Andrew Schultz

As an investor’s real estate holdings grow, more and more tenants will call with maintenance requests. These requests can range from emergencies to frivolous, but will require attention at some point. How should maintenance calls be processed? What about taking calls in so they can be logged and prioritized? Don’t get bogged down, it isn’t as bad as it seems. With a good system in place, managing maintenance tasks can be easy!

There are a lot of programs out there currently that will allow investors to log, track expenses, and run fairly sophisticated reports on maintenance tasks, but in the early stages, it may be possible to get by with a simple spreadsheet. Most spreadsheet software has the ability to add multiple sheets to one file (normally they look like tabs). Prioritize using 4 different sheets, Emergency, General, Cosmetic, and Tenant Caused. Each spreadsheet should have columns for address of property, tenant name, phone number, work requested, and work completed. This allows the quick scheduling of work at a glance, the ability to track when it is completed, and have access to tenant information as necessary. Now, when calls come in, they can logged and prioritized as necessary.

<!--more-->How do the calls come in? My suggestion is having a separate phone line or voice mail box that tenants call with maintenance requests. At first, this may be just an additional cell phone that the investor (or his maintenance guys) checks the voicemails on regularly. Investors may want to give tenants one number for their general maintenance requests, and a second number to a live person for their emergencies. However, some tenants will try to call all requests in to the live person. Explain to them that if it isn’t an emergency, it needs to go through the request line so it can be logged appropriately.

How do calls get prioritized? When broken down into 4 groups, Emergency calls would be handled first.. These are the calls such as flooded basements, hot water tank burst, fires, and other true emergencies. These will be the calls that someone will need to tend to immediately.

General maintenance tasks would be things such as lock changes, broken windows (unless tenant caused), loose steps, and other requests that are important to keep the property functional, but not urgent. These should generally be handled on a first come first serves basis, but eventually all systems find a way to sort things internally by importance.

Cosmetic tasks would be things that tenants request that really aren’t landlord responsibility, or things that while esthetically pleasing, aren’t necessary to keep the property functional. Examples of this could be painting a wall in a tenants unit, gardening (and lawn mowing!), and upgrading light fixtures (such as an upgrade to a ceiling fan from a standard light).

Tenant caused repairs will sometimes start off in the general maintenance tasks list. Once a task is inspected, it may be determined that the tenant caused the problem, such as a broken window, or a door that was damaged. These tasks will generally fall into the tenant caused repairs. Often times, the tenant will need to be charged for the repairs, and work may be held off until after the tenant has done so.

Scheduling maintenance tasks is not an exact science, and over time systems evolve as necessary to schedule and complete work in a timely fashion. Having a system to prioritize and organize maintenance calls, however, will be the linchpin of the system.

Bird dogging and wholesaling are two activities in real estate that while similar, have one very fundamental difference.

Bird dogging can be seen as a way to get into real estate, without having to put a lot of money down to do so. Bird doggers will investigate a market to find the best deals available, using resources such as foreclosure lists, auction lists, distressed property lists, and the MLS where available. Using a variety of formulas, they will determine what properties would make a good investment based on their current value, cost of repairs, and estimated value after the repairs are completed. They then forward these deals to real estate investors, and are paid. Their pay may be based on the referral to the deal, or at the closing of a deal. Normally they are paid more for “closed” deals than for referrals, but the pay day is usually a few hundred dollars on a closed deal. <!--more-->

Real estate wholesalers are similar to bird dogs, but there is more of an investment in both time and (sometimes) money. The real estate wholesaler will find the deals, the same way a bird dog will. The difference is in what happens next. They will then put the property under contract. At this point they then find an investor to buy the property from them for more than the price of their contract. The difference between the contract price and the price the wholesaler sells the property for is considered their “consultation fee”, and can range from one to several thousand dollars! There is a MUCH bigger payoff for wholesalers than bird dogs.

By leaving enough value in the property for the purchasing investor, wholesalers allow for rehabbers to purchase property (still at a deal), do the rehab work to bring the property to its true value, and resell it, thus turning a profit for themselves.

Many people will start off as bird doggers before moving to wholesalers, because of the amount of money involved in becoming a wholesaler. Many wholesalers then move in to real estate investing themselves. This stepping stone effect is common, and there is a lot of money that can be made in wholesaling!

(This post is part of our “Landlord Basics” series, which seeks to help the new landlord / investor understand some of the basics of tenant relations and property management. This series can also be found at http://www.andrew-schultz.com)

You’ve found the tenant you want to place in your property, collected a security deposit, and now it’s time to sign a lease. What is a lease? What makes one lease better or worse than any other? What can your lease do to protect you as a landlord or investor? This article will answer all these questions, and more.

Simply put, a lease is a legally binding agreement between tenant and landlord, which states that the landlord agrees to allow the tenant to use the property for an amount of time, and in return the landlord will be compensated in whatever fashion has been negotiated between the parties, usually in the form of money. A lease is typically written for a specific term, commonly 1 year. Other terms are sometimes offered, such as 9 months (or a student lease), and 6 months (half a year). This differs from a rental agreement, which is usually a month to month contract between the parties. There are other significant differences, which will not be covered in this article.

Leases can be obtained in a number of ways. Many real estate agents, investors, property managers, and lawyers have leases that they will be willing to give you a copy of. You can also find leases in many office supply stores. In addition, there are many websites which offer leases online, for free or at a cost. Keep in mind that you will often get what you pay for. At the time of this writing, my preferred lease is written by an organization called The Landlord Protection Agency. The leases, and other forms they provide, can help make managing your property infinitely easier. The reason I like their lease is the built in protection for the landlord. It is very comprehensive, yet very simply spoken, and easy for both tenant and landlord to understand. This becomes important when the tenant needs to know their responsibility, or the landlord needs to enforce a portion of the lease. You should always have your lawyer review your leases before enacting them, to protect yourself further.

A good lease will spell out the terms and conditions of the lease, and detail who is responsible for what. Some things that are particularly important to spell out are:
* Utility Responsibility – who pays for what utilities?
* Maintenance Responsibility – who will make or pay for repairs when something breaks?
* Subletting and Assignment – can the tenant sublet or assign the rental unit to another individual?
* Pets – Are pets allowed? Is there an additional fee?
* Appliances – What appliances, if any, are included? Be sure to record make, model, and serial numbers.
* When is the rent due?
* What happens if rent is not paid? (late fees, eviction, etc)

This is most certainly not a comprehensive list, and there are requirements and restrictions that vary from state to state, which is why I suggest consulting your lawyer once you have determined what you will be using for a lease. Having a lease that protects you and your property is a key to your success as a landlord or real estate investor. Your lease, along with proper documentation, will help you and your tenants enjoy your investments for years to come.

(This is the first post in a new series aptly named "Landlord Basics". This series aims to help the new landlord / investor understand some basics of tenant relations and property management. This series can also be viewed at http://www.andrew-schultz.com)

You’ve done your homework and purchased a property or two that can provide you with positive cash flow. The broken has been fixed, the old has been renewed, and it’s time to place some tenants! After screening your tenants and drawing your lease, you’ll want to collect rent and security deposit prior to move in. But what exactly is a security deposit, and why is it important?

A security deposit is money given to you by a tenant (usually prior to move in) that acts as an insurance policy of sorts. This money can be used to pay for damages caused to the unit by the tenant during the term of their tenancy, and is a vital portion of the tenancy arrangement. Such items could include broken windows, holes in walls and carpets, and failure to completely clean the unit at the termination of tenancy. Keep in mind that security deposits should not be used to cover normal “wear and tear” items such as repainting, as this is pretty standard tenant turn over.

Security deposit amounts are usually based on the cost of the rental. For instance, many people choose to charge an equivalent amount of money for security deposit as they would for one month’s rent (ie: $500/month for rent = $500 security deposit). However, this amount could be more, perhaps the equivalent of two months rent. This is something that you will determine based on local market trends, and possibly quality of tenant. You should also write the amount of the security deposit into the lease, and if allowable in your area, state that the security deposit is not to be used as rent.

Security deposits have to be handled differently, and it varies from state to state. In some cases, you may have to handle a security deposit differently depending on how many units you have in a building. Your local board of Realtors, investor’s club, accountant, or a real estate lawyer can help you determine how exactly to handle security deposits. In many instances, security deposits will need to be held in a separate account (often interest bearing). In some states, you will be required to pay your tenants interest on the security deposit account.

There are also regulations regarding the time frame in which a security deposit needs to be returned to a tenant after they move out, if one is due. A good suggestion for any move out is to walk through with the tenant and mark damages / deficiencies on a standardized form. When the tenant hands you the keys, have them review and sign the form. Later you can deduct for the damages and send the tenant a statement showing deductions from their security deposit, along with a check for the remainder, or a request for payment on additional damages.

This primer on security deposits should give you some form of idea on how to collect, hold, and return security deposits. For more information, you can contact myself or any of the suggested resources in the article.