Category Archives: Property Management

I’m working with a short sale situation on a half duplex for sale in Olathe.  It should be ready to announce within the next day or two.  It’s only about 9 or 10 houses down the street from a rental property of my own here in Olathe and as I drove by mine I realized that I haven’t been a good neighbor.

See, the unit of which I speak has excellent tenants.  They always pay their rent on time.  Plant flowers next to the house.  Never a problem.  So I don’t go by that often.  But as I drove by this day I saw that dandelions from miles around had come to my yard to grow and prosper. 

This particular rental property is only a half duplex.  My neighbor’s yard is beautiful.  Not a weed in the whole yard.   So I went down to the local K-Mart, bought some Weed & Feed and addressed the problem immediately. 

You may find this funny.  But I like my neighbors liking my properties.  The better I keep up my rentals the more cooperative the neighbors are about letting me know about things that I should know about.  And besides, a sharp looking home usually attracts better tenants.  If experience has taught me one thing it is that your tenants will treat your rental homes like you do.  Take care of your rental properties and so will they.  Let them go and so will they. 

Talk about your law of reciproicity. 

Phone rings: “Chris.  I have some tenants that want to move in this weekend.  How do you handle the rent?”

Ah, the mid-month move-in.  They really are not that hard to deal with.  In fact, they are really no different than any other tenant.   Except;

• Regardless of what day they move in I always collect the security deposit and a full month’s rent when I give them the keys.
• On the first of the following month, I then charge them the pro-rated fee for their previous “short” month.

Quick example:  Rent is $1,000 a month with a $1,000 security deposit requirement.  They move in on March 20, 2008. 

On move in I collect $2,000.
On April 1 I collect $322.50  ( $1,000/31 days = $32.25 per day x’s 10 days)

And obviously on May 1 I collect $1,000.

This way I know that they have the money to move in and that I am getting much of my rent money up front.  To me, it’s non-negotiable.  I don’t want someone moving in and then not pay rent right away and I’m only holding about $700 less than I could be. 

Just my $0.02 on the mid-month move-in for your rental property!

“Landlording and long-term investing go hand-in hand. Being a landlord isn’t for everyone, but if you have the right personality and decision making skills then it’s a snap.”

Christopher Smith, Equity Scout

I love the sentences above.  It pretty much sums it up.  Being a landlord is not for everyone.  In fact, being the owner and hiring a property manager isn’t for everyone, either.   But that’s okay.  We’re talking to those that see the purpose and vision of using real estate to build wealth and a Retirement Worth Having.

Landlording takes patience.  Being a rental property owner also takes the ability to think quickly on one’s feet. It takes the innate ability to know when you are being lied to.  And to know when someone needs a chance.  You have to be both cold, and human. 

One of the best books I’ve ever read regarding the subject is John Schaub’s Building Wealth One House At A Time.  Chapter 13 tells you pretty much all you need to know without actually having gained the personal experience yourself.  And yet when I recommend it to people they say “Cool” and then never buy it or read it.  Why?

I digress.  The managing rental property aspect of real estate investing is what scares away most would-be real estate investors.  They are afraid of making a mistake with their tenants.  Or afraid the tenants will burn them.  Not pay them.  Tear their property up.  They can make you list after list of things that can go wrong.  And no doubt, they can.

But for those willing to learn, willing to believe in their current and/or future people skills.  Willing to keep reserves “just in case” and willing to act on their convictions, real estate investing can lead to wealth untold compared to other vehicles.  It’ll kick your 401K’s ass right down the road. 

If you are good at second-guessing yourself you may have a problem.  Sure, the grass will always be greener somewhere else.  Browner, too.  Pretty soon you just have to decide to make wherever you are the best place to be. 

One of the things I think helps to let your tenants know that you care about your rental property is when you occasionally assist with routine maintenance.  Now, this could be you or your property manager.  Either way, you want to convey the message that it’s important to take care of your rental property. 

Here in Kansas City our rental properties have probably had the furnaces running almost non-stop for the better part of two months, save a temperate day or two here and there.  This will not only put a little bit of a financial hurt on your tenants, it’s been heck on your furnaces. 

So, what we can do is kill two birds with one stone.  Maybe even three!  I suggest that you, or your property manager, take over to each of your property units a set of new furnace filters and replace them.  Why would this be good?

1. As I said, it shows you care about the maintenance of your rental property.  And a dirty furnace filter is tough on the furnace.  Even if the tenant does periodically change it, it’s like oil.  You can’t change too often.
2. It will show the tenant you are thinking about them.  It saves them only a few bucks and a couple minutes of time.  But it is the thought that counts, right? 
3. It allows you, or your property manager, to get inside and casually check out the condition of your rental home.  Dogs that aren’t supposed to be there?  Massive carpet stains?  Problems of any kind?

Many a time I speak with income property owners who tell me the horror stories of what their tenants did to their houses.  Almost to a person they also admit that neither they nor their property manager had visited the home while the tenants were under lease.  In my mind, that is a mistake.

Do you want to spend time with your family and at your profession while your money works for you?  Or do you want to fix toilets, paint walls and chase rent? 

Client Profile:  Working professional.  High credit score.  Cash to invest greater than $15,000.  Other retirement vehicles in play including home equity, 401K and/or IRA, stocks, mutual funds and/or bonds. 

I’m about to say something here that has gotten me more negative phone calls, demeaning emails and upset readers than any other subject. 

Buy property that will attract quality tenants. 

Where I get into trouble is when I start describing what a “quality” tenant is. First, let’s get one thing straight.  I do not, in any way, shape or form advocate violation of any federal statue concerning fair housing.  Regardless of race, religion, marital status or whatever I’m looking for a tenant that will take pride in their home. 

To me a quality tenant in the Kansas City area will fit into many if not most of the following desirable traits:

• Rent to income not exceeding 33%.
• Has enough cash upfront to pay first month’s rent and full month’s rent security deposit.
• Solid past concerning rental housing.  Check references where possible.
• No sexual predator or violence charges in the past.
• No drugs. Ever.
• No dangerous animals.

A quality rental property to me will usually fit into most of these traits:

• Rent range between $750 and $1,750/mo.
• Either a 1-5 year old property or an older property with major expenses already accounted for.  (ie., roof, water heater, furnace, air, structure)
• Neighborhood with 5% vacancy rates or below.
• Within 10 minutes of highway.
• Desirable school district.
• Close to job centers and shopping.
• Not on major thoroughfare.
• Bedrooms and baths that are the norm for said neighborhood.

Both of those lists are off the top of my head and you can add to them if you like.  (Just leaving a comment would be welcome.) 

People will jump on me immediately and say “Chris!  What about people who cannot afford $750/mo rent?  Do you not like working class people?”

The reason I generally do not like to recommend properties with lower rents is that they seem to find themselves in neighborhoods where future growth is limited (at best) and where tenants tend to be more transient.  And like it or not there is a direct correlation to the amount of troubles you will have and the amount of rent you charge. 

Don’t believe me? Take a chance.  Better yet, ask around. 

Now there are places and times and neighborhoods where I make allowances.  Usually on a case by case basis.  But if you fit the client profile above you are probably more concerned about finishing that project up at work so that you can get home to your son’s basketball game than you are hoping to get by your rental property so that you might catch the tenant home on payday.