Being self employed has its benefits. It is very nice to make your own hours and to be the one to call the shots. The downside of all that is that you are the one who has to be the problem solver when the problems arise.
And problems do arise at the most inopportune times. Plumbing issues nearly always happen on Friday through Sunday when plumbers are on emergency call rates. I’m not sure why this is the case but the number of people who have called me with issues on a Monday- Thursday is a very small group. Drain pipes know when it is the weekend. They are prepared in advance to plug up.
Tenants always call on the weekends with problems because they are off work and have the time to call. They have lots of questions. It might be about their lease. Although I gave them a copy, it has gone missing. Can the gardner trim the back of their courtyard? They think the dog is allergic to the bushes. The list goes on and on.
I always remain cheerful. My job is a customer service job. The bottom line is that yes I invested in real estate to have free time and I have that. It just is not always the timeline of my choosing.
Monday I will sleep very late and enjoy!
How do you handle the tenant for whom things are just not right?
We have one right now. I rented to the wife Ann initially. She is a very sweet American girl who found love and marriage while living abroad. The husband Massimo is an Italian national and was to join her a few months later. Well, Massimo is here now sitting on the couch watching soap operas and finding things for the landlord to fix.
The list was long and arrived by text. It included items like the toilet seat is worn. There is a leak under the sink. The window does not stay up by itself. The screen door needs painting. The auto lighter on one burner of the stove does not work. We would like a new metal screen door. Etc, etc, etc.
How did I respond? Cheerfully, I triaged the list. I called her immediately and told her what I would fix and what she could pay for. For instance, I am happy to fix all leaks, re screen windows and repair the auto lighter on the stove. I am legally required to repair health and safety items. I even threw in a new toilet seat. It is cheap enough and if it will make them happy, ok. However, any upgrades to the apartment are the tenant’s financial responsibility. An expensive metal door was not previously agreed upon. When they found out what the cost to them would be, they were somewhat less interested.
In the case of this particular unit, it was completely renovated just before Ann moved in. The unit was spotless! Massimo’s fix it list seems to me to be a bit of Italian machismo. The equivalent of pissing on a fire hydrant. That is ok. He is getting some attention and hopefully he will be settling in soon having marked his territory and the peace and quiet will resume.
I get this a lot. I don’t blame people for asking. The answer however is always no. I explain it this way: “Everyone on the property pays the same amount. I am very fair and equitable”. Usually people do understand and it doesn’t deter a potential renter. In the cases where it does, it is probably for the best. I don’t need a tenant that really can’t afford to rent my units. If it is stressful for them, it will become stressful for me in terms of late payments.
I charge everyone the same for like units. Otherwise it really does cause resentment. For instance, I did not charge one person a dog deposit. They had a very tiny chi and it was VERY well trained and quiet. Months later a tenant in the same building named Audrey brought a dog home without discussing it with me. When I found out and called Audrey and asked for the dog deposit she was irate! She new the people in the front had not paid and she resented having to pay. Never mind her dog was as big as a moose! The bottom line is that tenants talk and I NEVER do something for one and not for another.
Another consideration is that the value of a commercial building is based on income. Lower the rent and you are essentially lowering the value. I would rather have a couple of weeks of extra vacancy time while I look for a good payer than compromise the value of my property.
During a vacancy period, I use the time to polish my investment. I clean, spruce, update and fix. It is amazing how much of a difference it makes when the windows have any excess paint scraped away and are bright and shiny. Another tip is to buy and inexpensive welcome matt to greet a potential renter as they step through the front door. I buy them at Big Lots for $10.
Commercial real estate rule number one. Income is king! Never lower the rent. Polish your units until you find your new tenant.
There is nothing I like less than preparing for my tax appointment. Every year as I rifle through boxes of receipts and face my truly disorganized self I swear that next year will be different. I will input my expenses on a regular basis so at the end of the year I can push ONE button and VIOLA!
The thing about NEXT year is that it is always in the future. And in the present, I let the receipts pile up till I can’t see over them and then for convenience sake I box them. At first I say temporarily which turns into until when I have to drag them out for tax time. Hum….
The other big issue about tax season is the pit in my stomach about how much I might owe. If I was not concerned about owing money and then paying the penalty for late payment, I would get an extension until October 15th. That sounds nice right? Are you seeing a pattern here?
I have an excellent accountant. To make the appointment affordable or should I say more affordable, I have to add all the receipts and create all the categories. I present the finished product to him and in about 45 min we know what the damage is. I know people who just give their accountant boxes of receipts but that must be crazy expensive if you have a lot of expenses!
At this point I have gone through all the receipts, the online bill payer, the mortgage interest statements. I have sneezed and cursed and calculated. I am ready for my 1pm appointment. Fingers and toes crossed that I will walk out with a sigh of relief and not a pit in my stomach.
And then next year, things will be different…
What was the strangest tenant call I ever got? Well, it happened late one night when I was out of town taking a well deserved break.
One of my favorite tenants Joyce called me in a panic. Apparently a ferret, yes a ferret chased her into her bungalow. I did what any self respecting landlady would do while taking the day off? I told Joyce to call my husband on his cell. Ha! My husband called me within minutes. “You gave me the weasel call?” he said sternly. “Yes”, “but I think it is a ferret”. I replied. “What do you want me to do?” he asked. “Go over there and catch it of course!” was my answer, “but bring gloves!”
An hour later he reported that it was too dark and likely the weasel was under the house. The next day I hired a humane animal trapper that I’d used before. For $100 he caught the ferret in a humane trap. My tenant, Joyce thought it looked so much smaller in broad daylight that we questioned whether there was a family of them. Yikes! Invasion of the ferrets! But no, the truth is a ferret looks much bigger in the middle of the night when it is chasing you. Understandably.
The ferret turned out to belong to one of the neighbors behind us. “Skywalker”, that is his real name, was returned in perfect health. His owners begrudgingly repaid me for the humane trapper and promised that Skywalker would stay indoors from now on.
That was one for the record books.
As a landlord, one of my biggest challenges involves how to control the flow of water. Tomorrow we have a huge storm coming and I am working with handymen to fix a few questionable roofs.
Also, when we have a serious downpour like the one that the weatherman is expecting we also get flooding in the crawl spaces underneath my units. On several instances it has been so severe that it has damaged the floor heaters and has been very expensive to repair. We have made quite a few modifications in the landscaping and added french drains to divert the water. Still, when I hear the weather forecast predicting inches of rain, I shutter.
During the summer months in So Cal when it doesn’t rain, I still don’t get a break. The flip side of the coin is dealing with plumbing. We have the occasional pipe burst. My friends Steve and Gina just had a bad one at their condo. They were sleeping and a pipe burst three floors above them. They were awakened to find water flowing through the walls, ceiling and even out of the security speaker box in the hallway. It must have felt like they were going down with the ship! Months and many thousand dollars later they are on target to complete their renovation in a few weeks. Surprise, your are renovating!
Last summer we had quite a few major drain malfunctions. At one point, I had three plumbers working at the same time. We had a sewer that turned into a septic tank. We sent a camera down to take a look. Smile! Meanwhile everything (everything meaning effluence which is the technical term for poo) was backing up onto the bathroom floor from the tub. Yuch! Simultaneously, we were replacing massive amounts of drain pipe at another property. I was also getting calls from a tenant at a third property that they were having a backup emergency in their bathroom. It was a plumbing meltdown extravaganza of epic proportion. And all in a single afternoon!
In the end, we put in a new sewer line, replaced all the pipe and snaked everything that needed snaking. The bills got paid and my nervous breakdown was averted. Phew!
Alls well that ends well.
How do I get the word out when I have a unit available? Craigslist of course! The trick is to make your post stand out. Photos are the key. I take the dreamy-est photos I can.
The title of the listing is also key. I use as many key words as possible. ie bungalow, hardwood floors, foothills, 1920’s. My units appeal to people who like a place with character. My headlines reflect that the property is unique.
Recently I have done video tours of the units. I start by panning the street and the exterior and do a complete walk through with the camera. I post the video on youtube and have the link in my ad. The result is that while I get fewer calls, the prospects who do call are more interested and are better qualified. They have already seen the place!
In the body of my ads I describe the unit and amenities in detail, but I also tell people about the area and why they would want to live there. This is key for the out of towners but also for those who live in town currently and want to try a new neighborhood. For instance, we have great hiking trails, beautiful parks and a fantastic public swim center. Also, I tell people about the drive time to downtown and Hollywood. The drive time to work is key for someone considering where they might like to live.
Where else do I advertise? I buy a showcase ad with a local rental service called Westside Rentals. It is expensive but I get the visibility and that is what counts. They also allow the link for the video tour.
Recently, I bought an ad on rent.com. I have gotten several calls and am impressed so far. Rent.com is an ebay company and is getting some traffic.
Bottom line, I am open to everything that works. Instead of rental specials, I focus on quality of life. It has been my experience that people will find value in quality and those are the tenants that I am seeking.
Right now, I have a unit that is ready to show. My ads are posted and I am ready to meet my new tenant. Let the fun begin!
Distressed properties. There are tons on the market these days. There are great values including the bank owned. I looked at one yesterday. There were three, three bedroom houses on a 10,000 square ft lot. The price is very good and there is a lot of square footage for the money.
Problems? Yes, the place was a wreck. It is boarded up but squatters are still getting in at night. There is trash everywhere and inside everything needs major upgrades. The property next door is a real eyesore with peeling paint and boarded up windows. The neighbors dog barked constantly. Also, despite a big down payment, the appraiser had already been by and the bank refused to lend on the property because of its poor condition.
What was I doing here? An investor friend wanted me to take a look. He is interested in buying it. He is a contractor and can save lots of money doing the renovations himself. He will end up with a good upside in rental income when he is finished.
What was my advice to him? First, a high fence all around the property to make it private and to conceal the neighbors houses. Also, I suggested that when he paints he should offer to paint the side of the neighbor’s house that faces his. It will make a big difference when he has a prospective tenant touring the property.
The neighborhood is not good enough for me, but I can see the value in the property. If you read my post below, you will see that I was not initially positive about this project. Now I can see the benefit for him. Personally, I like a more well heeled tenant but everyone needs a place to live. When finished this property will cash flow even if it on the low end of the local market. The buyer has a very good renovation strategy and contacts for purchasing materials that will keep the costs down. He plans to spend about $20,000 per house in materials to bring them up to rental condition. I thought that sounded on the very low end but possible.
What about the loan? I told him to keep shopping it. Guidelines vary tremendously from lender to lender. I have seen properties in worse condition getting financed. Plus, he has 33% down which is a real bonus for a lender. I also suggested that he talk to the bank that owns the property now. Many time a bank foreclosure can be financed by the bank that currently owns it.
Bottom line. He is taking all the right steps. He has researched the neighborhood and the current rental market. He has spent lots of time planning the renovation at a cost that he can afford. I think he has a winner here. Stay tuned.
Yesterday one of my contractors called me for advice. He is planning to purchase a triplex near one of my buildings and he wanted to know what I though of the area. I checked it out on the map and could not be very positive. “But it only a few blocks from your building”, he replied. Yes, but it is a very few IMPORTANT blocks from my building.
And that is the way it is. In many areas a few blocks make a difference. In this case, the street was fine, but the two blocks East of his street are bad. And, it is too close to a liquor store that has closed several times due to criminal activity. The property is a little too far South and a little too far West for my liking.
A prospective tenant will drive around the neighborhood. They will come back at night. They will ask friends and coworkers. They will call the local authorities. People will rent in the best neighborhoods that they can afford. They are easily scared off.
First question I ask myself. Would you live there? Second question. If I drive around with fresh eyes, does it look safe? The prospective tenant from out of town may feel threatened by a couch sitting on the curb. You may know it is trash day and it will be picked up soon. Regardless it could be a red flag to someone moving into the area.
I am very conscious of the experience a prospective tenant will have when coming for an appointment to see my unit. On several occasions asked neighbors surrounding my building to remove eye sores. I show up early to meet prospects and pick up any small debris in front of my building. When asked about the safety issue, I direct them to call our local Sheriff’s Department and give them the most recent statistics. I try to be as accurate as possible for legal reasons. Landlords have been sued for being misleading.
Bottom line. Try to buy in a great area. If you already own property, do what every you can to maintain or better your community. You can increase your equity by making your neighborhood safer, more beautiful and more desirable.
There are a lot of very eccentric people in the world. And like a fine wine, I have a great appreciation for them. Frankly if everyone was normal, the world would be a very boring place. That being said, I like to keep my landlord life simple. When I show my bungalow to a prospective tenant I use the time to really interview them and find out what they are about.
Conversation is the key. Let them talk about themselves. This should be easy. People love to talk about themselves. If they are not talking at all, it is because they are not interested in renting your unit. You can shuttle these folks through quickly so you don’t waste your time.
What is the most disturbing think I have heard? We had an older couple who was looking for a place where NO ONE in the neighborhood used dryer sheets. Have you tried the moon? I wanted to ask. Apparently they had an extreme sensitivity to dryer sheets and the area had to be clear for several blocks of dry sheet chemical. I can picture myself on a neighborhood campaign to stop out dryer sheets. Here is me knocking on doors and passing out leaflets. I think not. I folded up the showing quickly when the conversation turned to dryer sheets.
The bottom line is that I want a tenant who is reasonable and easy to work with. I can’t promise that there won’t be problems. I look for people who will work with me as I work for them. People who make a lot of demands or are inflexible will not be fun when there is a plumbing backup and it is 10pm and I can’t get the plumber out until the morning.
It pays to be choosy and wait for the right tenant. Conversation is the key.