"Stupid" Mistakes Every Newbie Landlord Makes
Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes"Stupid" Mistakes Every Newbie Landlord Makes
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Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
8yYou win, or you learn. The only stupid mistake is not trying.
142 Replies
- 8yWendy PattonBusiness MemberReal Estate Consultant · Clarkston, MI · Member since 2009 · 864 posts · 350 votes
Wait poor credit is not the issue it is the reason that people need a lease option 99% of the time. If they had great credit they would get a mortgage. A few suggestions to make sure they are solid: 1) pull their credit - did they have an explainable blip or are they just always going to pay late - that is a red flag and a no go 2) Do the full land lord back ground check - how do they keep their place now? maybe go drive by it or knock on the door to get "one more signature you forgot" - Do they have a Rottweiler at the window that they didn't disclose before? Look for signs. 3) When they fill out their application sometimes I will walk them to their car. Many times the way someone keeps their car is how they keep their house. In all my years of doing hundreds and hundreds of options I can think of less then a hand full that have done some real damage.
One of my best deals ever was an REO during the REO days that someone smeared feces on the wall. Apparently that really turns off most buyers lol. Anyway I was thinking about this and wondering how someone does this actually.... GROSS!
Michigan Real Estate Investors535 Reviews - Brookfield, WI · Member since 2016 · 191 posts · 108 votes8y
My understanding of these, again, I am a noob
Originally posted by @Scott Garvin:Per Mindy Jensen's post...
Not screening properly - How do you screen properly?
- Application Fee: background/credit check.
Not running numbers correctly - What numbers? House price, rent, expenses?
- the whole 2% rule(guideline). Or more specifically, not accounting for ALL the costs, like expecting vacancy 1 month per year, or the buffer you should be including so that WHEN the roof needs to be replaced, etc. check out the Starting out Forum, it's great. A lot of this has to do before even purchasing the property
Not evicting in time - What is the appropriate time for an eviction?
- in my experience, if you have an event/situation you think you might have to evict, it's time to evict.
- Pikesville, MD · Member since 2018 · 1 post · 0 votes8y
Thanks everyone, these are really great tips and strategies! I did some previous investing/landlording in the late 90's/2000's and said I would never do it again based upon many of the "biggest mistakes" named here. Now I am looking to get back into investing/landlording and in the market to acquire a multi-unit so that I can do again what is now called "house hacking" LOL.
Question: what are some of the key things to do to properly screen potential tenants? Is there a template, website, article, etc. that will name the key things to look for (do & don'ts, most efficient ways, etc.) and how-to's of screening?
I want to get it right this time! Thanks again!
- Mount Pocono, PA · Member since 2016 · 9 posts · 2 votes8y
Agreed, this is a great thread. I too have been taking notes as I read along. I am a super duper newbie and I am so nervous to get started, this information has calmed my nerves a bit.
- 8yJake FergusonPro MemberRental Property Investor · Panama City Beach, FL · Member since 2017 · 12 posts · 4 votes
-Get a full security deposit on or before move-in
-Call and confirm all utilities are in the tenants name before they move-in
-If a tenant has a sob story to go along with late or no rent, don't believe it, or at least continue to enforce the lease agreements
-Don't let late payments slide, and especially don't change payment plans with a tenant just because they can't pay the agreed upon amount at the appropriate time.
If someone can't make the payment all at once, they probably won't make the payment when it's split up either.
-Do background checks on EVERY TENANT
-Above all else - GET A SSN ON YOUR TENANTS! Yep...I had nothing besides a name on an application, and I let her move in with a half security deposit. Long story. Spoiler alert - she trashed the place in a few months and paid half the total rent before I evicted her.
We'll all never stop learning though!
- Pueblo, CO · Member since 2018 · 64 posts · 32 votes8y
I have two short stories of bad tenants.
The first involves me wanting to help two women who seemed to want to start over. They were recently married and one of them was trying to get her kids back. Kids back is the first red flag. Only one of them was working, but this one had a good job as a prison guard. I called to verify their rental history and was simply told they that: "Well, they paid there rent" That was the next red flag. I will never rent to someone who has a reference saying well, they paid they rent.
At this time I was more of a nice guy and wanted to help people out. They had 1 dog that turned into 3 and then like 6. They let the dog use my house as a bathroom. One of the girl's, sister's husband went to jail and she needed a place to live so she ended up in the basement without permission. This was not a livable basement. It was unfinished and had dirt walls.
They lived in my house about 6 months. The house was then vacant for 90 days due to pest problems. House did not have any bug issues before them. It really took 3 months to kill them. House was sealed up for two weeks and fumigated. Carpet had to be replaced, windows broken, hole drilled in my brand new hard wood floor. Had to bring in a dumpster to clear the trash out.
Well they did pay the rent, eventually... typically after I drove over there to collect it and in small weekly payments.
--------------------------
Tenant number 2 paid his rent on time and 1 day early. This guy hated me so much he paid it 1 day early via a credit card so I would stay away. Im going to explain how this guy looked because it adds to the story. He was around 6'3" very large build and said he was a professional trainer. He sure was built like one.So this very large young many moved to Colorado from out of state. He was not in anyway use to small town life and belong in a city. He got in a fist fight with the gas company for trying to read his meter. They walk into the yard to read it. He threatened to hurt my exterminator whom was called for the 3rd time in 1 week to spray for spiders. Yes... 3rd time... The tenant had a new born and saw a spider... I dealt with this because he was young and seemed to be a nervous new father.
This mans wife flushed female products down the toilet and plugged up the plumbing. I had to actually show him on the box that it said do not flush. He called me throwing a fit that the toilet was over flowing onto the floor. I rush over there to be told clearly that I would not be allowed on the property, my property. I had to serve a 24 hour written notice to enter the property. (this is in my lease). The police then escorted me onto the property to see the damages. There were none. He was exaggerating.
The system was backed up so I got a plumber out there. Again the police were called and and the police had to stay there while the plumber worked.
I was able to serve the tenants with an eviction notice for violating the lease because they were calling the police and causing a disturbance. Also in my lease. This was all in about 3 months. The house was spotless and the rent was paid on time but this guy was terrible to deal with. Kept me up at night stressed over it and hurt relationships with my contractors.
Interestingly... there was nothing in the house at any time. They purchased a mattress that was on the floor and they had two back packs. The wife was seldom allowed in our line of sight and the back pack was very well protected. I often wondered what he was doing to pay the rent and what was he hiding from.
- Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes8y
Originally posted by @Steve Babiak:
Originally posted by @Jason Dale:
Originally posted by @Steve Babiak:
Originally posted by @Jason Dale:
...
My new tenants seem great, they even offered to make improvements to the condo. Hopefully we'll get lucky this time, but I'm still skeptical. They move in next week.
Be VERY skeptical and DO NOT take them up on their offer "to make improvements" - if you allow them to do "improvements" you might find that they lack any DIY skills and you end up regretting allowing that to happen.
They are just painting, not like doing actual construction or anything like that. I meant it as in they are trying to make it better not worse like the last tenants, so I feel like that's a good sign. If tenants paint, they feel like it's more "theirs" and are more likely to not destroy it because they don't have attachment.
Before you hire a painter, I assume you take a look at some of their prior work. Does this tenant have a prior paint job in their portfolio that they can show off?
I don't have the pictures on my phone of the last paint job my mother allowed a tenant to do; when I get a chance maybe I will post. There is a reason you don't hire amateurs - they don't have the needed skills.
Good luck with your tenant painting, if you allow it to happen.
Tenant paint job photos:
And the pictures of the paint spattered floors aren't necessary once you observe the above ...
So go ahead and let your tenants paint if you think a paint job such as is pictured is what you want ;)
- 8yLinda WeygantPro MemberInvestor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
I could type out pages and pages and pages of stories, but I realized that they all boil down to one thing:
While I do not always get burned by making decisions with my heart instead of my head, every single time I've been burned bad, it was because I made a decision with my heart instead of my head. Every.Single.Time. The more it yanked on my heartstrings, the worse I got burned. - Investor · Saint Ann, MO · Member since 2016 · 16 posts · 13 votes8y
My biggest mistake was going to one of those real estate meetups and paying for a mentor's help. $1500 later I could have gotten the advice and help from biggerpockets for free
- Detroit, MI · Member since 2017 · 17 posts · 3 votes8y
Accepting the tenant story "we need to move quick". Every renter with this story has been problematic ( late rent, no rent, constant complaints)
Letting someone move into a place "as-is" agreeing to do fixup work. They are basically squatters.
Working with a contractor who looses keys, equipment and can't finish after moving the deadline several times
- Member since 2016 · 13k+ posts · 12k+ votes8y
Tough business that will toughen you or break you.
Principals to always keep in mind.
1) No good deed ever goes unpunished
2) Nice guys finish last.
3) Compassion/emotions have no place in business.
Be professional, provide safe secure housing and special considerations will never be required.
"No" is a landlords go to response that will never get you in trouble.
- Princeton, KS · Member since 2014 · 357 posts · 169 votes8y
• I don't care if your lease is 20 pages long: PUT IT IN WRITING! Sit down with potential signers (before finalizing) & read over the whole thing with them. Any infractions will be addressed, up to & including eviction. Be fair, but be firm.
• SCREEN, screen, screen! Better to go another month vacant than take the first warm body with a job: you may be verrrrry sorry!
• RENT IS DUE ON THE FIRST. Period. Eviction will commence as soon as legally allowed following non-payment. Period. This alone takes care of all kinds of excuses, sob stories, tall tales & BS. States are different, but know your local procedures & rights. Follow them!
• Don't handle cash. I know some LLs do, but I have a bank account set up for tenants to deposit whatever form of payment they want. I check each property account online the morning of the second. (See above if not deposited.) I won't touch cash; it's too easy to start "he said, she said" & have no paper trail to back it up.
• Respond, repair, replace - but on your schedule. Unless it's a true emergency (see first bullet), & you take care of the problem in a timely manner, tenants aren't going to turn into pumpkins if the faucet leaks another day.
• Get set up with reputable local contractors/tradesmen. Pay them on time, don't pester them for little stuff you could take care of, be polite, never think you know more than they do (if they're pros, you don't!), & don't hesitate to recommend them. A good plumber, electrician, HVAC tech, realtor, etc. is GOLD. Treat them that way.
• Document everything. (Especially nice if you get called into court.) That includes texts, receipts, e-mails, photos, daily work log, etc.
Plus everything previously said! Nothing like horror stories to make a point - learn from other's experience!
- Philadelphia, PA · Member since 2016 · 36 posts · 4 votes8yI did not screen my tenants properly, rented to this guy who appeared to be a Saint, I got a sense of a great human being, but what came behind him was the total opposite. Turns out his fiancé was a nightmare. She wanted to have a daycare while her child went to school. Now the first floor tenant who worked over night could not sleep during the day. The 2 times the gentleman came to see the apartment, she never came by. I asked him why she couldn’t come by and he would give me an excuse. I should have known something was wrong. But I gave him the benefit of the doubt and got screwed at the end. I had to give him his security back so he could find another place. The fiancé was running the water during the day on purpose. My water bill may be arriving high, but I took it as a learning experience. I even paid for the moving truck. But I now sleep and have peace of mind. It did cost me but I learned and now am stress free. Screen your tenants properly or you will pay in the long run.
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