Property Management Maven

Like many landlords and property managers, I require that repair and maintenance requests be presented in writing….e-mail is preferable; however, where emergencies are concerned * FIRE * FLOOD * BLOOD * I’ll take an emergency phone call or voicemail message with a call back phone number.

I’ve been expecting to this phone call…didn’t think it would be this soon; however, I knew it would come. 

In late summer, a local Realtor of approx 4 years called me regarding a listing that had gone vacant as the owners had moved to their new home out of state.  The Realtor wanted me to talk to their owner about managing the property for lease until the local real estate market recovers.  I talked to the property owner and provided my management agreement and management proposal.  I also advised them with a list of some repairs and cleaning that should be done as quickly as possible to make the home attractive to potential tenants.  I also provided them with the amount rent they should expect.  Obviously, it would not cover their “costs” and they were not happy.

When I did not hear back from the owner or Realtor, I forgot the property until I saw it listed a few weeks later on Craigslist for lease through the listing Realtor at a rental rate that was over the rental market. 

This past week I got a call from the property owner.  In a long telephone telephone conversation, the owner asked my advice. 

Evidently their listing Realtor with no leasing or rental management experience had been approached by another Realtor in their office about allowing the second Realtor’s clients to rent the home of the property owner.  Seemed like a good idea so the listing Realtor prepared a standard Virginia Association of Realtor lease and the new tenants signed it and moved in.  They paid their first month’s rent and promised the payment of their deposit once they had rented out their home that the second Realtor had listed on Craigslist.  So far, so good.

Then, the second Realtor could not lease the tenants’ home as it was actually in foreclosure.  The new tenants knew this and had not shared the information with their Realtor.  Likewise, the property owners’ Realtor had relied on their office/agent/buddy’s representation as to the creditworthiness of the new tenants.  No credit check had been obtained and no credit history was known at the time the lease was negotiated.  The lack of monies for the deposit had not raised a “red flag” and the fact that they were willing to pay a rental amount way over market did not cause eyebrows to be raised.
 
According to the property owner, they have now been served by US Bankruptcy court paperwork indicating that their new tenants have declared bankruptcy and their Realtor/Agent does not know what happened or what needs to happen now. 

Unfortunately, I had to refer the owner to an attorney who can advise them now to make a claim for rent in the bankruptcy and how to evict the residents if they do not follow through with their payment of their deposit or monthly rental payments.

This scenario has prompted my November, 2007 newsletter article…..Leasing Rental Property is a PROCESS and not an EVENT.

A prospective client/owner call over the weekend got me thinking about who purchases real estate as an investment in an area they have never been to and know virtually nothing about.

The web allows us to research a lot of information and a call from a CA investor who has purchased 4 units in a converted apt building at almost  $1/4 million per unit demonstrate my point.

This investor did talk to real estate agents, most with the company selling the units for the building owner/converter/developer.  With a few clicks of the mouse, he could have talked to a local rental property manager about the RENTAL PROSPECTS for his new units.

Unfortunately, he got to me too late for me to give him the ‘facts of life’ on his new investment properties.

          Had he called me BEFORE he purchased units which are essentially 20+ years old, I would have advised him to purchase a NEW home (SFR) in a desirable area like Lake Monticello with his funds.  He would get a NEW unit with few repair hassles that appeal to more prospective residents and which will provide greater potential for appreciation AND increased rental income.

          Had he talked to me BEFORE he purchased 4 IDENTICAL units, I would have suggested he purchase 2 NEWER SFRs in different areas with good schools.  Lake Monticello, Forest Lakes, Northern Albemarle/Greene counties.  These are the areas where there are new businesses * commercial building at the ZionXroads area of Louisa county 10 minutes from Lake Monticello makes it an ideal area for families to reside.  Additionally Lake Monticello is equi-distant between Charlottesville/UVA and the west end of Richmond/Henrico area.   The NGIC has had its plans approved to double the size of the facility which will bring 2,000 more families into the Forest Lakes, Hollymead Town Center, Greene county areas.  Those “new hires” will be arriving within the next 6 to 8 months and the facility will rent temporary space until their facility is completed.  

        He now has 4 units that each rent in the $1,000 range in an area that is overrun with similar properties * approx 3,000 by last count with new coming online daily.  The units are not attractive to UVa undergraduate residents as they are too small and too far from the “grounds”(campus).  The units are rented to graduate school residents and employees of the UVa Medical Center and because of the sheer number of similar available rental units, the prospects of increasing the rent for the next 3 to 5 years is not possible until these units are absorbed into the rental market.  Keeping the units rented will be costly using print media  and individual owners without access to the local Realtor MLS, a national rental website, or as a member of the local apt association will be at a disadvantage so they will take prospects on a first-come, first-served  basis.  The entire property will suffer from poor resident selection which does not happen in SFRs.

The GOOD NEWS is that I was able to refer him to a team of local property managers who are familiar with the local rental market for “converted rental units” and whose company is a member of the local apt association and which has a state of the art website featuring interior photos and floor plans.  I turned them on to posting listings on Craigslist and they have been successful in rental units through this “first contact” source. 

Having grown up in the 60s and 70s when many women first began choosing careers in real estate, I view Leona Helmsley as a REAL pioneer.

When she divorced her first husband, she had very few job skills that qualified her to work above a secretary.  With a son to raise, she got a real estate license and made a small fortune when many NYC apt buildings were being converted to coops.  This is when she met Harry Helmsley and together they forged a commercial real estate empire that included the Empire State Building.

Unfortunately, she will most likely be remembered as the woman who wrote a $1m check on TV to pay her taxes and who left millions so that her dog would be taken care of after her death.

I believe she pioneered as the first REAL ”Apprentice” before the Trumps, that her  “the Queen slept here” ad campaign for the Helmsley hotel chain was EXQUISITE by camping on her rep as the Queen-of-Mean, and that she suffered much like Martha Stewart suffered by being put in prison for something that really was not a crime.

Most likely, her reputation will not earn her the place in “feminism” history that she deserves, so I wanted to acknowledge her place among women in real estate.

SHaving grown

I should not be surprised to see the number of rental properties on the market at this time of the year….usually, in Central Virginia, the rental season is done and over….UVA students contract for their NEXT YEAR’S housing in October for the following June.  Rental homes, however, should have been leased and occupied two months ago since school started mid-August.

Property owners who could not SELL their homes and who have had to vacate and move to their new homes/jobs/employment are now trying to rent them and they are posting their homes on Craigslist or having their listing Realtor post a listing on our local MLS website.

Realtors who think they are “caretaking” listings by performing property management/rental duties are doing their property owner/clients a disservice.  The “good/professional” agents are referring their clients to professional property managers.  Newbie and hungry agents are trying to perform these duties themselves which could be a disaster for their clients….most of these rental listings are over-priced (they think their property owner’s carrying costs should dictate the rental amount), the homes have not been cleaned and are not being maintained and the agents don’t know the difference between showing a property for SALE v a property LEASE. 

It’s going to be a bumpy ride……