5 Things I WISH I Knew Before Investing in Real Estate...

hey everybody it's ken mcelroy here and i'm excited to actually have danielle in today yes for interviewing me today i know so obviously you know she's a small landlord yep i know a lot of it like you know it's how we all start right start with one then two then three and i of course have a lot of units as a lot of you guys know but we were having some fun this weekend and we're like you know what would be a really good podcast and brainstorming with a whole group of people at this conference we were at and we decided we came down to we're actually having fun the five mistakes landlords make yeah when renting so i i you know because all you know these are stories now that you can laugh at but you can't always laugh at them well there's just so much that you learn as you go and then you look back on the things that you initially did and you're either like i'm so happy that that worked out because it definitely couldn't have or that was a mess and i had to get myself out of it well as i know i was talking to robert actually and he goes you know you can read how to play golf but it doesn't help you play golf so once you play golf then you can learn how to play golf it's the same with management same with renting so let's start right at the very beginning here so the obviously the first one the one that happens the most is not filling out a move in move out form right yeah i didn't even know what that was the first time that i ran into that first few times i run into somebody actually yeah so this so this is like the property condition report yeah actually the first time i learned what a move-in move out form was when somebody in your office was chatting and they're like well to somebody else like did they get a move in move out for him and i said oh are you supposed to do those i was like yeah and i was like oh man so your sister actually printed one off for me that she uses oh good that i then started using in my properties yeah so if you guys don't know what this is when you take deposits and hopefully you do if not then we need to add to this list but the the bottom line is is obviously you're renting even short term you need a deposit yeah and and there are items in the house whether it's furnished or unfurnished and there are you know people that rent things they don't treat it just quite as well what i was thinking too like what was i thinking like that i could just be like hey you have a 500 bill because this wall is dented but i have no documentation no picture i just know that it wasn't there before he moved in right right and this happens all the time especially to new landlords and so it's kind of awkward but it needs to be part of your lease and the reason i didn't put lease on here well hopefully you guys are at least doing that although i know sometimes i've heard somebody say yeah well i have a verbal lease yeah yeah yeah or i printed a one page off the internet what is a verbal lease now by the way if you guys want any of these forms just go to kenmacrow.com they're there for free on our website just go look at them and download them for they're under the premium membership but if you use premium live you get seven days free and then can access it that's a good point yeah so all right so any stories about this well yeah it was actually a good story so it was literally the tenant after you're well so this actually happened so i released to this girl and i don't have her do the move in move out for him because i didn't know about it so then i talked to your sister she gives me the move-in move out form and then about six months later this girl's like hey my boyfriend and his kids are gonna move into the condo wow so i followed you know what you guys you know what you should do which is i ran a credit and background check on him as well and collected a little bit more of a deposit and told her hey because somebody news moving in i need you to fill out the move-in move out for them oh perfect so they fill it all out so she had lived there for like two years the place looked great like the same you know so they were there about a year and a half so then i go to move them out and the place is just destroyed i mean like the oven top was burned they smoked in the unit like there was just a million that's from her boyfriend yeah from the boyfriend and they probably should have went back on a dating site yeah i felt that you know yeah so i so i um withheld um money so i got a quote from the handyman i remember that i got a so i i withheld about eight hundred dollars of their you know twelve hundred dollar deposit or something like that and um so then well okay let's back up okay because i kind of remember this now uh i didn't know what story you're gonna use you we have a handyman yeah that we use all the time larry and larry went over there and he's like holy cow and he put a list together and he said it's this is what it's going to cost so he so you didn't just arbitrarily pick 800. correct so so there was a step here where you said larry please go over there and so he went over there being thorough like he is he's awesome and so you have his labor rate plus the cost of materials and he put he detailed all that on there and if i remember right now that was close to eight hundred dollars it was yep so so in other words just to get the unit back to the way it was yep not extra not profit you're not putting any money in your pocket yep he i think he said it was right around 800 yes so then you then said to the tenant there's 800 worth of damage yes and then that's when the fireworks started right yeah they weren't happy you know specifically the boyfriend of course the girl really didn't say much that i had you know my original tenant but the boyfriend was very upset he said that i was overly charging and trying to upgrade the unit beyond you know what it um initially was and because i had two things i had the move-in move out form where they had put everything was basically in good condition it's supposed to be when you move in yep and when it's all detailed right and but it was when he moved in so all detailed and then on the move out form i had two things i had all my documentation but based on your recommendation i also took pictures of everything so something that i've learned now is you take pictures of the unit before and then you take pictures of any of the damage after yes and i had the pictures and the move-in move out for him and he threatened to take me to court okay so let's not go there yet okay so okay so because i kind of remember uh by the way uh you were a little hysterical had a little anxiety a little stress a little bit of anxiety right right and you're like what should i do what should i do because a man this guy is basically threatening you he was he was being very unpleasant so what was interesting was the you rented to his girlfriend and she had like a 1500 deposit up or something right and you said this is what it's gonna cost to fix and then he was the one so he was like a new guy that came in later right uh was he was kind of verbally threatening you and you i just said listen just stick to the contract yep that's right and and and the emails back and forth i remember right um well text messages but writing yeah yeah threatening you on all kinds of stuff so this is what happens this is this scenario happens everywhere guys and they were tenants i never had an issue with them the whole time they lived there you know and you know what what kind of damage what are some of the things that that i see a lot when somebody moves up pets number one children number two smoking number three bad boyfriends number four right no it's true like there's there's kind of a list of things that always have you know kids they ride on the wall they have fun they kick in the wall they they're playing in there um pets do a fair amount of damage especially if you have a carpet um and um you know and uh if you get puppies i mean you know your whole life is people people are walking through the mall they buy a puppy and next thing you know they're in your place you don't even know they're there so these are things that can turn into full carpet replacements pad replacements the smokers are the worst yeah right yeah yeah i now have something in my lease about smoking that that was a lesson i learned but i've i've taken pictures we've that's not true we've we've walked in and we've seen where the pictures were on the walls that's how heavy a smoker they were literally you can see the square yeah it's nasty yeah and i you know i um the funny thing is is you know i didn't charge them any extra then i got billed and i had it all laid out from larry and i was thinking that they were going to be grateful to get some money back with how bad of shape they left the place but that was me by me being a naive new landlord that's right and so what what saved you if i remember was you had literally larry has his own firm he doesn't work for us he literally has you know call it larry's handyman llc or whatever you want to call it a lot of clients and yeah yes bunch of clients so he had an hourly rate he itemizes the parts he shows where the stuff where he had to go to home depot and the paint and all the stuff in order to put it back and invoiced you right and then you used that to deduct it from their security deposit and that's when they went ballistic yeah and and so when they um yep and then they threatened to take me to court right right right which they always do but if you have all of those things you're going to be fine well and that's the thing is i said okay and i was like you know i have all this proof of all this you know before and after pictures move in move out form you know it's hard for them to argue a case since i had all the documentation however if i wouldn't have had that it would have been very easy to argue the case yeah yeah and so just know that that's like a standard box to check when when a tenant says i'm going to take you to court yeah just have yeah be ready for that and it's okay if you have your lease your move-in move out form sign and the pictures and the itemized things you will not lose definitely and i um something else too is you know handymen you know sometimes larry has a two-week window well you only have a couple weeks to get them their security deposit back so you need to make sure that you're scheduling your handyman you know the day after their move out date because if you wait and then you know the handyman can't get there for two weeks you've missed your window to be able to even build them to begin with right right which which i think kind of leads you into the next big mistake which is turning a unit quickly because what happens is to your point we as a company try to have a three-day turnover if we can't have a three-day turnaround that's our goal so imagine the logistics that has to happen there you know and you what you you find people that move out and the thing looks like they never even moved in yep you do find that yeah a lot of times and those are super easy turns and those can get back on the market that same day even the next day depending on how long it takes to clean the carpets or or whatever else you might have paint and touch up or light touch-up or or minimal maintenance you can usually do that in just a few hours but then um we've also had turns where it's like oh my gosh like this there's a disaster in here right and that was yeah and that's what you had so so let's just say that they moved out november 1st well if that unit isn't back on the market until the third week of november you've now lost three weeks of rent for the next person so obviously one of the biggest sometimes people don't look at the downtime the vacancy time in between renters and so when you have that that's an in addition to the um you know because now you have to have larry come there assess it give you a bill go get the stuff do the work and he's doing it around his other clients and if i remember right right that took a little over a week to get all those things done it did i was fortunate where the tenant moved out early but yes yeah and so you do have guys this is a big piece and so if you have let's say three or four people moving out in a year and hopefully you don't but you could you know you you might have you know call it one to two weeks of downtime in between the next tenant and you start adding that up it's a fair amount of vacancy right and that's real revenue and people don't always look at that that you know that turn time and that's why our goal as a company is three days because and so hopefully i can't remember did you have another tenant that was moving in yeah okay yeah yeah so you were under a timeline thankfully thankfully so so that has to be really managed and this is part of having your team this is part of having somebody that you can call right away thankfully you had a good relationship you've got three rentals that larry as part of his business you're one of his clients yes right he's one of your vendor you're one of his clients so this is a big big one to be able to turn that unit because i'm telling you i've seen situations where i've walked into places where uh the landlords haven't touched them right there you right you're like oh my god but something interesting on that though is that when i you know um first had my rentals i gave the um my first move out with my tenants i gave them the option to do everything versus um billing them because uh you know we all know i'm cheap we always talk about that and as a tenant i would love that option and you were like that is not what you want to do now i got lucky with my first tenants because they did a good job about patching the walls and painting over everything looked great um but you just you have to build you don't want them to you guys don't want that listen trust me there are small things like it sounds small but if you have gloss paint or semi-gloss and the tenant goes and buys a different color white and it's flat it's going to look shitty like you know there are little things that you have to control and that doesn't sound like much but it is when you go in and look at it well plus if you tell the tenant hey you know we don't have to bill you for this if you do it and then they do it and it's not up to your snuff or whatever then you're billing them now they're pissed well then they did both or they go to the the grocery store and run a carpet cleaning machine like you know that's actually what i told my first time to do to clean the carpet of course you did yeah of course you did so no get a company that has a high-powered system in a van with the long hoses you know those guys can knock those things they can knock out a rental in like an hour hour and a half of max by the time you go get the machine haul it there put it in your car haul it up the stairs or wherever you are do it hook it all up get all the chemicals and all that kind of stuff and it's really not all that great yeah um you know and you know sometimes those do leave a lot of water in the in the pad and you know that's when you if you're walked into a unit and it's been all musty and smelly you know that's typically it's you know it's like washing you're washing the carpet basically well yeah and at the end of the day you know what i've now learned is that that's all part of the non-refundable deposit so on my unit with carpet right there is a non-refundable carpet cleaning deposit there is a on all my units there's a non-refundable cleaning deposit so i have the money to hire a cleaner i don't pay for that they pay for that and they're non-refundable deposit that's a very good point we basically tell our tenant don't touch the place like just leave it in good condition and if there's damage you're going to be charged for that and so if you're if you're charging or pre-charging for some of these items the cleaning and the maintenance and then it's just expected it's it's done deal the box is checked you know but then sometimes what happens is you might walk in and your appliances are gone like yeah yeah exactly that's happened i mean people people do the funniest things so yeah you know oh and or i mean i'll tell you one this is i couldn't believe this we had a situation first floor unit the the people were from um laos and they were laotian and my brother has worked over there a long time so i have a high appreciation for that culture of those people but they decided that they didn't know how to use the oven so they cut a hole in the floor this is on the first floor thankfully and below the first floor uh literally wood and cut through the carpet carpet and through the wood uh was dirt and uh what they did is they took the oven racks out and they that's where they cooked in the living room not a fire hazard no not really uh so those are things that happen uh we walked in and seen tenants literally uh do full uh engine replacements on their motorcycles right in their living room so yeah there's stuff like that there's all kinds of things that tenants do and um and those obviously are there this could be a little more money yeah just for a little bit okay let's talk about the third thing uh tenants think everything is urgent so this is one that drives you nuts no i think it actually drives you more nuts than me because i make it urgent to you well yeah okay so good point i have 10 000 tenants i'm completely fine i sleep well at night she has three and she makes her problems my problem so i don't need more i've gotten much better at this um but tenants do think everything is an emergency and then they want it fixed like either right now or in the next day or two well larry our handyman might have a two-week wait no it depends on what it is correct right now there are two emergencies the air goes out in phoenix in the middle of summer or the heat goes out and you know when it's cold out um the hot the hot water tank's not working those are all very urgent those are things you got to get to health and safety issues are are immediate but even with that you know you the next day is okay if it's in the middle of the night and that kind of thing we call it fire flooding blood so sure make sure make sure those are big deals but i've had tenants you know where the um cabinets aren't closing correctly or the um you know they have um ants or something like that those aren't emergencies now i'm gonna correct the an issue obviously all that stuff but it doesn't need to be done tomorrow it could be done in a week you know it's not a a huge urgent thing so then you have to communicate it to your tenant because one thing that i've learned is if you're too responsive to things that aren't emergencies that's what they get accustomed to yeah and that's what happened to you wasn't yeah a light bulb issue didn't they want some light bulbs yeah they wanted someone to come over and change the light bulbs and i'm like okay this is not like these are things you have to do yourself this is not a luxury apartment you know where you guys have a full-time we shouldn't she has like a that should have been a comedy routine because here i am with all this property management experience of course i know nothing right so and she's like you know she's running around she's changing light bulbs calling larry for like like uh chipped paint yeah yeah or or a drawer that won't close in the kitchen the littlest so then i had to then go and set boundaries with my tenants like you know i will get to it it's not urgent then i had to put boundaries on you larry can come in two weeks uh you know or you know this is not covered by larry if you want to hire larry you can but it's not and i just know from now on going into my new rentals you know with new tenants i'll lay that all out at the beginning which i haven't ever done and i think that you know you have to establish that relationship yeah and there's a couple things one there are people that will push there are people that don't have a lot of uh rental experience so like i know um you know uh some of these younger kids is there you know maybe their first job or whatever they might not have a lot they don't know what to expect right that too they don't understand if light bulbs aren't covered yeah yeah yeah so so i think um you know there are but the the point is is that every tenant thinks everything's uh uh an emergency now now and there are of course things that are and and you need to make sure that you have a system set up for that and just because it's not an emergency doesn't mean you don't give them a schedule i mean if they tell me that they need something fixed and it's you know something that i should fix that's not an emergency i immediately text larry i figure it out within a day of when he can go there and if it's not for two or three weeks i let them know larry's going to be here on this day so i don't blow off their issue right right you do need to be responsive on their issue and keep in mind they are your customer yeah so they're paying you which is paying off your mortgage yes so you're owed some some serious communication to them and it's important that you communicate to them and obviously if they renew their lease because their experience has been good then it's going to be better for you because otherwise they move out you have to clean the unit paint the unit fix the unit re-rent the unit you've got vacancy loss you got all those things that hit you before your new tenant moves in and then you obviously have now another tenant another relationship that you're relying on for paying rent and all those kinds of things so so the the tenant is gold yeah no they they definitely are and it's like any business that they're not treated well they're going to go elsewhere yeah so it's important but they like everything there are tenants that think everything's urgent right now when it's just it's really about establishing boundaries yeah yeah another big mistake a fourth one is of course we talk about this a little bit is the criminal credit background checks now let's talk a little bit about how you started here because this is pretty darn funny okay from my opinion so this is my first rental i had just met ken i had just bought my second house so now i was going to be renting my condo out first time ever so i i actually didn't even know about zillow so i put it out on craigslist and i get this guy that wants to come look at it so okay you know great so he's really nice we go through the thing and and i said okay and i didn't bring my my rental application with me because you know i didn't know what i was doing and so i he goes well like i want to rent it and i said oh great great great you know um i have to do the rental application he said well actually you know here's the first two months in rent you know i don't i cash i don't what was a check it was a check but i don't really want um i don't i don't really don't have time for you to run all that and you know i said okay okay that's fine i mean if you just gave me two months worth of rent i mean i wait first of all should this be a red flag i hope so you guys like like hey i was like be you don't know who i am but here's a couple months up front you know i got his driver's license and so um anyways so i i get my car and i would go to meet ken for a drink and i'm so excited because this hassle of trying to rent my place is done easy peasy second person to look at it great so i go to ken and i said hey we're good i got this check i'm gonna go deposit it two months worth of rent plus the security deposit we're good to go and he goes well you're still going to do the credit and uh background check i said uh i mean he's no he doesn't really have time for that you know and uh he said oh no no no this is like a bad bad red flag and i'm like really really oh yeah by the way he's so nice like here i am with all this experience and uh this actually shouldn't be my red flag i'm like come on really you're not gonna run a credit background check on this guy who's going to have to pay you ready everything's going to cost me like 30 exactly this is my problem it was it was a 30 it was several she's holding several thousand dollars four or five thousand dollars in her hand but she doesn't want to spend 30. and so and i didn't want to lose the tenant so anyway so i called him and i said hey uh you know um i texted him and i said hey you know she blamed it on me my property manager yeah my property manager actually said that they actually have to have the credit and background check so i'm gonna email it to you you know and he said actually um that's not gonna work for me so can you just meet me so i get my check back and i was like oh okay sure so i drive down meet him at the apartment i give him his uh check back and he was still really nice and he goes you know i'm actually a recovering uh alcoholic and it's probably in your best interest i didn't rent the place because honestly i probably would have destroyed it he said that yeah oh wow wow yeah he said that and i was like oh no worries great you know and i got back gave him his check got back in my car and left um oh there's a bigger story there yeah but but the but the i i ignored the flags and it would have probably been a disaster yeah and if i didn't know you i probably would have run into him he probably would have destroyed the place and then i probably would have sold for him then i probably would have sold it and been like i'm done with rentals this isn't for me so this is kind of the point and so you know um obviously uh uh you can make sure that they have the credit to be able to rent something from you you think about it as thousand dollars or two thousand dollars a month is a commitment especially if it's a year the um the criminal uh they're not protected so if they have a criminal or their felons they have a criminal background you think about especially if they're you know you're moving them into a neighborhood or some next to something you got to think of those kinds of things criminal behavior we've had drug dealers we've had prostitution we've got all that stuff in our properties and then the the third one which we started doing uh it's been a while is a sex offender check now a sex offender is supposed to register in a state that they move to but what happened in our case is the sex offender moved to an indian reservation first somehow and they didn't register because they were on a reservation and then they rented to ah and one of our places and so when the manager ran all that they weren't registered in arizona which was a mistake we learned they we ran a arizona registration uh uh a sex offender check and and he didn't come up then he moved in then he registered oh so now so everyone got a flag yeah everyone got notified because what they do is they flyer the neighborhood instead just letting you know that um there's a sex offender living in your area it doesn't say where but um it does it did say um uh what happened was in this particular case of course every person that got that uh came into the office yeah and it spreads like wildfire yeah and so those are the kinds of things now that's obviously super prominent and right in your face but some of these other things might not be as they might be a little more subtle whether they can pay rent what kind of job they have didn't you have another one where the guys rolled up and the uh like pot was billowing out their windows oh yeah the drug dealers yeah there was pot billing out their windows and uh and the one guy was like real put together and the other guy was real not put together you know you could just tell and so the child did not put together one i'm like so what do you do for work you know like you know where they're looking at the place and just like i don't have a job yet i'm like oh that's great you're unemployed it's great that you look for a place when you don't have any work and so the other guy's like i'm going to pay for everything and you know it just kept getting shadier and shadier and and basically they were going to deal drugs out of the unit is kind of what i was sensing um you know and and the guy that was gonna sign wasn't even gonna live there he had a place in montana and this other guy was gonna live there but not be on the lease because his credit was too low so it's just but at the time i really needed someone to move in so i could see we're live that's a really good point this is a great difference move them in this is it guys this is the issue you're there's there's effort to show a place there's effort to get it going there's there's there's stress around not having income yeah so so you have to be disciplined here yeah you know because when you move somebody in i'm not saying that that guy would have done anything wrong but you spend money on cleaning a unit painting a unit getting the maintenance done even advertising it and then to move somebody in is um uh so quickly it's a horrible idea you always got to trust your spidey senses especially as a small landlord like small landlords have different um rules than larger landlords so as a larger landlord you're not allowed to you basically just have to take the paper application and if they qualify they qualify as a small landlord um you can't discriminate on certain things and you wouldn't want to but if you are getting a spidey sense that something's just not adding up you are allowed to not rent to somebody based on just the fact you don't want to and if you don't have a spidey sense find somebody who has fun right yeah but you just know and so with me with the guys i mean they kind of like the guy that wanted to sign had good credit he had plenty of money in the bank because you know we got his um bank accounts and things but just something just didn't feel right to me yeah you listen that's um we have you know with the student housing that we have you know obviously a lot of students don't have credit so we go and get a co-signer from their parents and so every single student that rents from us their parents are co-signed and that is important and so you have to have somebody on the hook financially that you can go to and in that uh but you got to be careful you so you use your gut there and yeah well can we talk about how when the funny things that come up when you tell people they're gonna you're gonna run a background check on them that's what i love the most is is uh all you got to do is mention it oh yeah we're going to run a criminal credit and background check are you okay with that it's either a quick no or a really really slow yes right right right and um the funny thing is too is you will get people like so i you know i was underage drinking when i was 20. is that going to matter i mean you like hear everyone's like criminal minor and you know that's like a very small percentage of the stuff you know like like well i had a funny story one time so i had this couple moving in and i had to do a credit and criminal background check well they were coming from out of state and out of state it can take a little bit longer so it's taken like four or five days and she kept calling me like is it back yet is it back yet are like no not yet we're still waiting on it whatever so she calls me one day and she goes we have something to tell you it was her and her husband right and i said oh okay she goes um i think i think i know why this is taking so long and she goes show her she goes do you tell him so she gets her husband on the phone he's like when i was 19 i stole like something from a grocery store like a little whatever and i you know it ended up being a misdemeanor and it's not why first of all that guy's that guy's a beta yeah i can tell you right now like who is this guy like what he's like it's like a wounded puppy like it was like she was putting her kid on the phone oh my heaven i feel bad for you if you're out there but i but i was laughing because um you know it was just so funny because you know they're sitting there and she's like you didn't you haven't done anything that would and he probably reached back like well i stole this thing from the grocery store karen but it was just funny so they ended up moving in it was fine but it really cracked me up because you know people really like but but then you know you have the people too that that know they've done a laundry list of things you know but yeah yeah it's it's it is funny it's it's and so the fifth and final one is being afraid to say no yeah i'm still learning that let's talk about this one now this is a subtle one it's not probably what you thought it would be but this is interesting why don't you talk about this i think that because you know i'm i'm not a very shy person and i think a lot of people that that manage properties probably are a little bit more um not as confrontational as i am you know and um i have trouble saying no it's yeah it's this is the trust but verify piece but even just to like can you fix this you know part of me wants to be like yeah i can just send larry over you know it's hard for me to say no it's just not covered you know i mean it really is something that i'm working on and i think a lot of landlords out there i mean it's probably why a lot of people hire a property manager for those uncomfortable conversations yeah and that that's a really good point they do happen things happen guys and and there are times people have to break their leases there are there are rule issues that you have to deal with sometimes they can't afford to pay uh which of course we just are dealing with in this pandemic so you know you're renting to people and they're in there this is their home yeah there's a lot that revolves around it uh from you know from parking to pets to people i call it the three p's parking pets and people those are kind of the three big ones um you know and we have those a lot and there's a lot that revolves around this from custody issues and and uh domestic violence and like there's there are things that go on uh in homes in letters from the hoa i mean i get letters from hoa then i have to call my tenant and say hey you can't keep doing x y or z unless you're gonna have a fight and it's tough and then you gotta notice them and then they get mad and you know then you get the nasties nasty text next to email whatever it is and and um it's rough but you have to maintain the you have to keep things tight you know that's a in you know in the in the um in the auto world you know they have the repo man he just comes and gets the car in the middle of the night and it's gone and they just confiscate it and and it's not as easy for in housing and it's actually a lot harder and and there's a lot at stake you know you don't want to you don't want to evict people right you don't want to do that you want to vet them in the beginning and make sure that you the better the tenant the better credit the better rental history you know the better employment the better employment history all of those things do matter and make this business so wonderful oh yeah and i've overall had a great experience well just take a look at your little run here you've had uh you're on your third rental mm-hmm you're you know we're looking at some you know you've under-rented now this is one battle that she won that i let her win because it just wasn't worth it but she was under renting you have been under renting i'm under ending significantly now we're talking about a couple hundred at least per place per month at least at least so let's just say it's 200 okay so that's that's probably 10 70 500 and 10 000 a year of income that you've got 900 a month there you go so 10 800. so there you go that's my point so but she chose to do that and so now rents are going up and so now she's looking at how much 400 well i'm in a predicament because i've underended and now i need to that's my point so now i need to up my rents a lot a lot and guess what they're going to be pissed they're going to move yep i'll probably lose my tenants over it this is the issue this is why i said you know the the rents need to keep up with the market you don't have to jack these people but if you're keeping up with the market when they renew they're small but if you're way under and you don't do anything about it when they renew you could be looking at four or five hundred dollars a month and so now you're facing three potential vacancies yeah because but out of that it's gonna be another 1500 a month so but that's the you know short-term pain for the long-term gain i guess but it's disruptive and you would have been better off to rent those and what happened was you again back to this didn't want to say no they were negotiating with you and when i felt bad this is my point and and i i didn't look at it like a business like i needed to and i really and my costs are going up you know my hoa costs are going up larry's gotten more expensive my property taxes are probably going to go up so now you know i'm actually spending more that's right it's just things are things are up guys yes you know like parts are up you go to home depot things are more larry raises prices ten dollars an hour because he had to do the same thing because his gas went up and his insurances have gone up and so there's all these things things go up and and um and so if they're on a fixed lease and your income's fixed on what you're getting from them and your costs are going up the same time for those kinds of things you're making less and and that is part of it is part of one you should be renting at market and two you should be slowly communicating with your tenants on the increases so that when they go out and look and they will they're they're gonna see that oh okay this is market just like you guys can see every day on zillow it there's nothing really that shows it like that on the rent side right and and if there was it would be much much easier but there isn't and so what potentially is going to happen is um is some of your tenants are probably going you know probably going to have to potentially move because he can't absorb a four or five hundred dollar increase right right definitely and so then you're gonna have a vacancy you're gonna have to clean it um and you're gonna have to find a new tenant yeah so so this uh being afraid to say no um and and just having that uncomfortableness you know you got to be comfortable being uncomfortable yeah in this business it's property management 101 you know forcing the rules making sure that things are buttoned up tightly and if you don't know how to do it then rely on somebody else to do it because it's totally worth it totally and right i did a webinar for um can come it's located uh if you sign up for a free membership on kenmackery.com there's a whole one-hour webinar i took questions and walked you beginning to end through landlord 101 yeah so hopefully you enjoyed the five mistakes landlord makes landlords make when renting to tenants uh and uh keep the questions coming in guys we love them uh we try to deliver this specific podcast was a result of you guys sending questions in so thank you and uh tune in in a year from now when i'm sure i'll have five more mistakes that i will let you guys know about all right cheers you

Channel: Ken McElroy

Views: 37,977

Keywords: Rich Dad, Entrepreneurship, Investing, Personal Development, Get Wealthy, Earn Wealth, Ken McElroy, Entrepreneur, Rich Dad Advisor, Success, Business, Self-Help, Coaching, Real Estate, Real Estate Entrepreneur, Real Estate Investing, Freedom, Lifestyle Business, Hustle, Ken McElroy Housing, Ken McElroy Real Estate, MC Companies, MC Companies Investments, Real Estate Investment, Investing in real estate

Id: pI_6rXqeydA

Length: 41min 4sec (2464 seconds)

Published: Wed Dec 01 2021