Saturday, April 29, 2006

6 Questions to Ask a Contractor

After you get referrals from your Realtor or other investors, you still need to get three bids. Ask these questions of each prospective contractor:
  1. What are your specialties?
  2. How big is your in-house crew? (i.e., full-time employees)
  3. Which jobs are subbed out?
  4. How many jobs do you have going on right now? (should be less than four for sure)
  5. Get recent references (if won't give 'em, then move on)
  6. Can I see some examples of your work? (photos for interior, drive-by for exteriors)

General Hints and Tips for Selecting Contractor:

  • Don't use the Mega-contractors; find someone small enough that your project matters, but big enough to get it done on time.
  • Find someone generally close to the job site.
  • Only consider those in business at least five years under the same name.
  • Visit a current job in progress (if possible)
  • Ask for the names of his suppliers and call them to check him out
  • Check if there are any complaints with either BBB or city/state departments
  • Ask for both workmens comp and general liability certificates - then call the insurance company and make sure the coverage is active (I have heard of many contractors who get insurance the first year and then don't renew, yet show off the certificate)
  • How professional is he at returning calls and in other dealings with you.

Rehab Projects You Could and Should Not Do

Here are some projects that almost anyone can do to save money during rehabs. Of course, you have the option to pass these off to professionals as well, but they will generally save you money when you DIY:
  • Demolition
  • Cleanup
  • Landscaping
  • Spot painting
  • Remove wallpaper
  • Replace switch faceplates and heating registers
  • Replace door hardware and cabinet hardware

Here are some jobs you should almost never do unless you are a trained professional or have one helping you...You will just get in trouble by either doing it incorrectly and failing inspection, hurting yourself, creating a liability, or doing such a bad job you actually hurt the value of the house"

  • Asbestos removal
  • Roofing
  • Tile work
  • Refinishing hard wood floors
  • Replacing cabinets
  • Installing countertops
  • HVAC
  • Most electrical
  • Most plumbing

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Should You Do the Work Yourself?

Rehabbing houses is getting more expensive, so many investors try and cut costs by doing some of the work themselves. Personally, time is your enemy and I believe you save money when you hire professionals -- as long as you do your homework and get the best price.

However, you will always be tempted to at least do some of the work yourself. How do you devide which jobs to do? When determining whether to do the work yourself or hire someone, consider these questions:

  1. Can this job be done without getting a permit?
  2. Would your workmanship pass an inspectors approval?
  3. Do you know the building codes for this type of project?
  4. Have you done it before?
  5. Do you have the proper tools?
  6. Do you have the time to do it properly?
  7. Would YOU hire you to do the job?

A "no" for any one of them should make you reconsider.

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Friday, April 28, 2006

Where to Find Appliances - Cheap

If you have rental properties, it's only a matter of time before one of the appliances dies on you...and then the tenants will be calling you up right away. There's nothing worse than having to come up with a major appliance in 24 - 48 hours, so plan ahead.
I am always on the lookout for good used appliances - and when I find one, I can store it in my garage. This way you can look like a hero when the stove, refrigerator or dishwasher kicks the bucket and you replace it within a day or two (or faster!)
So where do I get these appliances? Well, there is eBay of course. Most of these auctions are no shipping so you can create a favorite on one more categories (Home & Garden -> Major Appliances -> Dishwashers) and enter your zip code and the distance you are willing to travel to pick it up. Then subscribe to your favorite with an email notification. Now you will know when someone is selling an appliance near you. You can even enter keywords such as 'white' so you get the color you want.
Another good place is First click on the city or state closest to you; then go to the For Sale section. Go to Household and then you can do a keyword search for what you are looking for (Example: white dishwasher). You will get the results of everyone who has both of those words in their ad. You can even select a minimum and maximum price. Now here's the best part: scroll down to the bottom of the page and click on the yellow highlighted RSS word. This can be used to subscribe to your specific search. You can post the results daily into an RSS reader or on your MSN or Yahoo homepage.
OK, if you must buy new, you can get some reasonable discounts on GE appliances at their online clearence center at 
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Sunday, April 09, 2006

10 Commandments for Handling Service Repairs

Here are 10 commandments for handling a service repair for your units (i.e., you are going to fix something yourself) from "Down to Earth Landlording":
  1. Do not enter unit without permission from tenant or without proper notice
  2. Knock and wait for an answer, if no answer, enter and call the person's name.
  3. Complete only the work that is on the work order
  4. Do repairs with a partner if possible; especially if tenant is home and of opposite sex
  5. Do not make comments on other repairman's work, or tenants housekeepping (in)abilities
  6. Get permission first if personal items need to be moved
  7. Do not enter rooms that are not part of the maintenance request
  8. Do not touch or operate a tenant's belongings
  9. Do not make comments with sexual overtones; if tenant makes sexual advaances, leave and don't go back alone.
  10. Do not enter property with children present unless there is an adult at home

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Saturday, April 08, 2006

Reasons to Install CO Detectors

Here are some good reasons to install Carbon Monoxide detectors (at your expense) in every unit!
  • CO is colorless, odorless, and tasteless
  • Low level of CO can cause cause irreversible learning and memory defects in fetuses
  • Early symtpoms of CO poisoning are often diagnosed as a virus (dizzy, headache, nausea, fatigue)
  • Half of all fatal poisonings in the USA are attributed to CO
  • Automobiles are a major source of CO (i.e. attached garages)
  • Heart attacks can be triggered by high-levels of background CO
  • Appliance malfunction and back drafting casue 1500 US fatalities every year and 10,000 serious injuries (blindness, brain damage, etc.)


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Lead Based Paint Pamphlet Available Online

It is required by law to provide the lead-based paint pamphlet to your tenants, regardless of whether there is lead paint in your unit (brilliant, huh?)
You can download it from HUD here

Legal Reasons to Refuse Tenant

Want some reasons to NOT accept someone in your unit that will stand up in court? Here are some:
  • bad credit/no credit
  • unemployed or unstable employment history
  • cannot verify income
  • cannot provide two forms of ID (one with photo)
  • fails to sign rental application
  • failure to complete rental application
  • provides false information on application
  • has a pet
  • does not meet your (written) guidelines for minimum income
  • has active judgements/liens filed again st them
  • has evictions filed against them
  • convicted of felony crime
  • owns a vehicle that is not allowed on property
  • owns too many vehicles
  • has history of disturbing others
  • has history of damaging property
  • has a disease that is contagious via casual contact (e.g. TB)
  • filed for bankruptcy
  • did not give notice to current landlord
  • more people in family than allowed by ordinance for the unit size
  • cannot pay first month rent and security deposit in full
  • application fee of deposit check bounces
  • is a minor with no co-signor
  • too much debt (compared to income)

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Checklist for Tenant Move-In After They are Accepted

So the tenant passed your screening and they are still interested in the unit, now what? follow these steps:
  1. Obtain a portion of the security deposit (non-refundable) to hold the unit [give receipt]
  2. Give copy of lease for review (email or US mail)
  3. Suggest (or require) renter's insurance be purchased
  4. All pages of lease initialed and last page signed by all adults
  5. Inspection sheet fille-out and signed
  6. Get tenant's new phone number on premises
  7. Give list of move-out charges, maintenance request forms, and any other necessry information (e.g., HOA rules, etc.)
  8. Give the keys


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Tips for Reading a Credit Report

Here are some tips on reading a prospective tenant's credit report:
  • Look at public record section for judgements and liens
  • Verify social security number on application and credit report
  • Verify address on credit report, drivers license, and application all match
  • Is there more than one name associated with SSN?
  • Compare birthyear to first credit entry; if the first time they used creidt they were older than 25, they may be using someone else's SSN or credit report
  • Check the inquiries section to see who has bee requesting the person's history most recently
  • Check for bankruptcies;  find out if they have been discharged.

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Sunday, April 02, 2006

Red Flags of Potential Tenants

Here are some things that others have used as a potential "warning" sign of a bad tenant. Of course, full due diligence is required...
  1. If, when asked, the person cannot show you a drivers license...yet they drove to the appointment
  2. If a person calls about your rental unit and before asking any questions or hearing about the unit either (a) asks when he can see it; or (b) says "I'll take it".
  3. The tenant hands you a copy of their credit report and says they just ran one recently (run another anyway!)
  4. Many inquiries on their credit report in the last few months
  5. Names on application, names you were told on phone, and/or drivers license names don't match.

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Tips on First Contact by a Prospective Tenant

It's important to take control of a conversation the minute a prospective tenants calls your ad; don't wait for them to ask all the questions. Also, I found it saves a lot of time if you tell people up front that they will need to show income with 2 recent pay stubs (or 2 years tax return). Also mention that you call references and do a credit check. I find this eliminates some people (who you wouldn't want anyway) right off the bat -- remember, say the same thing to everyone that calls!
Another good question to ask is: "How long to you plan to live in this area?" You want to eliminate turnovers as much as possible. Nothing kills cashflow faster than a vacancy - not even a major repair.
Here are some more tips when scheduling an appointment to show the unit:
  • Make sure that everyone (even pets if allowed) shows up so that they can see it and you can meet all of them
  • Tell they need to confirm an hour vi aphone prior to the appointment otherwise you will not be there (this eliminates many no shows!)

Notes: I think I've mentioned this before but a person asks for a copy of their credit report ("I paid fer it, didn't I?") you cannot give it to them, it is illegal. Also, do not mention names of specific creditors. You can say "I see you have a late payment to one of your cards.", but not "I see Joe Smith has a judgement against you."

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