One tenant replied that she hated my policy because she was a good tenant who always paid her rent on time but God forbid she ever have an emergency. I can certainly understand that and my heart goes out to her and to anyone like her. But like I said in my blog post, if I made an exception for ten tenants, it would work out for maybe two of them. The other eight would screw me, badly. Thousands of dollars in unpaid rent. A badly damaged property left behind strewn with discarded mattresses, couches and garbage. One girl left her dog chained in the basement to die – we pressed criminal charges against her and I’d like to think that had something to do with animal cruelty becoming a felony in Pennsylvania, finally. Keep in mind, these destructive tenants all passed our background and reference checks before moving in. Even good tenants can turn bad.
What I would say to the good tenant with a family emergency – yes, we have to file eviction papers on the 5th, but that doesn’t mean it can’t be worked out. Once those eviction papers are filed, we can fill out any paperwork for emergency assistance from welfare or the Commission on Economic Opportunity. The tenant can show up at the court hearing and work out reasonable payment arrangements, with definite amounts and dates in front of the magistrate, which we will honor. If the tenant can’t make it to court because they can’t take time off work we can take the written arrangements with us and show the judge we are working it out, and as long as the payments are made, there will be no forced move out. The tenant will have to pay the filing fees for the court, in addition to the back rent due. Yes emergencies happen. It’s a smart idea to put aside some money from each paycheck in a savings account for such situations. I realize that can be hard in a low wage job, but don’t talk to me about being poor – I survived my own childhood, adolescence and early adulthood, and I pulled myself out of it! You can, too. (http://thisgingerjustsnapped.weebly.com/blog/bootstrappin)
Another comment I received was that Luzerne County Homes & Apartments should be for listing rentals only and I shouldn’t be posting my blog there. I simply pointed out that the site has two sections: one for listing sales/rentals, the other for discussion, and I always pick discussion. I will publish Ginger Snapped there until the moderator tells me to stop. My guess is she won’t, because it’s pretty popular with landlords.
I am not trying to alienate tenants and stir up the class war that’s already brewing. I’ll leave that to Donald Trump and Bernie Sanders! I don’t consider myself in a higher class than my tenants. It wasn’t that long ago I was renting an apartment – I moved out of my last one in 2004. Tenants are people who need a place to live, so they rent one. Landlords are people who own properties and rent them out to tenants who need a place to live. We are small businessmen and women. This is a business. For some of us, the rental income is gravy on top of a good salary from a full-time job. For others, I would say for most of us – rental income is an essential stream of income for keeping our own households running. Meaning we’re only a few destructive tenants away from bankruptcy – so we’d better run our businesses right.
What I’m attempting to do with this blog is pass on the lessons I’ve learned as a landlord in the Wilkes-Barre area for the past eight years. The kind of landlord who is building a business out of rentals, not merely supplementing a high paying job. I’ve never been able to find a high paying job! Since my family is depending on these rentals for income, I’ve needed to become scrappy and streetwise. I don’t pretend to be a guru who knows all the answers – I learned most of these lessons the hard way through trial and error. The School of Hard Knocks! I gave you Lesson #1: If the rent is due on the 1st and you don’t have it by the 5th, file eviction. Now on to Lesson #2.
Lesson #2 – Have a solid plan for maintenance
The key here is to have the unit in good working order before anyone moves in.
The biggest mistakes we’ve made in this area have involved abandoned properties my husband purchased at tax sale. I blame these mistakes on inexperience. Once Steve got the keys, he walked through the units and saw most of them just needed to be cleaned up and given a fresh coat of paint to be presentable as rentals. Or so it seemed!
Granted, you can’t tell what really needs maintenance in a place until someone is living there and using the systems on a daily basis. But we’re no longer going to be so quick to get these vacant properties rented. Yes we need the income, and the sooner the better. But not until we’ve given all the major systems a closer inspection by someone who knows what they’re looking at.
I know some landlords who do complete renovations on a tax sale property before renting it out, keeping it out of commission for months. But they have a brand-new flipped property by the time they get their first tenant. I know other landlords who blow the dust off the floors, kick the furnace, say “Oh, it works” and put the for-rent sign in the yard. We’re moving closer to the complete flip model. Within reason. I’m ok with missing a month of rental income to fix a place up if it means attracting a better tenant and having fewer maintenance headaches. Two, three months is a bit extreme. We can always do upgrades between tenants, or if we get a good long term tenant we can upgrade while they’re living there, year by year.
Keep up with simple maintenance
If a unit is in good working order before you rent it out, maintenance should be fairly easy. It’ll be little stuff – the toilet clogs, a faucet drips, a bedroom door stops closing right. My husband handled all that stuff when we first started out. Now we have a property manager and she dispatches a handyman.
You’ll have a lot fewer problems if you keep up with regular maintenance. Put it on your schedule. Get a system in place. And make it a priority to have reliable people on hand.
It took us eight years to figure this out. Don’t be too hard on yourself. The lack of work ethic from some people in the maintenance trades will astound you. It’s hard to find good help, so when you do, treat them like gold. Pay them in full and on time. Pay a fair wage, agreed to before work starts. And if you’re not happy with the quality of work, move on quickly. Don’t make the mistake we made and give too many chances.
Budget for big emergencies – they will happen!
A furnace just stops working for no apparent reason and you have to order a part and send an HVAC guy. A sewer line clogs. A refrigerator quits. Stuff like this happens and it’s largely beyond your control. Budget for it. In the case of a sewer line, that can be expensive - $8,000 for us last summer. Make sure you have a nice cash cushion or access to a line of credit. These big problems will happen from time to time, no matter how meticulous you are about maintenance, so be prepared.
The success of your rental business is your responsibility
Even if you have a property manager, the buck still stops with you. You are ultimately responsible for the upkeep of your rental property. You can hire a manager to handle the day-to-day, but don’t neglect to check up on the work being done.
Every single property manager I know in NEPA has the same issues with maintenance help that we had when we were self-managing. Substandard work. No-shows. Or the most heartbreaking – a great handyman-type who’s going along fine for a month or two, then decides he just doesn’t want to work anymore.
My husband and I are kicking around the idea of starting a company that will specifically handle maintenance for rental properties. We’ll get an SBDC loan for our start-up and hire a maintenance supervisor at a good salary, who will then hire and oversee a crew. This maintenance supervisor will be skilled in figuring out quickly whether a crew member is going to cut the mustard. The crew will have a high turnover at first – that’s the nature of the business – but once good solid people are found they will be paid well. The crews will work on our own rentals, and we’ll contract out to other landlords. They will also help us flip houses for sale. We may have to make this company a reality because nothing like it currently exists in NEPA. If it did, we would have contracted with them by now!
Network network network!
The best way to get leads on good maintenance people is to network with other landlords and investors.
My husband’s group, Investors Network NEPA, meets the second Wednesday of every month, 7pm at the Iron Skillet, inside the Petro Truck Stop, Highway 315 in Dupont. The website is www.investorsnetworknepa.com
The Wyoming Valley Real Estate Investors Association is the local landlords group that meets the last Tuesday of every month, 7pm at Wyoming Valley Church inside the Dolphin Plaza at 1153 Highway 315 in Pittston near the casino.
Other groups can be found on sites such as www.meetup.com
There is strength in community. And it feels awful good knowing other people are going through the same issues you are as a landlord. You are not alone!
Join me next week for Lesson #3 that I learned the hard way.