Property Management Maven

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.

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 phone call today from an insurance company representing a local family whose home burned over New Years clarified an aspect of being a landlord that I am often hard pressed to explain.

The insurance company representative was pleased to advise me that, should the home be suitable, the insurance company would rent the property and pay me the rent....they just needed to ask me some questions regarding the property.  I advised the insurance representative that while I appreciate the situation of her insured family * homeless in minus 20 degree weather * I would not rent to the insurance company and that I required completed rental applications for all of the adults in the family.  The insurance company could pay the family who could pay me; however, the lease would be in the name of the adults in the family as I wanted them to be responsible for the condition and maintenance of the property.

She again assured me I did not understand - the insurance company would pay the rent and I assured her that I would not put my property owner clients in a position of attempting to sue the insurance company if their insured family destroyed or damaged the property.  If the family was not responsible for the terms of the lease, there is no guarantee that the property would be maintained during the lease.

Over the last four+ years, I have had several fire-displaced families in my rental homes.  I currently have a family renting a home in the same subdivision where they are re-building the home that burned in June, 2007.  Their insurance company paid them the entire rental amount of the one year lease and they pay their rent to me monthly.  They were required to pay their own security deposit as the insurance company had no way of tracking the refund at the end of the lease. 

This process seems reasonable to me and in today's conversation when I attempted to explain that the collection/payment of rent is not my only concern as their prospective landlord, she was incredulous that I would expect more than just the rent and that I would want to hold the residents accountable for the property condition at the end of the lease term.

I wished her success in her quest for rental housing for her insured family and suggested she call individual property owners who may be willing to work with her on the insurance company's terms....I am sure there is someone in need of a rental tenant who won't look past the collection of the rent every month.

Since late April, I have been sending brochures (3-panel printed on my laser printer) to homeowners who can't sell their homes * overpriced, poorly presented in listing photos (don't get me started) * the properties are PRIMO from a rental prospect * 4BR, garage, basement...The flyer has a reprint of the the article entitled * REAL ESTATE * Rent Now * Sell Later * Local housing market stalled? Consider becoming a temporary landlord. By Pat Mertz Esswein *From Kiplinger's Personal Finance magazine, February 2007.
 

I've done 15 property presentations from these flyers and gotten 10 new properties to manage for 12 to 18 months...of the 200+ flyers I have mailed out, I've tracked which ones ended up listing their home for rent with their listing Realtor or attempted to rent and manage themselves.

Over the last week, I've gotten 2 calls from property owners * one who rented themselves and one who rented through their listing Realtor * both of whom have tenants who have not paid rent and the owners are now out of the area...I asked the first homeowner why their REALTOR is not assisting him and he said the Realtor does not know what to do * DUAH!?! and he can't afford to keep the home since he has a second home to pay for now. The second owner did not screen the Craigslist tenant he was lucky to find on his first property posting AND allowed occupancy without a deposit....JEEZE!!! I'm going to go back and see if these properties were overpriced to begin with when originally listed for sale.

In both instances, the wives had kept my brochure and urged their husbands to call me when their rent did not arrive with the Xmas cards....one owner I will assist and deal with the wife and the one with no documentation on their tenant I will refer to my local attorney with permission to use my name to get their phone call returned.

I am amazed and amused at the quality of photographs still being posted on Realtor and MLS websites....It is one thing to show a poorly staged furnished home and another thing to not see the GREAT shot that is available by using your imagination.

Realtors who photograph the interior of the clients' homes that are furnished need to allow time to "stage' the individual rooms...the dish rag hanging on the stove handle does not indicate a "homey setting".....placing items under the counter, in the cabinets or outside the shot can take mere seconds and allow the viewer to actually view the property rather than kibitz on the owners' poor housekeeping.

Taking exterior photos when the grass is a week overdue for cutting or after the leaves have been removed are easy to comprehend when you view the resulting photos so why not ask the client to arrange for these events so that GREAT photos can be obtained.

I am marketing a home for Jan 2008 occupancy and I did not have a good exterior photo.  The exterior was repainted 2 years ago in the spring/summer and there is a large tree in the front yard....to take the VERY BEST photo, I waited until the leaves were off the tree in the front yard, then had them removed by a yard service and then took the exterior photo of the front on a bright sunny day...the result is awesome.

Yes, I have a good camera.  It is 3 years old and was expensive when purchased.  Yes, I take a lot of pictures - for marketing, documenting move-in and move-outs of residents as well to document repairs and maintenance.  I always have a camera with a charged battery in my car and one in reserve in my office.  As I drive by my properties, I document items that need attention by the residents and for my maintenance-to-do list.

In the past, while I had a camera in my car, it had film that had to be taken to be developed and then the photos had to be scanned as JPEG images to be used in listings or as documentation.  Storing photos were also a problem.

With digital cameras, photos are kept on a 2GB jump/travel drive and photos that are no longer needed are archived onto CD for storage. 

At the inception of my property management career, I never dreamed I would become a property photo journalist, interior decorator or set designor.

With winter coming on,  many unsold homes in our area going on the rental market * I'm part of the problem/solution as I am marketing my services to owners of DESIRABLE unsold/vacant homes.
 
It is curious to have callers on my newspaper ads, website or Craigslist listings or signs  IMMEDIATELY ask if I will lower the rent?

I've already adjusted the rent for the time of year * after K-12 school starts and late in the rental season *  however, large, desirable homes in the Albemarle and Fluvanna areas were scarce a year ago and there are MORE people coming into the area wanting large rental homes.....why would I automatically say I would reduce the rent?

Prior to even discussing a lowering of the PRICE (that's what a rent reduction is), I want to show the property, meet the prospects AND get complete rental applications on all adult applicants....why say YES, I'll lower the rent without a quid pro quo - lowering the rent for GOOD, QUALIFIED APPLICANTS?

Why are there fewer rental homes in our area?   With the very strong home sales market of the last 5 years, many rental property owners sold their older rental homes to first-time homeowners and these sellers actually got out of the rental market. Because of this, fewer large rental homes have been on the market for the last 2 years when there were actually MORE rental prospects moving into the area....Graduate/Law/Business school families, UVA Medical Center resident families, as well as new hires for NGIC, GE-FANUC and PRA at the North Fork Business Park....ADDITIONALLY, we have people moving into the area who CAN'T buy a home because their home in CO, CA, AZ, TX, FL has not sold so they have no CASH to make the down payment on a local home purchase.

A 4 bedroom home with basement and/or 2-car garage in the 29North area might have rented for $1,995 during the "high rental season" of April, May or June of this year (2007).  The same home would rent for $1,595 in October or November * already a $400 reduction * below the "high season" rent.  Why should I go even LOWER for a voice on the phone?  QUALIFYING prospects at the higher  * rent meaning their income would be 3X $1600 per * and THEN lowering the rent if their FICO score is 700 or above or they want longer/shorter term lease or will pay 6 months rent at lease signing is the quid pro quo that owners and managers should look for.

As for those DESIRABLE homes I rented for $1,895 to $1,995 in the high season 2007, I'll be RAISING those tenants rents at least $150 to $200 when I offer them their lease renewals in February, 2008.

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.

Over the weekend a resident (single man who indicated he had been a homeowner in the not to distant past) called me Sunday afternoon saying he did not have hot water.  Now our 20+ page Resident Handbook provided to him when he moved into the property in July advises on how to reset GRIs, as well as check breakers (all the way OFF and then switch to ON).  I requested that he check the breaker and e-mail me the specifics of the situation...he continued to call me and leave voicemail messages Sunday night and I finally received a short e-mail from him on Monday morning.

I had our repairman check the hot water heater on Monday only to find the electrical breaker was off...once it was turned on, the thermostat was reset and within 20 minutes, the resident had hot water . 

The resident then e-mailed me that he had tried the breaker and thermostat reset procedure on Sunday which he neglected to advise me of  in his Monday morning e-mail or his Sunday voicemail messages.  On Tuesday, our repairman replaced the elements and thermostat and the hot water is back on.  While this second repair was being accomplished, my husband was at the property.  The resident started commenting on my non-responsiveness to his Sunday phone call and his numerous voicemail messages.  My husband was amused.

When my husband advised me of these comments,  I knew my procedures as outlined in our Resident Handbook were working by enabling me to be more responsive to my residents and client owners.  Had this "resident" followed the instructions in the Resident Handbook on reporting maintenance requests via e-mail and to fully describe the problem, the situation would have been handled prior to his arrival home from work on Monday.  However, since he called on the weekend, did not provide a full description of the problem or his attempts to correct the situation, he was without hot water for 24 hours longer than necessary.

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.