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Management Tips from MRLANDLORD.COM Ten Reasons Why Landlords Should Not Feel Guilty About Evictions

Posted on 01. Aug, 2019 by in all, Magazine Articles

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Create More Value, Increase Rent

Let’s say you have a single family rental: 1,200 square foot, two bedrooms, one bath that also has a living room and family room. Your last renter has recently moved out and you are preparing to get it ready to re-rent. You take Mr. Landlord’s advice about the first thing on our filling vacancy checklist which is NOT to simply look at the comps to see what is the going market rent, but to instead determine how much rent you want.

Comparable rental homes in the area rent for $1,000 a month. My friend first determined that he wanted at least $1,200 a month. So he walked back through the house to see where he might be able to create more value for the renter. He realized that the family room in the back of the house could become and get marketed as a third bedroom if he closed off just one wall and added a closet. He found that this type of value creation to be particularly profitable, because after doing this improvement, he was able to demand a higher rent ($1,200) in his area for a three-bedroom instead of a two-bedroom. 

By first determining how much rent he wanted, that challenged him to look for ways to create more value. In turn, he challenges you that the next time you have a vacancy do not be so quick to go with market rents. First determine how much you want, and if that is more than market rent, look for ways to create more value. 

Note: If you consider utilizing the above idea to increase value and income, you may also need to check if your city requires any permits for housing modifications. 

 Ten Reasons Why Landlords Should Not Feel Guilty About Evictions

  1. Always start evictions immediately. If the tenants need extra time, the court will give it to them.
  2. You don’t make a profit from evictions. You only cut your losses.
  3. You’ve already supplied the “needy” tenant with free housing. You’ve done your charity work. Give someone else a chance.
  4. If the tenant doesn’t have a friend or relative to help him out, doesn’t that say a lot about the tenant’s character?
  5. If someone asks you how you could put someone out on the street, ask them to pay the rent and you won’t evict them.
  6. The tenant has kept possession of your house and is stealing from you. He has stolen your home, utilities, and your services. The tenant is a thief. Do other businesses let your tenant go in and take from them?
  7. Letting a tenant stay in your house who is not paying rent is like giving your tenant your debit card and telling him, “Feel free to spend. I like giving out money interest free without knowing I’ll be paid back”.
  8. How would you feel if you worked all week and your employer said, “I don’t have a paycheck for you?” Guess what, your tenant has just told you that! Do you work for nothing?
  9. If you want to maintain your apartment or house and let the occupants live rent free, you should decide who the occupants will be, not your tenant. There are lots of people you may find more deserving.
  10. Your tenant is taking money, time and energy from you, which you could use to provide for your family’s needs. Picture yourself trying to tell your child that you could not buy him or her an item or send him or her to college because you had to pay a stranger’s rent so the stranger could buy gifts for his or her child.

Let Residents Play a Part in Lease Creation

Does your lease have any clauses which allows the resident to play a part in the decision making (lease creation) process? Review your current lease to see if your document is totally one-sided in favor of the rental owner. Are there ANY provisions in your lease which purposely allow residents to have choices in how the lease will be written so that they can choose what clause options better meets their needs.

In today’s rental environment, the more the resident feels they are playing a part in the leasing process, the longer they will be content and go along with your program and policies. This means the longer they will stay. Why wouldn’t they, if the resident played a part in establishing how the rental relationship will go? More and more residents are choosing to rent from rental owners who cater to and show consideration for the needs of the rental residents. Therefore, consider adding lease provisions which offer them choices and addresses their needs and rental preferences.

Regarding the last point which I consider vital to my success:  While some landlords try to make their lease a document that fully protects their interest, I believe that your agreement between rental owners and residents should have provisions that benefit BOTH parties. The resident should be able to perceive that there are benefits in the lease for them. For me, this means including unique provisions, like ones which inform residents that they are rewarded for length of tenancy and for referring others. I also go as far as allowing my residents to play an active role in helping to craft a few of the provisions in the rental document.

For example, residents can offer their input and preferences on issues regarding such matters as:

  • rental due dates
  • rent payment method 
  • security deposit amount
  • property upgrades
  • length of rental term,
  • allowance for pets, and 
  • how the relationship may be terminated

By allowing your residents to play a part in the drafting of each lease, that’s one of the key ways I work to develop and maintain a win-win relationship with my residents, which is vital to my long-term success. Consider adding clauses which offers options on how a lease can be drafted. 

 Would You Like Fries With That?

We’ve all been asked by our friendly McDonald’s drive-through person whether or not we’d like fries along with our order. There’s solid reasoning behind that question. Once a customer has committed to purchasing an item at a given price, the add-ons are easier to sell. So, if you’re working with a customer who has made a commitment to rent a home at a given price, up sell them on a garage or washer and dryer for an additional fee. Simply ask: “Would you like a washer and dryer with your home or apartment as well? It’s only $X more.” You’ll find it’s easier to sell it at that time than previously in your demonstration, especially if the prospect has a pre-defined monthly budget in mind.

 What’s the First Response You Use?

What are the first words out of your mouth when you hear one of your residents say, “I lost my job and I will be late with rent this month”? Here’s the top four landlord responses shared on MrLandlord.com. Which one is your favorite?

1. “I’m so sorry to hear about (excuse). How will you be paying the rent to prevent 

      eviction? Will your emergency contact be able to help?”

2. “If you have HALF the rent, let’s switch you over to the bi-weekly pay day plan effective 

    now.”

3. “Sorry to hear. Rent is still due as normal. We have a list of agencies that can help if you 

     need it.”

4. “If you can’t pay let’s help get you moved out by the 5th so you don’t get an eviction on 

     your record.”

Offer Solution, Increase Your Rent!

A Missouri landlord shared how he successfully uses the Pay Day Rent Payment Plan.  Read on: 

I’d like to think I’ve learned a few things in my past decade as a landlord. For example: Just five minutes ago I got a text from a resident, “Just wanted to you let you know my paycheck is going to be a little late since the 1st is on a Sunday, but I’ll have rent all paid Friday (the 6th) with late fees.”

I’ve had this resident for almost seven years. She’s rarely late and reliable when she is. She always gives a heads-up and never fails to follow through as planned. I don’t file until the 7th anyway, so the 6th is do-able for me. In the PAST, I would’ve gotten into a funk about being on time but then I accepted that she’d pay with late fees. But NOW, I respond, “Thanks for the update. Have I told you about our bi-weekly pay day plan? It can help avoid late fees. Let me know if interested.” She responds, “YES PLEASE!”

I’ll email her the agreement Monday. If she signs up, cha-ching! I just got an 8% raise. For those not familiar with the pay day plan –  it’s 26 bi-weekly payments at 50% the normal rental rate which means I get one full extra month (13 full months) per year, which is an 8% bump over the standard yearly rent rate. The benefit to the resident is that now all her payments will be on time and I can give her a flawless reference any time someone asks. The benefit to me is obvious — more rent.

Residents fall short on rent for whatever reason, i.e., money for travel for funerals, medical emergencies, fix car, etc. The rent money has to compete with all these priorities. The ironic thing I’ve found is that sometimes residents will have 75% of the rent, but they will wait to pay until they have the whole 100%. This can lead to a delay of four or five days during which late fees add up and I start getting nervous. BUT, if I give them a way to pay 50%–Well, that’s manageable! Times are a changin’.  I guess I am too! 

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