“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…
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.