3 MAJOR AREAS OF PROPERTY MANAGMENT: 1 of 3 Attracting and Screening For Great Tenants

By: Mark Frentz
www.akerahomes.com
mfrentz@akerahomes.com

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Start of The Process

I have heard many people shy away from investing in real estate providing this one reason: "I don't want to deal with tenants". I want to say two things to start this post and mini-series.
1. There are a lot of bad landlords out there and I believe it is unfair to simply blame tenants for the lack of skill or care that a landlord brings to the table.
2. You have complete control over who you rent your property to!
In the spirit of doing something to change your tenant situation as well as your investing experience... Wouldn't it be great to have little to no problems with tenants ever? I purchase my first rental property at the age of 19 and I can honestly say that I've never had a tenant I had difficulty with. Now, the first couple of tenants I had were less than ideal but I've realized since that time that I handled the situations wrong. I have never once in my life had a situation where my tenants trashed any property I was renting out and I would like the same for you. Without further delay I give you the art of attracting and screening quality tenants. In the 2nd and 3rd posts I'll discuss how to keep great tenants and prepare for your next great tenant.

Attracting Great Tenants

Before you place an ad, you need to determine what your rental rates will be and create a great rental ad that stands out. To determine your rent you need to understand what market rent in your area is. This is difficult for some people. Here's my advice: Just because the property is yours and you want to make money in it does not mean it is worth the same as every other property out there. If you have difficulty being objective about this, have someone else help out. Once you have the average of market rents for your place in your area I would recommend lowering your rent by a little bit. I typically keep my rent at 10-20% below the market average. That way I have more people walk through the place to find that ideal applicant. Now, to create a great ad you want to take great pictures (hire someone to do this because you aren't as good at photography as you think you are). Once you have your ad ready... post it online (Kijiji and Craigslist are musts, but every local market has its own online rental websites and/or classified sites that are popular. find them and use them). Market your rental in other ways thinking about whether it is worth your time. Two days ago I saw a 'for rent' sign in the window of a house at the end of a culdesac. This won't get great exposure, so decide on whether or not it is worth you time. I've always found online ads work the best for myself. One last thing here... Try to post ads and begin showing the property at least 30 days before the potential move in date. I've found that a ton of really responsible applicants are looking for properties well before their current lease is up.

After having applicants contact you make sure to contact them back quickly and watch how long it takes them to respond to you. I once had a family that had a pet (and I was advertising the place as not being pet friendly). The person who contacted me let me know she was aware of no pets, but was wondering if I would make an exception. I told her I wouldn't in a respectful way. She responded by thanking for getting back to her and wishing me the best... Now, if you know typical rental communication you know that it stood out that she was making an effort to say thank you. I ended up connecting with her and giving her family a showing because of how she stood out. Then I ended up renting to them and they were a fantastic family. The place was in pristine condition when they left. If you want to stand out to the great tenants, treat every piece of correspondence with respect on your end as well. 

When you speak with a prospective applicant on the phone make sure to pre-screen them. Do they have enough money for the first month's rent as well as the security deposit on the day of the showing? If not, it's a red flag that this may not be a long term fit.  Only show the rental to applicants who strike you as responsible people. Race, age, ability vs. disability, gender, occupation... I don't care about any of these. What I want is to know whether or not these people are responsible and respectful of this contractual agreement. Make a list of questions and try them out. Find out what works for you to glean whether you think they can afford the rental and will take care of it. Some people are simply kicking tires. Unless they are interested it probably won't be a great use of my time.

Next, you want to schedule showings or even open houses. I like to show my properties in 15 minute intervals and spend time with each applicant. I get a great sense of who they are and often hear information that helps me in my decision making. I have often heard applicants complain about their current landlords and even once heard someone say they would do anything they could to hurt their previous landlord... I took that as a red flag. Show your unit and ask questions. Get to know people. Some investors charge a $35 application fee. I haven't done that, but I can see how it would only bring serious applications to the table and saves you a lot of time. Remember that when you are following up on prospective tenants you are working and can be compensated for your time.

Processing applications is so important. Do your background checks. Ask previous landlords what their experience was. Remember that you are entering an agreement with a very expensive asset. Treat it as an expensive asset! Rent it to an applicant that you feel will best be able to meet your criteria of paying rent on time and treating your property with respect. Make sure that you are consistent in your rental standards. If you are racist... you need to grow in your understanding of the world. Enough said. When you choose an applicant to rent to, ask for the security deposit and first month's rent in order to sign the contract. As soon as the contract is signed you also need to take the needed time to let every other applicant know they did not get the property. Know that there are times when two great tenants will apply and I can only choose one... In that case it is best to also ask to keep in touch with the declined applicant. 

Note: Keep in mind that what I have provided so far is an overview. There are different laws and regulations in each province and state and you need to know the laws in your area. 

Lastly, complete a lease checklist which should include:

1. The lease (initials on each page)

      -Explain every detail. The better both parties understand this agreement at the beginning, the better your relationship will be moving forward. Miscommunication can cause serious difficulties later on. Make sure everything is communicated fully.

2. Copy of driver's licenses

3. Security deposit

4. First month's rent

5. Provide emergency contact numbers

6. Go through your initial walkthrough and sign and initial this agreement as well

     -Explain this agreement and the importance from their perspective as well. Let them know what you consider normal wear and tear on a property. Again, communicate clearly.

7. Hand over the keys

Summary

The key word to all of this is: RESPECT! If you treat others well, you will be treated well in return. I know of many slumlords in and around the areas I invest in. They are awful people to deal with and typically find tenants that don't have many reasons to respect them. Be the person you would want. As a general rule you want to communicate well and give your new tenants some space. If you trust them, then trust them (with verification). Respect your side of the agreement as well.


Here's to your future of risk-averse investing!

If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html

How (not to) to retire well beginning when you’re 20-35 years old!

By: Mark Frentz
www.akerahomes.com
mfrentz@akerahomes.com

Remember: Please share this article if you find it enjoyable










If you are like the average Canadian I have something extremely important you need to know: You don’t really want to retire with a lot of money regardless of what you think.

Now, this may sound harsh, but it's true. Today's post will focus on priorities and my hope is that, over time, your retirement will become a higher priority than it currently is.

The are very few people reading this post who will fall into a different category; those who truly desire to retire well in every way (not simply with money, but also strong relationships with family and friends, feeling healthy and strong, and a leader in your field). For the second group... I would recommend not even reading this post because you're well beyond it and you will simply read what you've already known for quite some time.

How can you work to quickly destroy your dreams of retiring well? I'll focus in this post to change your mind, even if just a little bit, in order to provide you with something better now and in the future.

7 ways to quickly ruin your retirement at a young age:

1. Finance a new car

The reason this is a killer is that you take on terrible debt on a depreciating asset that keeps you stuck for years and addicted to ‘new stuff’. Owning a car costs way more than simply the monthly instalments and gas. Insurance and loss of value (both of which cost even more if it is new vehicle), wear and tear, winter tires, car washes, and many other small expenses that creep up cost a significant amount on a monthly basis. The fact is that a vehicle is always much more expensive than the advertised payments and drain your bank account each and every month.

Solutions?

Buy a less expensive used vehicle with cash. Don’t have enough cash? Don’t buy it.
Move closer to work and walk, ride a bike, or take public transit to work until you have enough cash to purchase a vehicle.

2. Rent OR purchase a home to live in by yourself or with only your immediate family

A mortgage is never an investment. At best it is a savings plan. When young it is best maximize your ability to invest rather than get stuck in a place with a large family. If you disagree with whether or not a house you live in is an investment, simply take time to read authors who specialize in investing in real estate. Robert Kiyosaki’s rule of thumb is: anything that costs you money each month is a liability and anything that puts money into your pocket each month is an investment. In other words… mortgage, taxes, insurance, maintenance, etc. all take money out of your pocket each month you own a property you live in.

Solutions?

Rent a property making sure you can sublet to roommates. This allows you to break even or even make money while learning to manage tenants
Purchase a duplex and rent out the other unit. Again, you can come close to breaking even and, when you are ready and have enough money to do so, you can keep the property as a full rental and move into another duplex. If you play your cards right and focus on property investments you can even eventually move into 4-plex, then an 8-plex, then possibly a 12-24 unit building. If you could do this (it isn’t actually too difficult if you know what you are doing) before you are 30, you can now marry, have kids, purchase your own property to live with just your family and the multi-unit property will pay you an ever-increasing amount each and every month for the rest of your life!

3. A financed degree

I could go on and on about this. I myself have a master’s degree in the field of psychology and love education, but borrowing money to do so is a terrible idea for most people. One of my degrees I paid for in cash and another with debt and I would never pay for a degree with debt again! The major reason not to finance a degree? You are spending borrowed money to not work for up to 4 years of your life (which is lost income of a 4 straight years!) in order to get a job that may not pay much more than the job you could currently gain with a few thousand dollars spent on informal education.

Solutions?

Work full time at whatever job you can currently get and use the next 4 years of your evenings to learn the skills you need to develop a successful business. This is well worth your time. During this period of time I highly advise you to hire a mentor/coach who will help you fast track toward success. Even an expensive mentor typically doesn’t cost more than around $10,000 as of this writing (though it can cost a lot more) and is often less expensive. There are less expensive options as well such as working for a person you desire to learn from for free in order to learn on the job. This is a win-win scenario because you will be learning from a master int he field and the only cost is your time. Sometimes you can even develop a relationship with this person and do business deals with them in the future.

4. Travel (because we've all heard it will be difficult later on in life)

The question is: Do you really do the best travelling when you are young? Would you not rather travel with your family because you have the money to do so? I have travelled straight out of high school and am currently planning a year-long trip to France with my family… Guess which of the two will be best remembered later in life?

Solutions?

Work hard when you are young so that when you have a family you can take more time off and do the things you want to do. Let’s be honest… If you really want something you will do what is needed to get it. If travelling is a top priority for you I’m positive it will happen. Practice some delayed gratification rather than spending $3,000-5,000 each year wasted in a week or two that really does not add a lot of value to your life and, instead, take $50,000-100,000 later on to create memories with your family that matter while educating them in cultures and languages around the world.

5. Work like a dog for your current company

This will kill you physically but, more importantly, it will kill your spirit. Do what you are paid for and work hard, but realize that life in the workplace for any company is tenuous at times and carries it's own risk. I have worked at a government job and can assure you that even those jobs aren’t as secure as every believes.

Solutions?

Develop a business on the side or invest with someone who does. When it is making enough money to quit your 9-5, you can then realize a completely different freedom than you have ever had with a J.O.B.
Invest in yourself; your own education and ability to do whatever you want.

6. Keep doing what others around you are doing and what is advertised daily to convince you it is the best way.

If you have doubts about whether ‘the heard understands how to live well financially’ simply Google 2008, 2009, 2010, or 2011 and read all you want about how well the largest banks in Canada and the US of A's bank's protect their assets and make safe decisions. The 'best' banks took advantage of average people (people who dream of mutual funds and stocks because that is what the banks advertise) in order to line their own pockets.

Solutions?

At the expense of sounding repetitive I will again recommend that you educate yourself. Hire mentors/coaches, spend some free time learning instead of watching hockey or the latest show that doesn’t matter and grow into the person you need to be to manage your money better than others around you can manage theirs.
If you honestly don’t have the desire to manage your own money you need to hire someone to do so. The best way to do this, in my opinion, is to enter into a joint venture partnership where your partner only makes money if you do. An example is that you put up the cash for an investment property and your partner finds and manages the property (only if they have a proven track record and this matters to them). This way they only make money if you make money and they will work harder and better for you and themselves.

7. Negative friends or, even worse, investing in a negative partner by getting into a long term intimate relationship without your eyes wide open.

If you are living every day with a negative person who does not hope in the future or has so much fear than s/he cannot allow you to pursue your financial dreams… this won’t end up well.

Solutions?

a. The simple solution here is to simply take your time. The world doesn’t end for anyone if you don’t have a serious relationship at the ripe old age of 25! Statistics I’ve read state that the wealthiest people are generally those who get into a long term relationship a little later (at least after the age of 30), have already set up their business, and then never separate from their partner. People with multiple relationship endings often find difficulty finding wealth in life (there are always a few exceptions).

Summary

Why sacrifice the enjoyment of now in order to work for your future? Because while our world typically sacrifices a lot for small thrills, deeper satisfaction from life ALWAYS helps more in managing the day to day if you believe in what you are doing... We come to another problem: What if you don't believe what you need to in order to feel deeply satisfied right now? That's another post (or many actually). Stay tuned!



Here's to your future of risk-averse investing!

If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html

WOULD YOU RATHER BE RICH OR WEALTHY?

By: Mark Frentz
www.akerahomes.com
mfrentz@akerahomes.com

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What's The Difference?

If you are rich it means you have a lot of cash coming into your hands. Typically the rich are those who have high paying jobs. Rich people also typically spend about as much as they earn, though not all of them. I have worked with and know people who earn about $250,000, after taxes, each year and spend at least that much. Actually, it isn't uncommon for people to make a lot and spend a lot, typically on liabilities.

If you are wealthy it means you have a lot of assets that actually are assets. Remember from my early posts that an asset, I agree with Robert Kiyosaki, is something you own that puts money into your pocket each month (cash flowing investment properties or business are the best examples) and a liability is something that takes money out of your pocket each month (vehicles, your own home, and material possessions that you may be able to resell, but do not cash flow or grow in a controlled or expected way).

Here's the thing... Wealthy people are often rich, but rich people are seldom wealthy. Think about the people around you; it doesn't matter whether they are athletes, dual income families where both adults have decent paying jobs, doctors, lawyers, dentists, wall street brokers, etc. These people look like they have the world by the tail and yet often are struggling financially in many ways to keep up the facade. These 'rich' people tend to drive the newest BMW or Mercedes and live in a very nice area of town. They dress well and go on lots of holidays, and yet they often are people who experience bankruptcy or, at the very least, have to work like dogs to make make enough in their 50s and 60s in order to retire in a way that keeps up the lifestyle.

Now think about some of the people you know who tend not to drive the newest vehicles or live in the newest houses yet hold a bunch of real estate investment properties or own a few franchises or even have worked a farm to pay off the debt they needed to purchase the land. This second group of people don't look like they have a ton of money and yet they typically enjoy longer intimate relationships with their partner, are far more rested when they take a day off and, when they choose to retire, live a comfortable life no matter how long they live. In my experience these people tend to live even better in retirement than they ever did during their working years. Many of them retire in the early 50s and spend a ton of time with their grandchildren. If you've ever read "The Millionaire Next Door" you will know exactly what I am talking about. Good research shows that those who have a lot later in life and live well are those who did not look rich for a lot of their lifetime.

So.... Back to The Question

I would much rather be wealthy than rich. I would much rather make certain sacrifices for the next 10 years in order to live like very few others do later in life. Most of the people I know tell their children to have a lot of fun in their late teens and early twenties because 'they won't get a chance later in life'. I completely disagree. I'm hoping to teach my children to work hard and make sacrifices early so that they can retire wealthy when they are 30 and enjoy marriage and kids and travel and giving to others and figuring out deeper purposes in life for the last 50 years of life. I believe we often have it backward and the statement that people won't get a chance to travel and enjoy life later on shows that many people around me do not believe they have a chance at wealth. With this mindset it makes sense to enjoy life as much as possible and as early as possible with very little focus on the future.

A Challenge

Here's my challenge to you. First you need to ask yourself what you want in life. Do you want a midlife crisis from working hard but without a true purpose in life? If so, pay no attention to posts like this (actually, if that's what you want you have already probably stopped reading). If you want more in life and you want to life like very few others live, then you need to begin asking yourself another question: What am I willing to sacrifice now in order to live well later on? It is a worthwhile investment to spend weeks or even months figuring out the answer to that question and to begin putting a plan of action in place.





Here's to your future of risk-averse investing!

If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html