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15 DISASTER PRONE MANAGEMENT "STRATEGIES"

Copyright 2000-2011  Landlord.com

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 anyway.

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 rule is.

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 at 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.

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