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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!

Hey Baby, It’s Cold Outside

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Can you evict tenants in the winter?Winter Evictions

If’ you’ve never heard the song “Hey Baby, It’s Cold Outside”, you’re missing out, it’s a classic. If you don’t know what the rules are about evicting a tenant in the winter where you live, you could be missing out on some cold hard cash, like several months worth of rent.

The rules are different everywhere and with the temperature hovering around -30 degrees Celcius (-22 Fahrenheit) with the wind chill as I start writing, I thought winter evictions might be a timely topic.

Can You Evict Tenants In The Winter?

I think the most common answer is yes, but it can depend. I know, not very definitive as far as an answer goes. Ask tenants and they will almost all answer no, but if you’re getting landlord advise from your tenants you may have a much bigger problem…

The problem is the rules vary from state to state and province to province and it would be unrealistic to know the specific answer for every city, town, state, province, district or country throughout the world. But that’s where the internet comes into play.

I did some quick research and actually couldn’t find any places that allowed tenants to stay, just because it was winter. I started by specifically looking at provinces and states that were known to be more tenant friendly and cold.  I looked at rules in New York state, Minnesota, Ontario, Quebec and Alaska to name a few and all seemed to be pretty specific.

Evictions can take place at any time of the year if tenants are in breach of the lease. Now to be fair, I didn’t check every state, province, city and town, so you’ll want to do some local research of your own just to be well educated about it!

Winter eviction of tenants

However, just because it isn’t illegal to evict them, there is not guarantee it can be done quickly. There is a ton of leniency built into the laws when it comes to issues like compassion, hard times and basically bad luck. Here it isn’t written anywhere how much time someone has to be out of the property when evicted.

This gives judges and hearing officers the ability to make decisions based on the evidence and this could mean a quick and effective eviction in more grievous situations. While in other cases they can be given 90 days or longer, but with specific conditions in place or it can accelerate the eviction timeline. These would typically be payment conditions, but depending on the scenario they can vary.

Have you evicted a tenant in the winter? If you have leave us a comment and let us know where you’re at! Maybe we can form a mini database of info right here!

To get it started, I’ve not just evicted tenants in the winter, I’ve also done it right before Christmas and no I’m not the grinch, I just play one on TV! Looking forward to your comments.

Is Your Rental Ad The Reason You Aren’t Getting Calls?

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Your Rental Ad Sells Your Rental For You

A good rental ad makes all the differenceI don’t think all landlords are lazy, but I’m constantly amazed by some of the rental ads I see online for rental properties. It’s like the writer took thirty seconds to put down a couple features of the property and thought they were done.

News flash, you’re not.

This is front and center for me right now as I have a vacancy at a property that is a two hour commute from me. I need to write an ad that attracts the type of tenants I want to rent to and that sells the property as I don’t want to make twenty or thirty trips up to meet people!

The good news is here is what my competition has in their ad (sorry if this belongs to you)

built in 2012, modern, includes washer, dryer, fridge, stove, dishwasher, microwave central vac. lots of parking, close to downtown, parks, hospital, highway 2a. lots of storage, basement area for extra room

It has five pictures and the main picture is an external shot of the townhouse complex with no indication of which unit it is and it actually looks very similar to the place I’m renting, but they didn’t put too much effort into selling it in my opinion.

It took me almost two hours to write my ad and although it’s not perfect, I’m pretty happy with it and I’m already getting a great response to it. Here’s how it reads.

Looking for a modern three bedrooms place to call home? This three bedroom two and a half bath property is going to make someone a beautiful home, so why not you!

The three good sized bedrooms upstairs are bright, have large closets and are perfect for a new family or someone who needs a little more space. With a full bath on the upper level and two linen closets, storage won’t be an issue, but even better is the ensuite off the master!

Yes, the master bedroom has it’s own full ensuite with tub and shower giving you the privacy and quiet place you need. Plus with the huge East facing windows in the room, you can wake up to the sun shining in every morning making it the favourite room of your house! What an incredible way to start your day.

The main floor is ideally set up with a welcoming living room as you come in the front door with plenty of room for entertaining or just a relaxing night at home after a busy day. Then as you walk through the main floor, first you’ll see the half bath on the main floor tucked away to the side, then further in is the wide open kitchen and dining area and the two french doors leading to the back deck that let summer in and provide you a quiet oasis to unwind on.

The secluded back space is shaded by several beautiful pine trees and helps make you feel like you are out in the country and away from the city. Plus, it provides a great place to BBQ and relax after a day’s work.

Finally, the lower basement level is ideal for storage. As an unfinished space it’s a large blank canvas for you to set up and organize as you wish and giving you roughly 700 square feet of storage. Of course you’ll want to leave a little room to take advantage of the washer and dryer that are included which means no more trips to the laundry mat and more home time for you.

Built in 2007, this modern townhouse is approximately 1,400 square feet and has everything you need. From the included washer and dryer to fridge, stove, built in microwave and even a dishwasher, all the conveniences to make this a home you love are here.

Being located along 55th street and beside 56th Ave, the location is ideal for a family. The High School is located just a few blocks West and the elementary and Catholic schools are located just a few blocks East of the property making walking to and from school quick an easy. Add in the several nearby park and fields and your kids will love the area.

The particulars. This is a non-smoking property and unfortunately we don’t allow pets. We are very particular and we do full credit and reference checks on tenants before a lease is ever signed. We are initially looking at a six month lease and at the end of the six month term will look at a yearly renewal.

Now for the numbers. Rent on this fantastic three bedroom two and a half bath home is $1,395 per month and we require a matching security deposit plus the first month’s rent before moving in. Utilities are extra and will need to be put in your name.

We are currently repainting the interior and expect this property to be available as early as the November 15th, but can also work with a December 1st occupancy.

We will be onsite again on Thursday November 13th from noon until 3, so if you are available to view it, you should email us right away, or you can call or text Bill at xxx-xxx-xxxx. Note this is a long distance call from Xxxxxxx, but if you text me I can return your call as soon as possible.

This highly desirable property in a great area will not last very long so if you are interested and would like to come for a viewing contact us ASAP.

So which property would you want to see? I have ten pictures (the max allowed) and my main image is the kitchen picture at the beginning of the article. Why the kitchen? Because the kitchen typically sells the property. The picture below is another image I used that gives an idea of the space.

Ads and images for your rental property help you rent faster

Painting A Picture

Part of my goal with my ad was to create a picture of a home that someone wanted to live in. I didn’t want to just tell them I had appliances and I was close to a few things. I wanted them to know what I was close to, how the property was laid out and to present an experience.

I believe I mostly achieved that, but when compared to the competition, it wasn’t hard. So the question for you is, which one would you want to go look at?

It was almost a year ago I received an email from a very nice lady down in Texas that was having problems filling their vacant rental property. She’d sent a copy of the ad and I made several suggestions to help her re-write the ad to make it more appealing.

In less than a week she sent the new ad and I wanted to go rent the place it was so well done! Their phone didn’t ring off the hook, but it definitely picked up (the area was pretty tough at the time for rentals), which goes to show the difference a good ad makes.

Now please don’t take this as an offer to send your ad in for help writing your ad!! My time is too limited and I’ve apparently set a bad precedent by being so available to everyone for questions and answers.

The important lesson from this article for you will be too hopefully learn a lesson about what you can do to help market your property to get more showings, get better tenants and get your vacancies filled faster.

Yes it requires going that extra mile, but the return is well worth it! And don’t forget to let me know which one you’d rather rent?

Five Lessons From My First Tenant Eviction

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Lessons I learned From Evicting A Tenant - tenant evictionEventually, it happens. You run into your first bad tenant which leads to a tenant eviction. Unfortunately, this usually happens more often in your beginning years as a landlord. Right when you have the least extra cash flow and the most faith in humanity.

Now not to say it happens to everyone, and not to say all hopes for humanity are dashed, but the first time you run into a tenant that has no qualms about not paying you, leaving a mess behind and simply carrying on with their life is the time you start doubting why you are in even in this business.

Fortunately though, I have some tips to help you either avoid that first let down, cut down on the drama associated with it and save you some headaches. Would you like to find out about them?

Tenant Eviction Lesson One

A breach of your lease is serious business. Whether it’s non-payment, damage to the property or something even more serious. Because it’s serious, you need to take serious action and make sure a) the tenants know this isn’t how it works, and b) you need to start taking the appropriate action to evict the tenants.

One of the biggest issues I see with new landlords is they end up being compassionate, often too compassionate, and the one month’s outstanding rent ends up becoming two or three month’s outstanding rent and then the landlord discovers it can take an additional one to three months to get a tenant out.

What might have been a $1,000 decision now could be $6,000 with little hope of ever collecting.

You’re far better off being serious, starting the eviction and then cancelling it if you do manage to get paid, rather than hoping the tenant comes through. The other important point from this is it sets the precedent.

If the tenant sees you won’t let them get away with non-payment or any other breach they will see you treating this like a business and hopefully not let it become a pattern. Now, when it comes to non-payments in my locale, if the tenants pay before the date they are to be out, the eviction becomes null and void.

I tell them this and I also explain I am doing it to cover my ASSets. If they make the payment, no harm, no foul. If they don’t I am already well into the process of having them removed.

Now I mentioned these are lessons I learned from my first eviction, this is an example of something i learned afterwards. I expected other people were like me. Honest, respectful and that they would honor their commitments. I was wrong and ended up evicting these people a couple days before Christmas back in 2004.

I then spent the majority of my Christmas break, which I intended to spend with family, repainting a property, fixing holes in walls, repairing damages caused my neglect and cleaning floor, counters and bathrooms. All on a property I had just finished doing all of this on less than six months prior.

Don’t learn the hard way like I did!

Eviction Lesson Two

Tenants lie. Now don’t take this as a blanket statement, but when it comes to someone facing an eviction and the possibility of  living on the street, making up a small fib about paying the landlord doesn’t seem so bad.

You want to believe them, but you’re running a business and you need to remember that. Accept what they are saying at face value and move forward with the hopes that they come through, and many often do, but at the same time, don’t delay moving forward with an eviction or with the appropriate steps to take control of your property back as quickly as possible if it goes sideways.

This lesson I was first introduced to when I was continually promised a payment and wanted to believe them, but I was ultimately let down. Over the years this has been reinforced many times by people I have tried to help, only to discover no one was helping me, they were just looking after themselves.

Eviction Lesson Three

controlling your propertyRegaining control of your property should be your priority. When you get caught up evicting a tenant it often becomes about the outstanding money. This is understandable especially if it’s several months rent that never made it to your bank account.

Don’t get caught up in the money because the reality is you will likely never see it. If things are so tight for them they cannot pay rent, where will any extra money to pay you back come from? That’s why it’s so important to take immediate action as the longer you wait, the more you can be out.

Your priority should instead be to get back control of your property so you can once again turn it back into a positive cash flowing situation. Focus on getting the tenant out as quickly as possible using the rules and laws in place in your area.

Some places this can be tougher, some areas are definitely pro-tenant and the process can be long, slow and unfavourable to you as a landlord, but bottom line your goal should be to get the tenant out and the property back in your control.

In my case, I was able to get my property back just before Christmas and that gave me the gap between Christmas and New Years to get it repaired, repainted and re-rented and in our case I had it back and rented out within the first week of January. I went from losing money every month the tenants didn’t pay to having it rented out again with cash once again flowing the right direction.

It’s important to remember, once you have control, you have so many more options. You can get any renovations or repairs done if they are needed, which usually doesn’t make sense to do when the bad tenants are still in place. You can decide if this landlord business is right for you or not and either get ready to find better more suitable tenants for the next go around, or you can start preparing to sell.

But many of these decisions are delayed for you unless you have control of the property and get those tenants out.

Eviction Lesson Four

Knowledge is power. Understanding the steps involved in evicting a tenant is actually very powerful and many landlords I’ve walked through the process locally tell me it’s actually empowering.

It’s human nature to be fearful of something new and the first time we have to go through the process of evicting a tenant it’s not only a new experience, but also very stressful.

Your mind is filled with concerns your property will get destroyed, you’ll never be able to get the tenant out and that it could potentially cost you a fortune. All with the pressure of not knowing when or how long this could go on!

Granted, in some areas the process is much easier than others, but learning the process early is much simpler than having to do it under the pressure of a time sensitive eviction.

So where do you get this knowledge?

You can start with some of your local government service offices. They often have a consumer landlord tenancy agency or hotline that can provide you some information. It is usually the extended bureaucratic version, but it provides a starting point.

From there you might want to research local apartment or rental associations for landlords. They can be a great resource for first time landlords. They also should have tons of information regarding evictions, leases and everything in between that you can use to improve other areas of your landlord business.

The majority of these associations require memberships for complete access, but they often have lots of free information to help you move forward.

Finally, other landlords in your area. Networking with other landlords can be very advantageous for everyone involved. Locally it can provide you with changes in local laws or upcoming new rules, on the bigger scale it can be a resource for you to learn and make the job of being a landlord easier. (Never mind the opportunity to share this website to your new associates!).

This is part of how I learned to do my first eviction. I was a member of a local Real Estate group and sought out several of the members to get some guidance. By networking independently of the group my wife and I formed some life long relationships with some great people who we are glad to have as friends and fellow landlords.

Knowing how to evict a tenant isn’t knowledge you really want to have, but if the situation comes up, you’ll be happy that you do have it.

Eviction Lesson Five

Watch your property during an evictionKeep an eye on your property, especially the days leading up to the eviction date!

Depending on how the eviction went, you could end up with some vindictive tenants, after all it’s never their fault they couldn’t live up to the agreement they signed with you, it’s only your fault for evicting them.

One of the ways they can be vindictive is to leave all the doors and windows open when they move out in the dead of winter. Much like my first evicted tenants did. Patio door wide open too along with every light on.

Now back then I didn’t know to check out the property earlier (and sometimes the damage is already done by the time you get there) and we were lucky enough the downstairs tenant arrived home to tell us about it. Before he called he went through and closed all the windows, turned out the lights and closed the door(s).

I now warn landlords to even just do a quick drive by of their property leading up to the day the tenants are supposed to be out, or in the case of a suited property, I keep the other tenants in the loop as to what is going on so they can be my eyes and ears on site.

If you’ve also established good relationships with the nearby neighbors you can let them know what is happening as well. Some landlords become concerned that the other neighbors will think less of them for having a bad tenant, but more often than not they respect that you are taking action and keeping them informed.

Your property is a huge investment and spending a little time driving by, chatting with the neighbors and keeping other tenants in the loop just helps you protect your investment.

Anything Else?

Well, there’s probably another half dozen warnings I could throw your way, but consider the lessons above as your priorities. Of course, much of this can be avoided by making sure you screen your tenants diligently before you ever hand out keys.

From there you also want to make sure you have a written lease that’s valid for your area. It’s another pitfall that new landlords fall into. Without a written lease, you leave far to many loopholes that a bad tenant can take advantage of, so make sure you have a lease and again, one of the networking groups is a great place to look for these.

They may not be perfect, but they are a starting point.

So, my question for you. Have you had to evict a tenant already? If so, have you run into any of the problems I described? Or are there more you could add? If so, I would love to hear them, leave me a comment and share them with the others and we can form our own little landlord community.

 

Getting Back Into Hot Water With Your Tenants

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AKA – What To Do When Tenants Have No Hot Water!

tenants hot water tank brokeEveryday’s an adventure when you’re a landlord! Especially when a somewhat important part of your property breaks down and a tenants are mad.

The quick intro is I had a hot water tank go down, it didn’t burst a leak, it just wouldn’t stay lit. If it doesn’t stay lit, the water doesn’t get hot, if the water doesn’t get hot, the tenants get upset, I had an upset tenant.

Now for the extended story!

Why It’s Good To Have Contractors On Speed Dial

You never know when or what will break and that’s why it’s important to have people to call when things eventually do stop working. Whether it’s a fridge, a furnace or a hot water tank, over the years I’ve gathered a group of dependable people I can call in case of an emergency.

Last week was no exception, except for timing.

This is the part that’s problematic as a landlord. Timing.

It was last Wednesday just before 10 at night I got the text from the downstairs tenant at one of my properties that the hot water tank was out. It was pretty unlikely it quit at 10, it probably quit sometime during the day, or even first thing in the morning and I understand it’s not something they may know immediately about, but from a cost effectiveness stand point, I wasn’t going to call a 24 hour plumber to show up at midnight and pay huge charges for what I suspected would be a small problem.

That’s where the timing appeared to go down hill.

The next morning at 8:30 I called our favorite plumber and explained what the problem was. Much like triage in emergency, he had to decide where my “emergency” fit in his day and since he had two people with no water, I came up as number three on the list of importance.

This I understand, but the next problem was, he also had two other appointments he couldn’t change the next day, so things looked tight. But he was going to get back to me later in the day, once he found out how long or how short the other jobs would be.

So I settled down and by late in the afternoon, I still hadn’t heard from him. Now I wouldn’t say panic set in, as I know not having hot water can be a pain, but it isn’t life threatening, but then the upstairs tenant texted me.

I Was Given The Ultimatum

He wasn’t happy. He also informed me that going 48 hours without hot water was unacceptable. Now this is where things could have gone horribly wrong, and it’s also where the lesson comes.

First, to my knowledge at this point it wasn’t 24 hours, it was less than 18 hours earlier I first found out. So maybe someone there forgot to tell me the day before?

So rather than taking a defensive aggressive stance, (and this is what I also recommend you do), I defused the situation by agreeing with him, explaining what I was doing and going as far as to explain to him that if I hadn’t heard back from my plumber by noon tomorrow, I would either bring someone else in or personally come fix it myself.

That’s when he gave me the ultimatum of either it was fixed tomorrow or he was bringing someone in at my expense.

If you know anything about hot water tanks, they aren’t extremely technical products. Usually there is only a couple of things that go wrong and they typically can be fairly inexpensive to fix. However, they are awful expensive to replace and it’s often easier for someone to recommend a replacement than to simply do some quick trouble shooting or even replace a cheap part with fingers crossed.

The last thing I needed was for the tenant to bring someone in and to get a $1,200 bill for the installation of a new hot water tank, so again I reassured him it would be dealt with. I called my plumber again and ended up in voicemail, so I left a quick message explaining where things were at.

Why We Love To Work With The Same People Over And Over

Finally around 6:30 that night my plumber called me, he had just finally fixed the second emergency and wanted to come to the property to check the tank. Whew.

As I mentioned earlier there are typically only a few parts that quit on hot water tanks. The most common is the thermo couple which simply triggers the gas flow as it cools down. When it doesn’t work, it doesn’t trigger and hence, no hot water.

Thermocouples are not expensive. they are usually $20-30, which is way less than the cost of replacing a large tank! They are also not hard to replace.

They can usually be swapped out in 15-30 minutes, so my fingers were crossed.

By 7:30, my plumber called me back to confirm yes indeed it was the thermocouple and everything was back up and running, life was once again good and the tenants were happy.

Now as I mentioned, it only takes about 15-20 minutes to change the thermocouple, so why did it take him an hour? Well again, this is why it’s important to have trusted go to people you deal with.

After he changed the thermocouple out, he didn’t want to leave. He wanted to make sure it stayed lit and the tank heated up properly. So while he’s waiting, he hears water running in the toilet. When he questions the tenants they say it’s been like that for a while!?!?!?!?!?!? Sigh.

So he proceeds to replace the flapper and saves me money in the long term. By the time he’s done he’s able to check the tank, it’s still lit, the water is getting warm and his job is done above and beyond the normal call of duty.

The TakeAways

So what did we learn from this? Well first, you really need some trusted contractors. This can be hard as so many of them come and go, so many just aren’t up to snuff and so many simply rip you off.

But when you do find a good one, you need to make sure you hang on to them for dear life! I refer all of our contractors/repair folks to people all the time. I need them to stay busy to stay in business and to get tons of referrals from me so they in turn look out for me whenever they can as well.

Second, you shouldn’t power trip on your tenants when they get their backs up against the wall. Did my tenant have a legitimate beef about the hot water. Well, I can understand his side, he may not have know I only heard about the problem late at night, he may not have known I was actively working on it and he may not have known I really was trying to get it fixed.

I could have put him in his place, I could have matched his aggression and called his bluff (currently we have less than 1% vacancy rates in our city, so I would have very little problems replacing him and most likely at a higher rent), but I took the high road and worked with him and explained I was doing everything under my power.

This is part of the landlord business that landlords need to understand. You want to work with your tenants as good tenants can make your life easier. Getting angry back may have made me feel better momentarily. I could have shown him who was boss and that I was the property owner and that he had no right to question me, but it wouldn’t have served anyone.

In the end, he was ecstatic with the plumber coming after regular hours, he was happy with me for getting it dealt with and he will most likely be a very content minimal problem tenant for as long as he stays with me, because he knows I am being pro-active and dealing with any issues.

So, have you ever found yourself in similar circumstances? If so, how did you deal with it? Could you have dealt with it better? Let me know your thoughts on how I handled it and if you found this helpful for future reference!

Another Satisfied Tenant – NOT – Dealing With Bad Tenants

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You Can’t Win Them All

tenant defaces rental property - bad tenantIt happens, you get a losing hand in poker, you pick the slow line at the checkout, you pick a bad tenant.

It’s a matter of the numbers, in my case, more tenants equal more numbers and more chances for something to go off the rails, but the important part is you have to deal with the repercussions and move forward.

The image here is an example of a repercussion that I found yesterday upon arriving at one of my weekly furnished rental properties and is an an example of what can happen when you’re dealing with a bad tenant.

Etched on the top of my wooden coffee table were the words “Bill is a slumlord“. Just out of the picture is some additional graphic art including a swear word and random drawings. It was left by a tenant who had pushed my buttons too far and I evicted.

Yesterday was not a good day to talk to me…..

But today’s another day….

So I searched for the lesson from this, and initially there was none. Just frustration, disappointment and anger. Did I mention it wasn’t a good day to talk to me?

Today’s Another Day

The headline above may just be part of that lesson. It really is another day.

Part of the reason I evicted the tenant was he was continually late with rent, another was he was apparently incredibly messy and with this house being a shared accommodation, everyone has to clean up after themselves or it all falls apart.

When one person doesn’t clean up it deteriorates quickly. I’d left notes explaining things had to change, but they hadn’t.

I asked everyone who they believed the culprit was, but apparently their is honor among tenants and no one would point a finger, until a few days before I told this guy when his last day would be. One of the new guys said he was tired of the mess and confirmed my suspicions.

So anyway, I was to meet the departing tenant yesterday at noon, but instead found this, found the front handle on my door was broken off, my front light outside light cover taken off and smashed on the front sidewalk, a general mess of spills on the laminate floor in his room and of course, the lovely etching. What a lovely fellow.

Bad Tenant, But Big Picture

In the big picture it’s not a huge dollar expense, but it’s the time and energy to fix it that gets disappointing. But what hurt the most at the time was the frustration that he felt I was a slumlord.

Here’s a picture of the room normally, does it look like a slum to you?

Furnished Rental living room

Clean Up Day

With furnished rentals, it’s important to keep them filled, so my wife and I returned today to get everything cleaned up, to take the coffee table away to see if we could repair it and to get things back to clean.

After a couple hours of cleaning, it’s like a new place! Not back to where it was before this fellow moved in, but far closer.

And it was also where the lessons started showing up.

When we arrived, the table was still etched and the fellows room was still a mess, but the kitchen counters and kitchen table were all clean, neat and tidy. One or more of the other tenants had stepped up and cleaned up partially at least.

Since I had a very good idea of who it was that had done most of it, I texted the other tenant before I left just to inquire who had been cleaning and he admitted that he was tired of the mess. When I informed him we had spent the last several hours cleaning, floors, walls, taking garbage out and doing dishes, he was extremely appreciative and that was the important lesson!

Where we had one tenant who was so bitter and angry he defaced my property, I had another that was thankful for what I offered and for stepping up and those are the tenants we as landlords need to find and work towards keeping happy.

Good tenants are the lifeblood of our business

and bad tenants suck the life out of our business.

Having had over 1,000 tenants over the last ten plus years it’s amazing how many of the bad tenants seem to stand out, yet they made up such a small portion of the big picture. Yet of all the tenants I have had through, 90% have been  good and 5% I dare say were simply awesome.

We Need To Focus More On The Awesome

We can’t let the bad experiences rule our lives. If you’ve had a bad tenant you know it can be a slap in the face and it causes many landlords to give up, to walk away from the business, their dreams and their original plans. We, YOU, can’t let that happen and when you have bad experiences chalk it up as a learning lesson.

Take something from your experience and see how you can apply it to future tenants or future interactions.

For me, I’m not sure what or how I could have dealt differently with the tenant at this point, but I could have made the other tenants happier sooner by acting earlier. I have to chalk part of this up to some bad apple, but I know I’ve had so many great apples the positive has to outweigh the negative.

Have you had a bad tenant experience? Want to share it below along with any lesson you learned? If so, I’d love to hear it!

Raising Your Rents, Without Raising the Roof

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Increasing Your Rent Without The Ruckus

Rent increases - positioning them with tenantsLast article I talked about how stupid we tend to be as landlords. We have a great property, we treat our tenants well and yet you still feel bad about raising your rents to help cover our own increased costs.

Tenants understand costs increase, they know taxes go up, the can relate to increased insurance costs, but what they won’t tolerate is greed or abusive rent increases. It’s a pain in the butt to move, but if they feel wronged, it’s worth it to them.

On the other hand, if they feel like they are in a good spot, the increase won’t put them in the poorhouse and perhaps most importantly, it’s a fair rent increase, they typically have no problem staying. As always, it also requires common sense.

If vacancies are skyrocketing and rents are dropping everywhere else, you can be assured your increase will definitely have a higher chance of causing them to bolt. So know your market and understand the local laws and regulations regarding increasing the rent you charge your tenants and increase it when applicable.

Because when or if the market does slow later and you have a vacancy, you will definitely have to lower them to keep attracting tenants.

It’s All About Positioning

I was recently coaching a landlord through this and it all starts with positioning. She hadn’t raised rents for several years and was missing out on as much as $300 per month of additional rental income. Her current tenants were good, so throwing a $300 increase all at once at them was going to be a little unfair.

After all she didn’t want them to leave, she just deserved fair value for her property.

The lesson from that is, if you are paying attention to your local rental market, you’ll have a pretty good idea of the local vacancy rates and whether rents are increasing or not. If you pay attention to this, you can deal with more gradual increases which benefits both the landlord and the tenants.

When it comes to a strong rental market with vacancies dropping and demand for units increasing, it’s very important for you to be paying attention to how the market is changing. You need to have an idea of how much rates are increasing so you don’t get left behind and this is also where your positioning starts.

When I refer to positioning, I’m talking about putting yourself in the best light. The position that helps you, while at the same time puts you in a position to still provide good value for your tenant.

In this example, if you’re finding rents have gone up $100 per month for properties equivalent to yours, you start off with that in your written letter to the tenant. Now I’ve always advocated trying to get top dollar for your property initially. I believe having one of the nicest rental units in the area helps set you apart, helps get you better tenants and helps you garner higher rent.

You may already have been $100 higher to start with if you followed this process and if you are, you’re in a great position. Because you don’t have to raise your rents $100 this time, if you show your tenants how much others have raised their rents and end up only raising yours $50 or even $75, you’re still the good guy.

If you haven’t been following this process, you can still use this technique, but you won’t be quite as far ahead, but an increase is an increase!

Sample Letter of Rent Increase

So let me give you an example of some wording you can use, and feel free to copy and use this where you need to!

As you’re most likely aware local rents have increased over the last year as the costs of everything from taxes to insurance have increased. After doing some research we’ve noticed rents in this area have increased by $100 per month and in some places even more.

Now while we value you as tenants, we need to cover some of our increased costs and remain competitive in the market. So rather than giving you a big $100 jump per month, we’d like to reward you for being good tenants and only increase the rent by $75.

At this price, you are still getting the property for less than similar properties in the area. We hope you find this fair and again, we really appreciate having you as tenants.

How does that sound? Does that make sense to you?

You’re starting by talking about increased costs. You segue to rents increasing by $100, and possibly more and then you increase the rent by less than the average coming out as as the good person.

You’ve positioned yourself as not only looking after your interests and trying to cover your costs, but also letting them know that you value them and that you’re trying to help by not increasing the rent as much as you possibly could.

Now depending on the market, you’ll need to change the number where they’re bolded to the appropriate values, but that’s part of your homework. Now just to make sure you get the impact of this $75 per month increase, you have to understand it becomes an extra $900 over the course of the year and that $900 can cover a lot of your costs. If you have a suited property and increase both suites by $75, that’s $1,800 to your bottom line by the end of the year.

If you haven’t raised your rents in several years, rents may have increased by $200, $300 or even more per month since the time you originally rented your space out. If rents have increased even $100 per year for each of the last three years, you’ve missed out on $7,200 worth of income. If your property was suited, that’s $14,400 in lost revenue because you didn’t increase your rents. 

Now this is assuming you raise them them maximum amount, but that’s to make a point. The point being, you’re leaving money on the table!

Guarantees and Rules

will tenants leave if rents increaseNow there is no guarantee this will work every time. You may have some tenants that simply cannot afford the increase.

Whether they are just getting by, whether your property wasn’t quite working for them, there will be times when people will move out on you leaving you with a vacancy. This isn’t a bad thing.

If that’s the case and you’ve done your homework, you now have a very solid idea of what the local rents are and if you have a great property, you will be getting an even larger increase than the potentially discounted rent you offered your tenants.

It can be sad to think about losing tenants and the extra work involved in having to prep the property for new tenants, going through the screening process, starting over with new people and the concerns about whether you picked the “right” tenants, but as I’ve also mentioned time and time again, landlording is a business. And you have to run it like a business.

Which brings us back to the rules your business has to work under. Make sure you understand all the applicable local rules for rent increases. There can be caps on increases, timelines for increases and many other variables you’re required to know when it comes to increases.

Some areas have rent controls in place limiting how much rent can be increased per year. Usually these are tied to inflation and they are typically far less than the market will bear. If your region is restricting your increases with rent control laws, you need to consider increasing rents the maximum allowable each year so you don’t get left behind.

Often you cannot retroactively increase, so if you don’t do it now, you lose it forever, so don’t miss out. Other areas have specific legislation about timelines for notifications to tenants about increases and how often rent can be increased.

My location requires 90 days notice of a rent increase (which must include three full months) and I’m only allowed to increase once every 365 days, or once per year. Your local landlord tenant laws may be similar or may be more restrictive, so make sure you look into that as well before you attempt to increase your rents.

An illegal increase may not necessarily result in fines ( in most cases they are simply void), but if you’re not sure find out. Usually it just results in resetting the clock and delaying when the rent actually increases.

Finally, some areas also have caps on how much rent can be increased in a year. This too can cause issues if you miss out as you cannot stack multiple years if you missed out. So again, become familiar with the local legislation.

If you’re going to be a successful, educated landlord, you really do have to run it like a business and this means rents changing to reflect the market. These days those changes are typically going to be upwards, so you need to stay on top of your market!

Hope you enjoyed this article, if you have any hints or tips you can share with the other landlords that visit us, be sure to leave a comment below and thanks for reading this far!