Thursday, October 23, 2008

Creative Real Estate Investing: Get Rid of Bad Tenants; Find and Keep the Good Ones

When you're a landlord, most of your time is spent dealing with maintenance and tenant issues. If you're lucky (and you've done your homework), your tenants don't cause too many problems - and the problems that do crop up are minor.

However, despite your best intentions, the person who looked like a great tenant on paper can become the tenant from hell. Bad tenants cause real headaches, for a number of reasons:

  • Evicting and replacing them is aggravating, costly, and time consuming
  • Their disruptive and noisy behaviors can drive out your good tenants
  • They can cost you big money if they damage your property

Before I give you my hard-earned advice about how to find and keep good tenants, let me first describe the four types of bad tenants.

Deadbeats - Simple - these are the people who don't pay their rent.

Demanders - These types of tenants drive you crazy with their incessant demands. On the other hand, demanders are usually the best bad tenants to have because they have high expectations for themselves as well and are usually well-behaved and neat.

Disrupters - The worst kind of tenant: These people drive everyone else in the building crazy by playing loud music, arguing, or exhibiting other disruptive behaviors.

Destroyers - Not to be confused with a renter who accidentally breaks something, destroyers are the type that repair their motorcycles on your new carpeting or get drunk and break your windows.

So how do you weed out the deadbeats and destroyers? In addition, how do you work with the demanders and disrupters so they don't drive you and everyone else insane? What follows are my six tips for finding and keeping good tenants:

  1. Check all references

As with job references, a prospective tenant's previous landlord won't give honest feedback because they're afraid of being sued. When conducting your reference checks, instead of asking questions regarding a prospective tenant's character (e.g.: "Was this person a good tenant?"), ask questions based on facts that can be documented.

You can ask, for example, if the tenant paid his rent on time each and every month and whether he had any late payments. You can also ask for any incidents of property damage or disruptive behaviors.

It also pays to verify job and income history to ensure your potential tenant can pay the rent each month.

While still useful, a credit check is less important. Due to divorce or medical issues, people find themselves having to sell the family home and become renters. Such events can kill someone's credit in the short-term - which is why it's much more important to verify job and income history. A person who is working and making good money will often be grateful for the opportunity to help put his life back together by being a good renter.

  1. Set clear expectations from the get-go

Many tenant problems can be traced back to the landlord's failure to set clear rules and consistently stick to them. In addition to stating when the rent is due, the lease should also state any rules about modifying the property, acceptable noise levels, any building-wide rules (e.g. no on-property vehicle repairs, no pets, etc.), and contacting the landlord.

During the lease signing, you should go over these rules and expectations in detail to be sure your tenant understands them.

  1. Learn how to "read" potential tenants

As with anything, you cannot pre-judge people based on appearance. One of my best tenants had long hair, biker boots, and tattoos when I was landlordind. One of my worst tenants was a gentleman in immaculately pressed slacks, tassel loafers, and a designer polo shirt. When meeting potential tenants, watch for the following:

    • Over-eagerness - Your landlord "antennae" should be humming if someone wants the place right away - like now. This could mean that they need to get out of their current situation fast.
    • Lateness - If a potential renter shows up to the appointment late, doesn't return calls, or seems unreliable, pay attention. Usually this type of person will be unreliable in terms of paying the rent, too.
    • General weirdness - Always pay attention if someone makes the hairs on the back of your neck stand up or if he or she just seems "off" in any way. Often times we dismiss our suspicions, only to find out later that we were right about our instincts.
  1. Turn "bad" tenants into good tenants

As I said, demanders are the best type of bad tenant to have - they demand things because they have such high expectations, which means they want to keep a property looking nice and well-maintained.

To keep demanding tenants at bay, especially those who expect you to rush out at midnight to fix a broken light switch, give all your tenants a cell phone number they can call to report any problems, rather than your home phone or business number. Let them know what hours they can expect to reach you, then be sure to check for messages regularly.

Give disrupters the benefit of the doubt at first. People used to living in detached homes forget how noise travels through the walls of apartment buildings, so they may not be aware that their loud music or late night guitar playing is bothering others. Often, just asking them to turn down the volume is enough, but if the problem persists, they've got to go.

  1. Enlist the help of tenants you can trust

As a landlord, you want to know immediately if there's a real emergency with your building - for example, if it's on fire or a water main is busted. However, you don't want to give out your home or business numbers on the lease - because then you have those pesky demanders calling you night and day.

In this case, you'll want to find the most reliable and trustworthy tenant you have and give him or her your personal phone numbers - with instructions they're to be used for emergency purposes only.

  1. Be a great landlord

The best way to minimize bad tenant problems is to be a good landlord to begin with. This means staying on top of things and keeping your promises. Be proactive about maintaining your property, promptly fix things when they're broken, and ensure contractors and repair people arrive when promised.

In short, treat your tenants they way you would want to be treated. You wouldn't want to sleep in a bedroom with a broken storm window in the middle of winter - and neither do your tenants.

Finding and keeping great tenants takes some time and due diligence, but your efforts will pay off. State your expectations and rules up front, conduct full reference and job/income checks, and maintain your rental properties as if you lived in them. Your tenants will thank you.

Monday, October 20, 2008

Negotiating For Profit

James Gage here with Gage Consulting Group hoping that this blog entry finds you and yours in good health.

I have received a lot of phone calls over the past 2 weeks asking me how I could have possibly foreseen the financial down turn that we are currently experiencing. Rather then getting into a 50 page e-mail, I will be commenting on this very topic in my up coming newsletter. However, I would like to briefly comment on the turmoil in our world
right now and how I have learned to profit from it!

Today's a great day. Frankly, I was standing out side my house watching the leaves drop from the trees, while remembering my recent annual Snook fishing tip to Northeast Fla - a couple of weeks ago. I remember standing in the surf one morning with the bathtub warm Atlantic Ocean water lapping around my thighs as I was casting my fishing lure into the water.
I didn't care if I caught any fish or not. (But I caught two red fish - and released them.) Just standing there, feeling the ocean breeze and the sunrise on my face, I was very happy.

One reason was that I wasn't worried about anything, because as I was fishing I was making money! Other people were doing things for me that I used to do myself. For example, while I was standing in the ocean, my home back in the Northeast was being stained to give it a fresh look, my bird dogs were looking for deals for me, my option trades in the stock market were continuing to increase in value, and a lease option I had put together up the street from the beach was ready to close.

My only goal in life now is simple: Have no worries.

I can do that in a couple of ways:

a) Become a master negotiator so whether the market is up, down or going side ways I can profit in real estate or any business venture I decide to venture into (that's my chosen route)...or...

b) Ignore my troubles and let 'em slap me up side the head when I'm not looking. (Been there, done that...)

The thing I've learned in my 45 years - finally - is that faith in your negotiating skills is the key to happiness and financial security.
That's tough today when you look at the stock market, the banks collapsing, the government pumping $700 billion (more like 3-5 trillion when all is said and done) into the economy to "save" us.

I was a stock broker for a few years. And here's a little piece of advice: ignore the news media. Period ! They are the last people to state the obvious.

They love it when you're scared because you tune in more and they make more money. And the more you tune in, the more scared you'll become. Don't buy into that. Just remember my wife's mantra:


So, what does my wife mean by the season? I'm not getting into this very deep now. I'll save that for a future newsletter. But just suffice to say, that it means being aware of what environment or cycle the business and or real estate market is in, so you can fine tune your negotiating skills for maximum profit and success.

Unfortunately, you can't do that if you're scared, or have no confidence in your negotiating skills.

That being said, I have compiled my 22 years of negotiating skills as a Federal Arbitrator and real estate investor, and taken the very tips and strategies that I have used to be successful in business and real estate investing, and placed it into a compact, no non-sense, straight to the point, easy to follow “Negotiating For Profit System”.

It has been said, that you can have the best product, the most capable service, the best real estate strategy or technique, but without a negotiating system and the determination to make it work you won't be able to give money away in the middle of Las Vegas. Negotiating is a “million dollar skill” that is necessary for anyone who wants to attract financial success in their life. It doesn't matter what your product or services are or who your potential clients are, the only thing you need is to have a negotiating system where you work smart and go to the bank.

Before I let you go to read over my exactly what this timely system contains, many individuals have called me and ask if I would put together a step-by- step “ Negotiating System" well your wish is my command.

Normally priced at less then a few trips to Starbucks at $97.00, it is a great value if I do say so myself. But for the next 4 days (Oct 19 - Oct 22 ) I am extending to you, my faithful newsletter subscribers the astonishing price of only $33.00! That's a whooping 66% off my normal website store price!

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After Oct 23 it will return to the normal price of $97.00.

You maybe asking, why am I doing this? Simple, I am committed to getting this information into as many investors hands as possible, thereby you the best deals through negotiating in these challenging times.

So please visit the link provided for more information on this jam packed “Negotiating For Profit System” :

Also, as a thank you bonus I am including: A Newly Released CD entitled “ Unlimited Cash Flow” !

Don't forget to place promo Code 555 on your order page

To your negotiating success,

James Gage

Here is what this recession proofing package will do for you :

  • Never make a cold call again.
  • Qualify any prospect within 5 minutes.
  • Learn to set an agenda up front.
  • Never make a formal presentation until you have qualified and closed the prospect upfront.
  • Why you should forget about the word Yes and always go for the No's.
  • Never ask for the deal, make the prospect give it to you.
  • How to avoid buyer’s remorse during the negotiations!
  • Learn six figure income thinking by working smart and getting paid.
  • Fear of rejection will no longer be an issue.
  • Learn what works and what doesn’t work in negotiating and why.

and much, much more…

With this Negotiating For Profit package, which is jam packed full of one of a kind negotiating information, you will never have to worry about ending up on the short end of the stick or leaving to much money on the table ever again.

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So don’t wait another minute, click on the link below and start Negotiating For Profit.

Again, here's the places you should visit now:

Have a great rest of the weekend.

Peace & Prosperity to you and yours!

Wednesday, October 15, 2008

Real Estate Investing: Tips on Negotiating Leases

Ask for a copy of the lease before the lease signing, so you have time to review it. If you're reading this tip right before the lease signing and have yet to see the lease, don't worry. Just read over the lease carefully at the signing. If you feel uncomfortable with the lease or want someone to review it, ask to reschedule the lease signing appointment – have all legal contracts and documents reviewed by an attorney.

  1. Negotiate only with the landlord or someone who has the authority to make decisions. The broker cannot make any decisions, unless they have “Power of Attorney”, or are the “Trustee” of the Land or Realty Trust that the property may be in.
  2. Choose one person to be the negotiator, if you're signing the lease with your roommate or spouse. You don't want multiple people chiming in with points that contradict each other.
  3. Know basic information about the landlord and try to understand the landlord's position. Is your apartment owned by real estate management company with thousands of units or a family renting out a room or their second home? Will a $25 reduction in rent be a big deal to them? Knowing the landlord's concerns will help you tailor your arguments in the lease negotiation.
  4. The best negotiation time is during the signing of the lease when the landlord has approved you for the apartment and is ready to close the deal. You only have negotiation power when you have something the landlord wants.
  5. Ask questions before you begin the lease negotiation. It's good to demonstrate your reliability as a good tenant. This is the one thing you can offer the landlord that will make him or her more open to negotiation. Asking questions is one way to show the landlord that you want to follow the rules.
  6. Begin the lease negotiation after you've read the lease and asked all your questions. First identify what you want to change and why. Maybe you want a lower rent because it's higher than all the other apartments you've looked at and you see no reason for the higher rent. Or the ceiling is leaking and you want a guarantee that it will be fixed within a week, because you've had bad experiences with neglectful landlords.
  7. If the landlord resists putting any changes in writing or seems offended or hurt by your negotiation, be ready to reassure him or her that you trust him, but you are a person who likes to play it safe.
  8. If the landlord argues with you or puts you on the defensive, acknowledge the landlord's points by explaining why these concerns don't apply to you and remind him or her of your qualifications (good credit, timely rent payments, no disturbances, no damage).
  9. Always ask twice, followed by the reason. Giving more than one argument during the lease negotiation lends further support to your request.
  10. Write down all agreements on a piece of paper that is signed by all the tenants and the landlord. If it's a change to the lease, correct it on the actual lease, or write a lease rider that specifies it is overriding the lease. If any of the agreements are promised actions--such as repairs--write down a deadline (the water pressure must be fixed by this date).
  11. Know what your expectations are beforehand. Will you sign the lease if the landlord refuses? How flexible will you be if the landlord agrees to part of your suggestions?
  12. Be polite. Don't get angry or hostile, even if the landlord does. Take the higher ground and the landlord may respect your professionalism and believe you to be a good tenant.
  13. Do not make ultimatums--change this or I won't sign the lease--unless, of course, you mean it. If you don't mean it, this will only backfire and prove to the landlord that you're being manipulative, and therefore untrustworthy.
  14. Only negotiate items that are most important to you. Decide which issues are too small to argue over. The landlord is unlikely to concede to every issue, so pick your battles.

Sunday, October 12, 2008

Creative Real Estate Investing: Advice for those who mortgages have increased.

( This post is for home owners who are facing increased mortgage payments due to the adjustment of their interest rates)

What a mortgage company can do to your loan depends on who the investor is and the type of loan a borrower has. Most likely the reason why the current loan went up from the initial payment you have been paying was because the new payment now is fully amortized(Principal+Interest+ or Escrow). What I also know is that to PRE-QUILIFY for any type of workout options with the bank you will have to show your hardship has been resolved or that you're able to afford your current payment. So if you have an arm at a 5% intro interest rate and you adjust to a 6.5 and that caused you to be in a hardship then yes most likely they will help you out by giving you a int rate freeze at your intro rate. But if you show that you cannot make your payment and are negative(short) each month on money then they will talk to you about liquidating the property before you become delinquent and fall in foreclosure.

Yes I know its tough but they can't help everybody! I suggest if you know you cannot afford the payment and will become delinquent, think about renting out your property and move into a family member's home or rent an apartment till you can refi out of the loan you have, or sell the property when it has equity so you can buy another one. I know this is not what you want to hear, but it's the best advice I can give if you want to preserve your credit profile to some extent.

Wednesday, October 8, 2008

Creative Real Estate Investing: My New Investment Strategy

Hello All:

With all the bad news in the market place, and the pain that real estate investors are experiencing that do not use our leveraged investing strategies, here is something to laugh at...

My New Investment Strategy-Take up drinking

If you had purchased $1,000 of Lehman Bros. stock one year ago, you would
have $49 left.
With Wachovia, you would have $16.50 left.
With AIG, you would have less than $5 left.

But if you had purchased $1,000 worth of beer one year ago, drank all of the
beer, then turned in the cans for the aluminum recycling REFUND, you would
have had $214.

Based on the above, the best current investment advice is to drink heavily
and recycle.

It's called the 401-Keg plan.

Tuesday, October 7, 2008

Real Estate Investing: Oct Tip of The Month

Use Lease Options to Control Properties, Or Sit On The Side Lines!

The last few weeks has everyone wondering whether real estate investing is DEAD! REIA club attendance is down, real estate agents are waiting tables or working at Wal-Mart, mortgage companies are closing faster then the drop in value of the US dollar and mortgages are almost non existing ( being reserved for those with 20% down and FICO scores of 720 or higher). So what is the simple answer? Here is my take as an investor with 22 plus years of experience…

Yes, times are uncertain and who knows what tomorrow will bring, however, I believe that there is a tremendous opportunity available to the real estate investor to bring in a steady income with little or no risk! What is it? Lease Options!

I know, most of you, my faithful readers have heard me over the years advocating lease options as a way to be a leveraged investor in an up, down or side ways market. Frankly, when the housing market was booming most people didn’t pay attention to lease options, but now that our great politicians on both sides of the coin have gotten us into this bailout mess, my phone has been ringing off the hook with people wanting to know how they can cash in with lease options – here’s why…

  • Control without ownership
  • If the deal doesn’t work out the way you thought it would, you can get out of the transaction without any financial harm – “the ultimate escape clause”!
  • You make non-refundable money at the beginning of the deal, middle of the deal, and at the end of the deal!
  • Make 10% - 15% above FMV because you are giving people terms.
  • Use lease options on single family homes, multi-families, land, mobile homes, foreclosures, probates, new construction and pre-construction…

These are just a few reasons that why you should take a serious look at lease options and the many benefits they provide to you as a real estate investor. Please visit my site for lease option articles, strategies and resources. Of course you could always sit on the side lines and do nothing.