Mike's Blog

So I'm still a sucker. Way back when...when I first became a landlord I thought it would be easy to deal with tenants. But I got a quick awakening on my second property- when my new tenant paid her security deposit and first months rent...and never paid again. I kept getting excuses...I lost my job...blah blah blah. But...being the nice guy that I was- I gave her the benefit of the doubt and tried to work with her. Well that ended 5 months later after an eviction and 6 months of no rent.

I swore at that point- no more Mr. Nice Guy. I would never allow myself to again be taken for a fool. Someone had taken my "niceness" for granted and it cost me 6 months rent.

So guess where I'm coming back from today- yep- court. I just finished doing two evictions...eviction that should have been done 3 months ago. But once again- I tried to be nice and give someone a hand when they were down. I'm here to tell you- it doesn't work.

But what makes it worse- is that I've been doing this for 10 years now. I should know better...I give speeches on landlording and I tell people to issue the pay or quit on the 6th day that rent is not paid- and follow up with a Unlawful Detainer Warrant 5 days later. I didnt follow my own advice.

So once again- landlords...especially newbie landlords. Do as I say and not as I do...issue the pay or quit as soon as your grace period ends and follow-up immediately with the Unlawful Detainer Warrant. Usually that step is enough to get paid- but dont worry that it makes you look mean. Just do it- your financial independence depends on it.

Disposing of your CFLs

As a follow-up to my last post, CFLs....The Newest Environmental Hazard?, I wanted to let you know of a few options for safely disposing of your CFLs(Compact Florescent Light Bulbs).

Option 1: Contact your local trash service- they may have an option for you to dispose of your CFLs at little or no cost.

Option 2:Earth 911. This is a great website for all your recycling questions. At the top of the page- type in what you want to recycle and your zip code and the site will let you know everywhere near you that accepts recycling for your product.

Option 3:Probably the easiest option is Home Depot. Most Home Depot locations now accept used CFLs for recycling. Home Depot is the largest US retailer to launch a CFL recycling program.

Why I love Real Estate

The recent market gyrations have me remembering why it is I got into RE in the first place. Throughout the nineties I was an active investor in the stock market. I also bought various rental properties. Most were small 2 and 3 bed residential properties. The mortgage payments were low and I was able to clear $200-300 cash flow per property. It was slow going but the payments were there every month.

During this time I was socking alot more away in the Nasdaq that I was in RE. I looked like a genius throughout the late nineties- increasing the value of my portfolio nearly 300% over a period of a few years. Then 2000 came...and well we know what happened to the Nasdaq then.

I lost more money in a few months that I could have ever imagined. Why..because I got greedy and went for the quick buck. Appreciation was all I worried about. Meanwhile- my rentals were holding their value...appreciating some...and providing positive cashflow every month. My boring safe investments became my new best friends.

I learned a tremendous lesson from this experience. I swore to myself I would never allow myself to be duped into believing cash flow doesn't matter. After 2000, I went fulltime into RE. Over the next few years I would pick up numerous more rental properties. All providing a boring but steady rate of return. Sure I have some cash in the stock market- but nearly as much as before. I'm convinced the stock market for the most part is nothing more than glorified gambling. In RE...I , for the most part, control my investments value. I can't do that with stock.

So this past week's volatility has reminded me why I do what I do. And why it is I still believe, despite the problems with the RE market, that RE is the very best investment vehicle for long term wealth generation.

What are property flippers doing in your area?

Back in February I wrote a post questioning whether it’s the time to abandon house flipping. And I really wanted to revisit this topic in a different light. I’m curious what house flippers are doing in the various areas across the country. Are they retrenching? Are they still buying/selling?

Im also interested in the strategies flippers are using to get their properties sold. What are you or your clients doing to move inventory?

For example- around here in Richmond, VA- flippers are still very active. Atleast the hardcore guys are. Starter houses are popular and are still selling. Some flippers are doing the basics and selling cheap…some are doing more and trying to sell for more.

I’m trying to get some ideas- I’d love for this to be a pseudo idea generator for getting inventory to move in slow markets.

I was just reading an article in Business Week titled " A Tainted Badge of Honor". Basically- the article suggests that Energy Star's testing methodologies are flawed. If this is true-the Department of Energy(DOE) risks devaluing the Energy Star designation unless some simple steps are taken to remedy the testing.

The DOE itself states that only the top 25% of appliances should be receiving the Energy Star designation- however in some cases 92% of the appliances tested received the designation. In fact- in reading the story you'll see that two refrigerators tested only met the minimum requirements if the ice makers were turned off.

I'm interested in knowing what others think about this article. Are we being duped? Or this another case of a magazine making a mountain of a molehill to discredit a respected brand?  I've noticed on my many trips through the appliance isle at Home Depot or Lowes- virtually all the appliances have the rating. Reading this article made me question that...

Read the article and let me know your thoughts....

Drug Arrests at your Rental Property? How to handle the situation.

I recently had the joy of receiving letters from my local law enforcement informing me that there had been drug related arrests at two of my properties. This has NEVER happened to me so I automatically freaked out. I've heard horror stories of landlords being fined by the city and sometimes- even forfeiting the property.

Although these properties are my lower end properties- I was surprised to hear about the arrests. I was surprised because the arrests were at homes I NEVER expected it from. Now I've had tenants in the past that it would not have surprised me. But I got rid of that trash as quickly as I could.

So when I received the letters- I was obviously concerned. I think the fear came from my lack of education of how to deal with such a situation.

What happens now? How do I get the tenants out?

Am I going to be fined?

Am I going to lose the house

I quickly educated myself and thought I would share what I learned in case you or your clients are ever in this situation

What happens now? How do I get the tenants out? Upon receiving the letter- I immediately called the police department- assuring them of my intentions to remove the tenant and offering any help I possibly can in their investigation. I had to go by the office to get a copy of the police report.

The next step is issue a 72 hour notice to vacate the premises. Unlike evicting for non-payment of rent where you have to give 5 or 7 days notice-you only need to give 72 hours notice. Check you local laws- this could be different in your locality.

If after 72 hours the tenant has not vacated(or is still in jail), head on down to the Clerks office just like you would for a eviction for non-payment. You'll still fill out the Unlawful Detainer Warrant just like you would for a normal eviction. The good news is- instead of waiting 20-30 days for a court date- most localities allow you get a 15 day court date if you have the police report. YOU MUST HAVE THE POLICE REPORT WHEN YOU FILL OUT THE UDW. Again- this could be different in your area. From here- the process is the same as a normal eviction. You go to court- the judge decides if the tenant should stay or go- most likely go for a drug arrest, and he gives them a time-frame to be out of the house.

Am I going to be fined? Possibly. This is at the discretion of the city. The key for government action against landlords is the level of "nuisance" caused by the offending property. Nuisance in this case is "a pervasive, continuing and serious condition that threatens public health, safety or morals."[Every Tenant's Legal Guide] So basically put- if the problem is ongoing- and the landlord doesn't do anything to remedy the situation... the landlord is at risk of receiving a fine.

Am I going to lose the house If you're a responsible landlord- which I'm sure everyone on here is... this will not be an issue. This is an issue that's reserved for the worst case scenario. If you've received numerous arrest notifications and received numerous fines and still do nothing to remedy the situation...there's a strong case against you for the government to take the property. And quite honestly- all the other decent landlords around you would likely applaud that decision.

So there you go- in a very quick nutshell- it's not as daunting of a process as it seems when you receive the nauseating letter from the police. Work through the process and make sure you're taking care of the problem. The local government has a stake in having responsible landlords- they want to work with you. We can all work together to make the neighborhoods safer and more secure for our tenants.