15 DISASTER PRONE MANAGEMENT
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In presenting this web site, it was easy for us to assume all landlords want to be
successful, to make money, and to provide a valuable service to their community while
doing it. We are trying hard to avoid this trap, and ensure that we provide failure
inducing information to those of you who wish to avoid success, to lose money, and be a
drag on your community. Unfortunately, we could not expound the formula for disaster pure.
Those of you who insist on avoiding it will find that if you do the opposite of what we
suggest, you may just do that. In future, we will attempt to draft articles of this type
in such a way as to eliminate any possibility of usefulness to the success oriented.
Maintain total ignorance of your rights and duties under the law.
Although the landlord/tenant relationship is a business governed by law, there is
no reason for the landlord to inform himself of what his rights and duties under the law
are. While it is true that having a reasonable working knowledge of how the law works in
common situations will help avoid losses and send up warning signals when disaster is
pending, it is also true that all that reading and visiting web sites like ours is a lot
of work. Also, ignorance dispels all worry. A lawyer can always be contacted at the last
moment to escort you to the cemetery.
Save money by effecting all repairs with latex paint.
Repairs and maintenance together make up one of the big ticket items in your cost
of doing business. Think of the cost savings if, instead of repairing or replacing
cracked, broken and worn out items, you simply painted them. There is nothing your
tenants, renters' rights organizations, or housing code enforcement agencies can do to you
Rely exclusively on oral rental agreements.
Thinking through those complicated written agreements is a lot of work. Besides, if you
leave something out of a written agreement, why, the omission is obvious. But if you have
an oral agreement, and it comes right down to it, you can fudge a little and tell the
judge that you orally agreed on pets. And if the tenant lies, the judge will certainly
always believe you, right?
Allow your tenants to paint, carpet, and do other work on the premises in exchange
for a rent allowance.
There are many benefits to this strategy. First, those
day-glo orange walls with
pink trim will give the tenant pride of ownership, since he did them himself. Second, the
paint spills on the shag carpet strengthen the fiber. Third, the tenant as handyman comes
to feel a loyalty to the building, as he goes around busying himself, presenting a bill at
the end of the month for a dozen things you never authorized. Fourth, any disputes about
the quality of the work can easily be resolved by the tenant not paying the rent. Fifth,
if the tenant hurts himself you can have endless fun explaining why you do not have
workers compensation insurance and the amount paid as a rent rebate was less than minimum
wage, to the authorities. There are other benefits, of which other, less creative,
landlords deprive themselves by slavishly insisting that repair and maintenance work be
done by competent professionals.
Pocket all security deposits when your tenants move.
Despite the naive efforts of most state legislatures to the contrary, there is no
reason to ensure the tenant's security deposit is properly accounted for and the
unconsumed portion returned after he moves. After all, he is gone now, and there is little
chance he will sue you. Even if he does, why would the judge impose civil penalties for
wilfully violating the law? Just pocket the money.
If you are too wimpy for strategy 5, try this bonus tip. By scrupulously following the
strategies in this article, you will be blessed with extremely high tenant turnover. As
each moves, use his deposit to effect necessary repairs and renovations in his apartment.
If the carpet is fifteen years old and the tenant put up with ... er, umh ... lived in the
place for a year, use his full $1000 deposit to recarpet the place. Voila, carpet problem
solved. You can use the next tenant's deposit to install a working stove so you can take
back the two burner hot plate and loan it to the tenant in unit 12.
Be careful to keep your security deposits well below reasonable levels.
Because the security deposit is designed to minimize loss from non payment of rent and
damage to the property, it is incoherent for the landlord bent on failure to ensure the
deposits he charges are sufficient to cover possible losses. Rather than collecting
deposits of one to one and one half a month's rent, keep them very low, say, one quarter
of one month's rent. Even better, let the tenant move in without paying a deposit at all,
and pay it in 12 equal monthly installments. Be sure this agreement is oral, pursuant to
out earlier advice.
Under no circumstances raise the rent until it is at least 25% below market.
Prompt rent increases in small amounts designed to keep up with market rates are to be
avoided for a number of reasons. The primary one is that because they are usually so
ridiculously small as to pale in comparison to the cost of moving, the tenant is likely to
pay them without resistance. On the other hand, the landlord bent on seppuku knows that if
he waits until the rent is a few hundred dollars below market, not only will he deprive
himself of the increased cash flow to which he is entitled until he gives the rent
increase, but also that the tenant will resist the increase or move, in preference to
compromising his life style.
Save those credit report charges by doing no effective screening.
Tenant screening is the bane of landlords who value frequent turnover and high rent
default rates. By the avoidance of nominal credit check fees and laborious contact with
previous landlords and other references, the landlord can assure himself virtually
limitless financial loss.
If an eviction is necessary, do it yourself, especially if you do as many as one
every 5 years.
Some persons actually expend years of effort and a large amount of money educating
themselves in the law and how it works. Of these, a few go further and spend more time and
an enormous amount of effort to gain experience in and knowledge of landlord/tenant law
specifically. Smart landlords know this is not necessary and that anyone can, in just a
few minutes, become completely familiar with all the ins and outs of real property law and
civil procedure necessary to prosecute an eviction, without even knowing what the hearsay
Never serve rent payment notices until the tenant is at least 3 months in arrears.
The practice of serving a rent payment notice promptly after a default is one that is
frowned upon by landlords who wish to evade success. Not only does it increase the
landlord's flexibility in dealing with the delinquent tenant, holding out the option of
proceeding to evict or not, depending on how the tenant actually deals with the problem,
but also, it avoids loss of time, and consequent unnecessary loss of rent. Landlords
wishing not to mar their record of failure will make this strategy of procrastination the
centerpiece of their management style.
Discriminate freely on the basis of race, religion, sex, etc., and let all your
prospects know you are doing it.
This requires no discussion. Not only will you call down the full panoply of local,
state and federal power on your head, you will also probably be beaten up for it. A must
for landlords with strong masochistic tendencies.
Harass your tenants frequently by showing up at all hours and intruding into matters
which are none of your business.
You have undoubtedly read articles about how to get chummy with your tenants by
injecting yourself in their personal lives, sending out cards, gifts, etc. The way to
implement this policy is to be as gauche as possible. On move in day, your tenants will be
too busy to prepare lunch. By all means, go the extra mile and send your new Muslim
tenants a large Canadian bacon pizza. Send your Jewish tenants Easter cards. Show up
odd times, wandering about the complex, looking into windows and knocking on doors to talk
to tenants who had no idea you were coming. Ask questions to show that you care. For
example, in the common areas and in a hearty, friendly voice, "Hi, Jack. How did your
sentencing go?" That instant recall of information you obtained in your confidential
tenant screening (if you are still screening, stop it!) to show your personal concern with
matters which are not remotely any of your business will put you in solid with Jack. The
building newsletter is a bile generator not to be overlooked for the ease with which it
invades everyone's privacy at once. In it you may include all sorts of annoying personal
opinions as well as publishing details of the personal affairs of your tenants for the
perusal of all. Guaranteed to irk.
At the same time (see above) avoid all effort to keep up to date relevant information
about your tenants.
Do not waste valuable time you could be spending gratuitously intruding into the
personal lives of your tenants trying to keep up with relevant information, such as
updating employment, keeping track of additional occupants, and so forth. This information
might have the effect of mitigating such disasters as you are able to create by following
these strategies, thus defeating their purpose.
Do not waste time keeping accurate and informative records.
Wise landlords know that memory is enough. Furthermore, files are storage systems, not
designed to permit timely and convenient retrieval of information. For this reason, such
records as are kept should be sufficiently jumbled, illegible, and fragmentary as to be
useless to anyone else. Not only will such records have the disastrous effect of
decreasing the value of the property, as prospective owners will be unable to make any
sense out of them, they have the potential of creating frequent and increasingly costly
disasters as you are unable to be forthcoming with any information usable as evidence in
legal disputes with anyone.
Do not, under any circumstances, lay in any sort of system of internal controls.
Internal controls are procedures which raise a red flag to alert the landlord that
something is wrong and bears further investigation. Because they are designed to prevent
employees and contractors from stealing, and to alert you to brewing problems before they
get out of hand, the failure minded landlord will avoid them. Under no circumstances
should you ask your CPA to suggest a system designed for your circumstances. If your CPA
suggests you should lay such a system in, he is clearly trying to head off disasters and
should be replaced by someone else. Come to think of it, why would you have a CPA?
The strategies included here are not the only ones. There are others, but in our
experience these are the ones which time has proven best. Implement them and we guarantee
that, as a landlord, you will not long survive.