Over the years I have gotten some excellent advise and tips on how to more efficiently (= better returns) rental units. This past year I have learned some things that have made me a better landlord.
Probably the most critical is finding the right tenants for the right unit. How many times have you heard, “I can afford XXX per month” when the combined household income is twice that amount GROSS. You will end up evicting them usually fairly quickly. I spend real time with applicants and insist on meeting the entire family including pets. I explain my rules, expectations, limits and exactly what to expect if rent isn’t paid by the fifth of the month (due on first, late on fifth). I give them the option of dropping off rent at the office, my home or my Bank. Seems fairly routine right? Well I am ashamed to say I never did this until april of last year when my turnover was 50% or higher and vacancy was 30% in the Park, 20% mobiles on land.
I’ve added two this year and one is already rented and one is being advertised now. My new motto is better empty than wrong tenants. I have fix up tips I can share, repair partnerships, etc but this was so much more important…I started treating rentals as a business and not with disdain. This was HUGE and put me in the black (or as Bernd would say Paradisio lol I read Dante too)
Rentlas are tough work…any useful tips people? I’m not trying to waste folks time or fill screen…I’m humbly asking for advise to make me a better landlord.
Greg
Greg, it would be irrational to consider you as
Bernd,
As of the last year, I too have been demanding my tenant buyers to have a combined gross income of 4X the total of lot rent plus my home payment.
Ignoring income taxes:
When someone makes $4000/mo. and their rent/house payment is $1400/mo. (35% of gross) they can still afford to buy groceries AND a new $220-350 water heater if it fails at the same time as the starter on their car with that net income of $650 for that week.
When someone makes $1600/mo. and their payments are $560/mo. (35%) groceries, water heaters and car starters cost the same as for the guy above. Guy #2 cannot afford to do the same repairs on his net $260 for the week.
Steve
Greg,
The ability of the landlord to attend to business this closely will, in my opinion, be reduced by the increasing number of units and maybe this is what you faced last year, I don’t know.
Perhaps this diminshing effect can remind us that a few PRoperly run units, as you are describing, outperform a larger number of underperforming units.
Fixed costs and increased maintenance increase as our ability (to adhere to the type of plan you describe) decline with the added units create a snowball effect.
Have you also noticed that when you have too many irons in the fire you take on the “heads in beds” mentality of just renting to someone so that income comes in, electric is transfered to someone else and you plow that income into another needy unit?
If nothing else this “great recession” has taught me that less can certainly mean more (however getting there isn’t as easy as it might sound).
For me the true magic is how to mulitiply one’s self effectively so that the same level of service is employed upon more units. Guys like Rick are the people I seek to learn this from. It may still not be for me but I still want to see how its done. I can adapt some bit of everything in my life.
Tony
This post is not something I can respond to on the fly. I am off to my daughter
Congratulations to your daughter and your family!
Tony
the very best to the newlyweds and your entire family.
Expensive and emotional…I’ll give each daughter of mine a paid for house instead LOL
Enjoy your time and there is no such thing as too many pics!
Greg