By Gregg Cohen
I came across a great blog post by Shae Bynes of the Good Faith Investing Blog on property management and I wanted to pass it along. Here goes: (I'll give you my two cents at the bottom.)
5 Great Ways To Minimize Your Tenant Woes
We finally have a tenant for the property we closed on in mid-November. During the holidays it can be tough to find tenants because typically people aren’t focused on moving between Thanksgiving and New Year, but now we’ll have someone moving in on February 1 (reason #1,152 for why you should always have cash reserves before having rental properties). Our favorite way to get tenants is putting a sign right there in the front yard and that’s how we secured this one.
We’ve had some pretty good experiences with our tenants so far…well, except for our very first ones who only paid their rent once before deciding it was a better use of their money to rent large screen televisions and beautiful furniture from Rent-A-Center. LOL!
Anyways, I thought I’d share some ideas today on how you can minimize your tenant woes. Here goes:
#1: Always, and I mean always let your tenant know that you’re not messing around and mean business.
If your tenant misses a payment, you don’t have to have a conversation about it…let the 3-day notice be the conversation starter. Make sure your tenants know that you’re not going to be lenient when it comes to getting your money. They’ll respect you for it. We made a mistake with our very first tenants and gave them way too many chances before starting the eviction process.
#2: Even if you’re your own property manager, connect the tenants directly to your trusty handyman when repair issues arise.
My husband is the property manager for our properties, but he doesn’t have to do much because we have one awesome handyman who handles the phone calls from our tenants directly. He has an understanding (and the go-ahead) to just handle certain issues that will cost us $50 or less and bill us for it. For larger issues, he calls us first before moving forward. This has worked out great for us. Of course you need to have a handyman with integrity, but it’s pretty low risk. If you start to see that there are too many charges, you can question the handyman to see if it’s really legit and if not, make adjustments or find a new handyman.
#3: Have lease-to-own tenants and give them responsibility for anything that needs repair in the house under $200
We have both traditional tenants as well as lease-to-own tenants (or tenant buyers), and one of the coolest things about having tenant buyers is that they treat the home as their own and take no issue with the fact that they have responsibility for minor issues in “their” house. The number of calls you get from a tenant-buyer should be quite lower than those from your standard tenant.
#4: Provide options for payments
Some people are better with check writing and mailing….others are more inclined to go over to a bank and just deposit cash in your account. Some may even be tech savvy and willing (and able) to pay online. There are even services like PayYourRent.com or ClearNow.com you can use to set up monthly auto-drafts! You certainly don’t have to give 4 or 5 payment options to your tenants, but have a conversation with them and feel it out. If you can get your preferred way of getting payments and it’s something that appeals to them, that’s perfect.
(Disclaimer: I haven’t personally used PayYourRent.com or ClearNow.com so it’s not an endorsement however I’ve heard positive things about both services which is why I’m happy to mention them)
#5: Consider giving a discount to your tenant in return for early payments or handling something you’d rather not take care of
For example, we spend $50/month on lawn care for each of our properties. That’s one thing you can hand over as a responsibility of the tenant (and provide a $25-50 discount for it). Or you can include in your lease that early payments made within a week prior to the 1st of the month will be discounted by $50. Something like that…you can be creative. Whatever makes sense to you and will provide incentive to your tenant.
Hopefully you found some good ideas in here that you haven’t considered. Feel free to add your ideas to this list as well!
Here's my take:
For the first year we invested in rental properties, we managed them ourselves and learned many of these lessons the hard way. (Now we have a property management company – Progress Property Management- in our office as well…and life is much better!)
The first rule is the most important. As landlords, we must treat the management of our rental properties as a business…not charity. You can use the money you make from rentals to give to charity if you like…but don’t confuse the two!
Gregg Cohen is an owner of Progress Home Buyers and JWB Real Estate Capital, one of the country's largest home buying and residential redevelopment companies. In the past 5 years, he and his team have bought and sold close to 250 deals and is on pace to complete 120 deals in 2011. He speaks nationally to crowds of thousands of real estate investors with his mentors, Than Merrill & Paul Esajian of A&E "Flip This House," has been featured multiple times in the Florida Times-Union and the Jacksonville Business Journal, and he was also a member of the Board of Directors for Jaxreia from 2009 – 2010. To receive 30 days of free real estate education from Gregg and his mentors, please visit www.provenprofits.com or call our office at (904) 677-6777.
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