Why You Must Immediately Create a Cookie Cutter Move In Process, Part 1 of 2

The devil is in the details. So is success. Especially when it comes to real estate investing and landlording.

Most real estate investors are savvy enough to pay attention to all the small details when they are working on putting together a new deal. Whether that be new property acquisition, development or renovation.

But what about making sure that you don’t miss any of the details on your move-in process?

Does your process simply look like this?…

1. Run Ads on Craigslist

2. Have applicants fill out rental application

3. Meet with new tenant, sign contract, give keys

If that is all you have for your move in process check list then you are missing a lot of details. And you are missing your best opportunity to set the tone of the relationship with your tenant, set appropriate expectations on both sides of the relationship and develop strong mutual respect early on.

We have been in the trenches of real estate marketing, management and landlording for about 7 years now… and recently we are starting to see a swell in basic mistakes when it comes to landlording.

Why?

Because of the rise of what we call the “accidental landlord”.

Defined as “a real estate investor whose strategy is flipping properties and found they couldn’t flip a property because of the market so now have to rent it out”.

And there you have your accidental landlord. Someone who is great at finding new deals and making them happen. But someone who is inexperienced in the wonderful world of landlording and property management…

Which luckily never has any problems or headaches whatsoever

So, time to get as detailed and thorough about managing your rental(s) as you are about finding the deals and structuring them in the first place.

What You Should Have On Your Checklist?

An example of a cookie cutter move-in checklist that we share with the real estate investor community is:

1. Prepare a goody bag for tenants containing all their papers…
a. Include a refrigerator magnet with your number
b. Welcome flyers/page
c. Utility, phone, cable, internet contact info
d. Community packet (free at your local chamber of commerce)
e. School information

2. Plan and schedule an appointment for indoctrination of your new tenant, and they bring
a. A certified check
b. Full years renters insurance
c. Required signatures
d. Security deposit

3. Think of them as new employees… don’t tell them this but approach it as such (more on this in later posts… plus checkout our schedule of webinars to get all the juicy details)

4. Go through the “RENT TALK” – which will set proper expectations and develop mutual respect right out of the gate

5. Go through the rental or lease agreement in detail, line by line

6. Make them initial each page – this is important for your own records and protection should any future issues arise

7. Make them sign and date each form properly – yes, we actually have to say this only because we see rookie landlords cut corners here or simply miss details that come back to haunt them later

8. Treat tenant with respect and make copies of all documents for them

Well there you have it. That list should get you started. Print it off and put little check boxes next to each item. And make sure you can put a check mark in each of them.

Having thorough checklists that you can use repeatedly for the same processes simply makes sure that you cover every detail.

In the middle of a hectic schedule and looming to-do list it can be easy to forget details and be tempted to rush when everything is committed to memory.

Don’t rush.

Not in real estate investing or landlording.

Ever.

Thorough check lists (that you actually use!) are a key part of creating systems that produce higher profits and fewer headaches for you.

HELP MY TENANTS WON’T MOVE OUT!

They Won’t Move Out!

By Robert L. Cain, Copyright 2012 Cain Publications, Inc.

We have had problems with my tenants refusal/difficulty vacating the rental unit after the lease term has expired. We have told them well in advance that we will not be renewing the lease, but they still will not leave at the designated time. HELP! What do I do to get them out? At this point, isn’t this considered trespassing? How do I get them out? Am I able to lock them out of the dwelling? Thank you for your advice on this matter. Jane, Chicago, Ill.

Every once in a while landlords have to deal with people who seem to be unable to rent the U-Haul and get their stuff somewhere beside their ex-landlord’s property.  Usually those who are not wanted have the good sense and grace to move out.  Apparently these folks have neither good sense nor grace.  You are in a position to make their renting from another landlord extremely difficult by making sure you provide an accurate reference when a prospective landlord calls you for a reference. This offense ranks right up there with a midnight move out.

In the meantime, however, to protect yourself from the court system that consistently comes down on the side of tenants, you need to take some specific steps. It doesn’t matter if the tenants are good, bad or somewhere in the middle; courts in many places go out of their way to protect tenants from those “evil, greedy, uncaring landlords.”

Certainly those tenants are trespassing, but you would have no luck with the police having them removed since police don’t want to get involved in a “civil matter.”  That is in spite of the fact that these people are in the property stealing the rental because you can’t rent it while they are occupying it. Besides, the police officers would have to write long reports about what happened, something that, trust me, they hate to do.

You will have to file an eviction against these holdover tenants. One step that might persuade these squatters to move immediately is that you inform them that you are going to file the eviction at the courthouse the next day if they have not vacated.  This is a slam-dunk eviction since they had been notified, presumably in writing, that they were to vacate at the end of the lease.  Big warning! If you did not notify them in writing, you will have to begin the process all over again. Otherwise, the judge would throw the case out of court since you have no proof that you told them you were terminating their tenancy. Check the procedure for starting the procedure in writing below.

Do not, under any circumstances, ever, under any circumstances, even think about locking them out until you have the judge’s order in hand evicting them and a deputy sheriff or constable to serve the papers.  Locking them out is called constructive eviction and is illegal in every state.  Likewise, don’t take the front door off, turn off the heat or electricity.  Anything you would do to make living in the property difficult or impossible is considered constructive eviction and would result in your tenants getting to live rent free for several months because of the judge’s ruling.

If your “notice” that you would not be renewing their lease and they were going to have to move was oral, it is not valid.  Here’s what you have to do.

Send a notice in writing, according to the laws specific to Chicago, where your property is.  Laws are different in every state and in some cities, so do not under any circumstances use a form you find at the office supply store.  Those forms are generic and dangerous, and probably comply with few state laws or city ordinances and almost certainly not the ones where your property is.  Get a form from your local apartment or rental owners association, or from an experienced real estate attorney. If you use the wrong form, your tenants could end up staying rent-free for three months.

Make sure you give adequate notice, whatever that is in your area.  Most state laws are for 30 days, but check to make sure.  Also, make sure the procedure for serving the notice.  Can you mail it Certified Mail?  Can you send it First Class Mail?  Must it be hand delivered?  Must it be served by a process server?  If you don’t do it right, once again your tenants get to live rent-free for a couple or three months.

Finally, do not accept any rent from these tenants during this debacle.  If you accept rent from them, you have confirmed their tenancy and must begin the procedure all over again.

These tenants will get out soon as long as you do everything exactly correctly. As I said before, the courts are there to protect tenants, not landlords.  With each step you take to get rid of these undesirables, keep that in mind.  Your final payback will be when you get a call from another landlord asking for a reference.

“Robert Cain is a nationally-recognized speaker and writer on property management and real estate issues. For a free sample copy of the Rental Property Reporter call 800-654-5456 or visit the web site.www.rentalprop.com.”

Should an Eviction Always Disqualify an Applicant?

What is the Rental ‘Shadow Market?’

By Jennifer from Rentals.com

The rental market is certainly changing as an increasing number of people look for rentals and an increasing number of homes formerly for sale become rental properties. How will the surplus ‘shadow market’ of homes and condos affect traditional apartment rentals, and how can you benefit as a property owner?

What is the shadow market?

Though it sounds nefarious, “shadow market” actually refers to the inventory of unsold condos and houses competing with apartments to be filled by renters. The growing volume of these single-family rentals is cutting into the demand for traditional apartments, some experts say.

Quoting from Census Bureau data, the Web site Calculated Risk states that, since 2004, there are 3.6 million homes built for sale that are being utilized as rental properties. And as homes for sale continue to move slowly and owners look for a way to avoid foreclosure, those numbers will surely grow.

Why do single-family rental homes look attractive?

In some cases, owners of single-family rentals are not driven by profit as much as the desperate need to cover the costs of an unsold property that may have been on the market for months or years. Since rent prices for these homes will be extremely competitive, a family looking to rent will likely get the most square footage for the money by leasing a single-family home. And in many places, there are plenty of these properties to choose between.

As the renting of unsold homes and condos likely will continue to increase as income and overall home ownership levels fluctuate with the economy, it is important, as a rental professional, to be aware of this dynamic to help you cultivate prospects for your properties.

What is the impact on apartment rentals?
Any prediction of the overall impact shadow inventory will have on apartment rentals needs to take into account variables such as geographic location and the demographic mix in any given area. The two property types are not perfect substitutes for everyone. A young professional, for instance, who might like the idea of low rent for the square footage of a single-family dwelling may not be as interested in the other aspects of such a rental, opting instead for the convenience and amenities of apartment living. He may not want to care for a yard, for instance.

The lifestyle preference of the renter, then, could still determine the type of property he’ll choose.  But for those tenants who are open-minded to different rental choices than what they may have originally envisioned, the surplus of shadow inventory and its competitive rents will definitely capture their attention and continue to impact the apartment vacancy rate.

Other factors creating an inventory of apartment units is the doubling up that many families have done to stretch their declining dollars: children moving back in with parents, parents moving in with children, and other combinations of friends and relations sharing housing.

How you can benefit
Consider that exposure on sites like Rentals.com can introduce your properties to a whole new community of qualified renters who are looking to replace the housing they lost in a foreclosure or to move to a larger rental with their newly “doubled-up” family. Those property managers who continue to invest in their properties with proper maintenance and landscaping will reap the rewards of eager renters who can no longer afford or see the advantages in owning that home themselves.

Must Read for Landlords – Lay the Groundwork & Avoid Bad Tenants

I thought I had checked everything with this prospective tenant. He had a good report from his previous landlord. He had worked at the same company for five years. His credit was fine. And he seemed like a responsible person.

But he would turn out to be the worst tenant I ever had. He drank heavily, insulted and threatened other tenants, tried to start fights, damaged the property, and even got arrested in my parking lot for being drunk and disorderly and resisting arrest.

There are many different ways to be a bad tenant, but among the worst are disruptive people. Disruptive people in a multifamily property, can drive all of your good tenants out and permanently damage the reputation of your building. Even in a single family or commercial building, their bad behavior can cost you a fortune in legal and other costs.

Many real estate investors start with some naïve assumptions about other people. We follow the rules and treat others with respect, so we think everybody else does as well. But if you’re going to be a successful landlord, you must prepare to deal with the worst of human nature. That means using all the screening tools at your disposal; consistently enforcing a clear set of rules; and knowing what you will do for any type of tenant infraction, as well as the steps you must follow for a legal, trouble-free eviction.

The best solution to disruptive tenants is to keep them out of your properties. I believe the first step should be to check with your local landlords’ association or REIA (Real Estate Investors Association), which may keep a tenant database. After that you can check credit, employment, previous tenancy, and criminal behavior.

For each step in the process, there’s a right way and a wrong way. With the tenant database (and indeed all background checking steps) make sure that you’ve got the right person. Many good people have suffered because someone else with the same name misbehaved. Also remember that tenant databases often include both good and bad tenants. Check with the previous landlord, who submitted your prospect’s name, to find out what he really thought about the tenant.

Credit and employment are two areas where you may decide to be flexible. Many otherwise fine people have poor credit. If the tenant has only worked at his job for a short time, talk to his employers from before that change. In employment checking, make sure you find out the employer’s phone number on your own – don’t trust the rental application. In both employment and previous tenancy checking, watch out. Former supervisors and landlords often give overly positive reports.

Make sure you check the same things, document your process, and keep a detailed record for each prospect you check out. This system will help if a rejected prospect ever sues for discrimination.

The only downside to all this checking is that you will reject more prospects than most of the other landlords in your area, and your units may stay vacant longer. But, considering the hassle and expense that a bad tenant can cause, losing a month’s rent doesn’t seem that terrible.

Once you’ve approved a rental application and the tenant has moved in, the next step is to get them started with good habits. Make clear what you will not tolerate and give the tenant a detailed list of fines and rules that are the same for everybody. Make the list reasonable. An overly detailed and nitpicky list will turn off tenants you want to have. In the first few weeks or months after the new tenants move in, stop by both their apartment and their neighbors’ or call from time to time to make sure everything is going well.

Fortunately, most of your tenant disruptions won’t be that serious. Most are minor – loud noises, improper trash disposal, or parking violations. Where the complaints are along these lines, let the tenant know he’s getting complaints and back them up with the fines you have set. Some tenants don’t even know they’re causing a problem. In any case, your response must be firm and fast. If you don’t, the tenants’ behavior will get worse.

You also must make sure not to overreact. You may have two tenants who are both perfectly responsible, but simply do not like each other. They might show their dislike by nitpicking about each others’ behavior. Or you may have a very demanding tenant who calls you with trivial complaints about his neighbors. Maybe the neighbor parked her car a little too close to his. Another couple walks around their apartment late at night. The woman downstairs has a baby who cries a lot.

To evaluate these situations, talk to both tenants, and also talk to anyone else you have living in the building. Suppose Tenant #1 is constantly complaining about Tenant #2. But when you talk to Tenants #3, #4, and #5, they all think Tenant #2 is a fine neighbor. And you know that #3, #4, and #5 are also responsible people. That makes it fairly clear that the problem is very high expectations, not bad behavior. It’s time to talk to the complainer about lowering her expectations. You don’t want a reputation as a ridiculously nitpicky landlord.

But there are three classes of tenant behaviors that you absolutely cannot tolerate. The tenant does NOT get a second chance if he fights or threatens other tenants, or engages in any illegal activity (most likely drug abuse or public drinking). You should immediately begin the eviction process, and make sure you have documentation. There’s a standard clause in most leases that requires tenants to not interfere with others’ quiet enjoyment of the premises. That ought to cover most disruptive behavior. However, your lease should make it clear that any of the Big Three disruptive behaviors will result in immediate eviction (as always, checking with your local real estate attorney so that the language is correct).

No matter how carefully you screen prospects and set and enforce rules, you may still occasionally run into a nightmare tenant. However, these steps will make disruptive tenants much rarer, and your landlording experience both happier and more profitable.

Brendan O’Brien is the founder and president of Property Master Software. He is a contributing writer to REIP The Rewards® Magazine and is an active landlord and real estate investor. For more information about Property Master Web™ visit www.PCPropertyMaster.com or emailBrendan.obrien@pcpropertymaster.com.

Property Concierges can Help!

By Whitney

Before you can list your rental home, you will need to consider how much work will go into A good preparing, renting and maintaining it. Although you can certainly handle the responsibilities on your own, you may consider outsourcing some of the effort. Here are some of the professionals you may consider hiring:

• Property Manager (PM) – Whether to hire a PM depends on how much interaction you want to have with inquirers and tenants, as well as how much responsibility you want to have for property operations and maintenance. A property manager can field calls and emails from prospective renters, show the property, collect the rent and handle repairs, upkeep and emergencies. Of course, PMs don’t work for free. A typical fee for a property manager is 8-10 percent of the monthly rent and 80-100 percent of one month’s rent to find a tenant for your property. Rates can vary, though, if you prefer to let the PM handle only part of the responsibility.

• Lawyer – You can find forms and leases online (and if you utilize a property management company, a solid one will be provided), but if you have any special concerns or want to make the lease iron tight, you may consider consulting an attorney. Although attorneys can be pricey, having a reliable one from the beginning may be useful should you need to confront or evict a tenant.

• Maintenance Worker – You may consider an on-call handy man, depending on how comfortable you are with repairs and upkeep. Additionally, establishing a relationship with a maintenance worker may help in an emergency situation where fixes need to be made as quickly as possible. However, if your property is new or in great condition, you may not need one yet.

• Cleaning Service – If you are considering selling the home at a later date or simply want to keep it in excellent condition, you may want to hire a service and include a bi-weekly or monthly cleaning in the rent.

• Lawn Service – Like with a cleaning service, you may want to keep your lawn looking exquisite. If so, consider hiring a service to do the job exactly to your specifications and add it to your monthly rent.

Even if you decide not to hire any of these professionals, you may want to have names and/or numbers on hand should you need them down the road.

Courtesy of www.rentals.com