Today’s REI Classroom Lesson
Joe Lieber explains important rules to have as a landlord that you should be firm on so that your profit is maximized and you aren’t taken advantage on.
REI Classroom Summary
By having policies in place for showings, payments, evictions, and more can help you keep a structured business that is bringing in high returns.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. Now, let’s meet today’s expert host.
Joe: Hi, I’m Joe Lieber and I’m your host of REI Classrom for today. Today we’re going to talk about landlording for maximum profits, stay tuned.
Mike: This REI Classroom real estate lesson is sponsored by VirtualStaffNow.com.
Joe: Okay, so how do we landlord for the maximum profit? Well, you have to follow your rules. I have rules that I never ever ever break. So here they are. Get ready.
Number one, never wait past 15 minutes to show your property. If the appointment is at 2:00 and they’re not there by 2:15, leave. I have broken the rule too many times and every dang time I do that’s a sure good indication of how they’re going to pay their rent. Fifteen minutes late. Never stay past 15 minutes that’s number one.
Number two, receiving rent. You don’t know how many times I’ve sat at the office an extra hour waiting for someone to show up or you all know the line “the check is in the mail.” No. So this is a great tip, are you ready for maximum profits here? U.S. Bank, is the only bank that I’m aware of that will show the deposit ticket at the time of deposit. So you can go into any U.S. Bank in the country, write your name on the deposit ticket and your address, make a counter deposit and it will show online exactly at the time of deposit. Perfect, right?
So if someone tells me they’re going to pay their rent today, I can look online to see if they’re going to pay it, by the time the bank’s closed. If they didn’t then we’ve got a problem. So it really takes a lot of the guess work out of “Oh, I hope they mailed it.” or “[inaudible 00:02:04] office an extra hour” or any of that. So that is a great rule too. So make sure that you do that if you have a rental property.
And then, evictions, three-day notices. I don’t care what happens, I have rent due on the first, I have a five-day grace period, I start calling my tenants on the 10th saying “What’s going on?” and by the 15th I don’t care what the excuse is you’re getting a three-day notice. The three-day notice is the intent that you’re going to file eviction if they don’t move or pay in three days.
And then I always follow up on the 20th and file eviction. I let them know they can always be reinstated if they pay up. Pay the filing fees, pay the late fees, and I’ll reinstate you. I always say I never want to put anybody out but I have to run my company like a business. Because if you don’t, what’s going to happen is that they tell you they’re going to pay on the 20th, and they don’t, you’re really [inaudible 00:02:59] file your evictions.
Next, water bills. You don’t know how many times I’ve been burned on water bills. Now I know every state does it a little differently, but here in Cleveland the tenant can put the electric, and they can put the gas in their own name and they will not come after the landlord. If the tenant doesn’t pay, the gas gets turned off and they chase the tenant.
The water bill does not work like that though. The water bill follows the owner no matter what, even if you put it in their name. But, I go ahead and put it in their name anyway. Even though it’s going to follow me, it makes them feel, by the psychology, they’re responsible and there’s no way for me to get around it as a landlord. I’m going to get stuck with that bill if they don’t pay. But they’re more inclined to pay a bill with their name on it, than with my name on it. So always put the water bill in the tenants name, not your own.
Okay, last thing. Never let a tenant move in with a partial rent and a promise. I’ve been burned too many times, especially in the rent-to-own model that I do, I might be at $2000 down and 800 bucks a month and they’ll say “We’ll give you a grand now and first month’s rent and we’ll give you the other grand when we get our tax return,” or “in two months” or whatever the case is. It never comes through.
Unless they have the full down payment and first month’s rent I’m not giving those keys out. I’ll hold a property up to 30 days as long as they give me at least half of the down payment that is non-refundable. So if they did burn me, at least [inaudible 00:04:32] a month’s rent in a vacant property. So never break that rule though, if you do that you will definitely have a higher ROI and you will be maximizing your profit as a landlord.
Thanks for tuning in.
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