Posts Tagged Tenant Landlord

RENTAL PROPERTY MANAGEMENT – DEALING WITH “CHALLENGING” TENANTS

When my wife, Kris and I were traveling and staying with some friends, we walked into the room they had prepared for us and on the lamp was an antique looking sign which read: “Our guest bring us great joy… some when they arrive… and others when they leave!” I felt that way about our Tenants… sometimes, it’s the waiting for the joy at the end!

We are all challenging people to live with… some more than most! We categorize our challenging Tenants into three primary categories: 1.) Students 2.) Entitled Tenants and 3.) Those Tenants who upset the neighbors around them. In a way, they all have similar attributes… they want to live their lives… any way they choose… regardless of how disruptive they may be to others around them. Many of these Tenants “bully” their way through life… pushing their way through. Our tip for dealing with all types of challenging Tenants is to show respect to them, but also show your resolve. Be assertive in requiring that they go by the same rules that most others on the planet go by. We have developed what we call a “No” letter and it very respectfully says something to the effect of “Thank you for your concern about (whatever the concern is). However, this is not a situation in which we will be able to meet your expectations at this time.” (then state whatever clause in the lease which applies). Another option, if they are disturbing the neighbors or causing damage to the property is to threaten them with a notice to comply with their lease or move. There is a very strong chance that your Tenants won’t like either response. But with your resolve… you will get this challenging situation under control.

In summary: Don’t allow your Tenants to get the upper hand in your relationship… push back with respect and their legal obligation of their Lease Agreement.

To view a short video on this same subject, please CLICK HERE

If this tip has been helpful to you, please visit our website at: ManageToMakeMoney.com where you can find our “No” Letter and many more tools, tips and techniques for managing your rental property profitably.

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RENTAL PROPERTY MANAGEMENT – TENANTS BREAKING THEIR LEASE

Tenants Breaking Their Lease

One thing which occurs more often in Rental Property Management is Tenants breaking their lease.

Let’s face it, life happens and Tenants break their leases for many reasons . . . they can’t pay any longer and are skipping out or, it is generally something less sinister like . . .  getting a great deal on a short sale and just learning that they have to close in 2 weeks . . . YIKES!!  Either way, you have to know the Tenant’s and your responsibilities when this happens.

As you probably already know, the Tenant has the responsibility for the rent through the end of the term of the lease as stated in their lease agreement . . . and to leave all the utilities on and pay for them until the property is re-leased (if you used our lease form).  You, as the Landlord, if you want to be able to collect any rent through the end of their lease term, must immediately and diligently market the property for lease again.  Be careful not to market the property at a higher rent amount than the previous Tenant paid or you may have difficulty in collecting money for lost rent in court if . . . you “Jacked the Price up” which is how a judge may see it.  You will only be entitled to the lost rent between the time your previous Tenant vacated or last paid rent and the beginning of a new lease with your new Tenant . . . no double dipping!

The subject of Tenants breaking their lease along with many other property management challenges are covered extensively in our new Property Management Training Program; Manage to Make Money . . . . the Real Estate Series.  Click here for a workshop near you: Workshop.  This new series has been developed around one of our books: Manage to make Money . . . Your Guide to Profitably Managing Rental Properties which is now available for California laws as well as many states in the Midwest.  It is a virtual Survival Guide for anyone managing Rental Properties!

Imagine yourself having challenges with your rental property . . . NOW imagine yourself having a solution to nearly all of your rental property issues!   Visit our website at http://www.ManageToMakeMoney.com and check our books, e-books, documents, forms and checklists and much much more!  You never knew that life managing rental properties could be this easy!

Click on this link for a short video about what to do when Tenants break their lease:  Tenants Breaking Their Lease

Thank you for reading!

Pat and Kris

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RENTAL PROPERTY MANAGEMENT – EARLY TENANT MOVE IN

Few of us would ever allow our Tenants to move in before their lease begins but . . . many of us do unwittingly!

Would you ever knowingly allow your Tenant to move into your property early?  Perhaps unwittingly.

Think about this scenario for a minute:  You have rented your property and the lease begins on the 1st of the month which is a Sunday.  For our convenience, many times, we may be inclined to give the Tenants the keys on a Friday or Saturday, so that we don’t have to do it early Sunday morning.  What happens so many times is that the Tenant is excited about their new place and now that they have the keys they go by just for a look . . . just to “breathe it in”.  When they get there, they remember those two boxes in the back of the car . . . “Gee, if I get those out, then I can start with an empty car on moving day.” Once those boxes go from their car to the house or condo, technically, they have “moved in”!

Now, let me ask you, what is the effective for their renter’s insurance?  Chances are, it doesn’t take effect until the 1st.  why would it start sooner?  Without that date (the now NEW move in date) being covered in their lease or their renter’s insurance being in effect . . . you, the Landlord, are liable for any damage, or injuries they may occur during that time between when they moved the boxes in until the lease start date on the lease!

To solve this issue, we always wrote the lease to begin on the day we gave them the keys and, required the Tenant to have their renter’s insurance effective on that date also.  You don’t necessarily need to charge them for the extra days rent . . . just cover yourself legally and from a liability perspective.

In summary, think through the date relating to move in dates and “possible” move in dates.  You might just save yourself some heartache.

To view a video on this same subject click on this link:  Early Move In

If you have any questions about this subject, fell free to contact us via our free service; ManagementLink.  Simply click on the link and type in your question or issue.  We will get back to you within 24 hours with an answer.

Thank you for reading!

Pat & Kris Larkin

We have founded and developed “Manage To Make Money” which is a resource for anyone, novice or professional who manages rental properties.  We provide Books, Documents and Forms, Live Seminars, E-Books, Free Webinars, Tips and Private Consulting.  Check it out!

Manage To Make Money – Cottonwood Falls, Kansas 949-689-4344, Info@ManageToMakeMoney.com

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TENANTS – ALWAYS GET A CREDIT REPORT

Screening prospective Tenants can be difficult but here are a couple of tips that will help you to minimize your risk of getting a bad Tenant.

One of the main elements in screening your Tenants is to get a credit report. There are many other ways to check out your tenants but a credit report will do the best job of surfacing potential issues in their ability to pay rent and in general will help you to sort through your applicants. You can get a credit report in a couple of different ways; First, is to have your prospective Tenants run their own credit report. But be careful, free credit reports are available but rarely have a credit score. A credit score is key. Without the credit score you are subjected to reading through reams of credit information… some good and some not so good and having to figure out if this applicant is a good risk or not. The credit score will do all of that for you. Secondly, you can find many companies on the web that you can sign up with to run credit reports for your applicants. These companies will of course check you out first to be sure that you are trustworthy enough to be dealing with such sensitive information and that you will get the proper authorizations from your applicants.

As to what credit scores are good and bad; that depends on your market but I can give you some very rough ideas: a stellar credit score is 800+ and a score in the 500 range is going to be due to a lot of late payments, possibly judgments or even a bankruptcy.

In summary, a credit report will “tell the tale” about your Tenants. Be careful though not to be too restrictive; these are tough economic times we live in and you need to hear everyone’s “story”.

To view a short video on this subject go to: http://bit.ly/eCprVn

Thank you for Reading!

PAT & KRIS

Visit our website at: www.ManageToMakeMoney.com to see the full array of rental property management resources as well as our latest current live seminar schedule.

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RENTAL PROPERTY MANAGEMENT – SYSTEMS FOR THE PROS

SYSTEMS FOR THE PROFESSIONAL PROPERTY MANAGER

 Any business, in order to operate and deliver its products or services, must have systems and processes.  In this chapter, I will be sharing with you many of the systems and processes we implemented to manage the 320+ properties we were responsible for.  The process is like any other . . . it is never finished.  There is always something that, while it works better since you changed it, is still not working as smoothly as you would like.  What I am sharing with you is basically a snapshot of where we are in this ongoing process.

Filing

 Every organization has to do filing.  It is simply a way to put important documents and information away in such a manner as to be able to find it again with you need it . . . and that is the acid test!  You may have an awesome filing system that you have implemented but if you can’t find what you need when you need it, you have to ask yourself: is this really working for me?

The starting place for us in dealing with our properties was to assign a property number to each property.  This number is used in paying invoices; in setting up our property management software and . . . you guessed it . . . in setting up our filing system.    We start out arranging all of the properties in alphabetical order, by their street name and then begin assigning property numbers to them.  Under this convention all of your properties on numbered streets would come before your named streets in the order of your streets: 6th street, 10th street and 27th street, then Apple Street, Boston Street then Orange Street.  If you have more than one property on the same street; the ones with the lowest house number would come before those with the higher ones.  As you are designing your property numbering system, one thing to think about is to allow enough unassigned property numbers between the assigned ones to allow for some growth.  We only re-assigned property numbers once in the five years that we owned the company.  This was mainly due to the fact that we more than doubled our number of properties during that time.  As you can imagine, because we had outgrown our numbering system, we had a lot of property numbers with decimal numbers so that we could fit them between two consecutive whole numbers:  #110, #110.2, #110.5 & #111.

Here is an example of a numbering convention which works:

Property #               Property Address

1

623 E. 6th Street

2

Unassigned

3

Unassigned

4

842 So. 18th Ave

5

622 West 120th E. Ave

6

Unassigned

7

Unassigned

8

123 Apple Street

9

129 Apple Street

10

Unassigned

11

Unassigned

12

855 So. Boston Street

13

Unassigned

14

Unassigned

15

27 Highland Ave.

OK, now that we have figured out how to number our properties we are ready to set our filing system.  We recommend that you use a three folder system for each property.  One is a colored folder; red, blue, green or even electric colors are available at your local office supply store.  The other folder is a plain-Jane manila folder.  The two folders rest in the third folder, which is a hanging folder.  All three folders have the property number and address on it.

The Colored Folder – The colored folder is for all of the legal documents relating to the property, or you could also think of it as housing all of the long-term documents.  On the left side as you open the folder, we keep all of the documents relating to managing the property; Management Agreement; property set-up sheets; Owner information, and copies of any letters to or from the Owner of the property, etc.  On the right side of the folder, keep all of the information relating to the current Lease.  On this side you will keep the Lease itself, the rental application, any Change of Terms, any Three Day Notices or written correspondence with the Tenant or notes of communication with the Tenant.

The Manila Folder – This folder is for all of the day-to-day stuff that goes on with the property.  On the left side, you will keep all of the HOA documentation; newsletters, notices, etc.  On the right side is where you will keep all of the paid invoices for anything on the property: mortgage statements; HOA statements; and paid contractor statements, as well as the work orders for that work.

Another thing that we put in the manila folder is the Lease.  I know, I just said that you will keep that in the colored folder . . . whassup with that.  If you re-lease the property during the year, we put the new Lease in the colored file and move the outdated Lease into the manila folder.  This way, you will still have access to this information without having to go to your archives.

As I have mentioned before, I tend to be an efficiency-driven sort of person.  When I first saw this filing setup, I pushed hard for going to the multi-tabbed, all in one folders.  The reason that doesn’t work as well for this system is that at the end of the year you will want to purge your files and essentially the entire manila folder will go into to your non-active file storage.  This becomes a very efficient process when all you have to do is remove the manila file, mark it with a colored tab with the year it was for and make a new manila folder to replace it.  Also, if you don’t purge your files each year, they would become so fat and cumbersome that you literally would have to rent a larger space to house all of your files!

Archiving – If you are going to keep physical copies of your old files, you will need to maintain a storage facility where you keep all of your file archives.  Typically this is for files on properties that you no longer manage, or for files on properties that you do manage, but the files are so old that the likelihood of needing to access them is minimal.  A good rule of thumb is that you maintain records for 10 years and then have them shredded.

Depending on how long we have been managing a particular property, we would generally keep all of the past year’s files for that property in storage in our office.  Now, if you have been managing a property for 15 years, that doesn’t make sense; information that is 3 – 5 years old is only going to need to be accessed once at the most, during a given year, so it really doesn’t make sense to use your valuable file/office space for that and it goes to storage.  At any rate, this three folder system is working well for us.

Physical Hard Copy Filing vs. Electronic

With all of your current year files and three–five year archives, your filing will require a lot of space.  That is valuable and expensive office space.  If you can eliminate several file cabinets then you could add more work stations and not have to rent larger space in order to hire new people as you grow!

I recommend that you start out scanning all of your documents that you would normally file . . . as they occur!  This will start to build your filing system and when it is time to purge your physical files and move them to another cabinet you can skip that step and move them to archive.  You will have the electronic files on your computers (don’t forget to have an off-site backup!)

 

We hope this posting has been helpful for you.

Thank you for reading!

Pat and Kris

 

For a virtual goldmine of  resources for time and money saving systems and secrets of the pros, visit our website at www.ManageToMakeMoney.com

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PROPERTY MANAGEMENT – PAYMENTS – SECURITY DEPOSITS – SOFTWARE

Payments From Owners

 There are many instances when you will have to have your Owners infuse their account with funds.  This situation occurs for a number of reasons: the property has a monthly negative cash flow; you have just had to do some major repair (replacing the furnace or air conditioner); a major remodel after a long-term Tenant vacated, or something as simple but expensive as paying property taxes.

Buffer amounts

First of all, let me say that we strongly recommend that you maintain a buffer amount (minimum $500.00) in each of your Owners’ accounts.  This will give you the flexibility to take care of small repairs without having to have your Owner send you a check, and depending how much of a positive cash flow the property may have, you can replenish the buffer fairly easily for that.

Infusions

Holding on to the idea that Owners (as is the case with all of us) do not like surprises about money . . . unless we have won the lottery!  Now, emergencies happen and usually, they are difficult if not impossible to anticipate.  But I am speaking here about the expenses that the Owner is going to have on his property that we can anticipate: long-term Tenant moving out, real estate taxes (they’re always due on the same date – year after year) or a special assessment from the HOA.  When we can anticipate these expenses we need to be proactive in estimating how much they will be and when our Owners will need to send funds.  This will accomplish a couple of things:

1.) It gives your Owner a warm fuzzy feeling to know that you are watching his back and keeping him from having unpleasant surprises and 2.) It gives you the funds from which to pay the expenses.  Otherwise you could find yourself in the unenviable position of having done $10,000 worth of work on an Owner’s property and when you call him to get the funds you learn he is in Zimbabwe for 2 months . . . or worse yet, he thought that the expenses were going to be less and he doesn’t want to pay the $10,000 and now wants to negotiate the amount with you . . . YIKES!

Dunning Letters and E-Mails to Owners for Funds

 We have had very good luck with sending e-mails out (to our Owners that do e-mail) when we need funds.  You may think this is very elementary but before you tell your Owner that you need more funds, be sure to do your homework.  What do I mean by that?  You don’t want to send your Owner an e-mail telling him that you need $1,500.00 to pay for the new water heater if his property is running $100.00 negative cash flow each month and he has no reserve buffer left.  If you don’t say something about the negative cash flow and the status of his account, you will just be asking for more money again next month.  This makes the Owner feel like you are not on top of your game (which you aren’t) and causes both of you more work in the long run.

Again, be proactive with your Owners and anticipate what their cash position looks like.  Act like it is your money and how you would want to be treated.  If I had the above scenario, I would tell the Owner that I needed $1,500.00 for the water heater (as we discussed previously) and the negative cash flow on the property has run through his reserves.  We would like an additional $500.00 to replenish his reserve account and $600.00 to cover the next six months of negative cash flow at $100.00 per month.

Maintaining Security Deposit Liability Integrity:

 When a Tenant pays you a security deposit on a property, that is a liability that you will maintain in the Owner’s account.  The purpose of the security deposit is so that you have funds (security) in the event the Tenant fails to pay the rent or leaves the property damaged when he or she moves out.

When there is a cash need for repairs or whatever else on an Owner’s property, there is the temptation of the Owner to see that cash in their account and want to use it to pay those expenses.  If you allow them to use it, this is a very, very slippery slope to allow yourself to step onto.  For a couple of reasons: 1.) unless you document it well and in writing, after a few years, our memories fail us and our Owners are no different, they will typically not remember using that security deposit to pay operating expenses from and 2.) as property managers we are required by law to notify the Tenants that we are no longer holding their security deposit; that the Owner is, and give them the Owner’s contact information.

Now we, as property managers, are the Owner’s agent and the security deposit does belong to the Owner, we are just holding it for them.  If the Owner insists on using this money, we recommend that you go about this in the following way:

  1.  Write a check to the Owner for the full amount of the security deposit and mail it to him with a letter explaining the transaction and a copy of the letter you are sending the Tenant.
  2. At the same time send a letter to your Tenants advising them who is now holding their security deposit.

It is important that you not go back and forth with this transaction; giving the deposit to the Owner, putting it back in the account, back to the Owner, etc.  First of all, this will breed a lot of insecurity and concern on the part of your Tenant and secondly, it is a lot of work and liability for you!  If you are going to do this, we advise that you tell your Owner (put it in your management agreement if you want) that you will make one transfer of the security deposit and that is it.  Something to think about, given enough time and aggravation it won’t be long before your State’s Department of Real Estate will be conducting an audit of your trust account.  That could be right up there on the fun scale along with root canals and IRS audits!

Software

 There are a lot of very good fully integrated property management software programs on the market today.  When I say fully integrated, I use the term loosely as these various programs are integrated to varying degrees.  In general terms, there are programs on the market now that will take care of the accounting for your Owners; interface with your word processor so you can write letters to Owners or Tenants and it will file them with the property; and will keep a rent log for single or multiple properties.

This is the teaser. We will be discussing software programs and their pros and cons in the next chapter.

 

I hope you enjoyed our various topics today.  Next we will start some discussion on “systems” used by property managers . . . don’t miss out!

If this information has been helpful to you, visit our website for more resources to help you profitably manage your rental properties!

Thanks for reading!

Pat & Kris Larkin

 

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RESUMES AND MARKETING YOURSELF IN TRANSITION


 

Let’s assume that your construct confirmed your suspicion that you would be well suited for a career in property management, what are the next steps.  How do you put together a resume which will convince the people hiring that you are a good bet in property management even though you may not have as much experience in the field as some of the other applicants for the same position?

Resumes and marketing yourself is a vast subject and to do yourself justice you will really want to take advantage of some of the information that is out there which will take you to a much higher level of detail than we will here.

We do, though, have a lot of experience in the hiring side of things . . . both from the perspective of the employer as well as the employee.

In today’s wide-open Internet world, the possibilities for you to market yourself to countless numbers of people are nearly endless.  It is really just marketing.  Experts tell us that you only have seven seconds to make your first impression and that is why a great format for communicating to the decision makers is so important . . . scratch that . . . it’s imperative.

In my travels I have finally come across a resume format that literally turns heads.  I’ve even had interviewers at the end of an interview say to me, “This resume looks great, it really got my attention.  Where did you get it?”  So in the spirit of sharing my stuff, I am sharing it with you.

Resume:

First you start with what I call the “Billboard” section of the resume.  Remember the 7 seconds to make a great first impression?  That’s what the billboard is all about.  Please refer to our sample resume in the appendix at the end of this chapter to see what I am talking about.

Billboard – This at the top of your resume and it is going to give a quick snapshot of who this great applicant is (you).  It will contain the title of the general position you are seeking and then a short (perhaps two lines) summary of who you are and how wonderful you are. Next part is just words in bold type that describe your skills and talents.  Below this section is a section describing even more incredible skills and talents you have.  I say that a bit tongue in cheek, but it is true, you need to be selling yourself and this is the place to do it.

Selected Career Highlights –  This is where you list the previous positions you have held at various companies.  Be careful here.  Remember, you are not going to write this, as you would have when you were looking for another job in your old industry.  You are changing industries so you need to find similarities between your previous positions and the one you are seeking.  If you were a purchasing manager for a medical supply company and you want to be a property manager, you will want to find the things like: Balanced multiple projects simultaneously or Relate quickly and easily with all diversities, personalities and business levels.  Tell what you did, such as: Contracted with major pharmaceutical companies balancing multiple priorities continually.

Don’t misunderstand me, I don’t want to put words in your mouth and I don’t want you to be dishonest.  Tell the truth or you won’t be able to own it.  Be sure and tell the part of the truth that won’t distract them and will show them the part of you that they want.

Be sure to limit your information per company to four or five bullet points in your first listing and less for the subsequent listing.  This is of course unless one of your subsequent listing has the most in common with the position you are seeking.

You will want to continue to list previous positions to show at least the last five years of employment and, ideally, your entire career.  You will need to balance this with length of your resume.  Perfect world length is one page; I think 2 is OK, but I recommend that you not go over that.

Other Relevant Experience, I use this section in my resume for a position I held many years before the last job listing on my resume because it showed particular relevance to the position I was seeking but, did not fall into comfortable chronological order with the others.

Education – Just list the schools attended and degrees earned.  If you didn’t finish college, as I did not, just list the schools you attended. I don’t call attention to the fact that I didn’t get my degree.  The people looking at this are smart and will ask you about it if it is important to them.  If it is a non-starter for them, then it is.

Professional – List your licenses, any and all Trade Associations you belong to, or special training seminars you have attended, and computer skills along with particular software you are proficient with.

Personal – You don’t want to make this too long or too personal.  Just list your marital status – any children and what you like to do on your time off.  Sitting on the sofa sucking down beers while watching the game probably wouldn’t be a good idea!

References – I subscribe to the idea that in your first exposure to folks, your mission is to make that great first impression.  It is not to overwhelm them with paper work.  I don’t include references with my resume but I do tell them that I will provide excellent ones if they would like.  Again, if this is an important issue for them, they will ask.

 

Hopefully, this has been helpful to you.  For more information and resources about transitioning your career to Property Management go to our website.

 

See you next time!!

 

 

 

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