Screen Your Tenants, Trust Your Instincts

Real Estate Investing No Comments »

Through the course of this whole fiasco, I have confirmed one thing. Screen, screen, screen your potential tenants. Now I knew that this was important in the beginning, but it has really been brought to life with the set of circumstances I am dealing with now. The nice thing is, all my tenants have caught up, and so I am in clear, with some extra income due to tenants paying late fees.

But not only do you need to screen your potential tenants, you still need to put some merit on your instincts. If someone has an excellent rental application, and what you are able to verify is true, but they just don’t feel right to you, it may be a good idea to steer away from them. One of the tenants that I am renting to had problems in the past, and I had a bad feeling. But I decided to give her a chance, and I now have to deal with late rent every month. Now she has come up with the money, so in the end I am doing better than expected due to being able to collect late fees, but it is still a hassle.

So take it from me, check the rental, credit and job history of your potential tenant, and then trust your instincts for the final decision. You will probably find yourself in a much better position in the long run…


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Getting Back on Track in the RE Game

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It has been tough, but the Lord is good. The two renters I mentioned in my post on Eviction Notices decided to pay their rent and fees. I got the full amount from both toward the end of the week last week, just before submitting the actual eviction notices. So getting an extra $300 or so in late fees really makes the picture look better when I look at the net effects for January.

As you may or may not know, eviction hurts everyone involved. There are no winners. The tenants lose their home, and the landlord loses rent, court fees (assuming they don’t move out when instructed) and advertising costs to find a new tenant — everybody loses. So it is safe to say that I was very relieved to see the money come in.

So now it is back to concentrating on getting 4 different properties that I am managing leased. I am getting many calls in on the different properties, just haven’t gotten anything closed. Most people I am running into have bad credit, and I really don’t want to work with people that can’t pay. The two renters that I have had problems with both had bad credit, however I do have another tenant with bad credit that has paid on time every month. Are there any tenants out there with good credit? Please step up, I have some quality properties to put you in to.

The latest 2 duplexes have really been a great investment. They are making far more than the 1% that the typical investor looks for. One duplex that we have, if the top rents for about as much as the bottom (they are identical so it should rent for about the same amount) then we will be making over 2% on the rent. So we will see what happens, I need to go now, I have a showing for that duplex at 10 AM. Please leave your feedback/questions at the bottom of the page.


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Getting a Handle on Your Finances in 2008

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This is a good article on starting off your 2008 finances in the right direction. It gives some tips about budgeting, getting out of debt, and just sound advice about sure footing in personal finance. We all need to do better with our finances in 2008 than we did in 2007, so click the link, read up on it, and then come back here and submit your questions, I’ll be glad to answer them. Check it out guys (and gals).

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The Rental Day of Reckoning

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It has come to it. The last day for redemption. If my two renters in default do not come up with their required rent and late fees today, and eviction letter will come tomorrow. This is especially difficult for me as there are no winners in an eviction. The tenant loses their residence, and the landlord is left with no potential income. But letting them stay without paying is even worse for me as the landlord, so they will have to go.

Texas law says that I must give them 3 days notice to vacate the property (unless the lease contract specifically states otherwise), and even at the end of the three days, I still cannot force them out. If they refuse to move out, then I have to go to the Justice of the Peace, and file an eviction, as well as pay a $65 fee for the action. Just a side note, but where are my taxes going? I can’t think of anything that I don’t have to pay additional for, except for the public park that my wife and I take walks in.

On a better note, one of the duplexes we just bought has the new water meter installed. So now I will need to get with my plumber to do the switchover. At least this tenant is paying…


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Renters Still Not Paying…

Real Estate Investing 2 Comments »

Everyday it is the same thing…no money. I just don’t understand people. To me, paying your rent/mortgage should be at the very top of your priority list (except for tithes and offerings). I have gone hungry and would do it again if it came between paying bills and eating. In college I had a part time job and just about no money. I just barely had enough to cover the rent and bills. So what I did was bought 59 cent bread, 49 cent lunch meat, slice cheese and a little mayo and rationed it out as long as possible. On occasion I would buy the frozen burritos, and ration them as well. Long story short, I lost about 20 pounds between graduating college and getting my first career position.

But most people these days don’t do that. They put there cable, internet, phone and a host of other bills ahead of their rent. I know I am just venting here, but it really doesn’t make sense to me to see a tenant that has other non-essential bills that they are paying when they cannot maintain their rent. Am I crazy?

Has any other investors out there been in my shoes? Please share your stories, to give a little encourage to the rest of us.


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Eviction Notices

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Well I guess that I was mistaken, or perhaps mistaken in renting to single mothers with credit problems due to divorce. The renters that I have in my trailer and in my 2 bedroom, 1 bath house still have not paid for January’s rent. Each of these tenants have been late every month, but have successfully come up with the rent and all late charges. But February is getting oh so close, and I need to do something about it. I have never had to evict before, so this is going to be a tough one for me.

I was able to get a phone conversation with the tenant in my trailer, and she said they are waiting on getting a tax refund check in, that was supposed to be in last Friday. I am fully aware of how people will lie and deceitfully use others to get what they want, but I am going to hold off on the first notice letter until tomorrow, as they said that the money should be there today. We will find out…

Regarding the single mother in the 2 bedroom, 1 bath house, I guess I am just going to have to submit notice to them. I am no longer able to reach them by telephone (I guess they had their number disconnected) and I have driven by a couple of times, and there has been no one home. I really hate the concept of eviction notices, but I guess it is a part of being a landlord.

But as a word of encouragement to all the other real estate investors out there, keep your head up during these times. At the very least, I will be able to keep the deposit on the house, and the location of it merits a quick turnaround, so maybe I can get someone in there pretty soon.

Till next time…Sign up for my RSS feed, and get the latest updates automatically through a medium of your choice.


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An Alternative Budgeting Method

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For some folks out there, budgeting on a “month cost” method just doesn’t work for them. They have enough money coming in from their job to be able to afford the fast food, movies, and other entertainment that will just kill your budget. They don’t really have the concept of staying on budget, and sticking to what they had planned to spend. There is one such lady in our Church that I talked with a few days ago regarding just such a situation.

In this case, she is a single mother, two kids, and works as a nurse for a local hospital. She makes good money, and is able to afford the little things like going out to eat a lot, getting drinks at the gas station all the time; little things that will just destroy a budget. She wants to do better with her budget, and has tried at one point to chart all of their expenses, and got depressed when she noticed what she was spending.

For her, sticking to a monthly budget would be hard. She identified their main problem though - going out to eat at fast food places too much. This is a problem for a lot of people out there, but with a little discipline, it can be overcome. Since she has trouble maintaining a monthly budget, I offered this solution to her:

Instead of trying to keep a dollar tight budget, how about setting a maximum number of times per week to go out?

Let’s say she limited their number of times to go out to 3 per week. If she is able to stick to that, she would see a dramatic decrease in the total money spent over the month. Try it out sometime, just promise to only spend the additional money at the gas station or the fast food restaurant 2-3 times per week. So when you get the urge to go inside the station and get that coke, you may back off, to keep to the limit you set. I use this method as well, we go out twice a week, often I will grill once a week, and on a rare occasion we will get a Dr. Pepper at one of the local gas stations (it’s something about the way they mix the Dr. Pepper in their fountain drinks, it’s just really good).


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Some Simple Credit Card Warnings

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Credit cards can be disastrous, and the credit card companies are becoming even more sneaky when it comes to interest and fees. Here are some quick tips to watch out for when dealing with these financial monsters:

  1. “Fixed” Interest isn’t always fixed.
    Often, credit cards have clauses in the terms and conditions that will allow them to jack up your rate in the event of default, or even based on continual credit reviews they perform on you. That means if you have a 30 or 60 day late payment on a different line of credit, your credit card may jack the interest rate on you, even if you have been perfect in your payments with them.
  2. Don’t go over your credit limit.
    An over-limit fee of $20, $25, or more is assessed for going over your credit card’s limit. This may not be a one time fee either. They may charge this fee each and every month you remain over your credit limit. Most credit card companies have a way for you to review your account online, use this service, and keep a close eye on what you are spending.
  3. Make timely payments.
    I can’t stress this point enough. You cannot be late with your credit card company. You must make your payments, and establish good credit. All it takes is a couple of late payments to really put a bite in your credit, and then when you want to go buy that house, you can’t.

I have said it before and will say it again, credit cards are a good way to build up credit when you have none. However, they are very dangerous, because you get the euphoric feeling that you can get whatever you want because you have a piece of plastic to buy it with. Be smart, use your card as a credit building tool, not a license to shop.


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After Christmas Blues

Paying Off Debt, Budgeting, Credit Lines Other No Comments »

The holidays are over, but that doesn’t mean they aren’t still going to haunt you for another month or two. In fact, those credit card bills are probably going to be showing up very soon in the mail. However, don’t let the post-holiday bills get you down too much because there are a few strategies you can use to get you through the holiday bill season, such as a simple cash advance.

If you’ve been like most people and swiped the credit card through the holiday shopping season, then you’re probably going to have a hefty bill coming soon, if you haven’t received it already. There are a couple of ways you can insure you get that bill paid off and a budget and cash advance can go a long way.

Subtract your expenses from your income and see where you can pay a little more. If you have a positive number when you’ve subtracted your expenses from your bills then you can figure out how much extra you can afford to spend. If you have a zero or a negative number then you need to take a step back and figure out how you can make more money or spend less.

A cash advance is a tool that you can use to help you through those weeks when you need that extra cash to pay your holiday bills off. A cash advance has simple requirements for you to meet and you may even be able to obtain a cash advance that can pay your entire post-holiday bill off. This makes a cash advance ideal if you will have the money to pay it off, but you need to send the bill off now. Either way, a cash advance can make dealing with the post-holiday bills that much easier.


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Financing a Used Car

Budgeting, Car Finance 1 Comment »

Want to get taken to cleaners? Then consider buying a used car from a dealer. Even certified dealers will swipe the last dime from your pocket book. I am not trying to be hateful here, but I have a friend that was a car salesman for a year or two, and he told that they go for every last dime they can. They try to sell you on “Intergalactic Personal Car Protection” and a whole mess of other baloney add-ons that just boost their profits, not adding any real value. They will also go for the highest interest rate possible when providing financing for you. I am going to give you a few tips when looking to buy a used car:

  1. If at all possible, use cash.
    This is the most beneficial tip I can provide. If you use cash, you will be able to get the best bottom line price, and can more easily turn down all the baloney add-ons. Be sure to get the title in hand when paying cash.
  2. If you are going to finance a car, don’t use the dealer’s financing options.
    Again, the dealer is not your friend, they are trying to milk you for the most money possible. Look at the rate and terms they provide, and compare them to quotations you have already obtained from your bank or other lender. Use the power of “NO” when dealing with a salesman. If they tell you they can’t give you the price you want on the car unless you finance with them, just say no. You will almost always be able to work a better financing deal if you go through your own channels outside of the dealer.
  3. Get some kind of guarantee or warranty.
    Get the longest, highest grade warranty possible. Cars break down, especially used cars, and even more so used cars that are sold from a dealer or third party. Getting the longest warranty possible will guard you against major repairs that will eat your budget’s lunch.
  4. Have a mechanic friend checkout the vehicle before purchase.
    This is immensely important when buying from an individual seller. This kind of person usually has a reason for selling the car, and that reason is almost always because it breaks down a lot, and they want to dump it, and get a better car that won’t have so many problems. This means many times you will be getting a lemon. Almost every time that I have bought a used car from an individual seller, I have been forced to make substantial repairs, almost immediately after buying. Get the advice from someone who knows about cars, I can’t stress that enough.

Bottom line, use common sense. Get estimates on interest rates, maturities and other terms from several different lenders before making your choice. Avoid dealer financing if possible. If it were me and I had to finance a car, I would not finance it for more than 5 years (60 months). The depreciation on the vehicle will outdo the loan before you are finished paying on maturities that are longer than 5 years. And if you ever needed to sell the car, you definitely don’t want to be in a negative equity position.


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