Hi, it’s Lou Brown! And I am back with some more information. Having been a landlord now for over 40 years, I know what it’s like to buy and hold property and I know what it’s like to do everything you can do to be able to collect your money and to be able to use your money. You know, one of the challenges I learned early on is that most States have security deposits and most landlords collect the security deposit. Well, one of the things you got know about a security deposit is it’s not your money. It is the residents money and that money in many States, you have to put that into a separate bank account and you have to hold it there. And in some States you have to tell them what bank it’s in, what the account number is. And in some States you even have to pay interest on the money.
You have to manage the account. But you have to pay the resident interest on money while it’s there. So I finally got a clue and I said, this is just insane and it makes absolutely no sense because worst of all we can’t use the money. Secondly, at a later date when the resident moves out, that’s when we have to account for the money in addition to accounting for it on a monthly basis. It could be there five years, you still have to keep up with that money. And I realized that we could do things differently. So what we created is what we call a move-in fee. And this move-in fee is actually equivalent to a little bit more than one month’s rent. And when we collect that, it’s a fee and we can spend the money right away. And that was an, it was a game changer for us.
I do a lot of research online. I did a lot of research in various state laws and I discovered that it was perfectly acceptable to do that instead of a security deposit. And in fact you can do both. So I created a standard rental agreement loaded with profits centers and protection and ours allows for the move-in fee. And it also allows for security deposit. You can put zero in the security deposit fee, and you can put the amount of money in the move-in fee. Now it’s fully explained as to what a move-in fee is and it’s use for and explains that it is a nonrefundable fee. It also explains that we will pay our residents upon proper notice, within to our world. We we get a 60 day notice. And what happens is when we get proper notice then we notify them of what they have to do in order to keep the clean slate with us when they move out.
So we give them a 20 item checklist. Now this is all available in my volume eight Property Management System, volume eight Property Management. It’s got my standard rental agreement and it’s also got my move out inspection report and it’s got a move out checklist of about 20 items that we send the letter to the residents. The letters already written. It’s on forms disc. You can easily send it out. Now what happens is that we are willing to pay the resident or some of these various things. For example, we’ll pay for a clean stove, we’ll pay for a clean refrigerator, we’ll pay for clean carpets, we’ll pay for painted walls, provided that you approve of the work that’s done and you’re going to walk through when they tell you that they’re ready to have it inspected and you’re going to put together a checklist of items, which by the way is in my volume eight Property Management.
You can secure that by going to StreetSmartInvestor.com and what happens is that we actually have a schedule of payments that we will make to that resident when they move out. So here’s what just happened. You got to use that old ways the security deposit money. Now you get to use that money for your business. When they move out, you get to pay them for work that’s done, they have an incentive to get paid and you get your property back quicker, cleaner, and you don’t have a downtime to get it ready for the next resident.
I hope that has been a value to you. I love teaching and sharing what we’ve learned being in this business for over 40 years and I will see you again soon. Like this. Love this. Share this. And do subscribe. Yeah, baby!
If you want to listen to our Podcast, click here: