It’s a Mistake to Make Certain Assumptions
It’s good to learn from your mistakes but … it’s better to learn from other people’s mistakes. Often, we make decisions based on incorrect assumptions. Here are three big assumptions revealed by landlords that ended up being very costly, in some cases as much as tens of thousands of dollars. Learn from them; do not be quick to make the same assumptions which may end up costing you greatly as well.
- Thinking more bedrooms always equated to more profit. We lost thousands and thousands on our larger homes. Got rid of them and now we stick with tiny homes.
- Thinking I was the only person who could work on my properties. When I started going to seminars and hiring out my management tasks, my income exploded.
- Under-pricing the rent amount we could get for our rental. We based our rent on our mortgage payment, not on the market rent. Not only did we underprice the rent, but (due to low rent) we then undervalued the asset. This house was seen as a burden we could not unload, not as a money making asset. If we had been collecting the correct rent, we would have never sold this house.
Scheduling Showings of Your Rental
Q. One landlord asked about scheduling showings. She felt that she may have lost two prospective renters because the scheduled showing was too far out. She asked, what was the maximum time to schedule a showing between talking to the prospect and the rental’s show date.
A. When scheduling showings of your rentals with prospective renters, do so no longer than 48 hours, ideally within 24 hours from when they call AND have them re-confirm they are still coming one hour before the appointment.
Are you tired of fooling with entitled, deadbeat, “looky-loo” prospective renters who lie and don’t value your time? Today is a great day! One of the regular contributors to our Q&A forum (Sid,MO) shares below in his own words how he automates his screening process.
“The following process saves me time and headaches and has me with a vacancy rate of less than 3% for the year (and back as far as I keep stats … 2013). It has evolved a bit over time and I am still tweaking it but this WORKS! I call this “Sid’s Hassle-Free/Worry-Free Tenant Screening Process”.
- When a property comes vacant, I immediately advertise on the Zillow syndicate. If it’s an eviction or the resident is being contentious (rare), I don’t. I also bribe the current tenant with a $100 referral bonus and $50 “say good things about us, keep the house nice for showing” bonus.
- The ad contains instructions for “To View” and “To Apply” with links to my website.
- Our website has a “Tour Request” form. It’s really pre-screening. Asks the basics: full name (including middle), income that can be documented, how many animals (don’t say ‘Pets!’ emotional support animals aren’t pets!) and what kind, reason for moving, email and phone number, and how soon they want to move.
- I use the results of the form to run a pre-screening.
- Background check: Missouri has online court records on CaseNet. A lot of them get disqualified at this point…evictions, violent felons, recent drug charges, pattern of violations overextended period.
- Income. Must be minimum of three times the rent. Anything below is automatically disqualified. Rents are low in my town. Adjust as needed for your area.
- Reason for moving. If they trash talk the landlord or say something really silly…no go!
- Moving timeline… No I won’t hold this apartment for you three months! I’ll file the email address later so if I have a vacancy in two months then they’ll get an email blast. Keep this info – it’s valuable.
Vacant Unit: I send them a “Good news, 123 Anywhere Ave is ready to tour and the key is in the lock box on the front door. The combination is 1234. Say hello to our handyman Joe if he’s there finishing up a few small items. Or, you can apply online at (website) -$19.95 per adult age 18 and up.” This means they get to tour NOW while other landlords make them wait. It also keeps them from stealing or damaging, knowing that “Joe” could show up at any time. The worst thing I’ve had in four years of doing this is someone used the toilet and didn’t flush.
Occupied Unit: same idea, but my bribed tenants allow them in.
NOTE: I have not talked to this applicant yet. All calls go to a voicemail and they get a text or email response. This means I haven’t heard any ‘stories’ or been asked if we ‘work with people’ on the deposit. I am too busy working with good tenants to work with poorly qualified prospects. Don’t worry – I’ll talk to the good ones eventually. I know some of you insist on that and I do too, but I would rather talk to one or two well-qualified, cooperative people versus 100 entitled, deadbeat, looky-loos.
6. If they tour and respond via the website application, we process it fully. They pay the fee to a third party that does the credit check for us who then emails us PDF copies of the application, photo ID (required) and pay stubs/income documentation (required). We do all the usual stuff to weed out the fake landlords/employers and fake pay stubs. That’s a separate post!
7. Assuming they qualify…I text/email: “Congratulations! Your application is complete. We’ll need $____ deposited to reserve this unit for you. I’ll be in touch soon.” They have to deposit the funds and sign our Property Reservation Agreement that spell out the deposited funds are a Holding FEE (non-refundable for ANY reason once we finish application approval process).
** Note: I did NOT say their application is approved. We have one more step….
8. I contact them personally. Yes, NOW I talk to the person who has established that they have money, good references, good background, decent or better credit, and who cooperate. I set up an appointment to come view their current home and take pictures of their animals. NOW I get a chance to see if they’re faking me out. If they are disagreeable, uncooperative or sketchy, we cancel and will refund. It’s very rare to find this, though. Remember, this is a good person I screened pretty carefully and who is willing to go the extra mile.
9. An in-home inspection takes two minutes. I see the pets; I smell the home. This step will reveal more truth than any application or talk you will ever have with them or any of their references, guaranteed. Your house will look, smell, and sound like their current house within four weeks of them moving in. If you reject all nine of my other steps….DO THIS ONE!
10. Assuming all goes well, we sign the Property Reservation Agreement. Their deposited funds are now non-refundable if they back out for any reason. Keys will be turned over on move-in day when we do the walk-through and sign the lease.
This process has saved me TONS of time. There is little to no risk of damage/squatters. I get rented quickly and don’t waste gas or time on no-shows. Seriously, it works. I just did another one of these yesterday with the in-home inspection scheduled for this weekend. Her past and current landlord had only good things to say about her, so I anticipate a win and happy, happy all around.”
Top Ten Landlord Time Wasters
The following are 10 of the most common things (in no special order) that landlords do which, in the opinion of many rental owners, are a total waste of time or money.
1. Driving to post office, rental or bank to collect or deposit rent
2. Showing properties before pre-approval
3. Installing carpet
4. Over-improving a property
5. Renting to the wrong person
6. Halfway doing a maintenance issue
7. Getting drawn into tenant drama
8. Sending late rent reminder notices
9. Giving a renter more time to pay
10. Taking advice from unhappy landlords or landlords who are small thinkers.
The above tips are shared by regular contributors to the popular MrLandlord.com Q&A forum, by real estate authors and by Jeffrey Taylor, Founder@Mrlandlord.com. To receive a free sample of Mr. Landlord newsletter, call 1-800-950-2250 or visit their informative Q&A Forum at LandlordingAdvice.com, where you can ask landlording questions and seek the advice of other rental owners 24 hours a day.