Landlording Made Easier - Single family fortunes

Seven Secrets of Success
in Real Estate Investing
Landlording Made Easier
1. Get your mind right
2. Seek Wisdom
3. Develop Skills
By Dennis Henson
5 M’s of Real Estate Investing
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Mining
Money
Maintenance
Marketing
• Managing
Marketing and Managing
Properties
Should You…
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Make detailed plans
Take massive action
Form great alliances
Be persistent
How to Set Prices
• Rent
– ARV X .009 = Bottom Rent
– Call on Ads and Signs
– Run Rent Comps
– Ask Realtors
• Sell at After Repair Value (ARV)
Property Management
• Working with Property Managers
– 1 to15 properties it’s easier to do it yourself
– And a lot less expensive
• Hire it Done
(or)
• Do it Yourself
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More Questions for
Property Managers
Questions for the
Property Manager
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How long in business?
How many do you currently manage?
Do you place ads?
Paper/Internet/Social Media?
Do you put up signs?
Do you manage yard work?
Can you estimate time needed to rent?
• Must:
Property Managers
Requirements 1
– Be bonded and provide a copy of bond
– Be available business hours
– Answer the phone
– Have a 30 day escape clause
– Demonstrate a strong promotion program
– Have all maintenance pre-approved
– Cancel if renter defaults or cancels
Property Managers
Services
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Deliver all moneys in full by the 10th
File evictions notices immediately as needed
Handle complete evictions process
Collect all late fees
Handle government & HOA violations & collect
Provide a monthly accounting of:
• who paid and when
• payments remaining
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Will you provide the current rent rates?
How do you screen tenants?
What accounting paper work do you provide?
If I rent my-self, how will that work?
Will I be able to use my own contract?
Do you put signs to direct traffic to property?
Property Managers
Requirements 2
• Must NOT:
– Have commission on sale of property
– Require maintenance reserves
– Be exclusive – I may have other management
– Deduct for payments for your services from rents
– Receive commissions on rents not collected
Property Manager’s
Pay
• What Are Commissions?
– % On signing?
– % On monthly rents and late fees?
– % On signed renewals with increases?
– % Charge for services such as grass?
– % If I find renter?
– Breaks in % for additional properties?
– Send rent raise letters & get signed extensions
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Managing the Property Yourself
What Is a
Perfect Tenant
– Get “Land Lording”
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• by John Schaub
– Read Landlording on Autopilot
• by Mike Butler
What Attracts Good Tenants
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Finding Good Tenants
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Nice Homes
Clean Homes
Reasonable Rents
EZ RTO
Internet Sites
– Postlets.com
– Vflyer.com
– Realrentals.com (Free)
– Rentals.com (Not free)
Pays on time
Does not call often
Feels ownership
Takes care of the home
Stays forever
Brings other tenants and buyers
MLS
Internet Site
800 Number
Newspaper Ads
Internet Ads
Social Media
Signs
Property Management Companies
EZ Rent to Own
Have a Good Website
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To capture Buying Prospects
To capture homes for sale
To showcase your properties
To look professional
See www.vmiproperties.com
Find @ www.dennisjhenson.com
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Selecting Better Tenants
Showing the Property
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Use a Lock Box
Have prospect call when they arrive at the home
Say “Someone will let you in!”
I’ll be late
Have prospect call you back
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Locked key back
Spin lock numbers
Report condition of home
Left a light on
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Must Not Discriminate
Because of:
• Age
• Race
• Creed
• Color
• Sex
• Sexual Orientation
• Gender identity
• National Origin
• Religion or Disability
Minimum Standards for Renters
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Have a written policy
Application form
The interview
Tenant screening company
Using the deposit as a screening tool
But May Screen For
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Dirty Car
Mean Dog
Bad Breath
Bad Mouth
Serious Attitude
Tattoo
Green Shirt
Or anything in your Written Rental Policy
EZ Problem Solving
No felony on record
No foreclosure in last 5 years
No car repo in last 5 years
No Bankruptcy in last 5 years
No Eviction in last 5 years
Must have a checking account
Must have a job or income 3 times rent
Must be friendly and have a good attitude
Must be clean and neat
Car must be clean and well kept (No oil leaks)
Must have 2 landlord references
Must fill in all blanks on application
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EZ for the Landlord
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Avoid holding costs
Rent faster
Rent for more money
Get a much bigger deposit
Renters feel ownership
“E-Z Rent to Own”
For the
Renter/Buyer
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No Credit Check
Low Move-In Costs
Affordable Rent Payments
All of the Deposit Credited Toward Purchase
$100/month Can Be Credited Toward Purchase
Legal Credit Repair At No Additional Cost
Seller Assistance At Closing, If Needed
Security Deposit
• The deposit serves two purposes
– 1st – It is the Security Deposit
o Subject to the terms of the rental agreement
o To maintain the property in good condition
– 2nd – It can be used as a down payment.
Having a good down payment will vastly increase
the chances of getting a loan approved
• It MUST be held in a separate bank account
Get a Bigger
Security Deposit
• Make it easy to get into the property
– Break up the Security Deposit
– Collect some up front & some on 15th
– Why the 15th?
• Money needed for Purchase
• Make the deposit fit the property
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The Paperwork
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AVOID
FRAUD
Application
Lease Agreement
One to Four Family Purchase Contract
Copies on www.SingleFamilyFortunes.com
Clauses for Rental
Agreements
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On Time Payment & Maintenance
Discount
As an incentive to the resident to be responsible for
repairs and continuing maintenance of the house
and yard each month, and to pay the rent payments
on or before the first of the month, a discount in the
amount of $___.00 may be deducted from the
above rental sum each month. Tenants do not
quality for the discount if repairs are not made to
the property when needed, rent or deposits are not
received when due.
On Time Payment & Maintenance Discount
Access to Property
Abandonment
Termination
Access to Property
The Owner may be represented by an agent
who will carry identification. Resident specifically
agrees to permit the owner or agent(s) access to
the premises for the purposes of inspection,
repairs, or to show the property to another
person at reasonable hours, on request. The
Owner reserves the right to post a sign or signs
on the property during the eviction process.
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Abandonment
If Resident leaves said premises unoccupied for
fifteen days while rent is due and unpaid, Owner is
granted the right hereunder to take immediate
possession thereof and to exclude Resident there
from; removing, at resident’s expense, all their
property contained therein. By signing this rental
agreement the tenant agrees that upon surrender
or abandonment as defined by this state’s statutes,
the Owner shall not be liable or responsible for
storage or disposition of the tenant’s personal
property.
Termination
After one month’s rental payment is received, this
agreement may be terminated by mutual consent of the
parties, or by either party giving written notice of 30 days
prior to the end of any monthly period. Any provision of
this agreement may be changed by the Owner in like
manner. All parties agree that termination of this
agreement by the resident prior to ___/___/___,
regardless of cause, will constitute a breach of the
tenancy as agreed on Page 1, and all deposits shall
be forfeited in favor of the Owner as full liquidated
damages. Should Tenants continue to occupy the
property after the effective date of termination, the
tenants will be considered as “holding over” and will pay
a rent equal to twice the rent stated in paragraph one of
this agreement.
Move In Check List
for New Tenants
Training Tenants
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Go over the contracts with the tenant
Discount for paying on-time
$100.00 Bonus for on-time payments
Collect ALL the checks up front
Tenants should feel ownership
Send “Three Day Letters” automatically
Be all business
Keep good records
Communicate with newsletters
Inspections
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HVAC Filters
Smoke Detector batteries
Carpets
Cleaning
Repairs
Bugs
Damages
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[ ] Go over contract
[ ] Sign form on needed repairs
[ ] 3 strikes policy
[ ] Bad check policy
[ ] Rent raise after 1 year
[ ] Credit repair system
[ ] Lock box back
[ ] Make copy of keys
[ ] Birddog cards
[ ] You pay for minor maintenance
[ ] How to report Maintenance
[ ] Post office box
Collecting Rent
Collect all rent checks in at signing
– Famous quote = “The check is in the mail!”
• Put in contract inspections monthly
• 2nd Tuesday during office hours
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Tenant Retention
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Newsletters
Gifts
Contests
Birthday Cards
Fast Service
Nuisance Rent Increases
Remind of Moving Costs
Evictions
Be on the
Tenant’s Side
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Listen to their problems
Agree with them
You understand
But you are an employee of the LLC
Have Policies & Procedures
• Learn the process
– 3 Day Letter
– Filing
– Court
– Eviction
• Use the process for leverage
What are Policies & Procedures?
• Policies identify key activities and
provide a general strategy on how
to handle situations as they arise
Simply Said
• Our policy is to--(do this)
• Our procedure is to—(take these steps)
• Procedures are the specific methods used
to put policy into action
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Policies (& Procedures) Marketing
• Always be marketing
– Use the “47 Ways to Market Your Property”
• in Single Family Fortunes”
– When calling leave message
– Be persistent call back later and the next day
Policies (& Procedures) Marketing
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Always be building a prospect list
Never argue or disagree with anyone
Have all calls returned in one business day
Use a phone log
Capture calls both in & out
Policies (& Procedures)
Marketing
• Let prospects do their own research on
neighborhoods
– Don’t answer questions about types of people
in neighborhood
– Say your not aware of any crime and haven’t
had any problems
– Ask them to contact the local police to get
information
Policies (& Procedures)
Marketing
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In ads only use pictures of a mixed group
Do not put “No Children” in ads
Show homes using lock boxes
Have a presence on social networking
sites
– Facebook, Tweeter, MySpace, LinkedIn,
Meetup, etc.
Policies (& Procedures)
Policies (& Procedures)
Renting
Renting
• Have written minimum standards for screening
• Standards must not discriminate
• Check standards with attorney to be sure
• Screen prospective tenants on the phone
• Have prospects complete an application
• Do meet prospects at the office not the property
• Have prospects
– bring deposit with application
– Have prospects call back for decision
• Always check
– With two previous landlords
– Employment
– Checking account
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Policies (& Procedures)
Policies (& Procedures)
Renting
Renting
• Do a credit and criminal background check
Never let anyone have a key before
• Keep a list of written standards on file
• Rent to 1st person meeting minimum standards
• Get a big deposit
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Policies (& Procedures)
Maintenance – Renters
Policies (& Procedures)
Maintenance – Renters (1)
• All
repair requests must be in writing
• Give tenants a list the repairs covered
• and those that are not
• Give tenants work order forms to submit
• Inspect each property after 45 or 60 days
• Don’t allow repairs without permission
• Document calls, requests, deposits, & checks
• Fill out a “Work Order” for every repair
– Include
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Date & complaint
Name & address
Estimated completion date & cost estimate
Actual date completed and actual cost
Name of person who took the phone call
Person who did the repair
Policies (& Procedures)
Maintenance – Renters
Policies (& Procedures)
Maintenance – Renters
• Guarantee repairs will be made in 3 business days
• If delayed
• Offer a refund the daily rent
• Continue until the repair is completed
• Charge tenants for any damage they cause
All Repairs are completed
Lease is Signed
Deposit and rent are paid (cash in hand)
Move-In Inspection Report is signed
• Have penalties if work isn’t done on time
• Use door hangers
– We were here
– We were inside working
– We came by
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Call tenant to verify repairs were done
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Policies (& Procedures)
Policies (& Procedures)
Managing (1)
Managing
• Treat every tenant the same--it’s the law
• Give all tenants Policies & Standards
• Don’t allow any exceptions to policies
Policies (& Procedures)
Managing
• Payment should be made with
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Post dated checks
Mailed
Received from a credit card
Never cash
• Charge everyone the same fees
• Have the tenant pay first 100.00 in repairs
• Give a DISCOUNT for paying on time
Policies (& Procedures)
Managing
• Never go out to collect rent
• Never accept a cash payments
• Use Rent to Own
– So tenants do most of the repairs
– And will pay higher rent
Policies (& Procedures)
Policies (& Procedures)
Managing
Managing
• Everything must be in writing
– repairs
– late payments
• Do periodic inspections
– Reward tenants for cleanliness
• Use an answering service
– Do not give out your cell phone number
• Deposit & 1st rent must be certified funds
• Communicate with renters
– Use monthly newsletters
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Policies (& Procedures)
Policies (& Procedures)
Managing
Managing
• Use time blocking for tasks & meetings
• Have monthly staff strategy meetings
• Have Master Mind meetings
– With investors, bankers, CPA, RE Attorney
• Setup
a corporation or an LLC
• Become the property manager
• Position yourself as the manager
• Working for the owner
• Take the side of the tenant
• Never argue with any of the tenants
Policies (& Procedures)
Policies (& Procedures)
Managing
Managing
• Have a retention program
– Tenant stays a year pays on time
• Give a gift
– Ceiling fan, screen doors or carpet cleaning
• Have a referral program
– Pay tenants to refer friends to rent or
purchase
• Put all agreements in writing
• Tenant pays for handicapped adjustments
Policies (& Procedures)
Policies (& Procedures)
Move In
Move In (1)
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Have tenant complete & sign Move-in Inspection
Have tenant sign a repair cost sheet
• For any damage they may do
• Clogged toilet, lost keys, holes in wall, stained carpet, broken window
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Go over with tenants the rent and eviction policy
• Rent is due on the 1st, late on the 2nd, and eviction starts on the 3rd
• Give tenant “Renters Welcome Kit”
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With water, gas, cable, internet providers
Lexington Law and Identity Guard
Renters insurance companies list
Cost of repairs list
Work order forms
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Policies (& Procedures)
Move In
Policies (& Procedures)
Move In
• Go over credit repair
• Get utilities out of company name
• Call back to see all is fine
• Send welcome letter with credit repair info
• Get signed “Sales Contract”
Policies (& Procedures)
Evictions (1)
• Learn the eviction process for the area
• When rent is late--start the eviction process
• Set up a flow chart to follow through on evictions
• Let the tenant know that they put the process into action
• Always follow the law to the letter
Policies (& Procedures)
Move Out (1)
• When your receive a notice
• Send a move out check list and repair cost sheet
• Do a move out inspection of the property
• to compare with move in inspection
– Call to see if there’s anything they need
• 1st days are critical in determining the relationship
– Set the tone for a good relationship
Policies (& Procedures)
Evictions
• Stop eviction when rent & fees are paid
• Explain—Three Strikes
• Use abandonment letter
Policies (& Procedures)
Move Out
• Have all locks changed
• Get utilities in company name
• Get property repaired and cleaned
• Collect keys, remotes, fees due or other items
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Policies (& Procedures)
Move Out
Final Thought
• If you only take one thing from the
training today let it be this...
• Save and file all repair invoices
• Charge for damages not on the inspection
• Send check for balance of security deposit
Learning More is
Easy
Seeking Wisdom is a
Secret to Success!!!
To learn more about Landlording go to
www.SingleFamilyFortunes.com
– Learn to manage properties yourself (or)
– Carefully write property manager’s contract
• The best time to start on is TODAY!! So let’s
get out there and make it happen!
Questions?
Contact information:
Dennis Henson
6902 Shore Breeze Ct.
Arlington Texas 76016
Phone: 817-371-8658
[email protected]
Web sites: www.dennisjhenson.com
www.singlefamilyfortunes.com
www.turbobidder2.com
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