Landlording Made Easier By Dennis Henson Seven Secrets of Success in Real Estate Investing 1. Get your mind right 2. Seek Wisdom 3. Develop Skills 4. Make detailed plans 5. Take massive action 6. Form great alliances 7. Be persistent 5 M s of Real Estate Investing Mining Money Maintenance Marketing How to Set Prices Rent ARV X.009 = Bottom Rent Call on Ads and Signs Run Rent Comps Ask Realtors Sell at After Repair Value (ARV) Marketing and Properties Should You Hire it Done (or) Do it Yourself Property Management Working with Property Managers 1 to15 properties it s easier to do it yourself And a lot less expensive 1
Questions for the Property Manager How long in business? How many do you currently manage? Do you place ads? Paper/Internet/Social Media? Do you put up signs? Do you manage yard work? Can you estimate time needed to rent? More Questions for Property Managers Will you provide the current rent rates? How do you screen tenants? What accounting paper work do you provide? If I rent my-self, how will that work? Will I be able to use my own contract? Do you put signs to direct traffic to property? Property Managers Requirements 1 Must: Be bonded and provide a copy of bond Be available business hours Answer the phone Have a 30 day escape clause Demonstrate a strong promotion program Have all maintenance pre-approved Cancel if renter defaults or cancels Property Managers Requirements 2 Must NOT: Have commission on sale of property Require maintenance reserves Be exclusive I may have other management Deduct for payments for your services from rents Receive commissions on rents not collected Property Managers Services MUST: Deliver all moneys in full by the 10th File evictions notices immediately as needed Handle complete evictions process Collect all late fees Handle government & HOA violations & collect Provide a monthly accounting of: who paid and when payments remaining Send rent raise letters & get signed extensions Property Manager s Pay What Are Commissions? % On signing? % On monthly rents and late fees? % On signed renewals with increases? % Charge for services such as grass? % If I find renter? Breaks in % for additional properties? 2
the Property Yourself Get Land Lording by John Schaub Read Landlording on Autopilot by Mike Butler What Is a Perfect Tenant Pays on time Does not call often Feels ownership Takes care of the home Stays forever Brings other tenants and buyers What Attracts Good Tenants Nice Homes Clean Homes Reasonable Rents EZ RTO Finding Good Tenants MLS Internet Site 800 Number Newspaper Ads Internet Ads Social Media Signs Property Management Companies EZ Rent to Own Internet Sites Postlets.com Vflyer.com Realrentals.com (Free) Rentals.com (Not free) Have a Good Website To capture Buying Prospects To capture homes for sale To showcase your properties To look professional See www.vmiproperties.com Find @ www.dennisjhenson.com 3
Showing the Property Use a Lock Box Have prospect call when they arrive at the home Say Someone will let you in! I ll be late Have prospect call you back Locked key back Spin lock numbers Report condition of home Left a light on Selecting Better Tenants Have a written policy Application form The interview Tenant screening company Using the deposit as a screening tool Must Not Discriminate Because of: Age Race Creed Color Sex Sexual Orientation Gender identity National Origin Religion or Disability But May Screen For Dirty Car Mean Dog Bad Breath Bad Mouth Serious Attitude Tattoo Green Shirt Or anything in your Written Rental Policy Minimum Standards for Renters EZ Problem Solving No felony on record No foreclosure in last 5 years No car repo in last 5 years No Bankruptcy in last 5 years No Eviction in last 5 years Must have a checking account Must have a job or income 3 times rent Must be friendly and have a good attitude Must be clean and neat Car must be clean and well kept (No oil leaks) Must have 2 landlord references Must fill in all blanks on application 4
EZ for the Landlord Avoid holding costs Rent faster Rent for more money Get a much bigger deposit Renters feel ownership E-Z Rent to Own For the Renter/Buyer No Credit Check Low Move-In Costs Affordable Rent Payments All of the Deposit Credited Toward Purchase $100/month Can Be Credited Toward Purchase Legal Credit Repair At No Additional Cost Seller Assistance At Closing, If Needed Security Deposit The deposit serves two purposes 1st It is the Security Deposit o Subject to the terms of the rental agreement o To maintain the property in good condition 2nd It can be used as a down payment. Having a good down payment will vastly increase the chances of getting a loan approved It MUST be held in a separate bank account Get a Bigger Security Deposit Make it easy to get into the property Break up the Security Deposit Collect some up front & some on 15 th Why the 15 th? Money needed for Purchase Make the deposit fit the property 5
The Paperwork Application Lease Agreement One to Four Family Purchase Contract Copies on www.singlefamilyfortunes.com AVOID FRAUD Clauses for Rental Agreements On Time Payment & Maintenance Discount Access to Property Abandonment Termination On Time Payment & Maintenance Discount As an incentive to the resident to be responsible for repairs and continuing maintenance of the house and yard each month, and to pay the rent payments on or before the first of the month, a discount in the amount of $.00 may be deducted from the above rental sum each month. Tenants do not quality for the discount if repairs are not made to the property when needed, rent or deposits are not received when due. Access to Property The Owner may be represented by an agent who will carry identification. Resident specifically agrees to permit the owner or agent(s) access to the premises for the purposes of inspection, repairs, or to show the property to another person at reasonable hours, on request. The Owner reserves the right to post a sign or signs on the property during the eviction process. 6
Abandonment If Resident leaves said premises unoccupied for fifteen days while rent is due and unpaid, Owner is granted the right hereunder to take immediate possession thereof and to exclude Resident there from; removing, at resident s expense, all their property contained therein. By signing this rental agreement the tenant agrees that upon surrender or abandonment as defined by this state s statutes, the Owner shall not be liable or responsible for storage or disposition of the tenant s personal property. Termination After one month s rental payment is received, this agreement may be terminated by mutual consent of the parties, or by either party giving written notice of 30 days prior to the end of any monthly period. Any provision of this agreement may be changed by the Owner in like manner. All parties agree that termination of this agreement by the resident prior to / /, regardless of cause, will constitute a breach of the tenancy as agreed on Page 1, and all deposits shall be forfeited in favor of the Owner as full liquidated damages. Should Tenants continue to occupy the property after the effective date of termination, the tenants will be considered as holding over and will pay a rent equal to twice the rent stated in paragraph one of this agreement. Training Tenants Go over the contracts with the tenant Discount for paying on-time $100.00 Bonus for on-time payments Collect ALL the checks up front Tenants should feel ownership Send Three Day Letters automatically Be all business Keep good records Communicate with newsletters Move In Check List for New Tenants [ ] Go over contract [ ] Sign form on needed repairs [ ] 3 strikes policy [ ] Bad check policy [ ] Rent raise after 1 year [ ] Credit repair system [ ] Lock box back [ ] Make copy of keys [ ] Birddog cards [ ] You pay for minor maintenance [ ] How to report Maintenance [ ] Post office box Inspections HVAC Filters Smoke Detector batteries Carpets Cleaning Repairs Bugs Damages Collecting Rent Collect all rent checks in at signing Famous quote = The check is in the mail! Put in contract inspections monthly 2nd Tuesday during office hours 7
Newsletters Gifts Contests Birthday Cards Tenant Retention Fast Service Nuisance Rent Increases Remind of Moving Costs Be on the Tenant s Side Listen to their problems Agree with them You understand But you are an employee of the LLC Evictions Have Policies & Procedures Learn the process 3 Day Letter Filing Court Eviction Use the process for leverage What are Policies & Procedures? Policies identify key activities and provide a general strategy on how to handle situations as they arise Simply Said Our policy is to--(do this) Our procedure is to (take these steps) Procedures are the specific methods used to put policy into action 8
Marketing Marketing Always be marketing Use the 47 Ways to Market Your Property in Single Family Fortunes When calling leave message Be persistent call back later and the next day Always be building a prospect list Never argue or disagree with anyone Have all calls returned in one business day Use a phone log Capture calls both in & out Marketing Marketing Let prospects do their own research on neighborhoods Don t answer questions about types of people in neighborhood Say your not aware of any crime and haven t had any problems Ask them to contact the local police to get information In ads only use pictures of a mixed group Do not put No Children in ads Show homes using lock boxes Have a presence on social networking sites Facebook, Tweeter, MySpace, LinkedIn, Meetup, etc. Renting Renting Have written minimum standards for screening Standards must not discriminate Check standards with attorney to be sure Screen prospective tenants on the phone Have prospects complete an application Do meet prospects at the office not the property Have prospects bring deposit with application Have prospects call back for decision Always check With two previous landlords Employment Checking account 9
Renting Renting Do a credit and criminal background check Keep a list of written standards on file Rent to 1st person meeting minimum standards Get a big deposit Never let anyone have a key before All Repairs are completed Lease is Signed Deposit and rent are paid (cash in hand) Move-In Inspection Report is signed Maintenance Renters (1) Maintenance Renters All repair requests must be in writing Give tenants a list the repairs covered and those that are not Give tenants work order forms to submit Inspect each property after 45 or 60 days Don t allow repairs without permission Document calls, requests, deposits, & checks Fill out a Work Order for every repair Include» Date & complaint» Name & address» Estimated completion date & cost estimate» Actual date completed and actual cost» Name of person who took the phone call» Person who did the repair Maintenance Renters Maintenance Renters Guarantee repairs will be made in 3 business days If delayed Offer a refund the daily rent Continue until the repair is completed Charge tenants for any damage they cause Have penalties if work isn t done on time Use door hangers We were here We were inside working We came by Call tenant to verify repairs were done 10
(1) Treat every tenant the same--it s the law Give all tenants Policies & Standards Don t allow any exceptions to policies Charge everyone the same fees Have the tenant pay first 100.00 in repairs Give a DISCOUNT for paying on time Payment should be made with Post dated checks Mailed Received from a credit card Never cash Never go out to collect rent Never accept a cash payments Use Rent to Own So tenants do most of the repairs And will pay higher rent Everything must be in writing repairs late payments Deposit & 1st rent must be certified funds Do periodic inspections Reward tenants for cleanliness Use an answering service Do not give out your cell phone number Communicate with renters Use monthly newsletters 11
Use time blocking for tasks & meetings Have monthly staff strategy meetings Have Master Mind meetings With investors, bankers, CPA, RE Attorney Setup a corporation or an LLC Become the property manager Position yourself as the manager Working for the owner Take the side of the tenant Never argue with any of the tenants Have a retention program Tenant stays a year pays on time Give a gift Ceiling fan, screen doors or carpet cleaning Have a referral program Pay tenants to refer friends to rent or purchase Put all agreements in writing Tenant pays for handicapped adjustments Move In (1) Move In Have tenant complete & sign Move-in Inspection Have tenant sign a repair cost sheet For any damage they may do Clogged toilet, lost keys, holes in wall, stained carpet, broken window Go over with tenants the rent and eviction policy Rent is due on the 1 st, late on the 2nd, and eviction starts on the 3rd Give tenant Renters Welcome Kit With water, gas, cable, internet providers Lexington Law and Identity Guard Renters insurance companies list Cost of repairs list Work order forms 12
Move In Move In Get utilities out of company name Call back to see all is fine Send welcome letter with credit repair info Get signed Sales Contract Go over credit repair Call to see if there s anything they need 1st days are critical in determining the relationship Set the tone for a good relationship Evictions (1) Evictions Learn the eviction process for the area When rent is late--start the eviction process Set up a flow chart to follow through on evictions Let the tenant know that they put the process into action Always follow the law to the letter Stop eviction when rent & fees are paid Explain Three Strikes Use abandonment letter Move Out (1) Move Out When your receive a notice Send a move out check list and repair cost sheet Do a move out inspection of the property to compare with move in inspection Have all locks changed Get utilities in company name Get property repaired and cleaned Collect keys, remotes, fees due or other items 13
Move Out Final Thought Save and file all repair invoices Charge for damages not on the inspection Send check for balance of security deposit If you only take one thing from the training today let it be this... Learn to manage properties yourself (or) Carefully write property manager s contract The best time to start on is TODAY!! So let s get out there and make it happen! Learning More is Easy Seeking Wisdom is a Secret to Success!!! To learn more about Landlording go to www.singlefamilyfortunes.com Contact information: Questions? Dennis Henson 6902 Shore Breeze Ct. Arlington Texas 76016 Phone: 817-371-8658 dennisjhenson@yahoo.com Web sites: www.dennisjhenson.com www.singlefamilyfortunes.com www.turbobidder2.com 14