Learning the tricks to the trade
Being in the real estate business since 1993 I have learned a lot. So I will share with you some of my best tricks to the trade.
How to pick up a few extra hundred dollars from your tenant-
When drafting up a standard lease agreement spell out in the contract that if rent is paid on or before the 1st of each month the current tenant is entitled to the discounted rent amount. If paid on the 2nd then the normal rent amount is due and after the 3rd or 5th day late fees will apply on the total rent amount.
Here is an example- ($1000.00)= discounted rent if paid on or before the 1st ($1350)= normal rent amount if paid on the 2nd or later and if past due then late fees apply to $1350 x (5% late fees)
So one or two things are going to happen. One is, you will always get your rent money in advance OR two, you will pick up an extra $350 every time they don’t.
Now this is legal because you are offering a discounted rent so the county court cannot claim you are trying to gouge the tenant. (Note: please check with your local real estate county guidelines just to make sure this is legal in your area)
How to save time and money with repair issues
If you have more than one investment property the last thing you want to deal with are repair issues. Tenants could call you all hours of the day or night to come out and fix something. If you want to have any kind of life do yourself a favor and place a home warranty protection on your property. It usually cost on average of about $55.00 per month. You then will get a policy that will give you details of what is covered and what is not. In addition, you will have a 24/7
1-800 number that you can instruct your tenant to call should anything break that falls under that policy.
Paying only $55.00 per month will be a lot cheaper than hiring a property manager. Both you and your tenant will have a great piece of mind.
What to do when you find out your are tenants running a drug business out of your home
So you just received a call from the neighbors that your tenants are doing drugs, or running a drug business out of your home illegally. So what do you do? Call the police? Go pound on the door unannounced so you can inspect? NO! What you really do is; call the fire department and tell them you saw smoke coming from your rental property and don’t think the tenants are home.
So what happens is two things; One, they can enter the property without a warranty and two if they find any illegal drugs on the property they will call the police. This by law is the fire departments protocol. When the police arrive not only will they remove all the people from the property they will put them in jail. You would then be able to reclaim your property without filing an eviction.
You will have to check with your local county on how to file the paperwork in the court as well as removing of personal property.
How to protect yourself from unpaid rent
So if you don’t already know you better know your rights as a landlord when it comes to filing evictions for unpaid rent.
Remember this is a business and a tenant not paying is stealing from you and your business. A lot of problems I see from landlords is they fail and forget this part. So don’t go soft on your tenant and all the reasons why they can’t make their payment on time. We all have problems, but theirs should not become yours. It’s good to be empathic, but in the end you have to let them know they will have to borrow the money from someone else and not you.
You get your 7 or 10 day demand letter out on time. Never wavier on this even if they tell you they’re going to pay within that time frame. Believe it or not, there are professional tenants out there that know the system including stall tactics to buy more time or not even pay.
Now I personally do not do many rentals which brings me to another option when having investment property. I do a lot of rent to own or purchase options. This is where you rent the property to a tenant, but they have an option to buy the property anything during that term. You also get a down payment which is larger than a security deposit and its non-refundable. Should they not exercise their right to buy it then you keep their deposit and reclaim the property. You can then put another tenant / buyer in there and do it again.
This will be a less likely type of tenant who would damage your property because they have cash invested that they want to protect. Be sure to check out my investors corner section on my website to find out more about this option.