Property Management Blog

This article was published in the October edition of Residential Resource Magazine and was written by Kevin Mackessy Broker of Blue Olive Properties in Highlands Ranch CO.

The current real estate market, though showing steady signs of recovery, still remains challenging in many areas of the country. For many property owners, selling remains out of the question, and they must face the dreaded “we have to move, but can’t sell” dilemma. Many owners wisely choose to rent their houses in anticipation of better markets ahead. As professional property managers, we are always happy to help homeowners with rental management solutions.
One very important question we always ask owners is, “Will you maintain this house?” Most say “yes, of course.” But many owners, who are now de facto investors, have no idea what can come up in the course of renting residential properties. Owners often have deferred maintenance issues that they have learned to live with. The problem is, as all property managers know, tenants are not as forgiving. Nor should they be. If an owner is going to put a house on the rental market, it must be in a safe, clean and fully operable condition. Many states have habitability laws that cover this very issue, but that is another discussion.
For now, we want to help homeowners make a successful transition to real estate investor. We always require that a home inspection be conducted on all properties we agree to manage. A good home inspection will give the homeowner a baseline condition report. A competent inspection will also head off potentially dangerous conditions.
Home inspectors conduct a reasonably fast, efficient and cost-effective inspection and complete the following functions:
• Perform a complete interior and exterior visual inspection, looking at the overall condition and cleanliness, giving recommendations on cleaning or painting needed.
• Conduct a visual inspection of all carpet, tile, linoleum and hardwood flooring. Make cleaning and repair recommendations.
• Inspect the water heater for proper operation, corrosion, or leaks, giving a replacement or repair recommendation. The life of most water heaters ranges from 8-12 years. If a water heater bursts, an owner could be looking at steep bills for water extraction, cleaning, and restoration services.
• Inspect the furnace and air conditioner for proper operation and cleanliness, making cleaning recommendations if needed, and ensuring filters are changed regularly.
• Perform gas leak tests on the fireplace, water heater, furnace, and gas stove. This prevents more costly repairs
Do You Promise
To Maintain This House?and potential safety issues.
• Check for any carbon monoxide leaks, and that detectors are installed and functioning properly. Carbon monoxide detectors are required by Colorado law. We recommend installing hard-wired combination smoke and carbon monoxide detectors, rather than using plug-in type detectors, which manage to find their way into drawers.
• Check for water leaks, proper operation and condition of all appliances, disposal, faucets, sinks, tubs, showers and toilets. Small leaks can get expensive in a hurry.
• Check all windows and doors for proper operation, safety, and condition.
• Conduct a visual inspection of the electrical panel, exterior siding, roof, and gutters.
• Conduct a visual inspection of exterior walkways, patios, driveways, decks, and railings.
Once the inspection is completed, we give a full written report with repair recommendations to the owner, especially in health and safety areas. For all properties we manage, the locks are re-keyed after the owner moves out and also between tenants. We believe this simple, yet often overlooked task, is essential in providing security and protecting both owners and tenants. As managers, we have a fiduciary duty to reduce liability risks for our owners, and an obligation to provide tenants with peace of mind.
Once all needed maintenance items are handled, the owner can rest assured the house is safe and fully functional, and we are able to command maximum value for the property. Taking care to repair small items early often prevents bigger problems down the road.
Our next step, once we have a good maintenance baseline, is to train our tenants on how to perform first-line preventative maintenance and how to watch for many other common maintenance issues. We use a comprehensive five-page maintenance agreement as part of our lease package, which clearly spells out owner and tenant responsibilities. This document allows both owners and tenants to have peace of mind. It also heads off any confusion as to who pays for what services.
So remember to always ask potential owners: “Will you maintain this property?” Then let them know the very real protections, benefits and peace-of-mind provided through a competent, professional inspection. Mention that you train tenants to watch for maintenance issues as well, and you will likely win yourself a long-term, happy, and well-protected property owner to add to your portfolio. 

This is a great article from a Property Manager In Nevada  

A common frustration among property managers all over the country is the difficulty posed when owner/clients start communicating directly with their tenants. From the owner’s perspective, it’s difficult for them to understand why this would be a problem. After all, it’s their rental property! The tenants are their tenants, right?

http://judycook.biz/2013/01/owner-why-cant-i-talk-to-my-own-tenant/

 

 

Welcome to our new blog

 

 

 

 

 

To all current owners and tenants we are in the process of starting our property management web site. It will be a work in progress and is being developed by

Propertymanagementwebsites.com they specialize in working with property management firms in developing the most up to date technology advanced user friendly web sites.

 

This website will also be integrated with Property Ware; this is the web based property management software we use. Once we are 100% up and running you will be able to log on to your portal to view your account

 

We will be able to connect with owners and tenants through a branded customer portal that allows them to make online payments, communicate with our staff, access real-time information and much more. Property ware’s Conversations feature makes our technology more social by organizing conversations between tenants, owners and management staff in an intuitive manner.

All data is totally secure Property ware knows how to protect it. With hassle-free cloud computing, all of your data is secured in the SAS70 II compliant Property ware solution. Real Page has invested tens of millions of dollars through the years to develop a state-of-the-art data center complete with redundancy, backups, monitoring and diagnostic systems to keep things running smooth and secure.

Owners & tenants will be able view all their documents, scheduled repair request, payment history associated with their property any time day and from any computer with a internet connection

 

Tenants will be able schedule repairs, make payments, and view all documents  and the best part of all is Property Ware is fairly easy to use

 

 

 

 

Screening Tenants

 

Be Consistent, You Do Not Want to End Up On the Wrong End of a Fair Housing Complaint

 

 

All of us as NARPM members and even regular Realtors who are involved in any form of leasing or  Property Management understand the legal, ethical and the potential damage any fair housing  complaints can have on your firms reputation and license status.

 

What can Property Managers do to prevent this from happening in the first place?  Do you and your Firm have a written policy manual with clear guidelines outlining the rental process from the first phone call to the approval or the rejection of the application?  And if you do have a solid program in place will it stand up to any review if you do have a Fair Housing Complaint filed against you?  We all go by the basic criteria in tenant selection Income level, the ability to take care of the property,   job history, rental history, credit/background report, but what about any grey areas that you encounter that you may base your selection on.

 

Rental References

 

One of the first things we do is fax rental reference verification to the current or past landlord, but suppose they are a landlord who is not one to return you calls? One you do not hear back from, or worse yet what if they will give the applicants a good review just to get rid of them? What if the reference is bad because both the tenant and the landlord just did not get along?  How do you be fair to the tenant and still do a proper tenant screening?

 

Income

 

While it is more involved work, you will need to set an income level for each like kind of property.  The basic rule might be that income needs to be 3X the monthly rent in a average rental, but if you handle high end rentals maybe a higher formula will need to be used ( ie 3.25- 3 .50 X the rent )

 

Job history

 

A stable job history is vital to a tenant being able to pay the rent in a timely manner, but do you have a minimum time on the job ( say 6 months or so ) or if it is in the same industry a new hire might be ok to consider.

 

 

 

Criminal

There are a numbers of companies that do background screenings on tenants, unlike a credit background, criminal background reports are not indexed by social security (SS) numbers, they are indexed by name and date of birth so it is critical to be sure you have the correct information from the tenant ( a copy of a picture ID & something with the SS number and date of birth on it ).

Once you receive the report review carefully to be certain this is the tenant who is applying to rent your property. Sometimes we might be to quick to reject a tenant who has a prior conviction, you need to look at the charge and the outcome of the conviction and how long ago it was. A tenant who had a charge seven years ago might not be the same person who is trying the rent your property now; people do change and learn from past mistakes. The tenant might have a case against you that they were unfairly rejected by the past charge. Several local and state lawmakers are in the process of limiting landlords from rejecting applications based on some past criminal act.  Look at some of our current and past political leaders who have broken the law and gone on to serve again. We never know how courts would rule if the tenant would pursue a fair housing complaint

 

Credit Score

 

Do you have a bottom line credit score that you go by?  Is it tailored to different kinds of houses you manage?  If you set to high of a score to your more affordable rentals you might have a hard time getting these properties rented. Also, if you set a to low of a score on your high end rentals you might put a tenant in that house who will not have the life experiences or the ability to take care of the house and pay the  rent in a timely manner.

 

Medical Bills

 

How do you handle judgments on medical bills in today’s scoring medical cost if you do not have insurance most folks will have no way to pays off any judgments against them. Most landlord and property managers disregard all or most medical issues.  It is however important to take into consideration the tenant will have a portion of their income going to these bills, likely from garnishment.  This reduces their income to afford rent and could impact your income to rent formula.

 

Former home owners

 

Late mortgage payments.  Most property managers provide a special exception when a prospective tenant’s credit history shows late mortgage payments, or a mortgage default.  With the current economic climate and housing market there are a lot of previous homeowners that are either voluntarily or involuntarily losing their homes back to the bank?  Sometimes being former home owners they will make very good tenants since they are use to doing all the required duties a tenant needs to do and an important point to consider is they will be someone’s tenant for approximately 5-6 years before they can purchase again.  This type of tenant could save the property manager time and the owner turnover cost.

 

 

 

Once you have all these basics covered, you should be able to start the review process to approve or deny the applicant. If any applications are not approved, be sure the proper adverse action letter is sent to the rejected application.

 

Your company should have clear written guidelines to screen, deny and then process the applications.  Having established written policies would eliminate the possibility of your company having different property managers or other agents in the office doing their own version of screening tenants. As the owner of the company or the firm’s broker in charge, you could be the one on the hot seat if a property manager or agent makes a bad call and rejects a tenant who, then could go and file a fair housing complaint.

 

 

 

BIO

 

Joe Inge has been a licensed agent since 1999 and a NARPM member since 2011.  He started buying rental real estate 20 years ago. He is the property manager at ERA Woody Hogg and Associates in Mechanicsville, Virginia. He is looking forward to earn his RMP designation this year.