When I first started investing, I would run around town and pick up checks throughout the month. If someone started on, say March 10^th, I would set their payment date as the tenth of every month. I have discovered that a lot of other investors follow this same procedure.

It usually seemed to work for them, but not for me! I would show up, and they wouldn’t be there. So I spent half my time just running around trying to collect money. If pounding on doors and looking for missing people is your idea of fun, or you just want job security, well this is it.

Invariably, if you let one person pay on a day other than the first, the others will hear about it and want theirs changed as well. It’s funny how they can congregate together and compare stories.

If you want to handle this chore the right and easy way, require all of your tenants to pay on the first day of the month. And just a side note ?if you want to pick up checks fine. But I prefer to have a drop off location. If there is a bank near by, then have them drop the checks there.

Don’t change the date even if they are paid on a different date. I used to let it slide. I would have someone move in on the 1^st but lo and behold, their payday was the 10^th. Okay, no sweat, I thought, it's just a few days late this way.

Well, here is the problem with that logic. If they pay on the tenth they are already 10 days late, if on the 10^th they don’t pay, they are already almost 2 weeks into the non-pay status! By the time you get them out ?how much money will you have lost?

So what do you do when someone starts on the 10^th? Make them pay a full month's rent (always!), and then prorate the second month. So on the second month they would owe for 20 (or whatever) days.

Notice the condition of a person’s car

All right, this is going to sound a little crazy. But you can tell how a person lives by looking at their car. I don’t mean you only rent to someone with an expensive nice car ?I mean, look at the condition of their car.

Is it full of litter, and greasy and grimy? If it is, I can almost predict that your rental house will become greasy and grimy.

If you want to take it a step farther ?and be even more accurate, look at where they are living now. This is the more accurate test. Whatever it looks like now is what your house occupied by them is going to look like in a month.

If you don't this kind of tenant living in your rental house or apartment, then don’t rent to them. It’s as simple as that.

Always charge a late fee when late

I learned this tip (or trap as it may be) the hard way. It only took me a couple years to learn it. I can guarantee you that if you are slack on collecting late fees, you will continue to receive late payments.

I wanted to be the "nice" person. And invariably, my tenants would have some really good excuses for being late. You know, their brother was arrested so they had to bail him out, or their purse was stolen. Yadda yadda yadda...

If you will set a precedents of collecting a late fee the very first time they are late ?they will know you are serious and put you first on their list of people to pay out of their paycheck. No longer will you be relegated to their self-reasoning of “well...if Joe pays me back in 2 weeks I’ll have enough for rent...so for now, the money I have can be spent on whatever I want!?/P>

Build in a buffer between you and the tenant

What does building a buffer mean? It means, putting some distance between you and your tenants by having a third party.

It works like this. When I speak with my tenants, I am just the property manager of a big real estate company- just a cog in the wheel. Yep...I may own the company, but I am still legally an employee. They don’t have to know I own it. If they are late with a payment I listen to their sob story, sympathize (hey, I’m a nice person, I really do care!) and then I just say something like; “Man, that is really terrible. Look, I know it seems kinda unfair, but I can’t remove the late fees. I’m just the property manager, and I have to go by the rules.?/P>

This never seems dishonest to me ?but if it doesn’t sit well with you ?then by all means, tell everyone you own the place.

You don’t have to have the lowest rent in town

This is going to be hard for new investors to believe. You do not have to have the lowest rent. In fact, yours can be a little more than the going rate. Picture this, if you have the lowest rent in town, who do you think will be attracted there? The people whose criteria is the lowest rent in town.

Instead, focus on being the best apartment in town. Make sure it’s clean. Make sure the tenants are treated fairly and they are living in comfortable conditions. If you do that, you will not have a high turn over, and you will not need to be the lowest rent in town.

The true expense of rentals is vacancies. To prevent vacancies try to keep happy tenants, not cheap tenants.

Don’t give your new tenants a discount for cleaning up the prior tenant's mess

It sounds like it would be good business sense. You are busy, and don’t want to take the time to clean up an apartment you know was trashed. So, you make a deal with your next tenant. If they do the clean up, you’ll reduce their first month’s rent.

Don’t do it! I have done this several times (I’m a slow learner). But the tenants will invariably forget that you in fact compensated them for the mess. When they move out they will feel totally justified in not cleaning it properly. After all, they reason, it was a pigsty when they moved in. Why should you expect perfection when they move out?

If it is not clean and in perfect condition when they move in, how will they know what it must look like when they move out. Should it just be in broom-swept condition? Should the stove and light fixtures be scrubbed? Who knows! They don’t.

The second reason for not letting your new tenants do the cleaning is because it reflects your attitude towards the apartment. They will think you are not caring for it ? after all, the previous tenants left such a mess, you must rent to some pretty derelict people.

What kinds of people are attracted to “derelict apartments? You guessed it ?the derelicts.

Happy Landlording (if it's possible)!

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