5 Oversights That Drain Landlord Profits

In this episode, we are digging into five common oversights we see landlords make all the time (plus a few extra ones)—and trust me, they can quietly eat away at your profits if you're not careful. We’re talking about the kinds of things that seem small but lead to big issues later, like outdated leases, messy tenant files, or treating your rental like a side gig instead of the business it really is.

We’ll walk you through real examples, give you actionable tips you can use right now, and share some of our favorite tools to help you stay on top of it all. If you're ready to clean up your systems and stop letting things fall through the cracks, this one's for you.

Resources & Links Mentioned in This Episode:

🔗 Creating SOP's for Your Business 

🔗 Deal! QuickBooks Accounting for 30% OFF your first 6 months!

🔗 FREE Downloads: 10 Page Guide on How to Place Your Ideal Tenant, Prescreening Questions, Fall Maintenance Checklist, Spring Maintenance Checklist

🔗 3 part Masterclass on Leases: Episode 32

🔗 EZLandlordForms – Get 15% off with code STACIE15

🔗 Rental Property Inspections

🔗 Spring Maintenance Checklist for Rentals

🔗 Fall's Checklist: Rental Property Maintenance for a Hassle-Free Winter

🔗 Brushed Nickel Pull Down Faucet with Sprayer 

🔗 The best FREE PM software for landlords: TurboTenant

🔗 PM Software that integrates with QuickBooks: Doorloop and

Connect with Us:

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👆Click HERE for our FREE Landlord Forms and Doc’s

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Transcript

Stacie: 0:00

You guys do not screw tenants out of their security deposit unless there is damage or something that is absolutely negligent on the tenant's part. If there's holes in the carpet that's three years old, yes, charge them for that. If there's a window broken, yes, charge them for that. If there's a couple blind slats that are broken or bent and the blinds have not been replaced in over five years, do not charge them for that. If you tell them that the unit has to be cleaned and you do not give them exactly what needs to be cleaned and what you are going to charge, if it is not. Do not charge them a cleaning fee unless it's written in the lease that you can keep X amount of dollars of their security deposit on their behalf. Again, the very thing we discussed here was that owning rental property is a business not a hobby. Take it serious and do better. When tenants experience a bad landlord, that in turn affects us all. It puts a bad taste in their mouth and makes tenants assume that all landlords are money hungry, scum sucking, rental property owners. And it doesn't have to be like that. We can treat tenants with respect and still remain financially solvent with less stress. But the responsibility falls on us landlords to be professional, attentive, and focused business owners.

1:21

Welcome to Your Landlord Resource podcast. Many moons ago when I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lack confidence and the hands-on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping after many failed attempts. Fast forward to today, Kevin and I have doubled our doors and created an organized. Professionally operated rental property business. Want to go from overwhelm to confident if you're an ambitious landlord or maybe one in the making. Join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire. All well building is streamlined and profitable rental property business. This is your landlord resource podcast.

Stacie: 2:10

Well, hello there landlords. Thanks for tuning into the Your Landlord Resource Podcast. I'm your host, Stacie Casella, and I'm here with my co-host, Kevin Kilroy.

Kevin: 2:21

Hi-de-ho Landlords.

Stacie: 2:23

So Kev, this is episode 99. Can you believe that we have almost recorded a hundred episodes?

Kevin: 2:32

You know? No, I really can't. I mean, it still amazes me when you come to owning and managing your rental property, there is a lot to talk about, isn't there?

Stacie: 2:42

I know. I mean, do you remember when we were tossing around the idea of a podcast and we were like, is there even 50 things to talk about?

Kevin: 2:51

Yeah. And I do remember us saying that if we could get to 30 or 40 episodes, we'd surpass most podcasters. I mean, what was the average, something like 17?

Stacie: 3:03

Yeah, back when we started in 23, that's what it was. I, I looked it up, and on average now most people are gonna quit their podcast before episode eight. And it's estimated that around 44% of podcasts only have three or fewer episodes.

Kevin: 3:19

Well, I'd say then that we've beaten the odds, huh?

Stacie: 3:22

Yeah.

Kevin: 3:24

And to celebrate that hundredth episode that's coming up, we have a really cool giveaway, so you don't wanna miss tuning into that. So if you are not subscribed to or following our podcast, go to the top of the screen where you are listening and tap that follow button. That way our episodes will drop right into your library and we'll be ready for you to listen each time.

Stacie: 3:47

Yeah, you guys, this giveaway is something we have never done before, so make sure you give it a listen. I think it comes out May 27th, and that's in 2025. And you know we still have a long way to go before we say we've made it, but I'm, I'm proud of what we've accomplished. The whole idea was to help out smaller self-managing landlords that are just like us. And I think we're doing that. And one way we're helping is by sharing mistakes that we have made, as well as errors in judgment that we have witnessed other landlords make and what we have learned from all those. So today we're gonna go over how not paying attention to certain details of your rental property business can actually cost you in the long run.

Kevin: 4:37

Yeah. And where these oversights or mindset issues will definitely cost your business by way of money, by affecting your bottom line, they will also cost you time and potentially goodwill with your tenants. And let's face it, if your tenants aren't happy with the living experience you're providing, then eventually that will trickle down to the bottom line when they move out.

Stacie: 5:00

Yep. And besides time and money and goodwill, there are legal issues that can arise, and boy, you do want to avoid having that when you're owning rental property. So I want to really quick talk about what it was like when I first became a landlord. Now I'll be honest and say that financially I had a very small stake in the property. Recently I've bought out the rest of the partners in the LLC, which were family members, and now I own it outright, but not in the beginning. At the time, I did not have my real estate license and where I was aware of the legal ramifications of not following landlord tenant laws, I can admit now that I really had no idea of what it meant to manage rental properties. I knew we had to have a lease. I had no idea what needed to be included in it. No concept at all about background checks and tenant screening. I would literally pull their FICO score and if it was higher than like 650, we'd just accept them. If they gave me a sob story, I'd feel bad for them and I'd accept them. When somebody moved out, I did not explain what they needed to do to get their security deposit back. And honestly, for the first five or six tenants who moved out, I didn't even deduct a penny from their security deposit. Because I had no idea what I was doing. I just thought, oh, well they didn't break anything, they can give it back. Now financially I can say that I was on top of managing our income and expenses. I owned other businesses before and I did have a system in place for those that I pretty much just converted over to use for this rental property. And I did lean on our CPA at the time who was very helpful in setting up our bookkeeping chart of accounts, and that was back in 2005. So even though the internet was established, getting information was nothing like what we have available to us today. So think of how we had to establish market rents or how we listed a property back then. There was no Zillow when I first started out. We had MLS and we had Craigslist for like a computer generated information on rentals. We had a banner made that we used to zip tie to the front railing of the rental with my office phone number, not my mobile, for people to contact us if they wanted to see the property when it was vacant.

Kevin: 7:34

You know, we still have that banner down in the basement. I saw it the other day.

Stacie: 7:38

Yeah. Well, I believe it. We should hang it up to remind us what times were like back then. You know, my point is, you guys, I know you listen to us now and you think we really have our shit together when it comes to managing rentals and I mean, yeah, we kind of do. But we started off just like you did. First being so excited and then thinking, what the hell did we just do? And I'm here to tell you if this lady who was 35 years old and had three little boys and a sick husband to care for, if I can do this, you absolutely can do it too.

Kevin: 8:09

And just to let you all know that sick husband was Stacie's first husband, who unfortunately passed away in 2012. It's not me. I'm healthy and very much alive.

Stacie: 8:21

Thank you for the clarification. All right. Well one of the things that was so great was Kevin worked in the real estate space and the guy he worked for owned and managed a lot of rental properties. So when we started getting serious about dating, he was able to understand exactly what we were doing and eventually he came to work for us.

Kevin: 8:42

And the rest is history.

Stacie: 8:44

Right.

Kevin: 8:44

And just to clarify, I was able to understand what the rental business or us dating?

Stacie: 8:51

I, I think I'm hoping both.

Kevin: 8:55

Okay, good. Just wanna clarify.

Stacie: 8:57

All right. I just mean that I know there's people out there who are trying to learn about property management and their spouses or partners have no clue or no interest in this business at all. And I know I'm very fortunate to have you to bounce ideas off of and trust your response is knowledgeable and well thought out most of the time anyway.

Kevin: 9:19

I get it. I mean, we are fortunate to be able to be partners in the business, even though for the most part you run the show.

Stacie: 9:27

I do, literally. All right, so today I wanna discuss where landlords can go wrong when managing their rental properties. And some of these are reminders from other episodes. Some we have not talked too much about. The first thing I wanna discuss is not treating, owning your rental properties as a business, but more of a hobby. You know, you can't just wander in and out of rental property ownership. Now, there absolutely are gonna be times where there's not much going on and you guys count your blessings for those periods. But for the most part, every single month there is something that you need to pay attention to. And I get that many rental property owners have full-time jobs and families or other responsibilities. But if you have like a hobbyist mindset, which means you engage your time in your rental properties more like a pastime, you're gonna overlook issues that arise. This mindset usually includes, not budgeting properly, avoiding tough decisions, or making reactive decisions instead of informed ones. And this will absolutely create more problems for you as time goes on. You're gonna have lost income, bad tenants, damaged property, lawsuits, and you're gonna miss out on tax advantages. I mean, the list goes on and on. Those are all things that if you do not have a professional outlook or a business-minded mindset, it'll make owning rental properties a real pain in the butt. It will not be rewarding, and it will definitely be something that you're gonna wanna get out of when the going gets tough.

Kevin: 11:05

Hey, we work full-time at managing our rentals and those rentals for others and even we still make mistakes and ask, what are we doing this for? I mean, even with the business mindset we have when it gets hard, and it will you guys, so when it gets hard even we want to jump ship. I mean, owning and managing rental property yourself is not for the faint of heart. It takes focus and dedication. I know we have a tenant screening course we wanted to do for our listeners, and I'm wondering now if they would be interested in a course about setting up your rental property business. Like if we went over our standard operating procedures and walk them through developing theirs. So if this is something that you guys would be interested in, could you let us know? I mean, we have emails, we can be texted. All that info is in the show notes. So if you wouldn't mind taking a second to let us know if this is something you could benefit from.

Stacie: 12:06

That is a very good one, Kev. Yeah, you guys definitely let us know. You know, we did an episode all about standard operating procedures. You can listen to it at yourlandlordresource.com/episode6. We'll link that to show notes as well. But go give that a listen, and if you want us to do a course on that, let us know. And actually that leads us into the next area where landlords make mistakes, and that is poor record keeping and not having a proper paper trail. And let's be clear, this is not just record keeping like bookkeeping. This is maintaining communication logs between you and your tenants, staying up on landlord tenant laws, and providing lease updates annually, not just when people move out. It does also include keeping track of receipts and staying up on your bookkeeping every month. It's understanding what appliances are in which unit, how old they are, and when and what has been repaired on them. Keeping track of maintenance is another one. More importantly, deferred maintenance and preventative maintenance. So understanding how to file all these things, whether it be an old fashioned paper trail or if you manage your files digitally. There needs to be a procedure in place so that each time you do anything in your business, you can reference back to it quickly and easily. Here's an example of something that happened to me many years ago. I had paid for some new appliances in one of our units, and for some reason I put it on my personal credit card. I probably wanted the points or something. And it was somewhere in the range of$2,000. The card was paid in full and the next billing cycle, and because life was busy, I didn't take the time to get reimbursed by the rental property account. I also did not make copies of the credit card receipt or account for it in my bookkeeping. Tax time rolls around, and for the record, we file extensions mostly every year, but that's neither here nor there. The thing is because time had passed and I did not have that receipt, when we did finally file our taxes, I completely forgot about expensing those appliances off our rental income. And it was quite a while later when I actually realized this, probably when we were buying more appliances for another unit. Now, could I have gone back and fixed it? Probably. But honestly, the tax benefit of doing that, for us, was not worth the hassle of contacting our CPA and paying him to amend our tax return. But it got me thinking about what other expenses were missing. So after I took over the LLC myself, I sat down with our CPA and went over everything. And when we organized it all out, there were many expenses that we could have but did not include on our taxes. One big one being office space in our home. We did not include a portion of the utilities or mortgage interest or insurance that we pay out of our personal funds on our income taxes. Mileage to drive 110 miles to, and then back from the rental property up in Sacramento. And we also had one in Chico. Guys, this mileage number was several thousand dollars worth of a deduction. Or expensing off large projects and not adding those to the quote unquote improvement line on the books and being able to depreciate it over time. Because you see capital expenses, usually something that improves the property or extends the life of it, or would increase its value like remodeling a bathroom or remodeling a kitchen or putting on a new roof. Those typically should be capitalized, not expensed. And this means that the costs are added to the asset's value and depreciated over time, rather than being deducted as a current expense. And those are all costly mistakes that were being made, and we, for the most part, are on top of things with our rentals.

Kevin: 16:03

Yeah. And we cannot stress this enough. You need procedures in place on how to handle all paperwork that deals with your rental property. This includes setting reminders for lease renewals, or at least adding it to your calendar a minimum of 60 days before the lease is due to expire. So if you have not done so yet, go back and listen to episode six on standard operating procedures and see if we have any suggestions that can help you with this organization of your files and record keeping. And sideline here. We know in California there are a couple new landlord tenant laws, one being about positive rent reporting on credit reports. One about taking photos before a tenant moves in and again, when they move out. If you are a California based landlord, you should check those and see if either of those apply to you. I believe AB 28 0 1, the photo one for security deposits applies to all landlords and goes into effect July 1st, 2025.

Stacie: 17:08

Yeah, it does. So if you have a vacancy coming up, this is going to affect you. If you fail to take those photos and there is damage when they move out, you will have to be able to prove that that damage was not there prior with time and date stamp photos, or you're gonna forfeit being able to hold funds from that tenant security deposit when they move out.

Kevin: 17:28

Ha, one more thing for us having to deal with, huh? But lucky for us, we usually take all new marketing photos with every turnover, so we have them to use. And one more thing I want to mention is that we use and love QuickBooks bookkeeping software. We are partners with them and they have extended a discount of 30% off your monthly fee for the first six months. You don't need anything fancy, but QuickBooks Online lets your CPA gain access to your account and be able to make updates and changes as your business grows. You can track income and expenses by property and by unit, and if you want to, you can even invoice tenants and have their rent deposited directly into your bank account. Now, I'll be honest, they do charge a fee for this, so if your management software offers this for free, use that for the rent collection instead. Some management software companies do integrate with QuickBooks like Door Loop and Hem Lane. Which is the best case scenario, but if you use others like Turbo Tenant, you'll have to manually enter the rental income, which depending on the number of rentals you own, would be one simple journal entry per month. But QuickBooks is really easy to use, and as you grow and scale your rental properties, it's so much easier to incorporate them into your bookkeeping. If you go to sell a rental property, your rent roll and expenses are right there for you to be able to provide to potential buyers. So we'll put a link to check out QuickBooks and the property management software in the show notes. Okay, moving to our next mistake that rental property owners make, and that is inadequate tenant screening. So if we had to voice our opinion, which I guess is the point of this podcast, we would say that tenant screening is the most important task performed in your rental property business. Second to that, I guess, would be inspections and maintenance. And if you think about it, that is a task that if done well, only has to be completed every couple of years depending on the turnover of your units. Now we know that you don't often hear us discuss the details of what we do when it comes to tenant screening, and that is because it's not something we can just throw out in a podcast. The mindset and the order of tasks performed before you market your rental, during the application process, and after when you place your tenant, is very important. So much so that we are creating a course to teach you how to walk through these steps. It's called From Marketing to Move In, How to Place Your Ideal Tenant. We start with your rental criteria and then walk you through marketing your rental so you can attract the best tenants. We will include photography tips for your best unit photos and how to do a video walkthrough. We'll also suggest which sites to market your property to, as well as which to pay for and which to avoid. This course will cover prescreening interested parties and various methods of showing your unit to those who pre-qualify. Accepting applications, and of course, our step-by-step process on tenant screening and how to vet an applicant. Once you are certain you have the best applicant available, we give you verbiage on acceptance emails, texts, and how to lock them in as a tenant when dealing with a competitive rental market. Of course, we will include what your lease should include to protect yourself and your asset. What to know about eSigning versus in-person signing of leases and documents. How to create a unit binder, your welcome gift, and the move in walkthrough inspections. If you notice by now, we tend to be pretty detailed, and this course is not just a list of what you need to do, it's how you do it. But anyway, if you'd like to be on the wait list for when that course comes out, you can go to your landlord resource.com/M2M waitlist. That's your landlord resource.com. M as in Mary, the number 2 M as in Mary again, and the word waitlist. Not easy to say that one live so we'll link it in the show notes for you.

Stacie: 21:51

Yeah. Well thank you for promoting that, Kev. We do need to get that completed so we can help these landlords out. You know, not screening tenants is a mistake that can cost you thousands of dollars. Placing a tenant who was not properly screened is just a risk that we are begging you to avoid. And the bottom line is that you cannot go with your gut when it comes to tenant screening. And I used to do that, and boy did I get burned a couple times. I was absolutely one to fall for a sob story. Like, oh, I'm in the middle of a divorce and my credit sucks because my spouse went out and bought a bunch of stuff and then didn't pay the credit card bills. You know what my answer is now? Oh, well. Or if the holidays were coming and we all know it gets harder to run a unit once the holidays hit, and we had a tenant who did not fully meet our criteria, but his application wasn't horrible. I think his credit score was low and he didn't have a rental history because he had lived at home while he was going to college. And here's what I remember thinking, made him okay. He was a lawyer. I mean, aren't they all detail oriented and responsible? Well, apparently not. That guy who ended up being a smoker, he was an absolute slob and he created a nightmare for us when his unit had a fruit fly infestation from his, well, let's just say uncleanliness.

Kevin: 23:22

I, I mean, I know we've seen some nasty stuff online, like hoarding or people who destroy a unit when they move out. But you guys, this was next level infestation. I mean, I'm not gonna go into it, but let's just say it still traumatizes us for sure.

Stacie: 23:39

Yeah, it traumatized our bank account too.

Kevin: 23:41

Right? I mean, it's funny because when we were prepping for this episode, we were discussing our nightmare stories. And we definitely have some to talk about. But you know, for the most part, after we've had a couple of them, let's say, challenging tenants, we completely changed our strategy and process on how we screen tenants. And since then, every tenant, for the most part, has been great. I mean, they pay their rent on time, they take care of the unit. They let us know when repairs or maintenance are needed.

Stacie: 24:14

Yeah. And here's the deal. You can absolutely hire someone, a Realtor or a licensed property manager to place your tenants for you. You know, we have landlords who hire us for this service. But you're gonna pay a pretty penny for them to do it. Some will charge one month's rent, some are going to charge a percentage of the whole rental income for the period of lease. And that number depends on if you're using them for all property management tasks or justifying you a tenant. You know, here in the Bay Area, that could be several thousand dollars. Not a lot of landlords have extra funds, nor do they want to spend the money and end up trying to do it themselves, which honestly is what we recommend. This is how you get to know who is living in your unit. But no lie, it does take time to do it right. And like Kevin mentioned, there is marketing to find the kind of tenant that you want to live in your unit. Then there's taking nice photos because let's be honest, most prospective tenants are looking at the photos, the location, and the price. Very few take the time to read your criteria that you've written out, which is why you have to pre-screen your tenants before you even allow'em to see the property. And this sets boundaries. And where it sucks big time, it's also where you lose a lot of interested parties, which is hard, but it's what you want. Otherwise, you're gonna end up having to deny them later, and that's a hard one to swallow because you just wanna get it rented and you wanna get that money coming in. And like Kevin had said, we have a course that we're working on and we're doing our best, but it's slow going. So for now, our recommendation is to sign up for the wait list. You can also download our free guide, How to Place Your Ideal Tenant, which is a 10 page guide that includes creating qualifying standards and policies, understanding marketing your unit, the application process, performing background checks, and handing over the keys at move in. You can download it at yourlandlordresource.com/landlord guide. I think that guide includes our prescreening questions, but if not, we do have a free download for that as well, and you can grab that. At your landlord resource.com/prescreen. As always, we will link both these free PDFs in our show notes, so go check'em out.

Kevin: 26:39

Yep, you can't beat free. The next error in judgment that landlords make that can really cost them in the long run is not using the proper lease. So when renting out your property, it's not the time to just use an old lease again or pick up a generic one online. Your lease is your protection. Landlord tenant laws change and using templates from Google just won't cut it. Stace do you remember when we were helping that family member of yours? They had a two page lease they wanted us to use.

Stacie: 27:13

Yes. I mean, I almost choked. And I'll tell you, I, I seriously struggled to remain calm. I mean, this was many years ago, but I wanted to be professional. They were coming to me for help and I thought, okay, they've been landlording for some time and they know what they're doing. And holy cow, was I wrong. A two-page lease? I mean, especially here in California. I think it had like the tenant's names, the address of the property, the rent amount, security deposit, dates of the lease, and where to send that rent to. There was probably something about them having to pay their own utility bills on it or something too. And then a couple lines for signatures. You guys, for perspective, our leases are now nearly 50 pages long. That's 5 0. The main body of the lease is about 20 to 25 pages, I think, and then we have our addendums, which differ by property. So hey, if you want to know more about what we have in our leases and what we recommend, we did do a three part masterclass where we broke down our lease pretty much clause by clause and all the addendums that we use. And honestly, there's actually a few new ones that we have had to add since then. But start with the first episode by going to your landlord resource.com/episode 32. We'll link that in the show notes as well. But I want to sideline real quick here and talk for a minute about why it's important to not only have a solid lease going into the tenancy, but to keep up on signing new leases with each renewal as well. All right, so let's say you have a one year lease with a tenant. That tenant is perfect. They pay on time, they're clean, they take care of the unit, and they call when something needs to be repaired, all the stuff. When your year is up, do you just let the lease go and let them roll over to a month to month lease under those same terms of that original lease you created the year before? Or do you take the time to contact the tenant and have'em sign a new updated lease? And let's hope it's the latter and that you have'em resign each year. Here's why. Some landlords think that if they're not going to raise the rent, they don't feel it's necessary to go through the whole renewal process. But the problem is often landlord tenant laws or even provisions or concepts change, mostly in the favor of the tenant, but often enough, there are changes that benefit the landlord as well. If you're not operating under an up-to-date lease, you are not protected unless the tenant signs an agreement to those updates. For instance, you have no provisions in your lease about renter's insurance, which is something landlords are allowed to enforce. Your tenant buys a charcoal grill and uses it on the back deck off the kitchen. They make dinner, they go inside and they leave the grill to cool down on its own. Except for that in the middle of the night, a raccoon who smells that ribeye that was grilled earlier, goes up on the deck and ends up pushing that grill full of hot coals over onto the wood deck. Which causes a devastating fire that destroys the back half of the rental property, including the kitchen that you just remodeled before that tenant moved in. Who has to cover the cost of that? Well, if they have renter's insurance, likely your tenant. But if you don't require renter's insurance, it's gonna be your responsibility to file a claim with your insurance company, and pay the deductible, and either get dropped by the insurance company or deal with much higher rates to pay for years on end. Your lease is your communication. So when it comes to that tenant having a grill, you can add an addendum in there that says if you're going to grill you can only use an electric grill or you can only use a gas grill. It has to be used at least 10 feet away from the house on a gravel, cement, or dirt surface. And if anything happens as a result of their grilling, they have to hold runner's insurance with a minimum coverage of like a$100,000 or$250,000, whatever amount you choose. That way, any damage is run through their policy, not yours.

Kevin: 31:31

Yeah, and you know, we often thought, oh, we have apartments with no deck, so we have nothing to worry about. Then we show up and there's a small grill on the front wood porch and we're like, uh, no way. Another new one is micro mobility devices. You know those E-bikes and E scooters? We started using an addendum for those the last year or so because our locations, it's tough to park and those bikes are prime for tenants wanting to use them to get around town. Which is great, right? Well, it's great until they plug them into charge and they leave them plugged in for days and forget about'em, and the batteries heat up and catch fire. So we have had to add provisions about where they can charge them and for how long. We can't tell'em that they can't have them, but we can control their responsibility with charging them. And this has only become an issue in the last couple of years.

Stacie: 32:31

Yeah, it's funny you mentioned those. Last week when we had to go into our midterm rental. The tenant in there pays for a cleaning and I had to go in and leave clean sheets for the cleaners to change the bed. Because the tenant was outta town the timing was good to go in and get that cleaning done. And sure enough, in the kitchen was one of those e-scooters they're using to get back and forth to their temporary job location. I thought it was plugged in, I almost came unglued. But then I saw it was disconnected at the scooter, which was a huge relief.

Kevin: 33:03

Well, from the look of the unit when, when you walked in, I mean, I'm surprised you could find the scooter.

Stacie: 33:09

Yeah, it was a mess. But I will say that this tenant is really only using the bed and the bathroom. The kitchen has not been touched. And in five weeks of this person living there, the stove didn't have one drip, the dishwasher's never been run. There was one knife on the counter and it actually looked like it was used to open an envelope The blender and the coffee maker, the toaster, nothing's been touched. All the starter samples that we had left there are still there. The refrigerator only had one energy drink, one protein drink, and one bottle of water. That's it. So clearly this person lives on fast food or just eats all meals out, which honestly is fine with me. Less wear and tear on the kitchen is awesome.

Kevin: 33:50

Alright, let's get back to the leases. The point Stacie is trying to make is that your lease needs to be updated to keep up with changing laws and times. Years ago waterbeds were a thing. I mean, not so much anymore. Cable TV was a thing, and tenants would drill a bunch of holes in the flooring to get the coax cable to each room. Now it's the internet. And the way you learn about what you will allow and what you won't is by experience. Either issues that have come up with your own tenants, or those stories you hear about from other landlords. This is why our lease is nearly 50 pages long. Now at the risk of sounding salesy, you might be wondering where you can get a state specific lease. Often your property management software will offer one, but sometimes they don't offer adequate addendums, so use caution. We know Zillow is also working to get into the property management space, but you guys, we highly recommend EZ Landlord Forms. They're a company that started out with just state specific leases. They also have over 400 forms for all of your landlord needs. Like non-renewal of a lease notice, violation or adverse action notices, and pretty much any addendum you would need. It's free to have an account and that gets you access to 200 of those forms and you can purchase anything else on an add needed basis. Of course now they are stepping up their game and they do tenant screening, which we really have no idea how that looks, just that it's now offered, along with rent collection. If you want to check them out, we'll put a link in our show notes. Oh, and if you use our link and code Stacie 15, that's S-T-A-C-I-E and the number's 1 5, you'll get 15% off your purchase of any lease or form. That info will be in the show notes as well.

Stacie: 35:50

Yeah. You know, we're Realtors so we get our leases through a different site, but kid two is gonna be using EZ Landlord Forms for his new leases on that Idaho duplex that he's almost ready to list. Okay, I kind of want to step things up here a little bit. We covered most of the important areas where landlords fail to give their attention, but we have one more that we want to discuss before touching on some less obvious issues. And of course, you know we have to talk about inspections. You guys, this is where you're able to find out if that tenant you place is caring for your unit and following the rules. It's also where you can find out if there's any water leaks or maintenance issues that have come up unexpectedly. We have found unauthorized roommates, overloaded electrical plugs, flammable items in the unit near the gas stove. We have dealt with addicts and hoarders, elderly people that can't take care of themselves. Broken windows, doors that don't lock properly, unauthorized pets. I mean, the list goes on and on. And if you don't take the time to go in your units once or twice a year, you will never know. And please do not be that landlord that is like, I don't want to bother my tenant, or I don't want'em to think that I'm snooping on'em, or the worst case, I don't want to know what's going on in my rental. I mean, holy crap. Then you should not be managing the units yourself. The amount of money that can be lost by not being proactive and doing property inspections is insane. Roof leaks can lead to mold. Window leaks lead to dry rot. Unauthorized pets can wreak havoc on your flooring. Air filters that are not changed out can severely reduce the life of your heating and air system. And I'm not gonna go into details on what you need to do during these inspections. I'm going to link the three most listened to episodes, which one covers why we do inspections, and the other two cover what we do in our fall and then our spring inspections because each one has a different focus on maintenance. I believe the episode numbers are 3, 4, and 27. You can listen by going to your landlord resource.com/episode and then just put the number episode that you wanna listen to in. But we suggest starting with episode 4, which is why we do inspections in the first place, and what we're looking for. Episodes 3 and 27 on spring and fall maintenance respectively are more checklists of what we do at each inspection. Sorry, it was a little confusing, but you can check out our show notes. It might be a little easier for you.

Kevin: 38:26

Yeah, de definitely check out the show notes. Okay, we have gone over why you need to treat operating your rentals like a business, not a hobby. Why it's important to have an organized paper trail of all your forms and documents and financials. How you need to really pay attention to tenant screening and not just go with your gut. Why you need to make sure you are always reviewing your lease and keeping it updated. And how important it is to stay up on your property inspections. Now I want to touch on some other, less pressing, but still important issues that if not paid attention to, can really cost you in the long run. First up, not understanding turnover costs. Now we really hope you get tenants in your units that stay for years on end, and turnovers are less often. But regardless, you will face such expenses as cleaning because even if the exiting tenant cleans, when you go into do repairs, you likely have to clean it again. As I just said, you will probably have some repairs to do. Maybe things are working fine, but you know they get worn. We find this a lot of time with our kitchen faucets. And sideline here, we have found one that looks really nice and so far it's really good on durability. It's a tall farmhouse faucet with a pull down sprayer for like 40 bucks. We buy the stainless steel version, but it does come in a variety of finishes. We'll link that in the show notes. Appliances are another thing that may need to be upgraded if it's been a while. Carpet in the bedrooms and hallways, paint, fixing dings in sinks and tubs. You know, stuff like that. All of that stuff takes money. So make sure you're holding enough cash reserves. You also need to consider the lost rent during the vacancy and fees you would pay if you're gonna pay someone to find your next tenant. It all adds up really fast if you are pulling that from your personal funds. The next thing is do not sleep on preventative maintenance. Now, this kind of falls under the umbrella of inspections because often that is when we handle our preventative maintenance. But think about servicing your HVAC, flushing the water heaters, cleaning gutters, fixing fences or gates or dry rot that you've noticed. These, among many other things, that if ignored, will cost you way more to fix later on. We suggest you use your mobile phone and set up reminders for yourself about a month before you would need to handle these. So say, set a reminder in September to find a day to go and clean the roof gutters in November after the fall leaves have clogged them up and before the winter rains will start. We have free maintenance checklists you can download. The links are in the show notes.

Stacie: 41:20

All right, let me jump in and finish this list out. And the next one is important. Landlords, you need to stay educated and there are many, many ways that you can learn about changing landlord tenant laws. You can join your rental housing association. They will absolutely keep you in the loop. So, for instance, on April 1st of this year, and it's 2025 for those listening in the future. On April 1st, here in California, we had two new laws go into effect, which we discussed earlier. The first one is about how larger landlords have to offer positive rent payment reporting. And that's where when someone pays their rent on time, landlords have to at least offer to report it to the credit agencies to help that tenant improve their credit score. And it doesn't affect us nor most of the landlords that we know, yet recently, we sat, still sat in on a course all about it. The other one is about security deposits and how now it's required that all California landlords have to take photos of the unit before move in and after move out. You know, that's photos three times. You have to take them before to show the condition of the property at move in, and then after the tenant moves out, but prior to any work or cleaning being performed. Then you have to take photos again one more time after their repairs have been completed. And before you guys roll your eyes and say, come on, you know, this is a good thing. It's teaching landlords to protect themselves. It's also because there are a lot of landlords who refuse to return a security deposit, and makes shit up that they say is damaged or be yond wear and tear just so that they can keep a tenant's security deposit. And that's not cool at all. So you know what happens? Because these idiots don't handle their finances well and they're cheap, they ruin it for the rest of us who follow proper guidelines. They have made more work. But to be honest. We have always taken photos and included them with our move out inspections.

Kevin: 43:26

We also do pre-move out inspections so we can point out issues that a tenant might be charged for too, which I believe is law in California, right?

Stacie: 43:36

It's law that we have to offer it. It's not law that the tenant has to take us up on it. You guys do not screw tenants out of their security deposit unless there is damage or something that is absolutely negligent on the tenant's part. If there's holes in the carpet that's three years old, yes, charge them for that. If there's a window broken, yes, charge them for that. If there's a couple blind slats that are broken or bent and the blinds have not been replaced in over five years, do not charge them for that. If you tell them that the unit has to be cleaned and you do not give them exactly what needs to be cleaned and what you are going to charge, if it is not. Do not charge them a cleaning fee unless it's written in the lease that you can keep X amount of dollars of their security deposit on their behalf. Again, the very thing we discussed here was that owning rental property is a business not a hobby. Take it serious and do better. When tenants experience a bad landlord, that in turn affects us all. It puts a bad taste in their mouth and makes tenants assume that all landlords are money hungry, scum sucking rental property owners. And it doesn't have to be like that. We can treat tenants with respect and still remain financially solvent with less stress. But the responsibility falls on us landlords to be professional, attentive, and focused business owners. Alright, stepping off my soapbox now. And speaking of money hungry, do not be afraid to raise rents. The same landlords who screw people outta their security deposits feel that they deserve to do so because they never raised the tenant's rent. And that is your decision to raise rents or not. Every single one of us, if the market permits, has the opportunity to raise rents each year, when the tenant's lease renews. Again, you're running a business. If you think that not raising rents when the market calls for it, we'll keep a tenant in your unit longer, you're right. But you're also putting less money into your pocket to complete updates or do maintenance to keep your property inviting and functioning properly. You're also putting the value of your property in jeopardy if you go to sell. Not doing maintenance and not raising rents on a property size duplex and up just gives a buyer more negotiating power. And our son is a prime case in point. The property was never maintained. Rents were about$800 lower than the market for that area. So he used that to negotiate tens of thousands of dollars off the asking price, and he got it.

Kevin: 46:17

And didn't we just see another duplex? I mean, not in the direct area his but pretty close, that is selling for a hundred thousand dollars more?

Stacie: 46:26

Yeah, it's about a mile away. And if you're okay with that much less when you're selling your rental property, then by all means, keep on keeping on. But just the simple act of gradually increasing rents, trains the tenants to expect a little increase with each renewal. And should kind of light a fire under your butt to keep the property nice so that they won't argue about that increase. If they see the money that they're spending on rent being put back by way of maintenance and improvements, oftentimes they're more accepting of it. It makes a nicer home for them to live in, and who doesn't want that? The surefire way to piss them off is to not do any increases for years, and then hit'em with a$500 raise in their rent. All right, the last thing that we wanna reiterate is that you don't have to do this landlord thing alone. Build a team that you can lean on. Find a good contractor or a handyman to call when there's a maintenance issue that you can't handle. Make sure you have an electrician, a plumber, appliance repair person, as well as a good real estate attorney and a CPA. There's a bunch of really good property management software apps available. Like we mentioned earlier, there's Door Loop, Hem Lane and Turbo Tenant. They're all good options and linked in the show notes for you to check out. You can also join a local rental property association. Often they have evening meetings where you can meet other landlords and they have guests who are able to teach you something new or like service people discussing maintenance specific to your area and how they can help. We have met techs to add to our team and gotten resources on new laws. Like when the deck and balcony law came out for California. We met a guy with a company that does inspections and can handle all the legal junk that goes right over most landlords' heads. And lastly, rental housing associations often offer state specific leases. You know, back in the day before I was a Realtor, that's where I would get mine and uh, hand write them out.

Kevin: 48:34

Man, you are seriously dating yourself. I mean, right back with that banner you used to hang up for the marketing. Huh?

Stacie: 48:42

I've been at this a while, you guys and I kind of know a few things. I absolutely do not know it all, but I know a lot. And I'm telling you that if you ignore the items that we've discussed here today, you will end up paying in the long run. Some way or somehow not paying close attention to your rental property business will catch up to you. All right, that is our show for today. Thank you so much each and every one of you for tuning in. Your trust in us is humbling, and we cannot express our gratitude enough. If you like what you're hear on this podcast, would you do us a favor? Would you subscribe or follow on your favorite podcast platform? That way our episodes will be there waiting for you each week so that you can enjoy all that we have to say about owning and self-managing rental properties. And we would be super appreciative if you could leave us a kind review. Because those reviews really help other landlords like you know that we are the real deal. We have links to the review sites in our show notes. If you have a question or you want to suggest a subject for our podcast, you can text us at 6 5 0 4 8 9 4 4 4 7 or email us at stacie@yourlandlordresource.com. That's Stacie with an IE or kevin@yourlandlordresource.com. Feel free to download any of the forms or templates that we offer. Or if you want to sign up for our free newsletter, you can access all those links in the show notes. And if you'd like to follow along on the Daily, you can find us on Instagram and Facebook, and we have a private Facebook group as well. Again, all those links are in the show notes. Thanks again for taking the time outta your day to listen to our podcast, and until next time, you've got this landlords.