Fixer Jay’s Mom & Pop Millionaire Blog

If you can teach yourself to think like your tenants, you can stay a step ahead of them most of the time. Believe me; a step ahead is very important. It’s always better to act now rather than to act later. A friend of mine who’s been a cop for thirty years told me the best detectives in his department are the guys who could have easily been the best crooks. The reason, he claims, is because these officers naturally think just like crooks. It’s like they’re able to anticipate a crook’s next move before he ever makes it.

This same kind of uncanny ability can be a tremendous advantage for landlords who can develop it with their tenants. Just like the cops, landlords can benefit by knowing “tenant moves” ahead of time. With practice anyone can do it.

Good landlords always act, they don’t re­act. Don’t fight and argue with tenants any more than your boss would fight and argue with you about work requirements on your job. Obviously discussions are all right and I fairness should always prevail. Landlords are the boss of houses. They make the rules for tenants who live there. Never compromise the issue of who’s in charge. When tenants have the upper hand living in your rental properly, you’ve got big problems.

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Don’t make a game of rent collections. Rent monies are the life blood to apartment owners. Yet, I know many property managers and owners who participate with their tenants each month in a silly rent collection ritual. The tenant starts the game by saying the check is in the mail. Then the landlord begins calling every day or driving out to the property to inform the tenant he hasn’t received it yet. Sometimes this goes on for weeks.

Playing this game will only eliminate whatever respect one party may have for the other. It generally leads to more bickering about other matters as well. Don’t allow yourself to be part of this game. You’ll fare much better if you use the rules already on the books. I’m referring to your state landlord-tenant civil laws and, of course, your own rental contract terms, agreed to by your tenant.

Enforcement of the rules whether it’s the civil code or your own house rules, is the best way to develop a smooth running management operation. Preventive tech­niques are as important to managing tenants as they are for the doctor who manages your personal health. One of my main criticisms about professional property managers is that they very rarely act ­mostly they react. They’re always ready and willing to fix the busted door, but only after the horse is out of the barn.

Landlords who learn to act before small problems become big will control most tenants. This strategy works very well for collecting rents and also for enforcing your tenant rules. Speaking of rules; many landlords have far too many. It’s best to keep your list of rules short and enforceable, rather than long-winded, without any teeth.

One of the most important questions all landlords should ask themselves is, what would I rather be, popular or profitable? You don’t have to be a greedy person or steal candy from babies to become a wealthy landlord. What you must be is a fair-minded business person. Fair-minded business means that accounts receivable (rents) are collected in a timely manner and that your business assets (houses) are maintained properly by the tenants who lease them.

See how simple this stuff is!

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Why not hire out the management? No one shares the same level of motivation as an owner. Remember, its owners who borrow money against their homes. Its owners who invest their entire life savings trying to make a better life for themselves and their fami­lies. Owners have a much greater interest in their own success than anyone else could have. Fees from gross~ rents can’t buy proprietorship.

Imagine this: A call comes in on Sunday afternoon to fix the handle on Sally Smith’s toilet. It’s nothing serious. The thing broke off and the lever fell down inside the tank. The flapper chain is lying in a pile right there on the bottom where you can see it, but Sally can’t flush. Of course all the grand kids are there on Sundays. She needs help now. I’ll bet you 10-to-l odds, if Sally’s toilet ever flushes before Monday morning, it’s the owner who fixed it.

If you collect rent for Sundays, you must also arrange for flushing toilets on Sunday. It’s just sound business practice and common sense. Proprietorship is what’s most important, especially for new investors. Professional managers might be all right for later on but seldom will they help you in the beginning.

Individuals without any special skills or advance training can become very successful by substituting per­sonal efforts (labor) instead of spending money to hire things done. It often takes new owners twice as long to do a job, but remember it’s also training, in addition to the owner’s “free labor.”

You don’t have to agree with me about this. You don’t have to like it, but hands-on operators, the do-it-your­selfers, can put the big guys to shame in terms of building net worth. Call it tender loving care if you wish. It works’ there is indeed a great deal of truth to the old Chinese proverb: “The best fertilizer in the world comes from the owner’s shadow.”

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At a recent radio talk-show interview I was asked, “What particular technique or special skill has made you the most money during your long and obviously successful real estate investing career?” My simple single word answer as always seemed to surprise him. Perhaps he was hoping to hear a sexier answer! Understandably, “land­lording” doesn’t conjure up an exciting image for most listeners. Still, that’s my answer and I’ll stick to it.

Managing your property and tenants is a business. Treat it that way from the very beginning and you’ll be ahead of the game. Many investors have a problem with this idea when they start buying properties. It does no good to negotiate a “killer” purchase price, which is considered fun, and then give all the money back to a tenant who sues because you failed to learn about the paperwork or habitability laws, which many consider drudgery. Same thing goes for taxes.

Perhaps he was hoping to hear a sexier answer.

When you make landlording a serious business in your daily affairs, your investment life will suddenly become much more man­ageable. There’s no way I could have acquired 200 houses without this skill. That’s why landlording and wealth go together in my book.

I know many different ways and tech­niques to make money with my real estate. Over my 40 years or so I’ve done just about everything with houses and apartments­ even building from scratch. But I must tell you some of my most rewarding (that means profitable) deals have come my way because I know how to be a good landlord. I can handle tenants and I know how to arrange my business affairs to protect myself and stay away from problems.

In his excellent book, “Rich Dad Poor Dad,” Robert T. Kiyosaki uses a term “buy, hold and pray” describing what some investors do. He says: “Most people who invest are speculators and gamblers, at least mentally! True investors make money in bad markets and good times alike.” That’s what I do.

Buying junker houses for fifty cents on the dollar takes skill. Lease options, buying paper, adding value (fix-up) bank repos, partnerships and selling for top dollar all require a good bit or education. But none of these will provide you with long-term wealth if you don’t have a proper foundation to build on. When your business is houses and apartments, you need people skills and a business plan to support your real estate activity.

Your job as a landlord is to be as responsive to your tenants as you can. But never should you allow yourself to be stampeded into rushed decisions simply because your customers say you should.

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Landlording is not fun – so don’t consider it a hobby! You must prepare yourself mentally to deal with tenants (all kinds of tenants). They are your customers. As such, they deserve the kind of treatment you would normally extend to any good business customer.

Avoid personal conflicts over such matters as life-style, housekeeping (Inside) and moral issues. That’s not your business! If you feel compelled to change your tenants, try praying for them! All matters relating to their tenancy should be kept strictly business.

Obviously, it would be a poor business deci­sion to keep an unruly or destructive tenant because that would cost you money! Making money is top priority in the landlord business, same as any other business.

Tenant Urgency Is Not My Urgency!

It is your business to see that rents are collected and that rules and regulations set forth in your rental agreement contract are obeyed. You must never allow a tenant to intimidate you! It almost always leads to “poor decisions” on your part. Perhaps the most common mistake landlords make is to allow the tenants urgency to become their urgency.

After many years of doing this lob, I’m hard pressed to think of any situation, so compelling, that there wouldn’t be enough time to think it through!  For example; if there’s a fire at my property, the community fire department will handle everything. As for me, I’m protected by insurance on the building. Should someone die in my house, I’ve yet to meet any landlord who’d be of much help! The county coroner is the one you need.

In short, leaky pipes, broken windows and cockroaches are no more urgent to a landlord than dying patients to a doctor or raging fires to a fireman. They are simply part of doing the business!

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The first thing you need to do is understand tenants: what do they really want, what should they expect their living plans and, of course, what they are entitled to when they pay rent dollars for living in your properties.

One of the most important lessons I’ve learned over the years as a landlord is that there’s no such thing as a $500 per month apartment that rents for $500. I can prove this easily enough by inviting twenty tenants to one of my apartments and asking each one individually: “What’s this apartment worth?” Ten of them will guess about $450 and the others will say something between $400 and $485. No one is likely to agree with the current rent I’m charging. In their mind, it’s too high!

The quicker new landlords learn to under¬stand this basic adversarial relationship between the payee and the payor, the better they will fare. It’s easy to understand why tenants and property owners seldom make the best of friends.

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Most renting and buying and decisions are made in the car going 20 MPH as prospective customers drive through the neighborhood for a quick peek! These drive-bys or quick-peeks are where you’ll make a sale or lose it. If your property doesn’t show well on the outside, most folks will simply assume it looks about the same way on the inside! This is why I always advise students to concentrate their efforts on fixing up the out¬side before they start on the inside. The only exception I’ll make is when it’s raining!

Exterior painting is one of the most produc¬tive jobs on the fix-up list. It’s not unusual to spend $1000″ painting and get back $10,000 or more in added sale profits. You’re accomplishing high leverage fix-up when you can spend one dollar – and get ten dollars back!

Most yard work really important here! These outside improvements I’m suggesting are not using very much of your fix-up budget. You can really leverage your fix-up plan with plain old “Grunt Work”. That’s my term for non¬-skilled labor. But, believe me; it counts just as much as the higher skilled stuff when it comes to making a bottom-line profit.

See the big difference at Jay’s fixed-up colony houses Oct. 15, 16, and 17 2010 at Fixer Camp.

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Operating rental properties and dealing with tenants are inseparable parts of landlording. I owe my real estate success to my landlording skills. Some folks argue that professional property managers get paid a handsome percentage of the gross rental income to relieve owners of this thankless task. So what’s the big deal, they say?

Proprietorship is the “big deal”. No one shares the same level of motivation like the owners. Remember, its owners who borrow money against their homes. Its owners who invest their entire life savings trying to make a better life for themselves and their families. Owners have a much greater interest in their own success than anyone else. That’s what proprietorship is about. Management fees paid to others simply won’t buy it.

Try to picture if you can your professional property manager racing out on a repair call Sunday afternoon to fix the handle on Sally Mae’s toilet. Nothing serious-the handle just broke off and the lever fell down inside the tank. You can see the flapper chain lying in a coil right there on the bottom. It’s easy to fix, but still, Sally and the kids can’t flush. Naturally all the grand kids are there on Sundays. She needs help right now or she’ll never speak to the owner again. That’s you! I’ll make you a little bet if that toilet ever flushes before Monday morning, then an owner went over to fix it. That’s proprietorship.

Tags: Fixing For Money, Landlording Success by FixerJay
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Sure, I’d love to own more houses and apartments and have the extra income and appreciation—-I already know it would reduce my taxes – but here’s my problem: I just hate messin’ with tenants and having all the hassles like some of my landlord friends. That’s the reason I’ve flipped my own properties.

If you feel this way about managing real estate and trying to get tenants to play by your rules, you’ve got lots of company out there – believe me! What you don’t have is my excellent method for handling a bunch of tenants with at least 90% less effort than your friends. I won’t say it’s magic – but you might think so after you start using my memo’s!

I call it “MANAGING YOUR TENANTS BY MAIL” and 90% less hassle is not an exaggeration – believe me! There’s no good reason to have personal confrontation, even telephone calls and especially those unpleasant visits to your tenant’s house begging for your own rents! You can forget that kind of nonsense!
It’s a simple concept — I’ll teach you how to manage without nasty arguments and without those emotional outbursts that take away all the joys of counting your money. You don’t need to listen to lame excuses when you provide good quality service. After all, it’s your property! You shouldn’t have to chase the money your tenants owe you.

Think about it! There is absolutely no way on this earth I could have ever handled 300 screaming tenants and still enjoy any privacy for myself. I wouldn’t have enough hours in the week to counsel my tenants. Not only that, there’s no good reason to allow this to happen. Just the thought of it makes me start thinking about a morning drink! My memo by mail method handles almost all my tenant problems quite nicely — AND WITHOUT THE EMOTIONS, WHICH ARE ALMOST ALWAYS PRESENT WITH PERSONAL ONE-ON-ONE CONTACTS. Believe me when I tell you – there’s no good reason to manage properties with your emotions! The fact is, emotional confrontations are the number one reason why shortsighted investors sell out before they ever get rich, you can do much better — And my memos will prove it to you!

Here’s my promise to you — Try my method for a while and if you don’t like it, go back to your old way and I’ll refund all your MISERY. So far, no one’s ever asked me for a refund yet, so I feel pretty confident. Handling tenants my mail might sound kinda cold and impersonal – but it’s much more business-like, and a lot more professional! It’s also a marvelous record-keeping system. Try it, I know you’ll love it — But the real value comes from making your management job so much easier on yourself.

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Every time I attend a “How to Get Rich Quick in Real Estate” seminar, I’m told by some speaker in a pinstripe suit that I should always rent my properties to “blue-collar” tenants with good credit ratings. There is one exception, they claim. It’s all right to rent to senior citizens with an adequate pension income or a regular monthly social security check.

I suppose that’s good advice but I also suspect the speaker doesn’t depend very much on rental income to buy groceries like I do. Obviously, the questions I have, along with thousands of other small-time landlords are:
What happens if I can’t find tenants in those two categories? What if my properties don’t attract blue-collar workers or senior citizens? The last seminar- leader I tested those questions on tried to avoid me at first. When I kept on asking, he sorta turned the other way and tried to pretend he didn’t hear my question!

MOST RENTERS PAY THEIR RENT

Contrary to the landlord-tenant “horror stories” we’ve all heard about, most tenants who agree to rent your property will also pay their rent. This fact eliminates about 95% of your collection worries. Trust me on this, I have enough tenants to prove it. The big problems are caused by the remaining 05% who can literally destroy your life! It’s the old story about one rotten apple in a barrel and unfortunately, “destroy your life” is not too strong a term for what can easily happen when innocent, but “dummie” landlords do battle with “ring-wise” deadbeats.

To begin with, the “playing field” is not exactly level. Deadbeat tenants. are entitled to use many “free-bee” services, starting with specialized legal assistance. Usually a local legal aid society or the Civil Liberties Union is available for the asking. Also, the court system is different for’ deadbeat renters. For example, most don’t pay a fee to answer complaints like ordinary citizens. They are granted a “fee waiver” simply by filling out the pauper’s form or a declaration stating they have no money to pay! I’ve never known or heard of a landlord being able to use this “non-pay” gimmick, even though I have known several landlords who filed bankruptcy because they couldn’t collect from “deadbeats”. To do well at landlording, it’s best to accept the popular myth that — ALL LANDLORDS ARE RICH, RUTHLESS, TYCOONS AND TENANTS ARE THE CIVILIZED WORLD’S MOST DEILBERATELY ABUSED AND MISUNDERSTOOD PEOPLE — With the possible exception of witches and “fortune tellers”!

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