Keeping good financial records

I’m always astounded at how many investors don’t keep detailed records on their properties. Especially since most of this data is submitted to the IRS at tax time. For some reason or another, after the data has served it’s initial us, the information often gets tossed aside. If your records look like this picture or if they end up in the trash can, I encourage you to think twice about what you do. You are losing out on valuable information, which is crucial to any landlord’s business. Read more

Securing AC condensers

Nothing hurts a landlord’s pocketbook or pride like being the victim of theft or vandalism. The main security issue facing landlords in St. Louis and around the country is copper theft, but there are many other temping targets at any property. One particularly expensive and “easy to steal” component are AC condensers. Read more

Raising rents doesn’t make you a jerk

According to forecasts.org, as of today, the rate of inflation in the United States is 4.12%. That’s really high! Whether you live in St. Louis, the East Coast or Juneau Alaska this affects everything from the cost of a gallon of gas to your taxes. Money is worth less so it takes more of it to buy any product. Read more

Security lighting

Keeping your tenants and properties secure is an important part of running a successful investment. If your tenants feel unsafe, they will be less likely to remain at the property after their initial lease. If your property isn’t secured, you just might find your copper plumbing or AC condenser miss one day. Its a major concern.

Security systems are often used as a method to address this problem, but there is a more affordable, and in some ways more affective method: motion-sensor security lights. With a few strategically placed lights, you can really improve the security of your properties.

Your tenants will be happy because the building will be well lit when they enter and exit their unit. The property, as well as the tenants will be more secure because the motion sensors will activate when somebody enters the premises. A potnential burglar or robber is going to think twice before camping out behind a property that is well lit.

The next time you have a warm weekend free and are looking for something to do, head down to your local hardware store and pick a few of these up. They are well worth the investment.

Cleaning up your act

Trash is never-relenting enemy in urban areas. Your tenants can be the cleanest on the block, yet trash will find a way into your yard. Those “free” newspapers that seem to appear out of nowhere on your front porch are a particular pet peeve of mine. Regardless of where it comes from, it needs to be taken care of. You’d think people would realize that by now, but I find myself constantly astounded at how many rental property yards are just covered with junk. I don’t know if its dirty tenants or lazy landlords that are to blame, but its a problem that can be found throughout the St. Louis area.

Trash in the yard of your properties or in the basements or on the porch is unsightly and draws household pests. When prospective tenants take a look at your vacancy and see trash all over the place, you’ve just made a bad impression. The same goes for prospective buyers if the property is for sale. Its also bad for tenant retention and tends to get you on the City’s bad side.

This is a never-ending battle, fighting the pileup of this trash, and you need to keep on top of it. When you visit your property to collect rent or fix a sink, you need to pick up the trash. When you cut the lawn, you need to pick up the trash. Even if you have to make a special visit to do it every couple weeks you need to pick up the trash.

Landlords who have their properties professionally managed seem to have the biggest problem with this. For some reason, it seems like all the property managers in town seem to think that keeping their clients properties clean isn’t their responsibility. If you have a manager in place, check up on how they are doing with this issue. If you stop by and the place is filthy, call them out on it. You’re paying for their service, and if they can’t provide something as basic as picking up the trash, you might want to look elsewhere.

Whether you’re doing it yourself or have someone else do it for you, picking up regularly around your properties should be of major importance to you in maximizing th profitability of your investments. Dirty buildings draw bad tenants and we all know how that can turn out.

Getting ahead of the snow

Seeing as it has been sleeting and snowing all day, I figured I’d make mention of the issue of icy sidewalks. Spreading ice melt prior to a storm or getting quickly around to shoveling snow at your properties is not always a realistic option. It’s usually a gray area on who’s responsibility such work is as well.

One way to appease your tenants in this situation is to have some salt or ice melt and a snow shovel on site. This might not be an option for all properties, but if you have caring, attentive tenants, supplying these items will often allow the situation to take care of itself. If you have salt in the basement that the tenants are aware of, they will generally sprinkle it on the sidewalks for their own sake. If you have a cheap snow shovel in the basement someone will often take up the mantle as well. Its a cheap way to help yourself and satisfy your tenants.

Backup heating and cooling

Nobody likes handling maintenance calls. Not only are they a pain, but they tend to cost money to fix. And no one likes to pay for unexpected expenses. One of the most frustrating issues a landlord can encounter is trouble with a property’s HVAC system. A downed heater or air conditioner at the wrong time can really put your tenants on edge. If its a holiday or weekend its going to be a pretty expensive fix too. That’s why keeping a backup around is a good idea. The goal is to placate the tenants long enough to get a repair man to the property during normal business hours.

For heating, buy a couple of space heaters at the hardware store and keep them around for emergencies. If you trust your tenants, you might even want to leave these backups in the basement. That way, if a furnace breakdown comes in the middle of the night you won’t have to jump out of bed and drive to the property to offer a temporary solution.

For air conditioning, its good to keep an old window unit somewhere around. Whether you find one on sale at the hardware store at the end of the summer, have an old unit from another apartment or buy a used one, it’s always good to have a backup. If you can offer your tenant some sort of temporary solution while you try to arrange for a repair man to come by it will make the situation much easier. It saves money, it makes the tenants happy and it makes the landlord happy. Gotta love the win-win-win scenario.

Analyzing the profitablity of investment real estate

One of the most important things every investor needs to do before purchasing a property is a profitability analysis. At first glance, many deals seem great, but upon further review turn out to be less than ideal.

I’m not going to write a long article on what makes a good deal, but I will provide you with a tool that can help you figure this out for yourself. If you have Microsoft Excel, I have a financial spreadsheet, which I find particularly useful when scrutinizing deals. You can download this spreadsheet for yourself by clicking on this link: Rental Property Analysis.

The nice thing about this sheet is that it figures out most of the math for you. Simply enter the rents, expenses and financing and it figures out how profitable the investment will be. Of course, this is a very simplified spreadsheet. It does not account for major repairs, appreciation or tax benefits. However, it should give you a realistic snapshot of an investments potential.

I like to pay particular attention the the cash-on-cash return. Some people tout using cap rates, but they do not take financing into account. The percentage cash-on-cash return tells you how much money you will get back in a given year for the money you put it.

Try it out and see what you think. If you have any questions, comments or suggests I welcome them.

Following Fair Housing rules in St. Louis to avoid a discrimination lawsuit

I find myself constantly shocked at what some landlords say to perspective renters. Lines like “I don’t rent to single mothers?” or “How many kids do you have?” seem to come out of far too many people’s mouthes. For those who use that kind of language, I have a bit of advice: STOP!

According to Federal Fair Housing Law, the State of Missouri and the City of St. Louis, the following classes are protected from discrimination:

Race

Color

Religion

Sex

Disability

Familial Status

National Origin

Ancestry (Missouri)

Sexual Orientation (St. Louis)

Source of Income (St. Louis)

So what does this mean for you? That you better not even ask personal questions of prospective tenants that relate to these classes. Credit scores, employment history and criminal records are fine to use as determining factors, but the categories above are not. Despite what many property owners seem to think, these laws apply to everyone. Even private owners.

Your personal feelings towards these laws or these people are irrelevant in this situation. The fact is that if you discriminate or treat one group of prospective tenants differently than another, you are opening yourself up to a lawsuit. There are plenty of nonprofit organizations that provide free legal assistance in such cases of discrimination. If you can’t force yourself to keep within the limits of these laws, you’re probably in the wrong business. Watch what you say, watch what you do. You’ll be better off for it.

*If you want to take a look at the current Landlord-Tent Law Handbook, you can check it out HERE.

Don’t forget to clean out those furnace filters

Its so easy to do, but so many people don’t bother to do it. I can never understand it. When the filters in a furnace get clogged up with dust it lowers the efficiency of the heating and cooling system, by reducing the airflow. The harder the system has to work, the more costly the system is to run and the faster it with break down.

A once a month cleaning of the filter can really keep things running smoothly and save you a lot of hassles. Completely replacing the filter every month might be a bit of an overkill, so I recommend bringing a small vacuum cleaner along. Suck out all the dirt in the filter every month with the vacuum and replace the filter quarterly and you have yourself a happy furnace. If you’ve been slacking on this one the past few months, I suggest you get on it. And the best part is that it gives you a great excuse to pay a monthly visit on your tenants to make sure they aren’t putting holes in the walls. The half an hour it takes each month to do this is well worth it.

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