14 ways to avoid bad tenants from HELL, and turn the bad tenants into good tenants…

… Plus how I built a 10k/month side business by doing joint ventures with realtors, investors and apartment complexes.

As I always say I’m still starting out and new to all this so I hope helps you but I also want to hear from you about anything I may be be missing.

First of all, THANK YOU again for making this channel the number one channel for Indiana real estate on YouTube according google analytics and SocialBlade info for BigReia.com.

If you want to get better at screening tenants or build a side business this resource should help you.  I’ll put the summary first and then more detail right below it.

Or you can download the .pdf HERE.

Thanks!  = )

Again, you can download the above in .pdf HERE.

14 ways to avoid bad tenants from HELL, and turn the bad tenants into good tenants. 

This is how to make sure you don’t get stuck with bad tenants who cost you money, time and sanity PLUS how to make sure that if the occasional bad tenant does sneak through you can convert them into good tenants.  Great tenants even.

So this is two fold:

Avoid bad tenants.

… And…

Turn bad tenants in into GREAT tenants.

This is important for investors, you’ve invested time and money into your property, and the last thing you want to have happen is to be stuck in a situation with tenants from HELL.

Here’s a horror story I witnessed…

I was young and looking at my first house.  My budget was tight but I knew I had to invest into home ownership.  I was eager to find a place of my own. My realtor took me to a house that had been a rental and it fit my budget.

I was surprised to see the neighborhood she took taking me to though, it seemed like it would be WAY out of my price range.  She pulled into the drive and we got out of her car and I was thinking to myself:

“There is no way I can afford this much house, not in thisneighborhood!”

We walked up to the all stone exterior, and I was surprised to see that it wasn’t in bad shape at all.  I only realized after the fact that the reason it was in good shape is because you can’t really damage a stone exterior as an angry renter with an M.O. (Just wait…)

She punched in the key code to the lock box, got the key, opened the door and then she gasped.  I was pregnant at the time and thought the worst right away…

“Oh my God, is there a dead body or something!?!?!”

I looked over her shoulder and saw why she gasped.

The place was STRIPPED bare.

I mean it was a shell of a house!

The previous tenants had taken everything… EVERYTHING.

They took every single that they could, down to the copper wiring and they destroyed whatever they couldn’t take.  There were literally ZERO kitchen cabinets, no carpet, the light fixtures had all been taken, the interior door knobs and light switch coverings were all GONE.

I’d never seen anything like this before, the holes in the walls would have been the perfect size for my baby to crawl through had he been born and crawling.  Not to mention that he could have easily fit into the holes left in the bathroom floor where the toilets HAD once been.

My realtor called it a cluster fu**.

It was a total and complete mess.  Strangely, a rather morbid curiosity overcame me and I wanted to see it all.  It was like rubber necking on the highway, I watched the horror unfold in front of me and I just couldn’t walk away.

After viewing the house, we made one last stop.  To the back yard, where the pool was.  The renters had partially filled it with CEMENT and LAWN FURNITURE.  The only redeeming quality about the pool was that some ducks had put good use to the rain water collecting over the cemented in lawn furniture.

The ducks loved it.

My realtor was MORTIFIED and said:

“This was the first time I’ve ever shown a house before seeing it myself first and it came to us through a desperate seller who just wanted to unload it after his renters were evicted.  I had no idea it was so bad!”

Well it certainly explained why I was about to view a home in a neighborhood that was in the $500,000 range and my budget was only $100,000.

But that’s just it, she was looking at a home that had rented for around $2,800 – $3,500 a month in it’s prime.  And that’s part of the problem here.

Let me explain a REAL WORLD problem

Sure everybody wants to screen their tenants and make sure you only let good people into your properties.  However, that’s not what happens in the real world.  The properties owner had a mortgage payment to cover, and then taxes, insurance, etc.  So the due diligence in screening tenants came lower on the list of priorities than simply “Who can start making payments right now?!”

Making a mortgage payment of $3,000 gets old… fast.

If you are about to make that payment out of your own pocket, and just then a tenant shows up with $5,000 for their first month’s rent and security deposit… Sometimes the screening process is relaxed.  Too relaxed.

A frustrated landlord’s standards are easily lowered. 

At the right time a landlord will say:

“I don’t care who it is but the next person who shows up and has some money to throw down, they’re in!” 

And that’s how this $450,000 investment turned into a $60,000 OBO deal…

… with just ONE tenant.

That’s the cost of just ONE bad tenant.

Just think about that for a second, all the resources that went into that purchase.  All the expectations, hopes and dreams.  All the potential.  All of that was wiped out.  Totally ruined, with one tenant.

There is good news though…

This mistake is totally preventable.

You can avoid having a similar situation happen to you.  You can dramatically cut down on the chances of having bad tenants AND cut down the damage they can do if you ever do have to deal with a bad tenant.

BigReia.com Presents…
14 ways to avoid bad tenants (from HELL)
and how turn bad tenant into GREAT tenants.

These are broken into two categories:

Prevention – what to BEFORE you work with a tenant

Policing – what to do AFTER you have accepted a tenant

Follow these rules and you’ll be ahead of the pack and you can even build a business around helping other investors stay smarter and implement these practices in their own businesses.

Let’s get started.

Prevention Steps:
What do BEFORE you work with a tenant

Remember the better you enact this the more control you have over the situation.  An once of prevention is worth a pound of cure as they say.  This is not largely practiced or adopted into action but you can be better than that.

There are seven steps in this section, so here we go…

Prevention Step One:

Screen your tenants with a background report.

Prevention Step One:
Screen your tenants with a background report.

There are several tenant screening services like Transunion’s My Smart Move, also Equifax has one as well and so does Experian.  There are many others but they basically all do the same thing, you can also watch my class on screening tenants here.

It isn’t as important WHAT service you use or what information you get, but how you are able to apply it.

Also I did another class on running credit checks on tenants here.

And another class on security deposits here.

Also here’s a video I did on the eviction process so that may help too.

So I have gone over this for you in a number of ways, just trying to help.  = )

What to look for?

The obvious stuff, obviously.  The RED flags are things like criminal arrests, warrants, convictions, etc.  The less criminal things are items like late payments, history of evictions, foreclosure, any and all court cases or legal actions that may be available the public record.  Their credit score, debt ratio and income.

You want to get pay stubs and/or 1099 forms and bank statements.  You want to get a crystal clear picture of their finances, incomes, payments, credit card debt, etc.  

Beyond the Basics

I’m kind of new here but when I first met Millie and Zach they were buying and building insurance companies.  That industry is all about statistics and risk assessment.  I learned something called the 3-5 Rule.  This is a series of questions that reduces the likelihood of problems dramatically.

The 3-5 Rule

This basically means that if somebody:

Has 3-5 kids.

Has been married for 3-5 years.

Went to university for 3-5 years.

Has been at their job for 3-5 years.

Has lived in their previous residence for 3-5 years.

What this usually means is…

Then they are about 80-90% less likely to cause problems as tenants.  There are a number of other things that are not likely or likely to do but for our purposes those are usually ideal tenants.  Now it is NOT legal to discriminate against tenants because they haven’t been married long enough or don’t have enough kids, this is just a guide.

These are just indicators, like clouds can indicate rain.  Sometimes.  You could see a bunch of dark clouds and choose to picnic another day.

These Are Just Indicators  

It’s a loose fitting rule for applicants that apply at the same time that have most other things on common, such as income levels.  It is NEVER legal to discriminate on Ethnicity, marital status, status of dependents, religion, sexual orientation, age, etc.

Jim and Nancy for example…

Jim and Nancy applied as renters and they’ve been married for 7 years with 3 kids, and each have worked at their jobs for six year.  They might be preferable as renters in terms of responsibility to Jake who is the same age as Jim, and has the same income as Jim and Nancy combined and applied at the same time they did.

Why?

Maybe they even live and come from the same apartment complex but Jake doesn’t have the same roots.

Why does the 3-5 Rule Work so Well?

This works like magic because of one word: ROOTS.

Ultimately Jim and Nancy have something to lose.  A lot to lose.  People with kids, careers and families do not want to create problems in their communities.  They want to take care of their properties, they want their kids to stay in one school and not move around and they also want a stable income and home life.

Find people who NEED to care about their credit

What this means is that if there are some problems these tenants CARE about having bad credit or marks on their file.  Many corporate and government jobs require a certain credit score and no personal liens or judgments to maintain employment

This gives you leverage.

These folks are not likely to go ostrich or skip town if there is a problem, they have incentive to resolve it.  When screening a tenant ask yourself this:

How would this tenant react to a blemish on their credit?

Does your applicant have something to lose in terms of negative credit effecting their job?  Remember certain levels of government clearance and things like corporate jobs require employees to have and maintain good credit.  This can be a great qualifier.  If your applicant has something to lose with late payments, damage to the property or suing them for money then you have leverage that can help avoid those issues.

Prevention Step Two:

Get Recommendation Letters and References

Prevention Step Two:
Get Recommendation Letters and References

Ask for letters of reference, and preferably from previous landlords and then HOLEY MOLEY actually CALL THEM.  You want to talk with the references and get a good idea of what kind of tenant they were like.  Take the time to verify the reference source and ask about about things like rental history, damage to the property, length of stay, potential complaints, why they left, etc.

Don’t be lazy about this step because it can save OR ruin a deal.  We had a case where a student even hired a translator for $50/hour to call a reference from overseas that was a previous landlord.

It was $50 well spent. 

Nobody was renting to the tenant because he seemed like a trouble maker and had bad credit but one call overseas and the previous landlord confirmed that the tenant was great but just a bit… flamboyant.

The deal went through and the tenant was a solid renter for years.  All because the student didn’t let a language barrier stop him from verifying a reference.

Prevention Step Three:

Have a 24/7 Number to Contact

Prevention Step Three:
Have a 24/7 Number to Contact

Have someone available for your clients to call 24/7 in case of emergencies, or at least a number.  Make this clear at signing and constantly refer to this benefit.  This doesn’t have to be a number that somebody answers, it can be a cell phone, a pager with voice mail, a property manager, a realtor, etc.

You just want to have A number for them to be able to call.

Is this really “Prevention”…?

Although you will do this AFTER signing as well you also want to use this in your marketing as well.  So this starts before the signing by mentioning “24 hours” on signs, ads, etc.  Be ready to at any time.

Afterwards, your tenants have to be able to get a hold of someone at any time, and give them alternatives like a 2 hour window with a preferred list as a backup.

“If you can’t reach me within 2 hours for an emergency, call one of the providers on this list for help.”

Make it REAL simple.

Include this list in the lease agreement and make a laminated fridge style magnet of these numbers as well, including your number or the number of whom they are to call first.  Fridge magnets are great and there are several places that you can them from, like Zazzle.com or their main Canadian Zazzle site, uPrinting.com, BuildaSign.com and many others.  Or if you are super crafty you can make your own fridge magnets for super cheap too.

This is a great advertising tool too.

People NEVER throw away fridge magnets so think of this as a little billboard that will last for years.

You want to make sure they have this info and it is accessible.  Remember that often the difference between a cheap repair and costly repair is how quickly you hear hear about it.

Give them ONE number so your tenants have NO excuse

You do NOT ever want to hear:

“I didn’t know who to call about that.”  

This could be a major issue or even a small issue, you don’t want to hear that the leaking roof in the garage was something they didn’t know who to call about.  Make sure they have one number and email for everything.  You don’t need to use an answering service.

If you use a free google voice number for example you can set it so that it automatically forwards texts and voicemails to multiple people who can respond ASAP.

Prevention Step Four:

Carry (and Require) Insurance Even IF the Property is Paid Off.

Prevention Step Four:
Carry (and Require) Insurance Even IF the Property is Paid Off.

Carry home owner’s insurance, landlord insurance and require your tenant get renter’s insurance as well.  You should get a policy EVEN if your property is paid off.  Some folks get lazy and cheap and if it’s not required by their lender or bank anymore, they will go without insurance and avoid the expense. 

Not smart.

Even if you can cut a check for anything that goes catastrophically wrong and not think twice about it, why would you want to?  To everybody else (us simple folks), insurance is a must have.  Get in touch with various insurance agents, and your bank to get estimates on these costs.

Also see our stuff on why tenants should get renter’s insurance, it’s a good book that we give to tenants at signing.

Prevention Step Five:

Hold Your State’s Maximum Security Deposit.

Prevention Step Five:
Hold Your State’s Maximum Security Deposit.

You want to find out the maximum amount of money you can legally require as a security deposit, and make that your minimum.  The more money you get up front, for anything, the better and more committed people are to the activity.  So hold the maximum allowable amount in a security deposit from your renters.

This is a good qualifier when added to the renter’s insurance policy and your own landlord policy.

How is it a good qualifier?  I’m glad you asked.

For the most part, people need to save to acquire any build up of wealth, be it a small or large amount. Saving is an indicator of responsibility.  Ergo if your tenants have saved up enough for your state’s maximum amount in a security deposit AND can make the first month’s rent at the same time then it’s a good indicator they are being with responsible with money.

Being responsible with money CAN and usually does mean being responsible with other things, like taking care of the property they are renting from you.

I’ll be very blunt and honest with you. 

I’ve talked to a lot of people who are… just too broke to be looking for a house.  I hate to sound harsh saying that but as an investor you have to do what is in the best interest of your people and be honest with them.  Buyers and renters do not usually want to hear that they should take it slow or prepare better for their move.  You have to identify the broke buyers quickly, and their opposites.  Maybe I shouldn’t be so direct and talk like this, but if this helps you then it is worth it.

I’ve talked to a LOT of buyers that were interested in doing lease with options (Hey! That’s another class you should check out that we have, just BTW) and if they don’t have the money I have to give them “The Talk“.  One thing I want to make sure they have is the down payment as well as being able to afford the monthly payment.

Often they will ask for delays…

Inevitably I’ve heard (enough times it would have been nice to have a dollar each time that I heard it)…

“Could I move the move in date back so that I could save for the down payment?”

“Can I split the down payment?”

“Can it be less?”

In other words, they can’t afford it.

So that means the budget is TIGHT and they are looking to make these monthly payments on a too tight spread of money coming in each month.  This instantly makes me nervous about proceeding with them and I want to think of other options for them in terms of different properties or arrangements.

So apply that to a landlord, asking for the state’s maximum amount in a security deposit and the first and last months’ rent as well.  If the renter has a problem with that or asks to spread it out or lower it then they may have an affordability issues and it’s a red flag.

Remember I made a class on security deposits here, think of it as homework since you’re already reading this.  I hope it helps.  = )

Prevention Step Six:
The Pre-Signing Walk Through Inspection

Prevention Step Six:
The Pre-Signing Walk Through Inspectio
n

Do a pre lease signing walk through with your tenants AND take before pictures and video, along with your checklist of items to cover during the walk through. Cover each item with your renter, and share the pictures/videos with them right afterwards.

As you go through a property take a picture and a video of each room and then a zoomed in picture or video of any issues that they notice.

Documentation is KEY

“Oh you don’t remember that wall being fully in tact last year when you signed the lease?  Cool. Cool. Cool.  Let me just pull up the email that I sent you AND that you verified you received with the pictures and video attached, and we can go over together what you see in the picture.”

Just the fact that you take pictures and videos and send them to the tenant right afterwards, these steps alone help to set a solid tone of what to expect with you.  They will think twice before trying to BS you or make stuff up.  Usually.

It also helps with accountability for everybody.

You don’t want or expect them to pay for something that they had nothing to do with.  This kind of documenting helps everybody.

Oh and just because I’m being REALLY SUPER DUPER NICE TO YOU I’m going to give our checklist for free.

You can download the Pre-Signing Walk-through Checklist HERE.

The instructions are in the doc and when you include the video and pictures you should have the framework for a good tenant experience.

Okay the last Prevention Step is…

Prevention Step Seven:

Use Money as a Qualifier

Prevention Step Seven:
Use Money as a Qualifier

Probably the number ONE question sellers, homeowners and investors have about doing a lease option is:

“What happens if the tenant damages my property?”

And the best answer has always been:

“The more they pay up front, the less you’ll worry.”

If a lease option buyer pays $2,000 up front you’ll stay up all night thinking he is going to disappear in the middle of the night and renege on the contract… BUT if he put $20,000 down now you’re up all night hoping that he reneges on the contract.

Money is a great qualifier – it gets people committed.

I’m reminded of a story of a boy and his father…

“Dad what’s the difference between being invested and being committed?”

“Well son, you remember that bacon and eggs we had breakfast?”

“Yeah.”

“The chicken was invested into your breakfast, the pig was committed.”

You want people who are committed.

Easy enough with lease option or rent to buy folks because they are BUYING, what about regular renters?  Yes you have the security deposit but what else can you can?

Discount rents paid in advance
If they pay the first and last month’s rent (on top of the security deposit) that can be a good chunk of money.  To add to that though you can also have them pay several months worth of rent up front and get a discount by doing so.

Premium for Option
Even if they are not trying to buy a property some renters want to keep their options open and would like the chance to have an option to purchase the property if they want to.  You can charge a premium for this.

Furniture Cost 
Allow tenants to purchase brand new furniture at a discount that you have arranged with a home decorator.

There are many more ways to get money up front that we cover in other places.

The point here is that whenever you are charging people more (but reasonable) money it is a good thing because the money can be used as a good qualifier.

That’s all she wrote folks (literally) about the “Prevention Steps”, there are a total of seven.  Now it’s time for the…

Policing Steps:
What to do AFTER you sign a lease with a tenant.

This process is not only to create good tenants but also to turn potentially bad tenants into good ones.

So now you have your tenants…

Here’s a pop quiz:

“You now have tenants in your property. What do you do next?”

A.) Police your tenants and make it the BEST landlord/renter experience possible

B.) Do nothing and passively collect your monthly rental income

C.) Run off and join the circus

I REALLY hope you didn’t pick option B or C, but if you picked C I am kind of curious as to what your calling for the circus is… bearded lady?  Man with four arms?  Maybe leave those in the comments below and let me know how it works out for you lol.

Okay back to it:

Policing Tenants:
Seven Steps to Creating Great Tenants

Notice I said “creating” because there are not enough great tenants out there for everybody to make money or build their business around them, so what you need is a process that CREATES great tenants.

There are three ways to do this and make money:

1. You can do it for yourself and your tenants.

2. You can do it for someone else or help them with their tenants.

3. You can do this as a business and make money with this doing JVs for example, more details on that in a separate class but I will touch on this a bit below because it is very exciting stuff.

This is all about making relationships with your tenants and keeping tabs on your investment, both in your property and your investment in your renters.

Policing Step One:

Keep Eyes on Your Property

Policing Step One:
Keep Eyes on Your Property

You keep tabs on your property either in person or via a property manager.  You want to get pictures, videos and anything else that will report back the condition of the property.  Of course keep in mind that you are NOT allowed just walk into a property whenever you want without permission.  Also if you have an apartment complex or hundreds of rentals then visiting each one is not feasible.

Actually even if it is possible or feasible for you to visit each of your rentals personally, it is better to have this done for you.  Building your business means subtracting yourself from activities.  It is never too early or late to start.  Here are some ways to keep eyes on your properly:

Drive Bys
A lot can be determined by seeing the way a tenant treats the outside of a property.  The care that goes into grass, bricks, paint, roofing, weeds, driveways, lighting, porches, fixtures, etc. can tell you a lot.  The care for things on the outside is usually a reflection of the care for things on the inside.  How you do anything is how you do everything as we say.

Employ Spies
It is amazing that more investors and landlords don’t do (or know about) this.  In your rental agreement you can agree to give a concession, incentive and/or a discount in rent if the tenant hires a cleaning maid to come though a few times a month.  The same can be done for landscaping and other service people.

You can even make this a requirement.

Usually these kinds of maintenance issues will be up to the tenant but by doing it this way with your own people you can get better feedback on the condition of the property and alerted of any danger signs very fast.  Some will be turned off by these “spies”, but those people don’t have an investment in this property like you do.

You can have people on the outside (and inside) of the property regularly.

Stay on top of things and all should be good.

I hate to use the word spies, but… a BETTER way to think of it is that you are perhaps offering to help pay for a service that your renters would actually benefit from.

Policing Step Two:

Build SOLID Relationships with your tenants.

Policing Step Two:
Build SOLID Relationships with your tenants.

One of the biggest mistakes managers and owners make is that they view the tenants as the enemy.  You want to build solid and long-term relationships with your tenants.  This one step ALONE can be worth millions and allow you to build entirely separate businesses with each property you work with.  You’ll see more on this below.

Some basic ways to become BFFs with your tenants:

Friend and follow them social media
Add them to your contacts, make friends with them, make a friendly comment on pictures and posts.  Don’t be creepy or a stalker about this.  Although you can be spooky on social media and still be cool.

There are a LOT of benefits to this especially when you friend some of their friends.  You become something of a staple in their social media profile.  This can be weird if you are just a property manager or landlord BUT as a friend this is totally common.  Think of how they would describe you, it should be that is a friend I met because they manage my apartment building NOT that’s some weirdo property manager.

This creates a friendship but ALSO creates leverage

It is much harder for somebody to stiff you or be unethical and dishonest when you know they’re friends and family.  This also allows to introduce OTHER kinds of transactions into your relationship.  Think of a rental property as a business and each tenant as a customer, you want to create life long clients and raving fans.  There are many other ways to leverage this that we’ll talk about below.

Friend/Follow them on Job and Career Sites like LinkedIn
You want to know the hopes and dreams of your tenants.  Are they in school?  What is the dream job?  What kind of background do they have or want to have?  You may be able to hire them or have work for them in your real estate business.  There are a lot tenants and potential tenants that have worked for us in the past.

I’m just now starting to hire people from my tenant pools.

This will not only give you a tighter bond with your tenants but you will also be in a better position to learn of any job loss, career changes, income changes, etc.

Give them a gift every 90-180 days.
Maybe it is just a card, or flowers, cookies, gift certificates, baked goods, furnace filters, framed picture, a hand written thank you note, etc.  Help them celebrate an anniversary, birthday, child birth, wedding, etc.  You can send something in the mail but ALWAYS include something personal so that they know it came from an actual person who remember something about them.

Invite them to parties or host one for them.
One of the best investments any apartment complex will do is host a (pool?) party for their tenants at their community clubhouse or something.  This helps to build better relationships and stay on top of troubled tenants and be more proactive with them.  Pool parties, singles’ nights, mixers, etc. are all good ideas.

Take lots of pictures and share them, and encourage them to share them as well.

As you develop a better relationship with them and it is NOT awkward or weird then you can invite people personally to events or parties that you are attending.  Anything that will get them closer to the “Raving Fanatic” status.

Help them with storage and/or selling extra stuff.
Part of the reason that some tenants are moving or having difficulties finding a new place is because they have so much stuff they don’t know what to do with it.  Offering junk removal or having keeping storage units somewhere nearby is a good way to help the relationship and make extra money.  This is not a small deal, little income boosters like this can totally change the cap rate (that’s a video I did on cap rates) and overall value of the property.

You can also help them sell their stuff on eBay, craigslist, LetGo, OfferUp, etc.  And if you use an affiliate program you can make money by sending them to sites like that.  Not to mention potentially making money from the sales themselves.  This can create another payday for you and and yourself.  One of the most successful “We sell your stuff on eBay” places in Indiana was a client of ours and his business was largely from his tenants and property manage referrals.

You can help them in other ways too…

A LOT of people don’t understand basic things about online transactions.  This means helping folks do simple things like creating an ad on craigslist, or even just using using browsing craigslist can seem difficult.  So basic tutorials like this or this are good models to use.  

Also keep an eye on new opportunities as well.  After a few robberies happened here in Indy, we have started creating safe spaces that people can use to meet buyers and sellers and exchange goods that they bought online.  Sometimes it is an apartment office, a school, a police station, one of our rentals or even just a nearby gas station.  This is a great way to help keep your community safe but also to make your locations, and in turn you, a trusted and helpful asset.

Get to know their family and friends well
One of the biggest factors influencing where we live is where the people who love live.  The best property manages and landlords that I have seen, on our team and elsewhere, are always learning new things about their tenants and the people around them.  Get to know their situation well and find ways to help.  

Do something at least once or twice a year that helps somebody they love.

One of the BEST ways to glue a relationship is to help somebody that your target cares about.  Get that somebody to thank your target and force them to mention that it was you.

“You’re welcome but that was actually a friend of mine, who is also my property manager.”

Maybe a cousin needs a good tech job reference, a sibling is in law school, somebody in their family has special needs and you can help make the property more accessible, etc.  These things go a long way in creating a friendship that will last forever.  You want people talking how EPIC-ly helpful you were for the rest of their lives.

Policing Step Three:
Get your tenants talking with a good bank.

Policing Step Three:
Get your tenants talking with a good bank.

From day one you want to put the dream of home ownership on the horizon.  This may seem counter productive since you want good, long term tenants BUT many of them will turn into buyers anyway.  Plus, if it is in their best interest then you should help them do this regardless of what it means to your immediate rental rates.

You want to help them create a road map of where there credit and financial is right now, where they want it to be and how they can get there.  Usually the plan will be for the next 6-18 months, possibly 24 months.  No matter how bad your credit is you should be able to clean it up in less than 24 months.

Credit repair companies can help

If they aren’t ready for a loan now then a good lender should be able to set them up on a credit repair program.  There are also companies that specialize in credit repair as well.  When you send these people clients for credit repair you should make money too.  One of my partners was making $400/day from sending tenants and potential tenants through credit repair.

Getting their credit fixed can help your tenants now and over time.  This can be a great way to get them ready to buy a property from you down the road.  You can also help them set up a rent to buy this way as well.

Credit helps with everything… errythang.

Aside from that, how cool would it be to hear your tenants say something like: 

“Hey, thanks for all your help!  That credit repair guy you put me in touch with over at ABC credit repair got some things taken off my credit report and I was able to get that new work truck I needed without any trouble.”

The feel goods baby!  = )

What about lenders?

You should have a good relationship with banks and a few mortgage brokers and loan officers as well.  You want them screening your folks and helping them get into homes.  The better your relationship with them the more money you can make sending them business.  There’s something called the Lender Agent Model that Azam invented with others on the team, it is a good way to make passive income, you can look that up here on BigReia.com.

The main point here is that you want to help your tenants get better credit and be able to actually purchase a home. Help them do what is in their best interest.  Be that force for good in their life and it will help everybody.

Policing Step Four:

Get involved with the neighbors and community

Policing Step Four:
Get involved with the neighbors and community

You want to be a pillar in the community and neighborhood.  This will serve several purposes.  First, this is a great way to show that you’re active in the community, volunteering and helping others.  Also nosy neighbors can be a great source of information.

Help with neighborhood cleanups, organize or help with neighborhood/complex crime watches, volunteer in the neighborhood for storm cleanups or anything else.

Send a quick text or email:

“Hey I’ve got two open hours on Sunday the 14th, who needs help with anything?”

Start Volunteer Efforts

Remember that pitch in dinner?  Here’s another great community service that can come from something like that:

“Hey everybody, every other month bring your pitch in dish and 3 canned goods we can donate to ABC food bank!”

Build a sense of community AND this is a great way to get the word out that you are in the market of buying and selling properties.  So this help the community AND be a great evergreen marketing campaign.  Look at you prospecting and helping others along the way, go you!

Six Figure Tug of Wars

I started doing this too but a few other student did it first before I learned about it.  I went to local fireman and cops and hosted a tug of war competition for charity.  The competition was done at a fire station and they had all the necessary gear so it was free.  To promote it and sell tickets the cops and fireman knocked on doors, made calls and sent mailings.

Each flyer that was hand delivered also had sponsors ads on the back.  Guess who had the biggest “I buy homes for cash!” full page ad?  It is hard to not make money with this because if you pick enough houses you’ll get calls.

My first competition resulted in six deals and the up front money was $20,000 or so, the second one was twice that.  I plan on passing six figures this year with the Tug of War competitions.

Neighborhood Newsletter

This has been better for me, I started with 500-800 houses and called them “My Hood” and started a printed newsletter that was hand delivered by the neighbors who helped me put it together.  Inside are cooking tips, babysitters, upcoming parties and cook offs, etc. that are all for and from that specific neighborhood.

Then of course my giant gaudy full page promo lol.  The first edition and I got two houses by the end of the weekend before they had all been delivered.  If you get involved with the community you can help them elevate their relationships and make more money too.

Policing Step 5:

Give “Good Guy” Tenant Awards

Policing Step 5:
Give “Good Guy” Tenant Awards

Give your tenants a name, a form of identity, a nickname that puts them on “your team”.  Then brag about the good ones and have a “Good Guy” tenant of the week or month.  Like the “Employee of the Month” with their picture up for all to see.

This works best when the person knows about the audience and cares about their opinion.  This is why putting them on your team helps.  Use a “Good Guy/Gal Tenant” award system. 

People LOVE being recognized. 

We are combining two of the  documented languages of love here; the language of gifts and positive affirmation.  It could just be your tenant’s favorite candy bar or a $5 trophy with a little note attached to it saying “Good Guy/Gal tenant AWARD”. 

Snap a pic with them, or a little video and share it with them and online (with their permission of course!) and publicly recognize them.

What do they get awards for?

For doing good stuff.  This is how our team acts.  Create an identity and then list what it means to be a part of the team.  We volunteer, we help people smile, we brighten days, etc.  You don’t need a tangible award either just an email or shout out can drive it home.

But with a tangible award like an actual trophy it can become a game too, like the “Traveling Tenant Trophy”.  Your tenants can actually looking forward each month to seeing who gets it.  I just started two arrangements like this with Zach and I can see this happening already.  

Take it further…

Make a donation in their name to their favorite charity and post it to the charity so they can get LIKES.

“Here’s Johnny with his Good Guy Tenant award and he picked to have a 30lbs bag of dogfood dropped off at ABC County animal shelter in his name!” @you @yourtenant @ ABC County animal shelter (you get the idea)

Include this too in your weekly email and BRAG about your amazing tenants and your  personalized policies.  I’ve been doing this with an apartment complex for less than a month and already they have seen a major improvement in the “neighborhood’s attitude” as the manager put it to me.

I think of Karma… a lot.

I love thinking about all the good karma you can spread and how many other people you can help by doing simple things like this.

Similar pet policies have been made and a few clients and people on the team here actually buying apartment complexes by using better pet policies!

Policing Step Six:

Set up ACH payments and credit card options.

Policing Step Six:
Set up ACH payments and credit card options.

This can be a real help for a lot of folks with budgeting issue or who are late on payments.  At the signing of the contract you can give the tenants the option of setting up automatic payments that are deducted from their bank account with via ACH (Automatic Clearing House) transactions.

You also want to help your tenants set up the ability to pay their rent with a credit card.  You never want to accept credit cards for rent because you’ll have to pay transaction fees for basically no reason.  You do you have another option though.

You can help tenants use a third party service that will charge their card and send you (as the landlord) a check for the amount.  Tenants can use this option if they are in a jam.  Or to rack up points, rewards and cash back that can more than pay for the 3% or in transaction fee. 

Pay Rent with Credit Cards

Here are some services that can help your tenants use credit cards to pay their rent:

Urbanr
This is the cheapest service that we know of at 1.5%.

Venmo
This would require that your landlord also has a venmo account.

RadPad
They specialize in using credit cards to pay rent.

RentMoola
They also have a list of rewards that can be earned based on how much you spend.

Plastiq
Here you pay them with your credit card, they charge you 2-3% and then they send your landlord or bank a check.

Using a credit card to pay rent can be a backup plan.

They also have affiliate programs as well so you can make money on that too.

Also using a card to rack up a bunch of charges and then paying it off is a fun way gather miles, free trips and even cash.  This is my little secret that I started doing once I learned about.

Obviously the card doesn’t have to be used so think of it like an life preserver, emergency line or just a tiny insurance policy.  For all parties.

Tina will love you.

Let’s say Tina is a single mom and her kid broke his glasses the same week her car broke down and guess what, rent is due.

Tina knows that her tax refund is coming this month, and that her medical insurance will reimburse her for her son’s glasses after she mails them the claim and receipt, but as far as actual cash on hand goes, this week it will be tight.

Right there, you’ve taken off her plate the following:

The choice between getting her son new glasses or getting her car fixed (the one she needs to get to work and to get her boy to the eye doctor)

AND

How she’s going to be able to float such a week when all three things came up at once, two she wasn’t expecting?

See how easy all of that is with your solution?

So that’s it…

Well okay one more, and this is a big one.  If you do your job right earlier then the first place you want to look for tenants, buyers, deals, etc. the first place you should look is…

Policing Step Seven:

Referrals – use your Fanbase to screen your Fanbase.

Policing Step Seven:
Referrals – use your Fanbase to screen your Fanbase.

You’ve seen somebody on facebook ask for suggestions for a dentist, soccer coach, violin lesson, etc.  Then you’ve seen some people get nearly no replies but a few people get great, detailed and numerous replies.  Those people are interacting with their friends or that engagement wouldn’t be there or last.

You want to do the same thing except not just on social media but offline as well.  When you send an email, text, voicemail, etc. out asking for suggestions on X, you want to be flooded with suggestions.  You even want people going out of their way to find you leads.

The right endorsement changes everything

When people are referred to you by a trusted source then they are a totally different breed of client.  They ask less questions, avoid challenging your authority and do NOT try to negotiate terms or price.  They feel lucky to have found you.

After all how many people say:

“You’ve gotta talk to my landlord about moving, he’s the best!”

And then proceed to add social pressure to your contact?  Not enough.

Do that and you’ll be happier.

Everybody will be.

Now we’re almost done…

Avoiding Sh**ball Tenants with the
Magic Steps of Prevention and Policing

I know you were enjoying reading this so much that you lost track of time right?  I know.  We are nearing the end and since you’ve been such a Good Guy/Gal today I’ll add a little something that I think you’re going to love.

Below I’ll show how I’m using these Policies to JV with apartments right now.

First a quick recap.

So remember:

So In Summary…

Remember there are two main categories of screening OUT bad tenants and creating GREAT tenants:

Prevention

AND

Policizing.

Let’s go back over these two categories…

Seven Steps of Prevention to Avoid Bad Tenants

1.)  Run Your Tenant Screening Well.

Use the 3-5 Rule, build a partial/complete profile, look for red flags, etc.

2.)  Get Recommendation Letters and References. 

Remember to follow up with these and make sure you fill in their profile better.

3.)  Have a 24/7 Number to Contact. 

Whether it is your marketing or maintenance remove all excuses and keep a number that is available 24/7 for all calls and emails.

4.)  Carry (and Require) Insurance. 

Even if there is no mortgage or bank requirement you should have an insurance policy and so should the tenant/s.

5.)  Hold MAX Security Deposit. 

On top of your state/province/government legal limit you also want to find others ways of raising the amount of money they put into the home.  It is in everybody’s best interest.

6.)  Record the Pre-sign Walkthrough. 

Follow the policies I outlined above, record with pictures, videos and documentation so that everything about the property is outlined and clear up front.

7.)  Use Money as a Qualifier.  

More money up front means less worry later.  One of the best qualifiers to use is “skin in the game” as they say, don’t settle for mere investment but aim for solid commitment.

Now for the Policing steps:

Seven Policing Steps to Avoiding Bad Tenants

How to screen tenants like a badass and turn shi**y tenants into GREAT ones.

Here are the steps to take AFTER you sign a tenant.

Many of the problems that investors and landlords have is because they don’t follow the PREVENTION steps but the second part of their mistake is not taking the below POLICING steps.

Here they are the Tenant Policing Steps:

1.)  Keep Eyes on the Property

You can offer incentives for things like maids, landscaping, repairmen, etc.  You want to keep a finger on the pulse of the houses and/or units.

2.)  Build SOLID Relationships

Follow the steps we went over, develop a profile, follow up use EI into each conversation.  You want to frame the relationship to raise the receptiveness of the Compliance Curve that you will later involve.

3.)  Get them Credit and Finance Help

Whether it is standard credit repair or a contingent pre-approval you want to begin the process of home ownership as soon as possible for nearly all your tenants.

4.)  Get Involved in the Community

Know the people, know the neighborhood and be a connector of people to solutions.  This is NOT just charity work all of the efforts you put into this can have a massive ROI as I explained above.  This is how you get info on your tenants and property but you become the first person to know of any new deals.  Run dat hood y’all.

5.) Give Good Guy Rewards

Use an identity as a super power, a sense of belonging so your approval and the community recognition means something.  Done correctly this will out weigh stuff like a TV, free flight, etc.

6.)  Set up ACH and Credit Card Options

Remember that the better you set these payment options up at the start then the easier it will be to avoid problems later.  Make it easy for people to pay you.

7.)  Referrals: Have Your Fanbase Screen Your Fanbase

The best sign that you are building your Fanbase correctly is that THEY are building and growing it for you.  This is a good test to see how well you are doing with your people, give them a chance to add to your ranks.  Then improve this metric.

 Some other helpful places:

These sites can also help you with tenant screening, I got these suggestions when I asked one of our realtors and property manager.  So you can check them out and let me know what you think.

https://www.rentalhistoryreports.com/

https://www.avail.co/

https://ctcredit.net/tenant_screening9.html

You can do this yourself or for others with a JV

I did this with a few rentals to test but then I emailed some of investors, landlords and property managers and let them know that I can help build the relations with their potential and current tenants.

How’d I do that?

I stole sh** from Azam lol, here’s an email he used:

Here’s the story from Azam’s email…

In July 1518, in a small town in France a woman started dancing.  At first she got applause, smiles and laughter.  That stopped when she kept dancing, 24 hours a day, for several days straight.  This spread to a few others, then dozens and then hundreds of people as a “Dancing Plague” broke out.

Hundreds of citizens were dancing non stop, 24 hours a day with no breaks.  They felt like they had no control over it and they could not stop.  Eventually people began to suffer fatigue, strokes, heart attacks and even death.  At the peak, 15 people a day were dying from dancing.  Yet the dancers kept dancing.

The government stepped in

The local authorities decided to build a stage and hire musicians so that the dancers would get it all “out of their system” but that only made things worse.  More dancers joined and the death toll grew.  There was no end in sight.

Then one day, for no reason, it all stopped.  Everybody stopped dancing and went back to their normal lives as if nothing happened.

To this day nobody knows why it happened.

The cause and “cure” of the “Dancing Plague” are unknown to us.  I would imagine that as you picture people dancing uncontrollably, for no reason and without music, to their DEATHS – you probably think the same thing most of us do:

“That would never happen to me.”

Seeing problems in the thinking, attitudes, behavior, actions and reactions of others is easy.  And, honestly, it can be a lot of fun too.  However, there is a danger in the way we overlook our own flawed thinking.  It creates blind spots.

We start out in business or in real estate with a definite idea of what we want to build and a definite idea of what we don’t want.  We start with the best intentions and we go on our way.

Then stuff happens.

A lot of stuff.

The result is what I see everyday with real estate investors, they have found themselves in situations they never thought they would be in.  They aren’t growing their businesses, instead they are putting out fires all day.  If I told you five years ago that your real estate business would be where it is today, how would you have felt?

“Not me, I won’t let that happen to me Azam.”

That’s how most people would react.  The further we look ahead the more optimistic we feel about what our future-self will do.  That person will lose weight, be a better spouse, wake up earlier, eat less junk food… and build a better business.

But the future is built each day.  Our dreams have rent that is due daily.  Your future is an accumulation of whatever you did today NOT what you wanted to get done today but what you ACTUALLY did today.  Are you making it happen, or…

Are you slowly dancing yourself to death?

Most investors and folks in real estate are not happy with the growth they in their business.  They’re spinning their wheels with no end in sight.  Everyday they get up and feels like they’re boxing an octopus.

They’re slowly dancing themselves to death with nonsense and busy work.  

Every now and then they have a solution and just like the government setting up stages and musicians, they only make the dancing worse.  Eventually you’ve been dancing for so long you don’t know if you CAN stop, or what will happen if you do.

I can make the dancing stop, if you let me.

END OF AZAM’S EMAIL

Then he went to explain how this wasn’t the only “dancing mania” and there have been several others in history.  There have also been other similar things happen like a laughing epidemic in Africa where over 1,000 people laughed for a year straight.  Schools had to be shut down, there was fainting, respiratory problems, random screaming, rashes, etc. on a massive scale.  All from laughing.

When most people think of Kazakhstan they think of Borat, or if you’re a boxing fan then maybe you think of the boxing legend Gennady “GGG” Golovkin, but there is something else fascinating about Kazakhstan.  There is the small, isolated village of Kalachi that has been suffering from:

Sleepy Hollow Disease

Since 2013 people of all ages randomly fall asleep for days and even weeks at a time.  Over 150 people have died.  Although there are theories, there is known cause or cure for this ailment.  Here’s an RT documentary on the sickness.

So Azam explained more of this and I actually learned a lot but the reason I cut the email off was because I replace his “closing” with mine, the hook “I can make the dancing stop” is where the solution begins.  Before I get into that let me say to anybody suffering from the above illnesses:

God Bless You.  

Sending Our Thoughts, Love and Prayers to You.

You won’t be forgotten and may our thoughts reach you all.  = )

When Azam first told me about that it was with a note “Be Grateful.”  That’s one way stories like that can help us put things in perspective.  It is easy to think you have it tough when lose the right perspective. 

So as the close of that email I didn’t put the same thing Azam did, instead in my email to my realtor was about the “Seven Policing Policies” above.  That realtor works for a property management company. 

I asked them the million dollar question:

“Do you want a relationship like THIS with your tenants?”

They did.  

Most of them anyway, and all of them when they understood what it meant in terms of other transactions that they could do with the same people.  The better the relationship, the better chances of other transactions.

This is in part what I did with some of the Youtube videos that I made.  I have about three of them that are on credit repair, how your credit works and why you need to get it fixed.  I go over all money, time and headaches that it will save you.

It’s an autopilot now

I made those because one of my property managers was getting close to 100-150 tenant leads a week.  I took a small sample of 20, 30 and then 50 and put them on the drip campaign.  They got the auto responder with those videos about credit repair.

Then at the end they could buy a credit repair program and I got an affiliate commission.  The first results went well so we added more and more leads.  Right now we are splitting the money from it.  How much?

We each get $600 a week right now

Then I leveraged those results and sent that email to my realtor (who is another property manager) and his buddies.  Before I did anything I told them the offers they make include a minimum monthly payment to me and then we split the profits.  If it didn’t work they wouldn’t have to pay.

The first offer I accepted was $1,500 a month.

Then I raised the minimum lol, so the second two were each:

$2,500 a month.

Plus another investor who just does SFR (single family residential) wants to do $2,500 but can’t right now so I let him make payments and that is $750 a month.  Altogether the monthly base pay was:

Just over $7,100 a month

Here is the exact process that I used to get that done.

First, you should do it for free (a GXM) or with your own leads.

Second, once you are building good relationships then find a good JV partner.

Third, test a small group of their people and see how well you convert and bond.

Fourth, find out the best transactions to introduce to these clients what converts best.

Fifth, this is the fun part now that you have your numbers you get offers and residuals.

Here’s another way to remember this…

You can download this into a .pdf HERE.

Again, You can download this into a .pdf HERE.

Okay… Now I have a bit of an update:

“How to JV with an Apartment Complex and Make $10,000 a month.”

In order to do this correctly I had to do some practice because you REALLY need to get good at the bonding part.  The first call you have is your chance to make the first impression.  If you get the Hook and Bond part right everything else is easy.

The Hook and Bond is KEY

You have to Hook that they’ll remember, makes you stick out and gets them on your Compliance Curve drip campaign.  The Bond is the first interaction you have that will really seal things so they go through everything from you.

If you do that right then you’ll have no problem moving forward with OTHER transactions because these folks will WANT to work with YOU and only YOU.  So the high value transactions are usually real estate ones.  Like the Lender Agent Model.

Just a few deals will get you $10,000 a month

And the better you get with the Hook and Bond the less leads you’ll need for a transaction to be completed.  To get a Hook or giveaway I call local businesses like restaurants and movie theaters so that we can give away free meals and free VIP movie passes.

Every theater that I’ve talked to will give away matinee movie passes for free.  That’s part of something called the Coupon Model which I’m still learning. 

So when a call comes in and there are no units or houses available for rent or sale we can still let them know they can get a free coupon book with a bunch of free stuff like movie tickets, dinner for two, car rentals etc.

People have been excited about getting the coupon book.

Especially if they are out of town or something because they can get a free city guide or tour.  So even an unskilled property manager or realtor can use the script to get people excited about give us their name, number and email.

Then somebody better on the phone will call them back for the Bonding part.  In that conversation we also find out their wants, needs and resources.  Then we help them get what they want.  Sometimes that means a loan and a house, the Lender Agent Model.

35 Leads = $10,000 a Month

That means about one good qualified consumer and we should my net should be about $10,000/month.  This is encouraging because some good manager and complexes get easily get a dozen or more calls/emails.  

These aren’t all going to be good “leads” or consumers but as long as I have a good process in place I don’t worry about getting good people because I can create them.  Hopefully lol.

This explains the process too, you can download the .pdf HERE.

Again, you can download the above .pdf HERE.

So that’s the process I’ve been going through

For me it helps to see it mapped out that way and then you can see the direct way to profit.  The better the Hook and Bond the less leads you need right now I’m at 35 but it can be improved no doubt.

The more ways that we can help these people the more ways we have to make money.  I included the L/A Model deals and not anything else.  There are other rental deals, credit deals and other totally unrelated transactions although I haven’t done those yet.

That’s about a wrap…

Before we go you can get stuff below and in all the other great pages we have here at BigReia.com

Free legal paperwork and stuff you can download:

WOW how cool is it that we are giving all this away for free:

14 ways to screen your tenants like a badass and avoid bad tenants from hell and turn the current bad tenants into GREAT tenants, the .pdf summary:
You can download it HERE.

The DNA of a good Tenant JV in five simple steps:
You can download it HERE.

The diagram of how to make $10,000 a month by doing a SINGLE JV with an apartment complex:
You can download it HERE.

The Pre-Lease Inspection form to use:
You can download it HERE.

The ACH authorization and/or credit card authorization form (VERY important):
You can download it HERE.

Here is a standard tenant application form:
You can download it HERE.

Also click around on our other pages because there is a bunch of other free stuff you can download that will help.

Also make sure you check out our comic below and get your free stuff with your name and email too.

Thanks Guys!

Indy Anna   = )

Want more EPIC posts of real estate badasssery...?

There is a great post and class on the 38 Ways to Buy Apartment Buildings Zero Down with Pet Policies, and here are some other helpful and EPIC posts... for starters as a real estate investor if you ever want to build a business that makes you 30 grand a month then you MUST do this...

The post is HERE.  There’s also another great class on how to buy apartment buildings zero down that you can check out as well.  This relates directly to growing income on rental properties.  Speaking of which make sure to check out our epic page on 14 ways to avoid tenants from hell.

Also here is a post on how I did this and I flipped a house off Zillow for 30.  Also you can check out the post on five steps to flip a house right off Zillow for 40.  You can also check out our other epic post on 57 ways to make money with vacant land.

Here’s another post on how a Hero flipped a house off Zillow and made 40k in a few weeks while he was learning to read.  Also you want to check our post on the EPIC $25 million letter and the copy writing lessons for real estate investors, you'll love it.  Also you can see how ONE letter is making me $9,000 a month.  Also you can check out the post on 101 FREE places to advertise your houses.

Also check out the "SA" class and your REAL chances of create social mobility and income ascension with your real estate business.  Brilliant stuff.  Also there is a great post on the ONLY way you'll ever make 30 grand a month as a real estate investor and/or business builder.

Plus make sure you check out Azam's post on how to hire a realtor that makes you $10,000 a month... while you sit back with your shoes kicked up on your desk and fingers folded behind your head.  Also there is a great post on how to make five grand a week from putting out signs.

Also we have some great posts on 30 ways to buy real estate with no money down.  That is a two part series so make sure to watch the second part on the 30 ways to buy real estate zero down and with no loans or credit.  I also get questions about our "Epic Flipping" and how to turn $1 into over $25,000 by flipping ordinary items for exponentially high ROI.

And don’t forget our EPIC page on 100 FREE ways to find motivated sellers, we are making the number one page in the world on FREE ways of finding motivated sellers.  Also check out how I find motivated sellers from code violation properties, and also how I make over $1,500 a week giving investors access to that list.

Go to BigReia.com and you’ll become allergic to being an LC and addicted to improving the world and creating Social Mobility for you and yours… 

Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
(317)969-5619 (that’s my Direct Line and and yes I actually answer lol)

Free Comic Book Reveals:

100 FREE ways to find motivated sellers.