All Forum Posts by: Patrick M.

Not at all, it was you who said it improves your relationship.

The perfectly honest answer which very few landlords on these "gifting" threads, give, is:

"I give a gift because it makes me feel good." 

That is it, plain and simple. And if a landlord is honest enough to say that then I have no qualms. There is absolutely nothing "wrong" with someone saying that. There are pitfalls a-plenty as others have mentioned, but it is an entirely selfish thing and a very nice selfish thing at that.

Instead we have landlord after landlord contorting themselves to make it fit into some business model. "They are more likely to renew... They are more likely to pay on time... it will improve our relationship..."  Instead of "I am so grateful that they paid on time that it will make me feel good to... I am so grateful that I have this opportunity that it will make me feel good to... It will make me feel good if I can show them I care..."

I do feel @Alex Corbishley that this conversation has had an adverse affect on our relationship... perhaps you could improve it? Show you care? My venmo is... ;)

A landlord who is responsive and professional cannot "improve" that relationship, being the best landlord they will ever have shows that you care and that you take the lease very seriously. It also reinforces the terms, and conditions a tenant to respect the professional and legal relationship.

When I am left waiting for a waiter, the restaurant offers me a gift. When I am unsatisfied with a purchase, the manufacturer may offer me a gift... they are trying to "improve the relationship" because it needs improving.

If your professional relationships with your tenants need improving then you would be better served by retaining the cash and putting it toward capital improvements, a more responsive repairman, pre-emptive maintenance...

If, on the other hand you are so filled with gratitude because you have these cash flowing properties, your coffers runneth over and you feel like you stepped in sh*t, then spend it on your family. They deserve it and likely have sacrificed something along the way. Your tenant has merely upheld their terms of the lease.

I speak from the experience of having a wife and two young kids when we bought and repositioned our buildings. We had to take on new debt; I have been called away from games; we had weekends scuttled and more often then not had our personal conversations revolve around the buildings. And more than a couple arguments. As I type this, if a tenant texts me, I will immediately address the situation. 

And I am going to give them my money??? No sir, my kids are now in an awesome school. Their 529's are regularly funded. They each have a Vanguard account that gets funded with the work they do with me. We travel the world (when we can). My wife gets to go shopping on Avenue des Champs-Élysées. Can you believe that? If you knew me in high school you would say, "No way!"

You know why we all get to do that, because we have all sacrificed for our buildings and by extension, our tenants. 

I don't know of a more profound way of showing I care.

To family and friends $100 is $100. Or in common parlance, "just a hundred bucks"

To my business it is 1/8 an installed water heater, 1/4 a new gas grill, 1/2 a months landscaping, a plowed parking lot, a quarterly treatment by the exterminator, a needed repair, etc.

I prefer Zelle, but when it exceeds the amount allowed, usually for a deposit, I take Venmo and transfer it right in. It is there the next day even with the free 2-3 day transfer.

Everyone will have a different method and you will develop your own over time. What I do:

List it on Zillow and Cozy (No craigslist). I tell the prospective tenant to complete the Cozy application but not pay for the background/credit check. This will weed through the casual clickers and area landlords/ realtors who are looking for comparables. It will also afford you the opportunity to see if they can even financially qualify.

Show the apartment. Having completed the application they are going to show for the appointment, or contact you if they can't. When possible I always stack showings so that the tenant will see demand. I speak with them, I am 100% honest to a fault- I never try and over-sell the apartment. I also make them aware of what myself and the other tenants expect.

If "we" wish to move forward they are required to pay for and complete the credit and background check. Lease and other paperwork follows. Apartment is removed after deposit is provided.

Thanks can be demonstrated in ways that are far more meaningful and appreciated. Promptly returning calls/texts. Addressing issues immediately. Building cash reserves so that their home remains secure. Investing in "unnecessary" capital improvements that benefit their tenancy. Running your business like a business.

While I am at times overwhelmed with gratitude in owning cash flowing buildings, I refrain from "thanking" a tenant for fulfilling the requirements of their lease. I thank them by being the best landlord they will ever have.

Also, without exception, each of my tenants drives a far nicer car then me.

Depends entirely on your location and class of rental, but here goes a couple...

1. Reserves will be taken more seriously - I was saying it back in March when some landlords were declaring "Free rent!" - You must hoard your cash and build reserves. I had pessimistically predicted that we would be exactly where we are today, not because I "knew" but because I wanted to be prepared.

2. Landlords will get more professional in their vetting or hire property managers that will. Many problems have arose because tenants have taken advantage of blanket relief that they do not require. The properly vetted tenant is unlikely to do this.

3. Landlords will be more professional - April and May saw an inordinate amount of landlords who "wish" they had taken action against bad tenants earlier. Some who chose to stop collecting rent because the tenants "were like family to me," and as a result put themselves over the barrel. Those who are left in the coming years will be more likely to run their business as a business.

4. Landlords who can justify upgrades, will- One thing that has come out of this is that the tenant who can telecommute is king. Those landlords who are in a market that can attract such a tenant will want to upgrade to attract them.

5. Space and outside amenities will hold more value- Yards, Parks, Trails, Beaches... These will all carry more value in the coming years.

"I've read some articles that predict absolute doom and gloom while others seem a bit more optimistic."
They are both 100% correct.

There was a great post about a year or 2 ago by an attorney who sets up LLCs. It went through the various steps to take to separate the asset into an LLC and then separate it from you personally. And then how you must conduct yourself going forward. It is quite a lot of work. Every business/ landlord I know who has an LLC is so co-mingled, that if someone wanted to pierce it, they could.

I will take a look for the post. Too many people believe an LLC is some magic bullet that will protect or insulate you from creditors/ liability. It must be done correctly and maintained correctly to protect you from a competent adversary.

While I keep my bank accounting separate, I use my personal credit cards for many purchases. My tenants all know me and know that I am the owner. I am sure there are a dozen other things... An LLC does me no good.

BUT, I am well insured! Unlike many who believe an LLC will protect them from liability and underinsure.

Additionally, I do not engage in reckless conduct (drink, DWI, neglected property, engage in personal relationships with tenants).

A person with a 2nd grade education can establish an LLC in NJ. If you are going to do it- do it right- unlike 95% of those out there. It is too much work for me and my 9 units.

@Chris Snyder These come up from time to time. I live in NJ which is very unfriendly- but it just causes you to be a better landlord to survive. I see landlords around me go about business half-assed and get upset when they are held accountable and bemoan how difficult it is to be a landlord in NJ. It really isn't, you just need to know the laws, run your business like a business and screen well.

Too many people out there that think this is or should be a passive income/business.