office by APPOINTMENT ONLY. They all so far choose to mail it to me. (I don’t have an office, but I figure I could just have them come by my job or meet them somewhere if absolutely necessary)
My whole reasoning is that when tenants pay their light bill does the light company come to them? What about the phone bill? The car payment? The insurance? The credit cards? Why should I be their only bill collecter that has to come knocking on their door.
Just my opinion. I know lots of landlords who go out and pick up the rent. I just have better things to do with my time besides chasing people down.
Re: “Rent Collection” my 2 cents - Posted by johnman
Posted by johnman on December 29, 1998 at 15:50:49:
Sandy FL,
When I got my first rental I was extremely nervous. I had no idea what I just got myself into. I immediately bought a book about landlording, asked a realtor, who owned rentals, for a copy of the lease she used and I read the rental agreements I signed in the past. I formulated my own lease form and had my attorney review it.
I didn’t have a problem collecting rent during my first year (there will be one who will test you). I didn’t because I presented myself as a professional and stressed that payment of rent is their NUMBER ONE PRIORITY!!! I tell them I’m not in the business of loaning money and I do have a responsiblity to uphold so it is important that the rent is paid on time. I try to establish the LANDLORD/TENANT relationship starting from the signing of the lease. I do tell them that I am 50% nice guy 50% butthead. I become the butthead when any provisions of the lease is broken. I am the nice guy when they keep up their end. I do take good care of my tenants because I believe they are the blood of my business. A happy tenant will NOT give you problems.
I have read the responses to you question and I love the methods. Each method is used depending on the situation and the personality of the landlord. Make copies of all that has been posted, review them and see what works for your situation and personality.
My lease states that “rent sent through the mail must be postmarked before the date rent is due. If the envelope is postmarked on the first of the month the rent is due, rent sent is considered late” Then I add late charges. This method works for me. I do STRESS this point to the new tenant. I also call my tenants if the rent doesn’t arrive by the 3rd. I react quickly. Like I said I try to establish who is in control from the beginning and that is ME. By the way I’m just 5’6 and I say what I mean. Straight to the point!
Sorry that is is a bit long. You will do fine. Just find what works for you. By the way, you will find out that everytime you rent out your unit(s) you will probably be adding new provisions to your lease as situations arise. That’s a long issue.
Bye and good luck,
johnman
P.S. this also works for me , I tell the prospect tenant “I expect the property to be returned to me in the same condition as you see it now. The last tenant did (even though that’s not true). If you think this is a problem then I don’t see how we could have a good landlord/tenant relationship.”
ditto
Thanks! & What Are Your Favorites - Posted by Sandy FL
Posted by Sandy FL on December 29, 1998 at 15:36:09:
Thanks for the generous feedback, you guys are great!
I was wondering if you have specific do’s and don’ts with buying? Obviously the numbers have to work, but what is your benchmark? You have to be able to clear $100/net a month after expenses per unit? You never buy condos? You only buy duplexes, etc?
Thanks again for your input!!
Sandy FL
Re: “Rent Collection” - Posted by Jim_NC
Posted by Jim_NC on December 29, 1998 at 12:10:00:
Sandy,
I have started using a company that does automatic drafts. I get all my rents the same day (28th) and don’t have to worry about tracking down the tenant or their check. They only charge me $2 per draft. They also have a overdraft service that I have not had to use yet(knock on wood). If the tenants draft would bounce then they monitor the checking account every day until the funds are available. They charge the tenant $25 if their draft bounces and they take their fee out of that. If you want more info just let me know.
Re: “Rent Collection” - Posted by Jennifer(NH)
Posted by Jennifer(NH) on December 29, 1998 at 12:05:03:
A lot of landlord’s do go out and pick up rent checks, but I agree with Phil that they have a responsibility to send that rent. It is also a pain to schedule in when you are picking up the rent and will the tenant be there. And some tenants try to use it as a means of controlling you.
I use to have 4 apartments where I had to go and pick up the rent. That was a carry over from the previous landlord. I have gotten it down to one. The easiest way to change this policy is to get new tenants in there that are more responsible.
I realize that low income areas in NH & VT are far different than low income areas in Miami. As far as personal safety, you may only want to initially focus on areas that you feel comfortable walking in. There must be some low income areas that aren’t infested with drugs and gangs. They are just poor.
If you don’t feel comfortable going by yourself to pick up the rent then how are you going to feel comfortable showing the apartment to prospective tenants and such. Of course maybe you could borrow someone’s dog. I always thought dog ownership and landlording would make a nice combination.
Good Luck
Jennifer
Re: “Rent Collection” - Posted by PBoone
Posted by PBoone on December 29, 1998 at 11:28:11:
Sandy,
Landlording is a great passive income for us with that in mind congratulations!!!
There are different personalities for different jobs, some like landlording some do not. I for one do not know what the big deal is about landlording. We make a ton of money. We have NO tenant problems, but we also spell out EVERYTHING up front. This sets boundries. I do not pick up rent. I do not clean toilets. I do not provide maintenance. these task are spelled out in the maintenance agreement UPFRONT. My only landlording JOB picking up the check monthly.
Now before you move into the landlording business follow these few simple rules.
Re: “Rent Collection” - Posted by JHyre in Ohio
Posted by JHyre in Ohio on December 29, 1998 at 10:41:09:
Sandy,
A guy I know who owns inner-city properties in Columbus, Ohio takes a 6’4" off-duty policeman with him when collecting the rent. His high collection rate and sense of pesonal security more than pays for the officer’s hours. His reasons for showing up in person are identical to Jim’s.
Good Luck,
John Hyre
Re: “Rent Collection” - Posted by phil fernandez
Posted by phil fernandez on December 29, 1998 at 09:28:12:
Hi Sandy,
I differ somewhat with Jim’s approach, but he does make some excellent points. I do not physically go out to collect the rent. I feel that the tenants have an obligation and responsability to mail the rent to me not the other way around. However Jim is dealing with lower income rentals, so maybe his way is effective.
Jim makes a couple of good points in that when he goes to collect the rent, at the same time he can inspect the unit and I also feel that it’s important to have interaction with the tenants to disspell the greedy landlord image.
Sandy I’m excited that you’re getting into rentals. Screen the tenants with due diligence and you’ll be fine.
Re: “Rent Collection” - Posted by Jim MA
Posted by Jim MA on December 29, 1998 at 08:51:33:
sandy,
Being a landlord is not automatically a bad thing. Properly managed properties with carefully screened and satisfied tenants makes for an easy operation.
My success has been in low economic areas but I’m sure others do well in higher areas. My units are top shelf for my area.
I do personally collect my rents on the evening of the 1st ,the 3rd, and 5th of the month on on the 6th i send out 14day eviction notices when necessary. I pick up the rent for a few reasons:
I prefer to be a known entity not a PO Box #. I believe in a strong positive relationship with my tenants.
I know when i’m going to get my income no its in the mail excuses.
It gives me an oppurtunity to inspect the property’s condition. I usually take care of minor problems on my monthly visit as well.
It gives me something to do for about 4 hours per month.
I prefer not having the overhead of maintaining an office where they can bring the rent to.
As my operation grows larger I expect that this process will become more time consuming any may cause me to seek alternatives such as automatic draft service or even credit card payment but in some way I feel it is imperative that I maintain the strong relationshps with the tenants. I have had only one eviction in 20 years. I have been having good success with getting tenant to renew their leases this past year 66% of my tenant renewed out of 34% that did not 24% bought their own home and the other 10% I prefered the fact they chose to move on.
Re: “Rent Collection” - Posted by Bill
Posted by Bill on December 29, 1998 at 08:34:37:
Unless you know someone who will do it out of the goodness of their hearts, you will have to contact someone in the phone book under, “Real Estate Management”. They will do everything for you including paying your bills. They usually charge approximately 10% of the gross rents for their service. There is usually a “setup” charge to get things rolling. This charge can be upwards of a couple hundred bucks per house. Hopefully this provides you with some kind of help. Good Luck, Bill
Re: Thanks! & What Are Your Favorites - Posted by Laure
Posted by Laure on December 29, 1998 at 22:47:45:
I won’t buy unless I can get 125 to 200 per unit positve cash flow. I know this may seem low to some of you, but I also amortise the loan over 10-12 years… so I am pleased with this. I no longer want multi-family AT ALL. Done had my fill ! hehe And, of course, only 3 bedroom properties.
Laure
here’s a few… - Posted by Cesar
Posted by Cesar on December 29, 1998 at 19:10:29:
This may not work for everyone, but my rule of thumb is to get a MINIMUM of $200 PER UNIT net cashflow on multi-family properties and $3-400 on Single family if they are in the right area. Obviously, if they are in lower income areas, you may not get as much, but I still manage to get my $200 on those, too. Sometimes I will go with a Section 8 rental which I pre-screen myself and put in clauses into their standard lease which will allow me to evict them quickly if things get out of hand. (By quickly, I mean less than 30 days!)
Otherwise, you really have to play it by ear, but always make sure that you can cover ANY and ALL contingencies that may come up. Appliances and all that WILL blow up and landscaping will need to be done, and toilets will get stopped up, etc.
One clause that I always use is that the first $50 or $100 of repairs are to be the tenant’s responsibility, and only “Major” repairs (water heater blowing, A/C going out, etc.) are my responsibility. This way they do not have to wait around for me to get around to their problems, and it saves a lot of useless trips for menial repairs.
Hope any of it helps…
Re: Thanks! & What Are Your Favorites - Posted by Rob FL
Posted by Rob FL on December 29, 1998 at 19:03:58:
I started out with duplexes. First one was where I lived in one and rented out the other. I am still in it 6 years later but plan on buying a SFH to live in next year. My neighboring tenant pays 2/3 of my PITI mortgage payment (which is fixed 30 year) and I have raised the rent nearly $100 a month in 6 years. (In other words I have reduced my own payment out of pocket $100 a month) Another reason for the duplex is that if one side goes vacant I still have rent coming from the other side. SFH’s do provide more appreciation in value and usually better tenants from what I have found.
My goal is at least $100/month after PITI when I buy. I have found that SFH usually will barely meet this $100 unless you buy way under FMV. The more units the better the cash flow, but the more the management type problems.
I do have 2 condos also. Bought them from distressed sellers ( very cheap) did some fix up and make an easy $200 a month each from them.
Of course I will say that I am far from an expert. Been landlording since 1992 and have 8 rental units.
Re: “Rent Collection” - Posted by Tim (OH)
Posted by Tim (OH) on December 29, 1998 at 12:14:46:
I think ALL of us landlords would like whatever info you have. Could you post it, PLEASE!