Real Estate blog

Archive for the ‘Landlording’ Category

I was recently interviewed by Dave Dugdale who runs Rentvine.com, an online resource for landlords and rental applicants.

I’ve often stated that one of the most important factors in your success as a real estate investor is your ability to select, screen, and retain quality tenants. This is something that I think I’m pretty good at, which has helped me as an investor.

I was going to write an article about this not to long ago when, bam, I ran into a problem: tenants who stopped paying.

The tenants were a flaky young couple that I knew I might be taking a chance back when they signed the lease in May. But I decided to rent to them and mitigated my risk by signing a short lease (six months, with renewal contingent on timely payment), charged them first and last month’s rent upfront, plus one month’s rent as deposit. I won’t go through the boring details, but they ended up breaking the lease and abandoning the property while they owed me money. If you find yourself in a situation like this one here are some points to keep in mind.

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When it comes to returning a tenant’s deposit when he vacates a property I have tended to go down one of two paths. I either a) return 100% or b) keep most/all of it. I don’t tend to have a lot of cases that fall in-between.

I’m usually leaving some money on the table when I return 100% of a tenant’s deposit, but for me that’s ok. If a tenant leaves the house clean and the landscaping looking nice then I won’t charge him just because he left a few coat hangers in the hall closet.

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It’s hard to argue with the success that Robert T. Kiyoski has had with his Rich Dad series. Head over to Amazon.com and you’ll see almost fifty items on offer; Rich Dad in English, Rich Dad in Spanish, Rich Dad for women and kids. Even Rich Dad in Chinese. My personal favorite is the DVD Rich Dad’s 60 Minutes to Getting Rich. Ok, it’s a bit pricy at $79.99…but that’s a small price to pay for a DVD that will make you rich in 60 minutes, right?

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We’re so accustomed to having our intelligence insulted by politicians that we rarely complain about the dumbed down worldview that we’re spoon-fed by both sides of the political aisle. The partisan mudslinging that we’re subjected to these days makes it hard to imagine a world in which candidates might campaign by voicing nuanced, well articulated views on the complex issues facing our country. That’s too much to ask for, but at least we get to watch the primaries, which offer up the entertaining spectacle of Democrats savaging fellow Democrats and Republicans bashing Republicans as they fight for their respective nominations.

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The media scares me. We all rely on journalists to make a big world small and help us digest current events, but whenever I see an article on something that is within my area of expertise – like energy policy or real estate – I’m often appalled at how badly some publications mangle the facts and principles in order to spin an entertaining story.

The worst offender among the popular press, hands down, is USA Today.

You can take courses, attend seminars, and read till you’re blue in the face - but there’s nothing like learning by doing.

Real estate investing is a long term play, and a few days ago I introduced five ideas that I feel are key to being successful as a buy-and-hold landlord.

Well I haven’t been a very diligent blogger as of late, but my excuse is that I’m now working full time for one of our presidential candidates. I’m told that mixing business and politics is unwise so I won’t specify which candidate - because If I did I would alienate 100% of my Republican readers and almost (but not quite) half of my Democrat readers. So – I won’t say who I’m working for.

But I will say that being on the road non-stop (I’m writing this dispatch on a plane from North Carolina to Puerto Rico) has acquainted me with some of the finer points of being a long distance landlord – a good reminder of why I prefer to invest close to home where I can keep an eye on things. What’s saved me is the fact that I have developed a bullet-proof relationship with an excellent realtor that I trust and with a handyman/contractor that values me as a repeat customer and not an easy mark. So although I like to keep an eye on things I realize that the world isn’t going to come unglued while the cat’s away.Good investors who have developed reliable relationships realize that they’re not indispensable - their businesses continue to run in their absence.

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Successful real estate investing is a long term game. Following the right strategy with discipline and perseverance will allow smart investors to weather the market’s cycles and build equity. Time and leverage are your friends.

But don’t underestimate the importance of the time part of the equation. In the past I’ve compared the performance of the real estate market with the stock market. For the disciplined investor, real estate performs favorably to the stock market over any reasonable period of time, but you’ll need a few years for the strategy to be effective. If you’re only going to stay in the game a year or two you might as well buy a mutual fund and call it a day. But investors with perseverance will see their wealth grow much faster by pursuing a prudent real estate strategy than they will betting on the stock market.