CategoriesEntrepreneurship

Five Famous Thinkers And What We Can Learn From Them

One of the best ways to learn is from your mistakes or others.  There is a bountiful knowledge of business advice from those who have gone before you.  One could spend weeks researching all the knowledge that was amassed by Harry Gordon Selfridge, Henry Ford, Walt Disney, Richard Branson, etc.  (Fifty fake points to you if you know who Harry Gordon Selfridge is.)  I am constantly reading biographies (and when available the autobiography) of famous entrepreneurs.  I have acquired massive knowledge over the years on a variety of topics.  In this blog, I’m listing my five favorite business tips from tycoons who came before us.

#1 Richard Branson: Put employees first

Richard Branson has amassed a global empire in the name of Virgin that spans almost every aspect of lives from cell phones to air travel to condoms (though…wisely he chose to give the latter a separate name from Virgin). His companies remain some of the most sought after places to work and its for one simple reason: he puts employees first.  Employees are not a secondary or third thought to him.  When a major shift is occurring one of his first thoughts is how will this affect the employees?  Virgin Group is constantly researching and implementing new policies, benefits and good old fashioned fun to ensure employee happiness.  If you don’t have employees, think about your spouse if they help you invest.  Or your general contractor that you call on for help.  It is simple to institute policies that make them happy and put them first.  If you are providing materials for your G.C. be sure they will arrive on time for when he wants to start the work.  Stop by the first day and see if there is anything you overlooked when purchasing supplies.  If the work was done well, and on time get them a little something to show your appreciation. Like a food or gas gift card. (Even better if you know your G.C.’s preferred home improvement store for tools, get them a gift card from there.)   

#2 Bill Gates: Handle conflict immediately

Bill Gates needs no introduction…he is Bill Gates after all.  Most of us use some device associated with Microsoft every day.   People have reported on his desire to address conflict and disagreements immediately.  This has been a cornerstone that has helped his business collaborations be so successful that even while the product may not succeed, the process was successful for both sides.  When Bill is reading correspondence or hears of a disagreement he immediately makes note of it and brings it to the attention of those associated with the transaction if he is not personally involved. He doesn’t gloss over it thinking that the person handling the task will address the issue.  If he is personally involved, he composes an email (or depending on the urgency of the disagreement makes a phone call) right away.  Even if it is just to acknowledgement that there is a disagreement and he needs 24 hours to meet with his team.

Conflict does not go away if ignored, nor is it forgotten.  Conflicts are often made worse when we don’t act to resolve the situation.  I learned personally first hand how this happens many times before I had my ah-ha moment learning about Bill Gates.

#3 Warren Buffet: Only invest in what you know

It seems simple enough…but do we really practice it in our business dealings?  Warren Buffet claims part of his success is due to the fact that he only invests in what he knows.  He invested in Coca-Cola because he likes Coke and drinks it.  He hasn’t invested in computers because he doesn’t know computers.  He sparingly uses one (he claims to have never sent an email in his life).  Do you know what your investing in? Not just well duh it’s real estate.  But the neighborhood, the architecture of property, the size of the property, etc.  If you don’t know, then you need to find the answers.  Research the problems that come with owning a older subdivided home.  Make sure you know the municipal codes that might affect your rentals.  

#4 Elon Musk: Focus on the product or service

Elon Musk is the introverted mind behind SpaceX and Tesla.  He is said to be the Albert Einstein of this generation with his deep grasp of science and technology.  Musk is often criticized for laser like focus, which often translates into poor people skills.  Yet this laser like focus on his product is what has made SpaceX and Tesla pioneers in their industry.  Musk focuses on the product he is producing rather than the nuances and process because he believes if the product isn’t up to standards, then the rest doesn’t matter.  Focusing on the product of providing safe, clean, and comfortable housing should be the focus of any landlord.  Always make sure the unit (your product) speaks for itself independent of anything else. Everything should be in working order, cleaned, and in a good state of repair. Focusing on your product will make other areas of your business run smoothly (move-ins, repairs, etc).  

#5 Walt Disney: Believe in what you are doing

Walt Disney really doesn’t need any introduction.  Disney would not have become what it is today if Walt himself had not believed in what he was doing.  Walt enjoyed creating cartoons and entertaining people with stories, his passion bled into Disney.   If you want to be truly successful at what you do you have believe in it.  The old adage says if you don’t believe in your business, no one else will.  Do you believe in the housing you are providing? Do you believe you are the landlord you should to be? (I don’t mean Scrooge McDuck rolling in the quarters.) If you answered no to either one of these, you need to take some time to think about what would make you believe in yourself. What changes do you have to make?

     

CategoriesReal Estate Investing

Do Credit Cards and Real Estate Mix?

 

It is a very heated topic among experienced real estate investors.  Using credit cards in real estate.  Some investors swear by it saying it is one the best forms of leverage they have.  Others would rather pass on a good deal than enter the realm of credit cards in real estate.  Factually, there are many ways credit cards can be utilized in real estate (all depending on your credit limit).  What you use them for is up to your level comfort in your ability and the investment.  

Rewards and Advantages

Credit cards can be lumped into two categories: store cards and bank cards. Store cards are cards that are store specific that can only be used at a particular retailer.  Think Menards Big card or Lowe’s Advantage.  The second major type of credit card are your bank cards.  These are issued with a Visa, MasterCard, Discover, or American Express mark. These are the cards that can be used most anywhere. These offer the most versatility.  

So what can someone do with a credit card in real estate? The obvious use is making purchases and delaying the payment for it.  We’ve probably all done that at some point or another. The handy thing about this is most any credit now days has cash back rewards or point system.  So as you purchase your repair items you are earning cash back or gift card rewards.  I use my Capital One rewards to get restaurant gift cards and treat myself. You can also opt to directly credit your cashback to your bill.  

The advantage of a store card is that most allow you to pick cashback or 6 month interest free financing for large purchases. They also may run specials that are exclusive to current card holders (i.e. 2% APR on flooring purchases for 3 months). The Menards Big Card gives you a percentage back from every purchase in a quarterly rebate and you can earn additional 1-3% by making brand loyal purchases.

Cash Advances As A Form of Payment

There are investors who use credit card cash advances to fund cash property purchases on fixer uppers. Usually this is done when they have their eye on a deal and are in holding to be cashed out of another deal.  This is an advanced form of real estate investing for sure.  You definitely need to know when you will be liquid and have a back up plan if you don’t get the cash as expected.

You can also use the cash advance with craigslist purchases.  My girlfriend who is also an investor saw an ad for appliances from an apartment complex that was getting updated with all stainless steel.  They were offering 5-7 year old fridges and stoves for under $150 a piece. My friend got a cash advance for $2500 and we hauled 6 fridges and 5 stoves to her storage unit (in one very long day). Best part was that  everything was plugged in and verified to be working when we picked them up. She paid back the cash advance with only one billing cycle of interest and fees using the move-in she had coming 3 weeks later. If she hadn’t been able to take a cash advance she likely would have missed out on the deal because Craiglist deals are cash only.  After paying back the credit card she still had saved 55% on retail.  

After all this, do credit cards have usefulness in real estate? Yes, with moderation and correct usage. Under no circumstance do I recommend the cash advance for property purchase idea. It is very risky if something happens and you can’t pay the full amount back quickly. The interest rate becomes a killer quickly and you could be left overstretched.  If you can stick within a budget, there is no reason why you shouldn’t use credit cards and get the cash back rewards.  The key is to stick within the budget and be sure to pay it off in full every month.  As for my friend’s Craigslist purchases…that was just pure genius.

CategoriesEntrepreneurship

Why New Years Resolutions Set You Up For Failure

Happy Yuletide cheer to you all! It’s the season of Christmas trees, champagne, and resolutions.  Humans are creatures who always wish to be better than what we are, its in our DNA.  So every year after Christmas and before January 1, we look back on the previous year and whine about what we didn’t do or how it didn’t meet our expectations.In a moment of inspiration we scribble down sentiments meant to correct us in the New Year.  We broadcast them to friends (or the world via social media) and say “Next year will be different” because we believe that somehow when the clock strikes midnight on January 1, we have reverse Cinderella syndrome.  We don’t turn into pumpkins, mice, or horses, rather we go from being our old selves to being Cinderella whose powers of self-change are magical.  Then January 16th comes, we look in the mirror and we are still a pumpkin, mice or horse and it turns out it was just the champagne that made us think we were Cinderella.

Now I am not saying to heck with self-improvement. In fact I am a big proponent of self-improvement. It’s a cornerstone of my philosophy and brings me joy in life.  I am always on some project of self-improvement. Not because I am negative towards myself, but because I am conscious of the fact that I am not perfect and I want to be a more accomplished person.  This past year I worked extensively on teaching myself Edwardian cursive and it is now my default mode of handwriting.  The year before I had focused on reading more. I used a Reading Challenge that pushed me to read 12 books. So by all means, create goals of self-improvement, but do yourself a favor and structure your game plan wisely.

  1. Don’t fall for the idea of reverse Cinderella syndrome.  You will not magically be able to cope with life changes on January 1 when you wake up with your hangover.  In fact, you may be in the worst position to do such things, especially if you are known to suffer from Seasonal Affective Disorder.   Write out your goals in the beginning of October and start the tasks before Halloween.  Doing this ensures that your tasks will be close to becoming habits by Thanksgiving and are less likely to be thrown off course by holiday havoc.  It takes around 45 days to form a daily habit. Around that 45 day period it becomes more like nature than a thought process. Keep in mind the that days 14-21 are usually the worst. You may have a nadir of existence during that time where you find it hard to press on with your goal.  You will really have to draw on self-discipline at that time.
  2. Make goals AND tasks. When we make a decision to improve our lives we often forget to write down steps to take.  Not having these steps lined out can make the goal seem unattainable.  As an example, if you were dropped off at the bottom of Mount Kilimanjaro to climb it as you are right now you would be unprepared and would fail.  But if you had been give a list of tasks to prepare for the climb (like climbing gear shopping list, training schedule, etc) your chances of reaching the top are increased. Your goals for self-improvement are no different. They need clear small tasks.  These help keep you on track and also serve as little victories.  If your goal is to learn French, your tasks can be as simple as “Listen to a french song on Monday and translate it; and on Fridays research random words you are using into French.”
  3. Don’t look at your life for the negatives you want to change.  Looking in the mirror and saying “God I am fat” will not inspire you to make a long term change.  You’re creating a negative mental association with the tasks needed to reach your goal. Instead,  get inspired.  When you look in the mirror think, “I’d love to be able to complete a 5K.”  That is a positive goal that can lead you to losing shedding body fat.
  4. Lastly, pick goals and tasks that inspire you.  If you dread the thought of treadmills and step climbers, don’t include those in your tasks for your goal to lose weight.  Trade them out for Yoga or decreased sugar or carb consumption.  (Note: I don’t claim to be a dietician. Just an example.)

It’s not too late to make goals for self-improvement for 2018.  My suggestion is to brainstorm in January after the holidays and initiate them in February when the holidays-less gloom has begun to wear off and it’s possible that the first signs of Spring are showing.

Happy New Year!

Corina Eufinger

WAA Board of Directors

Owner CRC Investments

Owner Brio Properties

 

CategoriesLong Term Rentals Real Estate Investing

Real Estate Books To Grow Your Portfolio

As originally seen on waaonline.org

One of the first Facebook live events I did was a compilation of the best books I’ve read for real estate investors and entrepreneurs. At LED earlier in the month I was asked to do a series of blog posts on the books I’ve read and talked about either on FB Lives or in blogs.  I decided to break the series down over a couple of months because I don’t want it to detract from writing other timely blogs or more pertinent topics.  What better way to dive into this topic of educational reading than to start with books written on specifically on  real estate? These books are in no particular order and is by no means an exhaustive list of the awesome books I have read.

Millionaire Real Estate Investor by Gary Keller

You have probably heard me refer to Gary Keller a couple of times if you have been following my online content. He’s written a number of books for investors and entrepreneurs.  Two of his books have been game changers for my life.  His Millionaire Real Estate Investor book is one of those.

Millionaire Real Estate Investors is NOT a book written by a man spewing his philosophy on what has worked for him.  It’s a brain trust book.  Keller got highly successful real estate investors together (net worth of $1,000,000 or more) and broke them down into two groups.  What ensued was a forum of ideas, war stories, success stories and nuggets of knowledge which were transcribed into a real estate book that could easily be deemed a “bible” for real estate investors.  Its topics are expansive, including:  acquisition models, property criteria, vendor issues, investing myths, mentality and more.  As a warning though, Millionaire Real Estate Investor is not a light read.  You don’t curl up with a cup of tea and read it to relax.  You actively read it, more so than most any other real estate book out there  It’s best read in a style similar to your school days where you are focused, writing notes, and maybe even re-reading paragraphs to be sure you took it all in.  It’s a must read for anyone that wants go further than in their real estate career.

ABC’s of Real Estate Investing by Ken McElroy  

Straight out of the Rich Dad Authors series comes McElroy’s book on real estate investing.  The series offers a wide variety of books on most any topic involved in real estate. I would recommend you google the series and add a few to your reading list.

ABC’s of Real Estate Investing would more easily be classified as light reading compared Keller’s book.  McElroy’s writing style is a less dense style. McElory gives a detailed overview in simpler language of how to evaluate investment properties (one of the best overviews I’ve seen).  McElroy does focus on multi family properties so if you plan on investing in single family homes as rentals,  you may not get as much out of the book. While other business books may have more thorough discussions on negotiation tactics,  McElroy gives an overview of how real estate investors should handle price negotiations based on their evaluations.  It’s topics aren’t advanced but that doesn’t mean it isn’t worth the read if you are experienced.  (In that case you can consider this booker a primer for his “Advanced Guide to Real Estate Investing”. Which I didn’t put on this list because I didn’t want this to become The Rich Dad Authors blog.)

Landlording on Auto Pilot by Mike Butler

Out of all of the books on the list, this is probably the easiest read.  Butler writes about how he created a system to his managing his rentals while keeping his more than full time job as a police detective.  The reason I like this book is because it’s a reminder of how integral to success it is to have a good system in place.  As Robert Kiyosaki likes to say, very few people truly go to McDonalds for the food.  They go to McDonalds for the system that produces inexpensive, consistent, and predictable prices for food on the go.

Butler’s book details his own experience and what worked for him.  I encourage you to read this book as a jumping off point for creating your own automation to your landlording because his book goes into detail about aspects of our industry that are regulated by state and municipalities (i.e. eviction, law compliance, screening).  His book is full of hundreds of ways to create a well-oiled machine for managing your small or moderate rental portfolio if you prefer to be a hands on landlord.  The book was originally published in 2006 and unfortunately Butler hasn’t updated it for the Kindle version released this year.  This means that some of the information is a little out of date (i.e. pager system, marketing that doesn’t feature social media or a high concentration on web based sources). I wouldn’t say its information is ground-breaking but its a good read to motivate you to systemize your landlording as much as you can.  

The Book On Investing In Real Estate With Low Or No Money Down

by Brandon Turner

This book certainly gets the award for longest title in the list.  Turner is a seasoned real estate rehaber and buy and hold owner at the young age of low 30s.  His motivation and enthusiasm make him an addicting person to follow in real estate investing.  

His book is written based on the strategies he used to get involved in real estate with very little money in his bank account as a young adult.  Turner outlines all the strategies he has used to acquire properties without having to save up for a 20% down payment.  His strategies include: Buy Rehab Rent Refinance (his go to and today tried and true platform), live-in flip for buy and hold, master lease, owner financing, and partnership (one person brings the money the other brings the sweat equity per say).  Turner’s books are always easy to read and usually an enjoyable narrative.  If you like narratives tied into your real estate books, Turner’s books will be ones you enjoy.  His enthusiasm and dedication even jump off the book pages at you.  

You can pick up all these books on Amazon in Kindle or paper format.  

Corina Eufinger

Owner Brio Properties

Wisconsin Apartment Association Director of Records

CategoriesEntrepreneurship

Productivity Is a Constant Demon

In the past two years I had noticed a sort of phenomenon with myself. I realized I haven’t been consistently paralyzed by a to-do list.  Don’t get me wrong I’ve had some stressful days that are jam packed and of those days (which aren’t a high number), I’ve only been distraught or depressed at the end of the day a handful of times. Today I clicked yet again on another article regarding time efficiency and productivity.  Everyday it seems I am bombarded with productivity or efficiency material geared towards entrepreneurs and real estate investors.  To the point where I began to wonder: “Was I defective as business owner and investor because I don’t have that overwhelmed feeling?”

Assuming I am not defective in those areas, I began thinking about what other reasons there could be as to why I don’t have that feeling.  Afterall, society was telling me my feelings should be different. It’s a fast paced world and much is expected of us.  There are so many different types of pressure that we feel throughout the day and many of them are subconscious. We don’t recognize it is or interpret it as pressure.  “Oh I’d better watch Dancing With The Stars tonight because everyone will be talking about it tomorrow.” Sounds harmless right? It is in fact another way we put pressure on ourselves.  We re-enforced a feeling that we have to watch it so that we can be able to converse with people tomorrow.   

The first thing I realized as I “meditated” on this idea of productivity is that I have always been a planner, a list maker, etc in some form.  For my 9th birthday I asked for a wet wipe board.  Which I believe my parents assumed was for any other purpose than goal setting and to-do lists at my age. I still remember my Dad coming into my bedroom and being shocked to find my new wet wipe board was already written out with lists and tasks before he had a chance to mount it on the wall for me.  I knew this pre-programming was not the only reason I lacked a feeling of being overwhelmed with my to-do list.  There had to be more.  My life is much more complicated now than when I was 9 years old. Also if it were truly as simple as creating a master board like that, everyone would do it.  

It’s a mentality that involves motivation. Being productive and achieving a mentality of efficiency requires having motivation.  When we are motivated we are less likely to put off the to-do list in favor of watching the latest reality show or sitcom everyone is talking about.  The emerging mentality is that “adulting is hard”.  Adulting is anything that involves responsibilities and a to-do list.  I am curious why “adult” became a verb and a negative one at that. Doesn’t anyone remember the days from when we were kids and how we longed for the ability to make decisions and be able to experience the world? We should not settle for “adulting” being the negative norm and “Netflix and chill” being the positive norm. We need to motivate ourselves to act or else in 30 years we may be disappointed that we spent our adult lives constantly doing “Netflix and chill”. I have a sneaky feeling that those who embrace this mentality are underproductive and in the end depressed about being underproductive.  

Prioritization is a must. As we go through our lives it’s important to prioritize.  As entrepreneurs and business owners it’s easy to get caught up in the day-to-day tasks that we believe are urgent or falsely important, that we never make time for the actions that could further our investing career (like networking and education).  Urgency should be reserved for something that will expire or be ineffective if done at a later time. (I.e. Going to the bank doesn’t have to be done that day unless you need the funds to cover your mortgage payment.) Important items are actions that would make a difference in the efficiency and viability of your business, family life, etc.  (I.e. Learning the new features that were rolled out by your accounting software, going grocery shopping because your child has no items left for a bag lunch.)  Once you know the difference between the two it will keep your mind clear and keep your stress level down because you can clearly identify the tasks that are truly of impact in your life at any given moment.

Allocating time effectively is something that we all struggle with from time to time, or on a daily basis.  Some people take time efficiency to the extreme by using their kids soccer games to be attached to their smart phones and working or even dreading sleep because it isn’t time productively spent to them.  Time efficiency first stems from knowing where you spend your time.  One of the books I read years ago recommended tracking your time spent from wake-up to lights off for two weeks to get an idea on how much time you spend on various tasks. We might not even be aware of the amount of time we spend watching tv, youtube videos, and web surfing (the biggest productivity suckers of today’s modern age). I was appalled at my two week breakdown when I got done with it.  While I thought I was doing well because I would set a timer for internet surfing, what I didn’t realize was how many of these 15 minute sessions I allowed! My short term memory had trained me to believe that because I had limited myself to 15 minutes that I was doing good. Evaluate how you use your time. Robert Kiyosaki in Rich Dad Poor Dad says “We all have the same 24 hours in a day. It’s what we do with those 24 hours that ultimately decides our financial future.”

There are two books I recommend for those wanting to delve more into the topic of productivity and efficiency.  There are so many books on the topic but these are the ones I’ve found that are best fit for entrepreneurs.

  • The One Thing by Gary Keller
  • Miracle Morning by Hal Elrod

Corina Eufinger

WAA Director of Records

Owner CRC Investments

Owner Brio Properties

CategoriesLong Term Rentals Real Estate Investing

Do Airbnb and Rentals Mix?

Written By: Corina Eufinger

Last week I attended a networking event for real estate investors in Northern Illinois and in the breakout session an investor was musing about her 1 bedroom being vacant over the holiday season unless she gets someone in there in the next month. Someone, intending well no doubt, said “I saw a video on Youtube where an investor rented out their vacant apartment on Airbnb for the holiday season and made a thousand dollars in one week.”  Danger Will Robinson, Danger.  I saw the stressed investor’s face light up at the suggestion of it so I immediately chimed in hoping to bring her back to reality and out of her Scrooge McDuck coin pool fantasy she was already imagining. I know it’s tempting when you are looking at having a vacancy through the holiday season to offer it up as a hotel like stay.  But there are many things to consider. It’s not as easy as you might first think.  It has its fair share of headaches and complications.

  1. Airbnb is still in a grey area and some places it’s illegal.

It’s been well documented that Airbnb’s in some locations are a legal grey area.  You aren’t a registered hospitality venue and (a point I will reiterate next) you are not a landlord.  In those geographic locations you are riding the rails between legal and illegal which makes knowing what is legally expected of you and what your rights are difficult.  Some municipalities have passed ordinances banning Airbnb’s all together. So it is important to find out your municipality’s ordinances. Hosts that obfuscated the law (whether they knew it existed or not) have been dragged to court and ended up paying triple or quadruple in fines than what they earned in one week of Airbnb.

 

  • As an Airbnb you are not a landlord!

 

One thing is for sure in Wisconsin is that for the particular unit you use as Airbnb, you are no longer a landlord.  Which means all the laws, regulations and codes you know (or hopefully know) like the back of your hand don’t apply.  In reality, you don’t know jack because your breadth of knowledge isn’t applicable.

 

  • Your existing tenants may hate you

 

[If you are considering renting your single family rental as an Airbnb replace tenants with “neighbors”.] Consider your existing tenant’s feelings when thinking about doing an Airbnb. How will your fixed tenants be affected (I mean really affected) by Airbnb guests? Holidays are stressful for everyone, including your renters.  Introducing an unknown like an Airbnb guests may make their holiday season even more stressful. That stress doesn’t tend be quickly forgotten January 1.  It may stick in their throats and sway the decision of renewal.

 

  • Most Airbnb’s come furnished

 

This is perhaps the biggest item to overcome logistically.  Most every Airbnb is furnished completely.  Most of don’t have a storage unit with a full spare of house furniture waiting to be used. Beds, dressers, kitchen table and chairs, couches, tvs, etc.  So that would certainly be a start-up cost.  Don’t think you could go to goodwill and pick up any old items and creating an eclectic look.  Airbnb’s rent on aesthetics like any other hotel guest so having a painted white dresser, maple tone nightstand and yellow lamp will work for selling your Airbnb.

 

  • Hotel guests tend not to care about utility usage…..in a worse way

 

Ever gotten to a hotel after a long road trip and just wanted to take a nice long shower?  I mean….l…o…n…g. That’s exactly what some Airbnber’s like to do.  They also like to unwind watching cable or streaming so you will have to do provide one or the other.  They also tend to use lights more.  If they are anything like me in a hotel, I always leave at least one on when even when I leave. Then there those who simply don’t care because they aren’t paying for it.  Long hot shower every day!  All these activities may create a higher utility bill than you are used to so be sure to budget accordingly.  

 

  • Increased traffic on the property

 

Think about the last time you stayed at a hotel? Chances are you came and went from the hotel without really thinking about it, and usually more than you come in and out of your own home.  Also consider your Airbnb guests may be more likely to entertain others (perhaps the locals they are visiting) since their lodgings have more of a homey feeling and they can cook in their lodgings.  Lastly, if you are a successful Airbnb host, you will likely having a revolving door of new guests every  4-7 days.  

 

  • What about insurance?

 

While this is last on my list, it should be one of the first things you think about.  How does your choice to Airbnb affect your insurance? Are you going to inform your insurance? If you don’t inform you insurance and something happens, what if the insurance cancels your policy because of unsanctioned activity? Can you get an insurance supplement that would cover you in case of an Airbnb catastrophe?

 

That might seem like a long list of negatives, but it’s merely a list of complications. During the U.S. Open at Erin Hills, property owners were raking in large cash for renting out their homes and rentals to golf patrons for a week or so.  Rates were anywhere between $1,000 and $4,000 for a week of moderate lodging. Which is a decent chunk of change, especially if you get great guests.

If you are considering doing this for the holiday period, definetly be sure there is a market for it.  It’s best achieved in a slightly populated area or destination area (like Baraboo, Sheboygan, etc). You can get an idea of how much you should charge by calling around to area hotels (think more Holiday Inn, Hampton Inn than Motel 6) and see what they are charging. Use that as a jumping block for your rates.  While a hotel may offer a pool, breakfast, etc you are offering a home setting with the ability to cook their own meals. So you aren’t necessarily offering less amenities.    

Final thought, if you do choose to convert a vacant to an Airbnb for the holiday season consider if the market is there for an extended stay year round?  Would local companies like having a place for their visiting contractors, executives and others to stay that isn’t a hotel environment? The best way to find this out is to start calling local large companies.

If you are wondering where I stand on the issue I don’t see myself becoming an Airbnb host.  I’m much more likely to create a duplex with extended stay than a permanent Airbnb mostly because I am familiar with renting out extended stays.

As originally posted on the Wisconsin Apartment Association’s blog.

CategoriesLong Term Rentals

Setting the Tone For A Tenancy (Pt. 3)

As Written for the Wisconsin Apartments Association

by: Corina Eufinger

In this final look at “Setting The Tone For A Tenancy”, we look at move in day and the successive first 60 days of the tenancy.  This article will put all the puzzle pieces together on how the pre-tenancy phase sets the standards for the tenancy. We will look at situations that often arise when a tenant has been able to assert dominance in the relationship and how difficult it can be to get it back.

Chances are most of us have had a tenant call us before the 1st to see if they can move in early. Sometimes they are looking for just a day or two so that the 31st they can turn over their previous unit to the landlord with time to clean it (or so we hope is the case).  Other times they are looking to move in more like 4 or 5 days early. I have no problem appeasing these phone calls if 3 circumstances are met: 1) the unit is ready at the time of their call (no exceptions); 2) I haven’t already set their move in appointment with them (one of my personal pet peeves is rescheduled appointments for move-ins because the beginning/end of the month is always jam packed); 3) I can reasonably fit their request into the schedule. Also, no matter how many days they move in early, I always charge a daily rate. The only day I don’t charge for is when they take keys on the last day of the month.

I cannot stress this next point enough: NEVER LET A TENANT MOVE IN WITHOUT FULL SECURITY DEPOSIT AND FIRST MONTH’S RENT PAID (in a non-bounceable form).  Even if you followed all the other pointers that I’ve laid out in this series, if you throw this one  by the wayside you have lost control, and control over the most important part of the tenancy for a landlord. Money.

Under most circumstances a move-in goes fairly smooth. In theory there shouldn’t be a long list of repairs because everything is already done. But s*&$# happens. One of the ceiling fan bulbs decided to burn out as you turned it on, the batteries on the hardwired thermostat aren’t working even though you just replaced them, etc.  I have been there and most tenants are extremely accommodating when it’s small stuff like that. So there is no reason to rush a maintenance guy over or quick grab your batteries.  It can be handled the next day. Responding like it’s an emergency to a standard repair on move-in day says to the tenant you react quickly to all maintenance repairs, all the time.  

If you find yourself with a tenancy where the tenant has seemingly taken control of the relationship Is it possible to regain authority in this relationship?  You can, but it is a painful and annoying process. You will need to be firm and use that backbone you hopefully have.  The tenant will complain you aren’t accommodating them anymore and accuse you of treating them differently. In reality you are treating them….more normally.  You’re not available at the drop of a hat anymore, you don’t respond to maintenance as soon as they call (emergencies excepted).  Other than how annoying this process is given the “lip” you will likely get, what is worse is that by changing your over-accommodating behavior after move-in you have also proven the idea that once you are a customer no-one really cares.  

If you have to regain control financially, it gets a little more sticky and…expensive. When you issue a 5-day notice they are shocked you would do such a thing. You likely got a less than pleasant phone call from the tenant telling you that you are a horrible person and why does it suddenly matter because it didn’t before.  If they don’t pay up during that period, they are trying to call your bluff.  You cannot back down from this.  You must file the 5-day.  File, get a process server, etc.  If you don’t follow through at this crucial stage you will never be able to regain control.  Your eviction threats will be hollow and meaningless. Don’t get caught in a trap where you chicken out of filing because it’s only one month.  If you have lost monetary control of the situation, you have lost control over the most important aspect of how successful your rentals are.  It doesn’t matter how safe and clean your housing is if you aren’t getting paid for it.   

Do yourself a favor and maintain control. Follow your rules and make your needs the priority (but not the need to fill the unit ASAP).  Be polite, but firm and accommodating when it fits your schedule.  Don’t place yourself in a rush or bind to appease the applicant or future tenant.  If you follow these rules, your future self may just build a time machine to come back and thank you for keeping their landlord life a little simpler.  

CategoriesLong Term Rentals

Why I Love Old Homes As Rentals

Last month at a local investor club meeting, I was asked by a fellow investor why I preferred investing in Victorian and Edwardian homes (built circa 1840-1920). He couldn’t understand why I would prefer properties that were older in age, most definitely contain lead paint, and usually come as properties protected by the state or local municipality. He’s not the first one to question my attachment to such homes, especially as rentals. There are some that understand my attraction to the properties but not in a capacity of renting them out. I have yet to meet an investor who shares my high level of passion for renting these homes out. I’m usually referred to as passionate, dedicated, and even crazy. What are my reasons for going through all these hoops and complications for my rental business?

For starters I am an avid history lover. My ideal vacation is to a destination of high historical significance. I’ve followed that passion to Spain, London, Paris and Washington D.C. and have a vacation to Montreal next September. One of my favorite things to do is to tour palaces, castles, estates and mansions. If allowed, I love to touch the walls, banisters, and doors hoping to feel some affinity to people and time periods.

Something that has been drilled into my head since high school is to find a way to incorporate your passion into what you will do for living. When I was entering the world of real estate investing I wasn’t sure how I would do this. At first I didn’t see how I could bring my passion to this. Then I felt so silly when it finally dawned on me. I could use my history passion to increase my excitement and drive for investments by specializing in Victorian and Edwardian homes. Even after I got into and realized all the possible deterrents, I was still convinced it was the real estate path for me.

When I drive around towns and cities, it breaks my heart to see older homes neglected and in severe disrepair. I often like to imagine what I could do to restore the home to its glory. It’s not easy to do things like restore a neglected building, especially to be as period accurate as its future purpose would allow. Your creativity is often limited by your desire to keep things like pocket doors intact, original doors and doorways in place, etc. Yet for me, I invite the challenge. If I can rise to the challenge it means I have saved a part of history all while giving someone a place to lay their head and call their own.

The Victorian homes known as “Painted Ladies” require 3 or more distinct color choices. Usually one for the largest portion of the home, another for window trim, and at least a third for the porches and embellishments. It’s a lot of coordination and decisions to repaint the exterior but the beauty in what you have created is irreplaceable. It’s a hugely satisfying sight to see it in its final state, especially when it may have modern homes as neighbors on either side. A well finished Painted Lady towers above the homes in the neighborhood in stature (and usually in size).

On the inside, details bring character unseen anywhere else. Each property is usually incredibly unique because of the personalization that happened when they were built. Most everything was handmade, which made personalization easy for the homeowner. In ways that today’s generic and pre-drawn homes can’t compare, each Victorian or Edwardian home is personal statement down to every detail. Those statements are what allows my property to stand out. When I renovate I keep as much of this character in place as I can.

It used to annoy me to see these large homes subdivided into triplexes and quads, but I eventually realized it was a better fate than the properties being razed in favor of newer housing. Give me the “headaches” of older foundations, cellar walls, and out of date electrical any day compared to buildings created after World War II. Sure they may be easier, but the joy and spark isn’t there for me.

Passion and joy are important as real estate investors. If you don’t love your property, your tenants won’t. I know they say not to buy with your heart, but I believe to a certain extent you have to. Your heart has to be in the property you are buying, but the numbers have to make sense as well. Don’t buy it just for heart. Love goggles in real estate won’t get you anywhere but a sad place with no extra cash flow.

Corina

Owner Brio Propeties

CategoriesLong Term Rentals

Setting the Tone For A Tenancy Part 2

Setting The Tone For A Tenancy

We prefaced last week that our actions from the start of contact with a prospective tenant, it can set a tone for the tenancy. In this blog we are going to focus on the pre-tenancy activities and how they can affect how successful a residency is for landlord and tenant.

It’s Sales 101 to always be pleasant and happy when someone calls that wants to rent your place.  After the prospect has decided that they would like a showing, your instinct it likely to tell them you can show it now and grab your keys. After all, you don’t want to miss out on renting it right?   people’s instinct is to jump and grab your keys.

You have subtly sent a clue that your schedule and time isn’t too important to you.  You will jump when the right keys are turned (so to speak). This is not the precedent you want to set.  You want to make sure the tenant knows that your time is of value to you and that you schedule your time carefully. Doing so will reinforce to the tenant that you have other obligations. It also avoids setting the false expectations that you will always jump to assist them.

When scheduling the showing try to do it at least 24 hours in advance (unless you have another showing already scheduled that you can piggyback). If your time is limited don’t be afraid to set an open house strategy. You can tell the prospect you are showing the property at 9am & 10am on Saturday and they are welcome to join you then.  The premise being that if the prospect is motivated enough, they will be there.

When you are at the property for the showing, it is important to remember that your time is money.  If the person doesn’t call within 5 minutes of the showing start time to say they are lost or had an emergency, don’t wait around.  Remind yourself that you have a schedule and other tasks to handle.  It is your choice if you choose to call the tenant about the missed appointment while at the property or later.   If you call while there do not allow them to monopolize your time more.  Offer to reschedule but make sure the next appointment piggy backs off an existing one.  (Just in case they don’t show again.)

If a tenant isn’t courteous of your time before they move-in, they aren’t going to value your time after.  If they don’t value your time they don’t respect you.  If they don’t respect you, they aren’t going to be inclined to pay you on time per your rules.

There is a difference between being flexible and a doormat.  If you become a doormat for the pre-tenancy phase you will notice rent due dates are fluid, rules are nice when they work for them,and your words aren’t enforceable. Your communication and actions should establish the idea that you are the one who will control the relationship. If they seize control in the pre-tenancy days you will never get it back and you will always be their second fiddle until you “man” up and kick them out.

In the next blog we’ll take a look at what happens after the prospect has seen the property.  We’ll address the subtle things you might be doing during the application and leasing process that further establishes a tone of tenant dominance.

Corina Eufinger

Owner Brio Properties & CRC Investments

CategoriesLong Term Rentals

Setting The Tone For A Tenancy

Two years ago I had a procedure altering epiphany that drastically changed how I ran my properties and those I manage.  It all started when I met a fellow investor at a networking event. After getting to know him for a few months, our conversations became more in depth and…well….useful. They transitioned from weather, etc to nitty gritty real estate.

I was expressing how I was frustrated with some of the newer tenants being demanding and flighty at the same time. I went on to explain who Iit was getting hard to get rent on time, tenants would scheduled repairs but then changed their minds one hour before appointment, and they only followed the rules that were convenient for them.  Immediately he began asking questions.

He asked me if the showings for these particular tenants were scheduled in advance or if the showings were done on demand.  He then asked if we had a security deposit and holding fee procedure.  Was the tenant late to any appointments in the beginning? At first I thought it his questions were unrelated and he had forgot what we were talking about.  Then I realized that his inquiries weren’t unrelated but were all funneling to a major point he was building up to.

After many questions he smiled and said “I know what your problem is.”

He went on to explain that from the moment my staff initially spoke to the prospective tenant we had already begun seceding power and establishing the tone of the tenancy.  My mind was blown.

When we reacted and scheduled a showing for a few hours from the time of the call I was showing them that their time was more valuable than ours. I furthered the problem by asking the leasing agent to stay 10-15 minutes later and her agreeing to show it when they eventually waltzed in. I thought we was being understanding turns out I was being a sucker.

Then the investor said the life-altering sentence “You have been setting the tone for a tenant dominated relationship from your first action.” I spent the next hour of the event going through scenarios and scribbling out notes and procedures on a stack of cocktail napkins. Yes I was that cliched person.  But those many napkins have turned into an amazing procedure and now…this blog series.

The next two blogs will take an in-depth look at some of the ways the tone of tenancy is set in the first 60 days of the relationship. Common landlord mistakes and ways to change it so you are establishing control of the relationship from the beginning.

Corina Eufinger

CEO of Brio Properties

Owner CRC Investments

Owner Brio Properties & CRC Investments

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