Posted by Teresa on August 31, 2010 under Housing Trends, Landlord Tips | 
Landlords looking for good news, read on:
- Rent.com says that only 31% of you are reporting lowering rents this year, compared with 69% just a year ago.
- The National Housing Council reports that vacancy rates are falling throughout the rental market, while demand is increasing.
- According to a study by MPF Research, which analyzes apartment trends, June vacancy rates averaged 6.6% at the end of 2009 in the largest 64 markets in the U.S.
- The U.S. Census Bureau’s vacancy figures, which include apartments and single family units were 10.6% in the second quarter of 2010—down from 10.7 in the fourth quarter 2009 and 11.1% in Q3 2009.
As units fill, rental property owners become more confident—and less likely to negotiate or reduce rents. Also becoming a thing of the past are the incentives many landlords initiated to fill vacancies—like large-screen TVs, free cable to go with them, and free rent offers.
Rent.com’s survey of rental property owners in June and July revealed that 56% of respondents said the number of vacancies dropped or remained steady from the previous year—good news in an economy which has not seen significant employment growth. Strength of local economies, not reflected in national reports, is given as one reason for increased demand for rental housing. Even small upticks mean people are more willing to sign leases, or parents are more willing to co-sign a child’s lease.
Another factor affecting rental demand is the continued weakness in the housing market. Homeownership fell in the second quarter to 66.9%–that’s the lowest it’s been since 1999. Financing difficulties and plummeting values continue to fuel the rental market.
Rental property owners, keep your eyes on both national and local vacancy rates and market rents, and react accordingly. Keeping up with data means you won’t make the mistake of undercharging on rent because you didn’t realize your market had improved!
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.
Posted by Teresa on August 27, 2010 under Landlord Tips, Tenant Screening & Background Checks |
Landlords are faced with making tough decisions every day. If you’re like the investment property owners we talk to, you regularly ask yourself questions like these:
- Where should my next rental property purchase be?
- What can I be doing to lower my vacancy rate?
- When can I quit my day job?
- Should I hire a property management company?
When it comes to question #4, we have some tips for you to consider when making that decision. Read on for ideas on how to choose a property management company.
First, take your time and do your research. Whether you own one or a dozen rental properties, the decision to outsource management is one of the most important ones you’ll make as a rental property owner. It can make or break your bank account—and even your business. Look at things like:
- How do they handle tenant disputes?
- What is their maintenance agreement like? Do they charge for labor and materials? Is there a surcharge on materials?
- How do they conduct tenant screening?
- What is their reputation in the community?
- Do they offer online rent payment?
- When do you receive rent payments?
- What is their fee?
Understand that hiring a property management company means letting go of the day-to-day management of your rental business. The PM company will show the property, advertise vacancies, screen tenants, handle the paperwork and all the maintenance. If you are not ready to give up control, then hiring a management company won’t do you or the company any good.
Smart landlords know that you must manage the management company. It’s like having employees—and business owners must manage their employees. The property management company is representing you, so make sure you are 100% happy with how they are treating your property and your tenants.
Hiring the right property management company can lead to increase profitability through lower vacancy rates, better tenant satisfaction and lower turnover. You might even get some of your free time back! Do your homework and carefully consider all the implications before you sign any contracts.
Posted by Teresa on August 24, 2010 under Landlord Tips |
When it comes to refunding security deposits, most landlords and tenants will squabble at some point over the flooring in the rental unit. Carpets get stained or wear out, hardwood is easily scratched, and vinyl flooring doesn’t always hold up to tenant wear-and-tear.
What is the best flooring choice for rental units? And how do you decide whether it’s time to switch to something new in your investment properties?
Ask a dozen landlords those two questions, and you’ll likely get a dozen answers. One thing most agree on is that carpet, while it can be the most economical choice, will often give you the most headaches.
Why? Carpet stains and odors are notoriously difficult to remove. A tenant’s pet, cigarette smoke and food odors are absorbed into carpets and padding and can permeate the air in the rental unit—as well as the sub-flooring below. However, in higher-end rentals, tenants may expect nice carpeting—just make sure your security deposit covers damage repair. Landlords know ruined carpeting can occur at every rent point.
- Individual adhesive-backed vinyl tiles are the first choice of many landlords—for bathrooms, kitchens or even the entire unit. They are inexpensive, easy to install and easy to replace. Some landlords we’ve talked to prefer commercial-grade tiles over the less-costly home variety because they hold up better.
- Tenants love hardwood floors. They look fantastic and add value to your rental unit, so if you have hardwood floors, make sure you advertise that fact! But what about caring for them? For homes that are lived in for years, it’s not as large an issue as it is for rental units that might have furniture moved in, out and around every 12 months. Some floor refinishers will recommend a harder topcoat if you inform them it’s a rental unit. Still, tenants can find ways to scratch and gouge the floors. Ask tenants to use floor protectors on furniture legs.
Furniture moving hint: When sliding furniture across a floor, put a thick sock on each leg to make it easier—and save the floor.
- Consider painting the hardwood floor instead. Floor paint is tough and easy to apply yourself. It’s less expensive than refinishing the floors, and between tenants you can repaint it quickly. Make sure you allow it time to cure completely before allowing the new tenant to move furniture in.
- Finally, landlords are starting to use concrete floors more often. They are inexpensive and easy to maintain. In addition, concrete is extremely durable and can be stained or colored to look very attractive. The key to a great looking concrete floor is proper polishing. Keep in mind that concrete floors tend to be hard and cold. Some landlords limit their use to kitchens and bathrooms.
Every landlord must balance initial cost, maintenance requirements and lifespan of flooring options before deciding which way to go. What issues have you encountered when replacing flooring in rental units?
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.
Posted by Teresa on August 17, 2010 under Landlord Tips, Tenant Screening & Background Checks |
- An incomplete tenant background check may not provide information on a lease applicant’s employment and income.
- Verifying the employer listed by a lease applicant will indicate his or her honesty—or lack of it. If you call the number provided and the telephone is not answered professionally (or at all) you might have reason to suspect the potential tenant is not being truthful. Certainly, exceptions apply—especially for small businesses.
- Long-term employment is an indicator of stability. However, recent economic difficulties have put many talented and dedicated employees out of work. Landlords may need to be flexible on their standards until the economy recovers. Requiring all tenants to have held their jobs for two years, for example, could mean a record number of vacant rental units for you.
- It can help you determine whether a potential tenant’s income source is lawful or illegal. Sure, it’s nice to have tenants who have plenty of cash to pay their rent. But if they’re not legally employed or cannot provide proof of income, like pay stubs, you could be asking for big trouble.
- Verifying employment can give you peace of mind. Renting to qualified tenants with jobs is the number one concern of most landlords. Confirming your lease applicants’ employment can keep your cash flow healthy and reduce turnover in your rental properties.
The best time to thoroughly check out a tenant’s employment situation is before the lease is signed. Following this tenant screening procedure on every applicant will ensure that you are not discriminating against any protected groups and that you will be leasing to only qualified tenants.
Posted by Teresa on August 4, 2010 under Landlord Tips, Landlord and Tenant FAQs |
When rental units sit empty and you’re starting to feel desperate, it can be tempting to lower your standards and sign a lease with the first tenant who shows you the money. Experienced landlords might remember doing just that—and living to regret it.
Rather than leasing to a tenant who doesn’t meet your qualifications, try to figure out why your units aren’t renting. Fix those issues and you might find the right tenant will come along sooner than you think!
10 Possible Reasons Your Rental Units are Vacant
1. The rent is too high. Check the market. Do your homework. In most markets, tenants have lots of choices. Reducing your rent is better than collecting zero rent.
2. The condition of the rental is not acceptable to good tenants. Does it look pristine or shabby? Are the railings solid or wobbly? Does the property need a coat of paint? New lighting fixtures? Ask yourself if you’d pay your rent to live there.
3. You are letting good tenants walk away. If you have a qualified applicant, don’t let them get away! Close the sale.
4. You’re not marketing the property enough. Expand your reach. Create appealing ads with great descriptions and get them out there. Put signs on the property (make sure they’re in good shape). Put arrow signs on the corners if it’s allowed.
5. The right tenants aren’t seeing your ads. Who is your ideal tenant? Where do they hang out? Whether it’s the laundromat down the street, a nearby coffee shop or Craigslist, put your ads where your best tenants will actually see them.
6. You’re not making it easy for potential tenants to reach you. Do you have a website, email and cell phone? Does your phone plan have texting? A lot of young people use texting over talking, and Gen Xers and Baby Boomers are more likely to email.
7. Your building or property manager has a bad reputation. If your current tenants are not happy with either, they are probably telling others. Ask them.
8. Your competition is giving tenants a better deal. Are there “free rent” signs on nearby properties? Find out what your competition is doing and match or beat them.
9. Your property management company (is it you?) is not doing its job. Take a hard look at how successful the rental management has been. Too many vacancies are not acceptable. And is you decide to replace them, make sure you put up “under new management” signs on your property!
10. The property looks unsafe. Visit your properties at night. How is the lighting? Are there people hanging around? Do shrubs and trees cover the windows? Fix these problems for your current tenants and potential tenants will feel safer, too.
If none of these factors apply, then you need to do some investigative work. Potential tenants won’t tell you why they decided not to sign your lease—they just go away. Follow up with the next interested, qualified tenant who disappears. Find out why they don’t want to live in your rental property. Poll your current tenants to find out what they like and dislike about living there. You need to know what’s wrong before you can fix it!
Posted by Teresa on July 30, 2010 under Landlord Tips |
When a property is advertised to be sold “as is,” it can mean a great bargain, or a barrel full of trouble. But is the “as is” designation always a deal-breaker?
Not to many savvy rental property investors. “As is” simply means the sellers don’t guarantee the property’s condition and won’t be making any repairs. It doesn’t always mean that something is wrong with the property.
Sometimes there is nothing wrong—the sellers just aren’t up for extended negotiations over replacing gutter straps and repairing a chip in the trim paint. “As is” could also mean the sellers just don’t have any cash to make repairs, or they need every penny of the proceeds of the sale.
It’s perfectly acceptable to ask the seller’s agent why the property is being sold “as is.” Then, when you know, you can decide whether or not to continue with your due diligence. Of course, major defects must be disclosed, like leaking pipes, a bad roof or drainage problems. If the sellers elect not to provide the disclosure, that’s a bad sign.
If you decide to go ahead with an offer, it should be contingent on giving you plenty of time to conduct professional inspections for mold and insects, as well as a general home inspection. If the inspections reveal any major issues, you can still walk away. If small problems are exposed, it’s okay to ask the sellers to cover the repair expenses. They might not, but you never know.
While “as is” homes are a gamble, they are certainly not something rental property buyers should exclude from consideration in every case. Ask your fellow landlords about their experiences, get advice from trusted advisors, and proceed with caution!
Posted by Teresa on July 27, 2010 under Landlord Tips, Tenant Screening & Background Checks |
According to MPF Research, the apartment rental market is showing signs of improvement, as the vacancy rate declined from 8.2% to 6.6% in the first half of 2010.
That’s good news for landlords. Perhaps you’re already seeing an increase in the number of prospective tenants viewing your rental properties. If you’d like to fill your vacancies fast, this might be a good time to review our tips for selling a good prospect on your rental unit. Don’t let a good tenant go just because you failed to close the deal and get a signed lease!
Remember, there is more to renting an apartment than the unit itself. People want to feel good about where they live. Highlight the following:
- Good communication with owners or management: let the prospect know how well you handle interaction with tenants. Examples of great communication include 24/7 emergency availability in case of emergency, a stellar call response policy, and active listening—which starts the minute you meet the prospect.
- Demonstrated level of professionalism: when you’re on time, your documents are in order, the unit is clean and ready, the grounds are professionally maintained, and you have the statistics to back up why your property is the best, who wouldn’t feel good about living there?
- Location: make it your mission to know every business and attraction within a 5-mile radius. Letting the prospective tenant know there is a dry cleaner, grocery store, library, park, and coffee shop close by could seal the deal.
- Amenities: even if you don’t have a first-class gym or on-site laundry, list the amenities you do offer. Things like water-saving fixtures, low-VOC paint, professional landscaping and free parking are good news to many good tenants.
When the prospective tenant shows signs of interest, be proactive and close the deal. People sometimes have a hard time making a final decision, so it’s up to you to help them:
- Have a lease application ready. Never show a unit to a prospect without one.
- Get a commitment: ask them to complete the lease application.
- Let them know you only want the best tenants, so there will be an application fee to cover paperwork and required tenant screening.
- Your goal should be to collect a signed application, first month’s rent, and security deposit at the same time. Let the prospective tenant know if they do not qualify, the rent and deposit will be returned.
- Remind the prospect that you are showing the rental unit to additional prospects and you cannot hold it without a deposit.
You don’t have to be pushy. If you have a good prospective tenant who needs a great apartment, it’s just a matter of putting the two together. As the rental property owner, it’s your job to make this win/win situation happen!
Posted by Teresa on July 23, 2010 under Housing Trends, Landlord Tips |
Regardless of the economy or the rental market, it is always a good time to retain your tenants. To keep tenants from moving out, some landlords have been offering incentives like free cable and even large-screen TVs to go with them. But is it really worth it to invest that kind of cash into keeping tenants?
Actually, yes. Savvy rental property owners know that keeping tenants is a good idea. Here are three reasons why you should retain tenants when possible:
1. Empty units cost money. Whether or not a rental unit is producing income, it is costing you money.. Mortgage payments, taxes, maintenance, lawn service, and sometimes even utilities continue to chip away at your cash reserves, while It could take one, three, four months or longer to find an acceptable new tenant. Why not do what you need to do to keep a current tenant in place?
2. Turnover is costly. There are a number of expenses associated with turning over a rental unit to a new tenant:
- Advertising
- Management fees for finding a new tenant
- Installing new carpeting, flooring, or paint
- Repairs
- Damage each time furniture is moved in and out
- Lost rental income during the changeover
- Tenant screening
Landlords are better off delaying these expenses as long as possible. You don’t want to incur these costs before you absolutely must. And don’t forget—the time needed to complete the changeover to a new tenant is lost rental income, too.
3. Reduced rents: It’s all about perception. A full building looks like a good place to be, and frequent tenant turnover looks bad. If your tenants are regularly moving out of your rental units, it can affect the rent you can charge. Think about the impact on potential new tenants if, each time they do a drive-by look at your apartment building or 4-plex, there is a moving van out front—and it’s not being unloaded. Potential future tenants will get the impression that nobody wants to live there, and the value of your rental will decline. Stability means desirability, which means higher rent.
Whether it means giving lease-renewing tenants a DVD player, a restaurant gift card, or free cable upgrades, it is usually worthwhile to invest a little to keep a tenant happy and in place.
Posted by Teresa on July 16, 2010 under Landlord Tips |
Whole volumes could be written about the difference between “damage” and “wear and tear;” but every landlord knows that tenants can be hard on a rental property. Most landlords have walked into a rental unit for a move-out inspection and been shocked at the damage they discover.
Don’t fall into the habit of performing all damage repairs and maintenance when you’re between tenants. Granted, that’s the best time to clean carpets, repair floors, and replace appliances. But it’s too easy to feel pressured if your tenant is anxious to move in. That’s when small problems and repairs will be neglected.
Conducting periodic inspections and continually maintaining your rental property is the only way to stay ahead of the game—and protect its value. The old adage, “a stitch in time saves nine,” has never been so true. Repair expenses just keep rising; between labor costs and materials, you’re definitely going to be better off fixing a problem while it’s small.
Keep these repair supplies in your vehicle to take care of issues while they’re manageable:
- Hinges and latches (standard sizes and colors for all your rental unit will make this easier)
- Paint and brushes or shoe-polish-like applicators
- Floor scratch cover
- Rhino Glue
- Duct Tap
- Spackle
- Extra linoleum tiles
- Basic tools
- Garbage Bags
During periodic inspections, do a quick check on window locks and frames, door knobs, locks, hinges and frames, woodwork and trim, and cabinet doors. Tighten any that need it. Look up at the ceiling and inside kitchen and bathroom cabinets for signs of water damage. Listen to the toilet to see if it’s running. Drips and leaking toilets are easily repaired, and if caught early, can prevent serious damage later. See to scuffs and chips on walls and cover with a bit of paint.
If you have a great handyman you can call on for jobs that are above your skill level, great! If not, you should develop a relationship with one. Ask around your network for recommendations. Electricians and plumbers specializing in quick response or small jobs are also valuable to have in your contact list. You never know when you’ll need any of these pros.
By keeping on top of rental property maintenance, you’re doing yourself a big favor when you’re pressed for time between tenants—and you could be preventing the headaches and repair bills that come from neglecting rental property.
Posted by Teresa on July 12, 2010 under Housing Trends, Landlord Tips |
When it comes to advertising a rental property, most landlords are sure to include the basics: the number of bedrooms and bathrooms, any included appliances, and of course, the area of town or neighborhood it’s in.
But you might be surprised to hear that potential tenants also want to know about an area’s walkability rating. What’s that? Walkability is a way to determine how close a property is to shops, grocery stores, libraries, and other amenities that people want. If you can get there by leaving the car in the garage, it’s walkable—and the more amenities within walking distance, the higher a property’s walkability rating.
Walkability means that tenants can avoid the congestion, parking, and pollution associated with driving—and still get their errands run. Walkability makes a neighborhood more pleasant to live in—and studies show that more amenities within walking distance can boost home values. Given that tenants want walkable residences, you might want to advertise the walkability rating for all your rental properties.
How do you know if your vacant rental is in a walkable neighborhood? It’s quick and easy on WalkScore.com, a popular site that measures how many amenities are within walking distance of any address. While the site’s algorithm gives the actual distance from an address to stores, restaurants, movie theaters and public transportation, it doesn’t factor in safety, street design or topography. So, it won’t mention any huge hills you’d have to climb to reach the nearest bookstore.
While WalkScore.com will likely add improvements like topography and presence of sidewalks, it’s still a clear snapshot of the amenities surrounding your rental property. Whether or not you include a walkability rating in your rental ads, consider using this tool to inform potential tenants of all the great stores, restaurants, and coffee shops that are close to your rental units.
