Landlord Basics: Hiring a Property Manager

Posted by Teresa on July 11, 2013 under General | icon: commentBe the First to Comment

tenant screeningAt some time, most landlords consider whether or not to hire a property manager. Perhaps your rental properties have expanded beyond what you can effectively manage; perhaps you purchased property in another town or state; or perhaps you just don’t want the hassles that come with day-to-day, hands-on rental property management.

An effective property manager will handle rent collection, fill vacancies, screen applicants, show your property, and take care of advertising, repairs and maintenance.

What To Look For in a Property Manager
You’ll want experience, of course. A good property manager has a strong set of management and organizational skills, as well as excellent interpersonal skills. He or she needs to be tough, but fair. And, the PM really needs to be a “people person.”

To choose the right property manager for you, think about your needs:

  • Do you need someone who is bilingual?
  • Do you want someone who can live onsite?
  • Do you need someone who can take care of light repairs?

Remember, your PM is supposed to make your life easier—and your business run better. Ask for references, and be sure to speak with each one. Also, ask other landlords for recommendations.

Managing a Property Manager
Once you hire a property manager, you will need to manage him or her. Depending on your arrangement, the PM’s experience and your personal preference, your level of supervision may range from hands-off to very involved.

As the property owner, you are still responsible for the actions your PM takes, from rejecting applicants to interacting with tenants. The federal Fair Housing Act, your local landlord-tenant laws and your own rules will all need to be understood and enforced by the property manager. And if he or she breaks the law by, for example, rejecting an applicant based on family status, race or another protected factor, you could be the target of an investigation.

Be sure your property manager supplies you with regular reports on rent collection, vacancies, marketing efforts, expenses, repairs and any new or pending tenant issues. Obviously, you’ll want these issues resolved as quickly as possible, so it’s a good idea to follow up.

Remember, your rental properties will still belong to you, even after you hire a property manager. It’s always a good idea to regularly check up on your PM and check in with your tenants to make absolutely sure everything is running as it should be.

Finding Your Niche in Rental Housing

Posted by Teresa on June 21, 2013 under General | icon: commentBe the First to Comment

tenant screening, tenant credit checkIn business, they say you can’t be all things to all people. It’s the same in the landlord business. Just as your neighborhood hair salon, coffee shop and drycleaner have to figure out who their best-fit customers are and market themselves, so should you.

Now, you can’t discriminate whom you will rent to, based on things like gender, family status, race, color or religion (see the complete list here), but you can certainly add amenities, focus your policies and market your property to appeal to a certain type of tenant.

For example:

  • If you want high-end tenants, make your properties stand out from the others on the market with top-of-the-line appliances, wood floors, beautiful landscaping, patios, a fitness center and other premium amenities.
  • If you want to attract executives and other professionals, you might think about going luxury: installing security systems, high-speed wireless Internet, upscale laundry facilities, a swimming pool and fitness center.
  • Women make housing decisions in the majority of families, and more single women are in the rental market than ever before. Women also want good security and exterior lighting, as well as safe parking areas, large bathrooms with plenty of vanity space and good lighting, wood floors, bright, open rooms, high-end kitchen counters and nicer appliances.
  • If you want to attract stable, long-term tenants, consider having a wide-open pet policy. People with pets, especially large dogs, are often desperate to find rental housing that will accept their furry family members. They will pay a premium, sign long-term leases, and agree to your terms and policies.

Think about the tenants you want to live in your rental property, then give them what they want. And be sure to advertise in places they’re sure to be—which is usually online. Soon, you’ll be filling units—with your targeted tenants—by word of mouth.

Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

In New York City, Tenants Have to Prove They’re Worthy

Posted by Teresa on July 16, 2011 under General | icon: commentBe the First to Comment

tenant screening, tenant background checkNew York City is known as a tough place to be a landlord, with tight rent controls; it’s also a tough place to be a tenant, with tiny apartments at sky-high rents and plenty of competition for even an eighth-floor walkup with a nice view of a brick wall.

The vacancy rate in Manhattan is near zero, so landlords can be as choosy as they want. If you’re a landlord in the rest of America, you might be surprised to see the typical paperwork a prospective tenant in Manhattan must produce in order to be taken seriously.

While most landlords like to see pay stubs and references, and will run a tenant credit check and background screening, New York landlords require a gross income between 40 and 50 times the monthly rent. In addition, they will likely ask prospective tenants for bank statements, tax returns and proof of employment.

What else should the tenant be expected to produce on the day they view an apartment? A check for the first month’s rent, the security deposit, and a broker’s fee of 8 – 15% of an entire year’s rent.

Without all the paperwork and high enough income, would-be tenants can kiss an apartment goodbye. Of course, paying several months’ rent up front can ease that situation, as well as help tenants relocating from overseas secure an apartment without an established credit history in the U.S.

Another option for tenants is to contact a lease insurance company. For a fee of between 75 – 85% of a month’s rent, the firm will cover a tenant’s rent if they stop paying and the landlord obtains a judgment.

As for the rest of America, the landlords we know require each prospective tenant to provide:

  • Proof of income (pay stubs, income tax returns, etc.)
  • Last two rental residences and landlord contact information
  • Place of employment and reference contact information
  • Personal references and contact information
  • Co-signer information, if applicable
  • Permission to run credit and background checks

No matter where you own rental property, why not be as careful as Manhattan landlords, and ask tenants for more paperwork than you think you need? You could end up with better tenants than you expected!

Rental Housing Advertising Tips

Posted by Teresa on June 12, 2010 under General | icon: commentBe the First to Comment

iStock_000009636788XSmall2-300x199When it comes to advertising your vacant rental units, there is only one way to measure an ad’s effectiveness—it’s making your phone ring! If your attempts to promote your rental property aren’t doing that, then you need to change tactics—and fast.

Tracking where your inquiries come from is an important side note here. If you’re not tracking sources, you don’t know which of your advertising dollars are working hard and deserve to keep going, and which you should retire.

Here are some advertising methods that work for the landlords we talk to. And keep in mind that in different areas, costs and effectiveness vary greatly. All you can do is keep track of what works for you.

Banners: There’s nothing like a large, colorful banner to grab the attention of drivers and pedestrians. No matter what size building it’s on, a proportionately-sized banner can really work. Make sure you word it in a generic way—today’s tough vinyl materials are meant to last, so don’t advertise any short-term rental deals, unless you plan to repeat them and re-use the banner.

Signs: Inexpensive plastic “For Rent” signs can be scattered throughout your property, or just placed in front near the sidewalk. But just don’t expect these to last—they tend to “walk away” and are meant to be temporary. Still, they do a good job of garnering attention. You can also place them in the windows of vacant units—so they cannot be stolen or blown away. Visibility could be less, but you’ll keep the signs longer! Some rental managers place “for rent” arrow signs at intersections; you should check the legality of this practice in your city.

Referral fees: offer your staff and current tenants a token of your appreciation for bringing in solid tenants. Knowing your minimum requirements is important, so be clear on your expectations. And of course, keep the Fair Housing Act in mind at all times, and don’t ever indicate a preference for one group over another.

“For Rent” publications: These specialized publications are typically used by multi-family complexes. They tend to be pricier than other advertising methods. But since calls can be directed to special numbers, you can easily track how well these ads are doing. The rental publications also give you the advantage of high production values, photos, and wide distribution.

Advertising can be cheap, free, or very expensive. Tracking ads is vital to keeping your rental property business profitable.

Easy Tips for Managing a Property Manager

Posted by Teresa on May 18, 2010 under General | icon: commentBe the First to Comment

shaking-hands1There are just as many rental property owners who wouldn’t dream of personally managing their rentals as there are landlords who would never allow a property manager to do it. As your rental property business grows, you may find it becoming too much to handle by yourself.

If you’ve made the decision to turn over the day-to-day management of your rental business to a property manager, keep these tips in mind for managing the individual or company you hire.

1. Even though the property management contract is signed, you’re not off the hook. You’re in charge, so you can feel free to take charge, be in control of the relationship, and require a certain level of performance from your rental manager.

2. Supervise their activities as well as you can. This can be a little more difficult if you are an out-of-town rental property owner. Still, you’ll want to avoid nightmares like unauthorized repair bills, erroneous charges, and poor rent collection. Require photos of repairs for proof they are done properly and to your satisfaction.

3. Be realistic. Some repairs will cost more than you think they will. Property managers shouldn’t have to call you for permission to spend $10 on your behalf. And emergencies happen—so don’t risk creating a bad relationship by complaining about emergency repairs—especially if they will save you money in the long run.

4. Remember, rental property managers are in business to make a profit. If they are providing a valuable service, you should expect to pay for it. Just be sure to check over invoices carefully, ask for clarification if don’t understand something, and require explanations of anything you don’t recognize as necessary.

5. Keep your contract handy and make sure they are following its terms. If rents are due in your account by the 15th of the month, and they routinely miss it by a day, they are in breach of contract. If monthly tenant reports, vacancy reports, and marketing reports are required—but are not happening—don’t let the property manager get away with it, or they’ll continue to do so. Be sure that you are abiding by the contract, too—remember you agreed to it.

6. If the terms of the contract you signed aren’t working out as you had hoped, ask to re-negotiate. It can’t hurt to ask. And if the relationship is still unsatisfactory at the end of the contract term, find another property manager. At least you’ll have a better idea of what works and doesn’t work for you.

7. Show the property manager that you’re the boss. Someone has to be in charge, and it’s your property with your tenants—and your liability. So that someone in charge should be you! Don’t pay for repairs you don’t authorize. Require pre-approval for any expenditures over a certain amount, like $100. Don’t allow tenants to sign leases unless they meet your criteria for tenant background screening and credit checks.

Property managers can be 100% honest, wonderful communicators, and an integral part of your rental property business. But not all of them are. When you hire a company to manage your rental property, you still need to manage the manager!

Hiring a Maintenance Company? 5 Things Landlords Should Look For

Posted by Teresa on May 14, 2010 under General | icon: commentBe the First to Comment

tools2Whether hiring an outside contractor for regular maintenance, emergency repairs, or both, landlords need to know a few things first—especially if they’ve never hired a contractor before. It’s important to keep your rental properties in good working order and safe for your tenants—so having a great repair person can bring you peace for mind. Besides, they’re a good investment in your business.

1. Is the contractor a member of your local building and remodeling association? Call them and find out! These associations are great sources for information and referrals. And generally, their members are experienced professionals who see value in associating with other professional contractors.

2. Is the contractor licensed and insured? Most localities and states require contractors to hold proper licenses. Most also require liability insurance—and closely scrutinize contractors. Before hiring one, ask your repair professional or contractor to show you their license and insurance coverage documents. Just because they say they do doesn’t mean a thing—and you don’t want to find out after they walk off your job or damage your property that your contractor has neither a license nor insurance!

3. Find out how they collect deposits and progress billings. We’ve all heard the nightmare stories of homeowners and landlords who are swindled by unscrupulous contractors. Paying large deposits—or the entire estimate in full—before the work has started is a risk. Some landlords never seeing the contractor again—and it happens every day. If your contractor is licensed by the state and a member in good standing of your builder’s association, you stand a better chance that they are reputable.

4. Does the contractor have excellent references? A good estimate and friendly personality doesn’t mean you should sign a contract. Too many people don’t check references—so too many dishonest contractors get away with illegal activities. Ask for references and call them. And be suspicious if they are too good—you could be talking to a friend of the contractor!

5. Does the contractor have a criminal past? As a landlord, you are responsible for the safety of your tenants. Imagine the potential liability of allowing an ex-con, thief, or sex offender around your tenants and their neighbors. For complete security, consider running a background check on the contractor you choose—before you sign the contract!

Target Women Wisely to Fill Rental Vacancies

Posted by Teresa on April 26, 2010 under General | icon: commentBe the First to Comment

dishwasher2In the home-building game, smart competitors are paying attention to what women want. And in a competitive rental market, property owners, managers, and landlords should, too.

Women are signing home-buying contracts in larger numbers than ever before—up to 25% of all U.S. home purchases, according to the National Association of Realtors. If women are buying more homes, it makes sense that they are renting more homes, too.

So what do women look for when considering a new place to live? It can vary, of course, depending on the area, her lifestyle, and her needs. But builders who are training to become “certified” in women’s housing needs are reporting the following as big plus signs that women want:

  1. Walk in closets: a must for every bedroom.
  2. Closets that pull double-duty: gift-wrapping or craft stations are a big hit. Simple upgrades like cubbies, drawers, and a few big dowels that serve as wrapping paper rollers are easy and appreciated.
  3. Nice-looking hardware on cabinets and drawers: contemporary, clean, and heavy hardware lasts and looks great.
  4. Security systems: motion detectors and alarms help women feel safer in their homes.
  5. Granite kitchen countertops: higher-end counters can help move a rental home from “for lease” to “lease signed” faster.
  6. Plenty of bathroom storage: this includes “hidden” storage for easy access to everyday products like hair dryers, as well as for keeping reading materials out of sight.
  7. Contemporary light fixtures: look up. If you see cheap-looking, 1980s lights, replace them quickly!
  8. Quiet ceiling fans, bathroom fans, and dishwashers: women like peace and quiet, and “whispering” fans and appliances are everywhere these days, so why not provide them?
  9. “Drop zones” where groceries can be placed just inside the kitchen door make good sense.

Not all rental homes are suited to such upgrades. But if you are targeting the section of the population who can afford a higher-end rental, you might be surprised at the simple things you can do to your property to make it more attractive to women renters.

And, it’s certainly true that many men want these same features in their homes, too. Many of these upgrades are just nice design features that appeal to everyone. Look through your vacant rentals and see about making a few smart upgrades that will target new tenants!

Pre-screen all tenants as part of your standard application process. Background and credit checks will help ensure you rent to qualified tenants. For more landlord resources, including forms and information on tenant screening, turn to E-Renter.com.

In Between Tenants: A Checklist for Landlords

Posted by Teresa on April 20, 2010 under General | icon: commentBe the First to Comment

to-do-list1Congratulations—you have a new tenant for your just-vacated rental unit. And you have very little time to get it ready before move-in day. Here’s a handy checklist to follow, with every detail covered:

  1. First, make sure any trash or property left behind by the previous tenant is removed. Whether you hold it for the previous tenant to pick up, trash it, or donate it is up to you.
  2. Check the plumbing, heating, and A/C systems. Turn on every faucet, let the water run for few minutes, then turn it off. Make sure there are no leaks. Check around toilets, the dishwasher, and the garbage disposal, too. Be sure thermostats, filters and vents are working properly.
  3. Change the locks, if necessary. Some landlords never change locks between tenants—others always do. Depending on your situation, either install new locks, have the existing locks re-keyed, or just check the locks to make sure they work properly.
  4. Turn on appliances. Check the stove—does every burner heat up? Does the oven put out heat? Are the racks still there? How about the broiler pan? Also, run the dishwasher through a complete cycle—make sure it doesn’t get hung up or leak. Check the refrigerator and freezer to make sure they are cold, now warm. If your rental unit has a washer and dryer, turn them on too. Make sure the washer does not leak, and the dryer is properly vented.
  5. Check cabinet and drawer pulls in the kitchen and bathroom. Are any missing or loose?
  6. Look for torn or missing window screens. Check the windows, too. They should open and close easily. Locks must operate easily. Think of your tenants’ ability to open sticky windows or unclasp a stiff lock. In an emergency, windows and locks must operate smoothly and easily.
  7. Clean, clean, clean. Whether you do it yourself or hire an outside firm, clean the rental unit thoroughly. Give the toilets and tubs, showers, sinks, mirrors, and floors in the bathrooms a good scrubbing; same for the stove and sink, countertops and refrigerator, tile and flooring in the kitchen; then, clean windows and sills, baseboards and carpeting throughout the rest of the house or apartment.
  8. Check the storage area, shed, or garage—make sure there is no trash, dirt, or spider nests lurking behind. Ditto for outdoor living spaces, like balconies or patios.
  9. Check smoke and CO2 detectors for proper operation. Make sure fire extinguishers are in place.
  10. Finally, provide a new roll of toilet paper and paper towels—usually the first things people need in a new place. Your tenant will appreciate the thoughtful touch.

If you’re able, an inexpensive plant is a great welcome gift for your new tenant—and will start your relationship off on the right foot.

1st Quarter Apartment Rent Report

Posted by Teresa on April 6, 2010 under General | icon: commentBe the First to Comment

iStock_000002845725XSmall2-200x300U.S. apartment rents rose from the fourth quarter of 2009 to the first quarter of 2010, by a tiny 0.1% for asking rents and 0.3% for effective rents. This is the first quarterly effective rent increase since the third quarter of 2008, according to a Reis, Inc. report released today. When effective rents (which include perks like free rent and utilities) increase, it suggests that landlords are actually making fewer concessions to tenants—and they are paying off.

While effective rent was up from the previous quarter, it was still down 2.3% compared to the first quarter of 2009. However, that’s much better than the 5.6% decline we saw from 2008’s to 2009’s first quarter. This dramatic change indicates a reversal in rent decreases.

Strong markets that saw rent increases include Miami, New York City (the most competitive apartment market in the U.S.), Colorado Springs, Washington, DC, San Antonio, and Dayton, OH. Continued struggles were seen with lowered year-over-year rents in Las Vegas, San Jose, and San Francisco.

In Miami, effective rents for the first quarter gained 1.6% to $1,008 per month, and in New York, the gain was 0.9%, to $2,667 per month.

Vacancy rates remained unchanged—at the record level of 8%—during the first quarter. However, no increase can a sign the market is at or approaching the bottom of the vacancy pit and recovery is on the horizon. In New York City, vacancies even fell 0.1% to 2.8% from the previous quarter.

What about new construction? Well, 22,000 new apartment units opened in 2010’s first quarter, and their vacancy rate was a whopping 52.8%. And in 30 of the 79 markets studied, vacancies rose. But large investors are again looking at developing apartment properties—perhaps anticipating increased demand for next year.

Looking at the overall 1st quarter picture, it’s much brighter than reports were throughout 2009, so it’s possible that the apartment market will be on its way to recovery this year—as long as the economy picks up some steam, and some jobs.

Pre-screen all tenants as part of your standard application process. Background and credit checks will help ensure you rent to qualified tenants. For more landlord resources, including forms and information on tenant screening, turn to E-Renter.com.

What you Say to Perspective Tenants Can Come Back to Haunt You

Posted by Teresa on March 30, 2010 under General | icon: commentBe the First to Comment

iStock_000009636788XSmall1-300x199A real estate brokerage in Las Vegas, one of its agents, and the owners of a rental home were all recently sued in federal court for discrimination. Here’s what allegedly happened:

Back in 2008, a woman tried to rent a home the realty company listed. She says she was rejected because she told the agent she had applied to adopt three children, adding to the three she already had living with her. If true, this is a clear violation of the Fair Housing Act.

She alleges the agent replied that they were “hoping to rent to someone without children,” or something to that effect. The home was eventually rented to a family with one child.

What did the agent do wrong? Plenty: It is illegal to make rental housing unavailable or deny rental housing because of family status, under the Fair Housing Act. His statement, if true, violates the FHA.

The real estate company denies the allegations, and says there is no evidence to support them. Their side of the story is that the prospective tenant refused to pay the asking rent.

While there are always people who look for a lawsuit around every corner, and every suit has two sides, there is no doubt that being sued is no fun. It can cost landlords plenty of time and money. Even if you’re completely innocent, proving that is a big hassle. And what about the bad publicity? Innocent, defendants can suffer negative reactions for months or years to come.

The best way to avoid this type of lawsuit is to watch everything you say to prospective tenants. Don’t ask about their personal situation. Keep every conversation and interaction 100% professional. If they ask if the neighborhood is safe, have them look up local crime statistics online. If they ask if you like kids, tell them what you think about kids doesn’t matter, and that your job is to make sure the rental units are rented fairly no matter what the applicant’s family situation.

Base decisions to accept or reject each tenant applicant on the same factors: proper income level, verified employment and income, acceptable credit history check, passing criminal background screening, and any other verification you require.

Don’t judge any books by their covers—the scariest-looking people sometimes make the most peaceful, easiest tenants. And Mr. and Mrs. Clean could be hiding some scary secrets behind their appearance. In the landlord business—you just never know.