When you’re looking for your first rental property mortgage it’s a natural assumption that the best place to go get that mortgage is your personal bank.

After all they have your bank account, know your history, probably even have their fingers into your retirement investments. Why wouldn’t they give you the best rates and the best options?

When it comes to rental properties, there are many reasons!

Rental Properties Are Risky

At least in the banks eyes.

And it’s understandable when you see how little so many landlords know about owning and operating a rental property.

This scares banks as they like to reduce all possible risk so they can make as much possible profits.

Overall, rental properties simply contain more risk than your personal home so many banks have restrictive options on both what types of mortgages are available and the qualifications you need to actually qualify for one.

Banks Typically Only Have Limited Options

When you’re dealing with your personal bank they tend to only have a handful of mortgages available. There’s often a bunch of variations on term length and a few options regarding fixed or adjustable rates, but that’s mostly it.

You then need to get shoehorned into these limited options which means you may not get the best fit, in fact you might end up stuck with the only fit which really doesn’t suit what you need.

Banks Will Limit Your Growth

The big problem for an investor looking to grow a rental portfolio is it doesn’t take long for you to outgrow your bank.

By this I mean the majority of lenders want to reduce their exposure to risk. Having someone owning multiple properties starts making that potential for risk grow.

To help protect themselves they often limit an individual to only a handful of properties before they get cut off from qualifying with that lender for more mortgages.

This typically happens just as you’re starting to hit your stride and figuring everything out and bam, you find yourself stuck in mid stride having to quickly get educated about mortgages and your options.

So why not save time and go directly to a mortgage broker?

Mortgage Brokers Give You Options

When you’re dealing with a mortgage broker, an entire new doorway opens for you. Especially when you’re using a mortgage broker experienced with investors.

You see a mortgage broker has access to not just one bank and it’s limited internal options, but often dozens of different lenders and mortgage products many designed specifically for investors.

As you’re not limited to a single lender they can also help you move past a single banks limitations of number of properties you have mortgages on.

True there will still be hurdles due to qualification requirements (debt servicing rations, total debt ratios and all kinds of fun ratios), but over time a broker will still have more options for you.

Plus a broker doesn’t cost you anything. There is no additional fee you pay, they get paid by the lender who they eventually line you up with (so yes this could provide a conflict of interest, but that’s why you want a broker experienced with investments as you also become valuable to them!).

What Has Your Experience With Rental Property Mortgages Been?

Have you run into this too? Got any good mortgage stories you’d like to share? Leave us a comment below!

When you create your own landlord systems for the various aspects of your business you end up reinforcing what works. And more importantly getting rid of what doesn’t.

These systems involve everything form how you screen tenants to how you maintain your properties and everything in between and by creating and following these systems you’re really laying down a successful process.

Granted we often just fly by the seat of our pants when starting out and while it works initially, the sooner we start creating these standards of how we do things, the faster and easier it makes everything come together.

The biggest challenge for new landlords or Real Estate investors is the amount of information they receive often feels like standing in front of a fire hose.

They may be busy researching, analyzing, talking to fellow investors and even learning by doing, but it’s often overwhelming.

Seasoned landlords typically have steps they’ve learned along the way that help them avoid many of the mistakes they made earlier in their careers or tactics they have learned to repeat due to their rampant success with them.

They stood in front of that fire hose and took the important lessons and simply used them to leverage moving forward.

The sooner you start taking those lessons you learn and creating even basic ways to replicate them, the sooner you’ll see the long term benefits.

You start learning by doing and eventually you move to repeating what works.

Start Creating Your Landlord Systems Today!

So next time you have to fill a vacancy maybe write down the steps you’re taking. Write down what worked, what didn’t and then use those nuggets of information next time to make the process easier, faster and ultimately less stressful.

Then simply start repeating this for other parts of your business. You don’t have to go to great detail, although the more steps you breakdown the easier it can be to hand the work to someone else later.

Bottomline, the sooner you start this the sooner you’ll reap the rewards!

Do you write your own ads when advertising for tenants to fill a vacancy?

Do you get a good response, or is it kind of hit or miss?

Did you know there are a couple secrets to writing a good ad that attracts good tenants?

It Starts With a Headline

Your headline, or title for your ad is what will attract your potential tenants first.

To many people use something dreary like “Three Bedroom Home For Rent” making them exactly like 90% of the other ads.

Never mind most of the online sites already allow them to narrow down theirs searches by bedrooms or bathrooms. You’re not telling them anything new.

So instead of telling them the obvious, spice it up a bit.

If you’re targeting a family “Bright Clean Home Close To Schools & A Park” or “Spacious Family Home With Fenced Private Back Yard”.

Maybe throw in some humor, I’ve seen ads that you have to read just due to the headline. “Not Just four Legged Pet Friendly, But We Accept Goldfish Too!”

You really just want to create something different, something that might catch their eye and set you apart.

Then Follow It Up With Benefits

But the writing doesn’t stop with the headline. Next you need to talk about all the benefits of your property and this is a huge letdown with most ads.

What do you typically see?

Three large bedrooms, two baths, in-suite laundry. Available right away.

Grabs you doesn’t it? Makes you want to rush over to see those thee large bedrooms because tit sounds like they are just what you’re looking for, right?

Maybe not so much. That’s because those are features, not benefits and benefits are what attracts people.

Instead of just three large bedrooms turn it into something that excites them or fills a need.

“You’ll be amazed at the size of the three large bedrooms which easily fit a king size bed in the master and there’s still plenty of room for up to four dressers!”

Now it’s created more of a vision someone can see.

“With a growing family you’ll appreciate the second half bath ont he main floor.”

Something simple and to the point but reminding them why a second bathroom is handy.

“You’ll love the included washer and dryer as you’ll be able to get laundry done at home on your schedule rather than spending an afternoon at the laundromat.”

A simple benefit of having in home laundry, you don’t have to go out!

“In a hurry to move, well lucky you we’re able to accommodate a quick move in within a week, or if you need a bit more time we can make that work for you too.”

Not over the top, but simply explaining their options versus simply being available right away.

It’s Not Rocket Science

Writing these ads isn’t rocket science and once you have a great ad you can use it for years and years to continue to attract tenants.

Just remember people don’t care that it has three bedrooms, they care about what they’re like. So explain that part.

Whee possible create an emotional response and always try to explain how the feature will help them.

What Would Benefit You?

I started putting together a course a couple years ago walking landlords through writing effective ads and became distracted by other projects so never finished it.

Then over the weekend, I had a chat going back and forth with another landlord inquiring about how to help landlords advertise and screen potential tenants as they had an acquaintance who had been vacant for a while and was struggling.

So let’s turn the question back to the general audience of landlords out there.

Would you find an hour long course that walks you through writing effective rental ads helpful? This would ad another skill to your landlord toolbox!

Or would you prefer someone to do it for you, create an ad you can use for the next ten to twenty years to attract great tenants? This would obviously cost more, but it would allow you to focus on what you are best at rather than adding to a busy schedule.

Or is there a space in between that would benefit you? Perhaps a two or four week mastermind session where a group of us meet online and we walk through writing successful ads?

Let me know what might interest you or any thoughts you may have.

90% of the time you’ll never have problems with a tenant, but for that 10%, keeping a tenant journal pays off huge!

So what’s exactly a tenant journal?

Well some landlords keep a notebook for each property and each interaction with a tenant.

Some simply write notes in their favourite note writing apps or on a piece of paper after every interaction with the tenants or regarding the property and put it in their property folder in their files.

For me, I simply kept a journal where I recorded everything. This was not just restricted to tenant conversations or interactions, but calls for viewings for properties, contractor interactions, virtually everything that was going on during my day.

Over the years I have amassed drawers full of them. Sometimes they would last three months, slower times six months, but they would be chock full of everything I may need to reference later.

What Do You Need To Include in A Tenant Journal?

So what did I include? I referenced recording everything, but the important part is to also include the dates. and property addresses or nicknames you may have.

I used my journal as todo lists as well, so I’d write the date on the days page everyday.

This allowed me to cross reference dates and often times where I’d include them to what tenants may bring up.

Tenant complains I never deal with furnace issues? Wants to use this to potentially break the lease?

Well let’s look in my journal, they called February 20th, I had a furnace inspection done on the 23rd at 10am. I reference further back to just before they moved in nine months prior and as part of the property cleanup my duct cleaning company had been there cleaning ducts and inspecting the furnace at nine in the morning.

I not only have a paper trial of when these events occurred, I know exactly who to contact to prove this and I now know the tenant may have had other reasons for wanting to get out of the lease.

By simply documenting all this information I have a huge resource of information to back up complaints, to remind me of task I’ve done on a property.

Once I finished a book, I’d write the end date and start dates on the front cover so I knew what time periods they cover.

It Became My Catch All

My journal held everything I needed. It had all my phone numbers of people who’d called, tenant interactions, contractor names and numbers along with where they’d worked and over the years they become a huge repository of handy reference information.

Can’t remember who did the roof on a property. Narrow down when it happened, find the appropriate notebook/journal and voila, now I know it was Steve of Steve’s Epic Roofing and I have his contact number.

Granted I try to store everyone’s name, company and contact info in my smart phone, but you need to know their name, or their company and that escapes you over time. That’s why the journal systems has been so handy.

The Busier You Are, The Handier It becomes

Sure taking the time to write down everything can be exhausting, but the payback and ability to look back later made it invaluable.

The busier I was the easier it becomes to forget something or someone. With my journals I could simply go back and update myself.

So whether you call it a journal, a diary, a day timer or just a notebook, the more you have to do, the more important it becomes.

Anyone else doing something similar?

Having a problem filling vacancies in your rental property?

Then you probably need to know a secret.

You ready?

Clean baseboards…

That’s it.

You would be amazed at what a difference having clean baseboards in your property can make.

I still remember having a showing in one of our small two bedroom properties years ago. I had a flurry of potential tenants come through (stack your viewings, it saves you time and creates urgency!) and it seemed like everyone who came through was amazed at how clean the property was.

One older lady, who just happened to work as a cleaner, pointed out to me that every place she looked at the first thing she checked was the baseboards.

She said if people take the time to clean the baseboards you know they’re thorough. Apparently baseboards simply get overlooked, who knew?

Clean Baseboards Indicate Clean Properties

Big picture the implication is that if you’re taking the time to clean and wipe down the baseboards to get any renovation dust and debris cleaned up, you’ve taken the time to clean the property top to bottom.

So while clean baseboards may be a start, I’d also suggest cleaning everything else. Having a clean, sparkling property will help ensure you stand out from the crowds and show you have a product and a place that you care about and that your potential new tenants can take pride in.

We tend to hire professional cleaners after we’ve done all of our fix-ups, painting and general updates and it seems to pay off by helping us attract better quality tenants who stay longer. Both traits that I love!

Clean Properties Make Filling Vacancies Easier

It’s a simple, but effective step and it’s a great strategy to help make sure you get that vacancy filled just a little bit faster.

So even though it might be an extra couple hundred dollars out of your pocket to get the property professionally cleaned, you make that money back in shorter vacancy times.

Which makes it well worth the investment on your part!

Have you had any feedback on your properties regarding cleaning? Share your stories below.

Landlording is really a business of risk management.

You look at properties until you find the lowest risk property with the best potential and you buy it.

You advertise for tenants and meet people and determine who is the least riskiest option.

You purchase insurance and choose the options that reduce your risk of exposure to lawsuits or big expenses as much as possible.

It seems like all we do is risk management.

Or at least that’s how it feels.

We Also Create Homes

This is the rewarding part of being a landlord. Creating a home for an individual, a couple or even a family.

And if you do it right, if you take care of your property and take care of the tenant they stay for a long time rewarding you for creating a home.

It often feels like a fine line between your game of risk management and creating a home, but once you discover that line or how far you will go to either side it does get easier.

Maybe you take a bit more risk with some borderline tenants that you simply have a good feel for.

Maybe you pick a property that might not be as good of an initial investment, but you know with time, patience and some sweat equity it turns into a little gem.

These are additional risks you take over time, as you become more comfortable with your landlording business.

You Need To Find Your Comfort Zone

The problem for many newer landlords is they don’t know where the lines are. The problem for many time hardened veteran landlords is they’ve forgotten where the lines are.

You simply need to find that ground that is firm enough to hold you and to carry you forward.

That comfort zone that works for you, that allows you to sleep through the night and that still gives you the end result you were hoping for.

If you’re finding owning property is getting to stressful, if you hate your tenants or you’re getting burnt out, maybe it’s time to step back and re-find your comfort zone.

If you’re finding yourself just getting started and you’re stressed out about what to buy, how to find tenants and what to do next, find that comfort zone that will help you move forward.

While being a landlord is a matter of risk management, thee is some huge benefits to creating homes for people, so find that happy middle ground and get comfortable.

When I started this article I had a fuzzy vision of what I wanted to write. Once I started to write it my vision seemed to get lost, so I wrapped it up and came back to totally re-write it.
Yet, when I read it again I found I liked what I had. Was I wrong? Did you take something away from this? Or have I wandered to far?

Inherited tenants are the folks you acquire with a dedicated rental property.

Picking up a property that already has rent paying tenants in place often sounds like the perfect solution for a new or busy landlord, but it comes with it’s own unique set of challenges.

The first question that always pops into my mind with this scenario is “If these tenants are so great, why is the owner selling?”.

Buying Other People’s Problems

Granted, there may be many valid reasons a landlord is selling a property, but typically it’s because they are burnt out or the tenants have worn them out. It never hurts to go into the situation with this mindset as it’s always better to be cautious to start rather than simply jumping in and learning expensive lessons as you go.

By buying the property you’re potentially shouldering that burden of a bad tenant or bad situation and hoping you can outlast someone else’s problems.

Now I don’t know about you, but I typically have enough of my own problems. So why would I want to inherit someone else’s?

That’s why I insist on vacant possession whenever possible, but if you’re reading this maybe it’s too late. Or maybe you’re looking for options or simply how to protect yourself.

So let’s break down the steps.

Tenant Diligence BEFORE You Buy

Before you commit to any purchase you need to do your diligence. You need to make sure the rental property is worth what it’s said to be and that it will earn what it’s supposed to earn.

That will require an appraisal on the property and an appraisal of the tenants and all their paperwork. Unfortunately while you can hire an appraisor, it’s a bit tougher to hire someone to analyze or dredge up the tenant info.

That’s going to fall on you.

The important parts of this will be all of the leases, walk through forms, deposit forms and any back end deals the landlord may have made.

Leases are clear enough as are walk through forms and being able to confirm deposits, but the back end deals are the scary ones. And are often not brought up by the current landlord, but miraculously appear after the fact.

Stuff like free lawn care that no one mentioned, or a guarantee they get all their security deposit back. You know, fun little pacts made to keep the tenant happy like free parking or the ability to sublet, but not things that necessarily fun little pacts for you.

To complete this kind of diligence as part of your offer to purchase you not only need a clause requiring all leases, walk throughs, deposits info etcetera, you also need to confirm it with the tenant and have them sign off to verify it.

You Have To Talk To The Tenant

If you’re inheriting them, you better make sure you either have a plan to work with them, or a plan to get them out. That involves talking to them.

By talking to them you can verify what they are paying, what their deposit was, any leases currently in place and inquire whether there are any side deals going on.

The worst situation you can run into is when you discover there is no paperwork. It’s all verbal

When you run into this and you haven’t committed to the purchase yet, you still have leverage and you need to apply it.

If you simply commit hoping to figure it out after the fact you may quickly discover why the original landlord was selling in the first place…

Using Your Leverage

One way to use your leverage is to change the rules to suit you.

Some of this can come down to how desperately you want the property, but if you’re that desperate you may be setting yourself up for failure so be cautious.

Big picture you want to verify everything and have it on paper, so if there is no paperwork in place maybe your offer, or amended offer, includes the current landlord having a signed lease in place with accompanying paperwork outlining everything else in place as well.

Or alternatively, if they don’t want to do that you can insist on vacant possession. If you’re aware there isn’t lease paperwork when you initially make the offer you can even use this opportunity to put a double offer in.

One offer with a slightly higher price and perhaps more favourable terms for vacant possession, and a second offer that’s lower and maybe closes a bit later if you are forced to inherit the tenants.

After all, if you’re inheriting someone else’s problems shouldn’t you get a discount for the hassle?

If You Have No Leverage Or It’s Too Late

Sometimes we discover after the fact we’ve made a mistake or we simply lost our opportunity to use our leverage.

In that case it requires you have a very good understanding of the local landlord tenant laws!

You may need to understand all your options for getting that tenant out whether it’s simply not renewing a lease, whether you can evict them without cause or what causes you need to evict them.

Cash For Keys

Worst case you need to potentially buy them out of the property or as it’s called offer cash for keys.

This is where you have to decide how painful these tenants may be. The amount of pain then gets translated to a dollar amount and an offer to them of that amount if they vacate.

Maybe it’s free rent for a month plus you cover the security deposit on their new place. Maybe it’s just $500 if they vacate at the end of the month.

You need to decide what will be fastest and least painful for you. If an eviction costs $1,000 and it could involve two or three months of not receiving any rent paying the tenant $2,000 could be a huge win.

You simply want to make sure you do what is bets for you and the property to succeed.

Or It Could All Work Out

All this worry may be for naught. You may simply be looking at a property where the landlord has had a great run and the landlord is ready to pass the opportunity on to the next lucky landlord.

And if that’s the case lucky you.

Either way, you still need to check all that paperwork simply to reduce your risks.

Being a landlord is often about risk management. The fewer risks you take, like fewer bad tenants, fewer bad properties, the longer you will last.

So hopefully it all works out! If you have a story about inheriting great tenants tell us about it below, or if you have a sorry about inheriting bad tenants share it to help warn others!