Four and One Third Weeks = Extra Cash for Landlords

Four and One Third Weeks = Extra Cash for Landlords

Back in the early 1980s I was employed as a Debit Account Representative. My employer was an insurance company that sold MDO and Industrial insurance. MDO stands for Monthly Debit Ordinary. Industrial insurance can be interchanged with the phrase get money out of poor people weekly. How does this cause Four and One Third Weeks = Extra Cash for Landlords?

Debit Insurance Agent

MDO premiums were collected monthly. Industrial insurance premiums were collected weekly. Both were nothing more than overpriced insurance for life and fire. They only paid if the premiums were paid up at the time you died or had a fire. If memory serves most of my clients were a little behind on their premiums most of the time.

My career was brief because it only took me a short time to find out what was really going on and my preference was to treat everyone better than they deserve. In just a couple of months I noticed my life insurance premiums with a major insurance company were lower than what my clients were paying Additionally I had 25 times the coverage than the products available for sale to my clients. My supervisor explained that these were high risk members of society and they were lucky to have the coverage.

Working in the Projects

Where do you think it is easy to find a lot of poor people in one place? The Projects of course! My route included the Gareshe Homes, Grinzer Homes Viola Jones Homes, Lee-Wright Homes, Venice Homes and another group of homes over in the Newport area that I don’t remember the name of.

Here is the insurance premium collection schedule: on the days the social security and welfare checks were issued I was in the projects up to 10 o’clock at night. There was never a moment when I was afraid. Not because I am an honorably discharged Marine on the large side, because I am, The reason I was never afraid was because my clients looked out for me. The clients were great people. They were being overcharged. After that I had to get another job. So for over 30 years I ended up being an insurance adjuster. It was meeting landlords while working as an insurance adjuster that got me into real estate investing.

Important Life Lesson

One of the useful things I learned at this job is that there are not four, but four and one third weeks in a month (4 1/3). I would not realize this windfall until much later in my buy and hold landlord career.

Think about it, we always say a month has 4 weeks. However, 4 X 12 = equals 48 weeks. What about the other 4 weeks in a year. That’s right there are 52 weeks in a year. Now how can that benefit a landlord?

Monthly Rent

Here is where Four and One Third Weeks = Extra Cash for Landlords!

Most landlords charge rent based upon a monthly amount. In this example the rent is $500.00 per month.

What do you do if your resident cannot make their monthly payment consistently?

Offer them either a bi-weekly or weekly payment plan that works with their paydays not against them.

You learn to work with your tenant. And to help them budget you will only charge a small $10.00 additional rent fee.

Example#1:  Bi-Weekly payment plan

$500.00   x 12 months = $6,000.00 annual rent

$500.00  per month Rent divided by 2 = $250.00 every two weeks

$250.00  every other week.

+  10.00  Don’t forget to add the additional rent to convenience the resident

$ 260.00 Total Bi-weekly rent.

 

52 /2 = 26 Bi-Weekly rent payment due dates.

$260.00 x 26 Bi-Weekly rent payment due dates = $ 6,760.00 per year in rent.

 

$ 6,760.00

–  6,000.00

$    760.00 additional rent per year

Full disclosure to the tenant is a must. They need to sign the Bi-Weekly payment agreement before you start this option.

Example #2: Weekly pay day plan rental agreement.

$500.00   x 12 months = $6,000.00 annual rent

$500.00  per month Rent divided by 4 = $125.00 every week

$125.00  per week on payday

+  10.00  Don’t forget to add the additional rent to convenience the resident

$ 135.00 Total weekly rent

52 weeks in a year equals 52 payment rent due dates per year.

$135.00 x 52 rent payment dates = $ 7,020.00 per year in rent.

$ 7,020.00

–  6,000.00

$1,020.00 additional rent per year

In Summary Four and One Third Weeks = Extra Cash for Landlords

Full disclosure to the tenant is a must. They need to sign the Weekly payment plan agreement before you start this option.

If your state AND municipality allow a late fee, don’t forget to add that to your payment agreement.

And that ladies and gentlemen is how Four and One Third Weeks = Extra Cash for Landlords!

If you need a the documents and payment plan agreement to do this contact [email protected] to purchase them.

This weeks featured vendor is Real Protect, providing Insurance for your projects.

By

George Skidis

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