tall apartment buildings in a line

Best Ways for Apartment Investors to Manage Difficult or Bad Tenants

You feel like pulling your hair out over the tenant in Unit 355. Again.

Thankfully, most of your apartment building’s tenants are good. Unfortunately, there are some bad apples in the bunch, too. And these bad apples are causing you to have a pretty rotten landlord experience.

The reality is, sometimes you have no choice but to deal with difficult or bad tenants. The good news, though, is that you can handle them with confidence and thus protect your real estate investment long term. Here’s a rundown on how to deal with band tenants.

Record Everything

An important step to take to protect yourself against bad tenants is to keep a written record of everything you do and say when interacting with each tenant.

Yes, this will add more to your workload. However, it’ll also reduce the likelihood that a bad renter will attempt to dispute something with you—like a certain charge. So, it’ll pay off in the long run.

Remain Rational

Your first reaction when a tenant tries to pull one over on you or ignore your request is to become livid. And understandably so. But you won’t make the situation any better by being hot-tempered.

Before you confront bad tenants, make certain that you haven’t allowed your feelings to take over your rational thought process. To do this, consider going through a cool-down period—maybe even an overnight one—before you speak with the tenant.

The truth is, a bad tenant will likely be much more willing to listen to you if you approach him in a calm and collected manner.

Create a Positive Atmosphere for Your Tenants

Another way you can diffuse a difficult tenant is to be overly kind in your dealings with him or her. In other words, if you’re wondering how to deal with bad tenants, go above and beyond in your efforts to be hospitable to the renter.

For instance, you can respond right away to the tenant’s calls or emails, or show extreme patience when interacting with him or her. This may seem counterintuitive, but if you treat bad tenants with respect, they may be more willing to work with you.

Set the Standard for How You Will Be Treated

Although being kind, patient, and helpful when interacting with bad tenants is certainly important, you also need to establish the standard for how your tenants will treat you.

As an example, let’s say that a tenant fails to pay his rent in a timely manner. If you don’t penalize him with a late fee, he may assume he can repeat this “mistake” again next month without consequence. In addition, other tenants may be studying the situation to see how you react to it.

If you allow the problem to fester, your other tenants may attempt to get out of paying their rent on time, and you’ll quickly lose control of your tenants and your property. However, if you institute a fee for your late-paying tenant, he may be more apt to pay his rent on time in the months ahead. And your other tenants will follow suit.

Now, let’s say you penalize your late-paying tenants but still cannot get them to pay up promptly. In this situation, follow up with the tenants constantly. By doing this, you’re showing the tenants that you won’t forget the problem and that they need to address it right away to avoid future negative consequences.

Utilize Property Management

Sometimes tenants will be difficult even if you take extra steps to satiate them. For this reason, if you’re wondering how to deal with bad tenants, consider hiring a property manager to help you.

A property manager will chase down late payments for you and facilitate necessary unit repairs. Thus, using a property management company will save you time and eliminate unnecessary stress for you.

Just be sure to hire a manager who has extensive experience in managing apartment properties. Also, verify that your prospective manager is comfortable with handling all of the tasks you’ll need assistance with. In addition, choose a manager who has positive online reviews and/or references.

Get Rid of the Difficult Tenants

You may get to the point where you can no longer handle a tenant. In this situation, you should ask the tenant to move out. Getting bad tenants to vacate the premises can certainly be challenging. However, it’s not impossible.

To eliminate your difficult tenants, just send them written notices to vacate. They’ll leave if they don’t want additional trouble. However, to make moving out even more enticing, offer to return their security deposits to them if they move out within a certain timeframe.

If this doesn’t work and they refuse to move out, you’ll need to begin the process of evicting them.

Evict the Bad Tenants

Evicting a tenant can be a costly and time-consuming process, so it should be your final resort if you’re dealing with a difficult tenant.

As a general rule of thumb, you have legal grounds to evict tenants if they’ve failed to make their rent payments. You can also evict a tenant who doesn’t move out after his or her lease has ended. Finally, eviction is possible if your tenant has violated his or her lease terms.

Take a good look at your lease to see if you need to add extra clauses that will protect your best interests in the future. For instance, you may want your lease to include a clause about drug and criminal activity being grounds for immediate lease termination.

Protect Yourself Against Bad Tenants Today

Figuring out how to deal with bad tenants isn’t always easy. And it’s certainly not fun. However, it’s critical if you want to remain a successful real estate investor in the years ahead.

I can help you to safeguard your real estate investing business by dealing appropriately with bad tenants. Get in touch with me today to learn more about how to handle difficult tenants in the most personally beneficial manner possible.

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Consider Accredited Real Estate Investors over Loans to Fund Your Deals

Securing a real estate investment deal that will generate a comfortable revenue stream for you is your dream. Unfortunately, if you’re like many real estate investors, you’re currently walking through the nightmare of figuring out how to fund real estate investment opportunities.

You’ve considered going to local banks to get help with funding your deals, but these traditional lenders may not necessarily be the best entities to partner within your real estate business. Instead, you may want to consider going to an accredited real estate investor to fund your deals with passive investment capital.

Here’s a rundown on who accredited investors are and how they can help you to more easily achieve your financial goals than a traditional lender can.

A Glimpse at the Accredited Investor

These individuals are different from banks and even hard money lenders in that they are not professional lenders themselves. Instead, they are high net worth individuals who are looking for greater returns on their monetary investments.

By definition, an accredited real estate investor in 2019 is any person whose income surpassed $200,000 in both 2017 and 2018. This figure jumps to $300,000 if he or she has a spouse. Or , an accredited investor is anyone whose net worth exceeds a million dollars (with or without a spouse). Accredited investors also include trusts whose assets total more than five million dollars or entities where each equity owner is an accredited investor.

Get More Flexibility

If you’re wondering how to fund real estate investment opportunities, a major reason to choose accredited investors over banks is that passive investor money doesn’t come with the types of points and fees you get with traditional lenders. In addition, you can more easily negotiate the loan’s term length in a manner that will best serve your interests and the other party’s interests equally.

These Investors are Qualified to Work with You Financially

In addition to offering flexibility in the area of funding, an accredited real estate investor has the net worth and income needed to finance large deals—something that small investors simply can’t do. This is a major advantage because these investors enable you to take advantage of opportunities you otherwise may not be able to tap into. These deals may include a large apartment building or even a retail shopping center investment, for example.

Knowledgeable Partners

If you’re wondering how to fund real estate investment opportunities, having accredited investors on your side is also a wise move, considering that investments in real estate are inherently complex.

Accredited investors are known for having extensive experience and knowledge in business and financial matters, particularly when it comes to evaluating a prospective deal’s risks and merits. In addition, these investors are sensitive to market conditions at the local level as well as the nation’s economic cycle. Therefore, with the help of an accredited real estate investor, you can more easily understand your investments’ risks and thus absorb possible losses.

You May Have More Success with Obtaining Funds through Accredited Real Estate Investors

Another major reason to consider passive investor capital over loans to fund your deals is that you may have more success.

The reality is, banks are tightening their standards when it comes to commercial real estate loans. As a result, going through the process of attaining a bank loan can feel like fighting a battle that will never end. However, with an accredited real estate investor, you don’t have to go through all of the red tape associated with banks. This means you can get your deals funded more quickly and without the headache that banks typically cause.

What Accredited Investors Get Out of the Deal

So, why exactly are accredited investors so much more agreeable and easier to work with than banks in general? Here are a few reasons.

Higher Returns

First, whereas banks tend to be more cautious, an accredited real estate investor is more willing to take greater risks, as these risks lead to higher returns on their cash. Some of their deals can easily generate returns of around 8%, mirroring what they’d likely get in the stock market, but other deals can lead to returns of between 15 and 25%.

Accredited investors are generally willing to take on the additional risk of working with you and having an illiquid investment because they know that the returns will be higher than what they may get with bonds, stocks, and real estate investment trusts.

Diversified Investments

Seeking funding from an accredited real estate investor rather than a bank is also a wise choice because these investors are all about diversification. Because today’s stock market remains volatile, investors are focused on diversifying their portfolios by pursuing assets that aren’t as correlated with the market. These assets include, for example, industrial buildings and apartment buildings. In this way, if the stock market ends up tanking, their real estate investments can help them to buffer their losses.

Start Investing with the Help of an Accredited Real Estate Investor Today!

If you’re trying to figure out how to fund real estate investment opportunities, you generally can’t go wrong with an investor. These investors can quickly become your new partners, helping you to more quickly and efficiently achieve your monetary goals in real estate.

The question is, how exactly do you go about seeking these investors and taking advantage of their funds? I can show you how to start using accredited investors’ funds instead of going to banks. With my help, you can become educated on this funding method and learn how to network with investors, all the while practicing due diligence. Contact me today to find out how I can work with you to take your real estate investment business to another level this year.

paper decor for Thanksgiving on a table

What 16 Real Estate Investors Are Grateful For This Thanksgiving

Real estate investing is a field that rewards hustling. Most of us are chasing down opportunities seven days a week. With Thanksgiving upon us, I thought it would be a could time to reach out to other leading investors to find out what they are thankful for. So I posed the question many of the country’s leading real estate entrepreneurs, What is a property or deal, person, experience, book, video, or conference that has been influential to your business’s success and you are grateful for?

Thank you to the 16 active investors who responded. Read on to learn about the people, books/podcasts/videos, and events/moments have been influential to active, successful real estate entrepreneurs:

Best Ever People

  1. Theo HicksJoe Fairless. Would have never gotten the confidence to pursue my first apartment syndication deal if I had never met Joe!
  2. Holly Williams – I would say this really smart kid named Joe Fairless from Texas in the Big City. Happy Thanksgiving to the Growing Fairless clan, my friend.
  3. Whitney Elkins HuttenLane Kawaoka and Chris Miles. Future Apartment Syndication Goals: Joe Fairless.
  4. Mike Knudstrup – 1. My local real estate entrepreneur group where a few presenters owned MHP’s (mobile home parks). 2. Parents of friends and acquaintances who owned parks and it worked for them.
  5. Julia Bykhovskaia – My man Tony Robbins! It was at the right place at the right time for me two years ago. All I’ve heard is “you have to burn the boats,” have to “make a decision and have absolute certainty,” and “you don’t need to know how; the how will come.” Three months later I read Rich Dad, Poor Dad and got even more convinced that being an employee is not the way to go. Fifteen months later, I left my J.O.B.! the “how” of course became real estate.

Best Ever Books/Podcasts/Videos

  1. Grant Rothenburger – Mine is lame but honest: Rich Dad Poor Dad for opening my eyes to real estate in the first place.
  2. Trevor McGregorThink and Grow Rich by Napoleon Hill has been a game changer throughout my entire Real Estate Journey. I highly recommend it to anyone who hasn’t read it, or if you have read it, pick it up again or be sure to listen to the Audio Version (When you’re not listening to the Best Real Estate Advice Show Ever – Podcast with Joe). Happy Thanksgiving Everyone!
  3. Glen Sutherland – Long time listener of the show (Best Real Estate Investing Advice Ever). Appreciate all your time you put into it.
  4. Michael CollinsThe Strangest Secret, Earl Nightingale. Timeless advice. Thirty-one minutes long on YouTube, loaded with great information.

Best Ever Events/Moments

  1. John Jacobus – The first Best Ever Conference in Denver in 2017. This was a game changer in terms of forming new partnerships with real estate entrepreneurs, sparking new actions, and building momentum.
  2. Adam AdamsBest Ever Conference
  3. Charlie Kao – A lot of moments but being on my very first podcast which happened to be BiggerPockets. I kept getting asked to be on other podcasts and had a lot of people reaching out to me for advice and it dawned on me how much more I was really capable of. I have doubled or tripled our business every year since the podcast.
  4. Cory Boatright – 1. My first short sale that I stumbled into with negative equity and created a short-sale empire that made millions in revenue. 2. The first time I sold six-figures in one hour from stage in front of 500 people. 3. My experience at the end of 2012 with thyroid cancer. 4. I am grateful it happened because of GratefulProject.org and the many miracles that came from waking up and being aware of life in a new way. 5. Meeting my wife and two step kids. Skydiving to overcome my fear of heights?
  5. Dustin W. Miles – I wouldn’t say it was any one experience/book/conference, but a collection. One of the first memories I recall is from childhood. I played soccer on a team with a kid (we were around 10). His parents owned many skyscrapers around Fort Worth. I would say that first opened me up to the idea of “why not me?” I would ride my bike around Fort Worth wondering who owned all the other buildings. Fast forward to today, we are working on our ninth syndication in the past five years.
  6. Jason Stofer – For me this is easy…I just came from it! Adam Triple A Adams event Raising Money Summit!! I have already rewritten my business plan, reworked my website, and am now working on my mind-map.
  7. John Fortes – Grateful for real estate entrepreneur communities and networks such as these and all educational platforms whether it comes from books, podcasts, videos, and conferences as you mentioned. At the end of the day, I’m just happy and grateful to be here breathing this beautiful air and sharing this earth with my loved ones. Thank you for asking. Happy Thanksgiving & God bless!

Conclusion

What are you thankful for? Add your comment below and tune into my Best Ever Show for more conversations between experienced real estate entrepreneurs!

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How 5 Real Estate Investors Turned Mistakes Into Cash

People have always learned from their mistakes, and the world of real-estate investing is far from immune. Even the most successful entrepreneurs have made investment mistakes. I have asked some of the leading investors to confide their real estate mistakes (or “learning opportunities,” as I prefer to call them) and what they learned from them.

Experience is the Best Teacher

I think Jonathan Twombly, who provided an outstanding answer to this question, said it best: “The only way to gain experience is by making mistakes.” Of course, mistakes are not the ONLY way to learn, and you should never TRY to make mistakes. But the point he is trying to make is that if all of your real estate endeavors go off without a hitch, you may begin to feel like YOU are entirely responsible for that fact. In reality, if you’ve never made investment mistakes in real estate, not only have you probably been lucky, but a sticky situation WILL arise eventually. When it does, if you have this sense of infallibility, it may be your downfall.

Whereas if you have made and successfully overcome investment mistakes in the past, you have gained the experiential knowledge that will allow you to avoid making that same mistake again or, if you are faced with the same or similar issue, to navigate it successfully. In some cases, facing and overcoming an obstacle may be the best thing to ever happen to your real estate business, as it forces you to reevaluate what you have been doing and determine if you need to alter your approach or entire strategy!

That being said, here are the responses:

Not Promoting Your Business and Working with an Inexperienced Property Management Companies

Jonathan Twombly made two big real estate mistakes. The first was not promoting his real estate business early enough and aggressively enough. The market is saturated with real estate entrepreneurs, so branding and promoting of your business is a must if you want to stand out from your competitors. For promotional tips, here are 8 ways to promote your real estate brand.

Jonathan’s second big investment mistake early on in his real estate career was allowing the property management company to put a manager on his property who lacked experience with that asset type, which caused a ripple effect of problems for YEARS, even after they were fired, replaced, and long gone. Having one bad year, or even a few months, of management will negatively affect the operations for a long time. A large dip in occupancy results in a dip in revenue, which means you get behind on payables, investor returns, your returns, and liquidity. And to make matters even worse, when you have liquidity problems, if an unexpected maintenance or capex issue occurs, you may not have the liquidity or cash flow to cover it, which results in out-of-pocket expenses, capital calls, or even foreclosure!

In regards to the property management issue, this is overcome by properly screening the property management company prior to hiring them. Here are the best practices for interviewing and screening property management companies. In regards to the vacancy and liquidity issue, Jonathan always ensures that the cash flow on the property is high starting on day one and that he has a large reserve fund on hand to deal with unexpected issues.

Hiring the Wrong People

Ryan Gibson’s biggest real estate mistake was hiring the wrong people in general. He learned that good people are what make your business and the world go ‘round. For the best hiring practices, check out our blog category on building your real estate team.

Similarly, Micki McNie’s biggest investment mistake came when working with and trusting someone she didn’t know. She gave this person $40,000 to do a rehab without having looked at the house herself. As a result, she had a hard time selling the final product because this person didn’t prioritize the repairs and upgrades that actually attract buyers. Projects, like updating the mechanicals or installing new windows, were not performed. The lessons she learned were to always perform her own due diligence rather than trusting a partner, even an experience partner, to do it. Also, she learned to be much more cautious of new markets that she’s never worked in before. Another solution to the market problem is to use the ultimate guide to evaluating a target real estate market!

Using the Wrong Strategy for Your Goals

Jason Buzi is a prime example of someone who realized he was making investment mistakes, completely changed his business model, and benefited greatly as a result. In 2011, he and a friend wholesaled a property to a fix-and-flipper and made $12,5000. The buyers ended up rehabbing the property and netted $400,000. This deal made him realize that he was leaving MILLIONS of dollars on the table, so he started rehabbing properties himself in addition to his wholesaling. Based on this shift, he had his first seven figure year in 2013 and bought a personal residence worth over $1 million free and clear. If you are interested in learning how you can net over $1 million per year as a wholesaler, click here.

Lastly, Cheryl Oliphant’s biggest mistake was not buying based on positive cash flow but for appreciation only. She learned that buying for appreciation is not investing, it’s speculation. In fact, not buying for appreciation is one of the three fundamentals to thrive in ANY real estate market. Click here to learn the other two.

Learn from Real Estate Mistakes with My Help!

If you feel you’ve made an investment mistake, or you want to better avoid them in the future, take some time to read some of the best real estate investment books I’ve found so far. The actionable advice in these texts can help you guide your business strategy and your deals towards better success!

residential real estate property investment

Do Real Estate Investors Need Good Sales Skills?

Many people who are not in the real estate business might be surprised to learn that investing and real estate sales skills are two different things. Some sellers are real estate investors, as well, but not all of them are. This fact raises an interesting question: Is it important to have good sales skills to be a real estate investor?

A number of top real estate investors weighed in. An overwhelming majority (26 out of 30) active investors said sales abilities are very important as a real estate investor.

Marketing Knowledge? Yes! Sales Skills? Maybe Not.

One of the dissenting views was Harrison Liu, who believed good sales skills were somewhat important. In particular, he believes location trumps sales skills. Someone with zero or minimal sales skills will have more success investing in a good location with a good school district compared to a sales superstar that invests in a challenging neighborhood. Here is a blog post with a guide to evaluating and finding such a location.

However, he does believe the marketing skills are required in the current market in regards to finding, renting, and selling deals. Whether marketing and sales are two sides of the same coin is a conversation for another day.

Build a Large Portfolio and Properties Will Practically Sell Themselves

Joe Cornwell held an opposing opinion for slightly different reasons, using Donald Trump as an example. He said, “Trump doesn’t have to sell any of his units anymore, and he is arguably one of the most ‘famous’ real estate investors ever.” In other words, once you build up a large enough portfolio of cash flowing rental properties, buying new assets or selling off parts of your portfolio are no longer a requirement. Therefore, sales skills are not always needed.

Generating Leads with Great Real Estate Sales Skills

However, as a counterpoint, does an investor need good sales skills to generate leads and find qualified buyers and/or renters to acquire enough properties to reach the point where their portfolio is so large that they no longer need to utilize those good sales skills? In my opinion, and in the opinion of 26 other active investors that responded to the poll, the answer is yes.

For example, Nick Armstrong said, “I think building your sales foundation builds your negotiation skills, which is obviously a must in my opinion.” Negotiations occur more often than just at the offering table. If you are performing renovations, you are negotiating with contractors. If you are a passive investor, you are negotiating with a syndicator. If you are a small rental or apartment investor with good sales skills, you are negotiating with your tenants and/or property management company. And, as a real estate investor in general, you will negotiate with lenders, brokers, city officials, and business partners, among others.

To put it another way, in the words of Dale Archdekin, “I think that true sales skills are really people skills. The ability to hear and be heard. So, if you as an investor are dealing with people, then YES, it’s a good idea to have sales skills.”
In regards to raising money for apartment syndications, I commonly hear a similar question: “Can I raise money if I’m not good at sales?” My short response to the question is STOP BEING SELFISH! Watch this YouTube video for my full reasoning behind this answer.

Learn how to hone your real estate sales skills with this collection of over 25 blog posts on that topic!

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