Scott Esmail Property manager

30 k for a house, deal of a lifetime?

Yes! believe it or not, there are houses with 4 walls that are livable for 30k. The biggest question you should ask is after finding a property in that price range that may not need a huge amount of work, is what is the neighbourhood like? The neighbourhood plays a vital role in the type of tenant you are going to attract. Is that important, YES! tenants are the one paying you the rent, so there ability to pay and pay onetime is important. H houses can always be improved with money and time, but you won’t be able to move the house to nicer street once done.  There are many factors that play role in a tenants decisions when comparing properties to rent 2 big ones are condition of the house and  the neighbourhood.

30 k house in the hood

Here’s a tip if your thinking about buying a 30 k property.  Never buy it online without seeing the property, even if the realtor says it’s fine. Some houses in decent area’s can be bought without being seen, for example if your realtor saw it and you have gotten a property inspection report from a home inspector and you think it’s in a B area or above. The same does not apply in a neighbourhood that is in lets say a C to D class area, this is the type of property you should see for yourself. Not so much the house but the area and more important the street it is on. What I like to do is before anything else is take a walk down that street during the day. I say day because it is safer if you don’t know the neighbourhood yet. If you think it is okay during the day, go again at night and see, things can often be a lot different at night.

Generally but not alway you will attract the same type of tenant as the neighbours.  Questions to ask yourself,  when looking at other residents on the street, is this the type of person who I feel okay to deal with ? Is this the type of person who I think can pay rent each month and on time ? Do I like the pride of ownership on this street or is it really run down? Would I feel safe coming down here at night to collect rent? Would I feel okay sending my staff down to collect rent at night? If most of your answers or all are “No” then run the other way. Save your money for another deal.

I have found  with many investors who many not be so experienced is that they will buy a house fix it up but not be able to get a tenant who is qualified to pay rent, they end up settling for a tenant who hasn’t met the requirements.  The process after that usually goes like this. They then fail to pay rent, you have to evict, rehab the house again and start the process all over. Also the investor is out of more money because the costs  is much more than they got in rent. Don’t forget the other important thing the time and stress that an unpaying tenant can cause.

So you ask, what do you suggest? I suggest looking for a nicer neighbour lets say B class blue-collar working neighbourhood, with a decent schools. Yes, it will cost more, yes you may have to borrow more or save longer. At least with this type of property you should be able to collect the rent if you qualified right. Also tenant after the first year of completing a lease will tend to want to stay longer in a nicer neighbourhood then a bad one, and yes lets not forget that means no rehab costs, each time a tenant leaves to get it rent ready.

The bottom line is you can’t manage your way out of a bad neighbourhood, and just because the ROI looks great on paper doesn’t make it reality. Buyers beware of the attractive MLS listings/Zillow on-line 30k money pit.

Scott Esmail

Scott Esmail Property manager

How to qualify a tenant

I’m sure many of you have been in the position where you have rented a space to someone thinking they seem like they are going to be great tenant(s) with little issues but you were sadly mistaken. Qualifying a tenant can be very difficult and challenging. You don’t want the property sitting vacant for to long but on the other hand you want someone who is going to pay their rent in a timely manner without causing you too much grey hairs along the way. In my experience of course you want to get someone in your vacant space as quickly as possible but even more so you want that person(s) to last a significant amount of time because as we all know the turn over costs could be painful if it doesn’t work out.  For example if that person(s) only lasts two months and lets say you collected $1600 of rent in that time but now they destroyed you house causing you to file an eviction, not getting rent until that goes through, then on top of that once you finally get rid of them you have to change carpets, getting rid of excess amounts of trash etc. This mistake can be very costly and often you lose more than you gain.

 

howtoqualifyatenant

Here are the ways I qualify my tenants and ever since I started this strategy I’ve seen a significant decrease in my turnovers and found that I get more quality tenants who stay a lot longer. I use a program called APPFOLIO, it has honestly been a life saver. I will do a blog solely on this program but in a nut shell here is what you can do, have your potential tenants simply apply on this site it screens their criminal background, credit history, rental history, employment etc, this information is key in choosing a good tenant. On top of this I always request them to show my proof of rental payments from where they are living now. If they can do this I’ve found that you will get a much better tenant because chances are if they’ve paid rent to their past landlord they will pay it to you. When people tell me they can’t prove anything and paid cash I usually run the other way. Of course there are always some exceptions, if everything else checked out ok in their background search then I will usually request a strong co-signer in addition. Generally the minimum requirements I use is 1 year of employment and rental history to qualify. Combining all these factors together you are surely to get a more qualified tenant.

 

Written by Scott Esmail

Scott Esmail Property manager

Tenant hasn’t paid rent yet, what next ?

Should I post a 3 day notice for non-payment of rent if the tenant made payment arrangements?

In one word “YES” You should always post notice because if for some reason the tenant decides not to pay or something doesn’t fall through for them you didn’t waste valuable time waiting for noting and you can begin action immediately.

3 day notice

Far to often tenants will use arrangements as stall tactics to just by themselves more time until they figure out their next move. I know we all want to see the good in people and maybe you will feel “I never had a problem with them before” or “last time when they said they would pay they did” but believe me there is a first time for everything and things are not always as they seem. Of course no one is going to voice to you that they have no intentions on paying. Not to mention if they do end up (which is hopefully the case) there is no harm done and you do not move forward with anything and hope they pay next month and they got everything on track. Here is an example of situations I’ve come across to often I see the first of the month roll around and a tenant calls with a story about “how they started a new job and their pay schedule changed” or “they are starting a new job on this day and their first check wont be until the 25th and their going to pay for the following month at the same time.” This is all well and good but lets say the 25th rolls around and nothing? No payment has been received and now your calling the tenant and shockingly you can’t get ahold or them. By posting notice your allowing yourself the opportunity to move forward with filing an eviction right away and not wasting those 25 days if it comes down to that. Now you can move forward with all the necessary steps in getting them out as soon as you can. In the long run based off this scenario would have saved you 1 months of rent because you would have gotten them out that much sooner which in exchange will allow you to rent it that much faster. Hopefully going forward you will be able to put in a more qualified tenant the next time around.

Written by Scott Esmail