Hiring a Property Manager

my very first investment property

I remember beginning real estate investing with no knowledge of what I was doing at all. The first thing I did was hiring a property manager to take care of my properties. This may have been the wisest decision I took at the time. 

To me, hiring a property manager didn’t mean laying back and getting my income at the end of each month. I felt that I had neither time nor energy to be running after tenants, fixing stoves, dealing with the tenants’ minor issues, etc. I wanted to have someone who makes a living from taking care of tenants. I had a full time job and it sure took a good 70% of my time. Then came promotions, followed with HR managerial tasks, added responsibility and compulsory travel. Apart from the fact that I’m a firm believer in specialization, I had limited time to squeeze in real estate management in that equation. 

Getting a skilled and well experienced manager who specializes in the area is an investment in itself. My property manager was/ is not that efficient though. Nothing is ever urgent to him. You may wonder why I keep him. What comes to my mind is honesty and lack of greed. This industry is full of “skelms”.

Reasons for my property manager’s inefficiency, in my opinion, vary from the long term nature of our relationship. People get to the comfort zone when they have had the same client/job for a long time. We have a long term client-service provider relationship. He has no insecurities. He expects me to hang around forever. I like my manager and I would hate starting with a new greedy property manager. I sometimes email him more than once on one small issue. But I guess, I ‘m more comfortable with that than a new dishonest guy.  

He also charges me 7% of rentals or less instead of the 10% norm. This is also due to the great relationship we have built over the years. I appreciate this discounted commission, but I prefer to pay more for great service. Who knows if paying more will get me better service in my case though. Estate agents are not always trust worthy.

The properties that he works with are in the lower cost part of the city. I think agents tend to treat tenants according to the area they live in. Reasons being that most also don’t necessarily treat the space they occupy with dignity. They even overcrowd the place if they can get away with that.

Three years ago, I started managing a three of my properties. I realized how hectic property management is. As it is, real estate investing and my online business are more than a full time job. Adding management responsibilities to that was pushing it. In that two and half years I dealt with complaints about noise, then tenant's children playing with stones and breaking windows, then evicting tenants in my townhouse, then vacancies and late rental payments, and the list goes on. These issues put things into perspective for me. I choose to be a property investor and not a property manager. I hate dealing with small issues and I think hiring a manager is worth the few thousands of rands I part with.

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Tenants' Rights and Landlord Obligations

Tenants' Rights and Landlord Obligations

Over and above the tenants' rights and entitlement to certain minimum standards of accommodation, I would love to think that I go an extra mile to provide my tenants with comfort. I have never rented a unit I wouldn't occupy myself. I pride myself in that. I believe its for that reason that I received an email more than twice from my new tenant declaring her love for her new home... makes me happy. 

*to your left is the image of when this property was being remodeled in 2010. It was really bad*

Off course my tenant has filled my move in move out checklist and identified the following to be faulty.  

Tenant’s checklist

1. Kitchen stove’s plug came off the wall
2. Bathroom sink is cracked. It may start leaking.
3. There is a problem with the bath drainage system. It is quite urgent.
4. Guest toilet sink is coming off the wall and needs to be attached.
5. All bedroom cupboard doors need to be replaced or re-attached. They are loose at the hinges.
6. 1 bedroom cupboard shelves need to be replaced.
7. The balcony door doesn’t close properly.
8. Geyser (water heating) cupboard needs to be closed 
9. The toilet seats in both toilets are broken
10.  The bathroom mirror is broken

I may have missed on telling you that this property was completely remodeled just over a year ago to prepare it for rental. Why does stuff have so much short shelf life when it comes to rental property and tenants? I am happy that there is no major project, but the small repairs do add up and can become too costly.
Having a tenant who seems to be reliable helps though. I hope she keeps being that way. And a huge bonus is that I got me a handyman again. He came highly recommended. I don't think I will easily bounce back if he disappoints me. I trust the property manager who recommended him.

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Tenants Making too much Noise

Another complaint about one of my tenants making too much noise came via email this morning. What to do when you are this far from the problem. My neighbor who owns the duplex next door emails me

...there has been a lot of noise from your duplex recently. Its male voices mostly. I also get the impression that there are a few extra people living there now.

My great neighbor had to specify that its male voices because my tenant is a single mom with 1 child. Its difficult for me to just take this at face value as there may be some neighbor conflicts that exist. I thanked her and promised to deal with it. A huge sigh later, I sent my tenant an email to say "I dont say you did this, but this is a complaint I received, I just want to get your side of the story, Sorting this out immediately is good for all of us..." and a lot of other yada-yada. I dont want to unnecessarily upset an otherwise good tenant. Do you notice I was being overly polite and lacked some confidence???

My tenant didn't notice that. She was really pissed to say the least.

Yes we had some noise discussion with (neighbor). It only happened when I came in late with the car music. It stopped immediately she complained. There is no additional people, its me, partner (new fiance or hubby), daughter and person 4. And that is still in line with the agreement we have. If that is a problem I would ask for a month to look for somewhere else to live.

She went on to explain how other neighbors are making noise. How that is never addressed. Parties, etc. And at the end thanked me for letting her know. I do hope that she doesn't go confront and fight with the neighbor. I didn't mention the name of the neighbor but my tenant knew who she was. At the end, I am left with more problems to take care of. My tenant started listing the problems she has with other neighbors neatly. I am actually glad she did so that I try to have them sorted out. I only wish she complained earlier.

What it means is that I should add a clause about noise in my contracts going forward. I always have a separate sheet of the rules in the tenants' files. Ten years later, I learn how to work better. To think I have so much in my hands already with the one tenant moving out end of September and one moving in beginning of October. That means I have to prepare the duplex for tenants whilst it still has the outgoing tenants. The only positive thing is that, I didn't struggle to get a new tenant, and I didn't have to lower the rent.

I am now looking at buying a property I can convert into duplexes. I never did any property that needs structural changes like that. It will be a nice challenge shopping for a house with a good size land, changing it into nice duplexes with separate entrances. I cant wait.

Do you ever get complaints about tenants making too much noise? or its just my luck!

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Multiple Tenants on the Lease Agreement

I hope I never deal with a sticky situation of multiple tenants on the lease agreement. When it comes to one of the tenants leaving, it can get very ugly. It reminded me of why I never had a roommate.

I was away from town when my new apartment was on the market. I hired my best friend to show it. This friend of mine is very much like me. If I wouldn't be the one who gets a perfect tenant for my newly remodeled duplex, she would. She showed a few prospective tenants and liked three young professional girls. They were going to share this three bedroom. She liked them a lot, and I did too. After doing the screening, that was it, my girls moved in. All three were having entry level office jobs. But I really didn't mind as they were sharing among themselves and together could afford the place.

Joint Tenant Lease
They signed a lease (one signed and two were just declared to be sharing the space) but I treated them as "a tenant" combined. I dealt with a deposit from one source and monthly rental from one source. One of them was the main contact but they all signed the contract as some "living with tenant" people. these tenants were a dream to work with until roommate X wanted out before the end of the term. I know better than keeping people because of the contract term. The question was more about the other two tenants. That was not my responsibility but I had to jump in to help out so that we get everyone happy.

Her original email goes:

Hi me

This is to inform you that i will be moving out 30 April

This is to hand in my 30 day notice as I have to unfortunately  move back home due to unforeseen circumstances

There is a person interested in taking over the room but I am not sure how serious they are

I will have to ask that we also eliminate my name from the contract as I will no longer be living at the apartment

Another reason for handing  the notice in is in case the person interested in the room does not come to the table; how would we work the deposit money situation

I have enjoyed having you as our landlord and is with total sadness that I have to unfortunately leave.

The other 2 girls will still be staying in the apartment.

Not only was I losing great tenants, I was also struggling to get a way to really handle this. I never wanted to do the joint rental, but tenant X was under the impression that, they were in joint lease. I had to point her at the contract and suggested that they all serve the notice and the two tenants Y and Z re-apply with the new tenant A. I hate tempering with the contract.

She off course naively decided to give her rights to the new tenant A, and stay in the contract. At this point I wanted to rather lose these girls than take on a new one. At the end we took the new tenant A, amended the contract to remove tenant X and added tenant A. All I was thinking about, was setting a bad precedence. What to do if this happens again. And indeed, only four months later, the other tenant, tenant Y wants out. I was not going to entertain anymore drama, I decided to deal with a vacancy instead. 


What I've learned from this is:

• I am not interested to know who stays with whom, I only deal with my one tenant and I know the number of occupants, and I monitor that,
• I stick to the terms of the lease agreement, no bending of rules to accommodate the tenant, unless absolutely necessary and legal,
• Never to entertain multiple tenants for one place.

Its always sad losing the best tenants but I suspect my one applicant will be my new favorite tenant. I am curious to know if other small landlords do sign on multiple tenants on the lease agreement. There has to be an easy way to handle it. I choose to stay out of it for now.

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Complaints Against Tenants

Yesterday, I got an email with the subject "complaints against tenants" from the homeowner association's administration. I knew that I am in big trouble.

Dear owner

 We have received complaints against your tenants

Their children have been playing in the estate and throwing rocks at the other units. 

They cracked a window at unit 5 , we have already notified the other children’s parents who were involved.

Please let me know who you wish to resolve this. We can either obtain a quotation from a contractor to fix the window and split the costs between you and the other unit’s owner or you can speak to your tenants and let them fix the window at their own cost.

Please get back to me regarding this on or before the 19^th of September 2011.

I've never had problems with this unit. Its in a very up market area. I could imagine how furious the owner is. What made me feel better, as I'm out of town/ country, was that this is one of the units that have the property manager. I responded to both the admin lady and copied the property manager.

I am very sorry to hear this xxx. I am copying *property manager*, my letting agent in this email. I never experienced problems in the estate before. I apologize. *property manager* will work it out with the tenant (his client).

These are the times that make me happy to have a property manager. At this point I thought I have transferred all the responsibility. The admin girl will just deal with the property manager to sort this out. The next email will definitely be to say "its sorted, at the tenant's cost". Oh well, the next email did come:

Thank you

The tenant of unit 5 did speak to the parents and they did apologize and agree to pay half of the expenses

This is the first incidence and clearly these tenants are not bad. Then I went on with my business. And then another email:

Thanks *admin girl*. I appreciate the great job *admin company* is doing in taking care of my investment. Let me know if we (*property manager* and I) need to intervene at any point.

I have to say things like this because I'm too nice you know! Well now I assumed that's over until the *admin girl* sent the last email:

Hi

 Could  you please arrange with your letting agent to speak with the tenant again, the contractor is their today for the quotation, will forward it to you as soon as I receive it

 Why am I in this business. If this were shares, I wouldn't even know there are problems with a property the fund has invested in. But I cant help it, this is my first love. I am still learning the share trading and for now, happy to have a broker taking care of my interests. Maybe next year.
 
The interesting part is that, my property manager didn't respond to any of the emails. Yes he paid attention to the problem but he never responded to any of the emails. My last email was that I hope he was following the conversation with *admin girl* about complaints against tenants. I then added that, its quite urgent. I still got no email back.
I think people need more communication skills. More so when they are in a services business. Everything is all about communication. I needed that for peace of mind. Everything was sorted, so I must get over it.

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Evicting my Tenant

the most popular of my rental properties

When I started investing in real estate, I hired a property manager. The whole rent and property management was too overwhelming. I had a full time job and thought its impossible to juggle my job, a small family and a real estate business. Besides, my property manager did get me my first rental apartment, then got me the one I was then renting out. He was and still is pretty easy to work with.

But what made me think he was the best manager I could get? I have no idea. It could be the instant client-service provider chemistry. Or the fact that I was young and naive and my apartment is low maintenance. I later learned that I have to do a bit of managing him, which I never found strange. I followed the trends in the market and informed him when there needed to be changes in my property. Even when the tenant sublet the property, I knew first and he didn't. I came with the solution to it, worked it with the new tenant and informed him to draw contracts. But still, I didn't feel like he is not doing a proper job. We flipped the second property we got and I bought my first 3 bedroom duplex.

Naturally, I gave my property manager a call. He worked on it, got tenants, etc. I got to know the tenants because they came in whilst we were doing finishing touches. They were two local, young professionals and an international student, sharing. These youngsters were great, and they kept in touch. Their relationship went sour and they left the duplex in great shape and my property manager got a new tenant. This tenant never complained at all, not about the place, breaking stuff, parking problems, nothing. It was such a breeze having her. I thought "having a property manager is the best investment of all", because obviously, he was handling everything with the tenant.

Evicting my Tenant
Whilst doing a routine property view for maintenance purposes, I visited the property by an appointment with the manager. The message never reached the tenant, and I was there with the maintenance company. The living area looked great I was so impressed. We then moved to the kitchen, which was in a bad state, the sink area was totally unhygienic, the bedroom carpets were worn out and so was the TV room, the bathrooms were a health hazard, the staircase was full of DIY awkward nails, the study room was turned fourth bedroom and I saw seven of them. The main tenant was still at work. We walked into the garden, it was so bad, never maintained, overgrown, the front porch looked bad. I couldn't wait to call the property manager. I wrote him to immediately evict his tenants as the place is "not suitable for occupancy". I gave them 1 month to be out of the place. That was it.

Remodeling the Property
Seeing that the property was vandalized by tenants, I had to remodel it immediately. I got a company to work on it and that was my worst nightmare. My contractors were worse than my tenants and I had to fire them with some of my money. I soon forgot about the tenant nightmare. Its now a year later, the place is looking better, and we kept it vacant as a holiday home for our family and our siblings. We do spoil our siblings. But we won't keep it vacant forever. But it suits us having it open for our personal use at the moment.

I learned a lot about property managers, contractors and myself in this process. And NO, I didn't fire my property manager because I left the city and didn't want to work with a new person. He manages 2 of my properties. Could this be separation anxiety? I really take better care of my units now whether I have a property manager or not. 

Did you ever have to evict your tenant? How did you do it? How easy was it?

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Enforcing Lease Terms

Let me the first to admit that I'm not always good with enforcing lease terms in the lease agreements with the tenants. I tend to be lenient, more so with the tenants I know. And yes, I rent properties to people I know, and other than the fact that they do negotiate sometimes, they are proving to be better that my average tenant. Anyways, I try to do a better job at screening to get the tenants that are unlikely to default on the contract terms. I still get late rental payments, but it can be worse, I count my blessings.

The Terms I never tolerate include:

• High Number of Occupants

A maximum of four people in a two bedroom (double bedrooms) is a general rule. That would be a couple with two kids. I hardly ever get maximum though. My new single mom applicant for a three bedroom duplex has four kids. But two are in college already. I had an overcrowded unit, which was sadly let by my property manager. I guess they didn't declare their room mates. I managed to evict them, nicely.

• General Neighborhood Rules

A tenant is your responsibility, not the neighbors'. I find the tenants in multifamily dwellings to be an even higher responsibility. There are always long lists of rules to ensure a harmonized life. Every time I get a new list of rules, I replace the old one in the tenant files, and email it to the tenant. These are simple rules like the keeping of pets, speed limit in the community, allocated parking spaces, or taking care of the gardens and porches. 


I find that playing my own part helps ease enforcing the lease terms in the agreement with the tenant. This is not a one sided process. One of the best ways to retain the best tenant is having a landlord take care of the property. The reliable and well paying tenants demand the best space. It is fair that way. I strive to keep the place well maintained. I am yet to find a reliable handyman though. I haven't been lucky in that department. 


I also keep the lines of communication wide open. My tenants email/ call/ text me anytime. They know they can. Their advantage is that I only have five units, unlike the property manager looking after tens of units. A friend of a friend was managing 40 units. That's a lot of properties to manage without an assistant, I think. I find that, if I communicate more with my tenants, they take better care of my properties. And this is not the case with properties that are managed by a third party. 


Continuous improvements on the place also add to the satisfaction of the tenant. I usually make a small improvement with every rent increase. When the rent went up in one duplex, I asked the tenant to give a list of things she would love to have changed. Its usually small things like the change we make in our own homes. It doesn't have to be costly. Sometimes we spend a lot more on repairing an oven than it would cost to replace it with a new one. 
Yesterday I shared my move-in and move-out tenant/ landlord check list. Feel free to edit and use it. From enforcing lease terms to the latest post.

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How to Screen Tenants

I decided to write a small post on how to screen tenants for rent or rather how I do it. My intern (soon to be ex-tenant) is hard at work showing the place. Isn't it nice that I could just hire her to do that, since she can’t now give my prospective tenants any bad attitude. Not that she would. She is a very sweet young lady choosing to go back home, on mom and dad’s budget. She is as sad as I am about leaving.

We are now getting a great response. Making this look all so easy whilst it’s actually not. I advertise and intern shows the place and hand over applications. One of the people who went to see the place is a single mom. I must mention up front, I have a soft spot for single moms. I heard somewhere that they can be irresponsible, etc. I totally disagree. The stable, working single moms have been nothing but a great pleasure to work with. The fact that they have their kids going to school also makes it harder for them to just up and leave the place too. And mature single moms do tend to take care of their spaces. I can imagine them to have more packed schedules than married moms to take care of the property though. Juggling a job or two, dinner and kids is just too much. I take my hat for them, and yes, I love letting my properties to them, when they have a good credit history and background check. Whilst a bit biased, I still try to stay objective. I will never discriminate against potential tenants. 

How I Screen Prospective Tenants for Rent

Whatever you do, familiarize yourself with the applicable laws in your area (state, country, etc). What I think is important when I screen my own tenants includes:

• Credit History and Financial Records

I am an investor and the bottom line is very important to me. The tenant has to have a stable work life. A job that pays well enough for him/her to pay the rent. I have signed the tenant who doesn’t earn as much as the other applicants did in the past, but that was a great decision. I followed my instincts, but that had its negatives. The tenant stayed for one full year and couldn’t afford to stay there anymore. But that year was great for the two of us. In all, the salary is not the only variable to be considered here.   

• References

Calling the references will also help. Your application form should allow your tenant to provide the numbers of the previous landlords. It may be great to call a few of them. This is something I really never do as thoroughly as I should.  

• Number of Occupants

I set a minimum number of occupants for each property. The higher the number, the higher the maintenance budget, the higher the nuisance behavior and the more unhappy the neighbors. Its as simple as that.

• Identity

I take it that the tenant has passed this even before you start with the rest. Being legally residing in the country.

• General Background Check

It’s only fair for you to do a good background check. You may still take a tenant with a criminal record, bankruptcy history, etc, but knowing beforehand helps a lot. You may want to make use of the online services to do a good background check.

I never work against any regulations in my screening. Just stick to the applicable Acts and laws. I never discriminate against a prospective tenant because of their race, religion, sex, disability, etc. That’s my basic list on how to screen tenants. I’m sure it has tons of gaps. It works for me though. 

In the past I wrote about how I prepare my places for rent, how I market my places, and how I determine the rent to charge.

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Banking on Mom and Dad

Yep, young professionals are having it tougher financially and are daily banking on mom and dad, or even on grandparents for survival. We are raising a back home generation. You may be remembering my post about my "about to be vacant" duplex. I am back to preparing it for rental and marketing it again, after just one year of doing so. My tenant's (soon to be ex) story goes...

By the way, she was the best tenant ever. I had a few maintenance complaints but nothing out of the ordinary. Money was in my account on time every time. One of those tenants you want to hold on to for a very long time. Unfortunately, after a year of a contract and a few months, she had a change of plan. I can imagine her sitting down with her balance sheet, as she should, and seeing the highest expense being rent. She emailed me, "I do not want to do this but the matter is off my control now because of the reasons stated on the letter." And yes, the letter attached was the one serving as notice to vacate the property. Yeah right, she gave me reasons too...."I have some financial problems and will therefore be moving back home".

Its sad that I am losing the best tenant, but I must say, Good for Her. If she still has a bedroom at home, and can stand the nagging that comes with a package, why not. She decided to forget the reasons she left home to start with, and objectively decided on banking with mom and dad again.

Forget the back home revolution, some of us are downgrading. Living in small spaces is more fashionable than a yellow dress. I must say, its quite sexy. Even I love small and intimate spaces, but with two kids, I just cant.

Beginning of 2010, my then young family tenants requested to be released from the contract before the end of the term. They were moving to a smaller and cheaper home due to changes in their finances and budget. I was impressed by that move, but still sad to be going back to searching for the tenant. Recession can teach a person a thing or two about themselves. Downgrading from a spacious family home to a tiny apartment has to demonstrate some strength in one's character.

The trend with investing in real estate follows the same trend. The first time buyers often rely on their parents and even grandparents to help them with achieving their dream of owning their first home. I found out from one of the National Association of Realtors publications that 24% of first time buyers in 2004 received gifts for a down payment from friends or relatives compared to 18% in 1991. Other financial help options include having adult children stay at the parents’ homes for longer than they would choose to, whilst they raise the down payment for their first homes. Some parents buy their adult children their first properties or cosign to secure them good mortgages. 

As I am traveling at the moment, my tenant agreed to show the place to prospective tenants at a fee we agreed on. Its good to build great landlord - tenant relationships. Here's to hoping I get an even better tenant.

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Things to Consider When Buying a Rental Property

I keep a list of things to consider when buying a rental property in my head, before my emotions take over. I have been doing this (though on a small scale) for 10 years but I still get entangled in emotions about what property I buy. You would think I will personally live in the property. In the midst of all those emotions, I tend to forget that a prospective tenant has a mind of his/her own. They may love walls whilst I love to have open spaces. Here is a list that can also help you before you invest:

You are in this for money.  That's the reason you are referred to as an investor. Look at the numbers carefully. How much rental do you want to get? That should be the starting point for any real estate investor. Make some assumptions to get to what you are prepared to invest to get the returns you want. You will need to do some research on where you can invest to improve your chances of getting the rental amount you want.

 Location. Like the agents state, good location will most probably get you the returns you want. Not only that, your location has to be attractive to your target tenant. I always target the young professionals (graduates), or young moms with school age kids. I will invest in a property close to schools, shopping and close to the city. I am not interested to deal with students even though I have friends who are very successful in that market. My take is - a single mom will want to create more stability for her child and not move places as often as a single girl. Being close to schools makes it even tougher for a parent to change locations. I also try to be centrally located, close to shopping places and other community areas like churches. Great location sells the property.

Building Age. If you have a good handyman/ constructor, you may buy an older property. It comes with a baggage of maintenance. The pipes may be tired, structure needing some anti-ageing or face lifts, etc. The are investors who can work with an oldie and give it a curb appeal like it was a new house. If you are not a typical DIYer, or know none, you may have to consider a newer building. Tenants love what is modern and classy. It is relatively easy to get the rental you want with a modern building.

Size.
Remember that you already have a target tenant. Young graduates will most likely be looking for a studio apartment, a mom looking for a second bedroom, a married couple may be looking at a home office, etc. The size of your property also determines how much rent you can charge. I have tried getting bigger properties for rental, which backfired badly. My target market and location is really not for mansions. The bigger houses have not been a success in my case. I stick to 2 to 3 bedrooms.

 Cost of Being a Landlord.  
Yes, it comes with costs. Financially, its never too early too investigate the expenses in the area of choice. Take a good look at the expected annual property taxes, insurance, property maintenance and unexpected repairs. I wrote about my emergency fund, or lack thereof here. A good landlord (not me) has one for some of those irritating things that break unexpectedly. I bought a new water heater, dealt with plumbing that was out of hand and a broken window. It never ends, I know. 
There are homeowner association and property management fees too (if you appoint one). These do add up. The other costs are actually difficult to manage - stress. Dealing with tenants is very stressful. The risk of them not paying on time, or just not paying period, damaging your property, etc can take its toll on your emotional health. Be firm but fair and empathetic. 

That's my list of things to consider when buying a rental property. There are a lot more things to consider, like the risk of owning a property. I assume you have gone past that already and are now shopping around. For me, this is what I love. I am happy that it has returns.

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Preparing a Property for Rent

A lot of planning goes into preparing a property for rent. You can’t cut corners and get it right. This is how I do it with my own properties in my real estate investment venture: 

1.      Setting a Target Market

    I actually set a target market before even investing in that particular property. Everything else is done according to the set target market. Do I want to attract students, single parent families, young couple, etc? Once I know the target market, everything falls in place nicely. 

My two bedroom duplex is just perfect for a single parent. It’s close to every facility that one can think of. You can walk your child to school, walk to your work, pass by the supermarket to grab dinner on your way back and still make it on time to pick your child up from school back home. It’s also big enough for an arrangement like that and has a small cute, low maintenance garden for a great playtime. My preparations for renting this place out includes child proofing the garden.

2.      Budgeting

The target market will determine the budget for you. High end market tenants demand the highest quality finishes and facilities. Easy as that. With my diversified tenancy, I know how much I will spend on a stove for one property and not on the other. 

The location of the property will also assist you in taking that decision. Think of the returns on your investment. It is a waste of money over-investing in finishes in an area where the rentals collected are the lowest in the city. Renters pay extra for comfort, and it’s only fair for landlords to ensure that tenants get what they paid for. A $7000 may prepare the rental unit fully in one neighborhood and not even scratch the surface in the similar unit based in another neighborhood. Stick to as low a budget as you can to get the best quality space possible. Your contractor will definitely help on the estimates.

3.      Specifics on Preparing the Property for Rent

The house has to be deserving of a prospective tenant. The exterior has to be welcoming and neat. The paint has to be fresh, garden and lawn has to look alive and flowers not in slumber. I usually get a garden service guy to freshen everything up. Trimming the edges is essential. 

The walkways, porches and verandas are to be cleaned and completely de-cluttered. Window treatments should look pleasant from the outside too. Everything has to be cleaned and hanging and loose odds and pieces removed or replaced. The house has to look picture perfect. Better than you would wish your home looked after spring cleaning it. In my case, because I am hopelessly lazy, and always long nailed, I get a cleaning team to help me out. I outsource any kind of cleaning in general, so that decision is quite easy. 

Enhance your home’s interior by: The interior has to be as spotless as the exterior. I cannot emphasize the hiring of a cleaning service company enough. It helps. I say this from experience.

Kitchen counter-tops are usually victims of clutter. Make sure your granite tops shine with only the essential appliances. Check the window tracks for broken and falling parts. Appliances should be in working order and so should the plumbing, heating, cooling, alarm systems, etc.  Do it all whilst trying to save on costs where you can. You may need to invest in new cupboard doors for instance, instance of changing the whole kitchen.

Please read the article on how much rent to charge for more tips.

Done Preparing a Property for Rent?Head to our latest article.

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Dealing with a Vacancy and Late Rent Payments

One of the townhouses

Dealing with a vacancy is less frustrating than dealing with late rent payments in my opinion. Vacancies are inevitable and contracts makes it easier for them to be predictable. On the other hand, late payments are the evils that we should try to avoid at all costs. I have one tenant who is developing a habit of paying the rent late. It started with 10 days and then 15 days with R450 shortage. I must say that, I have now set precedence by accepting the 10 days with no consequences. Tough!


How to Avoid the Late Rent Payments
Getting the best tenant is key when managing your own property. So avoiding any kinds of tenant - landlord discrepancies start with the screening. The advertising should obviously be done properly, in the right form of media. But the real work begins with  the screening of the potential tenants. Get the credit history right or hire someone who can do that for you. No cutting corners. Credit worthy tenants, take care of their finances, and should take care of their spaces too, Right! Not necessarily, but I would still trust someone who takes care of their money, to take care of my property, to pay rent on time and to want stability...thus staying for a longer period than most.

Well, if the tenant who had a promising financial record and had you fight for her/him to get the place rewards you with a late payment, just make sure it happens once ONLY. Stick to the contract and its contents. I know, its not easy, but its the right way to do it. If the contract has an "interest on late rental" clause; implement it fully from the very first breach.

Yes I know, I never did that when my tenant paid late the first time. I thought of the relationship that we have, how I wouldn't want sourness and the daunting task of getting a new tenant. So the tenant did it again. I am now expecting this and will have my Emergency Fund waiting for the third time it happens.

The beauty with this is that I've learned a valuable lesson that I am so human and not as much of a business person as I'd like to think I am.

Dealing with a Property Vacancy
I actually am having a tenant serving a notice for September to leave by the end of the month. The one month notice is meant for me to get a replacement as quick as I can. At least that's what I am trying to do.The tricky part is showing the prospective tenants a place with the notice tenant. I have to work around her schedule. I cant go and show as I please but only in the evenings. The prayer is that the great tenant I get should be free at the same time the notice tenant and I are available.Eeeeessshhh.

Anyway, as a landlord, one should be having the savings to cover the costs during the vacancy periods. A few posts ago I was talking about how I need an emergency fund. I have savings that are not titled EF and mixed with family funds. I so pray that I don't get to use anymore of the family savings than I already have because of this vacancy.
I always choose to collect slightly lower than market rate rentals than deal with a vacancy for the following reasons:

• That way I miss out on R100 per month, instead of R5000 per month over a few months of the vacancy.
• My property has someone in it and not at a risk of being vandalized.
• I have peace of mind knowing that the rates and taxes are covered even if my net worth is growing slower. R200 or R100 in some cases would build up.
• Psychologically I feel all together and efficient that I have no vacancies. Some ego boost.

The best way in dealing with a vacancy and late rent payments is avoiding them. I haven't had more than two weeks of vacancy since I started in the business. I must give credit to better economic times in general.

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When a Tenant Pays Rent Late

What to do when a tenant pays rent late??? Call, write letters, issue notices, follow the procedure stated in the contract? It sounds easier than it really is.

I have to thank God for being in this business from 2002 and never having a vacancy for more than 2 weeks. Its been a pretty down slide for almost 10 years. I credit the time I take to find the right tenant, and my broker, who did the same before I took most property rentals over. Last year, 2010, I decided to give one duplex to the girl I know. I was thrilled to find that she needs a place and I needed the right tenant. Apart from her being someone I know, financially stable, she is/ was a single parent. From experience, single women, parents require more stability and wont change homes as often as single people and couples without kids. The place is close to the child's school, just what should keep my tenant happy, or so I thought.
 
I'm sure she is happy with her child in the duplex but the fact that we know each other a bit could be the problem. The first time, in the beginning of 2011, she was 2 weeks late. There is a 7 day grace period, but she explained after I emailed a reminder. And indeed she paid 2 weeks after the rent due date. We have been great tenant and landlord since. I didn't charge any extra for the late payment. Me being a bad landlord and really knowing the tenant has to be the explanation. so that hump was over, or so I thought.

This month I get a text message from the tenant "I will be late with 9 days, please bear with me...blah, blah, blah..." It is a bad time for everyone, and I thought, its better to have a tenant that gets late with a week or so than have a tenant you need to evict. I immediately responded with a positive response, even wishing her well in whatever she is struggling with. So the promise date passes with some three days and I think, "please be a little patient". Until today, when I think, I have to let her know that I am aware that she hasn't made the payment. And off course she tells me she is still working on it. I say a little prayer "Lord please, can this pass without any ugliness in it".

If I were a good landlord, I would stick to the contract, and demand the late rental fee that the tenant signed to pay in cases such as these. I always thought I am ready to deal with tenant challenges, cases when a tenant pays rent late and worse evictions. But again, an eviction would mean, she leaves the place and I have to go back to square one, look for a suitable tenant, screen and get a good tenant. I know that she will eventually pay and we'll be back on track but I think mixing business with personal relations can get things out of hand. What is clear is that, we nay get back to this same situation with this tenant. Should I really try and be tolerant or rather get a complete stranger. I think not. I will keep my tenant for another year at least to see how things go. I know, from people close to her that she'd been in a number of costly and exciting situations lately. She may even be vacating the place soon.

So. I'm being a bad landlord, biting my lip until the end of the month. No one says its going to be easy. I am looking for one more property though. I seem to be happy with tenant stress. Its not as bad as having a 9 - 5 job with a difficult boss though. But the difficult boss is more certain to pay the bills. Meaning, if you choose this, you have to love it. I do!

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