“The Way Things Work” for Landlords
It’s another Swipe & Deploy, hooray!
So, this form is one of the handiest little forms in my new tenant packet. Basically, it restates a handful of crucial items from the lease — and does it in plain English so I know we have a crystal clear understanding.
So, here’s the plan…
Step 1: Watch the Clip
In this short little video (from Starbucks after just having signed up a tenant), I’ll walk you through the document, explain the purpose and mindset, and my personal approach when explaining it to the tenant.
Press play, friends…
Video Transcription:
Crisp, clear cogent. I've learned the hard way, after 22 plus years in the real estate investing game, how utterly important it is that the tenant landlord relationship be characterized by those three things more than anything else crisp, clear, cogent communication. But, you know know, wouldn't it be nice if there were a simple way to communicate that right out of the gate to kind of distill down the way things work in plain English and maybe like a one-page document that should outline this relationship before you really even signed the lease agreement together. And I don't assume any bad actors on either side of the table. I mean, humans are humans, and we can all forget, right? I can forget tomorrow what I said today, let alone next month or years from now. It's far too easy for things to fade into the white noise of our memories or become something else other than what they were at the start of this relationship.
You know, I seem to have this fuzzy memory of a guy one time at Starbucks maybe 13-14 years ago, sharing a document with me that accomplishes exactly that. But who was that guy? And what did he have to say about that document and how to share it with tenants without alarming them? Let's think back…
Hey, guys, it's JP. I'm coming to you from outside of Starbucks here in Memphis. I've been sitting inside, actually just met a tenant, signed a lease and all the paperwork ceremony involved in moving into one of our houses that's been vacant and just wanted to actually record a quick tip for you that was hugely beneficial to me when I first learned it. And while I was in my mind, I thought it might be something worth sharing to you. This one goes out to all my fellow landlords out there. And why am I outside? Because, frankly, there was just a lot of people sitting around me. I thought I'd look a little odd to them if I did this right inside.
Here's the deal… this is the package of paperwork that I just had her sign. Lots of stuff in here. If you're a landlord, it's nothing new to you. But this little piece of paper was introduced to me by a colleague of mine here. The way things work. And this is actually an addendum to my lease. And I'll put this out so you guys can download this and use it yourself. I want to thank let's see Chris Wark. My friend Chris Wark is the one who first turned me on to this thing. Here's the conversation I have, and I read through this, and actually, with my lease, even I go through it line by line by line with them and go through it to make sure we're on the same page with stuff. It's about an hour and a half long meeting every time we sign a lease. But here's what I say and here's exactly how I say it.
Ms. Tenant, here's the deal. This is going to be added as an addendum to your lease. Congratulations, because you actually qualify for our rent discount program. Now, you remember how I told you the rent is $475 a month on this property? Well, there's a little twist to it. And the fact is, the rent is actually $500 a month. But no, it's not a bait and switch. Here's the deal. $500 is the rent, but if you pay the rent on time, you qualify for a discount of $25. You only have to pay $475.
So here's the way things work. You have qualified for a special discount rent program. Your discount rent is $475 and your ordinary rent is $500. If your discount rents not been received in our mailbox by 06:00 pm on the 1st, then you will lose your discount for that month. You will owe the ordinary rent amount.
In order to avoid this, you should mail it two or three days ahead of time or drop it off in person by 06:00 pm on the 1st. We do not accept rent payments in person. If we have to call you concerning the rent, it will not be a pleasant conversation. At that point, I usually look up and just kind of smile and say, it never is, is it? And they smile back.
On the five days past due, a late fee of will be applied to the total rental amount due. Now you notice there's a late fee added to the $500. So after the 5th so if they pay before the fork before the first, it's $475. It's a discounted rent. If they elect to wait until the 1st through the 5th, they pay the regular rent $500, and after the 5th, they owe another 10% on top of that, which should be $550 in this case.
On the 10th, ten days pass to due. If the total rent plus late fees are still not received by us, our attorney will immediately file to evict in all capital letters you. We will also sue all persons on the lease for the total rent amount due for the rest of the lease. Eviction will stay on your credit report for ten years. This is bad. Again, I usually look up and just kind of make it. I make a little bit of a joke out of it and say this is bad, and kind of laugh about it to keep it light hearted, but also to make the point. I make eye contact with them when I say that.
Remember, it is not our responsibility to chase you down to collect the rent. It is, however, your responsibility to bring the rent to us. Finally, our landlord style is called fair. We are excellent managers and I usually look up and say, look, the fact is we really appreciate you. We're going to take care of you. We want to make you happy in your new home and plan to have a long positive relationship with you. In return, you should pay your rent on time, take care of the house and communicate. This is the key to us having a positive relationship. Now, I want you to sign that you have read the statement above and you additionally fully agree with them and agree to abide by them. I go through it just that way, just that crystal clearly just that flavor. And it's really been a benefit, even if it reiterates information is already on the lease in one form or another. The lease is pretty much a lot of legalese from their perspective and their isolated over the whole time going through it. No matter how much I try to emphasize it. This is in big bold letters, crystal clear and plain English.
And it's been a great little document to add to every single lease that I have signed. Glad to pass it on to you guys. Thanks Chris, for passing on to me and paying it forward. Hopefully it's beneficial to my fellow landlords.
Step 2: Download It, Use It
Now that you know how I use this document… I hope that you start deploying it in your business to level up your game…
Ready to grab mine for your own bag of tricks?
Awesome, here's how…
Step 2.1 ⤸
“Like” our Facebook page please?
Step 2.2 ⤸
Just leave a comment below sharing your honest feedback on “the way things work” for landlords template I'm freely sharing with you. Whatever you think after hearing my thoughts behind it in the video above. Good, bad, and anywhere in between. Seriously.
Alternately, I’m also interested in hearing anything else (another resource or tool) that you’d like us to share in a future “Swipe & Deploy” like this. Do tell.
Step 2.3 ⤸
Then Chuck Norris will hand you over my template.
Totally serious. Just try it. 😀
Step 3: Share & Pay It Forward
Within a couple of hours of uploading the above video, I already had a couple of comments on my account about it…
Like: “I have been giving an early discount on my homes and it works great. I also include that they cannot call me for anything under $50 in repair costs during that month. That money is to be used for those minor repairs, gas for your mower, etc.”
And that's before I even had time to post it on AwesomeREI.
And if you find this to be super helpful, too… share it with your fellow real estate investing folks. Pay it forward!
Oh, and BTW…
In case you didn't know, we give stuff away like this all the time, like seller acknowledgments (a.ka. the best damn doc, period), an affidavit of equitable interest and simple real estate contracts. You can also check out our entire “Swipe & Deploy” goodies category over here that we've compiled over the years to help you level up your REI game.
This is great information!!! I am not a landlord yet because I’m just starting my venture into learning about real estate, but I would use this when I do have properties to rent.
This sounds perfect and clear for both the parties.
This is a great way to let the tenant know that you are serious about the relationship they are about to have with them and to further impress upon them the terms of the lease they are entering into.
Awesomeness as always you guys are the best thank you so much
I have and investor friend who uses a form very similar to this at lease signing. I have been along during a signing and it works very well. All of his tenants KNOW what to expect so they PERFORM admiralty.
Yes! Crisp, clear cogent.
Clear, concise and cogent! I love it.
I really like the early bird incentive as I am sure it makes people eager to pay their bills rather than delay.
This document is a great idea when completing the process of leasing your property in person.
Not knowing anything about being a landlord, I would say this is definitely crystal clear. I don’t think I would have
said ” Remember, it is not our responsibility to chase you down to collect the rent.”. I would have made it clear that
I wouldn’t be visiting to collect, but I would have express to them the that I expect them to be responsible adults.
the “the way things work” letter is a must-have item for the Landlord’s tool kit!
Thank you for going through the doc with us.
Thank you for sharing these documents i can use them as I go along
Thank you! I’m not to the point of owning any rental properties, but I do see the value of the doc!
Clear, concise, cogent… Did I get that right? Thank you!
Than you! Haven’t said it before here, but I’ll say again: Thank you!
Thanks for the doc
Thanks for the doc
Good incentive to pay the rent on time.
The things that I have seen read
Is in incredible am ready for a life
Change
Thanks for sharing, guys. Perfect example of how doing small things can make your life so much easier in the long run!
Had to giggle because the addendum said they should mail 2-3 days in advance or pay in person. Then the next line states that payments are not accepted in person. That particular part wasn’t cogent, but still I appreciate the doc, non-the-less. Thank you
Looks really effective and simple
Thanks for providing this. Sure it will come in very handy.
Need to be able to Download document .
Excellent presentation and document. Thank you. Sharon
I totally like the idea or incentive of offering a discount to the tenant as motivation to pay the rent on time. I will definitely use this document.
That is an awesome way to get the tenant/landlord relationship on a good start. Simple, clear, cogent, and concise. Highly appreciated. Thanks.
Thank you
I will definitely use this document!
Sorry – this just seem like a method of exploiting honest hard working people. We have about 40 rentals and never felt a need to resort to this kind of thing.
Thank you, its a great form to use to support communication with tenant.
Nice. I was a landlord for 30 years. The best thing I did was have a company do an investigation of each applicant and then follow their recommendation. Never had a problem with a tennant tearing up the property or being late with the rent. You cannot ‘go with your gut’ in renting as it will RUIN YOU!
Great addition to our rental agreement forms.
works well to give tenants something for them to save money
This is a great resource, thank you!
Solid info for new landlords
Yes, it is good to read through the lease line by line with tenants before they sign it. I also like the discount they receive when they pay their rent on time. I will like to have and use that template.
Great information for new landlords
Excellent approach with the discount offer to timely rent collection. This is something I hope to impliment in my next rental property terms of agreement.
Thanks for sharing.
Truly,
Donald
thats a awesome idea love it and will definitely pass it on .thank you,
Great tips. Thanks guys.
I will defiantly use these doc.s. Thanks for sharing these and letting us get a hold of them for free. Awesome!
Not a landlord YET but this is really needed for protection of property and self. Thank you!!
I like this document because before they move in you are setting a standard for them to go by. I also recommend taking a look at their last 2 bank statements as part of the application process to make sure they can afford the place.
Ive always feared being a landlord but now i feel empowered.
Excellent Doc. Thanks JP.
AWESOME!!!!!!!
You Rock
smart real smart
Great Idea. It gives them an incentive to be on time with their lease. It is a win – win.
Love the document! Smart to give renters a small discount to get on time payments.
Great Scott!
I am confused, what does collecting rent as a landlord have to do with learning to be a financial money source for residential and commercial construction/renovation projects???????
Sorry, Janice — I’m confused by your question. Was there something in the blog post or video that made you think it has something to do with being a money source?
What a great tip and experience of yours awesome thankyou
I love this document. It’s a really good practice to make things clear at time of lease signing. I’m going to incorporate it as an addendum to my future leases. Thanks so much for sharing!
great info
Great addition to our rental agreement forms.
I like it, if they don’t sign it, you don’t rent to them
That is a great idea and makes it very clear where you stand.
Thanks again for over-delivering
Awesomely!
Thank you guys for sharing. I think it is never too much to make things crystal clear from the get go. Wil be using this document. Thanks!