Landlord Chronicles: I’m Not An Awesome Landlord

| November 15, 2013 More

As of the end of September I co-own a five-unit multifamily property with my husband. We decided rental property investment is going to be our part-time gig.

We're going to be awesome landlords!

We’re going to be awesome landlords!

We’ve decided to self-manage for these reasons:

  • It’s close–about a half-mile from our house.
  • We both work less than full-time, so theoretically we have the time to put in. We do have a kid, but she’s almost fourteen. After 2:45 p.m. we’re busy with homework, activities, and dinner, but during the day she’s at school.
  • I used to be a lawyer, and did a little landlord-tenant law including drafting lease agreements, notices to vacate, evictions, and other stuff.
  • I also used to be a real estate broker, which means I have met a minimum property management education requirement.
  • I’ve been writing about the property management industry and property management issues for almost ten years.

So, we figured we’re well-equipped to be awesome landlords. Now that we’ve owned the rental for six weeks, I’m going to downgrade the “awesome” to “decent” to account for reality. Here are the issues we’ve had so far:

1. Two days before the inspection and prior to closing, I wrote a post on meth lab rentals, got a little paranoid, ordered a meth test kit, and then was too busy working on a deadline to show up at the inspection to do the actual testing. Then I couldn’t figure out an easy way to arrange for the test without insulting my new tenants. Can you imagine if your new landlord wanted to come by to test your counters for methamphetamine residue?

2. Two days after we closed, my husband and I went on a two-week trip to Tuscany. The day we should have been preparing for the trip I had to set up an LLC, get a bank account, get a PO box for rent checks, get a federal ID number, check in with our accountant, draft an LLC operating agreement. I also wrote letters to our tenants introducing ourselves and telling them where and how to pay rent, checked out online rental payment options (and subsequently abandoned the effort, opting to ask tenants first if they’d use such a service), and created Tenant Information Sheets for each of them to fill out and submit with their rent.

3. The trip to Tuscany was awesome.

Look! It's the Duomo! This is awesome!

Look! It’s the Duomo! This is awesome!

Transferring electricity, garbage, and other accounts from a significantly different time zone was not awesome. Also not awesome was the email from one of our tenants who was understandably concerned about sending a check to new PO box, written out to a company she didn’t know (and of course she couldn’t find information on because it was newly-formed!). She wanted to meet us in person because she was concerned about rental fraud. Sort of funny, given my recent post on how to avoid Craigslist rental scams–maybe she read it! What was even less awesome was having to email her back that I couldn’t come by and meet her because I was in a foreign country–the classic excuse of many rental scammers.

4. A couple of weeks ago, one of our tenants called my husband (whom I now refer to as “Mr. Roper”) to let him know she had no electricity on her second floor. He called the electrician, who fixed it for $40. Nice. Then the electrician told my husband that our smoke detectors weren’t in compliance with code. It turns out the electrician was wrong. The smoke detectors are in compliance with code, but they don’t meet current recommendations. Not wanting to mess around with fire and tenant safety, Mr. Roper went out right away, bought four ten-year smoke detectors and installed them in the apartment. That night I wrote 24-hour notices to the other tenants that we would be entering their units to install new and additional smoke detectors the next day and congratulated myself for being so on the ball. Then we got busy and didn’t deliver the notices. I had to recycle them as the dates were wrong. That was fourteen days ago. Nothing else has been done.

5. For November rent, two checks hadn’t been received in our PO box by the afternoon of the 4th. That was ten days ago. We haven’t checked since. Maybe today.

6. The prior landlord, who has been great, suggested that I mail recycling guidelines to the tenants because some liberties are being taken with the recycling containers. I haven’t done that yet. He’s also worried that we haven’t put the spigot covers on yet.

Now, I know what needs to be done to be a good landlord. I’ve been a tenant before, I’ve been a landlord before, I’ve been writing about property management for almost a decade, and I’ve been a landlord-tenant lawyer. However, sitting down and actually doing the work is a lot different from knowing exactly what needs to be done, as the past six weeks have taught me. Things like your kid getting sick, unexpected work deadlines, outpatient surgeries on parents, family trips to cyclocross races, and multiple dentist visits (requiring Ambien) have cropped up. But the problem is, the stuff still needs to get done. So, here’s what need to do differently, point by point.

  1. The Meth Issue: I have no reason to believe any of our tenants is doing meth. None of the signs are there. I need to get over that. I think this a bit like when med students think they have the disease they’re studying that week.
  2. The Last Minute Closing Before our Trip Issue: This was a time management issue and organization deficiency on my part. If a property management company had been involved we wouldn’t have had to worry about setting up the PO box or contacting our new tenants, but I would still have had to form the business and set up the bank account. Besides, it’s kind of lame to complain that we didn’t have enough time to pack for our awesome Tuscan vacation. Classic first-world problem.
  3. The Transferring Accounts and Vigilant Tenant Issue: Another time management and organization deficiency. As to the tenant issue, I think we should have asked the prior landlord to write a letter to the tenants explaining the upcoming transition when we closed. If we buy another rental, that will be on our list. A property management company would most definitely have been able to help us with the vigilant tenant issue, and quite possibly the accounts transfer issue.
  4. The Smoke Detector and Notice Issue: I just need to do it, so I just emailed Mr. Roper asking when he can install the smoke detectors so I know the dates to put in the notice. A property management company could just take care of things and make that problem disappear, but we’re not caving in yet.
  5. Rent Checks. The solution to this one is to set up online rental payments, which I have added to my to-do list. In the short term, this is another “I just need to do it” issue, and I’m going into town to check the PO box in about twenty minutes. [UPDATE: They're all paid up--which is great because if I have trouble drafting 24-hour notices to enter, I can't imagine I'll have much enthusiasm for tracking down rent payments and threatening eviction].
  6. Recycling and Spigot Issues: I’m not going to drive out to the Recycling Center to get forms, but thanks to the Tenant Information Sheets I created and got back last month, I have my tenants’ email addresses, so I’ll find the information online and forward it to them. The spigot is a maintenance issue and, therefore, not my gig. But I did just nag Mr. Roper about it. A property management company might come in handy here.

Well. Since we’re not going to hire a property management company (yet), I need to get started on my list.

Besides criticizing me for my time management deficiencies, do you have any other advice?

By Tracey March

Category: Investment Property, Property Management, Tenants

Comments (78)

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  1. Tracey March says:

    Thanks so much for the comment — we’ll see how things go though! 1000 units is a huge amount — I would most definitely bring in a professional property management company if I had that many units! For now, five seems manageable :)

  2. Tracey March says:

    Thanks so much for the advice Diann! I absolutely agree with your point, and I’m working on the time management issues. Heading out on vacation immediately after closing was definitely not the ideal situation! I think the blog post was a good thing in that it forced me to write a list of things we have to do. There was a short term list (which included sending out notices to enter the units) and a long term list (which includes mostly maintenance and scheduling inspections). Writing about the experience might actually help keep us on track! I’ve been a little busier on my day job lately, which means I can’t spare 2-3 hours a day for office hours, but I am setting aside about 8 hours a week, at least for now, so we can get some things set up (I’m working on creating some spreadsheets, setting up categories in Quickbooks, etc). Once we get a system going, I think things will be much easier! Emails have been working very well for me and Mr. Roper – we keep them in our inboxes until the task is complete, and having that written record means things are much less likely to fall through the cracks.

    And we do have a separate email account and PO Box for the rental business :) Thanks again for the comment!

  3. Tracey March says:

    Dale — it sounds like you’ve had some bad experiences! I mentioned in another comment that we do have a property management company in mind if things don’t work out with self-management. Hopefully, if we end up hiring professional help, our experience will be better. I’ll be sure though to check with my state real estate commission and online review sites before we commit. From working in the industry for a while, I will say that I know there are some excellent property management companies out there — I’ve met them through my work with allpropertymanagement.com. Actually, I don’t think we would have bought our rental property if we weren’t confident that we could find a good manager if things don’t work out self-managing. But, like any industry/profession, there are also some not-so-great managers. For now though, we’re going to try to do it ourselves! Good luck with your rental properties — I bet you have some good stories if you have five!

  4. Tracey March says:

    Geoff – thanks for the advice :) I’ve been thinking that we do need to meet the tenants at some point, and I’m trying to figure out the best way to do it. They are on month-to-month leases, and there are some clauses I want to add, so maybe next month I’ll work on getting leases drafted that I’m happy with, along with some house rules. Then Mr. Roper and I can meet with our tenants to discuss them. I absolutely agree about tenant selection. We haven’t done any of that yet, but before we do I’m planning on developing a system that will keep us organized, protected, and compliant with fair housing rules. Thanks again for the comment :)

  5. Tracey March says:

    Point taken. I do have some helpful experience, which is pretty much why we decided to self-manage in the first place. As someone who has been in the industry, albeit on the edges and not actually doing property management, I’m still surprised by the difference between knowing what should be done and actually doing it. If you know of any landlord blogs by true newbies, I’d love to hear about them. Thanks for commenting!

  6. Tracey March says:

    Thanks for the comment! Ouch :) I’m planning at some point on discussing financial issues related to the units, but have some privacy concerns for both my husband and I, and our tenants. So I’m trying to figure that how to do that. The rental came with tenants who already had leases in place, so I couldn’t change them right away. In the next month or so I’m going to be looking at changes I want to make to those leases, and developing some rental policies, which will be part of the lease. And I absolutely agree – going on vacation right after closing on a rental is not the greatest scenario! Believe me, if we could have changed the dates of either the closing or the vacation, we would have!

  7. Tracey March says:

    Thanks for asking! There is no carbon monoxide source, so–for now–no. We have casually discussed eventually bringing gas to the rental and installing gas stoves, in which case we absolutely would. Thanks again!

  8. Tracey March says:

    Thanks for the comment David. We ended up giving our tenants 48 hours notice on a Saturday, with entry on Monday, so they had plenty of time to prepare. I’m relieved to say no o one complained about the timing — and we did give them our contact information so they could let us know if there was a problem. A property management company would absolutely have handled this from beginning to end, and at some point we may end up hiring one. I think I’m going to start tracking how many hours each of us spends on the rental so we can see how things break out time wise. If there is a default I can handle it. I’ve done evictions in the past, so know the procedures and hoops that have to be jumped through. But it won’t be enjoyable at all. I know that!

    ps: Are you saying we don’t have a life? ;-) We might be in agreement with you before long! Thanks again for commenting!

  9. Tracey March says:

    Great comments especially with communicating with our tenants. Your comment, and some others, affirm my thoughts that we should reach out and personally meet our tenants soon. I don’t want them to think we’re going to be meddlesome landlords, but I also want them to know we’re decent people who are trying to be decent landlords. I’ll look into the home warranty — we had one for our residence, and never used it, so we didn’t get one for the rental. Will follow up on that one for sure–sounds like you’ve got some experience!

  10. Tracey March says:

    Frank, I’m so glad to hear that you’ve had a good experience with hiring property managers since we may need some ourselves at some point! Sounds like they helped you set rents, get better tenants and leases, and increase your rental income. From you comments, you must have multiple managers and properties — even with property management helping you, sounds like there’s still some work involved! Thanks for commenting – we may well take your advice at hire professionals at some point :)

  11. Tracey March says:

    Thanks so much for the reassurance! And we checked some things off the list! I think writing the blog post and then publishing it out there on the webbernet definitely gave me the incentive to act quickly :) I’ll be blogging about our progress soon. Thanks for the comment!

  12. Tracey March says:

    Evelyn, thanks so much for sharing some of your experience. We definitely came to the landlording business in different ways :) It sounds like the home warranty company has worked really well for you — I’m going to do some quick research on them as I don’t have any experience with them — other than not using a home warranty policy that came with our residence! Someone else has commented about getting a home warranty, so it sounds like it’s worth looking into. Thanks so much for your commenting!

  13. Tracey March says:

    John, thanks for the comments — it definitely does seem overwhelming at times, so we’re trying to stay on top of our short list, develop and stick to our long term plans, adapt as we go, and take one day at a time. For maintenance and repair issues, Mr. Roper will handle most of the ones he’s comfortable with, but we inherited the prior landlord’s “team” in the form of a handwritten list of contacts for his electrician, plumber, etc. and we’ve already called in the electrician. Fortunately we both work from home and have fairly flexible schedules, but if we get any busier we’ll probably need to bring in reinforcements in the form of a property management company! Hopefully we won’t have to do any evictions, especially if we have a good tenant screening process in place. I guess we’ll cross that bridge if and when we come to it. I did them as an attorney, so I know how–but I know they will be far from enjoyable! Thanks again for your comments – we’ll take your good luck wishes! Thanks!

  14. Tracey March says:

    Hey Dawn! Thanks so much for the advice. I’m looking into electronic payments again next week and that tip on the USPS program is a total winner! And finding out about that is on today’s list! Seriously. That would save us a ton of time. Thanks!!

  15. Tracey March says:

    Thanks for the comment Karen! Happily we’ve been getting our act together and moving onward! Despite the time management challenges, we have been meeting our tenant obligations, so hopefully we get the same treatment as landlords. It’s definitely a two-way street!

  16. Tracey March says:

    Thanks for the checklist comment! I actually like to keep my checklists on paper as I work at my kitchen counter a lot, and there’s not good sport for a white board. Anyway, yesterday I ordered a tabbed graph paper notebook just for my checklists for the rental property and for my writing gigs. We’ll see if it works better than my current notebook.

  17. Tracey March says:

    Daniel – I already have a pretty good idea of what our tenant screening process will be, and the credit check is a huge part of it, so thanks for the affirmation. We made sure we had an insurance policy in place at closing on the property, but I just read a post recently, I think on http://www.landlordology.com, that made me thing about it again, so between that and your suggestion, I think I’ll call my agent to make sure we’ve got all the right clauses and amounts in place. Thanks for commenting!

  18. Tracey March says:

    Darcie, thanks for the reassurance :) I’m looking into online rent payments systems this week and plan to check out rentpost.com. Nisha at allpropertymanagement.com just interviewed them very recently, and it sounds like they offer a thirty-day free trial. http://www.allpropertymanagement.com/blog/2013/11/21/rentpost/. I’m all about testing it out before I commit! Thanks so much for the kind words :)

  19. Tracey March says:

    Good luck with your eviction proceedings — sounds like it’s been awful! Will keep my fingers crossed for you :)

  20. Tracey March says:

    Jason — Oh no! I don’t want to be old school ;) Will definitely look into ATM cards–I hadn’t realized that was an option. I do have to say though that I really like the idea of online rental payments, but they also cost money. And, spoiler alert on the next blog post – the smoke detectors are in. All the units already had smoke detectors that met code requirements (that was a specific condition of closing), but when I saw that they didn’t meet fire department recommendations we wanted to meet those too.

    I agree we need to be more on the ball – BUT, we don’t have any more awesome trips to Tuscany planned, so that will help :)

    Thanks so much for the comments and advice!

  21. Tracey March says:

    Phil – I guess in your case the third time’s a charm! I’m pretty hopeful that if we do end up hiring a property management company we’ll be able to find one that does a good job for us. And we really like living close to our rental property. Driving past it at least once a day provides a good opportunity to do a visual check in! Thanks for your comment :)

  22. Tracey March says:

    Thanks so much for the advice. I’m happy to say that before I dropped off the Notice I emailed each tenant to give them a heads up that the lady creeping up to their front porch in a few hours would be me! I think they appreciated it. I’m going to try to meet them all soon, just so we can all put faces to names. A few people have mentioned how important it is to have good communication with your tenants — thanks for affirming the idea!

  23. Tracey March says:

    Ann, so glad you liked my post :) Hopefully Mr. Roper and I will do a good job, but it’s nice to know we can hire a property management company if things don’t work out! I’m glad you made the right choice for you. Sometimes it takes a while to realize that you don’t have to be doing whatever it is you’re doing. I’ve made that choice a few times, and it was always somewhat liberating! Thanks for the comment!

  24. Tracey March says:

    Lynn – thanks so much for chiming in! Sounds like your experience could have been better — hopefully we’ll avoid high maintenance tenants like yours!

  25. Tracey March says:

    Noella, I’m actually considering taking your advice and requiring autobill pay for any new tenants. In the survey I sent out, 4 of the 5 tenants said they’d like to to online payments, but one said they wouldn’t use it, so I think it would be unfair to impose it on an existing tenant. We’re going to be much more vigilant about checking the PO Box — for that very reason – we want to know immediately if someone has paid after the due date. I think we’re getting on top of things now — hopefully I’m not speaking too soon! Thanks for commenting :)

  26. Tracey March says:

    Ann. Sounds like you’ve had some bad experiences with property management companies. Sounds horrible. I hope you replaced them with a more reliable company? Or did you start to self-manage instead?

  27. Tracey March says:

    Mike. Spoiler alert: I’m happy to report that my to-do list from the first blog post is done. Phew!
    Thanks for commenting :)

  28. Tracey March says:

    Thanks for the tip Ron. Buying and selling real estate really is quite different from property management. I think I would consider hiring a company that does both, but only if they have a department set up exclusively for property management. I’m curious what others think about this. Thanks for commenting Ron!

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