Michael Rossi's Landlording Blog

I just got back from a very relaxing vacation on Topsail Island in North Carolina. For those of you that have never been to Topsail Island, it is a very quiet island with beautiful beaches. It is just about as far from being a tourist destination as a beach can be. There is no amusement park; no tourist type shows; and very few tourist shops. It was very relaxing, and except for a trip to visit the Battleship North Carolina, we didn't do any tourist activities.

However, little did I realize just how relaxing it was. Today as I returned to work on my rental business, I discovered that not only did I get a lot of relaxation on vacation, I actually got younger - A LOT YOUNGER! In fact, one rental applicant that I talked to today apparently thought I was born YESTERDAY! Talk about finding the fountain of youth! LOL!

Here's what happened. A woman called today wanting to see one of my two bedroom apartments. As always, I asked her who would be living there. She said it would be her mother; her mother's boyfriend; and she would occassionally stay there too, when she was in town. I was thinking "B.S."!!! Obviously, if the mother was actually going to live there, then she would have come to look at the apartment. So, I asked the woman why her mother wasn't here to look at it and she replied that her mother had C.O.P.D., which is a lung disease that makes breathing difficult. It doesn't take a brain surgeon to figure out that a woman with severe breathing problems would not be able to climb a LONG flight of stairs to a second story apartment. Even though my vacation had been relaxing, I clearly wasn't born YESTERDAY!

Just for fun, I played along with the charade. I told the woman that I would need her to take an application to her mother and have her mother fill it out. And by the way, I would need a copy of all their driver's licenses in order to do their screening. We walked out to my truck and I gave the woman an application. She left.

Within 5 minutes, she was back. She asked if SHE could fill out the application and now claimed that she would be paying the rent for her mother. The crap was getting pretty deep and I didn't have my hip waders! Even so, I managed to keep a straight face. I told the woman that she could indeed fill out the application, but that I would still need the info for her mother and her mother's boyfriend, including their driver's licenses. With that she left again.

I quit work today about 1 pm and headed home. As I pulled into the driveway, the woman called me. She said that she had the application complete and wanted to meet me to give me the application. I asked her if she had copies of the driver's licenses for her mother and her mother's driver's licenses. She said that her mother and the boyfriend wouldn't be living there now - they had changed their mind! At this point even hip waders couldn't stay above the b.s. and I ended the game. I told the woman that I would not rent to her, her mother, or her mother's boyfriend and then I said goodbye!

As Paul Harvey used to say - 'and now the rest of the story'. When the woman came to look at the apartment, she brought 2 men with her. She looked iffy. Her boyfriend had tattooes all over his body and I judged him to be a druggie. The other man looked even worse - like a FREAK! From experience, I immediately knew that these were the scumbags that wanted to rent the apartment, probably with the mother and the mother's boyfriend. The woman claimed to have all the money with her to rent the apartment on the spot. That was additional confirmation that I did NOT want to rent to them. My theory is that these scumbags were being setout after being evicted. I'd bet good money that their current apartment is in the mother's name and if I had screened her, she would have an eviction on her record. I would also bet that the boyfriend had an extensive criminal record. Therefore, the only one left with a relatively clean record was the woman who came to look at the apartment. NO THANKS! I don't need any scumbags renting my apartment!

My morning started bright and early. Shortly after I woke up this morning, I sat down to watch the news and check my e-mail. My security camera views are always up in the background on my laptop and as I picked up my computer I noticed a convicted felon walk onto the property at one of my apartment buildings. This criminal is nothing but trouble and is barred from the property. I called the police and reported that the felon was trespassing (criminal trespassing) on my property and asked that an officer meet me at the building. I met the officer and gave a report. The criminal was about 2 buildings down and the officer gave him a citation for the criminal trespass charge. The officer also requested that I get a copy of the security camera video to him and I did so.

After this incident, since I was already in town, I decided to lay another room of carpet at one of my 3 bedroom houses. I got that done and then moved onto mowing grass. I mowed grass at 3 buildings and then called it quits for the day.

I had a very busy day today. It started with a trip to drop off my final 2008 tax information to my accountant (it's on extension). Next was a trip to the bank and post office. I moved in a new tenant yesterday, so I had to take the money to the bank.

After these preliminary tasks, I got started on applicance day, which consisted of putting appliances in two rentals. I know this sounds like a minor task that should have only taken a few minutes - but that wasn't the case.

The story all started a couple of weeks ago with the annual Section 8 inspection of a two bedroom apartment. As usual, the apartment passed the Section 8 inspection with flying colors. The problem started when the apartment was picked for a "quality control inspection", which is when Section 8 re-inspects the apartment to basically inspect the inspector. I've been picked for a lot of these quality control inspections and have always passed them. However, this time things took a turn for the worse. The unit failed the second inspection for two reasons: 1. the inspector said the oven didn't work and 2) the kitchen had a non-working refrigerator (which ended up being true). As it turned out, there was nothing wrong with the oven, except that the tenant had unplugged it. However, the stove was very old and ugly. I decided to just replace it, with a used stove from the used-appliance store ($65). This tenant had 2 refrigerators and a freezer in her apartment and has had this arrangement for several years. It is not my business how many appliances she has and I never questioned it (and don't honestly care). As it turns out, the refrigerator in the kitchen stopped working at some time in the past, leaving the tenant with a refrigerator in the bedroom and a deep freezer in the living room. The Section 8 inspector apparently questioned the tenant about the 2 refrigerators and freezer and found that one was inop.

The tenant is not in good shape and isn't capable of much physical activity. I had to move a bunch of furniture to get the old stove and refrigerator out and then move the new in. Of course, after doing that, I had to move all the furniture back. All in all, a 5 minute job ended up taking over an hour.

Next on the agenda was to put a (used) stove and refrigerator in the 3 bedroom house I'm finishing. Unlike the previous job, this literally took 5 minutes.

There was an armed bank robbery a couple of days ago in the area. The police released a description of the suspect and the get-away car today and I think I know who did it, so I called and talked to the police captain about my suspicions. To make a long story short, there is a convicted felon in the neighborhood near the pink elephant. The felon is on parole for robbery and he is associated with another scumbag that drives a car that matches the description of the get-away car. I offered to look at the bank's security camera system and the captain said that he would pass the info to the detective in charge of the case.

Enough for one day. More tomorrow.

Today was yet another day in court. The purpose of today's court appearance was to evict another deadbeat. The deadbeat in question is a 21 year old girl who only moved in one month ago. At the time of her move-in, she had no history of evictions and no criminal record. Now, she has both. Almost immediately after she moved in, she began hanging around with a convicted felon, who is out on parole and who lives down the street. In that short month, she's been arrested for disorderly conduct and has been involved in numerous thefts and fights. I did everything right on the screening and yet I still got this scumbag! UGH!

The eviction hearing was at 9am this morning and predictably, the scumbag didn't appear. It is almost impossible for scumbags to drag their butts out of bed to be in court by 9am! So, she was evicted and I immediately filed for the writ of possession. My guess is that I'll be throwing her stuff out by next Tuesday!

In addition to the eviction, I layed another room of carpet in one of my 3 bedroom houses and replaced a broken bathtub drain. All in all, not a bad day!

I'm back to work again, after taking a few days off last week. Today was all about getting my 3 bedroom house ready to rent. I'd like to have it ready to go for September 1st and I'm getting a lot of calls about it. The big project for today was to install carpet. I got the living room and spare room done today. In addition, I installed a fire extinguisher; 2 smoke detectors; and bought a bunch of miniblinds to be installed later.

With dozens of rentals, there is always something to fix. Today's project was a clogged drain line that occurred because the low income tenants weren't smart enough to scrape off their plates before trying to wash them. The drain line was BADLY plugged and it took a significant amount of effort and a significant mess to fix it. I ended up cutting the drain line and installing a new cleanout in the line so that I could run a snake through the line. After finishing the repair, I gave the tenants a lecture about scraping the food from their plates BEFORE washing their dishes. I also promised them that I wouldn't repair another tenant-caused clog without charging them! While we're talking about tenants that aren't too bright, one of my tenants reported to me today that a fellow tenant stole cigarettes from her. The tenant that stole the cigarettes is already being evicted for non-payment and has had several police contacts in the 6 weeks she has lived in the apartment. All the tenants, including the victim KNEW that this person was a scumbag and a thief. Even so, my tenant allowed the tenant into her apartment to use the phone and therefore became the victim of the theft. Not too bright. BTW, the thief (my tenant) had a clean criminal background check when I accepted her. She is young and was probably a criminal all along, but obviously previous juvenile records are sealed making it impossible to discover the truth about young applicants! UGH!

I took the day off today, at least as far as the rental property business is concerned. However, I did still have a personal real estate project to do. To make a long story short, my wife's family is selling a house they inherited and somehow I got picked to do a few maintenance items at the house. To accomplish that job, I needed to pick up a few things from my storage room at the Pink Elephant. I got the things out I needed and started to cut a 2 X 6 right there on the sidewalk. I'm always aware of my surroundings when I work in low income areas (and everywhere else for that matter) and therefore I certainly took notice when a very rough looking man approached me. He had a cast on his left arm and his right forearm had MANY noticable cuts. I stopped working and asked him what I could do for him. His answer was unique to say the least. He said he wanted me to call someone to pick him up. That's not too uncommon in low income areas. Many times in the past, homeless people have asked me to call someone for them because they don't have a phone. I'm normally willing to make a quick call for them, provided I have the time. I thought that was what he wanted and I asked who he wanted me to call. His answer was that he was "thinking of committing homicide and suicide" and he wanted me to call the police. Well, that definitely got my attention! I didn't see a gun or knife and he hadn't threatened me directly, but I felt like I needed to have a few feet of separation from this guy and I definitely needed to keep him in front of me for tactical reasons. I directed him to sit down on the porch and told him that I would call the police. As soon as he sat down, I dialed the police and explained the situation to them. The said they would send an officer.

As we waited, I talked to the guy. As it turns out he was a mental health patient who is homeless and hasn't taken his medication for about 2 months. He apparently got into a fight with someone who accused him of stealing drugs and that person broke his arm. That occurred recently, although he told me different stories about when. He claimed that his wife cut his other arm, but from the shear number of cuts and the look of them, I'd bet that these were self-inflicted razor blade wounds.

About 10 minutes later, the police arrived. They talked to the man for a few minutes and it seemed like they were just going to leave. The man told them that he thought he might kill someone and burn down the guy's house that broke his arm. I wasn't too keen on him being released without getting some help. I pushed the idea of taking the guy to the hospital for a mental health evaluation and after radioing the station for permission, the police decided to do that. They searched the guy for drugs and weapons and put him in the cruiser to take him to the hospital.

Very strange encounter for a day off and just one more reason to always be armed!

I spent a little time today working on my 2008 taxes. OK, I admit that I've procrastinated a little in getting them done. Anyway, something really impressed me as I was working on one of my rental property businesses. This particular business has about 10 rentals in it and I was entering the data into Quickbooks Pro. As I entered all the income and expense data, it became rapidly apparent that my expenses for this business were very low. I had very low maintenance; hardly any vacancies; no lawsuits; no legal expenses; no evictions; etc. Although I haven't quite completed entering the data and I don't have the exact numbers yet, I'll certainly have expenses WELL below 50% of the gross rents.

The big question is what does that tell us? Am I a genius at the rental property business? Have I discovered some secret to success? Am I smarter than other landlords? Do I live in the best rental market on the planet? The answer is that this data tells me NOTHING! It's completely insignificant and irrelevant. I'm not a genius. I haven't discovered the secret to success. I'm not smarter than other successful landlords. I don't live in the best rental market on the planet.

A sample size of 10 rentals over one year is statistically insignificant. The data tells me absolutely nothing about my long term operating expenses. It doesn't even tell me about the operating expenses in my local area over the past year. Trying to conclude anything from this data would be foolish at best and financial suicide at worst (if I were to assume those expenses were correct for the purpose of evaluating future deals).

Once I finish the taxes on all my companies and print out the financial reports, I'll post the results on my blog. We'll see if there is any useful information that can be derived from my several dozen rentals.

One of the things that is significant is the paydown of principal over time. As I was entering the data this morning, I noticed that I'm paying down about $1,000 per month on principal on one of the loans. Picking up $12,000 per year in equity on just that one loan is significant! I'm looking forward to seeing what the principal paydown is on all my loans! I can't eat that equity, but it sure does feel good to watch it build up.

After doing the paperwork, I felt like getting out of the house, so I went down to the Pink Elephant to do some painting. I actually got quite a lot done in a short period of time.

I finally got back to painting the Pink Elephant today. It was a beautiful day, although blazing hot, and I spent about 3 1/2 hours doing some painting. In addition to the painting, I had to stop by the insurance agency to sign paperwork for a renewal of one of my rental policies. I also fixed a leaking sink trap.

That was about it - all in all a pretty routine day.