Investor Mistakes that Can Really Bite - Tenants

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Real Estate Agent with Excellence in Real Estate Tm @ Allison James Estates & Homes

Investor Mistakes that Can Really Bite - Tenants
by John Occhi REALTOR
Realtor Consultant to Foreclosure Investors

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All Real Estate Investing boils down to one of two strategies. Granted, their are many subsets of each real estate investment strategy - but every investment is either a "Buy and Sell" investment scenario or a "Buy and Hold" your real estate situation. What else can there possibly be?

I prefer my involvement to focus on the quick cash flow "buy and sell" strategy - or flipping as it is often called. Flipping will generate huge amounts of cash flow, if done properly. I do believe though that the "Buy and Hold" method of real estate investing is the true path to long term wealth.

However, like so many others in the industry, I have my reservations about being a landlord and having to deal with tenants. Well, I recently had a conversation with a dear friend of mine who has a number of rental units here in Hemet, CA. He assured me that he never has a problem with a tenant, because he trains the right from the beginning.

His first advise is to never use a boiler plate rental agreement that you pick up for free or inexpensively as part of a catalog of forms. He tells me that like everything in life, you get what you pay for. He has a custom agreement that is revised annually by his attorney, accounting for every change in the law. He had his agreement crafted by an attorney and he has never lost in court with it yet.

When I asked to see what made his agreement so special, he informed me that based on the terms of his relationship with his attorney, the only way I could see it was if I were to rent a unit from him or pay his attorney. Smart man wh9o knows how to protect his assets, but now I want to go to the local court house and see if I can pull the file of an eviction he just finished, to see if I can find a copy of this "special agreement". (But that wouldn't be very Christian of me, now would it - I have no use for it, I just want to see what it says and I am not going to rent from him just to find out!).

The second issue my friend shared with me is training the tenants to take care of his property. If he ever has a tenant do any damage and calls him to fix it - he does and then he bills them for it. Stopped up toilet because of a feminine napkin - that will cost $75. Broken Window - that's $75.Replace the garbage disposal - $150.

He says if you don't charge them then you are telling the tenant they don't have to take care of your property and that you are giving them permission to treat you like their personal maintenance company. Next thing you know, you are getting calls at night, then the weekends and before long, you'll get a call on a holiday. Well, he charges a 50% premium for after hours and a 100% premium for holiday or Sunday emergencies.

My friend tells me his favorite is when he gets a call telling him that the rental unit has been broken into. He'll question what was taken and the tenant typically says nothing, but that either a window was broken or a door needs to be repaired. He knows the answer to the next question before he asks if they filed a police report. "Well, no" he is told and so he bills them for the repair - often upgrading the broken door to a brand new one. He tells me that it is very rare a tenant will file a false police report because they really don't want the police snooping around their rental unit.

My friend loves Hemet CA rental units - he has me looking for a nice four-plex to add to his inventory of over 60 rental units in Hemet California. He promises to teach me more on this topic and what I learn I'll bring back and share with you, so come back and check often - better yet, go ahead and subscribe to my blog to keep up to day.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR

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Until Next Time, Have a Blessed Day,

John Occhi, ePRO & Five Star Certified REO REALTOR®
www.JohnOcchi.Com
Hemet - San Jacinto Valley, CA
The Excellence in Real Estate Team @
Allison James Estates & Homes
2281 W. Esplande Ave, #102-B
Next to "Starbucks"
San Jacinto CA 92582
(951) 654-5550

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This blog and the contents written here is the intellectual property of John Occhi, San Jacinto Valley REALTOR® in the South West Riverside County region of the Inland Empire of Southern California.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0.  Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

Comments (4)

Scott Daniels Florida Real Estate 2.0. Agents Earn 100% Commission.
Florida List For Less Realty, Inc. Broker/Owner. - Cooper City, FL

JO,

This falls in line with what you`ve mentioned.

Landlords dealing with Renters "It is what it is Part 2".

Jul 19, 2007 11:07 PM
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

Scott Daniels - Thanks for this resource - I hope this blog helps others find your valuable insight on this topic.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Jul 30, 2007 02:09 PM
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

I just read a great blog post by Charles Parrish that nicely dove tails with what I have written above, and thought I would share it with you.

Take the time to read, There is NO such thing as a STANDARD CONTRACT OF SALE! and you will be better educated on the subject.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Aug 19, 2007 06:07 AM
David Slavin
Keller Williams Premier - Katy, TX
CDPE, ABR, SRES Keller Williams Premier
Thanks for the advice!  I think I'm going to have an attorney write up a lease for me.
Oct 02, 2007 04:39 AM

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