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Tis The Christmas Season – When Landlords Come Second

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Tis The Best Of Times

when landlords can come second - late rent due to ChristmasChristmas, a time of family.

A time of celebration.

A time of presents.

A time of excitement for families, both young and old.

It’s also a time where landlords can come second.

Tis The Worst of Times

This post will be live December 6th, six days after rent is normally due. If your tenants are late with rent right now, you have some tough times ahead of you. If your tenants are behind a month already, it just gets worse.

The reason I can relate to this so well is my very first eviction took place in December of 2004. It’s when I first learned landlords can come second to Christmas. They were already a month and a half behind and apparently struggling as they tried to catch up, or so I thought.

My generosity in letting them fall behind was a losing situation and when they didn’t have December’s rent, I waited a few days and then gave them an eviction notice to be out on the 22nd of December, or to pay me in full and they could stay until the end of the month.

We felt horrible. We were evicting people just before Christmas. People who we felt were struggling to get by.

The problem was, so were we!

I was still working full time in order to help our lives move forward. We’d been involved in Real Estate for 18 months at this point and had six rental properties (three of which were losing money, four if you count this one), and money was tight for us.

We knew we had to make sacrifices now if we wanted to get anywhere with our lives and if that involved having a small Christmas for ourselves, that’s how it had to be. As they say, if it was easy, everyone would do it and evicting people before Christmas isn’t easy.

To Make a Short Story Long

These tenants actually lived upstairs in this half duplex and our handyman was living downstairs. On the night of the 21st, he called us to tell us when he got home all the lights were on upstairs and the patio door, the bedroom windows and the front door were wide open and the tenants and their possessions were gone. Except for their garbage of course, and the damages.

No serious damage, just all the walls needed to be repainted, the handles and the vents had been painted with nail polish (most likely by their kids) and it was basically in a situation of neglect or lack of cleaning for many months.

Fortunately Ray the handyman had come home to find it, as we weren’t going to come by until the next day. Ray closed all the windows, the patio door and locked up the front door for us and we moved forward a little disappointed in life and in people.

The next day after work we stopped by to survey what needed to be done. Here it was December 22nd, I had five days off work, theoretically to spend with my family and discovered that the majority of it would be spent cleaning and painting my property so I could have it ready for January 1st. the perfect way to set the mood for the holidays.

The holidays became even more interesting the next day when the former tenant called to say we had all their Christmas presents for their kids. After trying to find out what she meant, she told us they forgot all the presents in the closet and since we changed the locks after they moved out they couldn’t get back in to get them.

Back to the house the next day and lo and behold, no presents.

Which leads me down another garden path, but to try and shorten this up, we talked to Ray the handyman and when asked about it he fessed up that he moved them downstairs to keep them safe…

So wanting to do the right thing, we told the tenant we would drop the presents off that night. We’d already kicked them out before Christmas, they were apparently down on their luck, so it had to be done.

So when we finally grabbed the presents to take to them from Ray, we took a closer look. These poor downtrodden tenants who were scraping by probably had over $1,000 worth of presents for the kids.

There was a Leap Pad, which my oldest daughter wanted for Christmas, but we couldn’t justify purchasing because things were so tight. There were other electronic toys, stuffed animals, clothes, all types of items that were far and beyond what we could justify spending on our own kids.

Yet these people could do it and without a thought about it, not pay me my rent causing me financial hardship.

So needless to say, Christmas has left me a bit jaded at times. And the lesson to be learned is while Christmas is a time to be forgiving, it’s also a time where people will take advantage of kind heartedness. We could have let them stay for another month, in the spirit of Christmas, but the only thing it would have changed is how much more money we lost by being too forgiving.

So my lesson for you, if you haven’t been paid for December rent by the time you read this, don’t get too caught up in the Christmas spirit of giving, unless you can afford to lose the money and you don’t mind coming in second. 

The Morning After Update

So I normally write these articles a day or two before I publish them which allows me time to think about what I wrote and how it will help others. When I posted it last night, I skipped that step and as I thought about it over night I believe it came across as perhaps a bit too harsh.

Now there is no discounting that these former tenants took advantage of me. I was pretty new and I was pretty hopeful people were good. Now almost ten years later I’m not so new, not quite so optimistic and even jaded at times. And occasionally my inner grinch comes out, like when I wrote this.

The important part to realize is not all tenants are created equal and when you have nothing to go on, history is important. History of the tenant that is.

If they have a history of paying late, your leniency should be short. If they have a great history and suddenly are having hiccups during the holidays due to unforeseen problems, then on a case by case basis, there may be room for slack and understanding.

Over the years I’ve received cards and gifts from tenants and they are definitely not all bad, in fact the majority of them are great, but we often forget the good and focus on the bad. So if you have good tenants, be good to them and they will reward you in kind.

There that’s my slightly revised message for you, hope it helps.

The Importance Of Having Current Tenant Contact Info

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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

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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!

Every Time I Think I Have Seen It All, Bed bugs…

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Bam, Something Else Pops Up To Bug Me

Just when everything is going right

I’ve been doing the landlord business for a decade now and every time I think I’ve seen it all, something new happens. Maybe I should just quit thinking?

You see enough as a regular landlord, but when you add furnished rooms into the fold, it exponentially increases your exposure to new events, experiences and yes horror stories.

In the last 10 years, I’ve found bullets left behind in rooms (that gets you thinking), knives, home made weapons, crack pipes, needles, pills and drugs. I’ve evicted tenants for non-payment of rent, damage to properties, threatening other tenants, fighting with other tenants and threatening me.

I’ve broken up parties at 1:00 in the morning, talked tenants into putting down knives at 5 in the morning, called the police in to remove tenants and made court appearances to help put tenants in jail.

I’ve had the police contact me as I was the first contact on a recently evicted tenants cell phone when he was found dead, I’ve had a tenant die in a property and I’ve been the one to “discover” the body. I’ve even had what appeared to be a minor home invasion. What else is there for me to learn, see, or happen to me?

Ooops, I Shouldn’t Have Asked

I’ve had skunks, mice, wasps and all manners of pests in the past disrupt my tenants, my properties and my business, but now, I’ve got a new one to add to the list. Bed bugs…..

Bed bugs have become a huge problem throughout North America and Europe and with the number of properties I have and the types of tenants I deal with it’s been amazing I haven’t run into this before, but finally I’ve been hit.

So, as with all my experiences, I need to share it not to freak you out, but to let you know the options you have if you run into a similar situation.

First, if you’re not familiar with bed bugs here’s a little background.

Most importantly, in my opinion, bed bugs are not a sign of unsanitary conditions. Bed bugs are showing up everywhere. From jails and court houses to hospitals and five star hotels, you can find them everywhere and it’s created a thriving business for pest control companies.

These tiny little bugs are about the size of a grain of rice and can flatten themselves into just about any space imaginable.They feed off of human blood and are attracted by CO2 which we give off when we breathe.

To make it easier for them to find CO2 and of course their meals, nature has deemed it necessary to fit them with a type of infra red vision allowing them to see at night and to see the CO2 as we exhale it from our body. This infra red vision also makes them rather adverse to light.

All these traits are what attracts them to their lunch, us, while we sleep. Being so small and being able to flatten themselves allows them to live in the seams of mattresses, couches and even under the baseboards away from prying eyes during the daytime. But once we go to sleep, the buffet is open.

Common signs are little red welts and as the infestation grows, the increase of the welts. Strangely, some people are barely bothered, while others are magnets to them. In my scenario, the female tenant is getting eaten alive, while the boyfriend is getting ignored.

Dealing With Bed Bugs

The problem obviously is how to get them out of my property and learning anything I can to help prevent it in the future. So first the bad news, I can’t prevent it from happening again.

The nature of these bugs is to attach themselves to humans, clothes, furniture and anything nearby. In apartment buildings, or buildings in general, they can get into the walls, under baseboards and travel great distances in both a self preservation tactic and for food.

In talking to the pest person Don (who has been incredibly helpful), he’s informed me that the bugs go through several stages before they start laying eggs, but this is a rather small window of time. And once they hit that stage, the females lay five eggs per day, every day. Talk about your exponential problem exploding quickly.

Oh, and they try to travel as far as they can to lay the next batch further spreading themselves throughout a property. This means once you find out you have them, you’re probably already in trouble.

To try and get rid of them, you can vacuum the mattresses, all your furniture and then bag and treat them with chemicals or discard them. But you’re not done. They are likely still in your clothes, linens and carpets, maybe even in the walls.

To kill them in your clothes and linens, you need to wash everything at the highest heat setting on your washing machine and then the hottest heat in your dryer to dry them thoroughly. And that still leaves the things you cannot wash.

This leaves you with two options. More chemicals or heat. The problem with chemicals is the more we treat pests with pesticide, the more they become resistant, plus the after effects on our children, our pets, our homes and ourselves is possibly years away from us discovering. Chemicals = bad!

The heat option though also has a challenge. It’s freaking expensive! Now costs will obviously range and they may be lower or higher depending on where you’re located, but for perspective the cost to treat my entire property with chemicals is around $600 here.

It would take minimum two treatments, possibly three and usually four or five. With a chance of success of maybe 90%. the problem being the timing and the effectiveness of the chemicals. It doesn’t kill them immediately, there may be eggs not quite hatched between sprays and you may be just off by a couple days of their life cycle leading to even more sprayings being required.

The property I am dealing with is two stories plus a finished basement. Due to the size of the place it will require three treatments of heat, one in the basement on day one, one on the main floor on day two and then upstairs on day three. Each of these treatments is just under $1,200 plus travel costs. So $3,600 plus, woohoo.

The upside? The heat treatment is pretty well 100% effective. What happens with the heat treatment is they pump in air heated by a generator and keep the temperature above 120 degrees fahrenheit (that’s 49 degrees Celsius!) for several hours to kill the bugs, the eggs and almost anything else alive in the house. Each day of doing this is the equivalent of eight months of heating for a normal home cost wise. Hence the big charge.

It’s enough to make you debate whether owning a rental property is worthwhile!

Now Watch Me Pull A Rabbit Out Of My Hat

A CO2 Bed Bug Trap, I hopeBut, there may be one other solution which is what I’m working on starting today. Bed bug traps.

My pest guy informed me of a new tactic that seems to be working very effectively, although it can take several days to a week or two to work. It uses a simple trap that uses dry ice to attract the bugs and then traps them.

As dry ice warms up, it emits CO2 also known as the bed bug dinner bell. This CO2 attracts the bugs, they climb up the side of these small plastic trays to get to lunch and then the inside of the tray is treated with talcum powder which sticks to them, impedes their ability to crawl up the steep sides and they perish in the tray.

These trays have to be emptied every day and you need to put anywhere from four to ten trays in a room to make it effective and depending on the room size. There are also some issues about too much CO2 in a room where people may be sleeping, so good ventilation may be required.

Using this technique, after about four or five days the number of bugs should dwindle down to hopefully nothing, or you just carry on for several more days until nothing new appears.

In my situation, I’m currently booking for the heat truck which they tell me is about 7-10 days down the road and in the meantime I’m filling my place with these trays. If the trays work effectively it is going to cost me a few hundred dollars by the time I am done and I will be bug free. Then I can cancel the heat truck.

If they do not work, I still have the heat truck coming and it’s back to the expensive plan. So please cross your fingers with me and let’s hope that this trap solution will work. If it does, it saves me over $3,000, it should fix things up fairly quickly and I can test some of my other properties just in case.

One More Warning

Remember how I mentioned these bugs attach themselves to clothing? Well, Don also cautioned me and said there is a chance a few may have attached themselves to my clothing while I was there searching for them.

I may have introduced them to my home!

Needless to say, I’m bringing a couple of the traps home to see if I catch anything.  Both my wife and I are already having trouble sleeping as just the thought of this has made us psychologically unbalanced and now we are imaging bugs when none have actually been seen. And hopefully none will be seen! Watch for updates and be sure to share any stories you may have to help others.

Hey, if you’re following along, you can find part two of me Dealing With Bed Bugs Here!

Interview With a Landlord

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Can you believe it’s fall already? Time has absolutely flown by and I apologize for the extended layoff with videos and posts. I think putting that Screening Course together in August threw me off further than I thought.

On the positive side, I have more information started that I want to get out to everyone and it starts with an interview I did last week with a landlord I’ve been mentoring for the last four years. I’d known Tim before he started in the landlord business and since he knew what I did, he reached out to find out more about being a Real Estate investor.

I think I gave him enough to get started as it wasn’t too much longer before he picked up his first rental property and now he’s got several in his portfolio and isn’t done yet. With an eye for analyzing potential properties he’s done well in picking some properties with great potential, but he’s also had some hiccups along the way.

In this 8 minute interview Tim sits down with me and goes over some of what he has discovered along the way and shares a bit of his story, I hope you enjoy it.

If you did enjoy this and feel your story would be interesting and informative to others I’d love to set up an interview with you. Since our readers are scattered all over the country I can do interviews via Skype if that works or I can even set up an online meeting to record our conversation.

To get started, email me at info@TheEducatedLandlord.com and let’s help make you famous!

 

Bill

Landlord Video Tip – Saving Time With Future Ads

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Rental Ad Time Saver

Inevitably you end up with a vacancy and suddenly you have to fill that vacant property again. Now you’ve got to try and find all those old pictures, remember what you wrote about in your last ad and then compile it all together again so you can start filling up your space.

Does this sound familiar? If you have multiple properties the problem compounds as you try to keep them all straight. Fortunately I have a solution for you, actually a couple solutions.

In the following video, I’ll go through how to save your time later by taking some action and being pro-active now. then after you’ve watched the video, I have an additional tip to help you out below.

As always, I love to hear any feedback you have and I also appreciate it if you can like and share the video and the post with other landlords you know. So here’s today’s video,

Was that helpful? Is it something you can implement today to help your landlord business in the future?

I talked about the creation of folders on computer as well and this is one of the best tips I can recommend to you. We have folders for each of our properties, folders for our rental forms and folders for almost every stage and type of form we use.

A quick review shows folders for each company, for rental forms, for purchase forms, for our shared accommodation properties and even for faxes/notices.  All logically broken out so we can find them quickly. Well logically to us at least.

Anyway, as per the video, when we write up our ads, we store copies of them in the appropriate folder and also the images we use for our ads. We don’t just limit it to a couple images, but keep adding as tenants and the look of the property changes so we have a range of pictures we can use.

So again I ask, have you already done something like this, or is it something you can start? My plan for the next few months is to try and add one new either video tip or post for you per week. Looking forward to any feedback you may have!

Landlord Video Tips – Set Your Rents Higher to Avoid Headaches

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Tired of getting stuck with problem tenants? Want to make sure you have more quality applicants for your vacant rental rather than trying to weed through quantity?

In today’s video tip I explain a tip that has helped us get better quality tenants who not only take better care of our properties for us, but also tend to stay longer. Two qualities than can definitely make your life as a landlord easier.

 

As always, i love to hear any feedback ou may have, so leave a comment and don’t forget to share these tips with other landlords you may know. And if you have questions, send them in and I’ll see if I can answer them in a video for you!