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Landlord Video Tips – Common Landlord Mistakes I Made!

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Learn From My Landlord Mistakes!

We can’t start off knowing everything about being a landlord and sometimes what you don’t know can hurt you. I know I suffered through many landlord mistakes. It’s part of learning.

When you’re growing up and first start to walk you get bumps and bruises from falling down, but soon enough you master it and your parents can barely keep up to you. Then when you’re older, you get that first bike and soon enough you’re zipping up and down the streets, flying over bumps and jumps and showing off to your friends.

Well, it’s a similar situation when you become a landlord. When you start off, there are opportunities for you to fall down, there are times you can injure your pride and your pocketbook and as an experienced landlord, I’ve done both.

Whether it’s being duped by a tenant for a couple month’s rent or its being deceived by partners who walked away with all the profits, I’ve been there. I’ve even had the economy rough me up, but during every incident, I’ve tried to take something away from it. I’ve tried to learn a lesson that I can apply to make my business stronger, to make my portfolio of properties more secure and to make sure I’m smarter for the experience.

My hope is that you too can learn from your lessons, and also from my lessons. That’s where the following video comes into play. It’s much longer than my normal short tips and I go a bit further into depth with examples of problems and mistakes I have run into during my tenure as a landlord.

As you can tell by my attire it’s even more casual than normal, so I hope you enjoy it and find it helpful. As always, I appreciate any feedback you have for me. I have several other videos recorded, I just need to make some time to edit them and get them uploaded, so watch for more coming in the near future.

As I mentioned previously, I want to get to around 20 videos and see how the overall response is, so if you like them and find them helpful, let me know. With that, hope you enjoy the video!

One more thing! If you know any other landlords, could you please let them know about this site? Hopefully it can help them too!

Landlord Video Tips – Explaining Your Lease To Tenants

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Leases & Tenants, Do They Get It?

Leases can be complicated documents and if your tenants don’t understand everything in your lease, do you know what happens? You develop headaches, often major headaches that not only affect your health, but your pocket book.

So what do you do? It’s easy, explain the lease to your tenant. Don’t just give them a copy to sign and walk away, that’s an easy out. Instead, go through all the major clauses, points, potential issues and the responsibilities of the tenants so you’re not disappointed. The few extra minutes this takes can make the duration of your lease simpler, less stressful and believe it or not, happier!

The accompanying video goes through this and a little bit more to help make sure your job as a landlord is as stress free as possible!

Explaining Your Lease

Explaining your lease to tenants and providing them the necessary tools to accomplish it can help turn you into an educated and informed landlord!

If you are finding these videos helpful, I’d love to hear from you and I’d really appreciate it if you share them on Twitter, Facebook and anywhere else too!

To make sure you don’t miss out on any of the upcoming posts, articles and videos, make sure you are registered on the site. That’s the big box on the top right of this page, just fill in your name, email and submit it and you won’t miss out on anything!

When it Comes To Leases…

When it comes to leases, not all leases are created equally. 

If you don’t have a custom lease designed for you it would be wise to have one drafted up. Leases tend to be state or province specific, but they can also be customized to benefit you and specifics you may have for your property (that fit within local landlord tenant law).

If you don’t have a lease or want more information about leases check out this article, You Got Your Lease WHERE?

Landlord Video Tips – Leases and the Law!

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Do You Know The Local Laws For Leases As A Landlord?

Bylaws, Landlord Tenant Acts, Tenancy Acts, Landlord Tribunals, Rental Laws, these are just a  few of the names of the local regulations and their associated acts covering leases and landlording that I have seen and heard of and I am sure my list is way too short.

You see every region, state, province, county, city and town seem to have their own quirks and rules when it comes to what can and cannot be in a lease and what control or lack of control a landlord has to deal with tenants and tenant issues.

Yet time and time again, I see landlords using leases that are completely wrong for their region because they were able to download a free copy off the internet. People, give your head a shake if you’re doing this. You have a rental property worth potentially hundreds of thousands of dollars, make sure you have a lease that protects you, even if it costs you a hundred dollars or more to get it drafted by your lawyer.

In this video I talk about making sure you use the right lease to protect yourself and making sure you know the local rules as far as what’s allowed.

Just to add to this, be careful of where you get your landlord information and advice, me included!

I’m a member of multiple landlord groups and I see landlords constantly asking questions about notices, eviction processes, leases and more. All without mentioning where they are located.

They are getting dozens of different answers that are all legal, hopefully anyway, where the person answering lives. It may not be legal in your area though, so do your homework!

If you’ve been watching several of my videos, I just changed the intro, do you like it? Leave me a comment below!

Why It’s Not An Investment Property, It’s A Long Shot

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Don’t Speculate on Investment Property, Invest In It

Quick,what’s the economic forecast for the region surrounding your “investment property”?

Do you know?

If you do and that’s why you bought in that area great, if you don’t it’s not an investment, it’s a long shot.

Without understanding the basics of what is going on in the area you are leaving yourself wide open and this is something an educated Real Estate investor would never do. By understanding what drives the market and the long term viability you can ensure your investment becomes successful.

So here’s a quick primer. If your investment area is dependent on one driving force, what is the long term forecast for that force?

As an example, you can buy a house in Detroit for almost nothing, the driving force in the area has been auto manufacturing and the prognosis for the near future simply isn’t that good.

So neither is the housing market and buying there is a long shot. Long shots aren’t a sound investment strategy.

On the other end of the scale is an area like Dallas, which is heavy on energy related industries, but also has aerospace, electronics and pharmaceutical industries to help carry it along.

This has created a strong job market, which attracts workers which further helps grow the economy locally which leads to good long term investment opportunities in that Real Estate market.

When you are committing serious amounts of cash into an investment, you need to do your homework. Lot’s and lots of homework!

If it’s going to be truly an investment, why wouldn’t you want it to be successful and success begins with understanding the local economy. That’s what will separates an investment property and a professional landlord from a speculator and a speculative investment.

3 Steps To Successfully Investing In Real Estate

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Must Have Advice For When You Invest in Real Estate

invest in real estate successfullyWhen I started to invest in Real Estate and created what eventually became my landlord business, I had a clear goal. That was to own enough property that I could generate an income to replace my job, to create a nest egg that would continue to increase in value over time and to get to a position where I had more free time for my family.

The problem was, I knew where I wanted to end up, I just hadn’t taken the time to create a map. Over time, I realized that map would have saved me many trips I took down the wrong fork of the road, often forcing me to double back and costing me extra time and perhaps even allow me to travel with different companions along the way.

While there are great things to be said about doing something on your own (there is a certain positive vibe to being able to say someone is self made), the reality is we need people to help us along the way if we want to get there quicker and to help us avoid some wrong and potentially expensive turns.

This leads me to three steps I learned along the way, that helped me create a successful landlord business and to successfully invest in Real Estate and I feel any beginning landlord must be aware of to help them succeed as quickly as possible.

Step 1, Create a Network

To help you succeed the quickest, you need a network of friends, contractors, supporters and professionals to help you get there. By creating a trusted network you have people coming along on your journey who you can go to for advice, support and even guidance. This tip alone can streamline years off your journey.

Our network includes lawyers, mortgage brokers, realtors, accountants, contractors and fellow landlords we have met over the years, the majority of these people are also in the landlord business. This group of knowledgeable professionals gives us insights and resources to get questions answered quickly and accurately and has saved us tens of thousands of dollars over the years along with shaving years off our progress.

Step 2, Don’t Stop Learning

To stay on top of your business as a landlord you need to continually educate yourself about being a landlord, about local laws and legislation regarding being a landlord and owning Real Estate, about mortgages and finances and even requires and understanding of the basics of the local economics.

Training in landlord and tenant legislation can help you deal with potential tenant problems easier and gives you confidence in your decisions. Understanding the basics of Real Estate transactions and local bylaws pertaining to Real Estate can help you avoid costly mistakes such as purchasing in improperly zoned areas. Knowing the basics of finances and mortgages can help you make better business decisions and make planning for the future easier. Having an understanding of the basics of economics can give you an edge when it comes to determining what areas may be better suited for additional properties and it can make you aware of trends others don’t see until it’s too late.

Some of these areas appear to remain quite static, but if you don’t pay attention and keep up, suddenly rules can change on you. Whether it’s changes in rules for secondary suites, a huge new employer coming to your area creating jobs or even changes in mortgage requirements, they all affect you either directly or indirectly, so stay aware of what’s happening. Once you think you know it all, you start falling behind quickly, so never stop getting educated.

Step 3, Build Up Reserves

No matter how well you plan or who well things appear, you never know when the wheels will fall off. The big example of this currently is to look back at the worldwide recession that recently hit us. For many individuals, it wiped them completely out, for those that had reserves built up and extra cash to cover them during the toughest times, it gave them an extra life (or two) to survive and then to prosper as the environment started turning around.

As tempting as it may be to pull all the profits out and buy a shiny new sports car or to pump them directly back into a new property, take a few minutes and make sure you have adequate reserves in case the situation changes. This single step can often be the biggest difference between long term success and quick failure.

Obviously there is much more than just these three steps to successfully invest in Real Estate, but if you start by paying attention to these areas, create a network of trusted friends and advisors, don’t stop learning about the landlord business and build up your reserves, you will find your path to being a successful landlord a much straighter and less arduous affair.

Do You Really Understand Cashflow?

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Determining Actual Rental Cashflow

rental cashflowT to succeed and really profit as a landlord, one of the basic areas you need to understand is the cashflow your property generates and how to then budget it for future expenses or issues.

Without planning ahead like this, rookie landlords often get caught in rough situations where there simply isn’t enough money to deal with a big problem.

Here’s how a new landlord typically sees it:

Basic Monthly Cashflow

Monthly Income
Rent Upper Unit: $1,100
Rent Lower Unit: $800
Total Rent: $1,900

Monthly Expenses
Mortgage: $1,200
Taxes: $175
Insurance: $50
Total Expenses: $1,425

Total Cashflow (Income – Expenses)
$475

This is pretty typical and the $475 then goes directly into the landlords hands as profit. However, this doesn’t help you long term. Especially if you plan to expand or avoid future expenses.

To avoid falling into a trap, I’d suggest you should change your projections a bit and make it look like this (of course use your own numbers!):

Monthly Expenses
Mortgage: $1,200
Taxes: $175
Insurance: $50
Vacancy Reserve (current vacancy rate % x 2, so 10% of monthly income) $190
Repair Reserve (approximately 5-7% of monthly income) $95 (I used 5%)
Revised Total Expenses: $1,710

Actual Cashflow: $190
But Why?

So you don’t end up like the US government and have to borrow money to pay your expenses! Lack of long term planning and understanding future costs and expenses is wreaking havocs on governments and individuals throughout the world. You can do better than that.

Plan Now For The Future of  Your Property

If you plan in advance and understand you will have vacancies and also understand you will need to do repairs and that you can create reserves so money doesn’t have to come out of your pocket later, you will learn to sleep much better at night. That’s what the second example shows.

The real trick is to take those reserves you are budgeting for and move them into a separate reserve account so you don’t accidentally spend them. Once you start thinking like this you will no longer feel like you are blindsided or trapped when vacancies or repairs start coming up and it will change how you look at your properties.

Remember, Properties are not short term ATM’s, but rather long term investments.

Advanced Landlord Tip

If you have steady tenants for an extended period, this reserve can build up, so we like to put a cap of around $5,000 on a property. Once the reserves break that dollar amount, it all becomes pure cash flow again like the first example. Or……

If you are buying a new rental property, we start with a $5,000 reserve fund that we use as our cushion. That provides us with the higher cash flow right from the start. Then if we do have vacancies or repairs, we draw money out of the reserve and then revert back to the lower cash flow amount until the reserve is topped up again.

Can you see how this takes the stress out of owning property? Once you start implementing a system like this and get used to it, the pressure of having to take the first available tenant just to fill the property evaporates. It affords you more time to choose the proper tenants and doesn’t affect you directly where it hurts, in your bank account!

Is this something you are already doing? If it is great I would love to hear how it’s working for you, if it’s not, when will you be starting?