Posts Tagged ‘Property Management’

FIVE RENTAL REVENUE GROWTH STRATEGIES

Written by Landlord Property Management Magazine on . Posted in Blog

by John Wilhoit

This article presents five areas to assist in rental revenue growth. But it goes beyond just rents and ancillary income. We know that most revenue from a rental property comes from rents but that’s not the whole story.

How many rental revenue growth strategies are you deploying presently on your property? How many are in process: working, operational, functional and bringing in dollars? For some folks that’s an easy question. They can rattle off those that are implemented and bringing in money and for other people you’ve got to stop and think about it.

Bed bugs an itching topic for rental housing providers

Written by Landlord Property Management Magazine on . Posted in Blog

by Daniel Bornstein, Esq.

An Inglewood family sued their landlords, Amusement Six Apartments, for breach of warranty of habitability, emotional distress, negligence, and breach of contract after they didn’t sleep tight.

Nothing can tug at the heart of a jury more than a three-year-old that is covered in bed bug bites and scratches himself to permanent scarring. As if Little Jorge Jr.’s bleeding and disfigurement were not enough to incur the ire of the jury, the child’s family was instructed by apartment management to discard their furniture and sleep on the floor in the aftermath of a bed bug infestation.

Revenue, Retention, Reputation: Why the Traditional Landlord Approach is Changing

Written by Landlord Property Management Magazine on . Posted in Blog

by Charlie Wade | VTS

Historically the primary focus of the vast majority of office landlords was to secure enough tenants to fill their buildings as quickly as possible. Their modus operandi was simple: persuade an occupier to sign as long a lease as possible, with a minimum rent-free period and on a maximum pounds per square foot rent, in the quickest way possible. Once the tenant signed on the dotted line the landlord could essentially not worry about that tenant/building until a lease event loomed large on the horizon.

2018’s Hot Item: Online Rent Collections

Written by Landlord Property Management Magazine on . Posted in Blog

by Becky Bower | ApplyConnect

Let’s face it – physically collecting rental checks is outdated. It requires you to invest a lot of time into recording the payment into your tenant ledger, and standing in line at the bank to deposit it. This process doesn’t even include enforcing late fees, bounced check fees or any time spent talking to a tenant that doesn’t have the rent. Bring your rent collections into the future by switching to a convenient, easy, and hassle-free online solution in 2018.

Pet-Friendly Rentals: Pros and Cons

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post by  | Appfolio

Property managers have to make some hard choices when they decide to establish rules for their rental units. According to a helpful report from Michigan State Extension, deciding to allow or prohibit pets might be one of those tough decisions. Before deciding, it’s a good idea to carefully examine the pros and cons of running a pet-friendly rental property.

Probiotics for Property Plumbing – Nature’s Cleaning power

Written by Landlord Property Management Magazine on . Posted in Blog

MegaMicrobes

DRAMATICALLY REDUCE MAINTENANCE COSTS BY USING MEGAMICROBES!

A common challenge for multi-resident, multi-story buildings is the frequency of plumbing repairs needed to keep waste water flowing freely out through drains, pipes, and outflow stacks. This problem can be especially acute in residential complexes where fats, oil and grease from in-home cooking accumulate all the way from kitchen drain traps to the common ground level drains.

Additional deposits of soap, hair, and other waste residue from bathroom showers, tubs, sinks and toilets add to the ongoing problem. Typically, this issue is dealt with as a maintenance budget line item for both plumber snaking at the unit level and the much more expensive jetting service applied to the inside of the common vertical outflow pipes, known as stacks. The annual cost for these services can easily top $10,000 or more, even in a modest-sized building with less than 100 units.

THERE’S A BETTER WAY!

The critical role of construction in property management

Written by Landlord Property Management Magazine on . Posted in Blog

By Ruben Walker | CAM Construction

Construction is more important than you think

If you own a commercial building or complex, you are either managing it yourself or have a property manager. So you know there are many responsibilities and tasks associated with managing your property. But you may have never thought about the role of construction in property management. This post takes a look and gets you up to speed on what you need to know about this important aspect of the job.

Definition of property management

According to Wikipedia, it is:

the operation, control, and oversight of real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and be held accountable for its useful life and condition.

Property management involves the processes, systems and manpower required to manage the life cycle of all acquired property as defined above including acquisition, control, accountability, responsibility, maintenance, utilization, and disposition.”

How does construction fit into property management?

Construction has several roles to play.

Repairs

Repairs are mostly self-evident. They involve fixing things that are broken through misuse. A window broken by a baseball is a good example. Simple repairs may be carried out by an onsite employee. But more extensive ones may be handled by a third-party. Say if someone drives a car through your front entrance.

Maintenance

Many times an onsite employee will provide maintenance. But it can be more efficient and less costly to contract it out in other circumstances.

Routine maintenance involves the day to day upkeep of your property to keep it functional. Replacing loose fasteners on railings, fencing, steps, or deck planks are examples. Recaulking older windows is another.

Preventive maintenance is a proactive service to avoid unnecessary repairs. Regular inspections and service prolong the useful life of your assets. It is also an important part of maintaining the safety of your property.

Capital Improvements

Capital improvements are a different thing altogether. They are almost always carried out by a third-party. According to Investopedia they are:

“the addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property’s overall value or increases its useful life. Although the scale of the capital improvement can vary, capital improvements can be made by both individual homeowners and large-scale property owners.”

They also have very different tax implications.

The components of your property eventually wear out and have to be replaced. Replacement is necessary even if they have been properly maintained. Technology also changes and requires upgrading or installation of new systems and components. New regulations from government also require additions to or adaptations of your property and its constituent parts. You might even have to carry out upgrades just to stay competitive.

Replacing old windows with new energy-conserving ones is an example of a capital improvement.

Experience counts

You know that you can’t be an expert in every area of responsibility that is involved with property management. That’s why it is important to have partners you can trust and that have the experience you need for third-party services.

When it comes to construction in property management, a financially-sound contractor with experience in capital improvements is a smart option. This role is more complicated and challenging than repairs or maintenance. It also requires outstanding project management and communication skills from your partner.

You need one who can work hand-in-glove with you, your architect, designer, and local regulatory officials. You want a teammate that can help you implement your management plan and advise you on it.

Conclusion

As you can see the role of construction in property management is vital to the success and profitability of your property.

The key is having the right general contractor to partner with for this crucial aspect of the job. It is important to have someone who can understand you, your business or property, and its mission and culture. You need someone you can count on to provide quality, safety, and avoidance of future problems.

What’s so Great About a Real-Estate Fund?

Written by Landlord Property Management Magazine on . Posted in Blog

By Kathy Fettke | RealWealthNetwork.com

You had a tough time getting to sleep. Then, the phone rings. You think it’s the doorbell as you stumble out of bed, in your dreams, and suddenly realize your cell phone is doing it’s ringtone vibrating dance on the nightstand.

“Hello? … The heater. … Right now? … Your kids are crying? … Let me call you back in five.”

Okay, that’s one possible scenario in the life of a landlord, if you manage your own properties. Or, you could have a property manager. In that case, the phone call would come the next day telling you of a difficult night with tenants, and requesting permission to spend a certain amount of money to remedy the situation. 

Option number two is a whole lot easier than option number one. But there’s an option number three that’s even easier. In this case, you would invest in a real estate fund created by a group of investors who pool their money to buy multiple rental properties. 

It’s like a mutual fund only it’s tied to hard assets instead of the whim of Wall Street investors. The fund itself is professionally managed along with the properties. You get returns and tax benefits on your investment but you don’t have any of the typical landlord responsibilities.

Direct Ownership vs. Real Estate Fund

There are big benefits to any kind of real estate ownership. When you have direct ownership of a rental property, you have complete control of how that rental is used and the flexibility to make changes. You also have big tax benefits, and you get all the profit.

A real estate fund can provide other benefits that may be better suited for someone who is too busy to manage properties or even a property manager. It’s also great for people who are new to real estate and don’t want to take the time to learn about the nitty gritty details.

When you put your money into a real estate fund, the first thing you are getting is “diversification”. You are pooling your money with other investors to buy multiple properties and getting the diversity without spending the time or money it takes to do that yourself. The fund may have 150 properties of different assets classes in different locations. That gives the fund strength if some of those properties, or markets, flounder.

With a fund, you don’t have to qualify individually for financing. That’s a really important part of the deal. Positive leverage is one reason we are in this business. That happens when you borrow money to decrease the amount of the initial investment and bring in higher returns than the cost of the loan. So if you are tapped out on financing, have bad credit, or don’t want to go through the hassle of getting a loan, a fund will take care of that for you.

Another big benefit of owning income-producing real estate is the tax savings. Most funds are set up as a pass through entity such as an LLC so any of the tax benefits you get from “direct ownership” are also available for fund investors. And, that structure is professionally managed so you don’t have to deal with a lot of paperwork or bookkeeping. You will get periodic statements that are often sent quarterly, along with your paycheck.

The icing on the cake — fund investors will typically get a “preferred rate of return”. That means that investors get paid first from the profit pool. Fund managers get paid after that. So whatever percentage you agree on as your rate of return, you will get that money first. This is a great benefit. It puts the investor “first”.

Other advantages of a fund include the buying power of a big team. The people putting the properties together for the fund will having relationships with industry insiders. They will have expertise at recognizing great deals quickly and the ability to buy those properties before they disappear. And, they will be able to negotiate lower prices if they are buying in volume.

The Role of a Fund Investor

First of all, any tips offered in this article are not to be construed as advice. The first rule of thumb for any investment is to speak with your accountant and get your advice there. This article only attempts to help explain the idea of a real estate fund so you are better informed to find one that works for you.

Preliminary research and follow-up are always important for any great investment. Here’s a checklist:

1 – Research fund managers & their investment history/track record
2 – Understand the fund’s return structure, timeline & exit strategy
3 – Read the offering documents & run it by your CPA and attorney
4 – Don’t be afraid to ask lots of questions
5 – Find out how and when you will receive updates & distribution statements

The background and experience of the managers is the most important factor. It’s better to turn down a great opportunity with inexperienced managers, than become a part of their learning curve. Experienced managers know how to choose the right investments and navigate through challenges that are certain to pop up along the way.

Understanding the timeline or the “life of the fund” is also very important, including when you are allowed to exit the fund. If the fund requires a 5-year investment obligation, you should know that ahead of time, and what it requires to remove your money from the fund when that timeframe expires.

Beware of a fund with no “end date”. There’s more of a chance the fund could turn into a Ponzi scheme if it’s open-ended. A closed fund, with a specific timeframe, is usually safer.

Accredited Investors Need Only Apply

Most funds require that investors are “accredited”, meaning that you must earn a certain amount of money or possess a certain “net worth”. To be accredited, you  must have an income of $200,000 a year for two straight years, or $300,000 if you are a couple. Or, you must have a net worth of one million dollars, excluding the equity in your primary residence.

You’ll see lots of buy & hold rental funds on crowdfunding sites these days. In most cases, you must be an accredited investor to participate in those. However, if a private company only reaches out to people with whom they have a prior existing relationship, 35 non-accredited or “sophisticated investors” may participate.

According to Investopedia: “A sophisticated investor is a type of investor who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity.”  Sophisticated investors (or accredited, for that matter) should never invest more than 10% of their net worth into any one fund or investment. Diversification is key.

A prior existing relationship requires “three touches” with the organization or three different ways that you’ve had contact with that company. It’s not well-defined, and is basically up to the fund managers to determine if that criteria has been met, but it could mean a combination of phone conversations, in-person meetings, email correspondence, or event attendance.

To find out more about buy & hold rental funds, private lending, and direct investment in cash-flowing turnkey rentals, join our network at www.RealWealthNetwork.com. It’s free and will give you access to quality investor education from real estate attorneys, CPA’s, property managers, insurance agents, and much more. 

How to Find and Keep Great Tenants

Written by Landlord Property Management Magazine on . Posted in Blog

by Kathy Fettke | RealWealthNetwork.com

HappyTenants

Finding a great tenant begins with having great information — and lots of it. Information is a landlord’s crystal ball. And the best time to get this information is “before” the tenant signs on the dotted line.

One of Real Wealth Network’s preferred property managers calls it the “honeymoon period” because tenants will tell you more about themselves when they want something from you — such as the keys to your property. And it’s not just important for the selection process. This information can be critically important a year or two down the road, if your rental situation suddenly goes south.

This property manager, who prefers to remain anonymous, owns hundreds of properties herself. After years of dealing with both good and terrible tenants, she is a wealth of knowledge about what it takes to select the right tenants. Here is some of her advice:

Tenant Screening Priorities

1. Begin with a criminal background check and a civil background check.
Criminal background checks are good for things like arrests, convictions, and warrants, while civil background checks will let you know if applicants pay their bills on time or have any judgements against them. Civil background checks tell you more about whether they will make “good tenants” and not just “law abiding citizens”. Lexus-Nexus allows you access to a more comprehensive database of information.

2. Credit checks are important for different reasons.
Credit checks are useful, but less important than background checks because they generally won’t tell you much about the tenant’s rental history. It is useful for understanding the applicant’s credit “load” and whether bill collectors are chasing them. Even if you don’t plan to do a credit check, always have prospective tenants sign a release form for obtaining one in case you need it in the future.

Bad credit does not always mean a potential tenant won’t pay their rent. For example, someone who lost their home to foreclosure during the housing crisis may have bad credit today but if the rent is less than their mortgage was, they could become very good tenants.

3. Current landlord information is helpful but you may learn much more from previous landlords.
Current landlords may not tell you if someone has been an excellent tenant because they don’t want to lose them — or they may not tell you if they are horrible tenants because they want to get rid of them. So talking to previous landlords may get you more honest information. Ask for information on two previous landlords.

4. Make sure they are who they say they are.
Request a photo ID and several pay stubs to verify source of income. Ask about next of kin and emergency contacts.

5. Be sure understand Fair Housing rules so you don’t discriminate.
Protected classes include: race, color, sex, religion, national origin, familial status and disability. In Ohio, military personnel are also protected. So know your state rules. Attorneys and paralegals are “not” a protected class. Renting to them could put you at a disadvantage in the event of a future court battle because the landlord would have huge legal fees while the tenants would not need legal advice, or would have access to “free” legal advice. Talk to an attorney on your side to protect yourself in advance with a bullet-proof lease agreement.

The Importance of Good Marketing

It’s also important to be able to attract a large pool of candidates so you can find the right tenant and not feel desperate to just take anyone. To do that, you need quality advertising. Another property management company, Renters Warehouse, offered advice on that:

Place your ad on a website that will display contact information accurately and consistently. Renters Warehouse uses proprietary software to spread the word on hundreds of websites.

Your ad needs to be impressive in order to attract the right tenant. Use high quality or professional photos of both the inside and the outside of the rental property. The photos should be taken with good lighting, and the unit should be spotless. A video walkthrough is also a great idea along with plenty of details.

Renters Warehouse says that most prospective tenants want to know everything about an apartment before they decide to call for a viewing. If you have a pet policy, say so in the ad. If you don’t allow smoking or you need a 2-year lease, spell it out in the ad. You could also include interesting details about the rental or the neighborhood and information about an HOA.

You should also have an eye-catching headline that will showcase a few desirable or unique qualities about your rental. Use well-chosen adjectives that represent your property truthfully. If it’s a recently-renovated older home in a happening neighborhood, the title could read: “Amazing, Upgraded Home Near Shopping & Entertainment.” Or if you expect to attract a younger crowd, cater to them with “happening” words or phrases. Just be sure your description is accurate.

One final point — If you are worried about current tenants making a unit look presentable during the tenant screening process, make sure you require their cooperation with a clause in the lease. For Renters Warehouse, that clause requires cooperation within the final 60 days of the agreement. It also says that most tenants are willing to work with you on those showings, so don’t be afraid to ask. It’s important that prospective tenants get a good impression.

Renting to People Who Plan to Have Roommates

Real Wealth Network has a hot tip for landlords renting to tenants who who plan to have roommates at some point. By requiring the lessee (the person signing the main lease) to inform the landlord of any potential sublessees (people who sublet from the lessee) the landlord can know who’s living in their home at all times.

The landlord then also has a “point person” to talk to about issues.

A clause about rules in regards to renting the property on VRBO or Airbnb would also be useful so you can control if your property might have complete strangers living there for the weekend.

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The Real Wealth Network is a real estate investment club that educates members on how to diversify their real estate portfolio nationwide by sharing information on the best US markets for cash flow and future appreciation. The company also offers referrals to experienced and highly-rated brokers, property managers, and real estate professionals in those markets. You can join for free at www.realwealthnetwork.com.

Is Your Toolbox Equipped For You To Be A Successful Leasing Professional? 

Written by Landlord Property Management Magazine on . Posted in Blog

By Elaine Simpson, President of Occupancy Solutions, LLC

property manager success

Set yourself up for leasing success  by making a resolution to consistently use these basic leasing tools.  If you put all of them in your leasing toolbox and use them regularly and properly, they will lead you to success!

The Tour Path

As they say, “put your best foot forward”.  After making sure the office entrance and office look inviting, are clean and in order for the day, take the time to preview the path on which you  will take your prospects while touring and demonstrating why your community is perfect for them.  Be sure to pick up any trash or cigarette butts along your route.  While walking your tour path, be sure to take notes of maintenance or other issues that must be addressed to make your tour route look its best so you can impress your prospect.

Models and Vacant Market Ready Apartments

Preview the apartments that you will be showing. Create  a “sparkle kit” of basic cleaning supplies to carry with you so you can clean a mirror, dust a shelf, pick up a dead bug, change a light bulb, etc.  Include furniture markers to touch up scratches and scuffs on the model furniture.  All the interior lights in the apartment should be on.  Set the thermostat to the proper temperature for the day.  Turn on the radio and open the blinds.

Leasing Binder

We love to use Leasing Binders to hold and organize our paperwork.  Leasing binders are generally 3-ring notebooks with tab dividers and pockets to hold: availability list; product knowledge; marketing materials including brochures, floor plans, photos and current flyers; market surveys so that you can educate your prospects regarding the competition (remember not to gossip but speak factually about what they offer or don’t offer); guest cards; applications; business cards; calculator; tape measure.  Also use page protectors to keep the documents and pages looking clean and crisp.

Product Knowledge Notebook

Make this section of your binder a place to keep all of the information that you can find about the physical asset:  year built, number of acres,  type of zoning, number of units, unit mix, type of construction, type of insulation, floor plans, room dimensions, window sizes, carpet and flooring colors, lists of upgrades, etc.

List of Competitive Advantages

Make a list of the things that set you apart from your competition to help you sell against them.  This list can help you when overcoming objections.

Telephone Call Log

Everyone in the office should be logging their telephone calls.  It will capture how many calls were answered by a person during business hours.  The data will also illustrate which days and times of day are the busiest.  Many people just hang up and won’t leave a message when they hear a voice message so try to answer every call in person.

Terrific Telephone Techniques

The goal is to give and receive as much information as possible in an organized way in very little time in a polite and professional manner that leads to an appointment to visit the community or a lease over the phone.  You can create your own leasing script.  We don’t want you to sound like a robot, but if you follow along with a script you won’t forget to ask important questions and to give each caller a brief description of the apartment interior and community amenities, invite them to tour and set up an appointment.  You should ask for each caller’s name at the beginning of the call and use it during your conversation to personalize the call.  Find out how each caller heard about your community so you can track what advertising sources are working and which ones are not working for you.  Your list of questions should also include: Desired floorplan? How soon needed? Number of occupants? Pets? Length of lease? Why moving? Your description should include: feature/benefits of apartment interiors; community amenities; utility information; deposits and fees; invitation to visit; location and office hours; directions if needed; instructions on how to apply, etc.

Ear Appealing Descriptions and Words to Avoid

Each leasing consultant should take the time to write out a description of each floor plan within the community and then practice verbally  using those descriptions for their presentations whether over the phone, on line or in person.  Think of your own “ear appealing” words to use in your descriptions.  Examples:  exceptional, unique, charming, cleverly designed,  stylish, etc.  Avoid using industry words.  Replace complex, property, site and unit with community and apartment or home.

Proper In-Person Greeting

Stand up to greet each prospect.  Look them in the eye, extend your arm to offer a firm handshake, verbally introduce yourself and welcome them to your community.

Guest Cards

Whether you use printed or computer guest cards, best practice is to fill out the guest cards for your prospects instead of asking them to do it.  You can ask questions and make notes while making conversation.  Record their “hot” buttons and note what is really important to them in finding their next home.  These notes will help you later during your presentation, tour and closing.

Product Demonstration

We suggest you show your selected vacant apartment(s) before showing your model(s).  This helps prospects envision their own furniture being placed in their new home. Use the information from your guest card and point out the features and benefits you already know will interest them.  Take this time to build rapport and start closing the sale.

Closing Techniques

There are several ways to approach closing the sale.  You can set the stage for closing when you first speak to a prospect on the phone or at the beginning of an office visit before you ever leave the office by asking two key questions:  1.  What other options are you considering?  2.  If you see something you like, are you prepared to lease today?  This will start the dialog you need to work your magic.

Fantastic Follow Up

It is a little old fashioned, but we suggest the use of a “tickler box” in your leasing office to keep track of ALL leads from ALL employees so constant, progressive follow up can be done with each prospect until they tell you that they have leased somewhere else or to stop contacting them.

Elaine Simpson, owner of Occupancy Solutions, offers awesome in-person training sessions on this property management topic and many others in addition to e-learning courses and webinars.  She can be reached at (800)  865-0948  or www.occupancysolutions.com.

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