Rent collection is one of the most important activities of a landlord. Without collecting rent your investment property is not generating the funds needed to pay your monthly obligations. Monthly expenses such as the mortgage, insurance, property taxes, association due, etc. must be paid each month or the landlord will fall behind and possibly go into default.

Rent is normally due on the 1st day of the month. Many landlords offer a grace period of 3 to 5 days. The grace period extends the date rent is due before a penalty is assessed. Most tenants pay their rent on time to avoid these penalties. Sometimes tenants do not pay their rent on time for various reasons, and the landlord must take action. The date rent is due, the length of the grace period and the penalty if late should be clearly noted in your written lease agreement. It is important that you assess all penalties when the rent is late otherwise it will continue to be late.

If the landlord does not received rent by the end of the grace period, the landlord should try and contact the tenant to find out why rent has not been paid. Many times by contacting the tenant the non-payment issue is immediately resolved. If the landlord gets no response from the tenant the landlord must start the eviction process by delivering a 3-day notice.

Collecting delinquent rents can be a difficult and discouraging chore. Allowing a tenant to get away without paying is even worse. Once a tenant has skipped out or been evicted for back rent, the landlord must take the extra step and aggressively pursue the tenant. Not only are the tenants essentially stealing from the landlord but if the landlord let it go, they will go on and cheat and steal from other landlords. We are all in this together and need to keep each other informed of bad tenants. Reporting to the Tenant Registry and the major credit bureaus puts all of us on notice that a bad tenant is out there and we should not rent to them.

There are online collection services that will take a landlords past due rent accounts on a flat fee or contingency fee basis. The flat fee basis is very inexpensive and completely automated. The contingency fee based method is more aggressive and open-ended. Either method is effective and ultimately brings the money back to where it belongs…the landlord’s bottom line!

In today’s uncertain economy landlords can not afford to lose money and let tenants get away with living in a property for free. If you need help with collecting rent or starting the eviction process please consult with your local property management company.

Kent Forsythe, Licensed California Broker
Member of California Assoc. of Realtors, National Assoc. of Realtors, Owner of Superior Property Management. Contact Kent @ kforsythe@superiorpropmgmt.com

The current real estate market is full of excellent opportunities for investors. Buying a rental property can be a great way to build your wealth. However, as with most real estate investments, it is sometimes difficult to know if you’ve found a good deal, especially if it’s your first time purchasing an investment property and you’re completing the purchase without the help of a property management company. Here are some suggestions to be sure you are purchasing a great investment property.

- – Location, location, Location-This very basic rule of purchasing real estate applies to investment property too. If the property is located in a high exposure location where potential applicant traffic will be heavier, it will easier to rent. A front yard sign will often pull more response than an ad in the paper. If it is a nice location, it will usually rent faster. Property amenities are also very important.

- – Examine the financials-You must know if you are getting a good deal financially. To do this you must gather all of your monthly expenses and deduct them from the anticipated monthly rental income. You should be at a break even or positive cash flow from the start. If you are you will have a solid investment that will reap tax benefits and future equity.

- – Verify rental history- If you are purchasing existing investment property make sure you ask to see the rental history. Note how long residents are staying on average, and if they pay on time. Do not take over someone else’s headaches.

- – Property inspection-Have the property thoroughly inspected. Make sure everything is checked including appliances, heating & A/C and the electrical and plumbing systems.

- – Low maintenance properties- Look for properties built less than 20 years ago. Avoid properties with deferred maintenance. Look beyond current expenses to see how much maintenance the property may need in the future. Low maintenance means fewer headaches and more profit.

- – Code compliance and tax records- Avoid properties that have costly building code compliance issues. Make sure you check the properties tax records to verify the number of beds, baths and square footage match what you are purchasing.

- – Home prices-Look for properties in areas with high and increasing home prices. When prices are high it will create rental demand. When people can’t afford to buy they rent.

- – Below market rents- Buying existing rental properties with below market rents allows you to immediately raise rents. Raising rents means you raise the value of the property and increase your monthly income.

- – Neighborhood is stable or improving- A stable neighborhood is good. However, if you can buy in a neighborhood that is improving you will rent the property easier and therefore get automatic appreciation in value with time.

Of course having a good property management team in place prior to the close of escrow is a great way in insure that your investment will be a successful one. A good property management company will reduce your headaches, and keep you out of the landlord business.

Kent Forsythe, Licensed California Broker

Member of California Assoc. of Realtors,

National Assoc. of Realtors, Owner of

Superior Property Management. Contact Kent

@ kforsythe@superiorpropmgmt.com