If you handle your rental business, like a business, it will make you money, like a business should. Your properties will bring in money instead of costing you money.
The following are some ideas that I use to keep tenant maintenance to a minimum and eliminate problems before they happen. Nothing is perfect, but following a good plan can cut problems in half or eliminate them all together.
Getting Tenants to PAY ON TIME …
Treat Tenants with Respect – This is the most important piece of information anyone can give to a landlord. If you respect your tenants and treat them well, they will be more likely to treat you and your property with the same respect. Their respect will not be limited to the property, but should extend to paying rent on time. You must demonstrate this respect by some of the following
1. Repairs – When something is broken, fix it and fix it fast. Yesterday afternoon a tenant called to say their water was not working. I got on my motorcycle and took time to find out what was wrong. I rode to the tenant’s apartment and checked. It turned out the city disconnected the water because the tenant hadn’t paid. They were very apologetic and offered to “Pay me for me gas.” My tenants like me because I go the extra mile.
Note: When was the last time a tenant offered to pay for YOUR Gas?
2. Communication – Keep your tenants informed on any changes with the property, including rent changes and maintenance. Don’t change the rent without asking the tenant what they can afford. Here are some good examples of notes I send to tenants
- “You’ve been here a year and I have your One Year Tenant Appreciation Gift.” Also, I need to notify you of a rent increase, can you afford an additional $50 per month? (I only want $25, but will be happy with less) My tenant likes the gift and likes, even more, the fact that I am asking them what they can afford.
- Perform regular maintenance checks on your houses. At least once per year, you should visit your property and do a Walk Through.
- Write letters to your tenants once per quarter. Just say “Hello” and thank them for being your customer.
3. Respect – They are people just like you and me. They deserve all the respect that we do. In addition, they deserve all the respect we would give to any customer, if we had a retail business. Our tenant are the reason we are able to make a living.
Getting Tenants to PAY MORE In Rent …
Rent Comps – Realtors and Property Managers can give you rent comps and this will give you an accurate idea of what OTHER Landlord are charging; however, this does NOT HAVE TO BE WHAT YOU CHARGE.
Sell yourself to the tenant. Explain why they are better off renting from you.
1. What makes your property worth more than other people’s? YOU DO!!! It all goes back to respect and upkeep. If you are better than the average landlord, you are worth more. If you’re worth more, you should be paid more.
2. When they say your price is too high. Tell them what to look for and how to protect themselves. In doing this – sell yourself. Here are some things to say, that make you and your property worth more, in the tenant’s eyes.
- Make sure the landlord compensates you if repairs are not made in a timely manor – I do. If your rent is late, you pay. Why shouldn’t the landlord pay if the repair is takes too long?
- You are bringing business to your landlord, make sure they give you something for that – I do. I give my tenants a gift for moving in and then another gift every 12 months. In fact I just got a new computer system for one tenant.
- Make your landlord treat you with respect – I do, because I used to be a tenant. I know what it’s like.
3. Don’t speak badly about other landlords. Build value in you and your property.
Getting Tenants to STAY LONGER …
Keep your Tenants – Your goal is to stand out from everyone else. You want to be different from all the other landlords in the area. Besides, if a tenant wants to leave, they will. Your goal should be to keep them from leaving without giving you a 30-Day Notice.
Instead, give them something, if they stay. If a tenant has already given you a deposit, they are not “losing” anything, if they leave. They just aren’t getting it back (from their viewpoint). They’ve already “lost” the deposit. However, if you promise them something, if they stay, they are less likely to leave, until they get their gift.
Free Gifts, Month-to-Month Leases, Paying tenants if repairs are not made, “In a timely manor”, Etc; make sure you promote yourself as different, let them know you’re not the ordinary landlord.
Move in Gift – Anything that is free is good. A free gift, worth fifty bucks means a lot to a tenant that is living paycheck to paycheck. My tenants get something
1. I give a DVD / VHS Player as a move in gift. My tenants are thrilled. Most have a DVD player, but now they have one for the bedroom, also. Then I tell them about the next gift they get.
2. The One Year Gift, which they get when I do my annual Walk Through, is a “Big Screen TV”. (23” Color TV from Wal-Mart for $149) Is it worth $149 to keep you tenant one year? What is it worth to keep them for two? That’s a small expense to keep from having to find a new tenant.
3. Three years is worth A New Computer System, which I pick up for $199 from www.TigerDirect.com. Again, this is a small price to pay to get someone to stay two years.
4. I have not been a landlord four years, so this gift has not rolled around yet, but I have one tenant that I am going to send on vacation, soon. For less than $300, I can send my tenant to the beach for a weekend, with accommodations and dinner for two. My tenant already knows he getting this, and has asked what he gets for 5 years.
In three years, I’ve spent $400 to keep a tenant. If I have one vacant month, it will cost more than that. My tenants are thinking about that next gift.
Repair Penalty – Most tenants have lived somewhere that the landlord neglected them and the property. That’s always a fear in the back of there mind. Let your tenant know that you will charge them, if they don’t pay their rent on time, but they can charge YOU if you don’t fix things in a timely manor. For example, Plumbing and appliance repairs should be 24-48 hours. Electrical and HVAC repairs could take 72 hours. Don’t get scared, if it takes longer, you’re covered.
IF the repairs are going to take longer than usual, I notify my tenant, in writing, with the reason and the expected completion date of the repair. As long as I do this, in writing, I am not going to be penalized; however, if I don’t make the call and I don’t write the letter, then the tenant gets a $10 per day discount on the rent for that month. This assures them, their needs will be attended to quickly.
Make Tenants feel some Responsibility …
Repairs – My tenant is responsible for the first $50 of any repair, no matter what the cause or who is at fault. HVAC goes out, they pay the first $50. If their child puts a toy car in the toilet, they pay the first $50 (they would be responsible for this whole bill). My lease covers repairs and who is to pay for what.
1. Plumbing – If the problem is above the floor, the tenant pays the whole bill. If the problem is below the floor (in the main drain line) the tenant pays the first $50 and the landlord pays the balance. However, in three years, I have never had a problem that has been below the floor of my houses or apartments.
- Leaking sink – Tenant
- Overflowing Toilet – Tenant
- Shower or Bath Problems – Tenant
- Clogged Drains (“P” Traps) – Tenant
- Clogged Drain Lines – Landlord
2. Other Repairs – Some items in a house will wear out over time but if the tenant is wearing them out, they should be responsible for the repairs.
- Storm Door Squeaks – Tenant
- Doors or Windows Don’t Close Tight – Tenant
- Appliances Break – TENANT (The appliances are in the property ar on “Loan” and “The rental payment specifically EXCLUDES all appliances of any kind…” If they don’t work, I’ll remove them, but not replace them.
- d. Bugs Show Up – TENANT Pays Whole Bill
- e. Hot Water Heat quits – Landlord (After the first $50)
- f. HVAC Goes Out – Landlord (After the first $50)
Rent – One of the biggest concerns is getting rent paid on time. What is “On Time”? Your contract outlines what the rent is and when it’s due. It also outlines what happens when rent is late. Rent should be due on the first of each month, but … it’s not late on the 5th, it’s late at 5:01PM ON THE 1ST!!! If you give the tenant until the 5th, they will take it (that’s five extra days, they keep their money).
1. Due Date – MY rent is due on the 1st day of the month, by 5:00PM. If the first is a weekend or a holiday, the tenant is responsible for having the payment made early. If the payment is made on the following Monday, it’s late.
2. Late Date – Late is any time after 5:01PM on the due date. And, if it’s paid late, there is a late charge. My late charge is 10% after 5:01 PM and $10 per day until paid in full.
3. Eviction Date – I start eviction proceedings on the 2nd. A letter goes out that says, “You’re late and you’re going to be evicted, if you don’t pay.” Most of the time, this is enough to motivate the tenant to pay. If it doesn’t, I’m ready to file papers on the 5th, when most landlords are just getting started.
4. Rent Discount – My goal is NOT to evict. My goal is NOT to get a late payment fee. My goal is to get my money – ON TIME. I encourage them to pay early, by offering a discount. If I want to rent my apartment for $550 per month, I increase that to $600 and offer a discount for paying early. If they pay “on time”, I get $50 more.