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Making a Quality First Impression

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Exuding Quality

Quality productI recently purchased a new fall coat and as the weather is starting to really cool off in the mornings I felt today would be a great day to wear it out.

To be fair this wasn’t a really expensive jacket, in fact it wasn’t even a real “jacket”, but rather a nice hoodie that had a very fuzzy interior lining, plush according to the label. A lining that would keep me perfectly warm on a cooler day.

I don’t even think I paid $50 for it, but it looked good and felt warm and comfy when I tried it on, so I was hooked. That was back in early August and since it’s been so nice it’s been safely squirrelled away in my closet waiting for the cooler fall days.

Well, now that we’re into October, those cooler fall days have quickly arrived! So out comes the new fall hoodie and that’s when I made some observations. It was as I was cutting the tag off that I noticed something. Just a tiny little detail.

But a tiny detail that upgraded my impression of the jacket, sorry hoodie, to another level.

The tags were made of a very thick sturdy paper that instantly upgraded my thoughts about the quality of the clothing.

Feeling the heft and weight of the tag made a huge impression on me. This tiny little incidental item, a tag albeit a nice one, exuded quality and the feeling that the manufacturer’s of this product actually cared about it.

It was as if they they didn’t cut corners, as so many people do, and rather than throwing on the cheapest tag possible in order to save .0001 cents, they had a better product that deserved a better tag.

Have you ever felt like this when you bought something?

If you did, how did it make you feel? A little prouder to own it? Maybe you stood up a bit straighter when you wore it or your friends saw it?

Now here’s the zinger, do your tenants say the same thing about your rental property…

Exuding Quality With Your Rental

They say you only get once chance to make a first impression and it’s so true. Although with my coat it was actually the second impression when I looked closer, but you get the idea!

Well, what impression does your rental give to potential tenants? Or to add to it, what impression do you give?

Is the entrance tidy and clean, or worn and cluttered? Do you show up in a torn t-shirt and the same shoes you use to cut the grass (which may be ok if you are actually there cutting the grass…).

Did you pick up a welcome mat from the Dollar Store that looks cheap, or did you spend a few extra dollars and buy a nice sturdy mat from a home furnishing store? It’s little upgrades like this that can make that good first impression!

Maybe it’s just a new door handle instead of the old worn knob, maybe swapping out the broken and chipped door skirt for a new tidy looking one to help make your property stand out.

It’s little steps like these can can help ensure your property not only gets rented faster, but stays rented. We often forget that our rentals are people’s homes and its a trap that can bite you in the pocketbook later.

Sure when the rental market is hot it’s not much of an issue, but when things turn, and they inevitably do, and the market is a bit tighter with more vacancies and less tenants to go around that they suddenly become very pressing issues.

Consistently High Quality Rentals

first impressions make a difference with your rental property

That’s why it’s far easier to be consistent with your properties and be pro-active at setting a higher standard. Then you don’t run into the hurdles of the down times, or if you do, unlike your competition you coast through them as others flounder.

This type of pride of rental property ownership pays more dividends than just filling your property faster, it also helps you keep tenants longer, attract higher quality tenants and as you stay on top of your property it helps maintain values.

A story I share with many people involves a property I owned years ago that had a very similar property just down the street. At least very similar in the style of property.

Both were half duplexes, both had front decks and both had yards, but the similarities ended there.

My property had tenants in place usually two to three years at a time, theirs had a for rent sign out front every six to nine months.

Now we’d never personally been in the unit, but one day my wife was at our property and saw the other landlord was doing some showings so she invited herself in to check it out, and chat with the owner.

Upon entering the difference was easy to see.

Now this was only a decade ago, but the other property still had the original shag carpeting from the 70’s in it…

And quite possibly the original white paint color, great first impression.

Going further into the property and looking at the kitchen my wife found the original dark brown fake wood look cupboard doors with more original 1970’s hardware.

No wonder people kept leaving like it was a revolving door.

In comparison, our property had hard wood (which probably had shag carpet on top of it at one point), freshly painted walls with a modern color, newer white kitchen cabinets with newer countertops and bright shiny contemporary knobs on all the cabinets.

It’s Not Rocket Science

First Impression of qualitySo just by description alone, which would you chose?

And maybe that’s why we were always able to fill the property so quickly and kept tenants for so long!

Now, let’s talk about you and perhaps some homework?

What do you think your property gives off as a first impression? Cozy place to call home? Or pitstop until we find something better?

Your homework, if you truly want to be an educated landlord, is to stop and take an objective look at your property.

Would you live there? If not, that’s the first sign you might want to change things.

What could you do to spruce it up just a bit? New front door? Drastic updates at the entrance to make it more inviting? Or maybe simple steps like fresh paint on the door and a new handle or trim plate across the bottom of the door?

Taking simple steps like this pay handsome dividends over time and it’s a matter of small efforts to get this done that pay back so well with longer term tenants and shorter gaps between occupancy.

If you’re struggling to fill your vacant property this might want to be a priority. If you expect to have a vacancy soon it should also be high on your radar. At the same time, if you have great tenants it can also be an assurance to them that you want to take care of your property and can also be rewarded with them acknowledging it and taking even better care of your property for you.

So, ball is back in your court. Are you willing to do some homework? If you are I’d love to hear what YOUR thoughts are on YOUR property and what you might need to do to improve it and to start making a good first impression as soon as possible!

Leave me a comment below with any changes you may be making in the near future to your property or with any changes you’ve made in the past that have paid dividends!

So, Your Tenants Late with Rent…

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Dealing With Late Paying Tenants

late rent payments - tenants late with rent

I received an email recently asking me what steps a landlord should take when a tenants late with rent and I was kind of taken aback.

You see, this is one of those issues that is so easy once you’ve gone through it a couple hundred times. The problem for me is it was so long ago, I’d forgotten what I do is a learned response.

And I learned it so long ago that when a tenants late with rent, I simply take action.

So, rather than making you learn it on your own, I’ll just go ahead and break down the steps you need to follow if this occurs to you, but before I get there,  I want to talk about the challenges of evicting a tenant.

It’s these challenges that create the need for your actions to follow a specific process on your end as a landlord, so let’s dive in.

The Challenge of Evicting a Tenant

Just about every jurisdiction has a specific process for evicting tenants. Sometimes it involves a three day notice to quit, other times a 14 day notice to vacate. Some places require a court application to make it official and others have tribunals.

The one consistent challenge this represents for landlords is you need to prove your tenant has breached your lease and/or that you have a valid reason to evict them.

In my experience those valid reasons for an eviction tend to revolve around three main issues,

  • Non-payment of rent
  • Damage to the property
  • Conflicts with other tenants

You would think any of these would be easy enough to prove, but when you end up in a hearing, landlords often find themselves ill prepared compared to the excuses or lies that a nefarious tenant may be able to come up with when faced with eviction.

I’ve had tenants late with rent lie about paying cash and not receiving receipts, I’ve had tenants try to explain the gaping hole in the drywall was there when they moved in and I’ve had tenants explain they had no idea there were conflicts.

So what’s a landlord to do? Especially when a tenant is outright lying?

Preparing For Evictions Before They Are Necessary

Now, the point of this article is about what to do when a tenant’s late with rent. It could just as easily apply to damage to your property being damaged, conflicts between tenants or any other reasons that could lead to requiring an eviction of a tenant.

The important sub message for you is that every issue like this you need to understand could be the first step to building up a case for eviction. Assume the worst, and hope for the best!

That’s why the first step you need to take is to create paper trails you can refer back to if the situation doesn’t correct itself and goes further out of control.

When I’m consulting with landlords about evicting tenants I continually harp on documenting everything. It’s not just a matter of talking with them, you need to document it as well.

That’s part one of preparing, but just because you’ve documented it doesn’t end there.

Part two is making sure the tenant receives copies of your notices/documentation so you have a complete paper trail and takes the ability away from them to say they weren’t aware.

Creating a Complete Paper Trail

Tenants late with rent so create a papertrailSo what is a complete paper trail? It’s evidence that shows everything along the way, whether it’s the written notice you provide informing tenants rent is late, to complete documentation showing the condition of the property when they moved in all the way to dates and instances of previous conflict issues with the tenants.

Hopefully this is making sense, but to clarify even more let’s walk through an example.

It’s the 1st of the month and Joe your tenants late with rent. Now maybe he usually sends electronic transfers later on the 1st, so you sit back and eagerly check your email on the 2nd, again no money!

Tenants Late With Rent

Step 1

I’d suggest calling and/or texting the tenant immediately advising them they haven’t paid rent for the current month yet.
It could have been an honest mistake, or it could be a sign of pending trouble. You can often tell by how easy it is to initially contact them. Although sometimes you may simply get strung along as well if you do reach them first time, so be diligent and stay on top of this.

If you get paid great, you still want to move onto step 2, but at least the pressure is off.

Step 2

If you were paid, great, but you’re not done yet.

Follow up with a written letter for the tenant informing them that you understand late payments can happen, but this can only be a one off type situation as the rent payment is required to cover your bills for the property like a mortgage (you may need to ad-lib here a bit depending on your situation).

If you weren’t paid, you want to create a more stern letter for the tenant explaining all of this.

In both cases you need to refer to the conversation and/or text correspondence that you previously had about this issue. This is a matter of building up your evidence and paper trail.

I’d suggest bringing up potential repercussions if it’s not dealt with immediately and what may happen if the situation isn’t corrected (eviction, extra costs to the tenant and more, but all without being threatening, just informative).

Step 3

***UPDATE – Thanks to some great feedback from one of our readers, who also happens to be a Constable located in Massachusetts, he’s recommended the following tips regarding service of paperwork;

1) Certified mail does not need to be accepted and won’t be returned immediately. First class mail cannot be proven to have been delivered. Worse still is there is no proof what was delivered.  Tenants can claim that they received an empty envelope or one containing a blank piece of paper.

2) Proof of service.  I am an officer of the court. As such my return of service is accepted by the court as prima facie evidence that service was effectuated as indicated. Also I am a disinterested person and have no involvement in the action.

I would strongly suggest that whenever possible a Constable, deputy sheriff or Marshall should be engaged to serve this process, ensuring  that the case  can move forward with little delay. – Constable MP Weisberg

Now rules and variations do occur depending on where you are located, so make sure you understand them locally. Service by a process server, Constable or Sheriff may be mandatory, or simply advisable depending on your unique circumstance. Thanks for adding your voice to this MP and thanks for helping other landlords!

It’s important that you hand deliver this if possible. If it’s not, you want to create some potential trail of delivery and receipt.

If you’re hand delivering make note of the date and time and follow up with a text and/or email referring to the letter you dropped off. A frequent tenant response in hearing is they never received any notice about the problem, this solves that.

If you are not able to hand deliver you can send it via registered mail or courier which provides a tracking process.

If neither of these are possible as the tenant is trying to avoid you, then your option may be posting the notice on the property.

The challenge with this is it’s still hard to prove they received it, so here’s some additional steps.

Make sure you post it on every entrance to their unit. If it’s an apartment, it’s easy, just post it across the door and the door frame so they can’t miss it as they go in or out.

If it’s a house with a front and back door, post a copy on the front and back door, again across the frame and door. If it’s a house with a garage, post it on the two doors and the garage door.

Perhaps most importantly whatever the circumstance, once it’s posted then make sure you take a photo with some sort of date and time stamp to verify when you took the picture(s), just in case you need to prove it later.

Just as a warning, be aware some pro-tenant jurisdictions may claim this is tenant harassment or potentially slanderous if it’s posted for everyone to see. Always be aware of local rules and laws and make sure you can back up any claims that may be indicated to protect yourself.

Step 4

Follow up!

Once you’ve talked to the tenant, left them notice or documentation about the issue, follow up with an additional text, email or follow up phone call which you also document.

I’ve run into numerous situations where tenants have confirmed via text they received the notice, then in a hearing deny it and their entire claims fall apart due to the text evidence showing they are lying.

The final proof ends up often being your follow up, so don’t take a short cut and miss that final step as often it can be the deciding factor.

Final Thoughts

One way to stand out if you do ever end up in an eviction situation is to be a professional. If your tenants late with rent it requires more than a phone call or text to be a professional. You need to do the extra work!

As is often the case it comes down to treating this like a business and doing your job professionally. If you’re in a hearing and you come across as a professional who has all the evidence, is following all the rules and are going through all the proper processes evictions become much easier.

Now it’s your turn for a final thought.

If you’ve ever evicted a tenant, tell me what the experience was like below in the comment section. If you think this article would have helped you I’d like to hear from you even more!

What You Need To Know Before You Own Your First Rental Property!

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Advice For New Landlords

Pieces of the puzzle with your first rental propertyI’ve been helping landlords for years now and as I look through the masses of info = I have shared, one gap I find is what a new investors needs to know before they own their first rental property.

The trigger for this was just a quick comment a subscriber named Matt left me the other day.

You see Matt’s been reading my articles and watching some of my videos preparing for his first rental property which he closes on at the end of the month.

He’s being pro-active, he’s getting prepared and educated and he’s being very smart about getting started!

I love it.

To hopefully get him off to an even better start I replied back to his comment with some additional tips and suggestions, but  I realized that unless someone is reading that specific article they will miss that specific information!

So I realized maybe I need some information all in one place to help others just like Matt! So here’s what I have.

Getting Started With Rental Property

Some of the information I’m going to talk about here you’ll find in other articles on the site or videos here and on YouTube I’ve done and I’ll include some references to these at the bottom of the article.

In my experience I’ve found that I read one article and don’t quite get a concept, but when it’s explained slightly different or from a unique perspective suddenly it becomes crystal clear.

I’ll also include a subscription form at the bottom where you can get my guide “The Secrets of Successful Rental Properties” where I also talk about some of these tips that apply to your first rental property and to your fortieth rental property, or at least in different ways.

So rather than babbling too much more, let’s get started!

Leases – They Are Not All Created Equal!

leases for your first rental propertyIf you’re not familiar with my background, my online start was with a site that helped landlords evict tenants in the province I’m located in, Alberta Canada.

Sure I had my own sites for my Real Estate biz that I’d created in the past or paid someone to build, but AlbertaEviction.com was all my own.

This site came about because of my own personal experience with so many evictions over the years. Now I hope it’s not a shock that a guy who educates landlords has had to evict a ton of tenants.

It should be more of a reality check.

Because just about every landlord I know has had to evict a tenant at some point in their career. Time and circumstances change situations and a perfect couple one year may be divorcing or laid off the next causing you the landlord problems as their problems trickle down.

It’s not uncommon for me to get emails from landlords telling me how they’ve had great tenants since they bought their first rental property five or even ten years previously, but suddenly they’re stuck evicting someone.

It can be a bit of a numbers game and the longer you own a property and the more tenants you have the better (or should I say worse) chance you have of getting a bad tenant.

In my case, I’ve just dealt with so many more tenants than the typical landlord that I’m that much more experienced with the negative aspect of the business.

Which bring me full circle back to my point about leases. One of the biggest problem so many landlords I helped through my eviction site had, was they used the wrong or if not wrong, a poor lease. Leases are not all created equal and the rules in various states, provinces and countries also vary making it important that your lease applies where your rental property is located.

An example of this is in my local area is that I recommend to landlords to only use “Fixed Term Leases” rather than “Month to Month Leases”. The reason being (at least in Alberta Canada) a landlord doesn’t need to renew a fixed term lease (find out local rules that apply in your area!).

“Fixed Term leases refer to leases with a start and end date, they can be as short as a one month term or as long as several years, but they have a defined end date.”

In English, that means that if I have a tenant who is constantly late with rent, doesn’t maintain the yard or I’m just not getting along with, once the lease term ends, I’m not obligated to renew it, they have to leave.

If instead I used a month to month leases that just rolls over with no fixed ending date, I require a valid reason to evict the tenant, so unless he is doing something in serious breach of my lease, I’m stuck!

The lesson from this is, understand your local tenancy laws and make sure your lease fits what’s best for you! You may not have the same rule about fixed versus month to month, but you need to understand what does apply and make sure your lease includes what benefits you the landlord the most.

Next step is to ensure you have a very specific lease for your region.

If you’re buying a generic lease from an Office supply chain, a corner store or downloading it off of the internet, it better apply specifically to your region.

Now just about any generic lease will work everywhere, but the problem is they are generic and they don’t contain the specifics you need to enforce them for your benefit.

If you can make your properties non-smoking, your lease needs to contain that information. If you don’t allow pets, your specific lease should state that. If you don’t want tenants to sublet rooms or the basement or a garage, your lease requires a clause stating the restriction.

I could go on and on, and I already have I believe, but I need to because it’s that important. Generic leases get you started, much like generic house plans are the building blocks for your dream home.

You need to fine-tune that lease much like you choose colors and materials if you are building a home, so it suits your needs and protects your interests.

It may require buying a lease from a local landlord association, it may require getting a custom lease created by a Real Estate specializing lawyer in the area or it could be somewhere in between. Just make sure it’s not generic!

For a reality check it should also not be a single page! My standard lease I’ve modified and edited over the years as rules change, is four pages long and uses a small font in order to contain all my clauses and information.

It’s that long because I try to cover everything!! And your lease should too!

Now onto the next priority.

Tenants – They Too Are Not All Created Equal

Tenant problemsMore reality checks for you, not all tenants are equal or will look after your property the same way.

That nice looking couple who seem so pleasant may be professional tenants who bilk landlords out of months worth of rent and understand how to live rent free for months or even years at a time by being smarter than their new landlord.

There are so many districts throughout the world that have set up very tenant friendly legislation that makes it virtually impossible to evict tenants in a timely fashion.

They’re set up to allow tenants to appeal or delay hearings month after month and even then they are awarded extra time to vacate. Professional tenants understand these rules and once they are in, they can cause havoc.

All while not paying, or while damaging your property or worse building drug labs or grow ops which you get stuck fixing later.

The lesson from this?

Screen your tenants diligently and rigorously. Create systems and processes where you check and double check the information applicants provide you.

This includes calling and verifying all references, previous landlords and contacts. I even go so far as to check online profiles for their Facebook, Twitter, Instagram and more to see who these people really are.

If you put in the effort up front to do all this fact checking, research and verification, you’ll find you can save yourself a ton of headaches going forward.

As my friend Julie The Street Smart Diva and I often talk about with students who have gone through our coaching programs, it’s far easier to let the wrong person in than it is to get that same person out.

Your job as a successful and educated landlord is to make sure you never let that wrong person in and makes sure they end up somewhere else while you reserve your property for the fantastic tenants you deserve!

The Final Lesson For Your First Rental Property

Processes, systems and checklists for landlordsCreate Systems! I just referenced this when talking about screening tenants!!

As new landlords and investors you have a ton to learn as you get started with your first rental property. From the incredibly important skill set of screening tenants to property maintenance and much more.

Some you may do yourself, some you may hand off to others to do, but long term, many of these processes need to be repeated over time. Often over and over as you own a property for years or expand your portfolio.

The challenge being, if it’s been a years since you last screened a tenant, can you remember all the steps?

If you happen to own several properties already and you’re ready to do your annual or semi annual inspections, do you know what furnace filter sizes to bring to replace at a specific property?

Do you know how many smoke detectors are in the property that take batteries and which kind of battery so you have them with you?

Or if you are adding a second or third property to your portfolio, what did you forget to do or ask the first time that you need to know for the next time?

Did you talk to your insurance people in advance to get the proper rental insurance in place?
Did you have a list of home inspectors you know and trust at the ready?
Did you have a list of requirements for your Realtor of what your next property needs to have?

These are just a few examples of the hundreds of questions that need to be answered as you maintain and expand your portfolio.

And yes it is a lot of work, initially at least. But that extra work at the beginning as you take notes gives you references and the start of check lists and the systems you need to streamline your landlord business going forward.

Once you get the basics of these processes down and in some semblance of order you’ll find it a helpful resource that you can go back to for years and years and that will make your land lording experience simpler, less stressful and ultimately more profitable!

Now just to tie all this together and to help make this easier to remember, I want to share with you what I call,

The Educated Landlord’s Mantra

  1. Remember how hard it is to get them out (bad tenants)
  2. Do your due diligence (on new properties & new tenants)
  3. Trust your gut, but have processes (so you don’t forget steps or get caught in emotional decisions versus rational decisions)

If you can remember these three steps as you get started as a landlord, it will carry you forward many years!

Landlord Lessons
Wrapping Up

So, those were my thoughts and words of advice about your first rental property, what would you add to this? I’d love to get some feedback from you, maybe share your advice or some lessons you’ve learned as you started in your Real Estate investing journey!

Just leave me a comment below and share any stories you could add and any feedback you might have! I look forward to your thoughts and will reply back to everyone!

Also, if you didn’t grab my guide The 7 Secrets of Successful Rental Properties yet, simply fill out the form below and you’ll get it emailed to you!

And finally, if you belong to a Real Estate group, know other landlords who this could help or could simply share this with people on your Facebook, LinkedIn or Twitter feed, I’d really appreciate it!

There are handy share buttons right at the bottom of the article and the more people we can share this with, the more successful and educated landlords we’ll have out there!






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Understanding The Basics of Leverage and Return On Investment

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Leverage in rental investmentsIf you’re buying your first or your fiftieth property one challenge that almost every Real Estate investor runs into is financing their properties.

In a perfect world we’re all sitting on a huge trunks of money and can simply purchase a property all cash. No financing required, no banks or brokers required and it all gets incredibly easy.

Yet, if it was easy, everyone would do it…

And if everyone had trunks full of money, sites like mine wouldn’t be necessary as money is supposed to fix all problem.

So let’s get back to reality and talk about a couple of areas involving financing. These are the benefits of leverage that financing gives you and I’m going to introduce some of you to the concept of Return on Investment or ROI.

Leverage is one of the most exciting aspects of Real Estate and it’s also why so many people get involved as it allows you to get involved without completely paying for a property.

I’ll break out other exciting tidbits a bit further, but for now let’s dig into the power of leverage.

The Power of Leverage

The Basics of Leverage in Real EstateIf you’re just getting started with owning rental property hopefully this little walk through can help you understand how leverage can benefit you as a Real Estate investor.

To help get the point across I have some examples that hopefully make it much clearer than just rambling on.

It’s also where you get to learn the basics of Return on Investment (which I’ll refer to as ROI going forward through this article). Anyone excited yet?

For ease of understanding I’m keeping this to the very basics very basics. I’m simplifying this by not taking into account any additional costs and expenses. These would typically include legal costs, taxes, financing setup costs, cash flow, mortgage pay down and many more annoying yet vital details.

Why skip these important aspects you might be thinking?

Because I’m only making a point about leverage, I’ll have a separate post about annoying yet vital details later to keep all the detail folks happy 8’].

So let’s go look at some examples!

Example 1

An investor purchases a property for $100,000 all cash and over the next five years the value of the property has increased by 10% making it now worth $110,000.

His $100,000 investment has grown by $10,000 and his ROI is 10%. That’s determined by dividing the growth amount or return, $10,000 in this case, by the original investment and multiplying by 100 to turn it into a percent.

ROI is typically referred to as a percent so it’s easier to compare across properties, industries or sectors.

The formula being

(Growth/Original Investment) x 100.

In our example the numbers look like this,

(10,000/100,000) x 100 = 10% return.

On a yearly basis the it works out to be 2% or the total percentage divided by the number of years. 10%/5 = 2% per year.

With inflation normally between 2-3% per year, this is a break even situation at best, but likely a net loss.

Example 2

In this example, lets say you still have the $100,000, but decide to now put only 50% towards the purchase price ($50,000). Then you use traditional financing for the remaining 50%.

Again, the value of the property has risen 10% over five years but the important difference is the return on the investors investment.

Using the same formula, but with a much lower investment, we get some much better returns.

Here’s this example,

(10,000/50,000) x 100 = 20%

Suddenly that return has doubled. Even on a yearly basis (20%/5 years) it’s double at 4%, so now you’re potentially slightly ahead of inflation!

But the aha moment is you still have $50,000 and could repeat the process on a similar property. By duplicating this and purchasing two properties your gross return would be $20,000 (2 x $10,000 in growth).

Your individual (and your overall) return on both of these properties would still be 20%, so that doesn’t change, just the amount of money you at the end does which is the important factor.

Example 3

This is where it gets exciting. We’re now going to look at only putting 20% or $20,000 down to purchase the original $100,000 property.

With everything staying the same except the amount put down, 10% increase in value over 5 years, lets look at the Return on Investment calculation now.

(10,000/20,000) x 100 = 50%

Anyone else excited? Same property, but now buying it with way less money and you’ve created a much larger return.

Breaking it down to a yearly basis, you’re seeing a 10% per year return on your $20,000 investment.

Let’s rethink our aha moment and now consider buying 5 $100,000 properties with our original $100,000 by putting only $20,000 on each.

With a $10,000 increase on each property that $100,000 dollars that only increased to $10,000 in the first example now becomes $50,000. Same original amount, just leveraged to allow additional properties and resulting in a 50% return on investment.

Which my friends, is the power of leverage!

And The Lesson Learned Is…

It’s also why you don’t want to typically buy a property all cash when financing is available. Is it always the case, no, but it is in my simple examples!

The issues do get more complex as you add in mortgage paydown, cash flow from having tenants in place and other external factors, but the one point I needed to convey with this article was the power of leverage.

Hopefully it made sense and it provided some clarity for you. To further help, I’ve created a Simple ROI Calculator for you to use. Just click the link below to download and once you’ve downloaded you should be able to open it in your spreadsheet program of choice!

Simple ROI Calculator

It just covers the basics, but it might be fun to play with when looking at a current property you own or even to project a return by estimating growth. Hopefully you find it helpful.

If you have a chance to play with it, I’d love to hear about your ROI, so leave me a comment. If you already understand ROI, let me know if I explained it clearly by leaving a comment, and if you think this will help others please share it with them!

Did Your Goal Planning Work Out?

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Did You Even Goal Plan?

Goal Planning Your Real EstateOr did you even do any goal planning? Without goals, you simply end up coasting through life and as the last several years of my life have shown me, you need to know when to coast and when to push.

When I look back at my most successful years, it all started with goals, plans and a destination. When I look back at my least successful years they all involved no goals, haphazard plans and zero destinations. Think it’s a coincidence?

I don’t.

I’m getting up there (in my mind anyway). I’m not as energetic as I used to be, I’m not as athletic as I used to be, I’m not as aggressive as I used to be and the list of not’s can now go on far longer than I’d like. But one thing I’m not is dumber.

That’s why I want to do what’s worked for me before and why I’m going to make it work again.

The Problem(s) With Goal Planning

The problems that pop up when people start goal planning could end up being a list as long as my arm, but I’ve taken so many seminars, courses and read so many books that talk about goal planning I’ve got some helpful tactics I want to share with you.

The big problems I see people running into with goal planning are making their goals realistic, making them achievable and staying on track with them.

So let’s talk about those.

Realistic Goals

I want make a billion dollars! Realistic, or just wishful thinking?

For the majority of us not just unrealistic, but also not very specific which can be another problem. By making goals specific they also become easier to accomplish, so a better example would be as follows.

I will increase my monthly income by $2,500 by December 31st, 2020.

Now it’s become not only realistic, but specific as I’ve listed an amount and a timeline to achieve it.

Keeping Goals On Track

Tracking Your GoalsSo now that it’s realistic, I need to keep it on track, so as a Real Estate investor, how would you be able to achieve this goal?

First thing that pops into my mind would be to increase my portfolio, but then what?

Well, I see several options now. If I plan on increasing income by $2,500 per month that means I need at least one, but realistically several more properties to achieve this.

If I have determined that I make $1,250 cash flow from a single rental property I own I would need to replicate it twice to achieve over the next 12 months to achieve that goal. If I only make $500, I would have to do it five times to achieve my goal.

If you’re like me though, it suddenly creates new problems. I don’t have enough money lying around to buy five more properties, so if that is the situation I’m in, maybe that goal wasn’t realistic and it needs to be redefined, or I have to get more specific!

Specific Goals

With Real Estate there are so many ways to skin the proverbial cat we could easily create a new list as long as my arm of how to make money in Real Estate.

Maybe that original realistic goal morphs into the following.

I will increase my monthly income by $2,500 by December 31st, 2020 by partnering with two or more investors who will help with financing.

Or,

I will increase my monthly income by $2,500 by December 31st, 2020 by increasing the income from my current properties by $500 each and adding another property that generates $1,500 income per month.

Or maybe,

I will increase my monthly income by $2,500 by December 31st, 2020 by learning
how lease to own properties work and adding two properties that
generate $1,250 each to my portfolio

Notice how each iteration becomes it’s own specific goal? A goal that could be achievable by just about anyone reading this article? the sky is the limit when it comes to setting goals, as long as you also include some specifics and a plan as to how to get there.

But that plan also needs to be trackable and accountable!

Tracking Your Goals

The tracking part is where goals often fall apart and they are also what separate the people who achieve them from the ones who let them fall to the wayside.

With goals like our $2,500 increase we’ve already set the deadline to achieve it of December 31st, 2020, but our next step would be to set timelines as well.

Looking at the first goal which involves adding two or more money partners, you need to donate time to find them before you can even start. Suddenly your goal morphs even more and might look like this.

I will increase my monthly income by $2,500 by December 31st, 2020 by partnering with two or more investors who will help with financing. I will acquire the first investor by March 1st, 2020 and the second by July 1st, 2016 with two additional properties purchased by September 1st, 2020.

Using the second goal and morphing it, you may find something like this.

I will increase my monthly income by $2,500 by December 31st, 2020 by increasing the rents on my current properties by $500 each by June 1st, 2016 and adding another property that generates $1,500 income per month by September 1st, 2020.

And since we’re morphing, let’s look at the third goal.

I will increase my monthly income by $2,500 by December 31st, 2020 by studying lease to own properties for the next three months and adding my first lease to own by June 1st and my second by September 1st
adding $1,250 each to my portfolio.

Now these are all achievable, trackable and you should be accountable to at least yourself to reach these goals. Of course, these are all generic goals and I’m not saying any of you should specifically use them, they are just examples. Yet they are examples I hope you can learn from.

My Wife’s Take On Goals

Everyone should have their own little tactics and strategies for achieving their goals, but my wife has put together a pretty helpful walk through for folks and she’s been kind enough to let me borrow it and post it here.

As an entrepreneur herself she has had to coach people along the way and created  steps on goal planning that she shared with her fellow artists and entrepreneurs, so here you go. It was from January a couple of years ago, but since this is coming out in December, that means maybe you can start early!

I hope between the two of us you’ll get something out of this and it helps to make 2016 your best year yet!

The Great thing about goal planning is that you get to start fresh….a time to re-evaluate what worked for you last year and what didn’t.  This time is a chance to tweak things, or just to start fresh.  Any successful business person must be able to plan for their business.  I want you to really focus on your business in regards to this goal setting.  Yes, you can apply it to your personal life, and that’s a good thing to do, but for today’s benefit it’s all about your Business.

Now, we’re going into this year with January almost over, but that’s okay.  Any time is a good time to start your goals.  My husband and I have created an annual event on New Years Eve where we sit down with a nice glass of wine and talk about the past year, and set our goals for the new year.  We’ve done this for many years, and now our girls join us.

1.  Take a look at last year.  Take a sheet of paper and divide it in half.  On one side write down what worked the prior year.  What got you excited, what your customers liked, what were your successes.  What made you the most money.  And what do you enjoy doing the most.

On the other side write down what didn’t work, things that didn’t make you money, wasted      your time, or you just plain didn’t like.  Think about what you need to stop doing…..perhaps it’s  saying yes to everything that bogs down your life.

2.  Start planning your goals.  First think about the things that were a success, they are already working, what can you do to improve them or stream-line them?  Do this before you start adding new Goals to your list.

The thing about goals is that they should be reasonable, and measurable.  Sure I would like to earn $10,000 a month….but is that reasonable based on how much work I’m prepared to do.   Whether you intend to go hard with your business or not, being clear on your intention and what you can achieve is really important.

3.  Setting goals can also create a great mountain that seems impossible to conquer.  So you need to make sure that your goals are broken down into mini-goals.  When you are able to check off little tasks that will eventually take you to your goal, you will be motivated to continue, and feeling good about your progress.  If you feel good about what you are accomplishing you will continue forward with a positive frame of mind.

Pat Flynn from  SmartPassiveIncome.com  has a great phrase.

Write it down…get your goals out of your head where all the other stuff is rattling around and write it on paper, or a white board.  Once you do this, then the goal is real, and not just a thought.

Break it down…Task it out into little mini-goals.  The only way to get the big goals completed is by giving yourself achievement along the way.

Take it down… this is where you start chipping away at those little tasks, checking them off to   get you closer to your goal.

4.  Review your goals!  This is so important for you to succeed.  Putting all those mini-goals into months so that you can focus on them individually.  If you try to focus on all the mini-goals, you will not be giving the appropriate attention that you need to get that goal completed.  The reason I want you to review your goals monthly is to help you keep on track.  If you fall off, it’s only a month that you need to make up for.  If you review quarterly, you will either forget it’s the quarter, or if you missed the goal, you are now three months behind.

If you are a goal planner, I’d love to hear from you! Maybe leave a comment here and share how it’s helped you. If you don’t goal plan, maybe this was the incentive for you and next year you can come back and tell us how it worked!

Either way happy 2020 to you!

You Will Fail As A Landlord

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It will happen at some point.

Turn failure around as a landlord so you succeed

It might be something small, it might be something big, but you will fail at some point as a landlord and sorry it’s not an option.

It’s what you do with that failure though that will separate you from the landlords that simply quit after there first bad situation.

As many of you are aware, I have one website that teaches landlords (and tenants) about the eviction process where I’m located (www.AlbertaEviction.com for those that are interested). I have thousands of visitors each month and many of them are landlords who have just gone through their first eviction.

And often they are so disappointed with having to evict a tenant for the first time they are telling me they will be selling their property and it simply baffles me.

What the hell were they thinking and what lesson are they learning? They failed to have the proper tenants in place either through a mistake on their part, or bad fortune and they are taking their ball and going home? Not only did they fail, but they failed to learn and that’s far more depressing.

We all fail.

It’s how we learned to crawl, it’s how we learned to walk, it’s how we learned to run and it’s how we learn to grow. If we quit every time we failed we’d all still be sitting around on the floor in diapers never taking a chance to learn to crawl, walk or run.

Yet here are people who have invested typically their hard earned money into property and becoming a landlord and turn tail once it gets hard. These people are destined to continue failing as they won’t learn from their failures and use it to improve.

The few landlords that I do get to talk to I try to break it down for them.

They’ve just gone through one of the worst problems a landlord faces, the eviction process. They’ve gone through it and they now understand the process which does three things.

First it educates them (yes I am a big proponent of landlord education surprise right?), second it makes them highly aware they don’t want to do this again and leads to better screening, more diligence about their property and a renewed interest in treating their property like a business and third it shows them what they need to do if it ever happens again which takes a ton of fear, uncertainty and doubt (also known as F.U.D) away from being a landlord.

Now that you’ve gone through this and are better educated and informed, is it really the best time to walk away? That is an even bigger failure than going through an eviction.

Learn From Your Failures

Failures are lessons we need to learn from and adapt so we don’t repeat them.

And the more painful the failure the more we should learn to avoid repeating them!

Whether it’s evicting a problem tenant, discovering your property is illegal and is getting shut down, discovering your lease is inadequate or a million other instances or problems that can pop up in the life of a landlord these are all lessons we need to learn from rather than accept as failures.

I’ve failed more than most, but that’s simply by sheer volume, the important part is I try to learn from each failure and not repeat it.

I’ve learned about partners the hard way, I’ve learned about mortgages the hard way, I’ve learned about bad tenants the hard way, I’ve learned what needs to be done when tenants die in your property, what happens when sewer pipes collapse at your property and so much more.

Some of the problems were out of my control, some could have been avoided I learned after the fact, but I learned from all of these examples and a multitude more. Many of these lessons I now try to share through these articles and posts so you too can avoid them.

So it’s your choice, you can fail and quit, or you can embrace failure as an opportunity to improve, to rebuild and to come out better than ever. Just make the right choice!

 

Rainbows and Unicorns, Exit Stage Left – A Landlord Nightmare

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Dealing With Rental Disasters & Disappointment

Dealing with a fire at your rental property - another one of my landlords nightmaresSometimes your world falls apart and you get caught in a landlords nightmare. Or so it seems. Right now I am on week two of significant problem after significant problem of both the disaster type ( fire at a rental property) and disappointment type (tenant who I attempted to help out who burnt me hard, this time with garbage rather than fire).

I started out writing this as an email to all the subscribers, then after I had been writing the email for roughly 20 minutes and I wasn’t a quarter of the way through the story, I realized I needed to turn this into an article so I could cover more of it.

This post has actually taken me a month and a half to work through, to write and to finally get near the end of. It’s also the first post in almost nine months on this site. I’ve become a bit burnt out and tarnished, but I am making a comeback!

The intent of this isn’t to make you feel sorry for me and my problems, it’s to make you aware of potential problems that can occur and hopefully some additional lessons about dealing with what seems like overwhelm and how dehabilitating it can be.

We all face problems and as landlords these problems affect not just yourself, but your tenants who you are also somewhat responsible for and that can make these issues even more important.

I’ll start the story with disappointment and then we’ll move onto disaster. This will be a long one, so grab some coffee or some tea and get settled in.

Explaining The Parameters

Rental Markets FluctuateI think I need to preface these stories with a little background of our local economy. Often time what’s happening locally with unemployment, job creation and the economy all contribute to the experience you have as a landlord and in this case it’s very apparent.

The first parameter of note, the local economy where I live and own properties is driven by the energy industry which has been taking a beating lately with low oil prices. This is translating to unemployment rising, wages dropping, uncertainty in the local housing and job markets, higher vacancy rates, lower rents, and a significant amount of doom and gloom in the air among people.

Now if you’re in Real Estate for the long term, swings in the economy happen. If you’ve bought based on cash flow and long term value, these types of scenarios are reasonably easy to ride through. It may involve reducing rents, taking a hit on cash flow and making time your friend as you wait out the inevitable ebb and flow of economic cycles.

The second parameter is I like to help people. Often times more than I should. And often to my detriment as people in general appreciate help, but it’s becoming more and more common for it to be expected rather than truly appreciated.

This most often occurs when I try to help tenants out when they get laid off due to the slower economy or situations that are often out of their control.  In return for me giving them more time to pay and to get on track, I do expect a few things and maybe my expectations are too high.

They’re tiny little things like, if you’re “looking for work”, don’t spend the little money you have left getting drunk in the middle of the day. Little things like if you can spend $10 a day on booze and $10-30 a day on take out pizza, don’t complain you don’t have any rent money.

I know lofty expectations. Apparently far too lofty and for these expectations perhaps I should be punished.

Disappointment

So, near the middle of October, just before 7:00pm, I get a text from one of my working tenants complaining that the last three or four nights straight three guys who aren’t currently working (and coincidentally owe me money) have been partying it up until late in the night in one of my rooming properties.

He’s getting up (or trying to) at 6 in the morning after trying to sleep through these bozos who are displaying zero respect for the other tenants and zero respect for my house rules which involve quiet times from 11pm until 6am. Queue the disappointment.

​I immediately head out and park half a block away so I don’t alert them and walk up the alley so I can come in the back way unseen.

This particular property is two sides of a duplex, so I go to the south side first where two of the culprits live and walk in surprising them.

I find one guy in the kitchen, the other guy sitting on the couch smoking in my non-smoking property and a plethora of empty beer and liquor bottles lying around. Ramp up the disappointment to sheer anger.

One thing that sets me off is tenants smoking in my properties. From burns to odours to picking up cigarette butts after they’re gone, the entire issue of smoking in my properties just pisses me off. I find it shows a complete lack of respect for me, for my properties and for my rules. And to top it off,this is the second time I caught him!!!

I immediately tell him, he’s done and to be out in the morning (true, this isn’t even close to legal as far as evicting someone goes, but he wasn’t arguing with me at that point most likely due to the colour of my face (red with anger) and my tone of voice. I also inform the other guy, he has until Saturday to vacate.

After that brief explosion, I head over to the north side of the property to deal with buddy number three.

On this side I find more empties, evidence of smoking, but no actual smoking going on and buddy who I read the riot act to. At this point I made another mistake (perhaps two). This guy, let’s call him Richard (cause it’s his name), owed me a lot of money.

Richard owed me multiple weeks of rent, but had been diligently been paying me back. He was a brick mason, so he got paid quite well when working, but much of his work had been drying up with the slower economy. He’d fallen behind in the past and I’d helped him out and he had caught up previously.

My first mistake was letting Richard get this far behind, the second mistake was not kicking him out that night as well. I erroneously though the other two guys were the instigators and he was dragged along due to peer pressure. That may partially be true, but this guy was bad news as well.

In the end I told him he could stay, if he caught up quickly and he informed me he was working full time again and would have no problems catching up. Lies…

I’m going to omit a bunch more depressing details to fast forward to the weekend which is when I collect rent. Both of the first two guys are gone by this time and buddy Richard is supposed to have a bunch of money for me and things are supposed to be turning around. Except he’s not there…

And one of the other guys tells me he hasn’t been working full time, but rather has been working at a temp agency sporadically and is supposedly where he left for that morning. Or so he told the other guy.

To top it off, I also find a ton of empty beer bottles, more smoking evidence and a huge mess in the kitchen and common area which I know are all Richard’s doing. I know it’s him as the only other upstairs tenant is away for the long weekend and had left two days ago (this becomes important as we go forward). No wonder he didn’t want to see me that morning.

As my anger rises, I write up a note telling him to vacate by the next morning and I would be by Monday and wedge it into his door frame so he can’t miss it when he gets home.

A Landlords Nightmare – Disappointment Turns To Disgust

So far it’s been a heck of a week. And I still haven’t talked about the image at the beginning of this article which happened the week before. To recap my seven days I evicted three tenants, had a fire at a property and with everything going on, it felt like my world was collapsing.

So obviously it got worse..

On the holiday Monday I received a call from the tenant who had been away for the long weekend. He’d just got back and someone had broken into his room, stole his flat screen TV, his new Xbox, his tablet, jewellery, money and other miscellaneous items. Gee, I wonder who that could have been?

So I drop what I’m doing and head on over to the dark side.

Suspecting it may have been Richard and one of the other tenants I evicted before I leave I stop to photocopy their pertinent information that I gather when I fill out my rental application. This includes full name,  birth date and usually some form of government ID complete with number.

While I’m doing this I text the fellow at the house to call the police to report this, to start inventorying what is missing and to find his insurance companies number. In situations like this the tenant needs to be covered by his own insurance as my insurance does not cover tenants belongings.

Roughly 40 minutes later I finally pull up to the property to find perhaps a dozen empties scattered across the front lawn and on the front deck, one of the chairs from the deck laying out on the lawn and a sense of even more trouble inside.

Little did I know what awaited me inside.

I’ve Seen It All, Or So I Thought

With almost 1,500 tenants under my belt and after having been in the landlord and specifically the rooming house business for over a decade you see a lot of things! And every time I think I’ve seen it all, I get surprised.

To get right to it, I’ll shorten the intro to this as it could be a novella otherwise (and probably already is to some of you). It appears Richard kicked the other tenants door in, stole everything to pay his crack dealer, and then bailed. It was when I opened Richards room to see if he was around I got to add a new something to my ‘seen it all’.

dealing with a horrible tenant - landlords nightmares
Sorry for the blurriness, I was shaking with frustration when I took this

Garbage was piled up all along the bed (and under I found out) almost even with the dresser and top of the bed. I could see pizza boxes, empties, plates, bowls clothing, chip bags and more at first glance.

Disappointment was the first thing I felt.

I created these properties as a safe, affordable place for people and this is what I get for it. Of course disappointment evolved into anger, but the reality of it is, it had to be dealt with.

So over the next two days I started cleaning up.

Cleaning up after a tenant

16 black garbage bags, two large city garbage bins and two large city recycle bins later the main garbage was done.

During our clean up we found hundreds of cigarette butts thrown in the garbage,pizza boxes with maggots, beetles and all types of bugs in them.

We had pizza boxes stuck into the carpet and we discovered that our tenant had a peculiar habit of urinating into two litre pop bottles, beer cans and pop cans.

We threw out over 15 sealed large pop containers and I had to empty around 20 cans of urine out into the toilet. Definitely one of the most disgusting clean ups I had ever done.

When we had the garbage out and we had a chance to look at the furniture it was decided none of the furniture was worth saving. The mattress had cigarette burns, stains and who knows what else on it, the frame and furniture had spills and stickiness of an unknown nature and would have taken days to look clean, so we threw it all away including the carpet we had to remove.

Horrible tenant trashes carpet
Guess what the bottle was full of……

By the end of the week, once it was all done and all cleaned up, I realized I was getting burnt out.

Within a couple days from there, we talked to our Realtor and had it up and listed and actually just closed the sale on it December 1st. The new owner is going to carry on as a rooming house and he’s excited about the cash flow, the possibilities and as part of the sale I’m providing him with my systems, contacts and more to ensure he does achieve success, even after hearing of my setback.

Retrospective – What Went Wrong?

As I look back, the fault for how this tenant ended up does partially belong to me. Granted he has to take responsibility for his life and how he lives it, but I tried to help him (as I do many of my tenants) and I let him slide far too far. If I would have followed my normal procedures and hammered the guys for getting out of control, none of this would have happened, or at least on a much smaller scale.

I was burnt out and I was tired of the business. I’d been helping people for so long and getting so little back (or more realistically letting the bad over-shadow the good) that I let things slide, I didn’t show up at the properties as often as I should have and I realized I over stayed my commitment.

Typically I try to see inside a tenants room once a month just so I know the condition, in this case it had been several months and I had previously warned him to clean it up, but didn’t follow up. All bad mistakes in retrospect!

I’m excited about the opportunity to help this new owner make this a success, but I’ve already cautioned him to have a five year plan to move forward and so that he doesn’t get caught up in it for too long and also become burnt out.

This has also turned into a positive as its made me realize all the systems and processes I put in place to help make this a success and I can see me creating some programs to help other rooming house owners succeed and avoid many of the problems that can occur.

This particular property was a huge benefit to me over the years and not only generated a nice profit when we sold it, but grossed in excess of $500,000 worth of  cash flow while we owned it. Even with the headaches and the disappointment on the way out, it was still a winner!

Now Onto Disaster

So we’ve talked about my disappointment, now it’s time for disaster.

This fall was extremely taxing for me and really wore me down. Disasters and disappointment have that affect as they can be emotionally draining and I can vouch for that from first hand experience.

October 3rd, just after 5am the first call came in. It was a Saturday morning and it’s not unusual to get a call early in the morning from one of the guys, it’s just unusual to get it this early. Normally it’s just to let me know they are off to work and left money hidden for me to grab when I collect.

I leave my phone plugged in by my desk at night, I’ve learned that if someone is calling in the middle of the night either the police or the fire are better suited to deal with it, I can deal with it when I get up. So I ignored it.

The second call came in about ten minutes later and I ignored it as well, but started to get a sense of problems. It rang again one more time a few minutes later and I continued to lie in bed until around six which is when I normally get up on weekends (yep, I’m one of those early risers and sleep in until 6 on weekends).

First message was from a tenant just saying call me as soon as you get this, second message was from the neighbour telling me my house was on fire…. Now was a good time to semi-panic, I just didn’t have time for that.

I got dressed and headed out the door and tried calling the tenant along the way but couldn’t get an answer.

When I show up 20 minutes later there are police and fire vehicles all over the place, with the road blocked off so I park a block away and walk to the house.

By this time the fire is out and it doesn’t look like anyone is around except for a tv crew. Not being excited about talking to them without knowing anything I walked back looking for any firemen or police and noticed a city bus parked an idling down the street.

I head over there and find all of my tenants safe and warm and finally find a police officer and start getting the story from everyone.

Apparently an arsonist had been running around early in the morning and had lit three or four separate fires so the police and firemen were scattered all over making sure everything was under control.

At my property the fire was started in the detached garage and it destroyed three quarters of the garage and ran across to the back wooden steps blowing out the back house windows into the kitchen, burning the deck entirely, spewing smoke into the house and damaging the roof and back section of the house.

The good news again was all the tenants were out and the house wasn’t destroyed, it just wasn’t habitable. Fortunately I had some vacancies in other rooming properties and was able to shuffle everyone around so they had a place to sleep and stay until I knew what was going to happen here. Dealing with a rental property disaster

The Repercussions of Disasters

Dealing with a situation like this can be draining. Much like my previous story of disappointment there is a lot of emotional weight involved with disaster. In my case I took on the burden of the upheaval of my tenants, several of whom had been there for a considerable time.

I had to deal with the mother of one of the tenants to confirm he was ok, I had to deal with police and fire reports and dealing with insurance and fallout of everything after.

The biggest blow being the insurance company deciding they didn’t want to insure any of my properties after this claim. Trying to obtain insurance on rooming properties is bad enough, but trying to acquire it when the original insurer cancels it becomes expensive and time consuming as dozens of new forms and tenant info sheets needed to be filled out.

In the end I saw my insurance increase by over 3.5 times. I went from just under $4,000 per year to around $14,000 per year in just a few weeks. Talk about a hit to the cash flow!

As for the repair work, here we are just shy of two months later and we are almost done. the garage was finally demoed and removed the other day and I’ve decided to take a payout for it rather than rebuild (more on that shortly). The only thing left is the repainting of the outside stucco which they left until it was too cold to paint outside…. and now has to wait until spring, unless I get paid out on that too!

But it doesn’t end there.

I decided to forgo replacing the garage and instead get paid out by the insurance company. The best demo and repair estimate they came up with was just over $27,000 for a single car garage, but I found out when they pay you out, you don’t get any profit or taxes which that number included.

Additionally as it was a rental, first payee is the lender as per the mortgage agreement, although they do make exceptions. The positive about this is it does go on the principle, although I could have used the extra cash to cover payments while it’s vacant (I did have loss of rent coverage, but it was inadequate and only covered about 60% which is nice, but never enough as complete!).

This property was also due for renewal on December 1st, so when I called them to inform them about the payout from the fire it caused more problems (I really noticed a trend during this, when you do the right thing it causes more problems). Since the garage was not being replaced they informed me the property would need to be re-appraised, at my expense, to see if they would even renew it or if I had to potentially put more money in to decrease the loan to value (LTV).

Having dealt with buying foreclosures in the past, having dealt with previous lenders who wouldn’t renew, and with my previous history as a mortgage broker, I explained how anything but renewing was going to cost them extra money as I would force a foreclosure and sell the property before it got anywhere leaving them on the hook for a large internal costs. Lo and behold they came back a couple days later with an open mortgage that fit me perfectly with no appraisal required.

Another lesson from this, if you have knowledge about the process and how it works, you can avoid being pressured or leveraged into situations that others might fall into. I am positive if I didn’t know and completely understand my options, they would have stuck me with the appraisal fee, they would have required me to top up the mortgage and they wouldn’t have provided me a mortgage that fit my needs.

Knowledge is power!

Light at the End of the Tunnel

So, here we are into the first week of December and the dusts from my previous several months of my landlords nightmares has settled. My horrible tenant property is sold and I have cash and time on my hands again (hence finally finishing this).

My disaster property is all repaired and officially listed and although it’s a horrible time of year to sell as most people are focusing on Christmas right now, I know the buyers who are coming in are pretty serious.

I’m excited as going through the process of selling this rooming property is opening my eyes to how much I know about rentals of this nature and the new owner is finding the information I’m providing to be, and I quote, “Awesome” and helping him get off to a huge headstart without all the headaches.

Life may not be quite great, but it is under control and pretty darn good and I like that. Your lesson from all of this is simply that there are lessons from bad things. That if you focus on dealing with the situation whether it’s good or bad, you can get through it and maybe end up in a better spot like we feel we have.

It may not have been where you wanted to be, or it may have taken a circuitous route, but you can get there, just don’t put your head in the sand as I’ve seen other investors do and hope, it simply doesn’t work out!