Property Management Maven

http://www.virginia.edu/uvatoday/newsRelease.php?id=7838

While the Central Virginia area has been fairly immune to the foreclosure crisis effecting CA, FL, AZ and other states, we are not immune to the “fall out” from incoming area new-hires from those same areas who are unable to sell their current homes.  If they are fortunate enough to have good long term tenants in their current home, they will be better able to weather the real estate market in those areas while leasing a home in Central Virginia.

I find myself giving property management advice to my current renters since they are NOW landlords themselves.

Two property owner/clients I fired in the last 2 years now want to come back.  I’ve never had this happen before that I can remember.

One client did not like the repair/rennovations I suggested for long-term holding of their property so I suggested they find another property manager.  They elected to try to sell the property and had their Realtor handle the temporary leasing of the property.  Well, it did not sell, their “faux” property manager failed to use the correct leasing forms and lead disclosure, the tenants are gone and the property owners have had no income since December.  I’m going to have to think about this one as they may have other issues with the property.

The second set of clients were “new” and after an hour property presentation, 19 page management proposal and numerous e-mails, they wanted to choose the tenants, I said NO; they did not want to repaint children’s rooms to a neurtal color and they did not want to include yard service as we originally discussed.  Since I had very little time invested in setting up the property, I suggested they find another property manager who would agree to their conditions.  Evidently, they made the same demands of other PMs in the area and got similar responses and they now feel that my management program and marketing efforts are superior to the other area property managers they talked to and still want me to handle their home.  I’m leaning toward NO as I see similiar conflicts in our future relationship.

I now see why many property managers are electing to charge a set-up fee when taking on new management accounts * I charge a $400 fee if the 2 year management contract is cancelled within that time * I’m going to pay more attention to the time I invest in setting up a new property and consider it more seriously.

I just wanted to thank you for taking the Deadbeats and their 4 children.  I know they presented their “prior landlord” as a heartless B-witch and that the property they rented was full of mold; however, the truth is that they were late 3 times with their rent in the FIRST 6 months of their 12 month lease and I had placed them on CERTIFIED/BANK funds only for their FUTURE payment of their rent.  I allowed them to pay their December, 2008 rent on the 15th and I agreed to waive their late/notice fees provided they were not late for the remainder of their lease. 

When they did not pay their January, 2009 rent on time, I served them with a 5-day pay or quit and filed the unlawful detainer/eviction on them on the 12th of January.  They then proceeded to bring up mold, as well as many mis-assumptions regarding the Virginia landlord tenant statutes.

They failed to appear in court; however, they advised the judge via a fax that they would be willing to leave the property in 30 days.  The judge awarded me immedite possession and I filed for a writ of possession that same day.

I advised them I would stay their  removal by the sheriff for a week so that they could move over the following weekend which is when they contacted YOUR real estate agent and offered to lease your beautiful home.  It is unfortunate that your Realtor failed to call me for a reference on them or check the county court website which shows the eviction I had filed. Had your agent run their credit report, they would have noted my inquiry in July, 2008 and that should have triggered a suggestion that they call me directly and verify their story regarding the property they were leaving so abruptly.  Had your agent driven by the property they rented from me, he would have seen a 3 year old $350,000 home, much larger than your home and in much better condition.

Again, thank you for taking my deadbeats.  If you and your sloppy real estate agent not taken them as residents for your home, I would have had to remove them through the sheriff, gone through abandonment postings for items left at the property  and notifications per Virginia eviction rules.

Don’t expect your rent for the next few months.  I am having his pay garnished for the judgement for the January rent and I have filed a Small Claims court action against them for the February and March rent. 

Wallace S. Gibson CPM *
Gibson Management Group, Ltd.

I had my first eviction of 2009 - tenants in a $1800 per month house on 12 month lease….2 checks bounced so they were put on bank/certified funds and then they were late in Dec and I waived late/notices fees ($300) if they paid as agreed AND were not late for the remainder of their lease…they paid/I waived. THEN, they did not pay Jan rent and I filed for eviction/UD = unlawful detainer (Jan rent & late/notice fees) AND a week later, when I did not hear from them, I filed a Small Claims court suit for $5,000 * max in VA.

They tried to claim no mold disclosure (it’s in the lease); I did not tell them where their deposit was held (not required in VA); I allowed people in the property without them agreeing (again, they don’t have to agree and HVAC firm advised them via phone and e-mail) and I allowed gutters to be cleaned when their windows were open (it was Dec and their windows SHOULD have been closed at it was 30degrees outside)….all non-issues.

They did not appear at the return date for trail and I got immediate possession. I e-mailed them that I would not ask for the writ of possession (request sheriff to put them out) for a week which would give them a weekend of 60degree weather to move and they should return the keys to my office by noon on the 10th….she e-mails that they are gone and keys are on the counter. I advised her that was not my stipulation for not serving the writ of possession….she calls the police and reports I am threatening her via e-mail.

It gets better….the rented property is in a 4500 home GATED community with own police who are “sworn” and who can arrest/issue citations, etc. A sgt from the police called me and was obviously having a bad “bald man” day….he started screaming at me that I could not threaten her via e-mail. He did not want to listen that it was an eviction situation and that I was providing information mandated by the county courts….no matter to him.

After a day thinking about the situation, I elected to write to the chief of police with a copy to the general manager of the development (I am also a homeowner as I own rental property there) and while pointing out the unfortunate situation with their “sgt”, I related a similar situation a few years earlier when a tenant actually returned house keys to a police officer and when I was notified, I had the locks changed at the tenant’s expense.

In my letter, I offered to be part of the solution and to come give a presentation to the police department on the mechanics of the eviction process and how they can assist their homeowners (who pay their salary) by knowing the law and being able to field eviction questions more appropriately. I enclosed my 10 line “speaker intro” with my letter in the hopes that they take me up on my offer.

In our lives as property managers, we will encounter police and other government “authorities” in our duties. Rarely, do these people know or understand the laws governing the landlord-tenant relationship…they are not attorneys and if they are, they probably do not have the specific knowledge of the situation in question. Realizing that this type of situation may offer an OPPORTUNITY to actually enlighten them as to our profession, duties and responsibilities should NOT be missed….I encourage property managers and landlord to not be afraid to offer your knowledge and experience to better the public perception of our profession and landlording….

 

A recent posting on the real estate web site, ActiveRain, invites comments on the “Today Show” real estate guru Barbara Corcoran discussing the real estate woes of the country with specific emphasis on renting.  The AR post brought out some heavy comments from landlords and property managers.

The AR discussion dovetails beaufitully with a recent e-mail discussion I had with a prospect that wanted me to come down $200 (20%) on rental price of a home from the rent that had been charged for the last 2 years….I am not going UP at this time of the year; however, my e-mail correspondant insists that rents in Charlottesville are too high and they AND real estate prices have come down….tell that to the City Tax Assessor who when UP on recent assessments - just not as much as the last few years.

As I explained in my e-mail, our area rental home (SFR = single family home) market is extremely tight.  More families moving into the area for grad school, JAG, law and med school are electing to rent rather than buy as they have in the past.  Likewise, the influx of 800+ new-hires at NGIC are also predicted to be renters as they currently own homes that they can not sell and access equity to purchase in our area.

In her Today Show appearance, Barbara Cororan’s discussion emphasised asking for concessions, reduced rent and then going on to the next ad (or Craigslist listing) may well work for listings in Orange County (OC), CA where there are estimated 2200 to 2800 rental listings DAILY on Craigslist…..her suggested process will not work for prospects for local homesin our area as we have no where near that number of rental homes AND our number of rental homes is actually lower than in years past as our “shadow rental market” (unsold homes rented for a short term) have actually been absorbed and are rented.

Knowing how to deal with these prospects is a challenge since many are over-reaching their income capability to move from an apartment to a SFR just as first-time home owners over reached their ability to buy when interest rates were down and they were ignorant that their interest rates would adjust UP in a few years. 

I’ll make rent concessions after I have run a credit report, checked the applicant’s FICO score and have a deal making offer * lump sum rent up front; long term lease; assuming landscape/yard maintenance duties….to reduce stated rent just because the Today Show guru says so is WAY DOWN on my LIST of reasons to reduce the rental rate. 

I’ve just finished Sue Grafton’s T is for Trespass ….heroine Kinsey Millhone, sometime CA PI/process server/insurance investigator does some work for a landlord serving 3-pay or quit notices and after serving some delinquent tenants, she gets a call from the landlord advising her that the neighbor of the deadbeats has reported the residents appear to be leaving and he has to go to San Francisco. He asks Kinsey to arrange to do the CA mandated check-out inspection ….Kinsey responds “Look, Richard, I’m happy to help you out, but I’m not in the property management business. You should really hire a professional to handle things like this.”

Landlord Richard responds “I could, kiddo, but you’re much cheaper. A management company would take ten percent of the gross”.

I won’t spoil the rest of the story, suffice it to say, 10% is CHEAP for what the landlord has to ultimately lay out.

On The Real Housewives of Orange County this week, Jeanna and Vicki will argue about the delinquent tenant Jeanna put into Vicki’s rental property. Both of these women are successful business women * Vicki has made millions in the insurance business and Jeanna is a Re/Max Top Producer and owner of several rental homes in upscale Coto in the OC.

While these storylines make good TV DRAMA and ENTERTAINING READING, they send the wrong message to the public regarding our profession.  When the emphasis is on the COST of professional property management and not the VALUE ADDED aspects that a professional property manager bring to their clients and residents in the equation, we all loose in the depiction…..and in this economy, many absentee-landlords as well as investor rental property owners need professional property managers with the skills, tools and expertise to aid them in managing their investments.  

It’’s hard to think of this as possible when local “tabs” are printing articles about local Realtors and RE appraisers having their properties in foreclosure; however, the Central Virginia area will fare much better than many areas of the country in 2009.

The “We’re Hiring” signs are out EVERYWHERE….the new Topeka Steakhouse in front of the Hilton Inn @ Pantops started their hiring efforts almost 6 weeks before their scheduled opening and fully expected to have to bring staff from their Richmond restaurant until fully staffed.

Although some restaurants on The Downtown Mall have suffered economic hardships from poor parking and City Council decisions, the new Vitamin Shoppe at Fashion Square Mall as well as the new Sephora store at the Mall are doing great as evidenced by my recent trips. The new 24/7 Snap Fitness across from Office Depot is gaining memberships and there are still long check-out lines at the local LOWE’S.

Mid-to higher end homes have been difficult to rent if they were not marketed early in the 2008 summer/spring season; however, mid-range properties close to town have been fairly resistant to drastic rent reductions.

Many of our rental Craigslist rental listings are actually from out of our area * Staunton & Culpeper * as they do not have a designated “site” of their own as of yet on the CL website.

By posting our rental home listings DAILY in a professional HTML format, we are attracting residents who know they will be moving to the area this summer. These “early lookers” are mostly military JAG families, new-hires for the UVA Med Center or the Martha Jefferson Hospital expansion on their Pantops campus.

The medical school residents will start looking in early-spring and the new hires for the sub-contractors at NGIC started arriving in waves since mid-summer as those employers have taken temporary offices in the airport/Forest Lakes area.

For the first time in the recent past, there are sufficient rental properties for tenants to live in Albemarle and work in Greene and Madison counties which have new businesses in those areas and little rental stock.

While Greene county is out of my “management/carbon footprint” for managing properties, it is good to see that this beautiful area is being enjoyed newcomers to the area.

Real estate investors have continued to buy quality rental homes in our area * other than the proximity of the UVA grounds * directly from builders with tenants already in place. Some have bought when the price in our local MLS was reduced sufficiently for the proposed rental amount to make the investment worthwhile in the long and short term. By purchasing newer or brand new homes, investors anticipate fewer repair/maintenance costs so their “asking rents” can be AT or BELOW current market to attractive and rent quickly.

The Lake Monticello area continues to be an attractive destination for rental families because of the schools, amenities and close proximity to I-64 and the west end of Richmond. The Zion X Roads area at Rt.15/I-64 has considerable commercial growth including a new LOWE’S and commercial/retail center. Since many of the new employees to these businesses are being transferred in within their company, they are electing to rent rather than buy as their current home has not sold and is being rented.

Adapting our rental marketing program to transpose from local print media to Craigslist, Google Base, Hot Pads and other internet housing web sites has worked well and we will continue to search for innovative and rewarding methods to fill our clients’ properties with qualified residents.

I got a VERY NICE letter faxed from our local newspaper - LARGE VA publisher Media General - wanting me to re-sign a rate contract for min 4 lines at $1.47 per line for another year….this, they were quick to point out, is not an increase in my current rate.

I in turn sent them a nice letter indicating not only am I NOT signing another contract, I was pulling my 5 inch 2-column ad and using only a 6-line 2-column ad in future with hot link to my website.

Since my client/property owners pay a pro-rated amount of my ad costs depending on the # of days their property listing appeared in my ad, this does not really cost me anything; however, the administration and accounting is a hassle….and is no longer justifiable.
 
Since I cover the costs of my website, daily postings to CL and our local MLS, I do not think that this additional owner expense is justifiable it in the long run. If an owner insists on their property being featured in the local newspaper, I’ll insert an ad and they can pay full rate charges for the # of days it runs.

In order for a rental prospect to find a rental property in the newspaper, they would have to be in town to pick it up from a news rack or Google “VA newspapers” to find The Daily Progress online…..I think most rental prospects are now attune to using CL or other housing websites rather than searcing for local print media classifieds…..sort of like the Yellow Pages for phone numbers, this is a print media that has segewayed nicely to the internet and will be appearing on telephones and PDAs that are web-enabled .

Maybe there is hope for me that I am not SO OLD as to not be able to break 40 years of real estate training to depend on the daily newspaper…..for NASCAR race results or rental classified advertising.

For past few weeks, I have been getting notices from a trustee in SoCA regarding a foreclosure….NO, not one of the properties I manage * a property BOUGHT by some tenants I have a judgement on/against.

They rented from me for almost 2 years and signed a second lease extension in February, 2007 for the coming year.  In May, 2007, they notified me they had purchased a home and had moved.  I had already served them with the pro-forma pay or quit and filed against them in Albemarle General District court for the non-payment of their May, 2007 rent AND a companion suit in Small Claims for the max amount allowed for the accelerated rent under the new lease extension.

When I knew they were out, I had the locks changed, had the property cleaned and proceeded to re-rent it with only the loss of 2.5 months rent. 

Both court cases were heard at the same time and I received a judgement for the unpaid rent, my late/notice fees, my re-leasing fee, ad costs, utilitity costs and yard maintenance costs - approximately $4,000 once their deposit was applied.

Once the appeal period of 10 days had expired, I recorded the judgement in both Albemarle and Greene counties - their new home purchase was in Greene. 

This is where my getting their foreclosure notices comes in.  As a lienholder against their property, I am entitled to notification that my lien position is about to be wiped out by the foreclosure by the first mortgage holder.  The first mortgage holder probably wants ME to buy the property at auction to preserve my position - sorry, no dice.

During the time they rented from me, he lost his job twice, she did not work for a year as their newest child had health issues.  They struggled to pay $1,395 per month in rent YET a mortgage company gave them a mortgage for over $213,000 * WHY?

Over the last 5 years, approximately 25% of my tenants bought homes either in the Charlottesville area or whereever they moved.  RARELY did I receive a request for rent verification for their mortgage company - RARELY.  Why would this not be the FIRST piece of paper requested by the mortgage underwriters?  Why were loans closed without verifying that the purchasers were capable of paying their current rent?

At the end of September, a family of 6 will be homeless unless they move in with friends or family.  They will have a foreclosure AND eviction on their credit report and little monies to pay the move-in monies on a new rental home.
 
Yes, I blame them for not making good choices and budgeting their finances AND I blame the mortgage company that loaned them money without checking to determine if they could make the payments.

I suspect this has happened often in our current housing meltdown…..