The Involuntary Landlord

What is an Involuntary Landlord?

©2007-2009 Chris Compton

 

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Over the last decade, the real estate market in the US has ridden a rollercoaster of epic proportions. Climbing to unprecedented heights, the market called out to speculators like the sirens called to Odysseus. Unfortunately, the speculators heeded the call and smashed on the rocks to the tune of trillions of dollars. Many of the speculators have sunk to the bottom. But what about the regular folks that just happened to be in the normal home purchasing window during the run up? Some have sunk as well. Some are treading water. Many need to move and can’t afford to sell their homes at a huge loss. It’s this last group we’re interested in here.

What is an Involuntary Landlord?

An involuntary landlord is a homeowner who has decided to rent their home out as a “lesser of evils” rather than as an investment opportunity. Generally these homeowners would like to sell their home. They need to move for work, or they want to be closer to family, or maybe they have a health care need or an opportunity for their children. Whatever the situation, they have a strong motivation to move. Unfortunately, unless they want to price their home as if it were in foreclosure, selling the house is not really an option. On top of that, an enormous number of homeowners owe more to their mortgage lender than the home is worth in today’s market.

After going through the typical cycle of disbelief, frustration, anger and dismay, they begin to consider their real world options. Stay put? Sell at a big loss (possibly requiring a short sale)? Send the keys to the bank (called a deed in lieu of foreclosure)? All distasteful choices.

“Maybe we could rent it…“ “What?! Rent our home to a stranger? Suppose they tear it apart? Suppose they don’t pay the rent? Who will pay the utilities? Who will pay the Homeowners Association? Who will pay the insurance? Suppose something breaks? What if there is a fire? Will there pets ruin the carpet?”

Slowly, but surely, an involuntary landlord is born.

Being a landlord is a lot like being a barber. It looks pretty simple, but there is a tremendous amount of knowledge and skill involved when it is done right. There are probably way more involuntary landlords out there operating without the necessary knowledge than there are untrained barbers cutting their own hair. I would rather see you try to cut your own hair. Mess up your hair and you can just shave your head and three weeks later, voila! Mess up as a landlord and the consequences can be dire.

Fortunately, you have come to the right place! Among these pages you will find articles on every aspect of the landlord experience. Learn how to prepare your home for rental, market it, set the rent correctly, select the right tenants, handle the security deposit, handle maintenance requests, perform evictions, renew the lease, raise the rent, lower the rent, handle the move out, and everything in between.

Welcome to the wonderful world of owning investment property! Even if you didn’t plan to be a landlord, this may be the first step you take towards an enormous fortune built on the backs of rental houses. Throughout history, rental houses have been a great source for building wealth. Enjoy your visit, make sure to sign up for the free newsletter and come back soon.  Until then, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

 

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6 Mistakes that cost Involuntary Landlords Thousands of Dollars

I talk to people every day that have rental property they wish they could sell. Unfortunately they have joined the realm of “involuntary landlords.” Managing rental property seems very simple, but like any business venture, there are lots of things to know and the learning curve is steeper than it looks. I have helped clean up a lot of messes for these fine people and here is a list of some common mistakes. If you are making these same mistakes, maybe you could use my help.

 

1. Not performing routine maintenance on their home – Owning a home is an expensive proposition. Maintaining a home properly can cost a lot of money. Failing to do so is guaranteed to cost a lot of money. A properly maintained heating and air conditioning system can last three times as long as a neglected one. Ignoring a small water leak can lead to a mold problem and you don't even want to investigate the cost of a big mold problem. A tiny crack in your basement wall can be a sign that the foundation walls are in danger – do you really want to ignore them? You may have a tenant, but you really need to look after your own home.

2. Not visiting the home – One of the first homes I ever managed was outside of Atlanta in Lawrenceville and was owned and self managed by a lady in Virginia. When I saw the house for the first time, she had not been there in over two years. To this day it is the shining example to me of what a bad tenant can do to a house. Broken windows, holes in drywall, fixtures ripped from their mountings, dirt and debris everywhere – if you can imagine it, this home had it. Just a semi-annual visit would have stopped this issue in its tracks and saved her thousands of dollars. If you live too far away to visit your tenants 2 or 3 times a year, you really need some help with your property.

3. Allowing rent to be paid late consistently – Late rent happens. If you have tenants long enough, you are going to accept some late rent. When it becomes a habit, however, you need to be proactive and find out why. Late rent is usually a symptom of some other malady and left unchecked can quickly turn into “unpaid” rent. Landlords and managers should have a system for dealing with late rent and follow the system. Enforce late fees, send written demands, make phone calls – whatever you have decided to do. Show the tenant that you take late rent very seriously and you will move to the top of the list of who to pay first. Let it slide and you will find yourself on the bottom.

4. Having a rigid “No Pets Allowed” policy – 80% of renters have or want a pet. Do you really want to market your home to only 1 of 5 potential tenants? Stop thinking of your home as “your home” and start thinking of it as an investment. Every day your home sits unoccupied costs you money. Even two weeks of vacancy time will cost you more than the average “bad” pet will cost you and most pets are pretty good. Accept pets with a pet deposit and see your home rent much faster.

5. Asking for an above market rent – This is incredibly common and very costly. Determining market rent is simple. Find out what homes like yours have rented for recently in your area. That's the market rent. It doesn't matter how much your mortgage is or how much you spent on repairs, paint and carpet. Your home isn't that much nicer than your neighbor's. I know you think it is, but you're wrong. Don't be confused by what people are asking for their homes, either. All that matters is what people have actually paid. If you can't find the information, don't guess. Call an expert. If you price your home too high it will sit empty and you can't afford that.

6. Leasing without a written agreement – This is just stupid. I know hundreds of people and about four are welcome to live in my property without a lease. I don't care who it is, put your agreement in writing. A standard lease is available in any office supply store or online for a few dollars. Not having a written lease can cause you thousands of dollars, not to mention the stress!

 

This list is far from complete. The landlord game really seems simple until it isn't. Don't get fooled. Read some books, get some advice, do your homework or just break down and hire a professional. It's very likely that if you own rental property your time is worth more than you would pay your property manager.

 

In Atlanta, call the Best Atlanta Property Management Company – Absolutely Affordable Property Management. Find us online at www.absolutelyaffordablepropertymanagement.com or call us at 770-682-7735. We keep more money in our client's pockets every day.

 

For tips and advice, visit www.InvoluntaryLandlord.com. We post vlogs every Thursday and Monday, so visit often.

 

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Return of the Involuntary Landlord

This title is somewhat of a misnomer, as it is I, the author, who is returning and I am a voluntary (professional as a matter of fact) landlord, but it is also the blog that is returning and the blog is actually called "The Involuntary Landlord", so there you go.

I am in the middle of a major transition. For nearly four years I have helped landlords by managing property in the Greater Atlanta Metro. I have performed under the umbrella of a RE/MAX franchise. Beginning Tuesday all of my property management business will be brokered by Absolutely Affordable Property Management Services, a Georgia Corporation licensed as a real estate brokerage with yours truly as the qualifying broker.

This is an exciting transition, and I am looking forward to it. From my clients' point of view, not much will change. They have always enjoyed hands on, close contact service, and had an open line of communication with me and my staff. We look forward to continuing that fine tradition and building on it.

Some of the changes we made are obvious ones. like our spiffy new logo.

 
Some of the changes are more internal and are items we will deal with as a company on a day to day basis.

One exciting change is our decision to reduce rates across the board. Our goal is to provide full service property management at a price that allows our landlord clients to succeed. We strive to keep money in the pockets of our clients through our simplified low pricing structure, our close ties with reliable and affordable maintenance companies and our dedication to finding good tenants fast and keeping them long term.

If you own property in the metro Atlanta area, keep an eye on our website and this blog for information and give us a call if you need professional assistance. The number is still the same - 770-682-7735.

If you need assistance with any sort of real estate need anywhere in the country, I personally would be delighted to introduce you to the right professional for your particular situation. Just shoot me an email and I will help you out.

See you next time...

 

Holiday Tasks for Landlords

The holiday season is upon us. This is a great opportunity for Involuntary Landlords, investor landlords and property managers to take a look at your property and build on your relationship with your tenant at the same time.

As you can see from this earlier post, It is very important for you to have occasional access to the inside of your rental home. While most tenants will take good care of your property, it is a big deal to find out earlier than later that you have one of the "bad seeds." The only way to get this information is to go inside.

Your lease probably contains a provision that says you can go inside and inspect in certain situations. Maybe you have to provide 24 hours notice and do it during office hours on a weekday. You should definitely be using that provision. I recommend a minimum of two visits each year and lean towards three in the first year. Not only do you get the peace of mind that putting your eyeballs on a well maintained home provides, you let the tenant know that you care about the manner in which they maintain the home. This knowledge will make a difference to most tenants and the property will be in better shape for it.

It is also very important to have a good relationship with your tenants. Every time you have to find a new tenant you are going to spend money, usually more than a thousand dollars. If you are an Involuntary Landlord, you are probably not in position to throw away that kind of money. A much better strategy is to invest fifteen dollars. Let me tell you how.

At the beginning of December, I emailed all of my tenants and let them know that I intended to visit them during the second week of December to "take a look around the house and bring you your holiday gift." I asked them to let me know when they were available and I offered them a choice of gifts. You can find dozens of nice gifts for twelve dollars. I bring turkeys, red wine or white wine. If they don't want any of the above, I bring a gift card. This visit gets a great response. Everyone likes a gift. Just like women appreciate a man bringing flowers, our tenants appreciate a gift as well.

My visits last just a few minutes. I take a quick walk around the house, deliver the gift and a card, and take some time to ask my tenants if they are happy with their home. I don't ask these questions to appease the tenants, I ask because I want them to LOVE their homes. I write down their comments and discuss them with the homeowner. If we can improve things in a cost effective way, we generally do.

These visits are enjoyable for all of us. It is always fun to give to others and the holidays are a time where most conversations are light and happy.

If you aren't making holiday visits as a landlord, I strongly urge you to try it out this month. We will continue to add new information for landlords here. Come back often and make sure to sign up for the free newsletter.  Until then, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.

How Can I Evict Thee, Let Me Count the Ways

Involuntary Landlords are as a rule a little bit impatient when it comes to tenant shenanigans. Unauthorized pet? Time to evict. Late rent? Eviction. Bounced Check? Call the Sheriff. Grass getting high? Eviction Notice on the way! How many legal reasons are there for eviction anyway?

How Can I Evict Thee, Let Me Count the Ways

In reality, there are TWO reasons for eviction. Surprised? No need to be. Once you read this article you will be in full agreement with my answer. Stop rolling your eyes!

The first reason is almost indefensable. When you go to court for non-payment of rent, you have a pretty strong case. If the tenant appears in court and cries poverty, job loss, death in the family, sick child, dog ate the money, and so on and so on... The judge will rule in your favor. The tenant is obligated to pay the rent.

Of course every rule has its exceptions, but in nearly all cases, failure to pay rent as required will result in a judgment fo rthe plaintiff.

So what's the second reason? Eviction for wrongful possession. In other words the tenant has no legal right to be in the house because their lease has expired or has been legally terminated. That's the proper procedure for all of the other problems.

When you find out your tenant, who has signed a lease clearly stating that no pets will be authorized decides to take in a couple of canine room mates, you should not proceed directly to court. Make a pit stop at the post office and send him notice that he is in default of the lease. Give him time to cure the default and if he doesn't, send him a letter informing him that you are terminating the lease due to his default and demand that he return possession of the property to you immediately. Then proceed to the courthouse and file for eviction.

Whether you should demand possession for an unauthorized pet in the current rental market is a business decision you will have to tackle on your own. Our position is to always consider the cost of your actions prior to taking them, but that's the subject of a different article.

Be sure to sign up for our free newsletter, which features valuable information on topics like this one, and remember, if you have any questions concerning property management, landlord/tenant issues, general real estate concerns or just need the best possible team managing your North Georgia Property, call me personally at 770-682-7735.