Landlording Is A Business, Not A Hobby
Mar 29, 2009 Investment Strategy
Landlords are constantly trying to reinvent the wheel. Why? In my first book, Streetwise Investing in Rental Housing, investors find a kitchen tested recipe for landlording in the inner-city. Throughout the entire volume I detail from start to finish how to accumulate and manage investors to financial independence. Those who have not read the book can plead ignorance and I will accept that as a viable excuse. However, for those who have read the book have no excuse for not achieving the success which I now enjoy. When I encounter other landlords at eviction court, I find them to be mean and temperamental. Again, those who aren’t familiar with my tactics are welcome to a reprieve from my criticism. However, for all others I submit: What’s the problem? Why are you mad and upset? Did the tenants get the better of you…….again? Let’s get back to the reinvention of the wheel again. You’ve read my books, newsletters, and such, so you know what works. Permit me to remind you.
1. Eviction notices are given on the second. (No partial rents: “Pay entire amount in cash or money order or get some boxes.”)
2. Evictions are filed on the day permitted.
3. Full rent and deposit is required in cash or money order before the lease is signed and keys are given.
4. First come, first served.
5. Only cash or money order holds an apartment.
6. No deals.
This is the procedure. How hard can it be? Why are landlords so spineless? Aren’t you sick of being at the brunt of tenants’ jokes. Get a grip on reality and do the right thing. Isn’t it about time that you enjoyed the success that I do? My BMW convertible payment is $656.01 monthly. Consider that two rents would easily cover the payment. The two payments that you let slide or the balance of the four partial payments that you didn’t collect could have also made that payment! So, what’s the problem? Is it that you do not want to enjoy a quality life, or that you do not know what one is? I’ll bet neither. I contend that you are so locked into doing business a certain way that you just don’t want to change. To those I say: You’re ruining it for those of us who really run their real estate like a business. Remember, when I go to court, I’m not out a dime. That’s why I’m in a jovial mood and not locked into that poor me syndrome that many investors find themselves. They cry out for compassion and advice, yet they are deaf to reason. One more thing, all the back rent that you suffered and your courtroom tantrums are so predictable. Admittedly, if I were to suffer such setbacks I would feel the same way too. But there is a difference between me and the masses. I have learned from my mistakes and refuse to keep learning from the same lessons over and over again. May I suggest that you forge a new future for yourself? You and I do hold the same vision. It is simply a matter of who will realize their dreams. You know the right way to conduct business. Simply you should conduct business like millions of other businessmen, yet you refuse to do so. When situations arise {there you go again} you reinvent the wheel knowing well that your changes have not worked in the past but hope that they will in the future. Indeed, real estate holds a whole range of problems. I insist that rent collection is the foundation for achieving financial independence. If this is flawed, it will be impossible to build upon and counter attack all of the other problems that are associated with real estate investing. Furthermore, my attitude is that all of the problems I encounter are minimized when I feel financially compensated enough. In other words, if I make enough money, I don’t mind the obstacle. In essence, the whole idea is to make a lot of money and constantly reduce obstacles. Conservative investing is my hallmark. In fact, what makes investing in the inner-city attractive to me is the ridiculous profit schedules. Having the rent collection down to a science is what makes me successful in these neighborhoods. Without my successful methods in the collection, found in my Streetwise book, it would not be a conservative investment. Thank you for allowing me to remind you that all financial compassion should be reserved for family and friends, and groups that you choose to help in your spare time with excess funds. It must not in your business from where your existence and livelihood is derived. Permit me to remind you that real estate is a business, not a hobby.
Tags: Eviction, Landlording
Real Estate Strategy
Mar 27, 2009 Investment Strategy
A real estate investment strategy is different from a real estate investment technique. A real estate investment strategy is a real estate plan, policy, approach, tactic, line of attack, and could also be considered a stratagem. A real estate stratagem is a real estate ploy, device, scheme, or a real estate plot. A real estate investment technique, on the other hand, is a real estate method, system, modus operandi, or procedure. In other words, the real estate investment strategy is the overall game plan, while the real estate investment techniques are the plays called, so to speak. We need both a real estate investment strategy and real estate investment techniques. My strategy is to achieve financial independence and experience financial freedom. Ever since I was in the military, I’ve had quite the aversion to being told what to do by someone inferior to me. For the most part, I kept finding myself in situations where some idiot was my superior. It continued after I got out of the Army as well. Every crummy job I acquired had the proverbial idiot in charge of me. It was like a curse. Even when I got my job with the city of Columbus inspecting sewers for $5.63 per hour, I had losers as supervisors. I guess it would take an idiot to inspect sewers anyway. What did that say about me? (I’ve already admitted on a number of occasions that I was trapped in a dead end job and I was a loser as well.) Not only did I not like being told what to do by an idiot, but I did not like the idea that someone else decided what I was worth per hour. At least, that’s the way I’ve always looked at it. I know that the reality is that each job is only worth so much and someone is hired for that position. But, when it comes to me working for someone else, I get a mental block and take the whole pay scale thing personally. I still do it to this day. I can’t help it. Hence, I needed to develop a real estate investment strategy to get me where I do not have an idiot in charge of me and where someone else doesn’t determine my worth. My strategy was to invest in real estate. I would be entirely in charge of my own actions, self employed, and when it comes to income, the sky was the limit. Some enormous obstacles I had were that I didn’t have the wherewithal that most people did who go into the real estate business. I didn’t have the cash or credit worthiness that is ordinarily required to invest in real estate. My real estate investment strategy was to circumvent the system by finding for sale by owners who were so motivated to dump their properties that they would finance their properties themselves to get rid of them. No one ran credit checks on me, or asked for a financial statement. They were just grateful to get the deeds out of their names. A part of my strategy was to stay away from banks. No lender in their right mind would grant me financing anyway. So, why should I bother? You’re right. I shouldn’t. I picked a field where it would be possible where, if all went well, I could become financially independent in the real estate field. I could work for myself and make as much money as I wanted to. I could work seven days a week, or I could take a month off. My future, and present, belonged to me. This was my situation back in 1979. It really was much worse that I had described, but you get the point. I developed a strategy with everything taken into consideration to achieve goals that have been achieved by countless others. I outlined my problems and deficiencies and integrated a real estate investment strategy to overcome them. Yes, you have yet to select real estate investment techniques to make it all happen. Begin like I did by evaluating and analyzing what you are and where you are. Outline a real estate investment strategy that outlines a plan, approach, a line of attack for now. As long as you are honest with yourself, it won’t take long to figure it all out. Keep your chin up, and strategize a change for your future.
My Wife’s Repair Perspective
Mar 24, 2009 Now That's Funny
Although my wife doesn’t get involved in the real estate, except for taking my calls, she does have her own ideas and opinions. When she voices her opinion on real estate, sometimes it often makes sense when you think about it long enough. Last year I had a tenant break a toilet. I was remarking to my wife about how I could understand breaking a toilet seat, but not an actual toilet! (How do you break a toilet, anyway?) Nancy instructed, “When tenants damage property, they need to pay for it.” We both agree whole-heartedly on this point. She continued that I need to explain about tenant responsibilities to my tenants. She advised that I tell them, “Not only are there tenants rights, but there are landlord rights too.” I began to notice that she learned well and that we were finally on the same page, or so I thought. She informed me that the tenant should pay for two toilets, one that they broke and one that I must go out and buy. I asked for her to explain in detail her logic. She said, “The cost is double the cost of the toilet because you already paid for the one, and now you must go out and buy another toilet. You’ve bought two toilets, the tenants need to pay!” She further explained that this philosophy doesn’t stop with the toilet. I could integrate it into all repairs. “How about windows, thermostats, screens, and doors,” she argued. “Think of the profit margin!” Really, it almost makes sense, if you think about it hard enough. I mean, I really do have to buy two toilets, two windows, two thermostats, and on, and on, and on. It does sound like a great idea, for landlords. Certainly, circumstances have favored tenants for years. It sure is about time that we finally get something to go our way. I do confess that I haven’t tried it yet, so I don’t know what the tenants would say. It would be amusing to find out, though. One final thought from my wife, she says, “That’s what they mean when they say hidden costs.” Now that’s funny!
Real Estate Investment Training
Mar 20, 2009 Investment Strategy
The days of learning everything yourself through trial and error and suffering all of the consequences are over. Everyone wants a short-cut to get from point A to point B. Why waste years on a learning curve, teaching and learning everything the hard way? You’re right, that’s not a very smart way when there are so many shortcuts available to real estate investors today. If I could have shaved off my first five years, for example, and started with real estate strategies and kitchen tested real estate techniques, I could have been much less miserable and have acquired much more in much less time. That’s a fact! What I suggest for you is to obtain real estate training that makes sense for you. Examine what kind of real estate investment training it is.
Will you need to leave town to tend to your investments?
Do you need cash to implement the real estate techniques taught to you?
Do the real estate techniques require good credit?
Do you have the time to implement those real estate techniques?
Do those real estate techniques even appeal to you?
How much interaction with the public does it involve?
How much exposure to risk and liability do you have?
Are you risking everything that you have with your real estate investing?
How much money could you lose if things don’t work out because you made mistakes?
These are some questions that you need to address before moving forward with real estate investment training, or any other investment for that matter. Take your time and develop a game plan before proceeding with your real estate investment training. Be sure. Be confident about your decision.
Think Smart, Act Smart
Mar 17, 2009 Investment Strategy
Achieving financial independence is accomplished through both thinking and acting, or working, smart in all areas of landlording. A part of thinking smart is learning how to deal with hard-core tenants. Learning to act like a businessman or woman with respect to landlording is difficult for many investors. Recently, one of my students commented that he goes through phases, he’s either too easy or too hard. “Right now,” he commented, “I’m too easy on my tenants.” Investors must put procedure into landlording as do other businessmen. For example, when someone wants a gallon of milk, they pay for it or they don’t get the milk. That’s procedure. There’s no compassion built into the process. It’s not religious or feelings based. It’s cut and dried, just like your procedure for landlording should be. Landlords must always be one step ahead of their tenants. Simply having procedure isn’t enough. Investors must build creative thinking into landlord-tenant relations. Certainly, we must be creative to buy whole sale, which is truly a creative art in itself. Why can’t we mold ourselves a new, creative way of dealing with tenants? We can. As you’ve found out, tenants are savvy and professional in their own right. Talk about creative, tenants can obtain hundreds and hundreds of dollars annually, in addition to all their welfare, SSI, health care, and food stamp benefits. They obtain money, food, clothing, and utilities through churches, utility companies, agencies like United Way, and countless outreach groups and government agencies. That’s right, in addition to their standard entitlement package. Am I suggesting that many tenants work the system? You bet I am. They not only work the system, but the system itself perpetuates and literally encourages them to do so. For example, no agency will help with utilities unless and until there is an actual shut-off or notice to shut-off. Why pay gas? Why pay electric? Why pay water? Why pay rent? Logically, it would be stupid for poor tenants to pay everybody on time. Essentially, you’d have to be a moron to not take advantage of the system. Welfare will provide a one month’s free rent check once a fiscal year. Why wouldn’t they take advantage of that? In the process, if your landlord is a marshmallow you’d be on top of the world. Understand that you have a long way to got to even catch up with the street smarts of tenants, let alone being one step ahead of them like I am. You need to start now. It takes the wildest ideas to outdo and outsmart these folks. That’s a fact. My procedures are woven with creative ideas, and as you know now, they better be to stay ahead of the game.
Case Study:
As most of you know by now, I collect my rents in person. This way I find out early that I’m not going to get my rent and I give an eviction notice on the second of the month. That’s procedure. When I went up to collect her rent, she stated that she was going to move. I said, “That’s fine, but just in case here’s your eviction notice.” She knew the drill because we had gone through it before. I dropped back a week later and she again stated that she was not going to pay rent and she would be waiting until the last minute to move. I’ll hand it to her, at least she was forthright. I suggested that if she moved immediately I would pay her $100. She said, “No.” After she received her court papers she called me. She stated that she still wanted the $100. I agreed that she would receive the money if she was out by Wednesday. She did not move then either. The day before the hearing was Sunday and she again called me. She wanted to know if the $100 deal still stood. I said that it was now $50. We set a time that day and I changed the locks while she finished moving. She signed a move-out statement that she and all occupants were out of the apartment and anything left in the apartment was abandoned. Changing locks immediately and getting a signed statement are procedure. Paying tenants to move is an example of building creative thinking into landlord-tenant relations. Tenants work the system. Why can’t you? Now you have the opportunity to create an environment for success with creative strategies, like this one. Most of the time tenants want an agency to pay rent for them. When serving them with the eviction notice, suggest that they take that notice to an agency for help. That agency will inform them that they require the actual court papers, but at least this will get the ball rolling. You, too, can work the system.
Stay one step ahead of tenants:
1. Hand out eviction notices A.S.A.P.
2. File those notices A.S.A.P.
3. Always keep the lines of communication open. (Never be mean or argue with tenants.)
4. Return many times to negotiate a move-out settlement and/or get updated on agency payment.
5. Send tenants who owe and desire to remain to agencies for assistence. Actually name agencies who might help them. Tenants need direction. Surprise them with the suggestion and the location. Help them work the system, thereby helping yourself.
6. Get a signed tenant statement admitting that the tenant and all occupants are totally out of the unit and anything left in the unit is abandoned.
7. Change locks while tenant signs move-out statement, (Found in Contracts, Etc. and Streetwise Landlording Home Study.) Tenants could take money from you and not move. Get the statement, keys, and change locks before money is paid.
8. Only pay what you must. Measure the losses with respect to the timely tenant move-out and co-operation to what you will pay for the move-out. Take into consideration tenant’s deposit and damage, court costs and attorney fees.
Tags: Act, Landlording, Smart, Think
Real Estate Opportunity
Mar 13, 2009 Investment Strategy
The hallmark of an experienced real estate investor is having the uncanny ability to act quickly and decisively when a real estate investment opportunity presents itself. While most novice real estate investors want to think, ponder, evaluate, and analyze properties until they have a comfortable, warm and fuzzy feeling, experienced investors get into that comfort zone much quicker. This does give experienced investors the upper hand when it comes to seizing a real estate investment opportunity. Yes, experience is key to acting swiftly with confidence, but novice investors still have three other things that they can rely upon. Those three other things are knowledge base of property values in that area, knowledge base of rates of return, and common sense. While nothing compares to experience, these three attributes are the next best things to call upon. Real estate investors should know their real estate market, both novice and experienced. Knowing your market means that you are aware of sales prices of properties in a specific area. In other words, someone who knows his/her market will know of actual sale prices of houses, residential multi-unit, and small commercial properties. He/she would also be aware of how much to discount those properties with disrepair. This almost puts the novice investor on equal footing with the experienced investor. It doesn’t really matter if the knowledge of property values is from research or based upon experience. Secondly, a basic knowledge of cash flow and rates of return calculations are paramount with multi-unit properties. Multi-units are, indeed, almost always valued on income calculations. Hence, if you can calculate current figures and make projections for the future, then this can substitute for experience as well and give you confidence from book learning. Thirdly, common sense in the best source available when substituting confidence to substitute experience. I once competed over a 4 bedroom house for $14,000 with hundreds of people. Not only that, I was the last one to arrive. While everyone else analyzed, evaluated, and pondered that huge step of buying a house in disrepair in a marginal neighborhood, I snatched the deal away from everyone. If someone pulls up in a new Cadillac and offers it to you for $1,000, you might want to act fast and do it. He bought it last week for $65,000 and there’s only 2,000 miles on it. Are you going to stand there for two hours and ask, “What’s wrong with it?” Can you just buy it and get out of there before he changes his mind? Last week I heard of a guy buying a Rolex at a garage sale for $10. His wife sold it in the middle of her messy divorce. Likewise, if someone wants to sell a 4 bedroom house for $14,000, don’t waste time trying to negotiate the price down. Put the house in contract for $14,000 and run! Finding a real estate investment opportunity is only good if you act upon it, and quickly. Use whatever resources you have at your disposal, and don’t forget your common sense!
Geeking The Night Away
Mar 10, 2009 Now That's Funny
Awhile back I evicted a tenant who I’ve been trying to get rid of for 18 months! The problem was that she would pay one month, not pay the next month, and pay two month’s rent the following month. My problem was that I wanted my rent on time. Her problem was the same every month: I wanted my rent on time. I wrote about her last month in a STREETWISE LANDLORDING® article. She was the one who constantly gave evolving excuses, one leading into another, until she finally paid rent. As the story last month left off, I was going to call the bailiff to arrange a set-out time. After calling the bailiff I found that she had also called. She told him that she mailed me a check and wanted extra time to allow my receiving it. I told him that she had told me that she mailed $800 in cash to my post office box. I added that she didn’t even have a checking account and that I always collected rent in person and in cash. We had a good laugh and set the appointment. When I dropped by to inform her of her imminent demise and there wasn’t a box in the house! (Boxes are needed for moving.) She insisted that she mailed the cash and wasn’t moving. She asked, “What happens if you set me out and then receive the money?” I assured her that she had a legitimate concern: She would indeed be out of an apartment and also out $800. I insisted that she get some boxes before it was too late. I showed up with seven laborers and the bailiff, providing coffee and donuts for my comedic workers. (They always enjoy a good set-out.) Her grown son was asleep and sprawled out in the bedroom. She and her son gathered their wits, walked out the front door, and disappeared onto the boulevard. She had clearly moved most of her things, but many boxed items, console television, and furniture remained. In her absence, we quickly set everything out front and changed the locks. Other tenants complained about how she was heavy into drug abuse. “She’s geekin!” they would say. Geeking is a term used to describe someone using crack. She did give the appearance of a drug user; crumpled potato chip bags and empty 40 ounce beer bottles in the front yard were the tip-off. While standing out front, I explained to the bailiff that I filed an eviction on this tenant every two months for the last year and a half, sometimes even obtaining the judgment, only to have her pay before the set-out. We contemplated how her credit report must look about now: tens of evictions filed with some judgments as well, all from the same company, mine. I further realized that I should have brought my camera; it was truly a Kodak moment. Now that’s funny!
Real Estate Investment Education
Mar 6, 2009 Investment Strategy
Back in 1979 when I got started in real estate there weren’t any guru’s who gave instructions on how to get rich in real estate. Yes, there were books on real estate, but the how-to books and tapes were not being sold at that early time. Do I mean to say that there weren’t any real estate infomercials back then? That’s right. So how did potential real estate investors learn about real estate investing back then? Believe it or not, everyone learned the way I did, through trial and error. You might assume that learning about investing through trial and error would be painful and sometimes expensive. As you know, mistakes in real estate investing generally means someone lost money. You would be right in those assumptions. It was painful, and sometimes expensive. With the advent of real estate infomercials, successful real estate investors could continue investing in real estate, while writing of their real estate exploits and successes. They could realize income, fame, become authors, and build their egos in their spare time. And, of course, that’s what I’ve done. Today, rather than taking off your clothes and jumping in, there’s a better way to get into real estate. You can read about different real estate investment programs and compare and contrast them. Further, you can analyze and evaluate your current, and future, situations and actually tailor a real estate investment program for yourself. Some novice real estate investors have millions of dollars in assets, while others have virtually nothing. Some are retired, while others may work 40-80 hours per weeks. Some have large families while others are single or divorced. As for the future, some students have told me that they have just been laid off, or will be soon. Others have dead end jobs with very little pay and benefits. Some have even told me that they love their jobs, they just need some extra money. You need to analyze and evaluate your current and future situations to accommodate your needs and desires with respect to the examples listed above. To further exacerbate your analysis, you also need to take into consideration your personality. For example, a low tolerance of other people should steer you away from landlording. Landlording has much interaction with tenants. If you have a low tolerance level when interacting with others, stay away from landlording! Know your limitations and stay within the confines of those limitations. My father only had an eighth grade education, but he learned a trade as a motion picture operator. He also taught himself how to repair radios and television sets. Furthermore, I taught myself how to invest in real estate. Is it easy to see that it would have been easier on both of us to have attended step by step training on how to do these things? Sure it would have. However, my father was poor, on the one hand, and the program wasn’t available to me, on the other hand. It is obvious that your best bet is to acquire real estate strategies and techniques from a professional and acquire your real estate education that way. It will certainly be easier, less painful, and cheaper in the long run.
