So you own a rental. How’s that going for you? Hopefully, it’s been a pure delight. But usually, not so much…
Most investors in Single Family Homes and Condos and Townhomes have already had some emotional jar that came quite unexpectedly. Maybe you’ve had the “Midnight move-out”, or the “I’ll catch up when I get work”, or “What do you mean I can’t have a pet?!” Trust me, if you haven’t heard this yet, you will soon enough! But forewarned IS forearmed! Be completely ready, have a bullet-proof strategy and your team to smack this down! There is hope!
Here’s exactly what you need:
- A bullet-proof Lease. I strongly recommend it be prepared by your licensed REALTOR on the most recent version (!) of the CAR Residential Lease Form. Every clause is in it because of someone else’s lawsuit, so that YOU don’t become a reason to put in a new clause.
- An Eviction Attorney specialist on speed dial. All Attorneys can do evictions, but because the laws are so precise, specific, and subject to change, you need someone who does this as their primary practice. In Southern California, I use SII. Text me or email me and I can connect you with them when you need it.
- Logic and guts: if you cannot realize and evaluate how fast this can go bad and how deeply you can be damaged, then you may not have the guts or nature for Residential Real Estate Investment, but you can learn. But it sure helps if you also have this next vital item in your arsenal.
- Cash reserves to call the Attorney, start the eviction, carry the property in the process, repair the property, market for rental, carefully screen, and re-lease the place ASAP.
- A “hip-pocket” marketing plan that you can put in play in under one hour. Know the websites to advertise, have the words and photos and flyer pre-done for e-distribution, and have a credit checking bureau set to go.
Most small investors fail to plan, therefor have almost always plan to fail. The biggest problem most small investors have is cash reserves. Believe me, I’ve been there! And the scars run deep. In a market turn many years ago, I was unprepared for the cash needs of one vacant house and by the time the ball of yarn completely unwound, I had lost four houses! Me, yours truly, no kidding. And never again! So how do you avoid this pitfall?
If you have to put these things on your credit card to protect yourself in crisis (almost every crisis for a landlord started because of a crisis of a tenant!), don’t think twice – do it! The high interest on a credit card is nothing like what other damage you will experience by waiting for the Tenants’ other shoe to drop.
Key Take-Away #1: Know you’ll have problems, know where your money will come from to reduce the problems, pull the trigger on getting the tenant to “get right or get out”, and take action by the numbers.
Key Take-Away #2: If you, the Landlord, do 99% of an eviction process with your prospective tenant before you ever sign the lease or hand over keys, your problems will be instantly reduced to a fraction of the potential problems, risks, losses, stress. The property is an investment for you. It may be their home, but they live there under your rules that they pre-agree to in writing.
If you reconsider your Investments along these lines, I guarantee these results: reduced stress, reduced trouble, reduced marital/relational conflict in your house, and a stronger, more lasting yield on your investments. REMEMBER: “Experience Is What You Get When You Don’t Listen!”
If these investing insights are a benefit to you, they probably will be to those you know and love. Please share this blog, the website, like us on Facebook, Tweet and re-Tweet and re-re-Tweet, but most importantly build, maintain, and control your investments. This is investing Insights with Barry Burnett, Trusted Advisor, available to serve you.
Reprinted from Investing Insights from Barry Burnett, Trusted Advisor, as heard on Radio Real Estate Network, RERN.