San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
6y
My biggest mistake was renting out my primary home and hiring a PM when I moved out of state. Lost my shirt trusting the PM. Total nightmare. I'd never own out of state again unless I was managing it myself and could afford to travel there whenever necessary.
But, basically, the lesson, in my opinion, is to self-manage. The only time I think it's okay to delegate, would be if the manager was actually your employee and not someone who makes money from your losses. Hire someone as an employee and give them bonuses for helping you profit, instead.
Unfortunately, the way the traditional PM situation/contract is set-up, the PM only makes money when you lose money and have problems. It's not fair for the PM either - why on earth would someone do that much work for only 10% or less of the rental amount? Think about it. It's absurd. Nobody should be expected to do that, and it's obvious why the industry is full of con artists - because it's the only way they can make any decent wage for what they do.
So, hire someone and pay them a fair wage. Or, self-manage, is my opinion.
Rental Property Investor · Madison, WI · Member since 2019 · 32 posts · 28 votes
6y
@David Shiling
Not a huge error but on my 4 unit I didn’t account for common area maintenance (cleaning) and utilities (I use a management company). Best to check with the utility company or count the electric meters - if there are more meters than there are doors you probably have to pay something to light/heat stairs, halls etc. each month, especially in a climate with below freezing temps.
Lol. Absolutely! I just got through reading that! And yes, he talked about every mistake I made. I agree regarding understanding all the tenets of your lease...like “the security deposit will be returned within 45 days of move out” so that you have time to discover damages, get bids and do the repairs. It is NOT their last month‘s rent. Otherwise you have nothing to cover damages.
I make my pet deposit/fee (I didn’t know the distinction) $250 per pet, of which $100 is refundable to give them incentive to monitor their pet.
Rental Property Investor · Charlotte, NC · Member since 2020 · 21 posts · 5 votes
6y
@Todd Powell
There is a saying I live by that says " Smart people learn from their mistakes, wise people learn from other people's mistakes" with that being said thank you so much for the thrilling story. What program/ software or method do you use to vet tenets now?
Los Angeles, CA · Member since 2017 · 45 posts · 22 votes
6y
@david shill it makes your life a whole lot easier if you have a local apartment association you can join which usually has lots of resources such as standard leases and other helpful forms.
Make sure to outline what belongs to you in the property, what appliances the tenant is responsible for bringing, what utilities are covered, property "rules" such as quiet time, trash, landscaping etc. Obviously when the rent is due by and when considered late, what the late fees are, and make sure you stick to your guns. Document EVERYTHING including maintenance requests, repairs, monies spent, and all tenant communication.
Lastly, insurance insurance insurance. Make sure you are covered and don't be pennywise but pound foolish just to save a few bucks. Get a good policy that covers your butt if something bad happens.
Investor · San Antonio, TX · Member since 2017 · 31 posts · 33 votes
6y
@Emanuel Ohunwu
Good question. I haven’t dealt with multiple pets yet so I need to figure out a strategy. Not sure if I’ll keep the price the same or give a discount for a 2nd pet. Thoughts?
Rental Property Investor · Rohnert Park, CA · Member since 2014 · 306 posts · 160 votes
6y
@Cordell Martin
I have heard that landlords google the company then call the company where tenants say they were employed, instead of calling the number provided. Then ask to speak to the person listed on the application. If the tenant is lying, that will find him out.
Realtor · Wellington, FL · Member since 2018 · 68 posts · 47 votes
6y
@Eva Neikirk That is great. I see why having some patience and really checking out the leads for the tenants makes it worthwhile. If they aren't even willing to take those steps then sometimes its not even worth it. I appreciate you sharing all your knowledge with us!
Realtor · Wellington, FL · Member since 2018 · 68 posts · 47 votes
6y
@Megan T. Thank you very much Megan, I just purchased that book so I will definitely be reading it. And thank you so much with the pet "fee" I was wondering on how to word that properly so that there was no confusion.
Have you ever had any luck with charging a monthly pet fee? Or do you just do the one time pet fee?
Realtor · Wellington, FL · Member since 2018 · 68 posts · 47 votes
6y
@Colleen F. I didn't even think about that. I wish I would have when I was writing up the lease because that is a great point. I am adding it to my shortcut list for the next one for sure. Thank you so much for sharing that with us.
Rental Property Investor · Canton, OH · Member since 2019 · 67 posts · 40 votes
6y
If an inherited tenant gives you bad vibes, have the seller vacate the property before taking possession, even if it’s a hit at first. Whew, lesson learned here!
I personally have never charged pet rent. As a pet owner myself, I always hated the idea of being charged it, so I never charge my tenants for it. Personal preference
Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
6y
@David Shiling accurately: by determining the life usage left and dividing that into the cost of the replacement: ie you need a roof in 5 years that will cost you $10k so you need $2k/year of $166/mo set aside. You would do this for any other major systems like HVAC, etc.
Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
6y
@Anais Hawkins I use mysmartmove.com and each tenant prospect pays $40 each and does credit, criminal, and eviction background. I also check social media for an idea, and call previous landlords, but typically the one before their current one. Some landlords will say whatever they have to get a current tenant out now! I helped my inherited tenant get out with a reference, and they had NO other option and the company took a “chance” of them with their felonies. Again, this was a tenant I inherited in a 4 plex purchase. You cannot take too much time making sure your new tenant will work out , so have written rental policies in place, and do not stray. When you take “chances” you will get burned.
Investor · Ann Arbor, MI · Member since 2016 · 4 posts · 3 votes
6y
This is a small one, but in my first rental it was only spoken that the tenant would shovel the snow and salt the sidewalk to melt the ice. He did not do it once and I got a fine from the city. I confronted him about it and he has done much better, but continued fines would have cut into my cash flow in a major way. Now I make sure to explicitly state that they are responsible for snow and ice removal.
Realtor · Wellington, FL · Member since 2018 · 68 posts · 47 votes
6y
@Josh Gorokhovsky Thanks so much for sharing with us. I agree with what you said and will definitely be outlining all the rules in my future lease. Thanks again.
In Memphis, the mowing is a similar issue. The PM didn’t handle it and I got fined. Then I set a lawn mowing service, but they were inconsistent, wanted reviews/ratings from me out of state and wouldn’t send before and after pictures. They even reported 3 times that the grass was now mowed when they hadn’t done it.
Luckily I have good relationships with the tenants and they would send pictures.
Finally I wrote into the lease that the tenants handle the mowing and referred them to the guy down the street who mows consistently, but only for cash.
One tenant got herself a mower and enjoys the exercise.