A Go-To Voice for Landlords

The News Tribune - Kelly Kearsley

The down economy has meant brisk business for Landlord Solutions, a Tacoma-based company that specializes in eviction services.

President and founder Jim Henderson Jr. said more property owners are finding themselves being shorted rent, so his business is up 10 percent this year from last year. He wouldn’t reveal annual revenue.

While most people think of eviction as one step – the one when a person’s belongings are removed – it’s actually a weeks-long process. Henderson’s three-person company charges fees for helping landlords through it.

The company’s services include ensuring that notices are served properly, working with attorneys to guide the landlords through the court system, and sometimes working with the sheriff’s department if a tenant’s belongings must be removed.

The News Tribune recently sat down with Henderson to learn more about his company, its work concerning evictions – and to glean any advice he has for new landlords. What exactly does Landlord Solutions do?

We assist landlords by facilitating the eviction process for them. We also do tenant screening, and we have a service called rent watch where we collect tenants’ monthly payments on behalf of the landlord. But evictions are 80 percent of our business.

How do the evictions work?
It’s on a case-by-case basis – either the property manager or owner would call us and they typically they say “My tenant hasn’t paid rent.” That’s the most common problem. We find out from them whether they have given a notice to pay or vacate – that’s called a three-day notice. Then if they haven’t, that’s something we can start.

Do you physically do the evictions?
We don’t do very many physical evictions; most (tenants) finally get it and move on their own. I would say less than 10 percent actually push it that far. But we’ve done them in the past and we do them on occasion. Typically what we do when we’ve done them is we’ve just hired a crew and been on site to manage that crew as they remove all the personal property, with a sheriff’s deputy there doing civil standby.

Do you give legal advice?
We are not trained in the law, so we are not allowed to give legal advice. No attorney is needed to start a three-day notice. Once an eviction starts, all of our clients are represented by an attorney. Ninety percent of the questions we get are not legal questions, but questions about how to manage a property and how to manage tenants.

What common misconceptions do your clients have?
For us, it’s not just saying, “Here’s how the process works,” but it’s also telling them, “Look, you are the landlord and you are owed rent. You don’t have to accept stories or wait for the rent.” How many weeks can you afford to wait? It’s sometimes kind of getting them to move on that and do something.

And time is the big issue?
What’s not on the side of the landlord is time. The (eviction) process takes up to 61/2 weeks – that’s essentially two months of unpaid rent on top of how many months you haven’t received rent.

What mistakes do you see landlords making?
Often they think they sent their tenant a letter or an e-mail telling them they owed rent. They don’t realize that there’s a formal process that you have to go through that the court has laid out. Most of our clients don’t do an eviction but every couple of years, so they haven’t done this for awhile.

Is your business busy right now?
We’re seeing more evictions and more evictions for property that has been foreclosed on – that’s the banks doing the evicting or someone buying a property at an auction and either the previous owner or tenants of the previous owner that are still in the property.

What is your company’s workload?
We handle about 125 to 150 cases per month. Those can start with a three-day notice where the rent is then paid and the case is closed, (and) all the way to cases where we go to hearing and the sheriff goes out and does a physical eviction.

When you start an eviction, a number of them will resolve themselves, because again the No. 1 issue is nonpayment of rent. So if the tenant can come up with rent, the landlord is happy to let them stay.

Do you end up feeling like the bad guy?
I feel like I’m the good guy for my client. I know that bad things happen to good people, but we don’t get into the particulars of what caused the tenant to miss the rent. It’s simply that you can’t live there for free – you have to pay the rent.

I’m a property owner – that’s how I got into this – so I know the feeling of not getting paid rent, having to make the mortgage payment, having to pay to have an eviction done and then having to go back and turn that unit.

How did you get into this business?
I bought a house in 1994 and then I kept buying more property. There used to be a service in town I used to do my evictions. They were good in the beginning and then over time what should have taken three weeks was taking four or five weeks, so I decided I should learn the process myself. Then I thought I could do this as a business. My dad had some property and his friends did as well. They gave me a shot. And it grew from there. Now we are the only business like this in Pierce County, with the exception of attorney offices.

Do you have any advice for new landlords?
A couple of things: Join a rental housing association – it’s the best resource in our state for single family homeowners. Use a good lease. An office supply store lease or one off the Internet isn’t adequate because they aren’t specific to our state. The other thing is don’t wait – once the rent is late, do something immediately. And screen your tenants.

Kelly Kearsley: 253-597-8573
kelly.kearsley@thenewstribune.com
[hr]
JIM HENDERSON JR.
Title: President and founder, Landlord Solutions
Age: 34
Work: Provides eviction, tenant screening and tenant payment services. The Tacoma company serves property owners and managers from Snohomish County to Grays Harbor County.
Family: Married, three children
Home: University Place

11 Mistakes Inexperienced Landlords Make

By Katie Adams, Investopedia.com

With the housing market collapse many investors who have been fortunate enough to preserve their cash, or maintain access to credit, are snapping up incredible deals on residential properties to try their hand at real estate investing.

While it may sound easy enough — buy a home, make a few renovations and rent it out for more than the monthly mortgage payment — successfully managing your own investment properties requires the mindset of a business professional. Without experience, it can be easy to quickly lose money, time and sleep by making these common new landlord mistakes:

1) Not running adequate checks on a potential tenant

As anxious as you may be to get a tenant in and paying rent, it's not worth rushing ahead without checking your tenant's credentials first. Use a rental application form that will provide you with adequate information, pay the money necessary to obtain a credit report (to check on a history of late payments, delinquent accounts, etc.) and take the time to verify references – including employers and former landlords.

Even if the tenant is "desperate" to move in and can make the deposit amount immediately, check out their background first. Don't allow yourself to feel rushed or pressured into making a potentially costly mistake.

2) Thinking the property will always be rented

Before closing on a property you need to do your own financial due diligence and ensure that you can pay the mortgage (if you're taking on a loan) in the event that you have months with no tenant paying rent. Don't risk potential foreclosure and financial ruin because you failed to do a simple cash flow analysis and maintain sufficient funds to cover the mortgage payments when renters are few and far between.

3) Underestimating the cost of repairs or ongoing property maintenance

In order to keep tenants interested in (and paying for) the property you will need to maintain it. Make sure you're charging enough in rent to at least help cover a portion of ongoing maintenance costs (i.e. painting, cleaning and carpet cleaning between tenants).

Also plan on having to pull money either out of the business or your own pocket in the event that you don't have the cash needed to make major one-time repairs (such as repairing structural damage, replacing appliances, etc.).

4) Viewing it as a hobby

Owning rental properties is a business and in order to turn a profit you'll need to operate it as such. That means establishing separate bank accounts for deposits and expenses, using a bookkeeping system and consulting a tax professional to ensure you are correctly handling (and paying!) taxes on your business.

If you don't set yourself up with the necessary resources and relationships you will most likely end up losing money.

5) Relying on a handshake

In business you can't rely on promises. For your own legal protection it's essential that your tenants sign a lease agreement to reside in the property and ensure that he or she understands the terms of the contract. If you run into problems with your tenant you will need written, binding documentation (i.e. a lease) in order for the judge to make a ruling. Know your state's laws regarding leases and ensure that you use an appropriate form for your state.

6) Asking illegal interview questions

You don't want to run the risk of giving a potential tenant sufficient grounds to sue you for discrimination by asking the wrong questions during the screening interview. The Fair Housing Act of the Civil Rights Act of 1968 requires that you cannot deny a tenant's application based on race, color, religion, national origin, sex, marital status, handicap or family status (i.e. if they plan on having children).

7) Neglecting tenants

The home(s) you are renting out are your responsibility. If you do not regularly check in with your tenants and on the condition of the property you will have no one to blame but yourself if something goes wrong. However make sure you are not violating your state's laws regarding tenant privacy before stopping by the property unannounced. You may inadvertently give them the right to sue you or be released from the terms of your lease agreement.

8) Not meeting state and local housing codes

As a landlord you're required to make sure the property meets health and safety standards. If you don't take care of your end of the legal bargain your tenants may have grounds to break the terms of your lease agreement, potentially sue you and even to be legally entitled to compensation for damage or injury due to your neglect.

9) Delaying an eviction

Not beginning eviction proceedings as soon as legally possible can be a very costly mistake. If you run into problems with a tenant and are unsure about your rights or how to proceed, contact an eviction attorney as soon as possible.

10) Not enforcing lease terms

If you outlined that late rent payments would incur a penalty, charge it. If you noted that no pets are allowed and your new tenant buys a Great Dane, enforce the penalty. If your tenants realize that you're lax about the terms of the lease they will likely follow suit. Set — and enforce — the standard you want upheld.

11) Not writing it down

It's essential that you keep written documentation of interactions with your tenants in the event you ever need to take him/her to court. Note phone conversations and keep copies of emails, voicemails or text messages, etc. to be able to support your allegations.

If you are unsure about how to successfully start your career as a landlord, or fear you may not have the time necessary to perform the job well, consider working with a professional property management company. Interview several companies, check out their backgrounds and references and ensure that, like your tenants, you understand and agree to the terms of a contractual relationship.