Author Archive

Charge a Hefty, but Legal, Late Fee

Written by Landlord Property Management Magazine on . Posted in Blog

bigstock-Calendar-mark-with-Pay-rent-27131186-e1412018826477I believe that late fees provide the only real motivation for tenants to pay rent on time.

While some landlords mess around with early payment rewards to entice tenants to pay on time, I believe nothing works as well as a hefty (but legal) late fee.

Be Reasonable

My state doesn’t have a statute on late fees, therefore I’m only responsible for ensuring they are “reasonable” – which is completely subjective.

As such, I charge different one-time late fees, depending on the rent amount:

  • 10% if the      rent amount is less than a $1,000,
  • 7.5% if the      rent is between $1,000-$2500, and
  • 5% if the      rent is over $2,500.

Some lawyers will tell you that anything over 5% will get thrown out in court, but I would argue that a $30 late fee on $600 in rent, does not motivate even the poorest of tenants. They will still pay you whenever they feel like it.

Related: Daily Late Fees Provide Motivation to Pay Rent Quickly

You Won’t Get Rich

My goal is not to actually collect late fees – but rather to motivate my tenants to pay on time.

The cost of receiving rent late is far greater than the few hundred dollars you’ll make by trying to collect small late fees.

Whatever amount you choose, make sure that it’s written and agreed to in the lease.

You can’t assign a late fee, no matter how small, if it’s not in the lease.

Late Fees & Grace Periods by State

State regulations vary greatly on this topic, so it’s imperative that you learn and abide by your state laws.

According to my research (though I’m not a lawyer), only 15 states regulate grace periods and/or late fees. Please click on the links to the actual statutes, to ensure accuracy of the data.

State

Grace Period

Late Fees

Reference

Arizona Must be in a   written lease and be reasonable Ariz. Rev. Stat. Ann. §§   33-1414(A4)
Arkansas 5 Days A.C.A. § 18-17-701(b)
California Must be in a   written lease and be reasonable CA Landlord/Tenant Handbook
Connecticut 9 Days CT Gen Stat § 47a-15a (2013)
Iowa Agreements less   than $700/mo, a max $12 per day or $60 per month. For agreements more   than$700/mo, a max $20 per day or $100 per month. Iowa Code Ann. 562A.9(4)
Maine 15 Days Maximum 4% of rent Me. Rev. Stat. Ann. tit. 14 §6028
Maryland Maximum 5% of rent Md. REAL PROPERTY Code Ann. § 8-208   (2014)
Massachusetts 30 Days MGL c.186 § 15B(1)(c))
Nevada Must be in a   written lease NRS 118A.200
New Jersey 5 Days for   protected classes N.J.S.A. 2A:42-6.1
New Mexico Maximum 10% of   rent and be in a written lease N.M. Stat. Ann. § 47-8-15(D)
North Carolina 5 Days Maximum $15 or 5%,   whichever is greater NCGS § 42-46(a)(1)
Oregon 4 Days Must be in a   written lease and be reasonable, and may be a flat fee, a daily fee of no   more than 6% of the flat fee, or no more than 5% of the total rent for each   succeeding 5-day period or portion thereof of the rental period, until rent   is paid in full. Or. Rev. Stat. § 90.260(1)(2)
Tennessee 5 Days Maximum 10% of the   past due amount Tenn. Code Ann. § 66-28-201(d)
Texas 1 Day Must be in a   written lease and be reasonable Tex. Prop. Code Ann. §§ 92.019
All Other States No Statutes

by: Lucal Hall | Cozy Co & Landlordology.com

Why Are Millennials Rejecting Homeownership? Or Are They?

Written by Landlord Property Management Magazine on . Posted in Blog

1249fd_ec17f1e8f9894c4aa89fee9e680ac4aa_jpg_srz_491_335_75_22_0_50_1_20_0It’s beginning to look like enticing 25- to 34-year olds into purchasing their first home won’t be easy. According to CoreLogic, homeownership rates for this group pale in comparison to the 1980’s rates for the same age bracket. In 1980, slightly more than 50% owned, or were buying, their homes. In 2012, just over a third (38%) of Millennials owned homes.

But, just looking at the percentage of current mortgages doesn’t present an accurate picture of what young adults in the United States are doing across the nation. California based mortgage lender Carrington Mortgage Service took a closer look at what factors motivates some Generation Rent members to shelter in place while others embrace homeownership.

It appears where they live plays a critical role in the decision-making process.

Interest rates are still low, hovering around 4%, but interest rates may not be the best indicator of who buys and who rents. The national mortgage interest average in the early 1980’s (as determined by Bankrate.com) was 18-20%.

Carrington’s survey found a strong correlation between down payment averages and homeownership rates for this group. In areas where down payment requirements exceed the national average, fewer Millennials are willing to take the plunge.

For example, western states – California, New Mexico, Washington, Utah, Montana, Alaska and six other states – reported an average down payment far above the national average. While the national average (according to a 2014 RealtyTrac market survey) was 14% of the purchase price, Millennial migrations for work often led the group to areas where lenders and market conditions demanded much larger down payment investments. Take the San Francisco, California area as an example. Down payments ranged from 27.81% to 30.01% for high-end homes, that’s roughly two times the national average.

There are bright spots for these young adults looking to buy their first homes. Although Millennials paid an average of 3% more down to qualify for a mortgage in 2014, some found places like Des Moines, Little Rock, Arkansas and Columbus, Ohio quite affordable. Two Ohio counties, Ashtabula and Clark, were ranked in the top five markets with the lowest down payment averages in the lowest-priced markets, 9.68% and 9.56% respectively.

Interest rates and down payment requirements aside, there are still some common factors keeping Millennials in the renter pool. Student loan debt, high credit card balance, low FICO scores and a general anxiety about how to even start the buying process keep some renewing the lease every year.

In the same way that location impacts cost of living and property values, perception varies widely among Millennials depending on where they live. In the northeast, the biggest financial concern keeping respondents from applying for a mortgage was credit card debt. Nationally only 14% of those surveyed perceived credit card debt as the most important factor. In the southern states, respondents worried most about low credit scores and navigating the buying process.

Carrington’s survey showed that some put off buying a home in the Midwest because they typically earn lower wages. When they look at adding a mortgage payment to the formula that already includes student debt burdens and lower salaries, the debt-to-ratio looks overwhelming.

Delving into the data shows that Millennials are still thinking about homeownership, in fact, 50% think they’ll buy in the next two years. It’s interesting to note that although this cohort shares many things in common, when it comes to making the commitment to a mortgage many factors are holding them back. The Carrington survey highlights the reality that location is still one of the primary factors driving home sales, especially for 25- to 34-year olds.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Handling Tenant Turnover During the Summer Season

Written by Landlord Property Management Magazine on . Posted in Blog

tenant-screeningBetween May and July, a lot of leases come up for renewal. That can mean a higher number of tenants moving out and going to live in other locations. Some may be moving out of the area, or they may have bought a house or decided to relocate to a different neighborhood or school district. If landlords are new to their work, or they aren’t expecting a lot of their tenants to move out at one time, they can find themselves with a higher number of vacancies than they anticipated as they move toward the fall season. That’s generally not a good thing, as it can mean a lower level of income and too many units sitting vacant.

Fortunately, if you’re a landlord there are ways you can avoid that kind of problem. The main way is also the simplest: be proactive and talk to your tenants. Find out what their plans are, and if they are going to be renewing their lease. Handle lease renewals 60 days before the end of the current lease, if possible. Following your state landlord and tenant laws is vital, but within those guidelines you’ll want to have tenants renew their leases as early as reasonably possible. Then you have a clearer picture of how many of them will be leaving over the summer, and can begin seeking new tenants.

Looking for new tenants can be done in a couple of ways. You can advertise online and locally, or you can pull from a tenant waiting list if you happen to have one. Not all apartment complexes have waiting lists, so if your complex isn’t in high demand or there aren’t a lot of people moving to your city or neighborhood who need somewhere to live, you may need to place some online advertisements. Putting up flyers in local establishments can also work for smaller locations, but may not be effective in larger cities. Word of mouth from tenants who are already living there can make a big difference in how many people apply to rent from you, as well.

If you plan to have some turnover during the summer season, that can also be a great time to do some work on units that need repair or renovating. Whether you’re doing a ground-up renovation on the building as each unit becomes vacant, or you’re only fixing the more significant issues without doing a lot of upgrades, having a few vacant units over the summer can be a good time to get started.

Just make sure the turnover is planned for and expected from a financial point of view, so you don’t end up with cash flow problems due to a lack of tenancy. Getting the work done early in the summer is also a good idea, so the units are available to families that may want to apply and move in before the school year starts. With some careful planning, turnover during the summer season can actually benefit you and your apartment complex.


logo_aaoa American Apartment Owners Association | Company Website |

At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally.  Visit www.AAOA.com for more information about membership details!

Dorothy Or The Wicked Witch: Do You Really Know Your Tenants?

Written by Landlord Property Management Magazine on . Posted in Blog

free-property-valIt’s a little known fact that Dorothy’s Aunty Emm was renting the old farm house that blew away, and that poor landlord never received his insurance money!

Okay, so maybe we’ve made that up.

It’s no joke, however, when landlords end up with bad tenants who refuse to pay their rent, cause extensive damage to the property, and participate in illegal activities on the premises. Before renting to that promising looking applicant, it will pay you to find out if she will be a renter like Dorothy, or the Wicked Witch.

The best way to gain a complete picture of the potential tenant is with a thorough background screening process. Let’s talk about a few ways to learn more about your potential renters.

Will she let those flying monkeys damage your property? Renters who trash or have friends who trash your place can rack up thousands of dollars in damages that end up coming out of your pocket. Mitigate the chance of this happening by taking the time to do a landlord reference check. Hire a professional third party tenant screening company to obtain the important answers concerning how the tenant maintained their previous residence, and if the current landlord would feel comfortable renting to her again. A landlord reference check can also ask the question…..

Did she melt away, leaving a bunch of unpaid rent at her last place? The last sort of tenant you want to deal with is one who skips out on her rent. By conducting a thorough landlord reference check, you can review how well she paid her rent in the past. And it’s a fact, folks, past behavior is the best predictor of future behavior. If there is a pattern of late payments and non-payment, don’t take her on as a renter.

Does she have criminal convictions from throwing fire balls at people? One critical piece of information that should be used when deciding on a tenant is her criminal records history. A search of the applicant’s criminal convictions, which will be included in a criminal records history search, will allow you to gain insight into whether or not she is the type of person you are interested in having as a tenant.  Important factors to review in an applicant’s criminal records history is the nature of the crime (how serious) and the date of the crime (recent or in the past). Be sure to send a declination letter if you choose not to rent to her based on something found in her criminal records history.

A criminal records history can also answer the question…..

Will she bring an illegal poppy field onto your property? Smart landlords will avoid renters who are involved with drugs. This will most likely not be evident by merely meeting the applicant. A criminal records history search will also uncover drug charges, and if so, heed the warning. If she is addicted to drugs, or sells drugs, minimize the risk to your property and your other renters and choose not to rent to her.

Did she bail on her last job to chase the red ruby slippers? Renters without jobs tend to struggle with paying the rent on time. This is why you should hire a professional third party screening company to conduct a thorough employment verification search. A solid best practice is to verify the last 5 years of employment history, whether at one or multiple jobs. Her employment history will allow you to better gauge if she is financially stable and likely to pay her rent.

Professional landlords must take all of these factors into consideration when choosing their newest renter. Spending the time to investigate the applicant’s background and review the findings will go a long way toward gaining a tenant who will pay her rent on time, respect your property, and not endanger your other tenants.

And then, your tenants can feel safe and happy to live there, because after all, ‘there’s no place like home”.


logo_aaoa American Apartment Owners Association | Company Website |

At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally.  Visit www.AAOA.com for more information about membership details!

Why Don’t You Have the Specials That Those Guys Do?

Written by Landlord Property Management Magazine on . Posted in Blog

29bd_7ce9Has this happened to you … you’ve spent a good amount of time with a prospect, you’ve developed rapport and built a good relationship. You think you have a handle on what s/he wants and know that you’ve just offered your client the perfect new home, when s/he looks at you and says,

“Wait…your rent is $1,250 for a two bedroom apartment. The Willows across the street is renting a similar place for $1,100. Why are YOUR rents higher than their’s?” 

I dreaded this as a front line leasing associate and I’m not alone! Whenever I do a training seminar on closing the sale and overcoming objections, this specific question regarding specials

So what do you do when a competitor has lower rents, a better special and/or more attractive incentives than you can offer?

I would encourage you to use, what I call, the “Chuck Norris Response” 

b2ap3_thumbnail_image.jpg

This can also be referred to as the “Most Popular Guy/Gal at School Response,” the “George Clooney Response” or the “Kate Upton Response” (and no, I’m not putting in a picture of Kate Upton…nice try, folks!) 

The basic gist of this response is to turn the negative (“Why don’t you have specials like those guys??”) into a positive.

As Inigo Montoya said, “Let me ‘splain….” 

Somehow I imagine that if Chuck Norris were asked why he chose to double park his car outside, he would say, “Because I’m Chuck Norris, that’s why!” 

If you asked Kate Upton, “How in the world did YOU end up in a commercial for an Internet game set in the Middle Ages??” she could answer, “Because I’m Kate Upton!”

You get the idea? In a way when someone asks you why you don’t have any specials and the other guys do, the impression you want to give is, “Because we’re Cottonwood Creek!” or “Because this is Elm Grove Apartments!”

Here’s how you can give that impression, and turn the negative into a positive, without sounding arrogant…

“Karen, in my experience communities will offer specials like that when they need to rent more apartments. The reason we’re not offering specials like that right now, honestly, is because we don’t need to. We have lots of long-term residents, people love living here, and there is a high demand for our apartments…”

While the higher rent may still be an issue, now that you’ve explained why you don’t offer those specials it can actually make your community look better. The negative has been turned around and it is now a positive. 

Try it! And see what happens!

Happy Leasing!


RA picture 1A Rommel Anacan | Company Website | LinkedIn Connect |

Rommel is the president of The Relationship Difference; a corporate training, motivational speaking and consulting firm.  He is a multi-family housing veteran, having worked at all levels of the industry from onsite to corporate, where he developed a reputation for solving common industry challenges in an uncommon way.

Three Essential Steps for Turning Around a Problem Property

Written by Landlord Property Management Magazine on . Posted in Uncategorized

DienstenOur property is in really bad shape. Can you turn it around?

How would you respond to a prospective client who posed the above challenge?

Naturally, you’d probably have to ask a few questions to clarify exactly what the prospect meant by “bad shape” before you could provide detailed solutions. Whether you are struggling to turn around a property you currently own or manage or you’d like to be prepared if you’re ever faced with a difficult situation, here are a few challenges and possible solutions.

Vacancy Rates Are Higher Than Occupancy Numbers

This is a serious challenge, one that probably needs multiple solutions. The first step should be to explore what has your property upside down.

  • Are you constantly heading to court to start another eviction process?
  • Do a large percentage of your tenants pay late or skip out on the rent?
  • Is the property in a state of decline or disrepair?
  • Have you checked your reputation lately?
  • What is the number one complaint you hear from current (or former) tenants?

Screen for Better Occupancy Rates

Let’s start with eviction rates. A TransUnion SmartMove analysis showed resident evictions hit a five-year low in 2014, dropping slightly to 3.41 million. Industry experts suggest the drop indicates tenants today have better control over their finances than they did a few years ago. There are qualified residents out there. If your property struggles with slow-pay or no-pay residents, you may benefit from modifying your resident screening process.

The average cost of an eviction is about $1700. That can really curb your profit margin if you’re filing multiple cases every year. But, don’t make the mistake of thinking one eviction automatically disqualifies an applicant. Two thirds of the 66 million Americans who live from paycheck to paycheck are considered middle class, reporting an estimated net worth of more than $40,000. For these 25.5 million people, any unexpected life event like an accident, job loss or divorce can put their finances in a downward spiral overnight. Utilize your screening tools to help you make informed decisions based on job history, income, and past performance. Look for patterns more than single events.

Check Your Reputation

Managing your property reputation is critical today. One disgruntled customer can instantly spread their discontent around the digital landscape in seconds. Google your address, company name and the names of key personnel to find out what the Internet is telling people about your community. You should respond to any negative information online and if the complainer has a valid point, admit your mistakes and take immediate action to make sure your property doesn’t make the same mistake twice.

Banish the Bugs

It should go without saying, but here it goes. If you have a pest infestation, deal with it today. Seriously, right after you read this article, make a plan. Multifamily housing environments report more bed bug infestations and than other sector, including hotels, motels and other hospitality locations, according to a survey conducted by Orkin. Six percent of the survey respondents faced legal challenges stemming from the infestation. Pest control is an integral job for property managers. Not only do pest damage structures and landscaping, some pose health and safety risks for residents and staff.

Part of your job as a property manager is to talk to owners honestly and openly about issues preventing them from capturing the highest return on investment possible. Perhaps, it’s time to have a conversation about finances and property goals. Before you make that call schedule the meeting, make sure you know the challenges ahead and have solutions.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Four Reasons Renters Insurance Should Be Compulsory for Your Property

Written by Landlord Property Management Magazine on . Posted in Blog

Handwritten Insurance Claim Form with pen and calculatorMost landlords, property managers and real estate professionals probably understand the value of landlord insurance. However, many communities still don’t require every resident to provide proof of renter’s insurance. Things are improving. Between 2011 and 2012, the percentage of landlords/property managers who require self-paid insurance rose almost 15 percent, from 62 to 84 percent. According to the National Multi Housing Council’s 2012 Apartment Cost Risk Survey, almost 85% of respondents claimed they stipulate coverage as a lease requirement. The number is less impressive when you consider that 4 out of 10 people who claimed they required residents to purchase coverage didn’t have a standard that covered all properties.

It wouldn’t make sense to skip your landlord insurance, or fail to renew those riders that protect you against fire, wind, floods and other “normally excluded” acts of God.

Why would you leave yourself open to losses when it isn’t necessary? Recovering losses is arduous at best. In 2013, Scott Woodward, risk manager for Dallas-based Trammell Crow Residential, told Multifamily Executive Magazine the odds are about 1:50 of collecting on a lien filed about tenancy ends.

If you’re still among the shrinking pool of property managers who don’t require renter’s insurance, here are four reasons you should rethink your plan.

Number One: Reduce Exposure

There isn’t one insurance standard that covers every state. Some cities even have rigorous rules that apply only to residents and landlords living within their borders. But, the probability is high that your landlord coverage doesn’t shield you totally from liability.

Did you know that  some renter’s policies cover medical expenses if a resident and/or guest is injured on your property? Manager/owners who live on the same property as residents may think their homeowner’s policy is enough, but more often than not, you’ll need a separate policy.

Number Two: It’s “Free”

Okay, technically insurance is never free. Someone has to pay for the policy. You’ll want to explore options to help your residents find affordable cover that protects all stakeholders. Whether you add the monthly fee to your rent tiers or require residents to provide a prepaid policy, your property won’t have to assume the expense unless that is part of your business plan. Some property management firms opt to purchase coverage and pass the expense on to their residents. Others may ask their insurance agent for options that allow them to pay a portion of the coverage. Most probably choose to put the responsibility in the resident’s hands.

Number Three: Lower Your Operating Costs

Renters insurance is like every other insurance product, it’s sole purpose is to protect against emergency losses caused by accidents. There are plenty of other expenses beyond repairing the walls and replacing the appliances after a kitchen fire.

Have you considered loss of rent? If your resident has to temporarily relocate during renovations, who covers their monthly lease obligation to your property? Where will they store personal property and who pays for temporary storage. How much will legal fees cost to defend your claims or file a lien?

Renter’s insurance policies protect the owners, the property managers and the residents. Plus, it’s hard to put a price tag on the peace of mind that comes from knowing you have that extra coverage if something happens.

Number Four:  Make it a Marketing Mention

If you’re actively seeking new properties, mentioning you have a company standard that requires renter’s insurance may help you tip the scales in your favor. Owners are looking for managers who know how to protect the investment and save money.

It really doesn’t make sense to continue putting off the decision to add an insurance stipulation to your lease. Have you had a negative or positive experience with renter’s insurance? Comment and share your thoughts with our readers.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money.  Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Owner Versus Property Manager: Who Has The Last Word?

Written by Landlord Property Management Magazine on . Posted in Blog

regras-utilização-fgts-consórcio-ademilarWe’ve all heard the saying, “The customer is always right.” While every property management firm should strive to respect all stakeholders, there are some times that the customer is better served by standing firm.

Do you know when to give in to owner demands and when to gently guide your customers toward a better solution? Check out these examples.

Keeping it Legal

Some things are negotiable, some aren’t. If a property owner asks you to “fudge” the accounting records so they can report less taxable income, don’t. Beyond the obvious, knowingly ignoring federal law, your clients may not understand the complexities and nuances within tax code that allow (or require) changing the reporting method for rental property as new regulations emerge. Not all changes expand tax burdens, some include additional credits and incentives.

Recommend owners schedule a sit-down with their tax accountant to discuss options. Need some research to back up your position? Roughly 20% of attendees to Appfolio’s webinar titled “Is Your Business Ready For An Audit?” reported they had been audited by their State Department of Real Estate.

Your best solution is to remain firm, explain that potential negative sanctions associated with tax fraud far outweigh potential benefits. Then, provide accurate records accessible through your 24-hour on-demand owners’ portal supported by accurate monthly owners’ statements.

Negotiating for the Lease

Another time to stay firm is when owners want to go outside your current lease structure. If you live in an area with strict regulations, explain this to your owners, and provide resources for confirmation.

New York City residents and landlords have myriad laws governing responsibilities and rights on both sides of the fence. But, not every community falls under rent control rules and regulations.

So, what happens if an owner wants to allow a resident to repaint in exchange for rent or refuses to allow long-term residents to change the wall color?

#1.  First, make sure your lease documents always agree with local, state and county laws governing who must paint and how often.

#2.  If your lease doesn’t specifically exclude residents from painting interior surfaces, discuss preferences with your owner/clients and modify the lease. Exercise caution here. You can’t just march in one day and announce a change in terms in the middle of a contract.

#3.  Keep all stakeholders on the same page and document the details. Communicate with your residents and owners in writing.

If you allow renters to repaint interior walls, you should schedule a before and after inspection to identify paint splatter or damage caused during the remodel. Establish some ground rules, in writing, of course.

Things you might include in your agreement are:

  • Acceptable color palette
  • Who pays for paint and supplies?
  • Will tenants be required to repaint before vacating the property?
  • Texture and type: flat, semi-gloss or satin paint
  • What about trim, molding and baseboards?

Defining Owner Involvement Levels

There are roughly 206 thousand property management firms in the US, but no company dominates the market. Some owners are looking for a hands-on relationship, others are content with their property management company handling all details from screening tenants to replacing appliances and negotiating landscaping and maintenance contracts.

Your role as a manager is to make them so happy they wouldn’t dream of voiding their contract in favor of another team. To do this, you need to constantly evaluate your level of service and “happiness factor.”

  • Keep communication lines with tenants and owners open.
  • Respect owner and tenant rights and responsibilities.
  • Work hard to provide resources and support services that help both segments meet financial goals.
  • shape policies and settle disputes with contracts and written agreements.

Helping your owners make sound financial decision is sometimes difficult. While it is never fun to tell a customer “no,” sometimes that is the only way to make sure everyone is protected. Planning for conflict before tempers flare is perhaps the best conflict resolution strategy.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money.  Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Does Your Apartment Building Have the Right Insurance?

Written by Landlord Property Management Magazine on . Posted in Blog

untitledWhen you’re a landlord and in charge of an apartment building, one of the things you really need to do is protect your investment. There are a lot of different ways to do that, and one of the best and most important is to have good insurance. Do you have the right insurance for your apartment building? If you’re a new landlord, and managing (or just owning) an apartment building is new to you, it’s possible that you don’t have enough coverage. It’s also possible that an insurance agent sold you too much coverage, and you’re paying for something you don’t really need to be paying for.

You also have to consider what, exactly, your insurance policy covers. It’s got to handle everything that can realistically happen, or you could end up being sued and/or owing a lot of money to tenants or others who are hurt on your property. Having enough liability coverage is very important, and a good insurance agent can help you determine whether you have what you need or whether you’re putting yourself at risk by not having a policy that is high enough in coverage or comprehensive enough in scope to protect you.

The requirements for insurance will likely be different depending on your state and your specific situation, but that doesn’t mean you should just leave everything to your agent. Ask questions, and make sure you get some real answers. Actually read your policy, and understand what you’re covered for. The more you know about your actual coverage, and the laws when someone tries to sue you, the better off you’ll be and the safer you’ll feel. Owning an apartment complex is a serious business, and it’s vital that you treat it that way to protect yourself and your tenants.

Insurance is a big part of that, and it’s very different from standard homeowner’s insurance. Landlord insurance typically covers property damage, liability, and loss of income. There are some companies that provide landlord coverage that does not include tenant damage. These policies only handle things like break-ins and natural disasters. While that can be enough coverage for a single-family home rental in many cases, it’s often not acceptable for an apartment building, where damage from tenants could easily run into the thousands of dollars. That could far exceed any security deposits, and leave you on the hook for the rest of the repairs. Be sure to ask whether your policy covers damage done by tenants.

It’s also a good idea to ask your insurance agent what you can do to keep your costs down. Some landlords, for example, put in sprinkler systems, security systems, and other protective measures, so they can get a discount on their insurance. Since these systems can be expensive – and sometimes difficult to install in a large apartment building – it’s always a good idea to weigh the costs carefully and find out how much you’ll actually be saving before choosing to add something like that to your property.


logo_aaoa American Apartment Owners Association | Company Website |

At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally.  Visit www.AAOA.com for more information about membership details!

Establishing Rent Tiers: Low, Med-Range, High: Where Does Your Property Fit?

Written by Landlord Property Management Magazine on . Posted in Blog

Learn Airbnb: Help, Tips and Education for Beginners and ExpertsManaging sales, recruiting/training staff and attracting new owners are top priorities for professional managers.  Naturally, your main focus will fluctuate at times with the pulse and rhythm within your perimeter gates. Establishing rent tiers for your multifamily community is considered the single biggest issue for many management teams. Creating a competitive rental tier structure is imperative for maximizing revenue streams and keeping retention rates high.

If you’re not exactly thrilled with your returns, or your vacancy numbers, reviewing your pricing schedules may help put your property back on the track for success.

Riding the Rent Rollercoaster

Rent rates go up and down with economic conditions. But, that isn’t the only thing driving rising and falling prices. Inventory shifts, commercial development and consumer trends also drive prices. It’s not uncommon for a property to have multi-layered rental structures. Willingness to adjust rates in response to market conditions and local happenings makes the ebb and flow less stressful for management teams and owners.

Tip #1: Unless your property targets a hyper-narrow resident pool (for example, only Section 8 or top one percent wage earners), it’s important to consider diverse financial needs when establishing prices.  The norm, if there is such a thing, is to establish three distinct tiers, bottom-, mid-range-, and upper-income, with internal variables that include referral bonuses, renewal incentives and longevity discounts for loyal residents.

Overcoming Long-Term Vacancy Levels

Long-term vacancies eat away at profit margins. If you own or manage property in a declining area you’ll have to make some tough decisions. It’s difficult to think about dropping prices when you’re running at or below 90 percent occupancy. But, the longer a unit sits vacant the more your property declines, and the more money you’ll lose.

Conversely, an uptick in new apartment building can increase, or decrease, average rental rates. Zillow released a report in March 2015 that highlights the importance of understanding local tolerance levels. While the national apartment rental rates shot up almost 4% over 2014 numbers for the same period, Chicago and St. Paul/Minneapolis rates fell.

Tip #2: Utilize rent comparisons tools available with your property management software and keep a close eye on upgrades, promotional marketing campaigns and online reviews for competitors to gain a realistic snapshot of available housing.

Improvements and Upgrades

A survey sponsored by California based Tenants Together revealed some surprising details about tenant perception and rental rates. Most of the more than 5000 respondents renting single family homes owned by corporate entities felt their landlord was overcharging and about 20% reported their landlords failed to respond to repair requests for service, or made only minimal repairs.

Updating flooring and wall colors gives your property a fresh, inviting appearance which is very attractive for tenants. Before you make major renovations or upgrade appliances, consider touring a few competitor properties in your area to see what a prospect will experience from the moment they arrive at the property until they complete a walk-through. Seeing the competition through an apartment seekers eyes gives you valuable insight.

Tip #3: Balancing profit expectations and tenant perception is critical, especially if you’d like to increase rental rates.

Establishing a multi-layer pricing structure may bring your property more in-line with local inventory. Remember to consider the local economy, your target audience, condition and age of your property and competitor price tiers. It’s a balancing act, and one that often changes frequently. When it comes to rental rates, it’s a good strategy not to get too comfortable with your numbers. Sometimes dropping your rates may be just what you need to boost retention and occupancy rates, which ultimately may improve your revenue stream.


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AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money.  Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.