Lessons from the Pros

Real Estate

Guidelines To Get Good Tenants

Not everyone can buy property in the best locations, that’s not always possible or profitable.  It can be very profitable to buy in lower income areas and it’s possible to be successful with having good tenants.  When I was 19, I managed a 20 unit apartment building in Venice, CA. This was one of the first places I learned that most people want a decent place to call home and will rise to high standards if within their means.  I found that by simply being visible and cleaning around the complex every Saturday morning, I was setting an example for others. So here are some things you can do as property owners that will set high standards in marginal areas.

Your responsibility is to provide a decent place for someone to live. These basic guidelines will help:

1)     Know your tenants.  All people who live in a unit must be on the lease.  It is a fact that a large percentage of troublemakers are people who weren’t named on the lease.  It is a good practice to walk your units at least twice a year looking for unauthorized occupants and criminal activity.  If you can do this during the middle of a weekday and on a weekend you’ll get a good feel for what is going on.

2)     Clearly define things in your lease and review them with new tenants. For example: The number of days someone can visit. People don’t read and, unless you spell out the rules, they aren’t likely to adhere to them. Also be consistent and follow through. If you find someone is beyond the number of days they can visit, they must be added to the lease or the visitor must leave.  Your tenants will talk among themselves, so the rules have to be followed or the tenants will push the rules if you have made exceptions.

3)     Standards for children in your units. I would rather have a unit with 3 children that are well parented than 1 child who is not.  Hold a high standard for children; don’t allow unattended activity in common areas.  It is not against Fair Housing regulations to evict parents who don’t curb their children’s repeated rule breaking. It must, however, be clearly documented and not hearsay.

4)     Clearly defined community rules.  As part of the leasing process, a set of rules should be supplied to the tenant and signed.  Here are some examples: no littering, no storing things on balconies, no alcohol allowed in common areas, no “hanging out.” One of the rules I have for a triplex I own, is no open garage doors and no “hanging out” in an open garage. Each unit has a private patio where tenants can visit and get fresh air.  These garages are on the front of the building and I don’t like the image an open garage door sets.

5)     Attend to graffiti and vandalism the same day it happens if at all possible.  If you act quickly, it sends a message to the vandals that you will win, they won’t.  They will move on to where their “work” will stay visible.  Another very common form of vandalism is fence-hopping or cutting.  Doing things as simple as planting a thorny bush (bougainvillea is my favorite) will deter this activity quickly.  If you can’t plant something, apply axle grease to the fence. This will make it very difficult to climb.

6)     Know the property owners around you.  You can help each other keep an eye on things. Be consistent on taking action and messaging i.e.: “No Trespassing” signs.  This can create a powerful alliance.  You are also more likely to get attention from law enforcement if you are working together.  Or, if issues are very serious, you can hire security more cost effectively, paying for it together.

Being a landlord often reminds me of being a good parent.  You need to clearly communicate expectations, stay engaged and follow through on the rules that have been set.

Great Fortune,

Diana Hill


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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