A landlord asked this week on LandlordingAdvice.com, “How do you ‘tenant-proof’ your properties?  How do you minimize damage/wear and tear?”  One of our regular forum contributors shared the following 10 tricks of the trade.

1) Remove storm or screen doors – especially with children around.

2) VCT tiles are my low-cost choice for floors. Try dragging a washing machine or heavy furniture across any floor to test it for durability.

3) I have replaced broken glass windows with 1/8 inch plexi-glass instead.

4) Buy metal doors for entry/exit doors on a house. Use solid wood doors for the interior rooms.

5) When installing bathroom towel bars or roll paper holders, make sure you hit a stud with your mounting screws and not rely on plastic drywall anchors.  Kids use towel bars to do chin-ups with.

6) With hardwood floors that need refinishing but your budget will not allow it, I have painted them using chocolate brown OIL based S-W paint.  It looks great too.

7) Never use a light fixture that has an on/off pull chain on it. Provide a switch at the wall only.

8) Use medium-grade kitchen/bath faucets. Cheap plastic ones break too easily and the expensive Kohler ones tend to get stolen.

9) Use cheap mini-blinds and hang them yourself or you will discover what a four inch long framing nail does.

10) Never install carpet for anyone.  It is just a matter of time (or months) before it gets soiled beyond repair.

Why Many Landlords Lose Money!

Not surprising, many who get started in real estate lose money. I’m not talking about a 1040 loss after depreciation or other mystery losses. I’m talking losing cash – real green -every month. Why do so many lose money?

First off, real estate is enticing. New investors attend an “only six seats left” seminar with 246 CDs, 14 books, six booklets and a glow in the dark “Money is Good” orange badge. The whole shebang is only $5,995, but for you, only today, it’s discounted to $1,995. – Hold it, the seminar promoter just told me for the next 10 seconds its just $995 and presto – you are going to get rich!

Toto and Dorothy – please pull the curtain back and reveal the Wizard Guru and the dark side of the paradox. The real work. Not the fluff! And, as in most things, it’s not as easy as it might seem. The following are four real reasons why many landlords lose money!

1) Landlords don’t take time to really learn NICHE MARKETS, and rehab properties or add amenities aimed at niche tenants. It’s important to really know the tenant markets you want and gear your rentals and advertising toward those niches. If you do you will be blessed with at least six applications for every vacancy.

2) Poor Tenant Selection. Better to have a vacancy than a slob deadbeat. The problem is that many deadbeats today do not look like deadbeats and are not easy to spot on the surface. That’s why it is vital to do home visits, run credit, eviction, criminal checks, and adhere to your standards.

3) Poor tenant management. If you don’t enforce the rules, why should the tenant? Follow the lease (mine is 29 pages) and your procedures. File for eviction on the day your lease says you will with no exceptions. Nice guys finish broke!

4) Tenant Turnover. Always the largest expense. Average turnover for most landlords is $3,000 to $11,000. Turnover includes all repairs, plus lost rent and principal, interest, taxes and insurance (PITI) during the months of non-payment and vacancy. Yeah, I know, you do it for $1,500. Sorry buddy, that’s not a light, that’s a train. Turnover includes cleanout, major repairs, major replacements, minor repairs and replacements, paint, flooring, months of non-paid rent, rent-loss during vacancy, advertisement costs, cost of your time, etc. Still at $1,500. Buy a calculator that works.

What “One” House Can Do For Your Future 

A landlord recently made the following comment in response to a new landlord getting started with just one rental home, “Why bother with one rental house 90 miles away from your home?”   A long time landlord who has lived to see the value of “one” house responded.
Do you know what one rental house will do for your future? When I turned 16, instead of buying a new car for myself, I saved my money and on my 18th birthday purchased my first rental home.  Here’s what that one home did for me:

1) During the first 10 years I was able to get enough rent money to pay all expenses and save a little towards emergency repairs or vacancies.  I was also able to take several tax deductions, as an investor-landlord, which saved me $3,000 a year on taxes on top of the positive rental cash flow.

2) During the next 10 years I was able to slowly raise the rent and double the income, making me $1,000 a month positive cash flow and paying down the mortgage.

3) During the last 10 years I paid off the property, received triple the original rent, and now pocket $2,000 a month in positive cash flow and have an asset worth half a million dollars.

So one rental property gives me $2,000 a month income, makes my net assets rise by 1/2 million dollars and provides a nice supplement to my retirement.  In 30 years, think of how the property will be paid off and make you a great income.

Advice: Buy and read good books and newsletters from “real” landlords. Attend seminars or landlord conventions by real landlords and investors who do what they talk about and are successful and happy! Avoid gurus who won’t reveal what they own or manage.

Management tips provided by landlords on www.MrLandlord.com. To receive a free Rental Owner newsletter, call 1-800-950-2250 or visit their web site at www.mrlandlord.com where you can ask landlording questions and seek the advice of other rental owners 24 hours a day.

 

 

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