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Four Pieces of BAD Advice on Managing Rental Property You Should Forget

by Chris Clothier on August 30, 2012 · 16 comments

  
bad for rent advice

Every once in a while I come across a blog post or an article or even a video that I think misses the mark so badly that I want to reach through the computer at the person who put it out and ask them “what are you thinking”?  Not your usual disagreement or not understanding someone’s point of view, but actually wanting to ask why in the world they give the advice they are giving.  I never do mind you.  I think after 40 years I have learned it is much better to patiently respond to something instead of going off half cocked right off the bat.  That has helped me stay out of trouble more than once!

But, and there is always a but, sometimes I read advice that is so contrary to my own experiences that I have to throw my .02 cents into the mix.  I would never mention the blog, video or article of someone else because they may really believe what the advice they have given.  I just simply go to work writing my own advice or in this case, advice on what advice not to listen to.  With that being said, I came across a video of the Top Tips for landlords and thought to myself how awful some of the tips were and decided it was time to look back at some of the worst advice I have heard or read and write a few of my own “not to follow” tips.

1.  Write the bedrooms/baths and price on your rental sign

Not only do I think this is an absolutely dumb idea, when I look at examples of signs that are placed in the videos or in the articles, there is no way someone can read the sign from a car at the curb.  To hear the advice that one person gave in his Top Tips video, that is good thing.  He believes that making people get out of their car has made them take action and now they are committed!  I found myself actually yelling at my computer “Committed to what”?  Committed to a bad memory from that house as the one where they had to get out of their car to go look at the small writing on the chloroplast plastic sign that we couldn’t read from the street.

For me, I say leave that information off of your sign.  If you have a good looking property and are even halfway decent on the phone, list as little information as possible.  Do not let a prospective tenant talk themselves out of your home by listing information on the sign.  Give yourself an opportunity to “sell” your rental property to them so long as they are a qualified tenant.  We have trained our agents to be very personable on the phone, but also how to use question based selling when talking to a prospective tenant.  BY asking the right questions, in the right way, they are able to determine if a tenant will rent the house BEFORE going to show it and by making signs extremely simple with nothing more than a rental message and a phone number, we give our selves a great opportunity to “sell” prospective tenants on our property before they think about renting another one.

2.  Put Your Sign In The Window So It Does Not Get Knocked Down

Now, I get it that some of this advice really pertains to the area of town that you have rental property.  But, I have seen some people say, and have even read on blogs that this is a great tactic to use on any style home, but that could not be further from the truth!  When you put a sign in the front window of a house, you are sending two signals to prospective tenants.  One is that this neighborhood may not be safe.  Why else would you put a sign in the window instead of on a stand?  That question in the mind of a tenant has nothing to do with why you actually put it in the window.  All that matters is why they think you put it in the window.  The second signal you are sending is that, as a landlord, I am too cheap to do things first class and have a sign in the front yard for you to see from the street.  Instead, I am going to make you get out of the car and not just walk to the yard, but walk all the way up to a front window.  I can think of some worse ways to present your property to an interested renter, just not any that are actually advised by someone who calls themselves an expert landlord.

3.  Do Not Put Blinds on Windows So That Interested Renters Can Look In the House

I cannot make this stuff up.  I wish I were, but that is actual real advice and fits right inline with that phrase “rent ready”.  My theory on rent ready is, that it was a term created by landlords to justify spending less money on a property.  I hate that term and I think this piece of advice fits right into the mold of someone who would subscribe to my “rent ready” theory.  How else could you justify not spending $150 TOPS to buy blinds for a house.  If you are truly concerned about renting you property as quickly as possible, for the best rent possible, then your best bet is to make your property shine, and brand new blinds (with the tags left on the pull cords) is a great way to differentiate your property from others and show renters you care enough to take care of the details.  This silliness about leaving the blinds off the windows is not only bad business advice, it sounds like the author could have voyeurism issues!

4.  You Must Take Personal Checks If You Want To Collect On Time EVERY Month

I actually replied to this one and asked the guy to update his blog with one answer for me.  I asked him how many bounced checks he chased a month?  Of course, I am still waiting for a reply (this one was well over two years ago), the blog post was never updated, and my post was never allowed on the site.   When I read that this guy actually only takes personal checks and that he was trying to build himself up as a rental guru, I had to stop myself from laughing and actually take a little action. 

That piece of advice was crazy and anyone who has been in the land lording business for any significant amount of time will tell you that you raise your risk of default on rental payment significantly when you accept checks.  The reasoning behind this guy’s advice was that you spend a lot less time chasing rents and collecting late fees when you simply let them write you a check. 

What he failed to mention was the amount of time you spend dealing with your bank, picking up bounced checks (and let’s hope it didn’t cause you to bounce a check) and then chasing a tenant for the actual payment plus late fees plus a bounced check fee.  Simply telling someone that you take checks WILL NOT reduce your late payments.

Be Careful Who You Listen To!

There are so many steps that you must follow as a landlord to reduce late payments and increase the number of days your property is occupied, and none of them are listed here.  What happens much  more often when someone is posting this type of ridiculous advice is they are trying to create content. You see, everyone tries to be original and put out articles or blog posts that have something new in them.  Many times you can bet that the person producing this type of nonsense is trying to create filler – content for the sake of content.  They are not trying to actually educate and help others, they are trying to create content to boost their website or to increase their profile, and often times they follow it up with a learn how to be like me offer.

The reality is that there is much better advice out there today for landlords and much of it can be found on the internet.  As someone who reads this stuff on a weekly basis, I can tell you it becomes easier over time and even easier with a little experience of your own to tell the difference between someone creating filler and someone who knows their stuff.  I can tell you one thing for sure, the places where the above four pieces of advice came from had more filling than a cream puff and following it will get you no where fast.

Photo: Bruce Toombs

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{ 16 comments… read them below or add one }

Jason August 30, 2012 at 3:13 pm

Chris,

Good tips. I learned my lesson by not putting in blinds. First of tenants, cringe when it comes to thinking about how much it will cost them to do that. 2nd the interior feels very vacant and cold without blinds. Finally and its a personal thing for me, I control some of the look of the property. I do not like having ugly properties. The crappy drapes and blinds tenants may install can have a horrible look from the outside. I want the neighbors to shutter when they see my rentals.
I do have to ask through, where can you purchase them for under $150? Ive never gotten that low.

Your post is a good reminder that bad advice can be very expensive.
Jason

Reply

Chris Clothier August 30, 2012 at 5:54 pm

Jason –

That line was a bit tongue-in-cheek that it is an inexpensive touch that can make your property perform better with a better tenant, higher rents (really dependent on the rest of the house) and make it stand out from others. As far as the price, you can get blinds at Lowes or Home Depot for as little as $26. Nicer ones will cost closer to $45 and even better can cost up to $80.

You are right though. I think we could all share stories of bad advice we listened to on our way to getting a little smarter! We’ll simply call that experience.

Thanks for reading and taking time to right a response.

Chris

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Chris Clothier August 31, 2012 at 7:24 am

Jason –

I checked with Mark Anderson last night who heads our renovations department and he told me that we buy standard size 1″, white, vinyl blinds at Lowes and get a price for under $10. For larger sized windows it may cost closer to $15.

I wanted to get the exact numbers since you asked. Send me a message if you want the exact UPC code of the ones we buy. At that price – you could easily put up new, clean blinds for less than $200 – and in some smaller houses – probably less than $150.

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Joe Turner August 30, 2012 at 4:48 pm

You don’t take personal checks? What are you a cash-only slum lord? I can’t imagine paying rent without a personal check; it is not only payment, but a record of payment as well. I’m really surprised that your renters would put up with that.

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Chris Clothier August 30, 2012 at 6:01 pm

Joe –

I’m gonna go out on a limb here and guess that you haven’t read many of my other posts on here. Take a few minutes and read a few and I think you’ll get your own answer to the question about being a cash only slum lord. It made me laugh and i took no offense. I am the furthest thing from that and my company manages almost 1400 properties and we are the furthest thing from slum lords.

We do not take personal check or cash. We won’t take either one as they both present problems for the payer and the payee. Instead, all payments are with certified funds. Either a certified check or a money order. Both of which have an electronic record that can be tracked and each comes with a receipt for the renter. When they pay in person, they get a receipt from us.

Not only do the renters put up with that (to use your phrase) but they are appreciative for the protections certified funds give them. When we made this decision almost 4 years ago, the rest of the property management community told us we were crazy and, like you, thought it would never work. Today, in Memphis anyway, every respected property management company has followed our lead and do not accept cash or personal checks.

Thanks for taking time to read the post and to throw down a comment.

All the best – Chris

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Jason August 31, 2012 at 6:41 am

Chris,

Do you to ACH transfers?

Jason

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Chris Clothier August 31, 2012 at 8:20 am

About 1% of our portfolio is set up with auto-pay through their bank which technically is an ACH transfer. Another 1% has given us permission to do an auto-draft on the same day each month. There are also a handful of people who pay with a credit card each month.

Ethan August 30, 2012 at 5:32 pm

Do you actually suggest not accepting checks at all? In other words only cash or online payment? I’ve heard of landlords having cash payments disappear from their locked rent dropbox.

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Chris Clothier August 31, 2012 at 8:26 am

When I first started investing I used an property management company that accepted cash, checks, bags of coins…anything they could to get the payment in. Of course, every month there would be partial rent payments and I noticed deposits were getting smaller and smaller. It was not until the head property manager split in the middle of the night with about $100,000 in rents that the owners of that company realized what was happening. She would skim $100 here and $300 there from deposits and rents and doctor her paperwork accordingly. We took a lot of lessons from that experience.

Before that starts to sound like a dump on property management companies, I will note that one lesson we learned was to use a management company that is licensed and insured. We didn’t lose a penny as the owner of the company paid every owner what they were owed. But, we learned the dangers for tenants, management companies and property owners of accepting cash.

So when we started our company, our policy from day 1 has been to protect everyone by only accepting certified funds in the form of cashiers check and money order.

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Joel September 2, 2012 at 4:11 pm

Number 4 was crazy.I can’t believe someone posted that.

We do not accept personal or business checks either.Certified funds is the choice.Even if your tenants have the best of intentions they can bounce a check.The fees,extra accounting work,and more time to collect from the tenant is a big headache.

Not to mention if they bounce the rent check to you odds are the other payments took the cash and you will have a hard time collecting from them that month.Better is to train them to get certified funds FIRST before any other bills are paid.You get the rent and the other utility companies and bill collectors get to here their life story and drama for the month.

I can’t believe someone took 100,000. I hope even if the owner of the company made the real estate owners whole the criminal stealing was prosecuted to the fullest extent of the law.

I can tell you when it comes to money trust nobody with cash.It’s just to tempting even for mostly honest people when they fall on hard times to contemplate taking 10 here or 20 there.

I have had experience with that and never again.Even when you think you know people even personal friends you would be amazed.I have had to be more careful and cautious.It’s sad really.

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Chris Clothier September 3, 2012 at 1:32 pm

Joel –

Thanks for reading and commenting on the article. The person was prosecuted and I am not sure how much time she spent, but she did go to jail. The crazy thing was, she had been stealing for over a year and as you pointed out, she did it in small amounts at a time.

Chris

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Tanya September 3, 2012 at 11:57 am

Great article! Hard to believe that someone actually felt these were useful tips.

Thank you for the reminder about the blinds. I have one house that is missing the blinds in the spare bedroom. I had thought, “well, the tenants will probably just want to put up cute little curtains in here (most likely to be used as a child’s room), the window is on the 2nd floor looking out onto the windowless wall of the house next door, so no big deal.” But you’re right – it instead gives the impression of a non-motivated landlord, or just a lower-class property. I like the idea of putting up new blinds, and leaving the tags on, so prospective tenants can see you care about the property.

Also, regarding payments – I work with my tenants to use ACH – many of the national banks (Wells Fargo and Chase come to mind) have options for customers to transfer funds. This has worked great for me. Saves the tenant stamps and envelopes, provides a (paperless) trail, and even allows them to schedule those payments so they don’t accidently forget and get hit with late fees. It has worked great for me with no problems at all. I realize that all of this is dependent on the type of tenants you have. Mine tend to be young professionals, muc more willing (and actually preferring) to do as much as possible on-line, electronically.

Thanks again for a great article!

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Chris Clothier September 3, 2012 at 1:36 pm

Hi Tanya –

Thank you for reading the article and taking time to share it. The funny thing about little touches is that, if you do enough of them, it can really make your property stand out among others. We have investors in to visit our operations every week and it always amazes them when we take them to see houses in neighborhoods. There are a lot of companies here in Memphis selling property to investors and keeping the management, but when we take investors to see their houses and then they go see our houses, not once has an investor said they would rather do business with someone else. They can clearly see that the way you present little things like putting up blinds can make a HUGE difference in the profitability of a property. If a tenant stays longer, is willing to pay a little more and treat your property a little better, then the investor/owner always wins.

Those few dollars may seem tempting to save on the front end, but they can pay off big on the back end.

All the best – thanks again for commenting.

Chris

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Bill September 4, 2012 at 2:39 pm

Hi Chris,

When I saw the headline and intro for your article, I thought to myself these 4 practices should be easy to check-off for not doing. I cruised through the first three with no problems for the most part. Our For Lease signs include our name and phone number. But we do have flyers available in a tube showing a floor plan and price along with our website which includes additional listings. Would you think this is too much information?

Number 2 &3 were, in my opinions, no brainers.

On the 4th concerning rent payments, I had never thought of only accepting certified funds. I learned something new here! With some tennants we have ACH setup but otherwise accept cash and checks. We will have to rethink this traditonal means of accepting payments, as because as you point out, it provides a clear audit trail which protects the company and tennant from misappopriation of funds. Do you include the acceptance of certified funds as a part of your lease or was it just a change in policy? .

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Chris Clothier September 4, 2012 at 6:47 pm

Hey Bill –

Excellent questions! I would not personally put other properties on flyers about the property a renter is standing in front of, but I also run a company that has a lot of help and acts like a really big team. If the information you are putting on the flyers is a necessity to help with the management of your properties, then you need to do what makes you successful. However, I would think that information could be a distraction and lead to renters suffering indecision.

Our switch to certified funds coincided with a lot of other “shifts” we made in our management business. In the end, it was a business decision and was risky, but we made a renewed focus on our tenants and their ultimate happiness, so the switch was easy to make.

Thanks a lot for taking time to read and comment.

Chris

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Janet September 7, 2012 at 7:45 am

Chris, this is really good advice. I had to laugh when you said, “I cannot make this stuff up. I wish I were…” Personally, I had to learn most of this myself. Number 1 is priceless; too much information and you don’t have enough time to read the sign as you drive by. Number 2 – Why would you want someone walking up to your property and viewing it when you’re not there. Number 3 – The Blinds. Seriously, pay the few bucks (depending on the size of your windows, vinyl blinds really are a cheap investment) to put in blinds. My favorite might be, “Be Careful Who You Listen To. My two cents is that you have created quality content here. You seem to be writing for the right reasons.

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