Some readers did ask for my rules.  Your rules have to depend on your properties.   For example, there’s no point posting rules for using the pool if your property doesn’t have a pool.  Also, it’s up to you to determine what are appropriate fines.  Just remember to charge more for more serious items.  And, it’s not wise to threaten eviction for the first violation.  I can’t speak for the whole country, but New Hampshire is experiencing relatively high vacancy rates and so we have to love our tenants a bit more at this time.

I’m planning to put updated rules documents on my web site fairly soon, but in the meantime, here are some useful guidelines for rules.

Fire Safety

The following should not be allowed – tampering with smoke detectors, non-electric space heaters, fireworks, or any open flame other than a gas stove installed by the landlord or candles in holders, damaged electrical equipment.  You can order any tenant’s appliance or equipment removed if you deem it unsafe.

Trash and Sanitation

If you have dumpsters, the dumpster company will let you know what is allowed.  If you have trash pickup, the city will let you know.  Tenants must keep trash in closed bags inside barrels with secure lids.  If there is curbside trash pickup, tenants must put out barrels after a certain time and bring them back by a certain time.  The city may mandate a certain type of trash bag.  Impose a separate fine for each separate item of trash (e.g. bag, box or whatever) which you have to take care of because the tenant blew it - plus whatever you are charged.

One problem with this is it can be hard to tell whose trash is left out on the sidewalk.  Make your best guess and wait for denials.  i would be very interested to hear how other landlords “assign” trash.

Parking Lots

Designate specific spaces for each tenant.  The only things allowed in parking lots are registered motor vehicles (cars, trucks or motorcycles) or registered trailers.  Limit maintenance to these specific items – interior cleaning, replacement of small parts such as lightbulbs, adding of fluids such as oil or antifreeze, changing of tires.  Do not allow oil changes.  Do not allow any use of unregistered motor vehicles such as minibikes, scooters or ATVs.

Keys

Do not allow tenants to make copies of keys.  You can order key blanks which are marked with “do not duplicate” and a serial number.  Record the serial number when you give the keys to the tenant (typically one set of keys for each person who signed the lease).  It may be appropriate to offer the tenant additional keys at the start of tenancy for a small fee.

Common areas

If you have common lawns, tenants can use them for outdoor activities, but cannot leave anything on the lawns overnight.  The following are not allowed: fireworks, cooking, weapons, alcoholic beverages.  You may want to allow alcoholic beverages outside in case of a scheduled social event where the tenant asks your permission ahead of time.  All trash must be removed by the end of the event.  Do not permit any use which would prevent other residents from using the space at the same time – that is, anything that would block off an area.

Common area activity is not permitted outside of certain hours (which you may extend on weekends).  Designate which areas are not unit interiors, but are also not common areas (decks and porches, for example).  Activity in those areas may still be prohibited after a certain hour.

Pet policies deserve a book of their own, but obviously pet waste must be cleaned up by the tenant immediately, pets can’t be left outside unsupervised and pets can’t be outside even with the tenant unless they are on a leash.  The simple answer is obviously to ban pets, but this will also really limit your prospective tenants.

Guests

Tenants are responsible for the conduct of their guests.  If the guest of a tenant violates a rule, the fine or penalty will be owed by the tenant.  Any guest who threatens or endangers other tenants will be permanently banned from the property.

Overnight guests

Overnight guests are only permitted for a few nights per month (this is up to you, but I would suggest a maximum of four nights) and one or two consecutive nights.  If the tenant has an overnight guest he wishes to have stay longer, he can negotiate the matter with you.

Maintenance

Tenants must let you know immediately when they have a maintenance issue.  Impose a fine for late notices.  Typically you will not allow any tenant to perform his own maintenance (including painting and small repairs using tools).  You should not ever allow a tenant to perform maintenance on another tenant’s unit, unless a) the first tenant is a licensed contractor working in his field and b) you have a separate arrangement with the tenant to perform the work.

At the same time, tenants are required to keep their units neat and tidy.  Any trash must be bagged and in a barrel with a lid and removed from the unit at the next possible opportunity.  Entrances may not be blocked.

Social behavior

Any threatening or criminal activity is obviously banned.  Tenants are not allowed to put any signs or notices on the exterior of their units.  Solicitation is not allowed.  Tenants may not enter another tenant’s unit (including porches, steps or decks) without the other tenant’s permission.  Even within units, noises above a conversational level are not allowed after a certain time.

It is the tenants’ responsibility to let you know about rules violations, but not to address those violations themselves (by confronting another tenant, for example).  You want your tenants to be informants, not police.

In preparing your list of rules, you should also consider appropriate penalties.  A very few types of violations will be cause for eviction.  These include safety matters such as open flames inside units, as well as criminal or threatening behavior.  Otherwise, you should impose a system of fines, with second offenses commanding higher fines.  Charge more for safety and sanitation issues than for convenience violations.  The penalties as well as the rules must be either in your lease, or referenced in your lease.  Include that more than a certain number of violations in a month will be cause for eviction.

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Tags: eviction, landlord, renter, tenant, tenant rules

In 2005, I bought a house at the Dallas County auction for a California investor friend who asked me to bid in his place. With the help of a Mentoring student, Gloria Stephens, I was given valuable information about the current owner. What type of person she was and whether or not she would willingly vacate the property if I ended up getting the house for my friend. The owner had accepted the impending foreclosure sale and had agreed to vacate the house within two weeks of the sale, in exchange for $500. The only catch was… She would not allow anyone to see the interior of the house before the auction. While that is not the norm, it does happen from time to time.

Had the numbers been tight, I probably would have passed on bidding for it unless I was able to see the interior.

The auction God’s were on my side that day as I was the winning bidder (the ONLY bidder actually) on the house and even I was stunned that I was able to get it for $0.48 cents on the dollar (or 52% equity).
I had done well and figured with the move out agreement in place, the deal appeared to be a “slam dunk.”

That’s when things turned ugly.

The previous owner would not return any of my calls. The move out date came and went with no sign of the tenant moving out.

I placed a letter on the front door as a last resort before filing the eviction.
No response.

I filed the eviction and found that the tenant didn’t bother to appear in court. The judge ruled for the eviction and I crossed my fingers that the tenant would not trash the house on her way out. The “put out” was scheduled for the coming Friday.

Thursday afternoon I got a call from the tenant. I had never spoken to her directly and was rather surprised at how polite, articulate and pleasant she was. She was overly apologetic for not returning my previous calls and claimed she had been out of town for the previous three weeks “having to bury” her brother. I have been told a lot of things by people facing eviction and family deaths were not new to me. However, she was flawless with her explanation and I hate to say it but, I bought it.

Her request was simple enough… Postpone the put out until the following Monday and in return, she promised to be out by Sunday night and leave the house in a broom swept condition.
I called my friend who owned the house to ask him what he thought and our thinking was the same. We delay the put out two days and she hands over the house in a non-trashed condition. I called the Constable and he said he would see me Monday morning.

That is when I really dropped the ball!

The tenant had been so convincing that I didn’t bother to drive by the house Sunday night to see if she had actually moved. OOPS!

To make matters worse, I didn’t bother to round up a crew of guys to move the contents of the house out to the curb while the Constable kept the peace.

As I neared the house that Monday morning, I knew that I had made a serious mistake. The tenant had the U-Haul in the front but it was obvious that nothing had been moved until that morning. The Constable shook his head at me and said, “Where the hell are your movers?” Still stunned with how badly I had handled the situation, I pleaded with the Constable to give me 30 minutes to get some movers. He told me to go home and luckily for me… He said to come back the next morning “WITH the movers.”

As I walked back to my car, I glanced at the tenant who was standing at the front door, snickering as she waved at me.

I showed up the following morning with six guys ready to empty out the house. The U-Haul was gone and it appeared the tenant took what she wanted and left a big mess behind for me to deal with.
The Constable had me wait outside while he went inside to make sure it was safe for us to go in and start moving all the garbage out to the curb.

He wasn’t in the house for more than 30 seconds before he was back out in front of the house, waving us all off. He came over to me and said he can’t allow us to go inside because the house was infested with… FLEAS!

I tried to reason with him that the fleas couldn’t be that bad. He only laughed and told me to see for myself.

I gave the guys a confident look and walked inside. I think I got about six or seven steps in before I knew the Constable was not kidding. I was being bitten by more fleas than I could fathom. I turned and ran out of that house, with my arms waving all over the place and my feet bouncing around like they would if I was barefoot, trying to run across a parking lot paved with searing hot black top. One of the neighbors who was watching me prance around, managed to hold back his laughter long enough to yell out, “The Gringo Flea Dance! You can’t buy entertainment this good!”

Within a few seconds, a stream of water from a neighbors’ garden hose hit me and about 30 seconds later, I waved my appreciation to the neighbor as the water had flushed the fleas off of me.
Also laughing was the Constable. He told me to have the house bombed before trying to empty it.

End of story, right? NOPE!

I returned later that day with boxes and boxes of flea bombs and clothing that was more appropriate. I went in to set off a flea bomb but, right before I set it off… I saw something move. I walked over to the doorway where I had seen the movement and stopped dead in my tracks. It was a cat! And the cat had friends. All tolled… There were seventeen cats! How nice of that sweet to leave behind seventeen cats. It was good that she wasn’t there at that time because she had left all of the windows and doors…closed! The temperature was easily 110+ degrees inside and she had left them in that flea ridden, sauna!

Thankfully the SPCA was able to round all of the cats up that same day. I still tell myself that all of those cats were adopted but, in reality… I doubt that was the case.

By the next day, the house had been flea bombed repeatedly and we were finally able to clear the house out.

It was still a good deal for my friend but, I have not bid on a single house since, without first seeing the interior condition.

I will end the Flea House story on a positive note… The previous owner, who had abandoned seventeen cats in the hot, flea infested house, was prosecuted for animal neglect and cruelty. It made me wish that she would have been forced to endure the same thing but, it dawned on me that she DID live in that house!

Tags: cats, constable, eviction, fleas, Foreclosures, real estate investing, real estate investor

101 Ways to Know if You’re a Real Estate Investor

NOTE: This Article May Not Be Duplicated without express written permission of BiggerPockets, Inc. Like all other articles on this blog, this article is protected by copyright law.

1. You’re worth a million dollars and can’t afford to buy a sandwich.
2. You tell your Realtor to send you properties that smell like cat urine.
3. You have at least 5 unopened packages of white, Walmart mini-blinds waiting to be installed in the next property.
4. When your prospective tenant warns you that they think they have bad credit and after running their report you call them to see if they want to be a credit partner.
5. Your garage is full of used but working appliances.
6. You carry a flashlight, camera, and tape measure in your briefcase. Bonus points for coveralls and kneepads in the trunk.
7. You can’t drive into a new area without thinking about values and rents.
8. You can spot a vacant house from two blocks away.
9. You have business cards of 114 painters and 345 carpet guys.
10. You yourself have 4 different business cards!
11. You spend more times reading forums than you do watching TV.
12. Your “war stories” include tales of clouds of fleas hovering about 8″ above the carpet (this really happened to me in Houston) and of walking in on tenants/sellers or squatters in “flagrante delicto” (this too!).
13. When you talk about mortgages you mean the “coming in” kind, not the “going out” kind.
14. Your tenants/tenant buyers all have nicer; cars, TVs, stereos, (I guess now we can add; iPods, PDAs and cell phones) than you do.
15. Your tax return is a thicker than any paper you ever wrote in HS or college.
16. You’ve been asking your local Home Depot manager why they don’t sell fishing, camping and skiing gear, and groceries.
17. Your vehicles are full of tools, hardware, and fast food bags.
18. Your idea of a great weekend involves looking at houses, showing houses, and fixing houses.
19. You hate permits and nosy neighbors reporting on your renovations to the city.
20. You always try to take a different route to see a part of the town you have never seen before.
21. You see a “For Rent” sign and wonder how much they are charging.
    Bonus points if you pull out your cell phone and call the number immediately to find out.
22. When you’re in a large city you look at the apartment buildings and try to guesstimate how many doors there are and what the market value would be for that building.
23. When you send your parent to look at a house for you because you are looking at other houses.
24. You have access to Title search accounts when you not a broker, real estate agent, or loan officer.
25. Your husband travels out of town, and he knows that a gift of the local real estate magazines from the gas station will make you happy.
26. You go to a Borough council meeting and they mention a corner property has an erosion issue that is washing out on to the street and everyone in the room is mad about it. Suddenly it jumps onto your list of “properties to buy”
27. Your wife falls in love with a new house for you to live with her in and you immediately don’t like it because it’s not a foreclosure/REO or other deeply discounted property.
28. You spend a chunk of your vacation, when you are supposed to be unwinding, looking at for sale signs, and picking up flyers—- even when it is far too far away from home to actually buy anything there. But what the heck, you never know… you might find a great bargain and figure out how you are going to manage it.
29. It’s 3 a.m. and you’re on Bigger Pockets because you don’t have to report to a job tomorrow.
30. The eviction court judges know you by first name.
31. The cops in your low-rent areas know you’re just checking your properties and not out cruising for crack or some ‘ho.
32. You really think you’ve seen it all, and then you see (fill in the blank).
33. You really think you’ve learned a thing or two, and then some tenant teaches you something totally unexpected (and always costly).
34. You own fifty or more keys which don’t fit anything… not even the couple dozen entry locks you’ve accumulated over the years.
35. You can instantly tell the difference between the sounds of a .22, a .32, a nine, and a .45; and you know if it’s ten rounds or more in a row it’s a Glock!
36. Every time you watch the nightly news’ “disaster of the day”, instead of shedding a tear you wonder what the implications on the real estate are.
37. You know you’re a real estate investor when an attractive young woman invites you to her house at 9 p.m. to “drink some wine” and you turn her down because you want to scout property early the following morning.
38. You do more real estate deals than real estate “gurus” and so-called real estate experts.
39. You can predict the price of a home for sale within a few thousand dollars by just eyeballing it.
40. When you have a FT job and sit on BiggerPockets all day long.
41. You bought the cat urine house and you’re trying formulas and methods of applying deck and porch enamel on the floors inside yourself to prove to the painter he CAN get that smell out.
42. Your broker is reassigning a HELOC to one house instead of being attached to several to give you less than 10 mortgages on a loan.
43. Your lawyer says the title is messed up on the house you’re buying and it’s going to take $2000 to straighten it out and you go out and find a title insurance company to do the job instead for $150.00. YES.
44. You used “scribner’s error” as a reason for the purchaser to buy your condo instead of the one next door with a contract already on it.
45. You scream “Get the ____ out of my house” to tenants even though you don’t have a leg to stand on.
46. You feel the hood of the tenant’s car to see if it’s warm because they won’t come to the door and there are no lights on. This allows you to return and beat on the door and yell, “I know you’re in there-Come out”
47. You walk down the street and point to all the ugly houses and say I want that one.
48. You’ve ever screamed “What about holding costs!” at a certain A&E T.V. show.
49. You haven’t been out on a date in months (by choice) and you spend your Friday and Saturday nights looking for properties on craigslist, talking about deals with your partners and searching the internet for the latest “slight edge” that you can get.
50. You car looks like a homeless person’s because the back seat is chock full of real estate CD’s, books, signs, and tools.
51. You are sitting on this website at 3:30 on a Sunday trying to think of something funny to say, instead of spending a beautiful day outside.
52. You want to kill people who bring you a deal without the necessary information because they have wasted your time
53. You carry around a stack of “pay rent or quit” notices in your car, just in case
54. You have a really big metal flashlight in your car, that you think might save you, if you ever get attacked in one of the vacant houses you always go into.
55. Your rental contract started out at 1 page and 6 years later it 5 freakin pages. (thanks tenants)
56. You love the smell of fresh paint.
57. Every time you buy a car it has to have 4 wheel drive to get to those hard to see properties.
58. Every morning is spent writing down recording #’s of the foreclosure notices by hand.
59. You know all the extensions on the attorney lines to get the sale date an opening bid of your local attorneys.
60. When ever you meet some one you ask them how much they paid for there house.
61. You’re an a**hole to newbies just because you know more than they do and then you feel bad because you were there once. (If they would only listen)
62. Your contractor buys a new truck and you start rebidding his jobs.
63. Every relationship with a Realtor is love or hate…. There is no middle ground.
64. You try to talk your friends out of buying his/her dream home because it’s not REO/Foreclosure.
65. You write to Microsoft and YELL at them for not having a REI XBOX game!
66. Talk in CNBC ‘money talk’ and say ‘you don’t need cash or credit for REI’
67. You empathize homeowners who bought houses at the height of the bubble!! LOL
68. You have Biggerpockets.com as the default HOME PAGE in your internet browser.
69. You buy a real estate book from Amazon while your wife wanted you to buy a book on interior decoration.
70. You’re blogging along and realize there’s a new mortgage cap reduction from 10 to 4 (including purchase) and you try and go to Freddie Mac’s webpage to see it HELOC’s count as one or two mortgages. Turns out–no.
71. You just spent over $400 on REI books from Barnes and Noble because when you can’t be making deals you can READ about making deals.
72. You save 30% of your after tax income towards the down payment on the next deal.
73. You have more RE magazines in your house than books.
74. You agree with more items here than not.
75. When, upon waking up in the morning and looking in the bathroom mirror, you find yourself developing a striking resemblance to Quasimodo.
76. When you realize that over the years you have gone from reading the “funnies” to reading the “obituaries”.
77. When “bad news” somehow appears to you as “good news”, which you somehow rationalize as “Tony Robbins style” positive thinking.
78. Your wife uses a foreclosure analogy to help you understand why she needs more of your time.
79. When you find yourself coveting Donald Trump’s hair piece……… even though you have a full head of hair.
80. While telling the priest in the church confessional that you’re going the straight and narrow and giving up the mistress, you find yourself preoccupied with calculating the the additional revenue the apartment you provided her, will bring in.
81. You begin fantasizing that global warming and the melting of the polar ice caps may some day turn your troubled lower income properties into valuable beach front properties.
82. A death in a house for sale does not freak you out but excites you!
83. When every color choice you make on any decision whether it be property or vehicles, the colors always must be neutral.
84. When you are a master at base molding, painting, and yard design.
85. You know what the name of every granite is.
86. You do anything it takes to be the first to talk to that defaulting home owner with a bunch of equity and NO WAY OUT!
87. You ride up to view a property and you’re counting the parking spaces before you go in the house.
88. It’s a hundred freaking degrees outside and you’re spending seven days a week on your latest rehab after you SWORE you’d start hiring out this donkey labor, but noooooo… you figure you can do it better and cheaper and get it done right. But next time, oh yes, you swear that on the very next deal you WILL find some hard-working donkeys to do this stuff. But not today… today you’ll just try and stay hydrated.
89. Your wife accuses you of having an internet affair with a woman code named B. Pockets!
90. You go to REIAs to meet women to make your dating life a tax write off. My Favorite!
91. You don’t use your iPod to listen to music anymore. All you listen to now are audio books on RE and podcast on RE.
92. Your friends stop inviting you to social functions because all you EVER talk about is REI.
93. Your insurance company cancels another policy because of a theft in your “problem property.”
94. You tie all of your free money up in real estate instead of going on that vacation you’ve been waiting 10 years for.
95. Your tenants fear you.
96. Your tenants love you too.
97. You try to convince your friends and co-workers to unload their home to you because ________ (you want it cheap!).
98. You know all of the houses in a neighborhood, when they sold, and what they sold for.
99. You ‘re better at valuing a property by eyeballing it than most Realtors and online sites can do.
100. You read about some investor horror stories (Example 1, Example 2) and think “that’s no big deal.”
101. You wish this list could just keep going

Got any more? Add them below or to our You Know You’re a Real Estate Investor When . . . forum thread.

Bloggers: Add to the list by blogging on your own site and linking back to this post.

NOTE: Feel free to share this list. Download it as a PDF.

Tags: eviction, landlord, real estate, real estate fun, real estate investing, real estate investor, tenant

NOTE: This is applicable in Texas. Consult your attorney to find out the legality of this technique in your state

Getting a tenant to move peacefully and without causing physical damage is hard to do.
Tenants being evicted tend to feel victimized and when they get upset they are a risk to do physical damage to the house and leave behind mountains of trash.

It will take a minimum of three weeks to legally evict a tenant and can cost in excess of $500 (Texas Law).
Owners tend to reason that they will keep the security deposit to offset losses but a tenant can cause thousands of dollars in damage in minutes.

Here is a plan that has yet to fail:

Let the tenant know that you have filed to evict them and give them a copy of the eviction papers. (Making sure to follow the courts procedures)
Tell the tenant you will only talk to them 30-minutes before the court hearing and there will be no contact until then. When they laugh at you, tell them you will refund their full security deposit, in cash, the date they move out.

(30 minutes before the hearing) Offer to issue their FULL deposit back to them the day they move out as long as all belongings and trash are removed.

Set a date for them to be out (date needs to be before a date the court will set), add the requirement that they agree to leave the property completely free of belongings and trash which includes small things such as a candy wrapper
Have them sign your prepared agreement and proceed to your court hearing.

Tell the judge that you have reached an agreement and you would like him/her to endorse it (This is the only time I remember telling the Judge how I want them to rule and they agree).

The judge should (and has) accept the agreement and inform the tenant that if they break this agreement, he/she will authorize an immediate eviction.

Finally, once the tenant is officially out, then withdraw the eviction.

It is hard to justify giving the tenant cash to leave after losing money with them already. I can only point out that in a situation such as eviction, there is NO winning! There are only degrees of LOSING!
Evicting a problem tenant only to face a damaged property is bad enough. Give the tenant the one thing that is of use to them…. cash. And offer it when it will be needed…. upon move out! This is also known as a “Cash for Keys” settlement.

Hope this has helped…
Jim Watkins

Tags: evict, eviction, landlord, real estate, tenant, texas law, texas real estate

If you can’t get rid of them, raise their rent . . .

Sometimes we end up in a situation where tenants aren’t the wonderful people we hope that they are. They throw out of control parties, damage the property, litter the property, have 10 people stay in the 2 br apartment, pay rent late, and so on. You get the point - undesirable.

Many landlords don’t want to have to go through the eviction process. Often times, evictions can be costly and time consuming.

If you’re close to the end of a lease (and you’re not in a rent controled area), why not just raise the rent? I’m not talking about raising rent 2 or 3 percent, but 10% - 15%. There aren’t many tenants who will put up with that kind of increase, and if they do, then it might be worth reconsidering keeping them around. Remember, the odds are they would be paying much more then typical market rents at that point.

Set the Ground Rules Up Front

To avoid all of this in the first place, you need to establish your guidelines up front. You cannot put up with bad behavior, or your tenants will walk all over you. Write a set of guidelines that they must follow with a schedule of fines and have them sign it with the lease. If they pay late, fine them and send out your written warnings preceding eviction process. If they damage the property, fine them. The key is to let them know you are in charge.

I can’t tell you all of the headaches I put up with at first because I was too nice. When I started to lay down the law, and got rid of the undesirables, landlording started to become a much easier process.

Tags: evict, eviction, landlord, rent, rent-control, rental-property, tenants