The Successful Landlord Blog

Setting a Lease Option Future Sales Price

There are three schools of thought when setting a lease option price:

1.    Use current value

2.    Use estimated value at time when contract is to be exercised

3.    Set the price at future market value

To be quick and easy, you can use option 1 by finding today’s value for a similar property, or by using the positive cash flow with some notion of a current cap rate. Read the rest of this entry »

Down markets create amazing opportunities for the investor.  However, a landlord who is sitting on one or several properties might be real estate rich, but cash poor, and unable to tap into those current market buying opportunities.  In those situations landlords would traditionally sell one of their properties and apply that money to a new purchase, preferably one that offers a higher return than the property previously sold. The only problem is, as mentioned before, the down market might be forcing you to sell your property for less money than you originally expected, or worse- for a loss, and neither of those situations is ideal.  What’s an investor to do? Read the rest of this entry »

As a landlord, it falls upon me to control the expenses associated with holding property for rent. One of the expenses that can be relentless, especially in central Florida, is landscaping costs. As you can imagine, during the Florida summer (or rainy season as it’s sometimes called) anything planted in the yard of a rental property grows like crazy.

As far as maintenance goes, it’s usually the tenant’s responsibility, per the lease agreement, to maintain the yard in a manner consistent with the rest of the neighborhood. This works well if the tenant is conscientious and cares what the yard looks like. As a landlord, I can wholeheartedly say that this is usually not the case. Usually, the tenant will completely ignore the yard maintenance until they receive a notice from the city threatening them with a fine if they don’t cut the grass. The grass and yard is usually then ruined and can not be re-rented due to it’s lacking curb appeal.

One way to avoid this situation is to plant native species of plants at a rental property. For instance, be sure that everything including the ground covering, trees, shrubs and flowers are all native to the region where the rental property is. This way, nothing will grow out-of-control and with proper planning all the foliage will look like it belongs there. You will also avoid dumping chemicals into the ground that contaminate the Floridian aquifer.

Another great thing is that native ground covering is MUCH more tolerant of drought conditions that can sometimes occur in Florida. In most cases it will stay green while all the neighbors have large brown patches in their lawns due to the hot, sunny weather. In extreme cases the ground covering will dry out and turn brown but in a more uniform manner. Then, when it rains eventually, everything magically turns green again.

Owning rental property is one of the surest ways to financial freedom, but with it comes mountains of paperwork and hours of property management that can be quite a chore. It’s amazing how fast that back office work can pile up, even if you have only a few units.  There are the rent checks coming in, the expense checks going out, taxes each year, legal documents, deeds, mortgages, and enough contracts to keep you reading for years; not to mention the physical maintenance your units need from time to time.

Whether you run your business from one of your properties or from your kitchen table – these tips, combined with the latest technology, will help you tame the tiger in your back office and make your small business run more like the big guys.

Bookkeeping and Accounting

State and federal laws require every business, and individual sole proprietor, to file a minimum amount of paperwork each year. Large apartment developers and owners have the finances to outsource most of their accounting and bookkeeping functions, but that’s not usually an option for the owner of just a few units; the margin just isn’t there.

Thankfully, bookkeeping and accounting are two of the more basic functions, and whether you realize it or not you probably have more accounting experience than you need to run a successful landlord business.  Accounting is really a matter of simple math; tracking the dollars in and the dollars out. To help you with that math are a host of software providers that offer inexpensive programs to keep your accounting organized and on time. Read the rest of this entry »

So a few years back I had a tenant break a lease and attempt to move out on the sly. They did this presumably because they had caused extensive damage to one of the bathrooms, which they did not report and then wrote a bad check for their last month’s rent.

They even left a very lame hand-written note apologizing for moving out and that they would pay their late fees in arrears, blah blah blah. Of course, the late fees never materialized and the tenant was never heard from again.

Well, as a matter of policy, if a tenant passes a bad check to me and tries to disappear I file a worthless check complaint with the local state attorney’s office. This is when the wheels of justice begin to grind and creek. Though they might turn slowly, they don’t stop turning.

A full 2 and a half years after the worthless check complaint was filed, I received a check from the county Clerk of Courts in the amount of $100. This is good because this tells me that the law has finally caught up with the tenant presumably at a traffic stop and my favorite, they went to jail unexpectedly.

What will be interesting, will be to see how long it takes the tenant to pay the other $700.