Archive for the ‘Uncategorized’ Category

Family Dinner Time, Your Phone Rings..Do You Take The Call?

Friday, July 23rd, 2010

After months of getting your investment property prepared, the first call comes right as you sit down with your family for dinner.  You are not sure who is calling, but from now on every unrecognized number may be a tenant…a source of revenue to offset the payment and expenses you have incurred.

You ask your family to excuse you as you slip off into another room.  Sure enough, it is somebody calling to find out about the three bedroom home for rent.  As your heart skips a beat, you describe all the personal touches, along with the not so personal touches.  All the fresh paint, and efficient windows, and the extra storage.  The caller sounds nice enough and now they ask if they can see the property!

“This is going to be easy” that little voice in your head tells you.  The caller says they are free after work tomorrow.  You say great, forgetting for the moment that tomorrow is Jimmy’s playoff soccer game.  Remember, you need to get this home rented.   After confirming the time, you hang up and realize that you do not have the caller’s number.  Maybe it is on caller ID…but no…they must have used a blocked number.  You return to dinner as the table is being cleared.

That night your wife reminds you about Jimmy’s soccer game tomorrow night.  Immediately, you realize the conflict and wonder how you can find these callers to reschedule.  That fails, so you hope your best buddy can show it to them tomorrow.  He has plans.  So, you are stuck.  Maybe a quick showing and race across town and still catch the second half.  

The thought hits you, maybe you really should have budgeted for help with this hobby.

The showing time arrives.  You bring two rental applications found on line..just in case.  Not sure how you will get the background checks or credit pulled but you  will figure that out once you have the applications completed. 

 At the agreed time…no prospective tenant.  Fifteen minutes late, they pull up in a 20 year old van falling apart and very dirty.  It is exhuming exhaust.  The prospects both grind out their cigarettes on the driveway as they get out.   Both possible tenants begin to unload children from the rear.  First one, then two, then three and finally four and five.  Lets see, 7 occupants in a 3 bedroom 1000 square foot home.   Your heart sinks a little.

You show off your pride and joy and learn that there are some mysterious circumstances about where these people currently live.  A reference to how nice it will be to actually live in a home instead of the van by one of the kids catches your attention.  At that moment, you decide to ask what they do for a living.   One is unemployed..the other just got a job after months of unemployment.  The job involves selling magazines and appears to not really be as an employee but as a contractor.

Of course, they love the house and request the applications.  You hand them out and ask them to fax or email them back as you really need to run.  They do not have fax or email and want to fill them out now.  You are screwed.  Jimmy scores the winning goal..you miss it.  You waste an hour with a family that you are not even sure how to screen to officially reject.

Why is it again that you are doing this yourself?

Mistakes you learn by and the next time you will be smarter.  No answering the phone during dinner…but what if?  More pre-screening on the phone…but what if they call during dinner and you are in a hurry?  At least get a phone number…that one you can do every time!  How many more summer evenings meeting tenants before you find one?  Then, won’t it be fun to increase the return on this hobby by being there to service the leaky faucets and the oven that does not work on Thanksgiving?  Oh, and collect late fees when rent is late.

Leasing and property management sure sounds like fun when you have a life and a career..doesn’t it?  Most people actually have to enjoy experiences like this to decide that they understand why management and leasing companies exist. 

Save yourself the headaches.

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Posted in Best Practices, Owners, Qualifications, Rent Preparation, Responsibilities, Screening, Selecting A Manager, Tenants, Uncategorized | No Comments »

How Do I Get Ink On The Agreement?

Monday, June 28th, 2010

OK, silly headline.  I am writing about a pretty unsophisticated topic here, but wanted to pass along some tips and a little bit of information on how we get signatures from owners who we can’t meet face to face.  In fact, because so much of our communication is electronic, even owners we could meet seem to prefer other options.

We have an owner who lives overseas.  In the old, old, days we would have used snail mail to get a contract or lease executed.   We would have worked on a telephone authorization (risky and not going to hold up in court!) and wait 2-3 weeks to receive a signed document.   Then, in the 1980′s we had this amazing device that cost $1000 called a fax machine.  (Am I dating myself?)  We had documents that were printed on this thermal paper that curled and faded!  Powerful stuff when a year later you could not read a document!  So, we still needed snail mail to get a original copy.  Faxes improved and in the 1990′s you could get a “plain paper” fax.  No more fading, but often very poor resolution.  So, we still used mail to have an original copy, but by then we had options that sped up the delivery of documents such as Fed Ex and UPS.   Then email became popular and all we had to do was figure out a way to make it easy for clients to return a nice looking document from their email, with their signature.  There are two options, printing and scanning, or faxing the returned document.  Faxing works pretty good unless their fax machine is dated or the telephone connection is bad (overseas connections).  We still like to have the documents in case the resolution is poor.   There is often enough savings that visiting an office store is cheaper than using a delivery service.   Printing, scanning, and emailing the documents back to us is the preferred method. 

Our clients and Associates are recommended to install a free program on their computer for creating pdf documents.  There are a number of ways to send back an executed copy to us via email.  After printing and executing  the document, our client can scan or fax to make an electronic version.   We really prefer not to receive the fax because the phone line issues can often cause resolution problems.  Most of the simplest printers today also offer scanners and copiers for pennies additional.  A document can be scanned with the signature and saved to a computer.  If the scanner does not offer a pdf converter, and makes photograph type faxes, these need to be converted to a pdf.  In fact,a free pdf converter program is a wonderful addition for many different uses.  Check out pdffactory or cutepdf.  

Today we actually have electronic signatures making their way into the popular mainstream.  We have not gone this far but I suspect it won’t be long until we offer this service.  Of all the improvements over the last 30 years, this one may take the most getting use to.  An electronic signature does not actually provide a signature in the traditional sense.  It provides a verification that the person who executed the document on a computer, can be traced to a computer.  In some cases there are verification processes associated with a person but most I have seen go back to an IP address and involve a check box or initials typed.   The most popular service in real estate for this is called Docusign. 

Be warned though, the future is in electronic documents.  The improvements in speed, resolution, and legal enforceability have been made.   We are really just trying to decide which vendors and how to implement.  For now though, the suggestions above should cut your delivery costs substantially and provide all parties a faster turnaround on document execution.

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Posted in Best Practices, Owners, Procedures, Property Manager, Uncategorized | No Comments »

Best Practices Prior To Occupancy

Saturday, April 24th, 2010

Prior to a new tenant taking occupancy of a property we manage, we photograph the entire premises.  Our pictures particularly make note of any item that might, upon tenant move out, become a question as to whether it was damage caused by the tenant.  An example might be a large scratch on a counter top. 

By having a complete, thorough library of pictures, date stamped before occupancy, we provide the owner insurance against many disputes.  Of course tenants often wish to argue about a security deposit deduction.  Knowing these pictures exist, and actually sending them a before and after picture, often puts an end to that discussion.

As an aside, we have our own internal servers and web based system where these pictures are stored and backed up nightly.  We keep them forever-well lets just say we have never deleted any properties yet!  Also offers our owners a nice history of their property is it is ever needed.

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Posted in Best Practices, Owners, Uncategorized | 1 Comment »

How We Screen A Tenant

Monday, January 11th, 2010

When we are renting a property it is always exciting to be told by a potential tenant that they wish to complete an application for rent.  The application process is a most important step to determining whether to enter a lease with a potential tenant. 

It provides us with all kinds of information on the applicant including all of their contact information and previous employment and residence history.

It also provides us an approval to complete a thorough background check.  This check will include previous rental background verifications, employment verifications, criminal background check, and credit information.

We require a background check for each and every adult (18 and older) resident of a property.  So, a married couple with a 19 year old son living with them will require three checks completed.  I hear all the time the complaint that the 19 year old son is a student and should not have to have the check completed.  Last I checked a lot of alleged sex offenders are aged 18-25 and also are calling themselves students.  It is a risk just not worth ignoring.

As of this date, we charge $50 for one application, and $25 for each additonal application.  So the above family will pay a $100 application fee.  This covers our cost for reviewing the application and paying the professional background check company for compiling the information we require on the applicants.  If a potential tenant has difficulty with making this application fee, then I guess it is safe to say it is good we learned that before entering a contract!

Submitting to a owner a thorough background check on a potential tenant is an important part of the rental process.  We have actually been interviewed and cleared by a national company to be eligible to obtain this type of detailed information.  It is one of the things you lose when not selecting a professional property management company to handle your leases.

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Tenants Moving Out? Why We Do Not Do Walk Throughs With The Tenant.

Saturday, December 26th, 2009

Many owners, and tenants, have the idea that a walk through at time of move out is a good idea.  In reality, it may benefit the tenant..but only if the property manager makes some mistakes that later can be used against the owner.  How to avoid these mistakes, and the ensuing battle over a security deposit?  Avoid this unnecessary conclusion to the tenancy process.

Here are the possible mistakes and resulting bad outcomes if a property manager agrees to such a process.

Mistake #1- Implying that the property looks OK, or anything similar.   First, the walk through is not the way to actually study  the conditions of the floorcoverings and walls, and particularly to make sure all mechanicals and fixtures are functioning properly.  Too many ways to be distracted and too much one on one pressure from the departing tenant to explain whatever is found and questioned.  In addition, too many ways to temporarily hide the pet odors, carpet stains, or appliance malfuntions, that will be much more evident in a few days of a home sitting vacant.

Mistake #2- Inferring a return of the security deposit in full.  See Mistake #1 and realize that the correct environment to assess the return of a security deposit is one where all parts of the home can be inspected, compared to move in reports, and then properly calculate if any funds need to be subtracted to pay for repairs.  It is understandable that many tenants are counting on the return of their security deposit in order to move forward with their next housing commitment.  For this reason, the move out tenant will often do everything in their power to ensure the return of these funds and will badger the property manager to make some type of indication of the return of these funds..how much and when.  Anything the manager says could result in later problems…so we avoid this situation all together.

Our client is the property owner.  We are hired to lower risk and mitigate problems.  A walk through with the tenant will do nothing to respect that fiduciary responsibility.  To do the best job possible prior to reducing a security deposit to be returned to a tenant, a complete documentation of the decision must be provided to all parties.  This is best prepared with the benefit of a inspection after the property is vacant.

Finally, if you are a tenant and reading this, please also understand that we want to be fair and accurate so as to not provide a reason for you to feel cheated from your deposit.  We will create fair and honest documentation of the condition of the property when you leave.  The best thing you can do is let us know in writing up front, if you are aware of a problem that may create an issue with your deposit.  Don’t try to hide the fact the cat shredded the carpet inside the back corner of the closet.  Maybe your pet deposit will address that?  We won’t know until you are moved, but at least we will be working together to address the issues and this just might expedite the approval of the release of your security deposit.

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So Your Home Won’t Sell?

Monday, December 21st, 2009

It is now starting to be really cold…the depressing time of the year in the Midwest where people don’t spend a lot of time outdoors.  They also don’t look for a place to move to unless they have to.

If the home you have been trying to sell is still sitting on the market, empty, it is costing you money in maintenance and risk.  You know about maintenance (electricity, heat, leaves, snow shoveling) but what about risk?  Risk is what you are exposed to because nobody is living in this home.  I can make a case that you have more risk with your empty home than one with a tenant.

Risk is a function of decisions made by a responsible party and the likelihood there could be a resulting cost.  A vacant home is an accident waiting to happen..particularly in the harshness of winter.  For example, lets say during an ice storm a branch falls across some electrical wires that service your home.  Who knows the electricity is not arriving to the home?  Who knows that the heat is no longer functioning?  Have you ever seen the damage a frozen, then burst, water pipe inside a home can cause?  Who knows you probably should of spent $200 and had the home winterized just to prevent this type of event?

Who knows?  A professional property manager.  It is likely that no matter how much you know about your property, if you are not living within a fifteen minute drive, you need somebody who is lowering the risk of the fact your home is vacant.  Property managers, due to the experience gained from managing all types of risk events, are able to help an owner prevent and if necessary, mitigate risk.

The best way to prevent this risk exposure if your home is not selling?  Rent it.  Get somebody who has been properly screened living and enjoying your home.  The facts are not many homeowners who decide to rent make a profit on the collection of rent due to the economics that most have a mortgage payment that is high compared to the value of the home.  Yet, cash flow from a tenant helps to offset the expenditures associated with continuing to own the property.  More importantly, a tenant can help lower risk factors associated with a vacant home. 

Homeowners who choose to rent ultimately enjoy lower risk, while having a source of funds that pays the mortgage and creates equity over time.  There are also tax benefits available.  A professional property manager makes this process easy for an owner. 

If your home won’t sell, now maybe is the time to consider other options.  The best one is to hire a manager to rent and make sure your risk is lowered while continuing to hold this asset.

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