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Apartment Turnover and Other Maintenance

Apartment TurnMy final apartment turnover for March is complete.  I am all set until the end of April now.  I had the new tenant sign a lease and pay the rent for the remaining March rent, and all of April, on 3/24.  I prorated the rent for March, and she also paid all of April.

These tenants have a solid credit score, and solid income, so they should be a great tenants.  It is only one person for now, and another that moves in in August.  Both have been screened and accepted.

That is the way to do it, declare and screen everyone who will be moving into the apartment right up front.  No one wants to be told their significant other can’t move in a month down the road.

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Hidden Rental Expenses That Might Cause Problems

enter-the-catacombs-PDIf you are like most investors in real estate, you want to make money.  Unfortunately, Murphy has a way to continually take away your profits at the earliest moment.  Even though you have accounted for all of the known events, and even all of the unseen events, the ‘other’ events happen.  These hidden rental expenses are real, and they add up.

Some expenses are a part of running a business, and really have no bearing on the rental property you are purchasing.  But you would not have the expense if you did not have the rental.  So it impacts your cash flow and profitability.  Some expenses are very small, but they indeed add up.

Some expenses are obvious, but who would ever think to include that in the cash flow analysis of a rental property.

Were you aware that driving to and from the rental will cost you something?  Of course, did you account for it in your analysis?  It could add up to be several hundred dollars a year.

Were you aware that sending letter(s) to a tenant would cost you something?  Did you account for it?  It may only be a couple of dollars, but it adds up.

You may want to get a business business liability policy.  How does that affect the cash flow of the rental?

Tenant gifts?  Even $50 adds up fast.  Bad tenants?  Those are the worst.  Evictions?  Bed Bugs?  rental licenses?  Rental inspections?  Tax preparers?  Incorporating?  Time and effort?  YIKES!!

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What expenses in your own life have popped up, some that may have been expected but were unplanned?  Or even totally unexpected?

 

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The True Cost of a Bad Tenant: Why You CAN’T Afford Not to Screen

Bad tenantAre you capitalized enough to be a landlord? Can you really afford the true cost of a bad tenant?

Far too many ‘investors’ neglect one of the main things that will put them out of business.  Their customers.  Like it or not, no matter how genuine a tenant sounds in the showing, when they are behind on their rent, they can be as mean as a snake.

I see it all the time: A prospective landlord looks at the numbers and says, “Rent will be $1,000 a month. My payments will only be $800; I can pocket the rest.”

If you are any type of investor, at least one who reads here, you know that this is a losing proposition. There is $200 worth of cash flow — before expenses. After expenses of 50%, there is a negative cash flow of $300.  And they are even managing the property for free.

bad tenant 2But to the naïve investor, on the surface it looks OK: $200 a month in your pocket. And that is if you get a renter, if you get a renter who pays, if you get a renter who doesn’t damage the place, and if you do not have any vacancy.

The Start of Trouble and The Cost of a Bad Tenant

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January – February 2015 Rental Cash Flow

packs-163497_1280-PD24 of 25 rents were all collected and deposited in the bank by 2/3/2015.  Since I am now 100% full, it was a great month for deposits and rental cash flow.  My one late tenant is the same one as I have every month, and she paid on 2/6/2015.  It was late, and many landlords would be happy to get their rents by the end of the month, let alone the first Friday of the month.

My typical month goes just like that.  If you look at my previous rent collections, you will see that I rarely get any late fees, and I rarely go beyond the second business day of the month to deposit my rents.

How do I do it?  I get great tenants to start with.

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Landlord Work

plumber-35611_1280-PDIt has been a bit busy here.  There has been a lot of landlord work on the rental front that has been taking a bit of time.  I updated the landlord maintenance log, and added times to the chart.

 All My Rentals are Full (for now…)

I was able to take in a pretty decent renter in my vacant apartment in my duplex.  Now that the winter is over, the calls on the rental seem to be exponentially more in volume.  The tenant had lived at her old place for about 10 years, and was ready to move out of the apartment scene.  She was slightly more risk that my original plan, so I went with a month-to-month lease.  Overall, probably less risk than 90% of tenants, but I saw a few things that I would have preferred to have been different.  The fast move in was one red flag, although that was due to procrastination on her part.

So, February and March 2015 will be a 100% full months, that is the first time since July 2014.

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How to Be a Landlord’s Ideal Tenant — and Get into Any Rental You Choose

wonder-woman-533663_1280-PDIf you are a renter, you have many obstacles ahead of you. Landlords are full of horror stories, and you are just another potential horror story. Based on statistical evidence, you are not an ideal tenant.  You want and need to be the best renter the new landlord has ever seen.

No landlord really wants you, but they need you. They need you to help them pay their rental mortgage; they need you to help them pay their personal mortgage, they need you to help them retire early. But they do not need you to come around and damage the premise or cause them a lot of extra work. Here is how to be the best renter you can possibly be.

My rentals are multifamily, but much of this advice translates to all rentals. Much of it I have seen firsthand.

How to Be a Landlord’s Ideal Tenant — and Get into Any Rental You Choose

Prepare for the Apartment Viewing Process

When you set up a showing for a rental property, it is really an interview. You are interviewing the landlord or property management company, and they are interviewing you. Make a critical mistake in this process, and you will have to move on to the next property. You do not have to be dressed for church, but do not come looking like you are homeless.

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Have you ever been turned down for a rental?  If so, what was the landlord’s reason?  If you are a landlord, what do you find to be the most detrimental things a tenant does to get rejected.

 

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How to Get the Best Tenants into Your Rental Property

for-rent-148891_1280-PDWhen you have a vacant rental, you will inevitable have to advertise and fill it. And, you want the best tenants you can find.  Unless you are extremely lucky, you will not rent to the first person who inquires on your rental — or at least the first person will not likely be qualified to live in it.

At some point, you will need to decline a rental applicant. This is one of the main problems landlords have: being unable to decline a tenant.

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Best Home Improvements to Increase the Value of Your Home

It’s the question that nearly every landlord wants the answer to: What are the best home improvements to make that increase the value of my home?

Ultimately, you aren’t just embarking on your improvement project to increase your standard of living, you’d hope that there would be some return on your investment as well in terms of an appreciation in the value of your home.

Unfortunately, the question of which are the best home improvements is one where there is no one size fits all answer, and it would be foolish for us to assume that. It will depend on many factors such as the location of your home, preferences of the local market, the state of the economy, interest rates, and you could probably come up with a list the size of the Empire State Building listing numerous other examples!

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Month to Month vs Annual Lease: Which Protects Landlords?

hand-376212_1280-PDWhat are the advantages of a Month to Month vs Annual Lease?

When renting out property, many landlords want to lock in a new tenant as soon as possible, and they want to lock them in for as long as possible. It makes sense — until you begin to look at all of the commitments that you are making and how little of a commitment the tenant is making.

As soon as you know you are going to have a vacancy, you want to begin marketing. If your existing tenant is a slob, a hoarder, or being evicted, it is extremely difficult to attempt any turnover until you have a vacant unit. With a long term tenant, you just need to factor in a bit of vacancy time to clean up and repair, as well as some down time until you find a tenant.

Worst case, it was a one year (or less) tenant and you have to wait for the tenant to move out to show it, you can look in the mirror for your issue. You should have bypassed this tenant.

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Smoking in a Rental Property

no-smoking-145888_1280-PDAre you aware of the expenses associated with allowing a smoking in a rental property?  If not, you need to understand that a smoker will cost you at least 10% of your profits due to increased turnover costs and additional vacancy. That is an unscientific number, and I may venture to guess it may be much higher.

Smoking in a rental property will cost you plenty in term of lost profitability.

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