Property Management Maven

Having been quoted in The Hook about the rental increases for GOOD, single family homes, I’m including some recent articles on the real estate market nationwide that supports my observation that the local market is enjoying some significant rental increases.

$ There are fewer rental homes in the area as many investor owners took advantage of the last few years of double digit appreciation and sold their rental homes to first-time owner-occupants. They either went into the long string of apt to condo conversion units for CASH or they got out of the real estate market altogether.

$ Many new hires to the area are electing to rent rather than buy if they are only going to be in the area for 2 or 3 years. While the rule of thumb for the last decade has been to buy a home if you would be in our area for 2 or more years, newcomers to the area are not willing to get stuck with an unsold home if and when they leave the area.

$ Many new residents still have un-sold homes with little or no equity. They are either renting their current home short term until the market turns in their area or the wife is remaining in that home until it is sold and the entire family can relocate and reunite to our area. In anticipation of this, they rent a comparable home locally so that the family does not have to relocate twice.

$ In addition to NGIC * National Ground Intelligence Command * expanding and bringing in over 800 new employees, the new MJH * Martha Jefferson Hospital * has broken ground next to State Farm on Pantops. The UVa Medical Center is expanding, again, and with a significant grant from the State of Virginia, the new Emily Couric Cancer Center has broken ground where the old "Towers" at the corner of W. Main and Jefferson Park Avenue once stood. While many incoming new residents will rent some of the newer condos or conversions in the area, many will want to rent homes in the county for amenities, schools and quality of life.

$ The Fluvanna/Lake Monticello area continue to be desirable for new residents working in the west side of Richmond/Henrico/Short Pump area and Charlottesville. Additionally the commercial area at I-64/Rt 15/ZionXRoads has blossomed with a new Best Western motel on the NW corner across from a new LOWE’S. This area will continue to attract new com-ercial growth with the employees desiring to live in Albemarle or Fluvanna counties * a 10 to 15 minute commute.

Anticipating the tightening of our local rental home market, many homeowners who are relocating out of the area are electing to rent their current home and purchasing a second home in their new home town. They are buying at the low end of the market and hope to sell their current/local home when the area sales market increases in the next few years...Buy LOW and Sell HIGH works for real estate as well as the stock market.

Anticipating the next growth area for desirable rental homes is not hard. The Crozet/Old Trail area will not be a "rental home destination" until there is significant commercial presence in the area * primarily a regional grocery store which is in the works.

Although there continues to be new construction at Lake Monticello, it is smaller/Senior housing that does not attract families so the current rental homes in the area will continue to be desirable. The Forest Lakes/Hollymead area continues to attract families because of the very good schools and commercial businesses new to the area.

My crystal ball says that our area’s rental market will continue to remain STRONG and demand will continue to GROW!!

From our May, 2008 newsletter....view the full newsletter on our website...http://VAHomes4Rent.com

Education and experience have always been major differences between individual, private landlords and professional property managers and thanks to the government, the gap is widening.

The availability for private landlords to run credit checks on applicants has become next to impossible.  Unless a landlord has had a home inspection of their office and had the security of their tenant files verified, they are unable to subscribe to credit reporting/tenant screening services.

Almost 5 years ago, the government tightened the rules on the BIG 3 credit reporting agencies who in turn tightened the rules for their subscribers and third party re-sellers of credit reports.  One of the new criteria is that there be a "site inspection" for where reports are ultimatly stored and a review of the office practices of the landlord.  Having a locking file cabinet for tenant records is a "must" and separate area in the house for the "landlord's business" is also verified.

Most landlords who only have a few rental properties, either won't pass this site inspection or don't feel they need the extra expense of a locking file cabinet or lock on their home office so they just pass on this part of the process.  Landlords who are only renting until the "market gets better" rarely run credit reports since they see this as a one-time event.
 
These are the landlords that "poor credit" tenants find and take advantage of.  While first-time landlords BRAG about finding a tenant with their "first Craigslist post", they often end up having to evict them within three to five months.

Our area is in the "early throws" of the rental season, so I made sure ALL of my FOR LEASE signs were placed on available properties before Easter so that prospects in the area for the holiday weekend AND for Spring Break who are driving around the area would take interest in the properties I have for lease.

Surprisingly, I started getting several calls over the Easter holiday from prospects who wanted to know if I would LOWER the rent.  They did not know the rent the property was listed at, they just had a figure in their mind or a budget rent that was clearly below the market rent for properties in our area.

After the 3rd or 4th such call, I started asking the caller why I should even consider lowering the rent when I had not reviewed their application, run their credit report or heard their offer....such as a longer term lease; 6 months rent in advance, etc.  They were shocked that I would want to "check them out" BEFORE I AGREED TO NEGOTIATE A LOWER RENT - why wouldn't I just lower the rent for a voice on the phone?

Maybe it is the constant media attention to the nationwide real estate slow down, the pundits advising "now is the time to buy" or the make an offer/any offer mentality; the REALITY is  there are FEWER good rental homes for a LARGER pool of rental tenants this year.
 
....there are area apartment/multi-unit residents who want to move out on their own and lease a single family home;
....there are MORE people moving into the area with UVA Medical Center, the expansion of NGIC, UVa grads schools as well as new-hires to new businesses in the area - Lowe's at Zion X Roads, construction/expansion of the UVa Med Center;
....more people are choosing to RENT rather than BUY....in past years, the rule of thumb was if you would be in the area for 2 to 3 years, it made financial sense to purchase a home * in the current market, these people are electing to rent so that they are not stuck with a home to sell when they have to leave the area; and,
....we still have people moving into the area who want to rent for a year  BEFORE they decide where they want to buy or if they want to buy or build their own home.

Add to this, the fact that many investor owners have sold their older, single family investment homes over the last few years and gotten out of the rental/landlord business.  This has removed many homes around the university and urban ring from the rental pool so that even with property owners who have tried to sell homes and have now placed their homes on the rental market, the number of well maintained homes in DESIRABLE areas (south and north of town) will not provide enough inventory for the anticipated demand.

The economics of being a landlord can often be contrary to the current real estate market......Central Virginia landlords have the best of both worlds......

As a frequent poster to Craigslist for rental properties and a frequent "flagger" for discriminatory ads, I am glad to see that the suit from several Chicago area attorneys has been dismissed. Craigslist is an electronic bulletin board * they do not write or even proofread the ads that are posted UNLIKE the faceless print media classified voices or e-mail addresses that we use to insert print media ads. I have seen numerous discriminatory ads for my area on Craigslist and it is these individual landlords that need the attention of Fair Housing agencies rather than the 800 lb gorilla in the Bay Area....unfortunately, there is little or no potential for media attention on individual landlord complaints so it is more likely that these "big splash" cases will continue to be filed in an attempt to extort $$$ for the agencies tasked with investigating and filing these complaints....KUDOS to Craigslist for hanging in there!!!

It's happening * in the relm of area real estate, area list prices have dropped so that some would-be tenants can actually afford to BUY an area home; but their credit, employment history  or income are not sufficient to qualify them to lease a rental home.

Military families (officers) coming in have more than sufficient salary/wages and housing allowance to rent homes in the $1,800 to $2,200/month rent range....a family who has rented in the area for a year with only his income and a CAT and who qualify for a $400,000 ($350,000 mortgage) home purchase do NOT qualify for the same  rental homes.

Even with raising my rents, incoming rental applicants are better qualified BECAUSE they do not want to buy.  They want to rent for the 2 or 3 years they are in the area in grad school, medical school, building the new addition to the UVa Medical Center or on assignment.  

It is not that the area sales market is so terrible * there are loads of nice, desirable homes on the market * the reality is they don't want to be tied down to having to sell a home in two or three years. 

These rental prospects are asking if the property they are interested in is going to be for sale and they are asking for 2 or 3 year leases upfront which my investor clients are happy to accomodate with a rental increase for the third year.  Renting from owner who may want to sell in a year is not appealing to these would-be tenants so they quickly bypass our local MLS rental section and are making inquiries of area property management firms. 

Predictions have been that there would be fewer good rental homes on the market this rental season (May thru August) and those predictions are proving to be correct.

While some of our current residents are being forced to purchase a new home because they are at the end of their 2 year window from selling their former home and purchasing their "replacement" home for tax purposes, most of our departing residents are actually leaving the area through graduation, advancement in their medical specialties or reassignment by the military.  Those who are remaining have accepted a $100 to as much as a $300 rental increase to remain in their current rental homes.

For those properties that are going to be available in July and August, I've raised the rents $100 to $400 and have had no resistance.  Most incoming military families have significant housing allowances to rent LARGE homes in pricey areas such as Forest Lakes, Fontana and Redfields.

Schools continue to be a MAJOR feature in housing desirability; however, many incoming residents either home-school or have smaller children and convenience to day-care is also important.

As I have maintained for the last 5+ years, a 4th bedroom or bonus room for a home office is critical and broadband or DSL connections are a MUST.  Luckily over the last year or so, HughesNet high speed internet via dish has greatly improved so that even the more remote properties can get high-speed access.

Prospective residents who have been directed to search our local MLS rental listings are finding that homes being featered there are homes that are also available for sale and the owners/agents wish to continue to show them during their tenancy....since most military and incoming medical residents want housing for 10 months to 2 or 3 years, the prospect of having to move in 3 to 6 months removes these listings from consideration quickly.

Likewise, most "agent listings" * whether on MLS, Craigslist or broker websites * are poorly worded to attract rental prospects as few agents realize that what might attract a homeowner is not necessarily what is attractive to rental prospects.   

I am pleased that I started taking photos of homes while they were vacant many years ago and have kept those photos updated as interiors were repainted, carpets replaced, appliances changed out.  Since our web site listings also feature property floor plans, our website has become the "go to" web site for prospects wishing to rent "sight unseen".

To maintain this position, I routinely post our listings on Craigslist, Kijiji, HotPads, Google base using postlet format.  This creates the greater potential for "first capture" with a "long tail" as these listings contain hyperlinks directly to our website. 

Several other local property managers have now created their company web sites through HomeRentals.net * the national website that is highly ranked for national rental home searches.  The addition of these management listings  has populated the area listings on their national website with 30 and sometimes 60 rental listings which is good for all of the rental listings featured.

I suspect that in June or July, those owners who are attempting to rent their homes AND sell them at the same time will realize that they should hire a professional to give their full attention to leasing their property.

I sus

Since most of the rental properties in my management portfolio are high-end (rent over $1,000/mo), I am amazed at how some prospects follow the directions, read the instructions and get it right the first time, while some want to short cut the process and waste their time and spin their wheels.

Although my properties appear VACANT on my website, they are actually occupied and the current residents have given their notice so that the property will be available for re-renting on the date specified in our listing.

If a prospect needs an area rental home in July, they should be looking at those homes that will be vacant and available in that timeframe.  Wasting time looking at a property that is available NOW  - 3 or 4 months BEFORE their planned move-in date and then asking if I can hold the property shows a certain lack of logic as applied to the landlord-tenant relationship.  I have actually asked a prospect "nicely" why I would hold a property for them for 3 months in order to loose $5,000 in rental income......I saw the "eye roll" over the phone.

Likewise, if the listing photos and floor plan show 3 bedrooms, why ask me if there is a 4th bedroom?

When there is no photo of a garage, no garage shown in the floor plan, no garage checked in the listing information, trust me, there is no garage....I'm sure.

I love it when they ask if I have seen the property....DU-AH!!!  Maybe it is because I answer the phone or respond promptly to their e-mail inquiry that they think I am "the help"....their treatment of me thinking I am "the office help" is very telling.  Some insist on speaking with Mr. Gibson.  It used to be fun saying...."I'm HE"...now, I just say "I'm Mrs. Gibson".....further along in our relationship they should figure out I am female.

When they don't get the responses they want and tell me they are a would-be client, I advise them that my property owners are my clients, my residents are my customers and I start screening for my customers "at first contact"....sometime they get it, most of the time they don't.

How a prospective tenant treats me in our phone conversation; in their e-mail inquiry; the questions they ask; the information they have already gotten from my website ALL show not only how interested they are in my property listing but how good they will be as residents during our 12+ month relationship.

Prospects NEVER get a second chance to make a GOOD first impression.

Having just sent out 40+ rental renewal/increase notices during the last week, I am reminded that with rental increases come resident move-outs  which causes resident-move ins.....

Moving is VERY STRESSFUL and some new residents want to BLAME someone for all of the stress and hard work when stuff happens and it often comes back to the "nearest warm body" which is usually the landlord....certainly not their spouse, pet, parents or friends who helped them move. 

Of my last 5 move-ins, 1 has gone PERFECTLY and I suspect it is because they have not fully moved into the home.

....One couple failed to return their property move in inspection report within the 5 days per the lease terms and 3 weeks after move in reported spiders in the garage and MOLD in the master bath shower....I explained in numerous e-mails NOT to leave their garage door open AND that there was no MOLD at the property (they signed a lease so stating this), and that the problem was mildew as the shower enclosure needed to have ventilation after use to evaporate the excess moisture.  When this couple did return the move in inspection - 25 days late, I wrote them and acknowledged receipt; however, my condition report, photos and their lease would govern condition at their move-out.

....Another couple also failed to return their property move-in inspection report as stipulated and reported that the washer drain line was broken and the washer flooded the laundry area....since this was a newly purchased home with a home inspection less than 30 days old, I suspected that there was a "bubble" in the main drain line or that the incorrect washer setting was used.  I advised the residents that I would send a drain service to clear the line; however, if the service found no "break" or obstruction, I would charge them per their lease....I did not hear from them again.

Unfortunately, this list will get longer as more and rental residents for single family homes are coming from the "homeowner" section of society and their only experience with landlords is in the distant past in a multi-unit building where the landlord/on-site manager does EVERYTHING....

Knowing HOW and WHEN to JUST SAY "no" ....is often easier SAID than DONE.

A local Realtor referred a  property owner to me this week. He acknowledged that he was deciding if he wanted to sell his home now or rent it when they left the area.

I previewed the home with him after reviewing past sales/features/description on our local MLS and tax essessor records...the owners have done many upgrades including adding some much needed storage and a home office. A perfect rental home for UVa graduate families or new-hires at UVA.

He acknowledged that they had down payment to buy in the area where they are moving and keep their local home. Then I asked, since they had already talked to a Realtor about selling options, if they can buy a new home of equal or greater value than their current home? His answer was that the new home would cost less.....I then suggested he investigate the tax consequences of buying a home of lesser value AND that the option of selling their current home in 2 years after renting it for 2 years in a potentially HIGHER sales market would be the WIN/WIN. 

In this scenario, they could keep their new home as a rental and purchase a newer/larger home in 2 years and eliminate the potential for tax consequences for roll over replacement homes....they BUY in the slower/lower market and SELL in the higher market and have the cost of keeping their current home covered by the rental income - a WIN/WIN in a slow sales market.

Not only can I compose and write a cogent business letter, I know how to search Staples and Office Depot for time-saving and organizational office supplies. "Sign Here" stickers for lease and form signatures, proper weight copy/fax paper as well as laser printer color copies.

I am surprised how many business people and vendors don’t appreciate the use of a smaller size return envelope in their quest for information or payments....our local Realtor association spends money each month to send me a bill for $29 but does not enclosed a SAE (self-addressed envelope) for payment.

For 20+ years, I have always provided self-addressed size #6 envelopes to tenants for the payment of their monthly rent. I provide them in the front pocket our 19+page Resident Handbook that also contains a USPS mail forwarding kit, property condition check-list form and reminder to change utilities, complete the checklist and provide us with their new contact information.

While VAR and NAR have affinity agreements with the likes of UPS and FedEx, I continue to use mailing services of the USPS....our new resident lease packet including our Resident Handbook are sent out Priority Mail and often arrive at the same time if not sooner than a more costly packet from UPS/FedEx.

While many in our profession often thank their first real estate broker or property manager for providing them the skills and education they have used to advance in their profession, I want to express my appreciation for those early secretarial courses that have served me so well over the last 40 years.