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Landlord News Issue # 18

The LPA Newsletter,
April 2005



Dear Fellow Landlord,

In this issue of The LPA Newsletter:
I hope you enjoy my latest article, "The Secret Career Killer Facing Real Estate Investors"

  • The latest Tenant Excuses for no paying rent
  • Landlord Do's and Don'ts ... concerning the Lease Signing
  • More Quotes for Success & Inspiration

    Please e-mail us if you have any questions or would like to add or share any material / information. I hope this month's newsletter finds you well and off to a successful landlording season.
    John Nuzzolese
    John@theLPA.com




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    LANDLORD SPECIAL REPORT: #22



    The Secret Career Killer Facing Real Estate Investors

    So, you want to be a real estate investor? You are probably thinking the way I did when I started as a real estate investor. I thought the most important objective was to buy as many properties as possible. Well, I was only half right.

    As an investor in residential real estate, being able to purchase properties that will allow you to make money is paramount. While there are various methods you can use to make your real estate fortune, the two most common plans are quite simple.

    Buy and flip. This is when you purchase a property and sell it for a higher price. Many investors will find "Handyman Specials" or "Fixer Uppers" at a low price to improve and sell at a higher price. Sometimes you are fortunate enough to find an excellent opportunity requiring little or no work, only to resell for a quick and easy profit. Although this is a common way to make money in real estate, many investors choose not to sell their investment property.

    Buy and hold. This is when the real estate investor becomes a landlord in order to enable the investment property to generate income. Holding onto the property is also a way to allow the investment to appreciate in value over time. Why? The demand for residential real estate continues to grow and people are willing to pay top dollar for a place to live. What can be better than that? You have an asset appreciating in value plus you also have a tenant to pay your expenses on the property. You may even have a positive cash flow.

    So what is "The Secret Career Killer Facing Real Estate Investors"? Before I answer that question, let me ask you,

    • What happens when you put investment properties together with tenants?

    • You get a landlord tenant relationship. I wish I realized the ramifications earlier.

    Tenant problems are the one of the biggest reasons, if not, the biggest reason most landlords quit investing in real estate and sell their rental properties way before benefiting from one of the best features of owning real estate: appreciation.

    It is just as important to learn the secrets of landlord protection and property management as it is to know how to accumulate rental property. Let me say it another way: Without knowledge of landlord protection, you as a landlord, are in big trouble!

    Think about how much money people spend on books, seminars and trial and error learning about buying real estate. It’s incredible! I invested so much money learning creative ways to buy property. How about you? How much have you invested learning to be an efficient landlord? Most landlords learn their lessons the hard way like I did. Fortunately, now there are some books and websites on landlord topics that can shed some light on the subject and allow average landlords and “Newbies” to become educated and aware of their legal rights concerning landlord – tenant relationships.

    What good is struggling and sacrificing to own a lot of properties only to bail out because of overwhelming tenant problems?

    Get educated in the art of "landlord protection". Learn how to avoid tenant problems so you can keep buying more investment property.

    The three most important landlord issues to learn about for your own protection are:

    1. Screening and Tenant Selection
      • I always say, "95% of tenant problems can be eliminated in the screening process!" It really is so true. A lot goes into screening a tenant properly, so try not to jump into any lease agreements without doing your homework first. The article, How to Screen Tenants in 5 Easy Steps will help you break down what to do when it comes to screening your potential tenants. The idea is to make the screening process as simple as possible for you while helping you to eliminate the unqualified prospects and focus on the more promising ones.

    2. Using a solid landlord lease
      • One of the keys to a good landlord – tenant relationship is having both parties involved come to an understanding and agree with the terms in the rental contract. All too often we hear of and see tenant problems that could have been avoided if only the parties had used a better lease agreement. The problems usually stem from an issue that the lease should have covered, but did not. Most of the traditional leases are designed to make both parties happy, especially the tenants. Conventional leases are politically correct not to offend tenants and often leave the landlord wide open and prone to problems with the tenancy. Unless the landlord takes steps to protect himself in his lease agreement, the law will offer the tenants a strong bundle of rights giving them a legal advantage.

    3. Lease Enforcement
      • Even with the greatest lease agreement in the world, a landlord faces a myriad of potential tenant problems. Enforcing the lease has to start the moment you sit down with the tenant at the lease signing. I know you may still be in the negotiating stage on certain items concerned in the lease, but enforcing the lease begins here. Reading the entire lease, clause by clause, emphasizing topics that are important to you reinforces your terms from that point on. Later on, when lease infractions occur, you must be prepared to jump on the issues professionally and immediately. Having the proper landlord forms to enforce your lease is essential. Using forms to correct tenant problems is both professional and efficient because you are creating an official record on paper of your legal communications concerning the events at hand. From an Urgent Late Notice to a more serious Eviction Notice served properly on a tenant, the landlord projects a far more professional image. The objective of the lease enforcement forms is to squash small tenant problems quickly and professionally before they develop into full blown disasters, while snapping the tenant back in compliance with your lease agreement.

    If you have experienced the unpleasant part of being a landlord which includes loss of rent, possible foreclosure, loss of sleep, confrontations with unreasonable tenants, expensive repairs and restoration, vandalism, theft, squatters, evictions, legal fees, you may have had to consider if it's all worth it or not. Many new new investor / landlords decide quit the landlording business soon after a bad tenant experience.

    As a real estate investor who intends to be a landlord and enjoy that excellent long term appreciation, it is absolutely imperative to have some landlording knowledge. I strongly recommend having more landlord tenant knowledge than your tenants do!

    Happy investing and landlording!


    Printer Friendly Version of this Article



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    Landlord Do's & Don'ts

    What The LPA says you should do and what you shouldn't do about:

    The Lease Signing



    DO
    • Sit down and read over the lease with the tenant, emphasizing the important parts.
    • Have a signed & fully documented Property Condition Report before giving any keys to the tenants.
    • Staple a copy of the "Tenant's Notice of Intention to Vacate Letter to the back of the tenant's copy of the lease.
    • Be sure all funds are in cash or the check has cleared before giving the tenant any keys.
    • Warn the tenant that you or your partner or manager report to national tenant and credit bureaus, so it would be in their best interest to pay on time or early.

    DON'T
    • Allow the tenant to strike clauses or amend important parts of your lease.
    • Be afraid to tear up the lease and return the tenant's money if you are unhappy with the meeting.
    • Get too friendly with the tenants.


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    Rent Excuses...


    Excuse of the Day for 4/2/05:

    "You got mouses all over the home! You got to do something about these mouses to make this home habitual again."

    My exterminator found no evidence of mice and the unit was always habitable. This is just one of many excuses this tenant has used for not paying the rent on time. This time I am enforcing the late charges, and sending a copy of the LPA "Pests" clause in the lease. - Lisa M., Far Rockaway, NY

    Excuse of the Day for 3/30/05:

    "Can you lend me some cash?"

    I think this tenant has snorted my rent money up his nose in drugs.- Mary Lou, KY

    Excuse of the Day for 3/23/05:

    "Rent, Rent, Rent. All you ever want is rent. Well here it is... Oh, by the way, don't deposit the check till the 28th. Harry's mother died and we paid for the party after the funeral."

    I just took the check, but then I decided to charge them with a late fee anyway. The 28th is pretty late. - Phil S., AZ

    Excuse of the Day for 3/20/05:

    "My nephew is law student and he tells me that this lease is illegal."

    I knew it was just another excuse, so I my lawyer served them the next day. They did wind up paying the late fee, a partial attorneys fee and the rent. - Jack Klein, NY

    Excuse of the Day for 3/18/05:

    "I had to pick my sister up from the airport. Then she needed money."

    It turns out the sister is here to become a permanant unauthorized resident. Too bad she didn't use the money to pay the rent. Now they will have to use it to move. - Anna Marie, Fort Lauderdale, FL

    Excuse of the Day for 3/15/05:

    "I am filing Chapter 7, so scr@# you! "

    As he drives off in a SUV, and his $50.00 haircut looks like s###t! - Pam, Michigan

    Excuse of the Day for 3/12/05:

    "We will not pay the rent until you split the PG&E bill."

    I'm afraid I have no choice but to evict. They are angry because their utility bill is higher than expected and feel it is somehow my fault. - Robert G., CA

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    Quotations...


    eleanor roosevelt quotes Yogi Berra quotes Thomas Edison quotes Benjamin Franklin success quotes



    "No one is useless in this world who lightens the burdens of another."
    - Charles Dickens

    "A Wise man will make more opportunities than he finds." - Frances Bacon

    "It is never too late to be what you might have been."
    - George Eliot

    "How much did your last tenant problem cost you?"
    - John Nuzzolese

    A Way of Being
    - Gary Link, Attorney at Law

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    Credit Reports

    Reporting to Credit Bureaus

    Free Forms

    Q & A Forum

    Landlord Tenant Law

    Excuses

    Renewals

    Books

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