The first thing you need to do is sit down and set your goals. Diana Scharf Hunt said “Goals are dreams with deadlines.” A lot of times, people are thrown off by the idea of taking the time to set their goals. Read more “How I Lost The Secret Of Dazzling Success For 20 Years”
The first thing you need to do is sit down and set your goals. Diana Scharf Hunt said “Goals are dreams with deadlines.” A lot of times, people are thrown off by the idea of taking the time to set their goals. Read more “The Number 1 Secret Of Success”
The first thing you need to do is sit down and set your goals. Diana Scharf Hunt said “Goals are dreams with deadlines.” A lot of times, people are thrown off by the idea of taking the time to set their goals. Read more “Get Best Advertiser In Your Side Pocket”
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When we are showing a vacancy, we are usually in one mode: get it rented. We want the best qualified applicant as soon as possible. We want to find out as much about the person either prior to completing the application. It saves us time right? The more we know sooner, the easier it is for us to weed out the bad candidates. So we ask questions to get some answers and satisfy our curiosity.
Sometimes we are just making friendly conversation and we tend to forget that in the role we are as landlord, what we say to tenants and prospective tenants is scrutinized. So what was meant to be a friendly conversation point about the person may turn into a complicated Fair Housing complaint down the road.
Here’s a list of questions that will you should avoid asking potential renters. Some seem innocuous but can be construed as seeking for discriminatory information.
Where were you born?
This seems harmless but since its asking for information about a protected class (national origin) and it has no bearing on their possible performance as a tenant it’s on the no-no list.
Tell me about your children.
Familial status is a protected class. Phishing for information about the children’s age, grade, etc is a potential Fair Housing lawsuit Wait to find out information about the kids from the application.
Do you need to know where the nearest [mosque, temple, church] is?
No. No. No. You are inquiring about their religion, which again has no bearing on the application. If they ask you where the nearest worship location is, that’s different because you are answering their question. When you someone appears at a showing in unusual religious clothing, don’t make it a point of conversation.
You have a nice accent. Where are you from?
This is also a question that inquires about national origin or ethnicity. Your finding out someone is Welsh, Russian, etc which is something that should not have any bearing on their application. This is a hard one for me to follow because I love accents.
Do you have a disability?
….No. Just no It’s rude. It’s common courtesy. It’s a violation of Fair Housing.
Do you have a service animal?
You can ask if they have pets but not specifically service animals. Let the conversation flow naturally. Ask if they have pets, then if they do inquire about the breed, weight and other characteristics you want to know. If the pet is something you don’t accept you can say so. That is when most people will tell you it’s a service animal. You are still getting the information about pets but you are letting them tell you its a service animal.
You can still find out a decent amount about your applicants without probing in areas you shouldn’t. Be methodical with your questions and don’t forget as a landlord doing a showing you are held to a higher standard with your conversation.
Here’s a list of common questions that are still ok to ask:
That last one is a GREAT question to ask. It opens the door for them to tell you what might be concerning them about the application. If they are offering you the information without you phishing for it it becomes fair game.
The most underrated topic in buy and hold real estate investing is Fair Housing. In fact, its staggering how many investors don’t bother learning much if anything about Fair Housing. I was flabbergasted when I read a recent thread on a national FB group for landlords where half a dozen people were commenting that Fair Housing only applies to applications…once the person moves in it didn’t apply. What the….. Are you serious? Let’s get this out of the way: Fair Housing Always Applies. Every. Stage. Of. Tenancy.
But let’s start at the beginning of the tenant process because most Fair Housing violations occur prior to the tenant moving in. Our first interaction with potential renters is usually a written ad. This is where problems can quickly begin, even if we didn’t intend it. Remember: With Fair Housing violations, your intent doesn’t matter.
In Fair Housing we have federally protected classes, state protected classes and sometimes county and city protected classes. As a refresher, here’s our protected classes down to the state level: Race, National Origin, Ancestry, Gender, Familial Status (including Marital), Sexual Orientation, Lawful Source of Income, Status as a victim of Domestic Abuse, Age, Color and Disability. The language in our ads should avoid presenting the appearance of either appealing to OR detering anyone in those classes. An example of deterring a class would be the signs from the 1800s that said “Irish need not apply”. Having that line in your advertisement would certainly be grounds for Fair Housing violation. Yet as we said it above it’s not just exclusionary statements that create trouble. Informing people in the ad that a Kosher deli is located on the bottom floor of the building can be seen as encouraging interest and even stating that the building is perfect for those of Jewish heritage. This would violate Fair Housing because it’s encouraging one group of people to be interested over another.
Let’s Try Read An Ad
I pulled this ad from a FB group where it was screen captioned for discussion. Using both federal and state protected classes, see how many violations you can pick out:
Spacious 2 bedroom upper duplex available for rent. Fridge, stove, and microwave included. Off street parking and laundry in the basement. (Laundry requires going outside in the cold and down 2 flights of stairs. Not ideal for those with mobility issues.) Located within walking distance of stores, Chinese food, and St. Patrick’s Catholic Cathedral. I don’t provide a/c so not ideal for the elderly since they need a/c. Lower unit is occupied and there isn’t much noise dampening between the apartments. Energetic kids might cause problems between tenants. Rent is $905. Security deposit is one months rent or $1200 if you have kids.
How many possible Fair Housing Violations did you find in the ad? There were 6 immediate violations.
What Went Wrong…
Laundry requires going outside in the cold and down 2 flights of stairs. Not ideal for those with mobility issues.
While the landlord may have had good intentions of warning those with conditions that are aggravated by stairs or excessive movement, that is not how it will be interpreted by the HUD. HUD will view it as they are discouraging a protected class from viewing the property. The decision of whether or not something constitutes a burden because of their physical ability should be up to the person.
Located within walking distance of stores, Chinese food, and St. Patrick’s Catholic Cathedral.
This might appear innocuous because it’s a statement of the amenities located close to the unit. However because it mentions a particular religion it can be construed as encouraging Catholics to apply and discouraging those of other faiths because it implies the neighborhood might be a Catholic neighborhood. Also mentioning a restaurant based on its national cuisine is not a good choice. Even though its a type of food widely available in the U.S., it appears as though that one particular type of ethnic is food is being singled out.
I don’t provide a/c so not ideal for the elderly.
This again may be well intended but it violates Fair Housing because it’s discouraging people of a certain age from seeing the unit.
Energetic kids might cause problems between tenants. Security deposit is one month’s rent or $1200 if you have kids.
These statements both violate the rights of those protected by familial status. The first statement is insinuating that the unit is best for well-behaved kids or families with no kids at all. The second statement is a more clear violation. You cannot charge someone more security deposit simply based on their status in a protected class.
How To Fix This…
So how could the landlord have written the ad and still provided all the same information?
Spacious 2 bedroom upper duplex available for rent. Fridge, stove, and microwave included. Off street parking and laundry in the basement. (Laundry requires exiting the building and 2 flights of stairs.) Located within walking distance of stores, food, and a place of worship. A/C not provided. Lower unit is occupied and there isn’t much noise dampening between the apartments. Please be conscientious of whether this may present an issue. Rent is $905. Security deposit is one months rent.
They have still informed people about the laundry location, the lack of a/c, and the inadequate noise dampening between units as well as listing what’s local. But they’ve avoided trigger words like “kids”, “Catholic”, “elderly”, and “Chinese”.
It Doesn’t Take A Complaint
To have a discrimination case lodged against you doesn’t require a person to lodge a complaint, especially with advertisement wording. HUD and state agencies can initiate action if the discrimination is visible. The ad above has visible violations of Fair Housing therefore HUD or other agencies could bring charges against the landlord. So don’t think as long as no one complains that it won’t be an issue.
“Opportunity only knocks once.”
It’s a cliche in our society. It’s used in countless movies and tv shows, quoted thousands of times over. It’s a crutch for many people who cling to normalcy. It’s even misused by people who have the drive for success. There are motivated people in the world who run their professional lives like the equivalent of chicken with their head cut off frantically trying to find and listen for the opportunity that is knocking.
I’ve seen it in new entrepreneurs and investors where they are hyper vigilant on being able to recognize the “once in a lifetime opportunity” (also a horrible cliche) that will propel them to success. They never take the time to make deliberate choices that produce the results they want. They flutter around their spheres of influence seeing and listening to what everyone is doing in an attempt to find their ‘knock of opportunity’ through other people’s habits. Never actually taking the time to create their own habits of success.
They fail to understand that if you use habits to perpetuate self improvement, improve your relationships, and exercise self care that opportunities are then attracted to you. Create habits that attract opportunities rather than focusing on finding the one or two opportunities.
Your daily choices that you make turn into the habits that determine the direction of your life.
Make habits to improve your mind, improve your knowledge, connect with your spouse, engage with friends, find connections in your professional life, etc. Here’s a few examples of what you can do to create your habits of success.
MORNING ROUTINE
I’ve talked about the importance of a morning routine in a prior blog so I won’t go into too much detail here. We’ll skim the cream off the top of the milk. Of course it’s a dairy reference, I’m from Wisconsin.
Set a morning routine where instead of watching the morning news you exercise, read, and have whatever your version of healthy breakfast is (Not Cocoa-Cocoa Puffs). Morning routines set the tone for your day and are the most overlooked portion of our days that can create not only success but true joy. Spending 2 hours in the morning doing what we enjoy that improves us puts our minds in a positive state before we begin the ‘real’ portion of the day. Don’t get caught up on the idea of having to rise early to have a good morning. You don’t have to mimic the people who get up at 3am, 4am. You can get up at 6am and likely still have 1-2 hours to run through your successful and happiness habits before the real world begins to wake.
IMPORTANT FIRST THEN EVERYTHING ELSE
Structure your days so you always do the tasks that have the potential to create massive change first rather than reacting to the urgent. There are few scenarios in this world that are urgent that can’t wait a few hours. Reserve the mornings to tackle the important tasks that will get you closer to your goals. Leave the urgent (and your email!) until you have devoted time to those tasks.
Also leave the routine items like errands, returning calls, and bookkeeping to the afternoon. I prefer to leave those for the last 2 hours of my day on alternating days. This provides you with maximum productivity for working on the important, handling the urgent and ending the day with the routine to make sure you stay on top of the day to day.
TOUCHDOWN AND SHUTDOWN WITH PURPOSE
An evening routine provides additional structure of joy but also sets the tone for the morning. If we have a crummy night, it will be harder to get up and do our ideal morning routine. We’ll likely sleep-in or opt for “chill activities” like Netflix or the morning news. So start the night before with having a shutdown protocol..I guess kind of like a computer.
First on the list should be handling household items that “put in a bug in your butt”. Hate dirty dishes in the sink? Get those done first. Smelly trash throw off your entire evening, then toss it. Get those 1-2 pesky things done that will mock you out of the corner of your eye if they aren’t done. Then move on to preparing yourself for the next day. Get your items ready for the following day. Clothing, documents, charge your devices, prep your on the go meals, and get ready for bed, etc.
Lastly, end with quiet items that begin to shut down your mind. Read, journal, meditate, ASMR videos…whatever puts your mind into a cool down mode. Like at the end of the workout where you’re supposed to allow your body to slowly cool its jets. Something that quiets your mind, relaxes your body and maybe even makes you sleepy.
Create habits like this and opportunities will find you in abundance. Then your biggest problem will be selecting the opportunities.
Corina Eufinger
Owner of Brio Properties
Chairman of WAA
@passiveincrev on IG
Growing a real estate portfolio with a large purchase is a daunting task. It has the thrill of a successful outcome tied with apprehension of taking on something so large, usually in debt form. For many investors its the apprehension that prevents them from acting on it. There is a limited few that dare to go big in this industry. This is why most larger buildings end up being owned by “the same four people” in a certain town or city. People usually end up admiring these people saying “If I only had the guts” or “Man I wish I could that” as they walk by the buildings. But they never will. Because these are the same people that focus on the failed expansion stories that seem to be routine in corporate business news.
At one point in our lives, we’ve likely read a news story about “Company X” going out of business because they expanded too quickly. The story will tell you that 3 years ago Company X bought “Y Company”. It will state that Z number of people that are currently employed by the now merged company are out of work and have lost their pensions. But yet they won’t offer any true explanation as to why it occurred beyond the expansion being “too quick”. In reality it wasn’t that the expansion was too quick it’s because it was executed sloppily. There’s no calendar time frame on being successful in expansion. It comes down to execution. A failure to execute the merger effectively by proactive and changing things that don’t make sense or they sink the success of the acquisition afterwards by paralyzing themselves with fear. What kills many of these companies are the same things can kill real estate entrepreneurs when they expand.
#1 Expansion Without Forethought
In the business world and as real entrepreneurs some people tend to approach expansion…well…like a bat of hell. Out of the gates they are zig-zagging around, reacting to the major urgent items that are thrown at them that need to be done to close the deal. They’re gathering documentation, signing papers, reviewing final drafts of contracts. They are reacting to what the transaction needs to happen. They aren’t taken any time to look ahead and plan for the day after the acquisition. They believe they have all the time in the world to change things after the ink is dry.
What they should be doing is reacting to the urgent items in tandem with proactively working towards things that need to be done to set-up a smooth and successful acquisition. As a real estate entrepreneur being proactive may include things like creating your property plan and evaluating the current logistics of the property. I.e. On-site staff, door key systems, storage spaces, recurring expenses. Looking at all areas of the operation for efficiency and redundancy as well as how to best adapt the property to your current administrative operations.
When buying a new property don’t fall into a pattern of doing things or keeping things only because it was established under the old regime. ‘They used it/did it so therefore it must be necessary for you.’ This one way to inadvertently leave money on the table or lose money on unneeded services or overpriced vendors. It might be administrative tasks that don’t meld into your process so they should be eliminated or modified. Or contractors that you don’t communicate effectively with so projects are taking a little longer or not being done to your standard. It also creates a more cumbersome operations system that decreases the entire portfolio’s efficiency, not just that one property’s. If you fall into the trap of “there must be a reason it was done this way” or “they used this person because they knew the building” you’re starting down the path of the many failed mergers of Corporate America.
#2 Expansion Paralyzation
The other reason for expansion failure arises from the after acquisition glow which turns into acquisition terror. They wake up one day rather sobered from what they’ve done. They’ve purchased a $500,000 property….*gulp*. In this sobering light they become scared, fearful of failure. They are so obsessed with the risk they have taken that they become over-determined not to become a statistic of a real estate failure. This usually presents itself in cult-like worship of their bottom line. They begin pinching every penny to build that nest egg to astronomical sizes so they can pay the bank if (god forbid) the property starts to fail. They opt for cheaper labor and forgo regular maintenance for the $75 here or $400 there all to ensure that they don’t fail. They put laser like focus on reducing cost. Overtime, as they had predicted when they started their Rainy Day Crusade, their property does begin to fail. People are moving out, vacancies are taking longer to fill, and the rents are slowly, slowly going down. It’s not the economy or the market. It’s the consequences of the real estate entrepreneurs overzealous attempt to not fail. The quality of units has gone down and the property has a new less desirable reputation. The rents they had when they bought the place now become overpriced. And it spirals from there…
Being overly focused on the bottom line can create low tenant satisfaction. Cosmetic repairs aren’t completed on the building, or broken items are replaced with inferior quality items. Tenants become increasingly inconvenienced by mechanical breakdowns because of routine maintenance being put off in addition to buying inferior products. They are no longer getting “what they pay for”.
Reaction Mixed with Proaction While Avoiding Paralyzation
If you decide to make a large move, plan your expansion and don’t just react to it. Make sure you are doing more than just reacting to demands of the transaction and are actually evaluating and creating plans. Don’t do certain things because that’s how they were done prior, evaluate everything in the potential acquisition’s operation. Once you’ve acquired the property don’t over-correct out of apprehension. Refuse to allow yourself to be so focused on the bottom line that you neglect other critical areas that determine the property’s success. Trim costs when it seems reasonable but don’t become a penny pincher that drives your own property into the ground.
“Sometimes I show apartments. Sometimes I’m the enforcer. Most of the time though I’m a psychologist who provides housing to people.”
In a moment of bold zaniness I described my profession this way at a networking event last week. It got some good laughs. On the way home it reminded me of how much this business is about personal connections. Not just with our vendors or colleagues but also with our tenants. It’s easy to get caught up in the robot mode of the business. Where in a way we forget we are dealing with people.
I’ve talked with tenants over cheating spouses, divorces, life traumas, milestone events, promotions, demotions, and more. I’ve learned so much about thought patterns and societal norms from these conversations. The conversations that I’ve been privileged to have with my tenants, when they have confided their worst life stories in me has made me a better person…and better investor.
I’m not changing my mantra. Our industry is still a business and we need to run it as such. Yet there are times when the human element is applicable. We are different than big corporations like Chase, CitiBank, or any other big name vendors people use on a daily basis. Why? Because we as property owners interact with our tenants on a consistent basis. Emails and texts are exchanged. Property visits are made where we cross paths. Their lives play out in a building we own. All of this creates an environment where we find ourselves as the sounding block, consoler, and therapist.
How does one walk the line between business robot and business with people skills? Well there are obvious ways we can do this. When we hear a tenant has lost a loved one (and it’s not a story…) send a condolence card in the mail. Go the extra mile and google “sympathy messages” to include a handwritten sentiment of your own. Some owners send birthday cards, congratulations on your baby or promotion cards as well. These are easy every-day ways to remind your tenants that you know they are more than your mortgage payment.
Yet, at times you may be forced into a situation that requires more than a sympathy card. About 6 years ago I got a call at 11:35pm from the police that my tenant a 24 year old with a 3 year old son had been killed in a drunk driving accident. (I know exactly where I was and what time it was because you don’t forget things like that.) I went over to the unit to be sure it was secure and wait for the police who needed locate her son yet. With the police presence, neighbor’s slowly started to congregate outside the building near her apartment. Then a police transmission gave away what I hadn’t said yet. “…Be advised decedent’s son is at her mother’s currently. Officers just verified location.” At that moment to the crowd gathered around with me I became the therapist. I kept that role for months. When they came in to pay rent (just a few days after her death) they were all still in shock. I’d be at the property and I’d stop and chat about Jessica for a bit as part of their healing process. Listen to their stories, tell one or two of mine. When one tenant moved out because she couldn’t handle the daily memories 4 months later, I hugged her and consoled her one last time as I took the keys from her.
I’m a counselor. Therapist. Life coach. Cheerleader. Property owner. I don’t mind being these things and I don’t let what I know interfere with it being a business. If I show sympathy it doesn’t prevent me from being the enforcer who still needs the rent paid. If I congratulate them on a birth it doesn’t mean I can’t critique them when their children leave toys in the hallway. If I show empathy and sympathy I am creating a bond which ultimately creates a sense of loyalty. Those that I’ve been there for have not been the ones that “screw me over” by skipping or getting behind or damaging the property. They end up being my most respectful tenants and sometimes long lasting ones.
1. You Aren’t Protecting Your Time.
It’s a common thing in real estate investing and business in general to jump as soon as a potential or current customer needs something. It’s our natural instinct. But have you stopped to consider that your reaction to jump is probably preventing you from focusing on the tasks that grow your portfolio. When a prospective calls for a showing our instinct is to ask if they are available at that moment or within the hour. It’s great customer service right? (It actually sets a bad precedence as a rental investor which I talk about in my blog “Setting The Tone For A Tenancy”. #shamelessplug)
What makes the most successful people in the world…successful, is how they protect their time. They set a schedule (which we’ll talk about next) and they have spaces where they can put appointments. They do not deviate from this schedule, especially with appointments. They protect their time. If Bill Gates were a bootstrap real estate investor he wouldn’t look at his schedule as an investor and say “Well I can read about syndication deals later. I’ll go do this showing now.”
When we push something off, we often don’t get back to the task pushed aside for awhile. We’ll quickly get into the pattern of dealing with urgent rather than the important. What’s important doesn’t get done. The successful people we admire protect their schedule, they protect their time, and this provides them with maximum productivity.
2. You Don’t Have A Set Schedule.
It doesn’t matter what size portfolio you have or if you have a day job, you should have a schedule (at the very least) for Real Estate. I argue it’s infinitely more important if you do have a 9 to 5.
Your schedule should look like a template. You should have set hours and days where certain categories of things happen. I.e. Bookkeeping 3-5pm on Monday; appointments 12-3 Mondays, and 4-6 Thursdays. So on and so forth. If you do your own maintenance include times on certain days that you will do repairs at your units. Everything you have to do should have a block of time assigned to it every week. This includes ‘growth activities’.
The key is to only schedule appointments during the specific time period and stick to the category your suppose to be working on per the schedule. The blocks of time should be viewed as mandatory. If the time block arrives and you have no activities associated with it (i.e. repairs or showings) you can then decide what to do with the time block. I suggest using it for items that will make an impact on the future growth of your portfolio and not using it for the ‘urgent’ or routine.
3. Finding And Evaluating Deals Isn’t On Your Schedule.
You should be blocking 1-3 hours per week to find and analyze deals. This may seem silly because the best deals are off market and found at networking events. But if you make it a habit to look for and analyze deals during the week, you’ll be current on the market, evaluations will seem routine and it will be easier for you to do it quickly when a deal is in front of your face.
4. No One Knows You’re Looking To Buy.
One of the biggest ways to self sabotage expansion is to not tell people that you were looking to buy. Telling other investors that you’re looking to make a purchase is the most effective way to find out what’s available. When an investor asks you ‘what you’re up to’ or ‘how it’s going’ your first instinct should be to tell them what you’re looking for. If no one knows you’re looking, how are they going to know to tell you when they find something? Don’t assume everyone knows your looking to buy just because they know you invest.
5. You Aren’t Networking Enough.
In the digital age networking is more than just going to in person events. In-person events are where you will get the best connections but they aren’t the only piece of the puzzle. By being part of digital networking groups on Facebook, Bigger Pockets or others opens yourself up to the possibility of getting deals or working with people who do not live in your state. Chances are you won’t meet them at a local meeting. If you aren’t where they are, they won’t be able to find you, and you won’t be able to do business with them.
Stop sabotaging your own expansion. Implement these tips, stick to them and you will see how expanding your portfolio is quicker than you think it is.
Corina Eufinger
Owner of Brio Properties