1. Start rent on the first of the month

  When I first started, and a lot of other investors did this too, I would run around and pick up checks through out the month. If someone started on, say March 10th, I would set their payment date as the tenth of every month.

  It usually seemed to work for them, but not for me! I would show up and they wouldn't be there – so I spent half my time just running around trying to collect money. If pounding on doors and looking for missing people is your idea of fun – or you just want job security – well this is it.

  Invariably, if you let one person pay on another day other than the first, the others will hear about it and want theirs changed as well. It's funny how they can congregate together and tell stories.

  If you want to do it the right easy way. Have everyone pay on the first. And just a side note – if you want to pick up checks fine. But I prefer to have a drop off location. If there is a bank near by, have them drop the checks there.

  Don't change the date even if they are paid on a different date. I used to let it slide. I would have someone move in on the 1st but low and behold, their payday was the 10th. Okay – no sweat I thought, it's just a few days late this way.

  Well here's the problem with that logic. If they pay on the tenth they are already 10 days late, if on the 10th they don't pay you are already almost 2 weeks into the non-pay status! By the time you get them out – how much money will you have lost?

  So what do you do when someone starts on the 10th? Make them pay a full month worth (always!), and then prorate the second month. So on the second month they would owe for 20 (or whatever) days.

  2. Notice the condition of a person's car

  All right, this is going to sound a little crazy. But you can tell how a person lives by looking at their car. I don't mean you only rent to someone with an expensive nice car – I mean, look at the condition of their car.

  Is it full of litter and greasy and grimy? If it is – I can almost guarantee you that your rental will be greasy and grimy. Yes, I know, there are exceptions. If a guy drives up in his construction truck he probably doesn't care as much about it as a regular car since it's usually used for moving heavy dirty stuff anyway.

  If you want to take it a step farther – and be even more accurate, look at where they are living now. Yes, that is the more accurate test. Whatever it looks like now, is what yours is going to look like in a month.

  If you wouldn't rent to a person with a house/apartment in that condition then don't rent to them. It's as simple as that.

  3. Be careful what you say

  Some really unintentional things have been said and interpreted the wrong way. I'll give you an example. A lawyer I met told a group about an investor who was showing a property to a woman. In the midst of their conversation he saw three children sitting out in the car – and as a matter of conversation he just happened to ask, "are those your children?" He was just being friendly.

  Later, he turned the lady's application for rent down because of bad credit. She sued him claiming he discriminated against her because she has children.

  I don't know the final out come. Oh yes I do...the lawyers became rich.

  Some really unintentional things can be interpreted in strange ways. And guess what – your insurance is not going to cover you if you get sued. Yep.

  Some obvious things to watch out for – never mention religion, children, and race. Oh yeah...and age.

  4. Always charge a late fee when late

  This tip (or trap as it may be) was learned by me the hard way. It only took me a couple years to learn it. I can guarantee you that if you are lax on collecting late fees you will continue to receive late payments.

  I wanted to be the nice guy. And invariably, they would have some really good excuses for being late. You know – their brother was arrested so they had to bail him out – their purse was stolen. Yadda yadda yadda...

  If you will set a precedents of collecting a late fee the very first time they are late – they will know you are serious and put you first on their list of people to pay out of their paycheck. No longer will you be relegated to "well...if Joe pays me back in 2 weeks I'll have enough for rent...so for now, the money I have can be spent on whatever I want!"

  5. Build in a buffer between you and the tenant

  This almost goes hand in hand with number 4 "always charge a late fee".

  What does building a buffer mean? It means, putting some distance between you and your tenants by having a third party.

  It works like this. When I speak with my tenants, I am just the property manager of a big real estate company- just a cog in the wheel. Yep...I may own the company, but I am still legally an employee. They don't have to know I own it. If they are late with a payment I listen to their sob story, sympathize (hey, I'm a nice person, I really do care!) and then I just say something like. "Man that is really terrible. Look, I know it seems kinda unfair, but I can't remove the late fees, I'm just the property manager and I have to go by the rules".

  This never seemed dishonest to me – but if it doesn't sit well with you – then by all means, tell everyone you own the place.

  I find the need for the buffer to be truer for women than men. It seems that women are expected to be more lenient or something. A tenant will sob to a woman investor far more than to a man (its true!). So its just food for thought and you decide whether you want to implement the buffer.

  6. Keep relationship with tenants courteous and professional

  I like to be pleasant with tenants. In fact, I think most would say I'm pleasant and fair. But when you start making friends with your tenants – I mean outside of saying hi – then the impartiality and objective reasoning goes out the window.

  If you become friends with someone and they lose their job and can't pay what do you do? Give them free rent because they're a friend?

  You need a little bit of objectivity to make sound judgements. Remember, you are in business to make money not run a charity. Well...if you are into running a charity, then make sure you're registered as a nonprofit organization and get the tax benefits!

  And yes, I've heard of landlords who send cards and Christmas Hams and such. I suppose it doesn't hurt, (I don't go that far) but I still don't invite them over to my house, or eat Easter brunch at their place.

  7. You don't have to have the lowest rent in town

  This is going to be hard for new investors to understand. You do not have to have the lowest rent. In fact, yours can be a little more than the going rate. Picture this, if you have the lowest rent in town, who do you think will be attracted there? The people whose criteria is the lowest rent in town.

  Instead, focus on being the best apartment in town. Make sure it's clean. Make sure the tenants are treated fairly and they are living in comfortable conditions. If you do that, you will not have a high turn over and you will not need to be the lowest rent in town.

  The true expense of rentals is vacancies. To prevent vacancies try to keep happy tenants not cheap tenants.

  8. Don't give your new tenants a discount for cleaning up the prior tenants mess.

  It sounds like it would be good business sense. You are busy, don't want to take the time to clean up an apartment you know was trashed (we'll talk later about why you shouldn't be doing it yourself), so you make a deal with your next tenant. If they do the clean up – you'll reduce their first month's rent.

  Please don't do this – I have done it several times (I'm a slow learner). The tenants will invariably forget that you in fact compensated them for the mess. When they move out they will feel totally justified to not clean it properly – after all, it was a pigsty when they moved in. Why should you expect perfection when they move out?

  If it is not clean and in perfect condition when they move in, how will they know what it must look like when they move out. Should it just be in broom swept condition? Should the stove and light fixtures be scrubbed? Who knows! They don't.

  The second reason for not letting your new tenants do the cleaning is because it reflects your attitude towards the apartment. They will think you are not caring for it – after all, the previous tenants left such a mess, you must rent to some pretty derelict people.

  What kinds of people are attracted to "derelict apartments"? You guessed it – the derelicts.

  It's just a small sample straight out of the book "101 Tips And Traps To Landlording"

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            Sincerely,

                        Brandy Eismon