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The day of the inevitable has come.  I have a very long term tenant that I inherited when I bought this particular building and she is finally moving out.  This Section 8 tenant has been great in one regard - the rent came on the 4th every month without question.  This ends the greatness.

This tenant has completely trashed the place.  Her apartment has probably never been cleaned during her tenancy, which I’m guessing has been about eight years.  For the several years we’ve owned the building, she’s had a permanent laundry pile in the bath tub.  Guess what that means?

Take a look at her bathroom.  How is it possible that it looks like this?  I honestly cannot think of a sane scenario that makes sense.  Oh I know why, it’s because I’m limiting my thoughts to “sane” scenarios.  I need to think outside of the box and maybe it will come to me LOL.  An incident from a couple of months ago provides some clue.

The fire department has been there because her smoke alarm goes off sometimes when she cooks since there is so much food baked onto the burners and inside the oven.  The city inspectors have been there and gave her a talking-to about the health and safety hazard she’s created.  We’ve talked with her social worker about getting her to clean or hiring a service to come in and do it for her.  Nothing has worked. 

At one point we converted the building to a smoke free environment and since she’s the only remaining smoker, she’s been required to smoke outside.  This happens most of the time, but needless to say the inside of the place is coated with a yellow haze never to be removed. 

With her exodus comes a major remodeling job.  We’ll need to replace drywall, appliances, bathroom sink/vanity/toilet, and all the flooring.  Lucky for us it’s a studio apartment and the costs will not be as high as they could be.

We knew this day would come eventually.  She’s a month to month tenant so we only had 30 days notice of her moving out.  As soon as we found out, my manager contacted her social worker to make it very clear that we expect the place to be cleaned as good as it possibly can be cleaned.  Her measely security deposit isn’t going to make a dent in the repairs we’ll need to make.

We also contacted the Bureau of Consumer Protection to see what recourse we may have for lost rent due to us needing to take time to remodel.  They said that we cannot pursue lost rent due to forced vacancy during the remodel.  They advised that our only course of action would have been to issue her a comply or quit notice as soon as we saw that the condition of the unit was deteriorating. 

It was bad when we bought the building so the only thing we would have gained from that is she would have been gone years sooner.  In retrospect I’m glad she stayed so we didn’t have to spend the money until now.  Plus we collected rent on that unit 100% of the months for all of the years we’ve owned it.  Not all bad.

As it turns out, the tenant is moving out the week before Christmas so at least we should have 7-10 days for turnover.  We are feverishly coordinating all the help that will be needed to get the work done during this tight timeframe.  We already have a referral from one of our other tenants so it’s looking like we may have it rented for Jan. 1.  Great!  No vacancy!  In the middle of winter it can be iffy to get the place re-rented immediately.  Pressure’s on to get the work done because I could not expect anyone to move in to a place anywhere near this condition.

This week’s edition of the Carnival of Real Estate Investing is now posted at Landlord Shmandlord.  This carnival has carved out a niche in the investing world and it highlights blog posts from all over the internet that are related to REI.  One of my posts made the top 10 this week

Be sure to check it out and you can also participate if you’re a blogger!

Recently I had to replace a property manager that was not working out after 18 months of trying.  My new manager Brian has been on board for nearly three weeks now and he’s been a dream!  Rather than compare the good and bad points of these two managers, I thought it would be useful to share some details about how our working relationship is set up. 

Many investors are afraid to invest out of state because of the management issue.  It doesn’t need to be an issue at all.  If you have the communication channels in place and expectations set up front, you can feel as secure with your properties as if they were across town.

I’ve created a landlord system for Brian to follow.  This system lives within a multi-tabbed binder and details all of our procedures.  It includes instructions for how to screen tenants, market the units, maintain the buildings, fill out forms and notices, handle incoming funds and outgoing expenses, and loads of other miscellaneous issues.  I’ve also supplied all the forms and letters that Brian should ever need.

Brian and I communicate using an online collaborative workspace called Basecamp.  It’s a great place to post questions and answers, photos, scanned copies of signed leases - anything.  You create conversation threads that can be organized by category and then named to reflect a more specific topic, such as a tenant name, unit number, or issue.  These threads are saved and can be reviewed again anytime in the future.  Brian scans copies of bills that I need to pay and posts them there.  He also keeps an activity log of his activities so I can look anytime and see what he’s been working on.  I can create to-do lists and assign anyone’s name to each item, and see when they’ve been completed.  I’ve set the system up with users and permissions for each one.  This way we can all access what we need to, when we need to.  The system allows you to set up many different projects, so each property manager is assigned to the project that is appropriate and of course can only see and comment on activities related to that project/city/building/etc.  As the administrator, I see every project in the system.

Last week I went to the city where these particular properties are and met Brian in person for the first time.  I had found him, interviewed him, and trained him virtually.  Oddly enough, now that I think of it, I didn’t even go to the properties on this trip!  Funny.  I guess subconsciously I knew I was comfortable enough with him that my mind didn’t tell me to stop at the buildings.  I found Brian to be a genuinely really nice guy and I’m very happy with my choice now that I’ve met him in person.

Turns out this new venture in Brian’s life is motivating him to expand his context and his own investing activities.  I had sent him some Rich Dad materials to read and listen to as part of his training, and he has since purchased eight other Rich Dad products for himself.  It’s exciting to see him excited to learn and grow personally, and him taking the initiative to learn more on his own can only benefit our arrangement.  Brian is buying his educational products for a fraction of full price on half.com.  I had never heard of this site before but he tells me he got everything he bought so far for $30!  He’s frugal, which is another great attribute of a property manager!

This week’s edition of the Carnival of Real Estate Investing is now posted at Fliperati.

I am honored to have my recent post on deadbeat tenants chosen as the top pick (thanks Fliperati)!

Seems the carnival did not flourish with participation this week.  Bloggers, let’s get involved and grow this community!  This is one way to cut through all the extraneous noise that we sift through everyday and present ourselves with a concentrated set of relevant information.  We can learn from each other and prosper in today’s market of opportunity!

You can write and submit your post for the next edition of the carnival here, and you can even volunteer to host.  See you at CoREI 3.

Last week I started the Carnival of Real Estate Investing as a way to pull together some of the best REI blog material on the internet.  There are many REI blogs hidden in the nooks and crannies and I figured this would be a great way for us all to find them and to get our own exposure too.

I’m working together with Zillow, who founded the Carnival of Real Estate, to cross-promote our carnivals and grow our collective real estate blogging community.

All you need to do to participate is write a blog post and submit it to the carnival weekly.  The cut-off is noon each Sunday so you always have the weekend to get your post written.  You can do that right?  While you’re thinking about it, go ahead and choose one of your recent posts and submit it for this week’s carnival now.

See you at the carnival!

I’ve been writing recently about the situation across the street with my neighbor’s rental house.  My neighbors built their dream home and decided to keep their house across from me as a rental.  At first they put it up for sale, but it sat there for three months and after several price drops they decided to keep it.  The numbers allow it to cash flow a few hundred a month and it seemed like a great idea at the time. 

It would have been a great idea, and still IS a great idea, however… attention get rich quick investors… effort required!  If not on the investor’s part, on the property manager’s part.

It all started with an arbitrary pick of property management companies.  My neighbors called a For Lease sign on our street and gave the company the business without checking references or asking too many questions. 

Look.  When you have a 100-unit building, you want an experienced management company.  When you have one single family home, said management company does not care about you! (more…)

Welcome to the very FIRST edition of the Carnival of Real Estate Investing! This is a brand new carnival that fits a great niche in the blogging world.  There are plenty of REI blogs out there, albeit scattered and hidden in the private home offices of individual investors vs marketed by corporate umbrellas.  Hopefully this carnival will bring them out into the forefront and allow us to meet each other and learn from our wide variety of experiences and perspectives.

There were a total of 17 submissions for the first edition.  Not bad considering it was a dry launch and the carnival has not been marketed at all yet.  Look for a surge in submissions as we all get the word out and participation grows.  You can definitely help increase awareness by mentioning the carnival on your blog!

My #1 Top Pick for this week comes from… drum roll please… Lording the Land - always a great read and this week is no exception!  The rest of the runners up are presented in no particular order.  Thank you to everyone who participated.  Enjoy the posts!

The Landlord presents Schadenfreude posted at Lording the Land, saying, “Sometimes it’s fun to watch the tide go up and make everyone rich. Other times it’s fun to watch the tide go down and see the fools get their come-uppence. Guess which time we’re in now?”

Runners Up:

Frugal Duchess presents The Frugal Duchess: Flipping Houses: Reality TV Disconnects on Real Estate posted at The Frugal Duchess, saying, “House Flipping — as portrayed on reality TV — is not plugged into reality. Here’s a list of ”Five Reasons Why Real Estate “Reality TV” Isn’t So Real,” based on the book: Buy Even Lower: The Regular People’s Guide to Real Estate Riches by Scott Frank and Andy Heller”

Brian Brady presents Real Estate Blog - Stop the Insanity in the Mortgage Marketplace posted at Stop The Insanity in the Mortgage Marketplace.

Joel Burslem presents Two Easy Steps Towards Mastering Craiglist posted at Future of Real Estate Marketing, saying, “Some tools to help investors get the most out of Craigslist”

Wenchypoo presents Book Review: The Weekend Millionaire’s Secrets to Investing in Real Estate posted at Mental Wastebasket, saying, “An oldie (from 2005) but something to get the ball rolling.”

Brad Wozny presents If You are Thinking About Real Estate Investing, a Good Mentor Can Help posted at REI Diary.

Gina presents Gina’s Tax Blog: Guaranteed Rental Agreement posted at Gina’s Tax Blog, saying, “Thank you for considering this submission!”

That concludes this edition. Submit your blog article to the next edition of Carnival of Real Estate Investing using our carnival submission form. Please review the guidelines for submission and remember that posts must be recent and closely related to real estate investing. 

We need bloggers to volunteer to host future editions of the carnival.  Interested?

This week Landlord Shmandlord picks the best posts within the real estate blogging community for this week’s carnival.  Check it out - there are some good ones.

Aaawww, we even made the list this week

So it seems we have a little eviction brewing at one of my units.  Over the weekend I got an update on one of my tenants who still has not paid his rent for October, let alone November.

In October he managed to land himself in jail.  Not that he did anything wrong, mind you, he was just “in the wrong place at the wrong time.”  Whatever that means.  Anyway he had to use his rent money for bail or a citation or something.  His dad co-signed the lease but he didn’t want his dad to know what happened so he refused to go to him for money.

Well a whole month later he hasn’t been able to pay the rent, with or without dad’s help.  So this weekend a letter went to the dad and on the tenant’s door - 5 days to pay or get out.

Why wasn’t this done earlier, you ask?  Good point.  This is the property manager that is being let go this week.  Lately I have found myself completely without energy to monitor or deal with anything he is responsible for.  I haven’t been able to invest anything more into the relationship.  I guess I’ve been operating in the mode of cutting my losses and moving on.  We may just be adding a little more loss to the pile now. 

Having a vacancy in November is less than ideal to say the least.  Maybe dad will save his son from being out on the street and hold up his co-signer end of the bargain.  If he pays now we’ll collect buku late fees, so all is not lost just yet.

My good friend Tom Kish is having a one-day bootcamp in Phoenix on November 11.  He’ll be teaching his trademarked money system for getting up to $300,000 in cash and unsecured business lines of credit.

I use Tom’s system to get the down payments for real estate deals, rehabs, and business startup capital. 

There’s no doubt that it works.  The question is, do you want to learn about it?

Tom’s bootcamp will teach you:

1. Where to get up to $300,000 in spendable cash for any kind of investing by using new business lines of credit instead of your own money or personal credit.

2. How to buy real estate in the name of a new business instead of in your own personal name.

3. Automatic systems for finding tenants and buyers for your real estate holdings. Learn the latest marketing technology that easily identifies buyers for the exact type of property you want to sell. You will even know how much the potential buyer has available for a down payment before you call them!

The event is all day on November 11 at the Embassy Suites at 24th St and Thomas.

I’ve heard Tom speak many times, and he’s not shy about answering every question the audience throws at him.  You will get huge value out of the day, both from content and from a networking perspective.

And very important:

Tom has secured some corporate sponsors for this event and therefore is waiving the normal admission fee.  But you must go to the website and print off a voucher so you can get in at no charge.  Also, if you tell Tom that you heard about his event through me, he will give you a gift at the door.

Hope to see you there!