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Welcome to Episode Six of Season Eight of the Growing Empire Show. Today is our question and answer segment so please stay tuned.

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Welcome to Growing Empires. Hosted by real estate entrepreneur and trusted investment advisor Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.

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Before we jump into today’s episode of the Growing Empires podcast, I have a program update for you as we are shifting this podcast from a weekly to a bi weekly show starting with season nine. I launched this podcast in July of 2020. Right in the middle of the pandemic. The real estate investment market was quite different back then versus how it is today and how I expected to evolve over the next few years. I will continue to make sure that each podcast episode focuses on new ways to help you optimize your real estate investment portfolio as an active investor and I am adding a new way for you to get the best information about investing in real estate for passive income. Combined with this Growing Empires podcast in my Growing Empires advisor guide newsletter, I’m launching the Empire Investment Club. Which is specifically designed for people who want to earn passive income from real estate. I’ll be sharing more about our new Empire Investment Club. So make sure you’re signed up for the Growing Empires advisor guide newsletter by visiting my website, JenniferdeJesus.com. Finally, I want to thank you for listening. Whether it’s your first time or you’ve been a loyal listener for a long time, I’m looking forward to continuing to bring you the very best expert interviews, information and education to help you grow your real estate Empire.

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All right, we are here with our question and answer segment. So let’s jump right in. We’ve got a couple of great questions today from our listeners. First one is; I have a good paying tenant, but he’s a problem for the building, what should I do? Well, my advice is always to try to deal directly with the tenant first. And you know, you can go just, because you’re a good paying tenant, let me start there is not the only reason that you would keep a tenant. Because if that tenant is disruptive to the other tenants in the building, whether this first tenant leaves or other tenants leave, you’re gonna still have people leaving. And none of that is a great financial position for you to be in as the landlord. So my suggestion is always to deal head on with the problem. And I always find that you get a little more bees with honey. So, what I like to do is I like to just have frank conversations with people. So if I was dealing with this particular tenant, what I would say is this look Joe, you know, I appreciate that you’ve been a great tenant for me, and you always keep a nice unit, and you pay your rent on time, and you’ve been with me for quite some time. And I really, truly do appreciate it. However, we’re having a lot of complaints from other tenants in the building, that you are destructive and you are loud, and you’re not allowing people to sleep or relax in their home and that is a problem for me that I cannot continue to have. Because while I appreciate that you’ve been a fantastic tenant for me, if you’re disruptive to other tenants, that’s not quite fair and I’m sure that you would agree with that. And I am sure that Joe is going to agree. So I would say to him, Look, we’ve got to come to a resolution where we are not being disruptive to the other tenants if we want to continue to have the great relationship that we have and if you want to continue to stay in my building. So what I’m going to ask you to do is to figure out what you’re doing that’s causing these other tenants to be unhappy. Mostly, what I’m hearing is that it’s late night parties or late night music blasting, or early music blasting. And it’s disruptive to people that are, you know, trying to sleep and get ready for their day or trying to go to sleep at night. So I’m going to ask that you just cut that back. During the day, you certainly can feel free to do what you’re doing. However, you know, after say nine o’clock at night, I really need you to tone it down. And before 8am in the morning, I really need you to tone it down. Do you think that you could do that for me? And I’m sure that Joe will say yes. So now if the problem that they’re causing is something else, like you know, maybe they’re not cleaning up after their dog in the yard, the conversation would just be very similar. I always find that it’s necessary to be direct. This is the issue that I’m having. This is what we need to do to resolve it. And these are some of the options that I can agree to with you. Now, if Joe decides that he’s not going to follow the rules, and he’s going to continue to be a disruptive tenant, then my suggestion is to put in writing a warning notice for him. Where you say, look, we’ve had this conversation, it is still an issue. I cannot continue to do this. I want you to be a tenant here. I truly do. But I cannot have you be disruptive to the other tenants in this building. So if you cannot figure out a way to get yourself together, we’re going to have to part ways and that is not something that I want to do. So if there’s anything that I could do to help you get to a better place where this is not such a concern for the other tenants in the building, then I’m happy to hear how we can accomplish that together. And hopefully, by just dealing direct with people, we’re going to make some changes that will be beneficial to everybody. But the reality is, is that if Joe cannot come to the conclusion that he is disruptive, and then it’s not going to be acceptable to you as the landlord, you’re likely going to have to evict Joe. And that is unfortunate. But that is something that you’ve got to do, because if you don’t evict Joe, Susie and Jane or whoever they are, are not going to stay there long either. So, and Joe likely will be a problem for every future tenant. So, you know, it’s not just about the fact that people pay rent. It’s about how they behave in your building that has just as much to do with whether or not they should be your occupants or not. And I think it’s really important to be mindful of concerns that you hear from other tenants. Because that is a good indication of what is happening in your building when you are not there.

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Next question, I have a one bedroom unit that by code only permits two people and I’m aware that there’s a third person living there. Should I be concerned with this and what is my liability? That is a loaded question. But I have an answer for this. You have huge liability. So you want to stop this immediately. Here’s why. If only two people are permitted by code, that means that there’s not another bedroom, number one. So as somebody is, let’s say, storing a bed up in the attic, which is not a habitable space, and God forbid you have a fire in that building, and one of those tenants cannot get out and they die. Guess who has liability there? You. So that is a really big concern. I will tell you that I am firm, very, very firm, not only on my own buildings, but buildings that we manage that under no circumstances will I agree on any level to do anything other than follow city ordinance or follow city code. And if I have a landlord that does not want to listen to the city code regulations, because they’re more concerned about their income than they are doing the right thing, I terminate those landlords immediately. It is not worth the risk of somebodes life. It is not worth the risk of your liability, it is not worth the risk of a bad reputation, and you certainly don’t want to be on the city’s radar. Because any other building that you own in that municipality will be looked at with a magnifying glass and that that’s not, none of those situations are good. Number one, as a landlord, you took almost like an oath to give people habitable spaces safe habitable spaces. It’s not just about your income, that’s your obligation. So it is up to you to make sure that you are always compliant with what city code is. And city code is 100% about risk, and it’s about fire and safety. So if the occupancy level is only two people, you don’t want that third person there. So in this situation, I would talk to the tenants explain that one of them cannot live there, they have to move out. And if you cannot do that, you’re going to have to throw them all out. And that’s unfortunate, but, you do not want to have occupancy levels higher than what the municipality has deemed safe for your building. And it’s just it’s too much risk and it’s not one that you should take.

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The episode will continue in just a moment.

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If you’re like me, you know the importance of diversifying your investment portfolio. Real Estate Investments, whether you’re an active or passive investor are a great way to add variety and reduce risk to your overall portfolio. But what about stabilizing that portfolio? If your portfolio is diversified through real estate, you still have to stabilize your properties with the right tenancy, know when and exactly what capital improvements to do, and assess your entire property’s portfolio to maximize property values and their income potential year over year. Yes, it’s a lot and you’ll need help to make sure you’re looking at everything as objectively and strategically as possible. Get the guidance you need to assess and make the right decisions that will stabilize and optimize your property. So their longevity is assured. Book a call with me and I’ll guide you through the process and answer your questions. Go to growingempires.com and click on book a consult and you’ll be on your way to a healthier, more stabilized and diversified portfolio with real estate.

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Last question is I have an old building with old windows and every year during the heating season, my tenants complain about the draft from the windows. I really don’t want to replace all the windows because it’s quite a big expense. But yet I don’t want the tenants to be unhappy. So what is your advice in this situation? Well, my advice in this to make sure number one that you’re actually analyzing facts, okay? Because yes, if you think about it, replacing all of your windows in one building could be a sizable expense. It’s a capital improvement. So I do expect that it’s a sizable expense. So when you’re looking at that as one bill, right, it seems overwhelming at some point. And you may look at it and say, Well, you know, I’m not going to be able to recoup this cost over the next couple of years. If you’re intending to keep the building for the next couple of years, this is going to be an improvement that you’re going to want to make. Because the reality is, is that when somebody goes to buy your building, when it comes time to sell, what do you think they’re gonna look at? Those windows that you never replaced. The other thing is you’ve got to look at so I know that you have the window bill or invoice in front of you, you’ve got to think about your turnover and the effects of not making this improvement. Because if the tenants are paying high heating bills, because the heat’s on them, and they can’t keep their heat in line, and there’s draft coming in and they’re uncomfortable, that’s going to make the tenants leave. So look at your occupancy over the last couple of years. Do you have a history of people not paying rent, especially in the wintertime? Do you have a history of people moving out, you know, every year when their lease comes up? All of that costs you money. So you’ve got to actually analyze apples to apples. Because it’s easy to look at one big invoice and think, Oh my God, that’s too expensive. But think about the result of not handling those windows over the course of your ownership. If you have constant vacancy problems, if you have constant non payment of rent problems, if you have constant turnover problems, all of those things add up. And they very well could add up to be far more than the cost of the actual invoice of the improvements of the units. So that’s definitely something that you’ve got to look at and analyze to make the best decision. And I can’t really tell you which way is better, because you have to analyze the numbers specifically. But I assure you that drafty windows and uncomfortable living environments for tenants is one of the easiest ways to get them to leave. So my suspicion is that you’ve had a high level of turnover. And that is just as costly sometimes as the actual invoice upfront. One of the ways that you can cut back on the hefty all at once bill is to do it one apartment at a time. So you turn over your unit, you fix the windows just in that unit. So you don’t do the whole building, you just do that unit. And then when you turn over the next unit do that units windows. That’ll help to kind of ease the burden of the expense and give you a little bit more play with income over that course of that improvement. But the other thing that you could do if for some reason you cannot replace the windows and that’s just simply not an option for you for one reason or another, then you’re going to have to find a way to help the tenants live comfortably without having the initial expense. So a couple of things that you could do is give them a little bit of a rebate during heating season, rebate on their rent, or maybe a rebate to give them a little bit of assistance with their heating. In old buildings in the past, we’ve actually shrink wrapped the windows during the heating season. We’ve given them space heaters to heat portions of the unit that were maybe much colder. You know, there’s so many different things you could do. You can do new trim around the doors and windows, you can caulk around the doors and windows better. Some of these little improvements actually go a long way to improving the quality overall. I mean, if they’re old single pane windows, you can’t really make single pane windows any better than they are. But if they’re double pane windows, sometimes again, just caulking around the outside, shrink wrapping the windows, putting draft protectors on doors, some of those things could be very, very helpful to your tenant. Adding an additional space heater to the units, maybe adding a larger size heating unit to the building would be helpful. But all of those things would go a really long way. Just showing your tenant that you care about their concerns, even if you can’t make the improvement, you know, at this specific time. And if you’re the one paying for heat you really want to look at is it really costing you more money to not do the windows or is it really costing you less money? Because sometimes the drafts are what cause pipe breaks in the winter. So if you’ve ever had a pipe break in the building, these old windows could be the biggest culprit of that. The drafts also keep your heating system running. So if it’s like an oil or gas fired heating system, and there’s a thermostat there that has to, you know, get to temperature if there’s a lot of draft coming in, it’s going to constantly run. It’s going to wear out your heating system much faster. It’s going to keep that bill constantly going and increasing. And again, sometimes that cost could be just as much as just replacing the windows. So my advice is this. Look at the whole picture. Not replacing the windows could have other effects. What are those trickle down effects that it has between the tenant and your costs as the landlord. And once you have an opportunity to analyze that, it’ll help you make a decision whether or not changing out those old windows makes sense or doesn’t make sense. But again, you don’t have to do it all at once. You can do it window by window as you turn over units as it makes sense. Well, that’s the end of our question and answer segment. I hope you got a lot out of today’s show and until next time, take care.

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For more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio, visit growingempires.com