Attention to my tenant: This is not the case for me, is I a wonderful landlord? right ? What? What?
I own several rental properties and have the opportunity to talk with various potential tenants. I hear a lot from these people about why they are moving. Some of these stories are suitable for after-school specials, but most of them are particularly concerned with having some problem with the former landlord. The most common complaint I heard is that "he has never fixed anything" or that he was "just a dirt bag".
I am here to give you some insight about why your landlord is a dirty bag. That is one of two reasons. In the first possible reason related to the way he / she first bought the property, the second possible reason is he is just a jerk's face. Usually, your spicy feeling should be able to avoid # 2 when you first see the place, so let's focus on the first reason.
Leverage is often used, but it is often a term that is misunderstood. In the case of our rental real estate, leverage in the form of real estate equity is often used as a means of growing a landlord's portfolio.
That means that the house / apartment where you live is very likely to be mortgaged by the landlord from Yin and Yang. Please cast on to the mix that you could not bear as exactly as the landlord paid during the housing boom. And we discovered that most landlords are sitting in leverage and underwater real estate.
So, what is the net effect of this? I am teaching you some secret landlord math. This formula has been proven when tested against thousands of rental properties.
Example: $ 800 / month Let's take a bath of 3 bedroom 2.
The rental property, which is about 50% of the average rent received, will be returned directly to the expenses (not including the mortgage). I know that there are difficulties to believe in you, but that is absolutely true. Property tax, insurance etc expenses will never be seen or considered frequently by tenants. This cost category also includes large items like a new roof, such as repaired leaky faucets and other sections and regular maintenance items.
What is not included in the cost is repayment of debt to real estate mortgages. Let's say the landlord bought a house as foreclosure of about $ 40,000. It would put around his mortgage payout $ 200.00 / mo.
Finally, because the landlord is outside the country, we use a local real estate management company to manage the rental. Typically, a real estate management company will bill a landlord a part of the monthly rent received. If there is a transfer of a tenant, a monthly rent will also be charged to replace the tenant. For calculations, let's say the real estate administration fee is about $ 100 / month.
The final math is as follows.
$ 800 Monthly Rent
$ 400 Average expense
$ 200 Mortgage fee
$ 100 Property management fee
$ 100 Monthly Profit
So basically your landlord is making $ 100 a month for this property. It's very easy to do basic things such as carpet upgrades and new stove. In fact, they try to protect that $ 100 at all costs. This is called "cash flow".
In this scenario, the only way to improve $ 100 a month is to postpone or completely avoid necessary repairs or real estate improvements made by many landlords. Here you get a dirt bag slum torudo. When they absolutely have to repair, they do it cheaply. Also, they probably have very little of their own cash reserves so they will not even be in a wise position in cash to make massive repairs if they want. You see these people listen to late-night information marketers about the way they become 'rich' even if they do not have money.
So, how do you avoid the big thief of the dirt bag? Sure it is difficult. Your best behavior is to ask for referrals from previous tenants. It is a good idea to look at some of the other properties you own to gain a general feeling as to how well they are maintaining other units. Secondly, you understand the secret landlord mathematics that you can hear the details of their ownership, property management, repair policy etc
But this is the best option (I do not intend to brag here) to find a landlord that is approaching real estate investment similar to my way of thinking. I do not finance my investment property so I do not have that mortgage fee. Second, since I manage all my properties myself, I do not have money for property management. I maintain cash reserves for all the property I own. Doing so will result in unexpected and serious costs associated with repair, you will be able to repair and repair it correctly with cash in hand.
What I can do is upgrading, repairing, improving, etc without turning red. I can earn a few dollars here as well. (I will not be rich). But I can offer high quality supplies to tenants without bagging.
So now you know that your landlord is a dirty bag and you know several ways to find a better landlord in the future.
