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

best_tenantIf 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.

 

How to Get the Best Tenants into Your Rental Property

for-rent-650x336When 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.

Paying for Advertising & Having Rental Criteria

I generally do not pay for advertising.

I post ads on Postlets, CraigsList, and once in a while, on RentBits. They are all online ads, and I have a lot of pictures and a decent virtual tour video that I post on YouTube. I never use printed media; it is too expensive, and renters who do not have online access are generally low quality renters. If you have a solid marketing program, a decent quality rental, and are priced right, you will get lots of responses.

If you do not, you can look in the mirror at your problem.

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2015 NoNonsenseLandlord Financial Goals

Financial GoalsIt’s time to start the 2015 New Year’s financial goals.  When you own rental property, and have a full time job, it can be difficult to coordinate any time off.  When you do have time off, if you want to maximize your hours to dollars ratio, you take a class to improve your skills, get an additional license certification, or do a side hustle gig.  Or, you can even do a remodel on a rental property while on a ‘vacation’ from your ‘real’ job.

While everyone needs a time to reflect on their goals, and enjoy some down time, the down time will generally cost you money, not save it.  I spend the majority of my down time from my regular job maintaining rentals or taking classes.  It gives me a sense of accomplishment, and allows me to buy some great tools. ;-)

For now, it is time to plan on the 2015 financial goals.

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5 Reasons You NEED to Be Properly Capitalized for Real Estate Investing Success

Properly CapitalizedThere are many aspects to investing real estate. Some require no money down, but most require a significant amount of money to get into. And after you get into them, some require even more money. Failure to be properly capitalized or being under capitalized could cause you to not only lose your entire investment; it could cause you to lose your personal assets, too.

Never underestimate the amount of capital that it will take to be a successful real estate investor. I see many people embark on an RE investing career, and think they can spend their last dollar attempting to “strike it rich.” There are no quick paths to riches, and with a higher return comes more risk, every time.

5 Reasons You NEED to Be Properly Capitalized for Real Estate Investing Success

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Have you ever had an investment that costs more than you thought?  Or thought about an investment but decided against it because you did not think you have enough money?

 

December – January 2015 Rental Cash Flow

cash FlowThe rents were almost all collected and deposited by 1/5/2015, so the rental cash flow was consistent with previous periods.  I do have one tenant that paid $400 for the first installment of the rent.  The same tenant seems to struggle, but since she has been there for a while, I let it ride.   Any new tenants I took in over the past few years, they must pay late fees.

So, as has been the case for a considerable time, all rents were collected in a timely manner.

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What is the Meaning of Financial Independence?

ChoiceThere are many people that read this blog that are striving for financial independence.  Financial Independence is more of a state of mind, than a financial thing.  If you are in the USA, you may consider yourself financially independent as soon as you become an adult.  Others wait until they are not working, are retired and on Social Security.  Lots of people just want to be able to quit the rat race, and enjoy life.  Still others are longing to achieve one of the main things that many people cannot, freedom.  Continue reading

6 Insane Landlording Stories That Prove the Importance of Tenant Screening

tenant_stories_screening_importanceOver the years, I have made many mistakes on tenant selection and have had the privilege of accumulating landlording stories. There is always value to a landlord education, even if provided by a tenant, and in the real estate game, the education can be very pricy. Almost all landlords have made similar mistakes, and it costs them dearly. Only the well capitalized or lucky landlords live to try it again.

One of my first rental investments was a couple of duplexes. I had one all cleaned up and ready to rent. Since I knew Section 8 was a guaranteed way to get rent, I figured “How can a landlord go wrong with that?” After all, most people are decent people and want to respect the property and the landlord. I quickly learned the hard way that tenants are not always that way.

Read More Here.  I have listed the landlording stories and lessons to be remembered.

6 Landlording Stories That Prove the Importance of Tenant Screening

 

Do you have any interesting landlording stories?  Or even a good renter story?

How to Get the Best Tenants into Your Rental Property

When you have a vacant rental, you will inevitable have to advertise and fill it. 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.  You want to get the best tenants you can possibly attract to your rental.

Like it or not, you will be at some point showing your property to tenants that do not want to rent from you, or you do not want to rent to.

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.

See the rest of the story here

 

November – December 2014 Rental Cash Flow

cash FlowThe rental cash flow for the month was as expected and according to plan.  All rents for December 2014 were in hand by Friday, 12/5/14.  That is 24 for 24.  All units were full, with the exception of my one vacancy that I have been working on for a few months.

I generally have ~10 to 15% of the rents in prior to the first, 50% in by the first, 75 to 90% of the rents in by the seconds of the month, and 100% by the fifth of the month.

I started a repair log that should help both readers and I understand the maintenance that is being performed.  Just as when you have kids, you do not always think about the time spent doing the ‘kid’ things, I often do not think about the time spent maintaining the rentals.

I had some expenses that were not unexpected, but were unexpected that day.  Things like changing water heaters and fixing furnaces.

Rental Cash Flow Definition

My incoming cash is always on the first week of the month.  The expenses are throughout the month and year.  I try to remember and log most items, but the recent rent collections are easier to remember than a month+ ago.

Expenses like taxes, insurance, utility bills, mortgages, vacancy, management, etc. are all paid or accounted for, and not necessarily reflected in these cash flow reports.  Since I manage and mostly maintain my own properties, I do not spend as much on other labor.  This helps as I can maintain my properties better than many landlords.  I can also purchase the tools I need to do a proper job on the maintenance.

Water Heater Replacement

The water heater started leaking, and very old.  It was a water heater that I wanted to replace when I purchased the building in 2009, but I decided to do other higher priority projects instead.  It lasted another 5+ years, so it was worth it to wait.  If I was going to be away for an extended period, I may have changed it sooner.

The water heater started to leak on the cement floor, which then mostly drained slightly away from the floor drain.  It was a slow leak, but any water leak is a bad one.  In this building, the individual water heaters are in the basement.  After being notified by the tenant, I changed the water heater the next day.  They are easy to change, and other than being a bit heavy, only take a couple of hours to change.  I left the old heater on the curb and called a scrapper to pick it up.

I spent about $300 on the water heater, and saved about $300 on the water heater install.  That’s cash money in my pocket, rather than someone else’s pocket.  It’s actually money not spent, but it’s the same.

Furnace Repair

The furnace repair was a bit more work.  The furnace was running a bit intermittent.  When I stopped over the first time, I was able to clean the burners and wire connections and get the furnace working again.  It worked for a day or two.  I stopped back over and replaced a ground wire that was suspect, and saw that the new ground wire did not fix the furnace.  So I ordered a pilot hood and a used computer control board.  The control board was $49, about $200 cheaper than a new one.  The pilot hood was $25.  I changed the control board when it can in, and it fixed the furnace.  I did not need the pilot hood assembly, so I now have a spare.

The furnace now appears to be working fine.  It took three trips, but sometimes that is necessary to diagnose and repair an issue.  A ‘real’ furnace guy would have had the part in his truck, and advised to change out the furnace or spend $500 to fix the old one.

Those two repairs, the water heater and furnace, saved me at least $600 – $700.

Tax Planning Expenses

I am now starting to spend money on future items that I know I will need done for 2015.  Any expense in 2014 will be fewer taxes for 2014.  I prepaid all my insurance that is due in January 2015, a few weeks early.  I purchased some supplies that I know I will need for future projects.  It’s not a lot or prepaid expenses, maybe $3000 – $4,000 or so.  By spending on those expenses now, it will save me about a third of that money in taxes.  I do not like to buy too many supplies ahead of time, as I may change my mind on how I am going to do the project, or the parts could get broken or temporarily lost.

Retirement Countdown

The retirement countdown is still getting closer.  I have some aggressive saving goals for 2015, and that should bring down the amount needed to retire.  I should save what I saved this year, plus any principal and interest payments that I made last year, on mortgage that I paid off.  I also had a one-time expense of $29K last year that I will not have for 2015.  That should help bring me closer to my ‘magic’ retirement number.

So, in 2015, my 401K deductions start again, and I pay less income tax withholding for the first few months of the year.  I am looking forward to the last full calendar year of working.

Previous Cash Flow

October 2014 Cash Flow

September 2014 Cash Flow

August 2014 Cash Flow

July 2014 Cash Flow

June 2014 Cash Flow

May 2014 Cash Flow

Tenant Credit Score is Easily the Best Indicator of Tenant Quality: Here’s Why

tenant credit scoreI know many landlords, and despite my success at screening and selecting tenants, they often think somehow their property is different from mine. They do not think they can use the tenant credit score as a reliable indicator. They are ignoring tenant credit score to their own peril.

The fact is, tenant credit score is the most reliable indicator of tenant success that there is, bar none. You need to make sure that the tenant can afford the unit with an income of 3.5x the rent, but the tenant credit score will weed out the people that have behavioral issues and have no problem cheating anyone that they owe money to.

If you are a landlord, you know you need to do a background check. A critical piece is getting a credit report, complete with a credit score. The credit score is a summation of everything that goes on a credit report. It is calculated the same every time, with no bias to any discriminatory practices. It is colorblind and not subject to any fair housing issues.

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What do you think of using tenant credit score to predict tenant payments and behaviors?