Tag Archives: lists

10 Mistakes Made by First Time Landlords

Last year I did two articles about mistakes made by first time renters and first time buyers. Today we’re going to look at errors made by first time landlords.

1. Setting Arbitrary Rent Rates

The price a tenant will pay has little or no bearing on your monthly costs. They will compare what’s available and, if your price is reasonable, they will rent your unit. If your price is too high, they won’t even look at it. If it’s too low, they will wonder what’s wrong with it or take you to be a sucker.

Apple can get away with pricing higher than anything else. You cannot.

Apple can get away with pricing higher than anything else. You cannot.

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Assessing the Association

I was recently talking with a first time buyer about the assorted contingencies that she’ll have to fall back on if she puts in an offer on a property. For those of you not accustomed to real estate lingo, contingencies can be thought of as “escape routes” – they’re reasons you can use to get out of your purchase contract. If you’re working off of a standard Chicago area housing contract to purchase a condo, you’ll usually be able to use the following reasons to get out of your purchase contract:

  • Inspection contingency (Major problems with the property found by a licensed home inspector)
  • Lawyer review contingency (Problems in the purchase contract language)
  • Home sale contingency (If you have to sell your current home first before you can buy a new one)
  • Loan contingency (No loan, no property.)
  • Condo association contingency (Problems with the bylaws or financial status of the condo association.)

Plane image adapted from a United Airlines safety card. Thank you for flying CondoAir.

I mentioned that buyers often do not see the bylaws, financial statements and meeting minutes of a condo association until just a few days before closing.

“Isn’t that really late in the game to be finding out that kind of information?” she asked. “Shouldn’t you know the financial health of the association before you make an offer?”

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10 Things that Renters and Home Buyers Forget to Check

“Do you have any questions?”

I always ask this at the end of a showing. It’s really an unfortunate question, don’t you think? Unless you’ve prepared well and assembled a list, it’s easy to forget a few of the big questions when you’re in the middle of a showing. Here’s a few you can take with you next time. They may help you to avoid some major annoyances. Some you can answer on your own, while others will require feedback from the listing agent or landlord.

1. Do the doors close securely?

Look at the outside doors. Do they have deadbolts and doorknob locks? Are there privacy chains or latches on the inside? Is there a peephole or some other way to see who’s outside without opening the door? Is it possible to accidentally lock yourself outside on the porch? Now look at the interior doors. Can you close the bedroom door securely? The bathroom doors? Is it possible to accidentally lock yourself into or out of a room? What about the kitchen? If you have pets, is there an area where you’ll be able to securely store their extra food? (more…)

10 Warnings every Landlord should give to their First Time Renter

So you’re renting your Chicago apartment to someone who’s never lived on their own before. This means that the person living in your space won’t have necessarily had the time to build up an inventory of common sense and practical wisdom that come with living alone. It doesn’t mean that they’re stupid or poorly educated. Rather than risk you having too many episodes of complaining to your friends about “kids these days,” here are some things that you’ll want to warn them about, or plan for.

1. Hair in drains. Renters may have previously had housekeepers who stood between them and the need to clear out a drain. If your renter has hair (most do), suggest that they get a hair catcher for the bathroom. Similarly if your property has particularly fragile plumbing please let your tenant know this. Often. Post laminated signs in the bathrooms. I’m not kidding. You’ll probably still need to snake the drains at least once a year, but at least you can say you made an effort.

2. Pilot lights. Old fashioned gas stoves & furnaces have live-flame pilot lights. This will be a new experience to renters coming from homes with high end electric stoves or electric spark pilots. A tenant who discovers a lit pilot may consider it to be a malfunction & fire hazard, and extinguish it. In the category of easily avoided bad ideas, this is the ultimate example.

Your average 25 year old will have no idea what these are.

3. Furnace filters, fuses & other comestibles. An apartment has needs. Your average newbie renter may not know that they’re responsible for replacing certain items as they wear out. The major repairs are generally going to be your responsibility. However, here in Chicago tenants are normally responsible for replacing light bulbs, blown fuses, smoke detector batteries, and in some cases they’re responsible for changing the furnace filter. Make sure they know this up front.

Oh, and now that we all use expensive eco-friendly bulbs, don’t be surprised if your tenant takes them to their new apartment upon moving out and leaves you with empty light sockets.

4. You keep whatever is nailed down. Basic landlord-tenant law. In an apartment situation, at the end of the lease, the landlord keeps as a fixture anything that’s attached to the walls or floor, plus any appliances provided at the start of the lease. This means that if the tenant puts in their own ceiling fan, full-length mirror, medicine cabinet, shower curtain rod or chandelier and they don’t remove it, it’s yours to keep.

5. Maximum capacity. It’s been almost a decade since the 2003 porch collapse disaster. Your average new college graduate was just wrapping up grammar school when it happened. While the event was sufficiently epic to merit its own Wikipedia entry, the after-effects have been less than thorough. Two-flats escaped the scrutiny of the inspectors and many private homes that have now entered the rental market were never inspected regardless of size. Chicago porches that are up to code have to bear 100 pounds per square foot but many are not up to code. Your first time renter may not be aware of the history. Don’t let them overload your porch.

From user sedatephobia on Tumblr.

6. Water is heavy. Humans have a weird tendency to deny that transparent items are heavy. Glass is molten sand and very heavy. Air is extremely heavy. Water appears benign, but it’s one of the worst offenders in causing floor damage in apartments. If you stuck Chicago’s Bean into a snow globe, the water around it would weigh over 26 times more than the bean itself. A tenant may think that their pet fish are harmless compared with a cat or dog, but a heavy fishtank on an old floor can be just as dangerous.

7. You are not alone. Unless your rental is a single family home, they will be sharing the building with other people. Noise carries from apartment to apartment, through floors, walls, and out of windows. Tenants fresh out of college dorms may need a reminder that they are no longer in a homogeneous environment where noise is forgiven as part of the scene.

8. You are not alone part 2. Pest problems are rarely confined to just one unit in a development. If one tenant gets rid of a pest problem independently of a whole-building treatment, the pests will simply move on to another apartment nearby. Infestations can be embarrassing but they can happen to anyone regardless of their housekeeping skills. Make sure your renters know that there is no shame in reporting a problem, if it means the issue is solved before it spreads.

9. Keep the doors locked. New renters may be coming from dorms or homes where the exterior doors automatically locked closed behind them as they left. It will take them several months of practice to get into the habit of checking behind themselves to lock your door on their way out. Encourage them by posting small signs above the door handle to remind them that safety is everyone’s business.

Miniblinds. Saving the world from needing eye bleach since the 1970s.

10. Out of sight, out of mind. Window treatments are not just a matter of style. They’re vital to the safety of your tenants’ belongings. Remind your tenant that valuables that are visible through a window are easy marks for nearby criminals, and that other people can see into their apartment through open windows at all hours.

This could very well have been a top 20 list but I figured I’d save some for another installment later on. Help me out. What seemingly obvious facts of apartment living have your first-time tenants somehow missed? Share them with us in the comments and I’ll try to cover them in the next installment!

10 Unexpected Reasons Why Tenants Get Rejected

The “Landlord’s Applicant Rejection Kit” actually exists, and is published by Nolo.com.

According to Chicago’s fair housing laws, a landlord cannot use a tenant’s race, color, sex, gender identity, age, religion, disability, national origin, ancestry, sexual orientation, marital status, parental status, military discharge status or source of income as a reason to select or reject their application. They can’t use any of those as a basis for showing or refusing to show them an apartment. Most tenants are aware of these laws and most landlords follow them to some extent or another. They may not know all of the specific protected classes for housing, as Chicago has more than other cities and states, but they do the best they can.

High credit scores, verifiable income of a reasonable amount and a clean prior rental record remain the holy trinity of landlords’ criteria for approving a renter. They allow a landlord to make a decision on the main issues that matter without risking a fair housing lawsuit. However, in the interest of protecting their buildings and minimizing maintenance costs a landlord may use some secondary, non-protected criteria in addition to the big three. Today we’re reviewing some of those surprise factors that could kill your chances of landing your dream apartment so that you can plan around them. (more…)

10 Questions to Ask Before Listing an Occupied Apartment

The sweetest tenants in the world can become your worst nightmare once it comes time to show their apartment.

A good and prosperous landlord will do everything in their power to minimize the time that their rentals sit vacant in between occupants. In an ideal world, the outgoing tenants would leave and the new tenants would move in on the same day, but unless you keep a model unit sitting empty this means showing the apartment while it is still occupied.

Show an occupied apartment adds a layer of complexity to the situation, risks harming the relationship with the outbound tenants, and bucks the expectations of the prospective tenants in the market. Before you put your occupied apartment on the market, give some thought to these 10 questions.

1. Does the apartment need less than 24 hours worth of work to get it into move in ready condition? Unless your lease specified a move-in and move-out time, your outbound tenants may expect that they’ve got until midnight to remove their stuff, and your incoming tenants may expect that their lease starts at midnight. By showing the apartment while it’s still occupied you are telegraphing that you intend to spend less than one day getting the place ready in between. Make sure that the place looks like it would be clean and habitable with very little work before you put yourself through the madness of a 2-4 hour paint, patch & clean at midnight. (more…)

Confronting our Agoraphobia, Part IV: The Active Shopper’s Guidebook

(This is the fourth and final part of a series that started with Part I: Carefully Taught, Part II: The Bad Guys are Winning, and Part III: The Long Road Back.)

Let’s Get Ready to Rumble! (Or at least have a polite chat.)

If you’ve been following the Agoraphobia series you may be ready to start shopping actively. However, if you’re the average American shopper you’re going to be pushing back against a lot of training and momentum trying to convince you that negotiation is difficult, scary, futile, or a waste of time.

It isn’t.

Negotiation is, at worst, a conversation with a stranger. But the American consumer has been treated for 150 years like a submissive partner in an abusive relationship. As is the case in many of these situations, learning to speak up for yourself can be difficult at first. So let’s assemble a guidebook to help you get started.

Level One Negotiation – learning to talk & think for yourself:

  • For level one, level two, and level three we’re talking only about goods, not services. This is about items that you can take home from the store with you.
  • From this point forward, every time you go to the store you will ask the clerks about the products you are purchasing. It doesn’t have to be about price. It can be about quality, color, country of origin… just get used to having the conversation. Get to know them. Be friendly and polite.
  • Never enter a shop without a shopping list. Never purchase anything that isn’t on the list. Never make the list less than 30 minutes before you enter the store.
  • I’ve got about 7 local grocers so I can go a bit overboard on this. I cap myself at 3 stores max when comparing grocery circulars.

    If you must pick something up that isn’t on your list, shop slowly. Carry it around with you in the store for at least half an hour before making the purchase.

  • Choose your favorite direct-to-vendor shopping site – Ebay, Etsy, or Craigslist. Find something you’ve been meaning to buy anyhow. Choose a handful of sellers and send them each some questions about the product you intend to purchase before you buy it.
  • Go to the farmer’s market closest to you and have a chat with the vendors. Ask at least 3 questions of a vendor before you buy something. And please, do buy something.
  • Pick up grocery circulars from the 3 closest shops. Figure out the least expensive combination of goods, and then compare with how much you’d pay by purchasing everything in your usual store. You don’t have to actually do the shopping in split locations. Just do the math. We’re practicing here. (PS, if you’re in Chicago and only shop at national chain grocers I am sad for you. Check out Tony’s, Food4less, Cermak Market, Harvestime, Morse Fresh Market, Mayfair Market Place, Butera and Stanley’s for some great alternatives.)

Once you’ve been at level one for at least 3 months, you’re ready to move on to level two.

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Confronting our Agoraphobia, Part III: The Long Road Back

(This is part 3 of a series that started with Confronting Agoraphobia, Part I: Carefully Taught and Confronting our Agoraphobia Part II: The Bad Guys are Winning.)

Where We’ve Been

Over the past two entries in this series we’ve reviewed how bargaining has gone from common to rare, and how shopping in America has become a passive experience. We’ve discussed how the evolution of marketing and discounting have consolidated the power of pricing entirely in the hands of the manufacturers. We’ve discussed the potential gain from choosing to haggle – a peak negotiator saved $2500 in a year. That means an average negotiator could save about $1500. What we haven’t discussed is how to work our way back to an even distribution of power.

Let me expand on that number a bit. $1500 saved per person, per year. 206 million adults in the United States, give or take a hundred thousand or so.[1] Roughly 10% of them are incarcerated.[2] If the rest of them saved $1500 per year, that would total $278.2 Billion saved. Annually. (That’s about 2x the annual revenue of Wal-Mart as reported to the NYSE,[3] or, sadly, just 1.7% of the national debt at this moment.[4])

Let’s have one more quote to get things moving forward:

“A recent Consumer Reports survey showed only 28 percent of Americans haggle over prices. A separate report from market research firm BIGresearch found 45.1 percent of adults haggle for things other than cars and homes.

However, the Consumer Reports survey found that consumers who haggle succeed as often as 83 percent of the time in landing a better bargain.”

— Yuki Noguchi, “Haggling picks up steam during recession,” NPR.org, August 2009.

 

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  1. [1]Wolfram alpha: What is the adult population of North America, July 2012.
  2. [2]NY Times: Adam Liptak, “1 in 100 U.S. Adults Behind Bars, New Study Says,” Feb 2008.
  3. [3]Ycharts: Wal-Mart Stores Revenue (WMT) as of July, 2012
  4. [4]US National Debt Clock, July 2012

Confronting our Agoraphobia, Part II: the Bad Guys are Winning

This is part II of a series that started with Confronting Agoraphobia, Part I: Carefully Taught.

Rollback Further

My folks have a good friend – we’ll call him Doug – who’s learned a thing or two about saving money. A wunderkind who made an early fortune in the evolution of microloans, he knows that small amounts add up. He’s also learned that to most businesses any sale is better than no sale. Doug haggles for everything. He will walk to the counter at Wal-mart with a $25 pack of t-shirts, toss it on the belt, and tell the clerk “I’ll give you $15.” He renovates kitchens for a living. He will go to furniture stores and open with a bid at 50% of list price.

You’d be amazed at how often he gets the discounts he requests.

Did you think you couldn’t haggle at Wal-mart? Have you ever tried? If you haven’t, you’re probably not alone, and you aren’t entirely to blame. It sounds like a fairy tale because you’ve been on the receiving end of a lengthy, multifaceted agenda to make you think bargaining is scary, difficult, time consuming and futile. Let’s take a look at how outside forces, both intentionally and accidentally, have contributed to the decline of negotiation in commerce. (more…)

Confronting our Agoraphobia, Part I: Carefully Taught

Fear of the marketplace

“Let us never negotiate out of fear. But let us never fear to negotiate.”

— John F Kennedy

 

“In North America and Europe bargaining is restricted to expensive or one-of-a-kind items (automobiles, jewellery, art, real estate, trade sales of businesses) and informal sales settings such as flea markets and garage sales. In other regions of the world bargaining may be the norm even for small commercial transactions. In Indonesia and elsewhere in Asia where locals haggle for goods and services everywhere from street markets to hotels, haggling is a strong cultural tradition that even children learn from a young age.”

— Wikipedia, “Bargaining

There are some places in the world where to get a bargain means that you’ve used your market savvy to nick some of the vendors’ profit back for yourself. It’s a win in the game. In America, getting a bargain generally means the vendor had decided to lower her list price on a certain item for a short period of time. There is a “win” involved, but it’s more like winning at slots than winning at chess. You’d not believe it from looking at the crazed shoppers waiting out front of Wal-Mart on Christmas Eve, but American-style bargain hunting is a far more passive experience than it is elsewhere.

I have a hypothesis that Americans are afraid of haggling. It’s a carefully taught agoraphobia – in the true translation of the term, “fear of the marketplace.” It has a twofold basis. On one side, the dogma that only the most clever can successfully negotiate a deal. On the other, the forced separation between buyers and sellers. Transactions are automated and anonymized. The pace is quickened to limit a consumer’s ability to research actual value.

This is a pretty major topic, so I’ll be doing this as a multiple article series over the next couple of weeks. To give you an idea of where we’re headed, I’ve provided this handy timeline.

Spiffy, no?

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10 Things You Can Do Regularly to Save Money

Many of you reading this blog are saving up for a down payment, security deposit, cash purchase of investment property, or a similar major expense in the near future. With slim paychecks and rising expenses it can be difficult to squirrel away the recommended 20% of every paycheck.

When I transferred from property management to brokerage I knew I was going to take a pay cut for a while as I rebuilt my business. Here are some of the things I’ve done to cut my expenses. Maybe they’ll work for you, too.

  1. Don’t pull your scores – real FICO scores are expensive. But definitely check your credit report.

    Check credit reports regularly. You get one copy of your report from each of the three credit bureaus every year. I usually pull one at the start of the year, once over Memorial Day weekend and once over Labor Day weekend. The dates go in my calendar. The FICO credit scores are not free. And the Scores offered by many of the “free” credit score websites that have popped up lately are not FICO scores. They use a different scale. The free reports you can obtain through annualcreditreport.com are just a list of your open accounts, but for checking accuracy that’s all you really need.
    My Cost: $0 and 15 minutes. My Savings this year: $0, but I learned that one old collection account had dropped off of my report this year.

  2. Call insurance companies annually. Did you know that health insurance plans since the beginning of the year have had to cover preventive care 100% before your deductible? Do you even remember what your car insurance deductible is? It’s always good to check with each of your insurance providers annually to find out if you can get a better rate. That goes for homeowner’s/renter’s insurance, business liability insurance, landlord umbrella policies, car insurance, and health insurance for the self-employed. You won’t always get cheaper insurance if you call, but it’s always worth the effort.
    My Cost: $0 and 25 hours. My Savings this year: $75 in car insurance plus $5580 in health insurance plus $120 for annual checkup now covered by insurance.
  3. There are other sites out there that allow comparison shopping but they’re owned by corporate entities. Plug In Illinois is the state-sponsored site and likely to be more neutral.

    Switch electricity suppliers. Hey Chicago! You don’t have to get your power from ComEd. You don’t. It’s worth looking into other options, especially if you have central AC. New carriers in the area offer lower prices. Investigate your options at the Illinois Commerce Commission’s “Plug in Illinois” site.
    My Cost: $0 and 45 minutes. My Savings this year: About 5% off my bill plus the good feeling of knowing that my electricity is now coming from renewable sources.

  4. Track cell phone usage. Do you know how many minutes are on your cell phone plan? How about the date when your contract expires, if you’re on a contract? When was the last time you used all of your minutes or text messages? Have you been with your cell phone provider long enough to earn a new phone? Do you not know? Maybe you should check. It’s especially useful to track your voice minute usage and make sure your plan suits your current lifestyle.
    My Cost: $30 for a new smartphone last year. My Savings last year: No savings but I got a phone and a mobile broadband router for the same price I’d been paying for just voice service on my old carrier. (I’m on a 2 year contract so I’m holding tight on this until next year. The expiration date is definitely in my calendar!)
  5. Appeal property taxes regularly. I’ve discussed this at length in a prior article about property taxes. You get a window for appealing your taxes every 3 years, and under certain circumstances you can appeal outside of that window. If any home similar to yours has sold nearby you in the past year, it’s worth trying to appeal your taxes based on their sale price.
    My Cost: County filing fee. My Savings this year: About $200/mo.
  6. Always get multiple estimates. Calling around for estimates can be annoying and you always feel like you’re being a pill. However, you learn in the process about the task at hand, and businesses that won’t provide an estimate are not going to remain in business very long. Treat your bank account like it’s a business operating account. Allow yourself a certain amount of petty cash for expenses, but if a purchase will require more than your petty cash allowance then go do the proper research.
    My Cost: $0 and a few hours of time. My Savings this year: $500 on a dental treatment and $700 on an exterminator.
  7. Chicago’s got some of the best water in the world. (Lake Michigan photo by John Chimon)

    Learn to love ice water. Beverages cost more than food. This is true for most restaurants, and especially for alcoholic drinks. Pop & sugary juices are not healthy either. With the exception of my morning coffee (homemade, french press, black) I stick to ice water from the tap for most of the day.
    My Cost: My portion of the water bill in my monthly assessments. My Savings this year: At 20 cents per can of soda, at least $113.75 so far this year, plus the wear and tear on my pancreas.

  8. Shop slowly. This started with my mother’s habit of carrying items around with her in the store as a “test drive” before purchasing. She generally does not make a purchase unless it’s on her shopping list or she’s toted it around with her in the store for a while. In my case I use my 2 week “Do I need an Ipad” test on pretty much all of my major purchases before I even walk into the store. Mom has picked up on this test and was recently using it herself. She’s quite the frugalista, so I’m very pleased.
    My Cost: Quite a bit of time doing research. My Savings this Year: At least $700 on an iPad, $200 in unnecessary clothing & shoes, and $80 in makeup.
  9. Be nice. Win stuff.

    Buy low, tip high, stay consistent. I don’t want my thriftiness to hurt the individual workers. I want them to be able to afford to go shopping too. Tips are 100% take home for the laborers, while unit cost is retained by the corporation. Whenever possible, especially in the service industry, I make sure to tip high and I frequently reap the benefits if I’m a returning customer.
    My Cost: Minimal. My Savings this Year: At least $80 in free beers from grateful bartenders, plus $30 from being able to go longer between manicures.

  10. Refinance the mortgage. Much like insurance, you won’t always win on this one. However, as long as mortgage rates stay below what you currently have and you stay on top of your credit score, you have at least a shot at a successful refinance of your loan. This is the one scenario where the cost may outweigh the savings. Make sure you run the numbers before you go ahead with the refi. Check with a different lender at least once a year, or once every 3-5 years if you recently refinanced.
    My Cost: About $700 in 2010 for a HARP refi. My Savings: About $28k in interest.

Do you have a money-saving tip to share with us? Let me know in the comments!