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Open House

Becoming a Landlord; Going Green; Garage Makeovers

Aired August 20, 2005 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANNOUNCER: Today on OPEN HOUSE, becoming a landlord. It may mean a nice stream of income, but it has its share of headaches too. We'll look.
Then, going green. From new houses built to be environmentally friendly, to small changes you can make to your existing home.

And our weekend project, a garage makeover. Get rid of the clutter and get organized, next on OPEN HOUSE.

GERRI WILLIS, HOST: Hello, and welcome to CNN OPEN HOUSE. I'm Gerri Willis.

From buying and selling to renovation and design, we show you how to make your home your best investment.

This week, we're taking a look at becoming a landlord. What's the best way to do it? What are the potential pitfalls? Check out this young landlord who's facing a very steep learning curve.

(BEGIN VIDEO CLIP)

STEVE CADEN, LANDLORD: Building next door is a high-rise building that sways in the wind. And since we're in a low-rise building, and they hang over, they encroach upon our space. And they built something wrong, and it's causing our building to crack.

J.J. RAMBERG, CNN CORRESPONDENT (voice-over): For Steve Caden, that's just one of the issues he's dealing with. At 28, he's a first- time landlord, managing two buildings and trying not to let tenant complaints fall through the cracks.

CADEN: You have no choice but to deal with them, they're there. And, you know, you try to be as nice and as courteous as possible. If they expect the world of you, you try to give them everything you can.

RAMBERG: It's an issue many landlords face. Even in a case like this, when tenants are concerned about legitimate structural problems, how nice is too nice?

MARK B. WEISS, REAL ESTATE AUTHOR: New landlords like to be nice and to their tenants. They want to be social. And you're in business now. As soon as there's a problem, and your tenant starts to withhold rent, things can get a little bit rough.

RAMBERG: Tenants can also move out, sometimes unexpectedly. So Weiss recommends buying a property with at least three units. WEISS: If you have three units, then at least if you have one vacancy, the other two can carry the building. And it's not an economic hardship on you.

RAMBERG: Another recommendation, live nearby. Caden keeps an eye on his tenants from his family's liquor store in one of his buildings. His other building is just around the corner.

But proximity only helps to a point. Caden says his most valuable lesson, learn to expect the unexpected.

CADEN: Never be surprised. Tenant broke the sink off the wall. I don't understand how that can happen. Dropped the wedding -- dropped the engagement ring down the toilet.

WILLIS: Still, Caden says, his buildings are a good source of income, and he plans to buy more. And as for that lost engagement ring...

CADEN: Got the toilet taken off, you know, reached inside, ring was retrieved.

RAMBERG: J.J. Ramberg, CNN, New York.

(END VIDEOTAPE)

WILLIS: So if you're still interested in being a landlord, even after seeing that, you'll need a little expert advice.

To help us, Jeffrey Taylor. He's founder of MrLandlord.com.

Jeffrey, welcome.

JEFFREY TAYLOR, FOUNDER, MRLANDLORD.COM: Hi, Gerri.

WILLIS: Good to see you again. Let's just start with the basics, though, because I know you think that people need to do a lot of work even before becoming a landlord.

TAYLOR: Well, they need to at least find out where they can get some information, because problems are going to come up. And so they need to know where to get answers to those problems, like where there's a local real estate association, where they can find out about landlord-tenant laws. So they just need to know where they can get answers, because there's so many things that can happen as a rental property owner.

WILLIS: What's the best place for them to go? Because obviously, this is a market-by-market kind of issue that you're describing.

TAYLOR: Well, in most areas, there's usually a local real estate association. That would be the first place that I would suggest that a rental property owner go. And you can usually just go to the Web site, go to Google, and put in the name of your city with the word "real estate association," and be able to find a local association near you.

WILLIS: You also say, treat it like a business. Do some people kind of get into this with good intentions, but maybe not enough information?

TAYLOR: Well, yes. And that's because they don't realize that things can go wrong. And sometimes they're too trusting. A lot of times, when you're meeting, say, a prospective resident for the first time, you kind of take their word on everything as opposed to really verifying the information that they're giving you.

And so I always suggest to rental property owners, make sure you do things like run a credit check, verify information. Don't assume everything is like it is at face value.

WILLIS: Are there classes you can take?

TAYLOR: Sure, most of your community colleges would (INAUDIBLE) operate a landlord class of some kind, a workshop for new rental property owners. There's also my company, MrLandlord.com, even offers classes all across the country for rental property owners who are just getting started. But there's usually a class of some kind that you can take to learn the basics as a rental property owner.

WILLIS: All right. Those are great ideas. But, you know, the big hurdle can be picking the right property in the first place.

TAYLOR: Now, that's true. And you definitely don't want to pick a property that's in an area where you're scared to go to. Some landlords find out the hard way that they picked a property, and come to find out that they really wouldn't want to visit that property at certain times of the day or night.

So I always suggest, pick properties in areas where you feel comfortable. Also pick properties in areas that are appreciating in value. You don't want to put your money into a property and five, 10 years down the road, that property is starting to -- the properties around it are starting to depreciate in value.

And so you want to pick in an area where is not also far from you, so it only takes you maybe 15 to 20 minutes at most to be able to get there if a problem arises.

WILLIS: All right. Well, Jeffrey, though, what you were saying about values brings up a very good question. When you're looking for a property, do you buy the most expensive one on the block, or the cheapest one?

TAYLOR: No, you buy the cheapest one, definitely. And then that way, as the years go on, your property will raise in value to match those that are surround it. So you always look for the cheapest property on the block, but in a good area. I would even suggest in an area where it's mostly owner-occupied properties. That also has a tendency to have higher value than neighborhoods where it's mostly properties where residents are residing.

WILLIS: All right. How can you figure that out, though, Jeffrey?

TAYLOR: Oh, well, that's just a matter of doing a little bit of homework. Now, if it's a property that's within 15, 20 miles of you, you can actually go there and even talk -- I like talking to the neighbors next to the property that I'm considering to buy. That even comes in handy as a landlord down the road, because they serve as a spy for me when I rent the property to someone.

WILLIS: All right, another big question, very scary, choosing the right tenant. Because if you don't pick the right tenant, Jeffrey, I mean, things can get really ugly really fast.

TAYLOR: In fact, 95 percent of the problems that landlords have, it's because they picked the wrong resident. You know, managing property is not so much about managing buildings, it's about managing people. And that all starts with how to select the right ones. Course, you want someone who can afford the place. So affordability is important. But you also want...

WILLIS: How do you figure that out, though? How do you know if somebody can actually afford the property or not?

TAYLOR: Well, couple of things. One, you might want to pick somebody -- a lot of landlords use a general rule of thumb, that they should be making at least three times the amount of the rent in their income, in the course of a month, or four times the amount.

Another thing is, how much are they paying right now in rent? Because if they're only paying so much in rent now, you're kind of fooling yourself if you think they're going to be able to pay more than that...

WILLIS: Right.

TAYLOR: ... or a lot more than that at your property. And again, check to see if they're -- you know, check that credit check to see how well they've been paying in the past, because if they have a poor record of paying, it doesn't matter if they can afford it or not, if they have a bad history of payments.

WILLIS: Jeffrey Taylor, thank you so much for being with us today. Great advice, as always.

And if you want to know more about Jeffrey, to find more advice on this topic, it's MrLandlord.com.

Thanks so much.

TAYLOR: Thanks. Thank you.

WILLIS: Coming up on OPEN HOUSE, they say it's not easy being green, but we've got tips on eco-friendly living that can actually save you money.

And our weekend project, organize your garage. If the toys, tools, and trash are taking over, well, we'll show you how to get rid of the mess and make room for your car.

But first, your tip of the day.

(BEGIN VIDEO CLIP)

ANNOUNCER: Protect yourself and your family against lead poisoning.

Houses and apartments built before 1978 have paints that contains high levels of lead. Lead exposure can be harmful to everyone, especially young children and babies.

If your home is one of those built before 1978, have it tested. A paint inspection and risk assessment can tell you about the lead content in your home and whether there is serious lead exposure.

And if you suspect that your house has lead hazards, contact the National Lead Information Center at 1-800-424-LEAD. That's 1-800-424- L-E-A-D.

And that's your tip of the day.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

WILLIS: More Americans are keeping the environment in mind when building a new home or renovating an older one. They're known as green homes, and they're built to be eco-friendly. Better yet, they may save you money.

Allan Chernoff checked in with one green-living family on Long Island.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): When Peter Baumert decided to build a house for his family, he knew he'd be breaking ground of a different kind. Baumert had an eye towards energy-efficient housing.

PETER BAUMERT, HOMEOWNER: Rising energy cost was a big factor. Second is the environmental impact. We were looking at newer products to make my house healthier, more efficient, and stronger.

CHERNOFF: But he's taken energy efficiency to a whole new level.

BAUMERT: We're working on creating Long Island's first net-zero energy-efficient home, which basically means, whatever electricity or utilities that the home would consume, it'll produce that much and give it back to the utility grid, so basically zeroing it out on the utility side.

CHERNOFF: And that could mean big savings. The Department of Energy estimates the average homeowner in the U.S. spends about $1,500 a year on utility bills, though homeowners in northern states can pay far more. An energy-efficient home will also have a lower impact on the environment.

DAVID GARMAN, UNDERSECRETARY OF ENERGY: Your home and the power that you use in your home is responsible for more pollution than the cars you drive. A lot of people don't understand this. So, obviously, by using less electricity in the home, or by generating some of your electricity in the home with zero emission-generation sources, like solar, you're actually contributing to a cleaner environment and cleaner air.

CHERNOFF: Construction costs can run higher than a conventionally built house, but the energy savings can make it worthwhile in the long run.

GARMAN: Energy-efficient homes are cheaper to operate, and they tend to be more comfortable than less energy-efficient homes. You may find yourself paying a little bit more for some of these features up front. Over the life cycle of the home, or even in the first few years of ownership, you can get all of this money back in lower energy savings.

And sometimes, in some areas, energy-efficient mortgages are available to homeowners that want to buy an energy-efficient home, so they can actually buy more home for the money.

CHERNOFF: Fannie Mae, the Federal Housing Authority, the U.S. Department of Veteran Affairs, as well as some mortgage companies, offer special financing for energy-efficient homes.

PAT GOOLSBY, CRITERION MORTGAGE: The loan product will take into account the fact that the consumer will be saving monthly on their utility bills. Because of the added energy-efficient measures that have been added into the home, the consumer will have lower utility costs. And so they're able to qualify for additional mortgage money.

WILLIS: A potential added bonus...

GOOLSBY: A home that has energy-efficient measures and has documented lower energy costs will be worth more, in both the value and marketability of that home.

CHERNOFF: But Peter Baumert says he has a greater goal.

BAUMERT: Every single day that you live in the house, it's a healthier house, it's more energy efficient. Your payback is, is that you're not burning the resources that everybody else is.

CHERNOFF: Allan Chernoff, CNN, New York.

(END VIDEOTAPE)

WILLIS: Even if you aren't completely prepared to retrofit your home, there are small things you can do to help protect the environment.

Joining us now, the editor in chief of "Natural Home and Garden," Robyn Griggs Lawrence. Robyn, welcome.

ROBYN GRIGGS LAWRENCE, EDITOR IN CHIEF, "NATURAL HOME AND GARDEN": Thank you.

WILLIS: So we got a lot of stuff to look at. But before we get started, I want to know, how much does it cost to buy these things? Are they fabulously expensive?

LAWRENCE: They are not. That used to be the case, and that's the question I face almost every single day, is, you know, does it cost more to go green? And it really doesn't. It used to be, maybe six years ago, that it was probably 20 percent more.

But it's just like organic food, the prices coming down as the demand is increasing. And so really now, some of these products are comparable to the high-end traditional products. And maybe you're going to pay 5 or 10 percent more, but you're going to make up the difference in energy savings and your long-term health.

WILLIS: All right, well, that sounds good. Let's start with these carpet tiles here.

LAWRENCE: Right.

WILLIS: Now, these are attractive, they're kind of fun. And I guess you would line them all in your house. But what makes them eco- friendly?

LAWRENCE: This is one of my favorite new products. What makes them eco-friendly is, first of all, that they're made from corn.

WILLIS: They're made from corn?

LAWRENCE: They're made from corn. Isn't that great?

WILLIS: How can they be made from corn?

LAWRENCE: They're made from the stalks. It's a fiber that's made from the stalks and the leaves of corn plants. So it's totally renewable. It's the first manmade fiber ever to be made from an annually renewable, you know, product.

WILLIS: Wow.

LAWRENCE: And, yes, and it, you know, it feels like a sisal...

WILLIS: Well, you know, I was going to say...

LAWRENCE: ... or a wool.

WILLIS: ... it's very soft.

LAWRENCE: It is.

WILLIS: I didn't expect something different, but it's... LAWRENCE: Yes, yes.

WILLIS: ... actually really nice.

LAWRENCE: It's just like a traditional carpet. The thing I love about these too is, there's no chemicals in them, so there's no chemicals that are going to be out gassing into your house. And...

WILLIS: Out gassing, you mean...

LAWRENCE: ... (INAUDIBLE)...

WILLIS: ... you mean just being emitted by...

LAWRENCE: Just basically...

WILLIS: ... the carpet, right?

LAWRENCE: ... emitted, the worst of it, so that you breathe them.

And then, you put these down as squares. You can do it yourself. So there are these adhesive dots on the back.

WILLIS: And these come off.

LAWRENCE: You just -- those come off, you plop it down.

WILLIS: OK.

LAWRENCE: Right? So no glue involved. And also, the other thing that's great is, because it's not wall-to-wall carpet, if you get a spill or it wears somewhere, you just pull up one of these squares, send it back to Interface Floor, who makes it, they'll recycle or refurbish it...

WILLIS: Wow.

LAWRENCE: ... and, you know, you just replace one square.

WILLIS: All right, let's move on.

LAWRENCE: OK.

WILLIS: This is gorgeous, and it looks...

LAWRENCE: Isn't this beautiful?

WILLIS: And it looks so special. What is this, a stone? What is this?

LAWRENCE: This is -- it's made from recycled glass, and a specially engineered cement.

WILLIS: Wow. LAWRENCE: It's from Ice Stone, which is a company that -- so it's all made in an environmentally friendly factory out in the Brooklyn Navy Yards. And, you know, it's (INAUDIBLE)...

WILLIS: This is like...

LAWRENCE: ... (INAUDIBLE)...

WILLIS: ... beer bottles.

LAWRENCE: Exactly, it's the recycled, you know, it's what you're throwing into your recycling bin every day, so finding a use for it. It's gorgeous...

WILLIS: I love that.

LAWRENCE: ... and it works just like granite.

WILLIS: All right, let's move on.

We've got some pretty sheets here.

LAWRENCE: These are organic cotton sheets. And one of the most important things that I tell people they can do is look at what you are sleeping on. Cotton is 3 percent of the crops that -- agricultural crops that we grow, and it requires 25 percent of the pesticides. So it's just very, very -- the most heavily sprayed crop.

WILLIS: So what does that mean, that when I'm sleeping on my sheets, I'm, like, breathing in pesticides?

LAWRENCE: (INAUDIBLE), exactly, exactly.

WILLIS: Well, that's not good.

LAWRENCE: And also, a lot of the traditional sheets, you know, it's heavy metals are used for the dyes, formaldehyde is put in as a...

WILLIS: Wow.

LAWRENCE: ... wrinkle, you know, to keep them wrinkle-free. So this is an organic cotton. It also is -- there's no chlorine used to...

WILLIS: Right.

LAWRENCE: ... to bleach them. And so, you know, no...

WILLIS: Great.

LAWRENCE: ... heavy metals used in the dye.

WILLIS: I don't mean to rush you here...

LAWRENCE: That's all right.

WILLIS: ... but we have a lot to...

LAWRENCE: OK.

WILLIS: ... get through.

We've got a light bulb here...

LAWRENCE: This is a...

WILLIS: ... that...

LAWRENCE: ... a (INAUDIBLE).

WILLIS: Thomas Alva Edison, I think, would be very surprised by this.

LAWRENCE: He would, wouldn't he?

WILLIS: It's very...

LAWRENCE: It's (INAUDIBLE) funky. This is not only a light bulb, but it's also an air filter. It's coated. It's called an ozone light. It's coated with titanium dioxide, which takes out, you know, any allergy, allergens, you know, mold spores, anything in the air. So it's great for people with allergies and asthma.

WILLIS: Very good.

LAWRENCE: Yes.

WILLIS: OK, now, what is this?

LAWRENCE: This is another one that's a twofer. So this is not only a water saver, it'll... it's the Rain Shower water filter, so it will cut your water use in half, but...

WILLIS: But is it strong enough? Sometimes these things, the water that comes out, it's very slow.

LAWRENCE: (INAUDIBLE), it's specially formulated so that you really don't tell the difference.

WILLIS: OK.

LAWRENCE: So you'll use half of the water. And it also takes the chlorine out of the water.

WILLIS: The paints.

LAWRENCE: The paint.

WILLIS: Why is the paint special?

LAWRENCE: This is great paint. There's no chemical smell. Take a -- you know, if you smell this paint...

WILLIS: OK, I'm going to take a smell.

I really can't smell it.

LAWRENCE: You can't smell a thing. I've been in rooms where they were painting, and you cannot smell a thing. So it's a completely low VOC product.

WILLIS: Well, Robyn, thanks for being with us from "Natural Home and Gardens." Appreciate your time today.

LAWRENCE: Thanks for having me.

WILLIS: Coming up on OPEN HOUSE, our weekend project. We're tackling your messy garage. Clear the clutter, get organized. That's coming up next.

(COMMERCIAL BREAK)

WILLIS: Is all that stuff in your garage forcing your car into the street? Have no fear. It's a problem you can begin to tackle this very weekend.

To learn how, I met up with Barry Isaac. He's author of "Organize Your Garage in No Time." And he started by telling me the first thing to do, get rid of the clutter.

(BEGIN VIDEOTAPE)

BARRY ISAAC, AUTHOR, "ORGANIZE YOUR GARAGE IN NO TIME": The first thing I recommend is to clear the space. So you basically just start bringing the things out into your driveway, and then you begin to sort.

WILLIS (voice-over): Group the items that belong together, and toss what you don't need.

ISAAC: So let's just group the shovels.

WILLIS (on camera): Hey, we've really narrowed this down.

ISAAC: And when do you this, it saves you a lot of work.

WILLIS (voice-over): Think zones. Whether you're a sports nut or just buy too many groceries, make sure all your stuff will fit into a zone, and put it away neatly.

ISAAC: One of the cardinal rules is, we want to put the heavier things on the bottom.

WILLIS (on camera): Very nice. Right at hand level, easy to get to, simple. And boy, I'm telling you, the mess is gone. That's great, Barry.

(voice-over): Hardware can be tough to organize. Your best bet, forget the toolbox, and keep things out in plain sight. Just make sure all your items are separated and stored in visible containers. ISAAC: The first thing we do is, after we sort it, of course, we want to organize them by types. We've got the screwdrivers, we've got the wrenches right here, we have a...

WILLIS (on camera): Nice.

ISAAC: ... suitable holder here that holds them. Every...

WILLIS: And look at this. This is really amazing.

ISAAC: Yes, I love these for nuts and bolts, these little tilt bins. They are a great product.

WILLIS: So much easier, you know, instead of...

ISAAC: Absolutely.

WILLIS: ... you know, having them all over the inside of one of these.

(voice-over): Another trick, whether it's excess food, or your kids' toys, you want to keep all items off the ground. This will prevent water damage and bugs getting into your goods.

Bulky sports equipment can be tough to contain. Try racks and bins to keep it neat.

ISAAC: Well, the cool thing about these racks are, they're multipurpose racks. And more than one solution is provided. We can put balls in the bags, we can put balls in the bin, we can put balls in a basket.

WILLIS: For stuff you only use once a year, like holiday decorations, try an accessible attic or other storage unit. You don't need to keep seasonal items out at all times.

Once you've gotten rid of what you don't use, and organized your garage into zones, well, there's only one thing left to do. Make sure your kids don't mess it up.

ISAAC: That's one of the important things, Gerri, is that people wonder, Will my kids keep the system up? Well, how can they not, when all they have to do is throw a ball in a bag, or stick a bat in a holder? It makes it user-friendly.

WILLIS (on camera): So Barry, the garage looks great. How do I get this done in a weekend?

ISAAC: Well, one important thing to remember, Gerri, is that you might not get it all done in a weekend. You need to be realistic with your expectations. Break the task into small, manageable pieces so you don't defeat yourself before you start.

WILLIS (voice-over): And once your garage is spic and span, you may finally be able to make room for one more important item -- your car. (END VIDEOTAPE)

WILLIS: We'll be right back.

(COMMERCIAL BREAK)

WILLIS: Thanks for watching OPEN HOUSE. We'll see you here next Saturday.

We want to hear from you. Send us your comments, your questions, to OPENHOUSE@CNN.COM.

But first, a look at the day's headlines.

Have a great weekend.

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