DODD FRANK FOR TODAY’s INVESTOR

by attorney Harry Borders

PART TWO- RESTRICTIONS ON OWNER FINANCING!!!

 

           

Here’s the GOOD NEWS… Investor buyers can STILL get financing from any source they want.

 

Here’s the TERRIBLE news… Owner occupant buyers now have lots of restrictions place on who they can get a loan from.

 

These new rules impact “contract for deeds” and “Land Contracts” as well as seller retained mortgages (and, of course, the ever present contract for deed in disguise as a lease-option) and private financing. 

So, assuming an owner occupant wants to obtain a loan from a source other than  a bank or mortgage company, here are the new rules.

If the lender only lends once in a 12 month period, the lender:

a) MUST be a “natural” person (i.e. not an LLC or corporation);

b) MUST have owned the property (i.e. no private financing, only owner financing);

c) MUST NOT have built the home in the ordinary course of his/her business;

d) MUST NOT have a negative amortization;

e) MUST be for at least 5 years, and if longer and adjustable, must be tied to an index rate, such as Libor   

 

If the lender lends 2 to 3 times in a 12 month period, the lender MAY be an LLC or corporation.  But the lender also:

a) MUST have owned the property (i.e. no private financing, only owner financing);

b) MUST NOT have built the home in the ordinary course of his/her business;

c) MUST NOT have a negative amortization;

d) MUST be FULLY AMORTIZED;

e) if the rate is adjustable, it must be fixed for at least 5 years, and it must be tied to an index rate, such as Libor; and

f) MUST determine in good faith that the consumer has a reasonable ability to repay the loan (similar to what a loan officer would do).

 

If the lender lends more than 3 times in a 12 month period,

all of the above requirements for a lender lending 2 to 3 times in a 12 month period apply and

IN ADDITION, the lender MUST BE A LICENSED LOAN OFFICER.

           

As you can see, navigating the waters of seller financing has again become tricky.

Please check with your real estate attorney before embarking on a seller financing transaction for a dwelling.

 

Until next time, peace,

hCapture

Harry Borders

Harry@HarryBorders.com

502.894.9200

P.S. Your simple solution to stay out of trouble is to never offer seller financing to any tenant / buyer or owner occupant. You can use Seller Financing to sell to other Investors, not owner occupants.

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Odds are, if you are in the residential rental property world, you have heard or know an investor who has been scammed by one of the internet dirt-bags.

This is nothing new. Remember the online scam where the victim is sent an email from who knows where, reporting they have won or inherited a billion dollars? But in order to claim it, the victim must pay for the processing fees and government stamps, etc.

You and I both say “there’s no way anyone with any sense would fall for this.” But Guess What? It is still happening every day with normal folks. These scammers would NOT be doing this if it did not work.

Here is how I know it is still happening and the scammers are still getting money from victims. My banker told me just a few weeks ago, he gets one or two customers a week who want to wire money to these scammers. Unbelievable. The scams continue.

Even as a retired Louisville Police detective, I have been scammed on several of my rentals. Let me share with you how it works.

The scammer surfs the internet for houses for rent. They find an unlimited supply of homes for rent on various websites from www.VistaKY.com, www.TenantFinderService.com, www.RentalHouses.com, www.Zillow.com, www.Craigslist.org and many more.

They find your rental house to target. The address is 123 Main St., Louisville, Ky 40207. It’s a 3 bedroom, 2 bath home with finished basement and 2 car attached garage. The rent for this home is $1200.

Here is what usually happens in this rental property scam.

STEP 1: After finding your target property, they download your all of your photos and details about this property from the online source they viewed. Think about this for a moment. The scammer has everything you have entered on the internet for the public to view. PLUS, most of the time they can use Google Maps to drive down the street, see what is on the corner (Walgreen’s, McD’s, etc) and the scammer can describe your rental and the neighborhood in great detail.

STEP 2: The scammer enters ALL of the information on your rental by “Stealing and Pasting” into a CraigsList.com Ad or any other website allowing investors to enter rental properties for free. The scammer lists the rent for your home at $899 which is a bargain for your rental home.

STEP 3: The Scammer’s ad will always have some kind of B.S. story about them being an “Out of Town Owner.” Some times they request a deposit up front and they will give them the key to see the home after receiving their money. They also inform the interested potential tenant that they have hired a local company to help get it rented and you might see their sign in the yard. Scammer tells them he is not satisfied with their service and he just decided to rent it himself or herself.

STEP 4: Unfortunately, many times the applicants actually send  money to the scammers and wait for the key to the house. After receiving no response, these folks then call the number on the yard sign and complain to the real owner (YOU) they want their money back. Don’t laugh, this is true.

You are totally blind-sided when you get this call. You are furious, ticked off, and want to find out exactly what is going on with your rental. Your jaw drops and you want to do something, take action now to stop it now.

What Can You Really Do? Think about it. Can you call the police? OK, what will the police do after hearing your story. First of all, you are NOT the victim. Your potential applicants are the victim. Who is going to pay for this? Who will get locked up and go to jail? Good Luck!

So what is a poor investor to do?

Here is your Best Tool To Prevent Your Leads from Being Scammed. It is simple and easy.

Your solution is shown below. Get some bright neon yellow paper and print.

Print 2 or 3 copies and place several on the inside of the front windows of your vacant rental and I promise, this will definitely get the attention of your prospective applicants.

To Your Continued $uccess,

Mike Butler

 

POWER LUNCH Chalk Talk Series

Back by Popular Demand!

00 PowerLunchTues15 – 20 minutes of “Meat & Potatoes” Training for Real Estate Investors

For Gold Members and Inner Circle Members Only
Gold Members are emailed the link to access Power Lunch Chalk Talk Series

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FLOOD INSURANCE

Earlier this year, your real estate market was devastated with the implementation of the new flood insurance program. Previously, any home in a flood plain, that had a federally insured loan (most do), were required to have flood insurance, no exceptions,
Prior to January 2014, if a buyer got a federally back home loan and borrowed $125,000, their annual flood insurance policy premium is roughly 1% with an annual premium of $1,250 in addition to all of the other regular insurance, etc.
I first learned of this mess when my wife Beth and I had dinner with our next door neighbors, Heidi and Sean. When we met them at the restaurant on a Tuesday evening, they were furious, angry, frustrated and shocked.
Heidi and Sean were selling their previous home, had a contract on it and were scheduled to close on “this friday.” (we are in the restaurant on Tuesday evening.) Heidi just learned on Tuesday afternoon, 3 days before the scheduled closing that their buyer’s already approved loan was being cancelled due to the new flood insurance program that went into effect around January 10th or so.
Heidi and Sean’s annual flood insurance premium for their previous home they were selling was about $2,000.
Their new buyer’s flood insurance premium for the same house, jumped to $23,000 a Year because of the new changes. WOW!  No wonder their buyer’s loan was cancelled.
As you can see, there was no way they could sell their previous home and they rented it for the time being.
This rocked my local market big time and killed many pending real estate transactions and it also did the same for many communities across America.
UPDATE: with a lot of uproar from the real estate industry, our federal government recently passed a bill making some modifications to the federal flood insurance program.
What triggered the original fiasco is the turning off of federal government “subsidizing” flood insurance premiums. Insurance experts explained that the flood insurance premiums were never increased. The extreme price increase occurred when the federal government stopped the funding of flood insurance premiums.
The recently passed new modification to the federal flood insurance program postpones terminating federal assistance in 5 years.
This means for right now, you are ok, but only for 5 years, then the mess is triggered again.
TIP:  If you or your family members or loved ones own real estate in a flood plain, you might want to do some more homework on your local market and give serious consideration to selling now before the bomb drops in 5 years.
My personal concern about all of this flood plain and insurance changes is not so much for the investor, like me and you, but just think about the poor old homeowner. A homeowner who worked their whole life at a job, who considers their home an investment, and in one fell swoop, our federal government just causes these folks to go belly up.
What if these homeowners live on a pension and their flood insurance premium skyrockets from $1,200 a year to $12,000 annually. They are sunk. They can not sell because the value of their home has tanked.
And these homeowners are somebody’s mom and dad, aunt and uncle, brother, sister, and so on.
 
To Your Continued $uccess!
Mike
QUESTION:
Not having any experience with land trust, here are a few of my questions.

1)  Does a typical real estate contract need to be executed to initially lock in the terms of your deal….for instance, selling price, terms of the note (owner finance), etc, etc,?

 
let’s dumb it down,.. when you make an offer to purchase, your buyer will be the name of your trust
 


2)  The trustee is the only thing that is public…..does this mean that everything else is private…like the terms of the deal, the note, receipts for payments, etc.?
 
Your deed is on public record and will show:
 – Name of Your Trust
 – Name of Your Trustee
 – mailing address for your property tax bill

3)  When a down payment is put down on the property, is that reflected as a percentage of beneficial interest in the trust?  For example, if the buyer puts 10% down, then you would own 10% of the beneficial interest in the trust and the seller would own 90% of the beneficial interest?  If that is so, then as the note is paid down, how is that reflected in the trust?

 
– hurts my head –  first of all most lenders will not lend to a trust.

4)  What happens when the note is finally paid off?  Buyer/Seller?

  – competent lenders will mail you the original promissory note marked paid in full and will complete a satisfaction of mortgage to record if there was a lien on your property. it is no different than a regular loan.

5)  Typically, is a new trustee appointed once the promissory note is paid off?

nope, you can change trustees anytime.

As you can tell, the structure of a real estate deal from start to finish are my main questions!

it is the same as any other real estate deal except your buyer and owner of record is the name of your trust

Thanks for your time.  As I get to know Mike’s product better I will definitely be using the strategy in my investing future.

Mike

 

hope this helps you Mike,

 

in the real world, do not worry about creating your trust until after you have an accepted offer; otherwise you will go nuts… keep in mind, so called experts will tell you that you must have your trust agreement in place before you make an offer… and they are correct…. but in the real world as an investor, you will experience many of your offers are not accepted… this is why i recommend to do your trust AFTER you have a contract.

 

keep in mind, writing a contract is not proper and many realtors use this language.

 

this might help you

 

STEP 1:  using a purchase and sale agreement form, you will write up an “Offer to Purchase”

STEP 2:  your seller will review and if they like, they will accept your “offer to purchase” and will sign and date.

STEP 3: At that point in time, your offer becomes a “Contract.”

Mike, you can get more information at http://TrusteeServicesUSA.com and http://5mLandTrusts.com

 

 

what do you think?

 

Mike Butler

 

 

Attention Landlords and Property Managers

In my neck of the woods, we are having record setting extreme cold temperature that seem to keep lingering on and on. In the past, we are use to having a spike for a day or two and then warm weather returns.

This year, right now, Alaska is warmer than my hometown here in Louisville, Kentucky.

Frozen pipes can be a devastating blow to your wallet and bank account, especially when it seems to never leave.

Keep in mind, in my “Landlording On AutoPilot” system, we send a Resident Newsletter with each monthly billing of rent to our residents. Plenty of winter cold weather tips are always in each newsletter before the season hits us.

This year is different. It feels like we are living in the arctic or Siberia. In an effort to try to keep plumbing cost down, I created this email to send to all of our current residents.

Please note, I understand not every resident will follow these instructions, but if one resident does follow these instructions you have save money, time, and grief.

 

Here is the email. Feel free to steal and paste (copy and paste) to send to your residents (tenants).

Subject: “WARNING! How to Prevent Frozen Pipes and Headaches!

BODY:   

EXTREME COLD is happening and TONITE!

RECORD COLD Temps below ZERO

TIP: How to keep your pipes from freezing Click Here for Full Video/Article (Members Only)

Happy Holidays and Here Is Your New Secret Money Maker for Landlords

My BIG Secret Tip to Get Your January Rents PAID Early!

It Works! 

I have been doing it for over 20 years!

If you have tenants and rental properties, this is a NO-BRAINER to make sure your tenants pay next month’s rent early.

Step into your Tenant’s shoes for just a moment. Holiday season, cold weather with higher utilities bills, extra expenses for holiday season… gifts for family, kids, etc.

Here is a great, simple, POWERFUL tool to make you look like a wonderful person and at the same time, almost guarantees your rent payment bill gets put on TOP of their bills to pay first or now.

The simple version is your very own Season’s Greeting Holiday Rent Coupon! You can get my Holiday Rent Coupon for free by clicking on the link below.

 

Here is How It Works!

As you probably already know, we bill all of our tenants on the 20th of this month for next month’s rent.

This means on December 20th, next Friday, my office manager Whitney will send monthly statements to all Tenants. Included in their monthly statement is the Vista newsletter for residents and their Vista Holiday Rent Coupon is enclosed as well.

 

How Much is the Discount?

Today the Holiday Coupon is $10 and can only be redeemed by making January 2014 rent payment on or BEFORE January 1. PERIOD.

Years ago, I tried fresh turkeys… did not work and made a mess. Depending on the size of your heart and bank account, you could change to $25, $50 or even $100. 

Click to Get Your Email with Link to Download

Download Now

BLINDSIDED! A TRUE NIGHTMARE KILLS a Real Estate Deal for my neighbor.

Last Tuesday, my next door neighbors invited me and Beth out for dinner at a new upscale restaurant in the “NuLu” part of downtown Louisville. (little did we know the University of Louisville basketball team had a game to play at the YUM center. Traffic was horrible.) They wanted to pick my brain about real estate investing and setting up Self Directed Roth IRAs for their two young sons.

This restaurant takes pride in all menu items are from local producers, including beer and wine. For the first time in over 25 years, I had myself an ice cold Pabst Blue Ribbon beer. It tasted pretty good, but not good enough for me to switch back from an occasional Bud Select here and there.

BLINDSIDED!

My next door neighbors, Heidi and Sean arrived and were visibly upset. They proceeded to tell me about the bad news they received that morning.

Heidi and Sean were selling their previous home, a nice home with a great view overlooking the Ohio River. After almost of year of trying to sell this unique river home, they finally got a buyer to purchase their previous home for approx. $225,000 AND their closing was scheduled to place this Friday.

Just 4 days before their scheduled closing Heidi gets a phone call reporting their buyers can not qualify now for their previously approved loan.

HERE’s WHY

Because of some new, hidden until now, federal regulations involving flood insurance and FEMA, the flood insurance on this property had increased almost 1,000% overnight!

Yes, when Heidi and Sean owned this home, their flood insurance was about $3,000 a year.

Get This!

Their Flood Insurance Premium is $23,000.

Absolutely Insane!

This can not be true!

What in the world is going on?

What about Real Estate Investors and Homeowners?

What gets my goat is how this new flood insurance pricing program “snuck up” on me, you, Heidi and Sean.

FYI, Heidi owns not one, but 3 Keller Williams offices. One in Louisville, another in northern Kentucky, and a third in southern Indiana.

Heidi is very involved in the real estate market and she was blindsided by this. Not a word in advance from our market industry watchdog groups. (I won’t name any group, but you know what I mean)

Here is the link from National Association of Realtors on this new flood insurance reform act

http://www.realtor.org/topics/national-flood-insurance-program-nfip

 

This is Part 1 – too much to write here.

Part 2 – some research reveals what is going on

Part 3 – new opportunities for creative investors

 

What are your thoughts?

Accelerating or Deferring Income / Deductions as Part of a Year End Strategy
 
from Mike Grinnan CPA

The arrival of year end presents special opportunities for most taxpayers to take steps in lowering their tax liability. The tax law imposes tax liability based upon a “tax year.” For most individuals and small business, their tax year is the same as the calendar year. As 2013 year end gets closer, most taxpayers have a more accurate picture of what their tax liability will be in 2013 than at any other time during the current year. However, if you don’t like what you see, you have until year end to make improvements before your tax liability for 2013 is permanently set in stone.

A good part of year-end tax planning involves techniques to accelerate or postpone income or deductions, as your tax situation dictates. Efforts are generally focused on keeping projected tax liability for 2013 slightly lower than that anticipated for 2014, not overweighing projected tax liability for any one year. Having spikes in taxable income in any one tax year puts you in a higher average tax bracket than you would be in if you had evened out the amount of taxable income between the current and subsequent year.

Right to income versus cash receipt

Generally, a cash-basis taxpayer (which includes most individuals) recognizesincome when it is received and takes deductions when expenses are paid. There is a subtle but important difference between the two:

  • Income is generally taxable in the year that it is received, by cash or check or direct deposit. You cannot postpone tax on income by refusing payment until the following year once you have the right to that payment in the current year. However, if you make deferred payments a part of the overall transaction, you may legitimately postpone both the income and the tax on it into the year or years in which payment is made. Postponement in this context usually takes place in a business setting. Examples include: installment sales, on which gain is prorated and taxed based upon the years over which installment payments are made; like-kind exchanges through which no gain is realized except to the extent other non-like-kind property (including cash) may change hands; and, on a higher level, tax-free corporate reorganizations pursuant to special tax code provisions.
  • Deductions, on the other hand, are generally not allowed until you pay for the item or service for which you want to take the deduction. Merely accepting the liability to pay for a deductible item does not make it deduction. Therefore, a doctor’s bill does not become a medical expense deduction necessarily in the year that services are rendered or the bill is sent for payment. Rather, it is only considered deductible in the year in which you pay the bill. Determining when you pay your bills for tax purposes also has its nuances. A bill may be paid when cash is tendered; when a credit card is charged; or when a check is put in the mail (even if it is delivered in due course a few days into a new calendar year).

Compensation arrangements

Compensation arrangements carry their own special set of tax rules. The timing of the inclusion and deduction of compensation is largely governed by the employee’s and the employer’s normal methods of accounting. Under the cash method of accounting, amounts are includible in income when they are actually or constructively received and deductible when they are paid. Most employees are on the cash method.

Cash-basis employers can only deduct the cost of compensation the employee actually or constructively received. Constructive receipt comes into play when an employee attempts to decline offered compensation in order to defer its receipt and thereby postpone tax. Under the constructive receipt rule, the employee is currently taxed in this situation. However, there is no analogous constructive payment rule. Thus, a cash-basis employer may not take a deduction for amounts that it is willing to pay, and that it may have debited on its corporate books, but that it has not actually paid.

Deferred compensation plans, however, may be used to modify these general rules. There are basically two kinds of deferred compensation plans: qualified plans (such as 401(k) plans) and nonqualified plans or arrangements (common in executive compensation packages). Qualified plans are tax favored in that an employer can take an immediate deduction even though the employee might not recognize the income for years. With a nonqualified plan, the employer cannot take its deduction until the employee recognizes the income.

Particularly relevant to employers at year end is an annual bonus rule. Bonuses paid within a brief period of time after the end of the employer’s tax year may be deducted in that tax year. Compensation is generally considered to be paid within a brief period of time if it is paid within two and one-half months of the end of the employer’s tax year.

Please Share Your Thoughts Below

Did You Know Giving Your Tenant A Project Can Be BOTH Your Time Saver and Money Saver?

“Project.” Is it a good word or a bad word in our world of real estate investing? Your mental knee jerk reaction is probably BAD.

Take a chill pill, settle down for a moment and you will learn how you can benefit with BOTH your time and MONEY by creating projects.

How many times has this happened to you?

One of your great long term tenants contacts you with a request for new carpet for their living room. (not the whole house, but just one room).

Do you have thoughts like…

  • Think about how good they have been by not being a pain?
  • Son of a #$#@, why now, I don’t have time for this problem and spending more money.
  • Perhaps a fear of not “giving in” to new carpet may cause them to move creating another vacancy?
  • How can I play ostrich, buy some time, postpone this expense for another year?
  • The carpet was new when they moved in, they don’t need new carpet if they would take care of it properly.
  • Thoughts switch to greed or “business”…hmm, upgrade with new carpet = higher rent?

Well, sit down and get ready to knock yourself in the noggin with a big stick.

Good Tenants are a rare breed today. They are on the endangered species list. I think I saw it on the Discovery Channel.

 

YOUR LIFE vs YOUR TENANT’s LIFE

YOUR LIFE: Do you have a busy schedule EVERY DAY. Putting out fires, “riding the bull”, doing deals, paperwork, insurance, taxes, phone calls, messages, bills, payments, evictions, late charges, late notices, work orders, Family, plus a job?… sound familiar? I found myself in this rat race above for many years. If this is not you, you are a rare exception. Stick to it.

TENANT LIFE: (perhaps as we view it), let’s switch gears and step into their shoes. Watch late night TV. Sleep late. Coffee in the morning, Jerry Springer, soap operas, gossip tv, gossip phone calls, pizza delivery is a meal, getting ready to wait for the mailman to arrive, 2 hours spent preparing a grocery list,… WAY TOO MUCH TIME ON THEIR HANDS.

Now let’s go back to the carpet story.

Your knee jerk reaction is another problem.

WRONG, You should view this as an OPPORTUNITY.

Especially with a good tenant, YOUR HOUSE is THEIR HOME. Do NOT forget this. It is a powerful tool for you.

When your good tenant contacts you with the carpet story, the absolute most dangerous act on your part is to go “check it out”. This “good business” practice on your part simply puts a bullet right between your eyes on the part of your tenant. Your “good business” behavior is actually calling your tenant a liar. Your actions are saying I am not sure I believe you, let me come over and check it out. Even with good intentions on your part, you just went 2 steps forward and 7 steps BACKWARD.

Hold On – there is more… So, you go “check it out” and you agree with your tenant. YUP, it is worn and could be replaced. Mentally, your tenant has their arms folded across their chest saying “I TOLD YOU THAT EARLIER STUPID.”

With good intentions on your part and a concern of SAVING MONEY…. You might tell your tenant something like…. “yes, I see you could use some new carpet. I will call my carpet guy and he will contact you to schedule putting in the new carpet.”

You work your butt off trying to run an efficient rental business by using the same CHEAP carpet with all of your rentals, the same installer, etc. This really is a good business thing by putting systems into place.

Your KIND act and pride of showing your tenant you have a system in place to take care of their problem is a total disregard to the concerns of your great tenant and you just SMACKED them square in the face with a 2×4 by reminding them they are a TENANT who is RENTING MY HOUSE. All of their thoughts about their HOME just evaporated with you bumping your gums about your system.

But wait a minute. You are trying to be a nice guy, a good landlord, etc. Yes, this is true BY YOUR STANDARDS. You are taking time out of your busy day, spending your money, to do something for your tenant in YOUR HOUSE. So when you get viewed as a greedy landlord, you remind your self of your good intentions, good actions, spending money, etc. all for not even one simple thank you. You are guilty of promoting the US and THEM attitude as much as anyone else.

SWITCH GEARS and try this next time. When your good tenant contacts you with a request for new carpet in one room, turn it into a WIN – WIN situation for both the Tenant and yourself.

If on the phone, let the tenant bump their gums for a while. Use their NAME when talking to them. It makes them feel good. After they make some noise for a while, here is how to make them want to stay forever. Refer to your rental house as “THEIR HOME”.

Give them a project. Tell your tenant you can help them out if they want the new carpet. Tell them you will buy the carpet if they get it installed.

Instruct your tenant to go “carpet shopping”. Give them some places to go. There are carpet remnant stores and outlets in almost every town. Tell the tenant to be reasonable and give them good instructions… no gold laced carpet allowed. The tenant goes carpet shopping and gets a bill from the carpet store. Have the tenant mail or fax the bill to you. You create a check payable to the carpet store.

Even though you are a tightwad, you should not have to replace the pad. Your tenant is going to round up their own installer. Do not worry about the installer. Odds are, your tenant will choose better quality carpet than what you normally install. By the time they move out, it really doesn’t matter how it was installed because you will probably remove it and replace it again.

Now think about this in the big picture. Tenant contacted you with a request. You are a good landlord. You acknowledge their concern, and you give your tenant a PROJECT. In their mind, they are going shopping on your dollar to buy carpet they choose for THEIR HOME. No more phone calls on your part and I bet the purchase of the carpet is CHEAPER than your system in the long run. I doubt if the cost of the carpet in this manner will be more than the expense of your installer and the carpet.

Using YOUR system, your tenant is reminded they are a tenant living in your house. They will be sitting at home waiting for your system to do their thing. Your tenant has time to waste on projects to make them feel good. Give them TIME EATING PROJECTS. Your Tenant will win and you will win.

This is a great program. Think about it from your Tenant’s perspective.

  • You did not challenge their request.
  • Carpet Shopping Time has just become a priority and will be placed at the top of their list of things to do.
  • Maybe they need transportation to go carpet shopping. Call family, friends, church people, to take them carpet shopping because their landlord is going to buy them new carpet… Wow, good free advertising as well.
  • Spend hours at the carpet store listening to all of the BS stories from the salesperson. We hate it. They love it along with all of the attention.
  • Maybe they need to think about it and return for a 2nd trip or opinion or maybe go to 3,4, or 5 carpet stores to help find the best deal. Yes, it sounds stupid, but this is a major project to them and they may really truly try to find the best of both price and quality. (Haven’t you seen co-workers who spend 60 hours of their time comparison shopping researching prices on car tires only to discover their best deal is $12.25 a tire cheaper at XYZ tire store? Sound like they worked 60 hours to save $49.00. They worked for about  $0.81 an hour)
  • You are instilling pride in their HOME by allowing your tenant to choose the carpet for their home. You will also become a hero and the best landlord in the world.
  • Now they must consider a lot of stuff. Color, texture, quality, fiber, cost… wow, a lot of stuff they never dreamed of… is all an important part of the project to install carpet in their living room. They had no idea how much stuff their landlord had to go through for carpet.
  • Moving on, they finally make a decision on a piece of carpet. Now they make the salesperson write up some kind of bill and I recommend to have your tenant hand deliver the bill to your office. (this is another mini-project). If you do not have an office, have them fax it or mail it.
  • Once received, if you have an office, make the tenant return to your office to “pick up the check” made payable to the carpet store. (again, another mini-project).
  • With no office, simply mail the check to the tenant or drop it off at their home if your office is on wheels. Nothing better than giving them a check in person for their carpet purchase. Wow, what a landlord!
  • Now the Tenant needs to make arrangements to get back out to the carpet store to purchase the carpet….another project.
  • Don’t forget about the installer…another project and a cost for the tenant. Now they have another project to research and will spend their time shopping for the best deal for a carpet installer.
  • Still yet another mini project involves making arrangements to schedule the installation, moving furniture, and on and on.
  • They do not mind all of these projects and time eaters that benefit them. We despise time eating projects. They love it and will probably seek an atta-boy from you for the results of their efforts while thanking you for ALL OF YOUR HELP.
  • You have really turned your house into THEIR HOME. They will be proud of their new carpet they picked out and all of the experiences of their project.
  • QUESTION – if you delegate this project to them, how long will this carpet be labeled or referred to as “NEW”?. I’ll bet it will be called “NEW” for a lot longer than your carpet would be called new. If you used your system and installed your generic run of the mill cheap carpet, it will not last a year as being called NEW. Next year it will be called “OLD CARPET” because it is over a year old.
  • Now your tenant loves their home with THEIR NEW CARPET and their landlord is the best.

Yes, I drug this out and made it painful. We do not have patience for s-l-o-w  m-o-v-I-n-g stuff. This is my point. We are in so much of a hurry and have no patience, we assume we are normal and everyone should be like us. WRONG. We are the 1%ers. We are the weird ones and proud of it. It is what makes us successful.

Use the same method described above on almost any improvement request by a tenant. Do NOT use it on skilled or licensed trades such as furnaces, plumbing or electric.

It works great for requests for such things as painting, landscaping, or window air conditioners.

So slow down, be patient, and the next time you receive a request for something, use your creative abilities and TURN IT INTO A TIME EATING FUN AND CHALLENGING PROJECT to benefit you.

It reminds me of the Tom Sawyer story of whitewashing the fence and he was getting helpers to PAY HIM for the privilege of using his brush to have fun slopping the whitewash on the fence. Try it, you might surprise yourself and they will THANK YOU.

To really nail it down good, drop them a note about how good a job they did or simply stop by with a positive attitude to see the results of their efforts

DO NOT ACT LIKE AN INSPECTOR. Let them bump their gums again and tell them they did great on colors and all. They are decorating their HOME. Help them feel proud and they will take care of it better and stay forever.

Please Share Your Thoughts of Giving Your Tenant A Project Below

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