As a property management blog, we have found that some of our most popular posts are those that answer challenging property management questions. Over the past year or so, we’ve tried to identify those questions ahead of time, and write about them as much as possible. For example, we’ve written about squatter’s rights, the grace period for rent due dates, and security deposit recovery to name just a few. However, we would now like to open up the floor to our audience for questions. Have a landlord, tenant, or property investment question for our property management experts in California, Arizona, and Nevada? Continue reading “Ask Your Property Management Question”
Property management is a challenging business where the property manager serves two different sets of customers with conflicting needs. As a marketer for a multi-state property manager, I have witnessed the razor-sharp line that a property manager has to walk in his place between the tenant and the landlord. At times, it can sometimes seem impossible to stay the course of this line, and I’ll share my insight into why that is.
The business of property management is one where the landlord compensates the property manager to relieve them of the burden of owning investment property (a.k.a, managing tenants). The late night phone calls with repair requests, the destruction to property, the late payments, not to mention the screening of and securing decent tenants – these are all part of the burden that the property manager bears. The owner, usually, doesn’t want to deal with the tenants, fixing up the property, or worry about collecting money. Usually, the property owner wants to make his investment by purchasing the property, and then simply collect checks by handing over the property to the property management company. In other words, they don’t want to do the “dirty work”. Despite this unenvious position, the property manager must do the bidding of the owner in order to get paid. If the owner feels that the service is not up to his standards, he can take his business to the next property manager in the area as switching costs are typically not that high. Continue reading “Why You Hate Your Property Manager (and Why You Might Be Wrong to Do So)”
It’s no secret that real estate can be a great investment. A property, over time, will gain value as debt is paid down. This leads to a nice sum of money owed to the owner when he or she chooses to cash out on it. Of course, there are some deviations from this formula, like the real estate bubble of the previous decade. Which, if one purchased property at the peak of the bubble (2005-2006), and then had to sell after the bubble burst, they likely didn’t garner a great return on their investment. Property owners in Phoenix, especially, took a big hit during this time with the huge volume of properties that flooded the market from rapid new development. This left a sour taste in many property owners’ mouths when their nest eggs lost more than half the value of just a few years before. Fast forward several years, and it’s become more clear that long term trend of gaining value is still holding. Property owners/investors are back to realizing their investments. Continue reading “Property Management Value in Phoenix”
The Nation recently came out with a report about rental backed securities. If you’re a property owner or renter in Phoenix, this is something that you need to know. The Private Equity firm Blackstone is now a property manager under the name of Invitation Homes. They’ve now created an investment product that is basically a collection of rental homes. They own groups of homes in Atlanta, Chicago, Jacksonville, Charlotte, and Phoenix.
Why should we be concerned about this? These rental backed securities are similar to the mortgage backed securities that sparked the last housing crisis and economic recession. There have been reports of improper evictions as well as poor property management practices. Most concerning about this trend is the economic impact on the rest of us. Home prices are increasing without the demand, and home ownership rates are dropping. Some experts worry that this could create another housing bubble in the future.
Does this concern you? Let us know your thoughts.
This article continues the series What to look for in a Property Manager. Today we highlight the concept of tenant management, and focus in on how to handle problem tenants.
What is the Best Way to Handle a Problem Tenant?
According to BiggerPockets.com, a proactive approach to tenant screening is the best defense against tenant issues, “the first opportunity to enforce your agenda with your tenant screening and selection process.” The best way to have “your pick” of prospects is to price your home at the more “Conservative” end of the price range. You may leave $50 on the table, but you will have so many prospects wanting your home, you will have a wide selection of applicants from which to choose. Sometimes, however, problem tenants get past the screening process, no matter how diligent you are. In these cases, the follow outlines some ideas for preparing yourself for them.
Strictly enforce payment deadlines – There are various laws in place to protect tenants from unfair landlord policies. The trend in recent legal cases demonstrates that the courts will be a little bit tenant-friendly in disputes with landlords. Due to this legal climate, GWM’s advice is to give the tenants a larger grace period (say 5 days after the 1st of the month) but then have a large late fee (10 – 15%). Also, stay away from exotic “tiered” fees and keep it simple (or be prepared for the judge to throw out all those extra fees above and beyond the late fee). Ultimately, enforce the policies in place, but make them crystal clear to the tenant.
Handle maintenance issues promptly and according to your lease – Don’t let a maintenance cause you to be in default of your own contract. Clearly state how you will handle maintenance issues, and then honor your contract. Most states give you 48 hours to address any issue from the time it is reported, and, minus a holiday, there is no reason why you shouldn’t be able to get a contractor to give you a short term fix while you, as the landlord, figure out a long term solution. Regardless, don’t be bullied by tenants who make outrageous demands (“come out today or I am going to fix this on my own and deduct it from the rent”) without giving you, as the landlord, a reasonable amount of time to tackle the repair.
Get insured (and get your tenants insured) – Prepare yourself for the worst case scenario. Assume that one day you’ll have a maintenance issue that you won’t be able to handle. Prime Location lists insurance factors that you should consider. Also, landlords, demand that your TENANTS carry insurance. At least make sure they pay for a year policy up front before you give them the keys…most policies are no more than $125 for a year of basic coverage.
Keep detailed records – As we’ve stated in our Repairs and Inspections post, take lots of pictures before and after tenants move in/out. Use email to correspond, use voicemail recording technology like that of Google Voice to capture voice messages. Even interview neighbors, if necessary. Organize everything away into a file. Chances are you won’t often need the records, but when you do you’ll really need them.
Monitor your property – Interior inspections are critical. Write them into your contracts and so you can perform interior inspections, at a minimum, every 6 months. Use drive by inspections throughout the rest of the year to keep an eye on the exterior. An unkempt exterior will give you a good idea of what is happening inside.
Be professional – This is very important. Always conduct yourself professionally. Be matter of fact, and firm, but always keep it professional. Don’t give a problem tenant any reason to flip the tables on you in a dispute.
Use a professional – We never recommend you manage the property on your own. Quite simply, every tenant will bank on the fact that you don’t know the Landlord-Tenant law and depending on what state you are in, that could cost you a lot of time, energy and money later on. Think about the fact that (3) hours of work by an attorney will probably cost you $1000. You can have a professional management company looking after your home for an entire year for that much money. In addition, tenants won’t be so bold to play games with a management company that has probably seen more games than Milton Bradley. Plus – do you really want your tenant knowing your phone number, your address and your email?
There are lots of things that, as a landlord, could cause you headaches. Hopefully, you’ll prepare yourself accordingly to mitigate the risks. If you have any more questions, please let us know!
Whether you’re looking for a property to purchase, or just a rental for a short term stay, the idea of a death on a property freaks most people out. No one wants to live with the thought of ghosts or bad karma within their walls. Now you can ensure that you don’t accidentally end up in a haunted house with a new website. A recent article from ABC News pointed out this website, recently, and it seems rather interesting. DiedinHouse runs a search with a proprietary algorithm to scour news and legal outlets for information on property deaths. It even gives out certifications to publicize that a property is death free. This service comes with a fee, however. $11.99 gives you a single search, and there’s a variety of pricing options for larger search packages. The price tag is reasonable enough to try out for a real purchase, or just for fun on the property in which you currently live.
Do you need professional advice on getting the most value out of your investment property? Contact Goldenwest Management for more details.
Need more ideas buying investment property? Let GoldenWest Management help!
If you’re in the process of deciding whether to rent or buy a house, you might be interested to learn that deferring home ownership could be advantageous for your budget. Rentals.com has a great article offering some reasons as to why this might be true. These include:
- Living where you want (not where you can afford) – Improving your standard of living
- Not having to handle (or pay for) most maintenance issues
- Not paying for Utilities (where included)
- Access to Free Amenities
- Stabilizing your Budget
- Investing your Down Payment
Rather own your home? Take some of the pain and risk out of it by hiring a property manager.
One of the most challenging things about owning rental property is handling repairs. Sometimes it’s the little things like handling normal wear and tear issues, but other times landlords feel a though they have to cross their fingers and hope their tenants aren’t trashing their property. Many owners struggle with this aspect of property management, and some even find their way into bigger trouble than a few nicks and dings on the walls. The way a landlord handles inspections and repairs can make all the difference between preserving wealth and losing a lot of value. We continue the series Professional Property Management: What to Look for in a Property Manager with the latest topic about repairs and inspections.
Repairs and Inspections: What is a reasonable expectation?
The purpose of this post is to enlighten property owners about how property management companies typically handle repairs and inspections, as well as some tips for “best practices” when it comes to doing it yourself.
Below are the main things experienced property managers should do, and DIY property owners should consider regarding property inspections:
- Monthly Drive By’s – These are good to have. They give you a regular, albeit superficial, visual cue about the state of the property. You can’t make judgements based on landscaping alone, but this is better than having no information about the state of your property. Note: If the property is located within a community governed by an HOA, then you don’t need drive by’s as the HOA regulates exterior condition.
- Details Matter – How detailed is the move-in inspection and move-out inspection? You need written and detailed record to go along with LOTS of pictures. The move-in and move-out inspections are critical points in the landlord/tenant process. Take the opportunity to capture each and every detail. This is the number one thing that landlords and tenants go to court over.
- Get Interior Inspections – Mid-term interior inspections are good for identifying several Tenant habits that may not be good for your home: Are they smoking in the property? Are their extra people or pets now residing in the house? Do YOUR KEYS still work, or were the locks mysteriously changed? Finally, you will also want to know if your home has been converted into a meth lab, or if there are other drug related things going on within the property. The general condition of the property is important, but remember you won’t be able to regulate or do much of anything just because your tenants may be slobs. Build it into your contracts for your tenants to allow you access for routine inspections.
Below are the main things property managers and property owners should should consider regarding property repairs:
- Contractors – Does the property manager use “in-house” contractors only? Regardless of the relationship you or your property manager has with the contractors that do work at your home, make sure you are provided with an itemized bills for materials and labor. A “lump sum” invoice is always a red flag.
- Written agreements about spending caps – For property managers and contractors, It is important to have an agreement with the Landlord (after all it is your money) on a spending limit for repairs. This way expectations are set ahead of time about what the owner is willing to spend without having to be consulted. If the estimate is over, only then would the owner have to be bothered with a phone call or email for approval on the fix. The amount can vary, but $200 is a typical amount. There will be of course some leeway for emergencies or if the landlord is unresponsive, but caps are a good guideline to make sure your wallet is not being emptied without your consent.
- Technology – There are many online tools available today that allow for easy logging of, and viewing of, repair requests, invoices, etc. Savvy property managers will have an online repair request system. Tools like these can make life significantly easier on landlords and tenants, and it provides a “Time/Dated Stamp” of when a request was first reported. This takes the “he-said, she-said” out of repair issues.
- Cash reserves – This is an important point. We’ve seen property owners bothered for their payment information for every (even minor) repair. Property managers should carry reserve funds that can be used to pay for repairs without having to bother owners for every repair payment. Furthermore, some emergencies need to be tended to immediately, and cannot wait for payment. A good property manager can handle these situations with minimal impact and intrusion to the property owner.
Choosing a Property Management Company
A great property manager can take the inconvenience out of owning property. By handling the inspection and repair process, managers can provide two valuable things to their clients — money and convenience. By protecting property owners during the inspection process, and shielding them from the hassle of managing tenant repairs, professional property management companies allow property owners to focus on the things that matter most.