(Shared by landlords nationwide)
Landlords nationwide were asked: “What was the average cost of getting a property ready for rent once a renter moves out?” There was a range of responses. One landlord’s response was a bit concerning to me. The response was this: “No clue. It’s not something I have tracked or cared to track. When a rental becomes vacant, it’s gotta be turned. So whatever the cost is, that’s what it is. Has to be done.” My response …
Improve Your Systems Instead of Just Doing The Work!
One of the advantages of tracking rent-ready costs for many landlords, including myself, is so that once you have broken down the various components (i.e., painting, flooring, wall damage, blinds, etc.) you can periodically review each component and see which aspects of the rent-ready process/system you can fine-tune and reduce.
Also, more importantly, by knowing which aspects or components of your rent-ready expenses generate the most cost, you are alerted to fine-tune your preventive maintenance checks during the rental term so as to check for the condition of those same components.
My goal is to reduce my rent-ready expenses by charging the residents while problems are still small (and don’t get worse), and while residents are still IN the property.
Reminder, your goal as a “business owner” (not just someone who manages rentals) should be about improving your “systems” not just getting the work done!
Vital Question to Ask All Applicants
Here is one suggested question to ask rental applicants on the phone to start the screening process. This question in particular was a simple but important to ask, because it allows you to do certain preliminary screening AFTER the phone call but BEFORE meeting the person. Here is what one landlord says they always ask when an applicant calls in response to say one of their Craigslist ads:
“I need to have the correct spelling of any adults interested in living there along with (phone numbers) and the address of where you are living now.” Before any further meeting, we check court records from the area they say they are from, and second check the property tax record to see who owns the home they’re currently in, and then google their phone number. Don’t make any appointment or take the application until this preliminary screening is done.”
No Batteries in Smoke Detectors
Landlords often discover that there are no batteries in the smoke detectors of their rental property. Sometimes this discovery takes place when landlords are doing a preventive maintenance check or a service call on the property. Often it is discovered after the renter has moved out. And tragically, sometimes it is discovered after a fire has occurred in the property.
It’s easy for landlords to put the blame on the resident and say that the battery was in place when the resident started renting, and that it is their responsibility to make sure the battery stays working or to replace when necessary. In at least one state, California I believe, it is actually the landlord’s responsibility to check the battery every 6 months. Residents have even been known to remove the batteries to stop the smoke detector from accidentally going off or chirping, or to use the batteries for some other item in the home.
The bigger point is, what can landlords do to help increase the probability that the smoke detector will always be working? The following are two suggestions by a couple of regular contributors to the MrLandlord Q&A Forum:
- Purchase the smoke alarm with 10 year lithium batteries. Not only do they last longer, but the resident can’t get to the batteries without literally breaking open the alarms.
- When one landlord does his quarterly maintenance inspection, he carries spare 9 V batteries with him. He buys them in mega packs at Sam’s Club for about $1.50 each. As per his lease, the resident must keep a working battery in a smoke detector at all times, and failure to do so results in the landlord (or his representative) replacing it for them. This is a bill of $10 per battery. Surprise! Now, all of the residents tend to have functional smoke detectors after the landlord’s first visit.
Collection Success Story
One landlord recently shared his success with collecting past due money owed by former residents. Below he shares of his experience with collections.
“I’ve posted this many times – get the money you are owed. Over the years, we’ve had over $400K owed and we’ve collected at least $350K of it. Time is on your side. There is no rush. The debt gets bigger and bigger each year – especially adding 15% a year (if that is what you stipulate in your lease, and is permitted by state law). You can renew the judgment every six years. As an example, lets use some real numbers:
Rent – original filing says $900.00 plus the next month since proper notice wasn’t given. Let’s just say $900 X 2 = $1,800 plus court administrative fees – another $300 = $2,100.
Damages to rental, say that’s another $600. You’re now at $2,700.
Add the collection fee which allowed 25% of debt or $625 and now you’re at $3,300.00.
Now add 15% interest a year – $495.00. With 15% interest – what’s the rush? Let it stay for a while. We never go after them until at least one year. It’s easier to find them if they think you’ve forgotten them.
Finding them: I just check the court records where they’ll have new disputes or legal problems – the address is attached to the court filing (This all results in a collection of $3,795.00).
Please learn how to do this. You can do it. You’re losing a fortune not collecting.
One last item: Many have said the residents will just declare bankruptcy. We say good, let them! One fact about bankruptcy: Once you declare it you must now follow the court’s pay schedule. Guess what? They can’t, and get kicked off the bankruptcy. Guess what happens then? You can go after them again. So don’t give up! My collection person is a pit bull and we are so proud of him.
Learn How to Choose Your Words Wisely
If you choose to manage rental property yourself, it is vital you stay current with all types of laws related to rental property management. In a recent news report, a landlord was charged with discrimination for not renting to a single woman and her teenage daughter in
favor of a bachelor. It appears the key problem, according to the Department of Housing and Urban Development (HUD), is that the landlord used gender and familial status as the basis for their decision instead of other non-discriminatory factors.
It seems HUD may try to use the landlord’s choice of words against her. When choosing between applicants, the landlord reportedly stated: “After reviewing all my applications, I decided to go with a bachelor. In the past, I have always rented to bachelors; that has worked best.”
While I do think it’s important that landlords know which type of resident has worked out best for them in the past, it’s vitally important to be able to use non-discriminatory “business” reasons for your basis of decision. To use factors which can possibly be linked to illegal discriminatory reasons can cause huge potential problems and fines. And the worst part is that if the landlord loses a lawsuit dealing with Fair Housing, most insurance policies do not cover you against such a lawsuit, small or large. That’s why I strongly encourage landlords to stay up-to-date on legal issues regarding rental property and how to best protect your wealth and assets.
Do You Have A Landlord Clone?
A landlord asked what I consider a very important question that all landlords should ask “themselves”. Below is a lead up to the question, followed by the question.
Lets assume you had an auto accident that left you with a broken leg and arm (now in a cast), and this injury is preventing you from taking an active role in the management of your rental properties. For this example only, you are not dead but you are in no mood to deal with residents or vacancies. Plus, your only source of income is rental income and you had two trashed vacant houses before the accident. In the above scenario, do you have a back-up plan to deal with this situation? More importantly, do you have a landlord clone of yourself who can take over and do ALL of the work that you were accustomed to doing before the accident?
The sad truth is that most landlords do not prepare for an unforeseen time that could happen at any moment, when they may not be able to temporarily handle the tasks they normally do on the property. And if or when that situation occurs, it could be financially devastating as they scramble to find individuals to cover for the many things they would normally do. The big point of highlighting this hypothetical scenario is to encourage you not to find yourself in such a situation unprepared.
Eviction Records May Lead to Good News!
You do your screening of a rental applicant. Through court records, you discover an eviction case with the current landlord. For that reason and others, you decline the application. Ready to move on to next applicant, right? Hold on a minute.
One landlord suggested that you consider contacting the applicant’s current landlord, but, not just in regard to the rental applicant. Did you also look to see if court records may reveal that the landlord has filed other eviction cases with other rental properties owned? If so, he or she may be tired of crummy residents and would sell you something cheap! Never overlook a potential “seller” such as a disgruntled landlord.
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.