Coach Mitch’s REFLECTIONS™
I read Mr. Landlord. Recently a good question was posed: What changes have you made in your rental business in the last three years?
I list my suggestions first and have cherry picked many of the others. There’s a lot of good stuff here.
When I ran a large Real Estate Investors Association, we created Mastermind groups as a featured perk. My group met regularly for 8 years. We shared many ideas from our personal landlording and investing experiences.
Amongst the best ideas:
1. Lead Generation:
Create a flyer about the property and, for a few dollars, have the paperboy pass it around the neighborhood or hire the local Cub Scout troop. Neighbors like the idea of being able to pick their own neighbors. No reward is necessary but a $15 dinner certificate is a nice thank you. Get them from one of the 2 for 1 GroupOn type services.
To reduce the number of time wasting applicant phone calls I changed my ads to read: “A good landlord wants a responsible tenant, for this cozy 3 BR, 2 BA…
This ad cut calls on one house from 103 calls to 30. The “irresponsible” applicants culled themselves out. This experience was duplicated by other members in the Mastermind.
On the initial call I take over the conversation and ask: “How many people will occupy the home? What are the ages of the people? Any pets?
If the age of the child is too young, I say: “This home is old and has a lot of lead paint. Do you think your child will be safe with all that lead?” As a result, the mothers say “Thank you for telling me.” I’ve never had a toddler in a rental.
I show the property later on a Sunday afternoon, within a 2 hour window, e.g. 2-4pm. All prospects are invited to attend. It usually works out that at least 2 sets of applicants view the property at the same time, creating a competitive atmosphere. The competitive atmosphere seems to make the applicant’s more forthcoming regarding their history and more willing to pay fees and accept my lease terms.
With multi-family property, market for a certain unprotected group, e.g. cat lovers. They will pay a premium rent; they will have plenty of neighbors who will take care of kitty, if necessary; neighbors will be friendly with each other because of a similar interest, etc.
A month or two before rent renewal time, do something nice and unexpected to the property, e.g. change the batteries in the smoke detectors, add a ceiling fan, plant a few bushes, etc. A rental increase will be easier to take if tenant feels they are getting something in return.
Have a strong pro-landlord lease. I wrote the lease used by the local landlords association and it has everything we would want or could imagine, including various ways tenants can pay and landlords can collect rent. Call for a copy.
Other great ideas from many experienced landlord contributors:
Rent collection: Tenants can pay at my local bank in person 6 days a week with cash, money order, cashier’s check or debit card. No charge to them or me for this service. I see the money the minute it hits my account, and the next day I see an online scanned deposit ticket, stamped with the date, with the tenant’s name.
Rent Collection: I give my tenants my account number and routing number and tell them to go deposit their rent each month in my bank account (Wells Fargo) on or before the first of the month. These numbers are on every check we write so it’s not private info. Each unit is assigned a “cents” identifier, if their rent is $950, they might have to deposit $950.12 (only required if paying in cash, actually. If paying online or by check, I can see the deposit online and who made it.) [Editor’s Note: EX: $1000.01 = Unit 1, etc.]I tell them to request and keep a receipt from the teller for their records, and they are done. We’ve been doing deposits this way for YEARS now without a problem. But the percentage of online payers is going up, from almost none to about one-third.
Rent collection: I have a special, deposit only account and the renters are instructed to give their name to the teller which is put on the “comment” section of the deposit screen. I am the only one who can change or withdraw from this account.
Rent collection: All my tenants do is go to any branch of my bank (anywhere in the country). I have a large bank with branches all over USA so they can even pay me their rent while on vacation. They get a deposit slip and put my name as the account holder, and give the deposit to the teller. They get a receipt from the teller like normal. That’s it.
Rent Collection: I give a discount for paying via bank draft. For example, I would advertise $650/mo if you pay via electronic bank draft or $675/mo if you want to drop your rent off. These tenants tend to have steady longer-term jobs and get paid via direct deposit.
Rent Collection: Payday/weekly rents. I have increased my income by accepting rent weekly. This gets you an extra one month’s rent. 52 weeks divided by 4 weeks is 13 months. [Editor’s Note: My lease automatically triggers weekly payments when tenant goes late on a regular basis. One tenant has been paying weekly for almost eight years. That’s an extra eight months rent.]
Screening: I retooled my phone screen questions to ask the important, disqualifying questions first.
Screening: A better way to ask about an applicant’s income is: “How do you pay your bills?”
Screening: Ask upfront when their lease is up. Nothing worse than to spend 20 minutes on phone than to realize your times don’t match up.
Pre-Screening: Hired an answering service to take incoming calls on the empty units. When advertising an empty unit I receive 25+ calls some days and I couldn’t handle it with a FT job and family. They give out the lockbox information, so I don’t deal with the prospects until they have viewed the unit and filled out an application.
Pre-Screening: Online / electronic applications. I combine this with my “pay your app fee at my bank” approach which again reduces my turn over time because applicants do the steps at THEIR convenience instead of MINE. I still have a J.O.B. and could only do showings and pick up applications after 5 PM or during my lunch hour.
Pre-Screening: Best change I made is to use the Craigslist anonymous email system. No phone calls, just email. It is an incredible time saver. My ad says a preliminary application will be required to schedule a showing and they can download the app which includes permission to verify credit.
Pre-Screening: I changed to email pre-screening. I might chase away some that I don’t actively engage on the phone, but I don’t think I lose that many actually. Every time I break protocol and answer the phone, I find myself listening to a loser.
Pre-Screening: When I get a response, I send them a questionnaire to fill out and email back. 9 out of 10 do not return the questionnaire. Of the ones who do, at least 50% do not qualify for a showing. So I usually only do 1 or 2 showings to get a house rented.
Pre-Screening: I used to do a Craigslist For Rent notice… but they don’t reply (think it is a scam or scary person on the other end). Now its Facebook and Postlets. Huge response from Facebook. Need to utilize it if you want the younger crowd!!!
Pre-Screening: The online application form is through www.Jotform.com. Free. I post pics and videos of the apt on there. Do most correspondence via email/text.
Pre-Screening: Make a post on your FB page. When you have hundreds following you, other people will get tagged on the post. They will see you have an open unit and word spreads.
Pre-Screening: That same post, you can “boost post”. I paid $20 for 2 days of advertising. It will show it to all the pages friends/likes and THEIR friends. So I had over 4500 people see it and 30+ comments in two days. My likes for my page quadrupled. Brad20K did this earlier got over 20,000 people see his ads.
Pre-Screening: What is nice about Facebook advertising… you can target your ad. Another words, I want these towns… age group 22-45… that is all that will see it. I call Facebook ads “sniper advertising” because you can target it and you see feedback via comments. Other ad forms, is like a shotgun. Fire it in a direction and hope you hit something!!
Pre-Screening: Also, there are probably groups for Real estate or Rentals for your area. If there aren’t, start one. There is one for my area. There are 10 people looking for 1 landlord posting. So imagine what happens when I post. A landlord post always gets tons of replies and hits. Are all of them good? No. Weed through them just like any other form of advertising.
Office: We also try to stay paperless as much as possible, or at least to not STORE paper. I scan and toss a lot more things these days since I got my great scanner!
Showings: Lockbox showings – I was a doubter at first until I found out ways to make it work and minimize risk. There a FEW markets where it probably doesn’t work. I haven’t had a “no show” or a looky-loo waste my time in years, and this process contributes to my ultra-quick turn overs. While other LL’s are still “scheduling appointments” or “getting back” with their callers…my prospects have already handed in an application and are being screened … and tomorrow they’ll be moving in if all goes well.
Showings: You can attach your lockbox to a handrail. They also make lock boxes that you can screw to the house or to another building or even a tree.
Showings: My For Rent sign has a brochure box with a flyer describing the house, pictures, etc. that can be prepared & advertised on Postlets.com. You can add rules, rent, pet policies, etc.
Operations: Outsourcing trivial work – cleaning, mowing, trash removal, most small repairs. Pay someone $10 – $15 an hour for unskilled labor or $25 an hour for semi-skilled that is drudgery and removes focus from getting a place rent ready quickly and stems the flood of vacancy expenses and lost rents. Your hourly rates may vary by location, but when I found that most contractors in my area wanted $40 – $50 just for semi-skilled work, I went shopping and found a LOT of decent folks who had some skill and were willing to moonlight for a lot less money. Church, recommendations from local REALTORS, college students, etc. Of course, screen well and only pay as work is completed. Took my average turnover time from 2 – 3 weeks to 1 – 3 DAYS…the extra rent more than makes up for the money spent to hire it done.
Operations: Getting an emergency fund in place – nothing fancy…just a money market fund at a bank that is filled with cash-o-la. I rest easier at night knowing it’s there when I need it. And my dear wife’s anxiety level is much reduced as well. Could it make more invested elsewhere? I suppose, but the cost to my sanity isn’t worth it. [Ed. Note: Having a Reserve Account is mandatory. Replacing a water heater costs $1000; that’s $83.33 per month. Get in the habit of putting some monies in a Reserve Account.]
Operations: Tenant text messaging. This allows tenants to contact me anytime and I respond when I can. We don’t both have to be available at the same time.
Operations: Started offering washer/dryer, particularly in my duplexes and lower-end homes. I charge $10/week or $40/mo. I buy a used set for $200-$250. It’s paid for in 6 months.
Operations: When I have an empty, I just change the lock cylinders to my “empty key” cylinders
Operations: My property manager now does all the things I hated doing! However, I do NOT let the manager use his work force to do my repairs. I have “my own people,” favorite contractors and cleaners. I negotiate the cost of my repairs, painting, cleaning, make ready.
Let me know some of your better Landlord / Tenant ideas.
All the best…
518-439-6100 until midnight EST