The Educated Landlord

Making Landlording Easier

You are here: Home / Archives for Landlord Business

I’m In A Quandary

By

Easing Back In

Hey, if you haven’t noticed I’ve kind of slipped off the pace here this year. My goal has always been to get one new article out a week and one email tip out a week to everyone that’s registered.

Fortunately I’m fairly far ahead in my email list, although those that have been on it for a while may not have seen anything new in a while. That brings me to my current quandary.

I know so many of you are at different levels and different stages of being landlords. Some have been at it for a years and know quite a few of the tips and ideas I talk about already while on the other end of the spectrum many of you are new to the landlord business and a few are still just learning before you even take the plunge.

Knowing the broad differences in experience I’ve been a little unsure of what direction to head with the site. Do I continue to write and guide with basic tips for new landlords, or do I throw in some advanced steps and topics along the way?

That’s been the way I’ve tried to do it with the big focus on helpful beginner tips, but I want to hear from you to find out what you find most valuable.

I’ve been trying to ease back into this and I’ve already written half a dozen new articles, but I’m just not happy with where they were headed, hence my quandary.

So can you help ease my confusion and tell me what you’d like to see more of? Property management tips? Renovations? Dealing with tenants? You tell me?

I’m still working on a few other projects and courses in the background, right now one’s on writing ads for your rental property and another is how to run a rooming house, so if there are gaps in your knowledge as a landlord that you’d like to fill, here’s your soapbox. Leave me a comment in the section below and let’s see how I do!

Analyzing Rental Properties – Rental Neighborhoods

By

Choosing The Right Neighborhood

Successful investing in rental properties leaves cluesHere we are on part three of analyzing rental properties, hopefully this is helpful for you if you’re planning on expanding your portfolio or just getting started in the landlord business and plan on purchasing your first property.

If you missed the first two articles, I’d suggest you backtrack and read them first, you can find them at these links, Analyzing Rental Properties Part 1, Analyzing Rental Properties Part 2.

So what is the right neighborhood? To be fair there is no specific right neighborhood and it can vary from state to state, province to province and city to city, but there are clues to what areas tend to work better.

Following the Clues

When purchasing a rental property there are a couple key considerations you need to think about. First and foremost is cash flow.

Cash flow requires two things, healthy rents and being fully rented as much as possible. If you generate $500 cash flow a month that’s great, but if you’re vacant four months every year you end up losing money. If you only generate $100 cash flow a month, but are vacant even one month a year you could also be going in reverse.

Ideally you want properties in high cash flow areas or properties that have the opportunity to provide multiple streams of income. This can be basement suites or multiple units.

Alternatively you can look at single family homes if the monthly payments are very low and rents are great, but this can be a challenge and leaves you open for extended vacancy periods with no income coming in.

The second area to consider is a good rental population. This is where so many potential investors fall down.

You can have the best rental property in the world waiting to be rented out, but if there are no tenants, it just sits there vacant with you feeding it. This is where the economics we talked about in the first article come into play.

In healthy areas where economies are growing workers tend to migrate to the area and they tend to be renters when they arrive. Often the healthiest areas in these places are districts with good access to industrial and warehouse areas.

The reason for this is they provide the largest supply of potential renters and renters like to be close to their work. Many people moving to new cities or towns who rent are typically blue collar workers or laborers and these are your prime candidates for many landlords.

They tend to stay tenants for longer periods of time and they are plentiful which gives you more applicants to choose from when you are vacant and leads to less vacancies.

Finding amenities close to rental propertiesThe final considerations are transportation and amenities. You want good transportation services nearby so it is convenient and you want shopping also to be handy for items like groceries.

An example of this is our furnished rental properties that cater to working men. They all have multiple buses that stop within a couple blocks that will take them to the industrial areas or other main work areas (downtown core, secondary industrial areas).

They are also located close to main transportation corridors if they have their own vehicles that can get to the North, South East or West of the city quickly. And we have nearby grocery stores, pharmacies and even restaurants that are all within a  short walking distance. These features create a benefit of saved time and convenience and tend to help us keep tenants for longer periods.

Good cash flow, a large pool of potential tenants to fill your property and proximity to transportation and amenities are all keys to successful rental properties. They aren’t the only keys, and these alone won’t guarantee success, but they will make the process easier.

So, if you haven’t purchased your first rental property yet, start including these in your parameters when searching. If you already have a rental property, how many of these three attributes do you already have in place?

Not having all three isn’t a guarantee of failure, there are always successful rule breakers out there, but the more you have the easier it can be.

Not having great cash flow can be compensated with you occasionally funding the property, perhaps the cash flow is compensated by great appreciation.

Not having a large supply of local tenants can be worked around by setting up relationships with relocation companies that provide rentals for large local companies.

Not having amenities can be compensated by…. hmmmm, well hold it that one may be more of a problem, but it can depend on the area and what people are used to, but you get the idea.

So, for those you with rental properties already, take a look around and see if you have these requirements and then let me know if you have them by accident or by plan by leaving me a comment below!

I look forward to hearing from you and I would also like to know from those planning on becoming landlords int he near future, did it help? Were these last three articles useful and applicable to you? your feedback will help ensure future articles and series can help everyone the most possible, so thanks for your input.

Analyzing Rental Properties – Neighborhoods

By

Location, Location, Location

Continuing on with my series on analyzing rental properties I started by talking about doing some homework before you jump in.

We started it by looking at the local economics of where you’re potentially looking to purchase an investment property. Economic factors can help ensure the chances of your rental property being a success are multiplied, so if you’re just starting with this post, you may want to go back to part 1 Analyzing Rental Properties – The Economics

In this post I’m going to talk about neighborhoods which help ensure a steady stream of tenants and even better odds of hitting a home run with your investment rental property.

next door rental propertyAs the old adage in Real Estate goes, the three most important parts of buying Real Estate are location, location and location, although when buying rental property, it’s not the same location as buying your personal residence.

So many would be landlords see a house down the street from where they live come up for sale and they get the idea that it would be ideal as a rental property for them. Nine times out of ten, it’s not. In fact it could be the worst decision you make as a landlord and has the ability to permanently scar you.

The Pain

I’ve been there. I purchased the house beside mine years ago to help out the little old lady who wanted to move away. We tried to help her sell the property, but the market was very flat at the time and she was on a deadline, so we did what we felt was right and bought it os she could move on.

We were already experienced landlords with a couple years under our belt, so we knew it would work. Except with a high mortgage and low rents we new we would have some cash flow challenges, but if we could make it last a year, then we could sell it, yeah that’s it!

So we went ahead with it. We repainted, we fixed up some minor issues and we had a great property, just no one to rent it. Now since fortune favors the brave (or the uneducated initially), we managed to find some people who drastically needed to sell their home due to foreclosure issues and needed help getting back on their feet.

We were able to set up a win win solution where we took over their current home’s equity and renovated it, put it on the market as it was in a much higher demand area and sell it quite quickly. At the same time we moved them into the property beside us, used a portion of the equity as a down payment for a rent to own scenario for them and it all looked great.

They were actually paying less per month, we were making a few dollars as rent to own properties have higher rents and we had a bundle of cash from the flip of the other property. Everyone was winning.

They seemed like nice people, we got along quite well and several times they even joined us out back on our deck for a beer or glass of wine during the summer. Then the wheels fell of.

One of the burdens they had to deal with in their lives was a severely mentally handicapped daughter . She was fifteen years old, but mentally only reached the capacity of a two year old. Needless to say, but helping her and managing her was a full time job for the mom. Plus they had another son, so their days were full.

It started when they asked if they could get a dog. Pets are great therapy for children and apparently even more so for people with disabilities, so how could we say no? So away they went and picked up a mid sized dog, for a very tiny back yard…

A little more background, our former neighbour kept an impeccable yard. The rumours in the neighborhood was that she snuck out late at night to pull dandelions as we never saw any in her yard and the back yard was beautiful with banks of flowers across the back and a lovely covered seating area to relax in.

renting the property next to you

Well, in no time it was a complete mess. The lawn was dead and torn up, they never cleaned up the dog crap and it went from bad to worse.

Very unfortunately the daughter’s health deteriorated even more and she passed away. We felt awful. They had done so much to make things work for their child, they had given up so many things to make a good life for her and she was taken away by failing health.

The positive we saw on this was with the extra financial burden gone, they would be able to turn their life around and while this left a huge hole in their lives, it would ultimately allow them to move forward. We were wrong.

People Just Think Differently

We were actively growing our Real Estate portfolio plus I was working a demanding full time job at the time, but we wanted to succeed so we made adjustments to our lives. We only had one well used vehicle to save money, we rarely ate out and we scrimped and saved. We thought that was how everyone should think when they are trying to live up to their ambitions and dreams.

You simply adapt to make things work and start to think differently.

Not the renters next door though, although they did think differently than us. What little money they had left they sunk into their daughter’s funeral, which is understandable, but it left them with nothing and when their daughter first became sick (this last bought was over a few months), we did what we thought was the right thing and didn’t pressure them for rent.

We knew they were incurring significant extra costs during that time, the husband wasn’t able to work as much as he was needed at home and we could cover it. So by the time they had the funeral they already owed us almost $6,000. I know rookie mistake, but a compassionate mistake, after all they were not just my tenants… but they were my neighbors too.

Then the husband’s vehicle broke down, so they leased a new expensive vehicle, still not sure where that money came from if they couldn’t pay me. Next we noticed the wife had new shiny manicured nails, a brand new cell phone and they even asked if they could get a second dog!! All expenses we refused to splurge on for ourselves as we were very money conscious. We said no obviously and suddenly we became the bad people for refusing them.

The best part? We had front row seats as it all took place next door.

Finally, we find out from them that the government funds they were receiving to help with their daughter’s disabilities were “suddenly” cut off now that she had passed. Their free supply of money that was obviously just being spent on them now suddenly dried up. Were they thinking it just ran on forever?

This just made the likelihood of us ever getting the outstanding rent back extremely unlikely, so we were ready to pull the plug and evict them. Before that hppened,  they came to us and told us there was no way they could afford to stay in the property and had located a basement suite to move into, but couldn’t get in for six more weeks.

They were going from a 1,600 square foot single family home in a nice neighborhood, complete with a two car garage and a basement, to something under 1,000 square feet. Talk about a change of lifestyle.

I can’t even remember if they were able to get us any additional money during that remaining time they were there, but I know I spent every day hating the idea that money that should have been coming to me, instead was going to the shiny new vehicle in the driveway beside my  older vehicle. It was a very painful daily reminder of how I was being taken advantage of.

When they finally did leave, the property itself wasn’t too beat up, but the back yard was a disaster and we had to completely repaint and re-floor the property. We knew there was no way we could rent to someone next door again and that we needed to sell, so a significant renovation was in order.

Rental property yard after lettign in dogs

In the end, the tenant walked away owing us over $10,000, plus we dropped another $20,000 in fixes and upgrades to sell it. The positive part of this was during the time the tenants were in there, the market had taken a huge upswing and even after all the losses and extra  expenses we still managed to make a healthy profit, but we were just lucky.

The TakeAways

The painful and expensive lesson we learned is that having your tenants next door or even near to you, opens up the door for more problems. Your relationship could evolve from just landlord tenant to a more complicated Landlord/neighbor scenario.

Part two of this is when things do go wrong , and there is no guarantee they will go wrong, it’s much more painful when it’s next door for you to see or you pass by it on your way home from work every day. Yes you get to keep a closer eye on things, but that too has it’s good and bad.

Part three, if things do go bad and it gets to the point where your relationship sours, do you really want your tenants knowing where you live, or having to see them almost every day? Especially if they are spending your money on themselves rather than paying the rent they owe?

Why take a chance?

In all likelihood the neighborhood you are living in isn’t the best location for a rental property anyway. Although the quality of tenants overall may be better in nicer neighborhoods, the quantity is way down.

This can lead to longer times filling vacancies while you are making payments each month on more expensive properties.

When buying in areas more prone to rental properties you have a much bigger pool of tenants to choose from and while you may have to put more work into screening, during tougher economic times you want a bigger base of potential tenants to choose from as vacant months add up quickly.

Also, buying rental properties in rental areas is usually much cheaper than purchasing in prime homeowner areas which can save you money to start with. Buying a property for less money and still being able to get the same amount of income is simply being smart.

Buying an expensive property in an expensive area and hoping to make money may work, but it’s much harder and has more drawbacks.

Most of these neighborhoods frown on renters. It’s the NIMBY mentality or Not In My Back Yard attitude. They complain about illegal suites (which they have a right too), they complain about too many vehicles, they complain about snow not being shovelled in a timely fashion or grass not being cut to acceptable lengths etc. And while these people exist in all neighborhoods, they are much more prevalent in owner occupied areas.

Even if you do everything right, if your neighbors find out your property in the nice neighborhood is a rental, it gets a bit of a social stigma. Yet if you buy in a rental area where you have a huge pool of tenants, it’s just another property in the neighborhood.

Yes you may have a longer drive to randomly check up on your property, but the other benefits outweigh this by so much!

The BottomLine

You have to do what works for you. I’ve given you my example of what can go wrong and I’ve explained why not renting next to you works better. If you’re already living in a rental neighborhood, you may not have an option, or if you’re in a small town it’s hard not be be near your rental, but if you have a choice, don’t make it too close!

The benefits of purchasing a rental property in a rental neighborhood are they are typically a bit cheaper, they typically generate better overall cash flow, renovations cost less, you have more tenants to chose from and they can often be suited providing you with multiple streams of income from one property.

The benefits of buying in your possibly upscale neighborhood is that it’s close, you can keep an eye on your tenants, the initial price is higher so % increases in value reward you more and the class of tenant is typically better.

The negatives of buying in a rental area is you have to do more thorough screening as it’s quantity versus quality, the initial price point is lower so if values increase x% it would be smaller than if on a more expensive house and it may not be near by where you live.

The negatives of buying in your neighborhood that is not a rental area are far fewer tenants to choose from, so longer periods of vacancy, lower amounts of cashflow, renovations are typically more expensive, if the relationship sours, you have to deal with it often on a daily basis and your property can suffer local stigma for being a rental.

There are people who buy near them and run their property successfully, with only one property this may work perfectly for you. However, all the investors I know who buy multiple properties tend to buy them further afield and usually in specific areas designed to generate the best chance of success and the most cash flow and I can’t recall any of them buying the rental next door or down the street from themselves.

And if they don’t do it, why would you?

So, this has been one of my longest articles ever, so I hope you got some value from it, I’d love to hear your comments and stories about your rental properties. Are they in your neighborhood? In rental areas, or next door?

The next article will be the third in this series and will talk about local rental markets, I hope to have it ready for you soon!

FYI, this is how it looked when we were done,

rental property renovated after bad tenants

Analyzing Rental Properties – Economics

By

Is It a Good Or Bad Rental Investment?

investing in rental propertiesWhen you’re purchasing a rental property as an investment, you’re really looking for a good long term investment. The problem is, how can you be sure it works, and how can you tell a good rental property from a bad rental property?

Fortunately, there are a few things you can look at to help put the odds of finding a good rental property in your favor. This article will address a few of them.

Before anyone purchases a rental property, they should really do some homework regarding the local economy, the neighborhood they are considering purchasing in and the local rental markets. So yes, there is homework involved.

Economic Factors

I’m starting with economic factors as I feel they are one of the best indicators of long term success for a Real Estate investor or beginning landlord. You really want to choose an area that gives you an advantage.

While it’s true there is rental property in just about every city, county and jurisdiction, these areas are not all created equal and understanding the local economics can give you an unfair advantage over those that don’t. This advantage doesn’t necessarily translate directly to success, but it does make it easier.

Some of the factors I refer to as economic are items like unemployment rates, new businesses coming to the area and even the general age of the local population.

If you look at historical unemployment rates for the area you are considering you’ll find a mountain of potential information. Ideally, you’ll be looking at an area where people are moving to for work and unemployment has been quite stable (low and stable) or has been exhibiting a trend of dropping over the years.

Right off the bat, this makes Detroit a bad choice. Sure you can get into rental properties very cheap, but with extremely high unemployment and not to bright of a future it doesn’t bode well for getting paid rent on time and potential increase in values in the near future.

If you know of new businesses coming into an area, this too can be a benefit. The biggest example currently of this is throughout the Dakotas where the oil and gas industry are working like crazy. While many of the workers will end up being transient and not necessarily sticking around the area, the huge growth in these industries also trickles down to new restaurants, stores and businesses that serve these workers. These businesses have employees who will stick around and will be getting paid.

Another area to look at is the general age of the population. If you have a relatively older population in the area, does that mean a sell off is in the near future as they retire? Will this form a glut of properties on the market affecting rents and values?

On the other hand if the population is relatively young, will they be transitioning to purchasing in five years from renting? Will this put extra pressure on home values going up and lending itself to more growth in the home building industry?

These are the types of questions serious investors look at when purchasing in areas and if you’re serious about being successful, they should be part of your process as well.

I know dozens of investors, very successful investors, who don’t even buy in the same region they live in. they have hand picked cities and towns hundreds and thousands of miles from where they live. it might be daunting, but it also reduces much of the risk.

Other questions to consider;

  • Is the local government pro economic growth?
  • Is there positive in-migration to the area?
  • Are wages increasing in the area?
  • and many more!

Anyway, this is part one of analyzing rental properties, in a few days I’ll add my take on rental neighborhoods and then after that I’ll go into local rental markets. Finally to close it up, I’ll just go over some of the math you can use to determine if the rental property you either currently own, or are looking at has a better chance for success.

So, is this helpful? Can you use this as a starting point in your education as a landlord and in expanding your rental portfolio? I’d love to hear your thoughts and any other ideas you can add.

The Importance Of Having Current Tenant Contact Info

By

Tenant Contact Info

keep good tenant recordsIf you’ve taken my Tenant Screening Course, you know I stress getting as much information as possible on your application and contacting all the references and contacts. It’s just your added benefit of making sure you get a really clear picture of who your potential tenant is and to make sure everything is consistent.

There is also some extra benefit from this as well.

If perhaps your landlord tenant relationship sours and you find yourself the victim of a midnight move, damages to the property you weren’t expecting and/or even just difficulties getting your rent, having knowledge of where the tenant works, contact information for relatives and friends and access to references can definitely work in your favor.

It’s always nice to try a have additional resources to contact when trying to track down a tenant who is avoiding you or owes you money, but it turns out there are other reasons as well.

Being a landlord can be a roller coaster, from the highs of getting your first rental property, your first tenant and even your first rent check to the darker side which at times it feels like it can shake your faith in people.

This week was another hill in my roller coaster. Every time I feel I’ve seen it all, I see something slightly different, both good and bad and this week had shades of both with multiple lessons learned.

When Tenants Impact Your Life

Over lunch with a landlord I’m mentoring this week we brought up a familiar subject, landlord tenant relations. As the saying goes with people in general, if you give them an inch, they’ll take a mile and this is especially true in a landlord tenant relationship.

The rules and boundaries you have in place need to be enforced so that you’re not taken advantage of. Whether it’s allowing a late rent payment, modifying your rules about pets or a myriad of other areas of leniency, you have to remember you have a business relationship, not a friendship with your tenants.

Having said this, when tenants have been part of your life for many years, it becomes more than just a tenant landlord relationship and when you lose one, it can be shocking.

And this week I lost a great tenant.

Kirk was a 70 year old fellow who had been with me in one of my shared accommodation properties since October 2008. Five straight years.

Through the tough years of the economic downturn and the good years of steady turn over, Kirk had been a rock in the house making sure it was clean, the other tenants were staying in line (or I quickly knew discreetly who the problem was) and acting as an ambassador to other incoming tenants.

He always made the new people feel right at home and was quick to welcome them from wherever they came. It was common in this house for Kirk to make a roast in the slow cooker or chili or some type of stew and to share it with everyone on Saturday and Sunday’s.

I mentally reviewed where some of the tenants  I had in this short term accommodation had come from and the list was extensive. People from not just across Canada and the US but also Australia, Ireland, Poland, Russia, New Zealand, Mexico many countries in the Middle East and many more that I’ve likely forgotten. And they all seemed to comment about how Kirk made them feel at home.

Perhaps especially the young twenty year old currently staying at the house who called me Tuesday night to tell me that Kirk had passed away at work that day.

Kirk had treated him like his own son and understandably this young man was extremely sad to lose this fellow so close to him and such a rock in his life. It’s just a testament to what a great tenant and a good person Kirk was. Sure he had his demons, but he affected so many people in a positive way.

There was a long list of previous tenants who would often be repeat clients as they cam back through our city for work and they always wanted to be back in that house as they enjoyed being around him. It was a common occurrence to show up at the house and find one of these former tenants just stopping by to say hi to Kirk or taking him out for dinner as he had made such an impact on them.

He will be sorely missed

Which brings me full circle back to having current tenant information and the lesson learned from this. As a landlord, we often have to do things which make us uncomfortable. Be it confronting tenants, evicting tenants or simply saying no to tenant requests.

Well Tuesday night I had to make the uncomfortable call to Kirk’s daughter to inform her of the news. I wasn’t sure if she knew already or if I was going to have to pass on the news. I dreaded making that call, but as a landlord, I have responsibilities especially when it comes to doing what’s right, as touch as it may be.

The dread became worse when I discovered I broke my own rules and didn’t have the full phone number for her. Here I teach people to get contact info and I couldn’t even get this right. I had a partial phone number, but obviously at the time Kirk didn’t have the complete number.

Fortunately her number was in his room and I made the call.

Also fortunately, I wasn’t the first to talk to her. Kirk’s work had called her earlier in the day. I had a quick conversation and we arranged to meet later in the week so she could collect his things.

The next day I began to reach out to some of the former tenants I knew had often come back to see Kirk and it wasn’t long before my phone was abuzz with text messages as word spread. Many knew each other and the resounding message was how much he will be missed.

So just to close up, there are some lessons to be learned.

Even though many tenants often portray us as cold hearted landlords, and it may come across that way at times, tenants do affect us. I had quite a sleepless night that night  and I know I will miss my tenant of so many years for more than just being a rock steady tenant. He was a good person.

Second, you need to stay on top of your tenant contact info. This is the second time I have had to deal with a death of a tenant and I also had to make a tough call that time as well. I’ve also had to call parents when tenants were badly injured and it’s never an easy thing to do, but imagine not being able to update loved ones about their sons or fathers.

So stay on top of your records and remember to treasure your good tenants, you never know how long they will be around.

The Curse of Knowledge

By

Are You Smarter Than Your Tenants?

Curse of knowledgeI am blatantly guilty of the curse of knowledge and even though I’m fully aware of it, I often still fall into as it’s a trap that’s tough to escape. Being aware is the first step and this article hopefully helps make you aware.

So what the heck is this curse of knowledge? It’s what happens when you go talk to your mortgage broker, your financial advisor and even your mechanic.

They speak in some sort of gibberish where they use words like amortization, fiduciary standards or ABS control module malfunction. Fully expecting everyone else knows what these words also mean.

Now often we may know some, but as the conversations drag on new and even more industry based jargon comes out. But it doesn’t end there.

In many situations when dealing with people who work in a specific field, they have specific knowledge that a layperson may not have. An example right off of this site would be something as simple as the master key system I teach new landlords about, or the process I teach for screening tenants. A new landlord wouldn’t necessarily know either of these, often even established landlords don’t!

Task, procedures or simple industry knowledge that seems natural to the person in the industry, but requires further explanation when talking to someone who is the proverbial duck out of water is where the curse of knowledge comes into play. And this curse can affect how your tenants and you get along, how profitable your property is and even how safe it can be!

You Really Just Have Different Knowledge

voodoo dollThe biggest problem with “the curse”, is you assume the other person has the same knowledge as you, which which is a gateway to misinterpretations. You believe the tenant should understand the bank requires your mortgage payment on the 1st, hence they have to pay on the first. They may think the bank will understand if the tenant suddenly had to pay support payments or an unexpected expense. Or worse yet assume you will constantly carry them!

You understand leaving windows open in the winter to cool the house down is an ineffective use of utilities (and if you as the landlord are paying them, is an added expense!). Yet to the tenant, they may just think utilities are free and it never occurs to them that it costs you extra money that takes away from potential improvements or maintenance of the property.

It’s not as if the tenants are dumb, they just don’t have your knowledge, or the curse that comes with it. With any luck your business model as a landlord isn’t based on finding tenants that aren’t as smart as you. Hopefully you are finding intelligent, thoughtful people that make your life easier, your property safer and don’t burn your property down.

You just have to remember, it’s not the matter of tenants being dumb when it comes to property versus you, it’s just that they have different knowledge. Often many of them have only been on the rental side, they don’t understand the ramifications of not paying on time, of leaving outside taps open when it’s freezing outside, or the downside of taking smoke detectors down when they go off and not informing you.

Part of your job as a successful landlord is to make sure you educate your tenants on many of these little knowledge gaps that you may have between the two of you. This is what’s called an information imbalance as Dan and Chip Heath refer to in their book Made to Stick: Why Some Ideas Survive and Others Die (which I’d recommend you check out if you are into marketing and/or business, and yes that is an affiliate link so I get a few nickels if you purchase it through there, so thanks).

So How Do We Educate Our Tenants?

Training your tenantsThis is where the big problem shows up, because it requires more work on our part! We need to take time to educate our tenants and to create systems so we continue to do it every time.

One place to start is creating a property binder for each of your units. In the case of an up down suite, each tenant would have their own binder covering the property. Some of the information overlaps, such as where the water shut offs are for the property, location of the breaker boxes and proper use of the heating and cooling systems where applicable.

This binder stays in the property and is the ideal for putting the tenants copy of the lease, any walk throughs, local information such as shopping, restaurants, schools, post offices and banks as well. It is their go to reference and can even include manuals for stoves, fridges, and laundry machines.

Another area we can work on is explaining our leases in detail to the tenants. No glossing over the fine print. Thorough explanations of why you always need to get paid on X day is required, from there explanations of any penalties or repercussions that also accompany late payment. DO NOT LEAVE THIS VAGUE!

Next step, thorough walk throughs of the property. In one of my email tips I refer to explaining about water shut offs on toilets, taps and washing machines. Make sure you point these all out to the tenants and explain them. With external air conditioning units, maybe take a minute to explain covers need to be off when using them or that they shouldn’t block the sides.

As a landlord, you’re probably already a homeowner, so while much of this isn’t rocket science, it might as well be to someone who this is brand new too. If this is the tenants first rental unit ever ) or they have limited experience with these items), you may have to walk them through how to use the laundry, the oven or even the programmable thermostat!

By putting in the time when you sign the tenants in, you can prevent hours of frustration and possibly expensive repairs or headaches later. But by putting in this extra effort you’ll also stand out in more ways than you realize.

It’s just one of those ways you can be a standout landlord that you’re tenant will also remember and refer people to in the future!

The P.S.

The landlord tenant relationship is a two way street. As landlords and especially as long term landlords, we often forget the hardships involved with being a tenant. There is also a curse of knowledge associated that goes along with being a tenant and it may be a matter of the market changing, new rules being put into place or just our forgetfulness about what it was like being a tenant ourselves once.

While I always caution against being buddy buddy or Facebook friends with your tenant, it is important to let them know they can contact you if there are problems. you don’t want to be the landlord they fear, but rather the landlord they respect because you look after them. Previous bad experiences with bad landlords can color the perception of  tenants and this can taint the knowledge tenants have.

Bottom line, do right to your tenants and the majority of the time they will do right back to you. Now get out there and get your systems in place to break down the knowledge barrier between you and your tenants!

Bed Bugs – Pests In My Rental Property Part Two

By

Bed Bugs – A Landlords Nightmare

Landlords and bed bugs - pests in my rental propertySo, here we are a week later and if you read my previous post where we first discovered we pests in my rental property (if you haven’t read it yet, please start here and then come back Bed Bugs Part 1), you’re probably curious to see how I dealt with them.

Well, I’m still actually dealing with these pests in my rental property, so it’s not over, but the good news is, our treatment is working after initially messing it up. Just to get you back up to speed, I initially had two options to get rid of them.

Bed Bug Treatment Options

Option one was spraying. This was going to require minimum three treatments and typically four or five. Each treatment costs around $600 and the overall effectiveness is around 90%. Part of the problem being where you catch the bugs during their life cycles.

If they are sprayed, haven’t died yet and then lay more eggs, you have to repeat with another spray and so on and so on, until you catch them at the right time. The downside being a) it’s not 100% effective, b) they become resistant to the pesticides over time requiring stronger and stronger chemicals and c) no one can be in the property during the spraying because of these chemicals for six hours. Then even after six hours, do you really want to be around the chemicals?

Option two is heat treatment. This works out to also require three treatments as the property has two upper levels and a finished basement. So one day in the basement, one day on the main floor and the third day on the upper level. The positive is this is 100% effective as they superheat the house to 120 degrees fahrenheit for several hours which kills the bugs themselves and I can only guess poaches the little eggs before they hatch rendering them inert.

This can be even more expensive though as it’s $1150 per day around here plus travel costs. Also, the tenants could stay for the first two treatments, although the house will be very warm, but on the third day I would have to put them up in hotels or find other alternatives, so it would easily be $4,000 for this approach.

Now fortunately, my pest fellow also introduced me to another option involving traps and dry ice. These involve small plastic containers with a center area where dry ice is placed and an outer ring that is covered in a fine talcum powder.

Bed Bug Traps

Using Dry Ice to Trap Bed Bugs - pests in my rental propertyUsing the dry ice traps was going to be considerably cheaper as the traps themselves cost about $120 for 24, plus the dry ice, which at the time I had no idea what the costs would be. It turns out for around 6 Kilos or 13 pounds, it’s just under $40 and I need that much each time I set up the traps.

The idea is you load up the traps, the dry ice which is CO2 evaporates and the bugs are attracted to the trap as the CO2 is what attracts them to people as they sleep. Once they climb over the outside wall of the container, they get trapped in the talcum area with the powder and can no longer climb out.

You simply go back the next day, empty the trap of all the bugs in the toilet and reload and repeat until there are no more bugs. Simple right? Well we really only learn from our mistakes…

Mistake number one, I picked up the traps on the Friday, went and bought my dry ice from one of the few local places that sell it, and proceeded to the property to set up the traps. I managed to roll this all into some other appointments that day and had all the traps set up by shortly after one in the afternoon and proceeded home to strip out of my clothes and set up a couple traps around my clothes in case I had brought visitors home with me.

Now it was waiting time! And learning time….

Apparently dry ice has a fairly short shelf life. So when I looked at my traps at home around nine that night, it was almost all evaporated, and by ten, completely gone. Since bed bugs are nocturnal, I wasn’t so sure how well this was going to work. My traps at home had nothing in them, which was good, I hoped, but the true test would be checking the property the next day.

The Next Day

So fast forward to checking the traps for bed bugs at the property and nothing. Absolutely nothing!! Just to complicate things even more, the dry ice place wasn’t open Saturday, Sunday or the Monday which was a holiday, so at this point I didn’t know if they simply didn’t work, if I set them too early, or if I really did have bed bugs!

Fast forward even more now to Tuesday. I’ve done some research and I’ve talked to my pest guy. He tells me that I should have caught something, even during the day if there was a huge infestation, maybe just maybe I only had a couple male bugs, and no females and I got lucky, but I’m best off trying again.

My research on dry ice helped me avoid a major catastrophe as I planned on buying more of it, taking it home and storing it in my freezer until that night when I would go out and re-set the traps. Apparently the extremely low temperatures of dry ice will cause freezers to shut down, instead you need to use coolers to slow down the evaporation and the coolers cannot be air tight as the gas needs to seep out. I was glad I did some research!

So picked up the ice, brought it home, put it in the cooler and off that night to set the traps around 7:30 and once again, I wait.

The Day After The Weekend After

So it’s Wednesday by now, time to see what if anything I’ve caught and lo and behold “Thar be bugs”! It looks like I’ve caught about 8 of them in the various traps spread around the rooms. All of them are very very tiny which indicates to my pest fellow that these are young bugs and I may have caught them fairly early in the cycle. That’s a good thing!

So Thursday night I repeat the process, I catch even more and here we are on Friday where I’m heading out this afternoon to buy a large order of dry ice which I’ll store over the weekend so I can make three more trips. I’ve been buying it in 6 Kilo batches, but for the weekend due to the decay of it, I’m going to pick up probably 30 Kilos so I still have some left over for Sunday.

The trick now is to stay on top of this every day until my traps remain empty. The positive is, it seems to be making a difference, none of the tenants are reporting any new bites and  the traps I set up at home haven’t caught anything which is making my wife very happy.

I’ve also found multiple other variants on dry ice traps explained out on the internet and I’m not sure if they will work better, worse, are easier to work with or would be harder, but this is working for me, so I will just carry on.

It does require cooperative tenants and they see that I am trying to help them which really helps, and hopefully by mid next week and for around $600 in total I should have this solved! Fingers crossed!

As always, love to hear your thoughts and any feedback you may have.