Property Management Archives - Page 2 of 18

Becoming a Landlord – What You Should Know

Property Management, Real Estate Investing

Many people dream of becoming a landlord, owning several investment properties, each of which provides financial security as tenants cover the expense of the mortgage(s) and then some. However, in today’s real estate market, the promise of profit can sometimes be elusive if you don’t pay attention to some fundamentals.

In. most cases, it is advisable to work with a property management company, who can guide you in the decisions that always go along with becoming a landlord. We will attempt to cover several of those here.

One does not simply pull a number out of thin air when determining what the rent should be on a given property. Properly assigning rent value is accomplished by determining the actual rental market value of your property. It is common to experience rents that are LESS than enough to cover a mortgage and expenses. Before becoming a landlord, you will want to make sure that it makes financial sense to do so.

2. You will need to set up (and maintain) an expense account to cover things like maintenance, management fees, and the occasional repairs that will need to be made. The older your house, the more you should budget for your expense account. Many of these expenses can be quite expensive, and as a landlord, you cannot afford to be unable to afford them. If the heater goes out in the middle of winter, you are obligated to replace it post-haste.

3. Finding the right tenant is an art form… and best left to the professionals. You might think that by becoming a landlord, you’ll have instant access to a ready pool of tenants (ie. family), but in fact… that rarely ever works out well. The greater the level of informality, the more likely you are to experience short or late payments, and many more tenant requests for repairs and/or upgrades. A professional property manager knows how to screen for the right candidates, especially zeroing in on those who will care for the property and pay on time, every time.

4. On the topic of payments, it becomes necessary to consider what happens if/when your tenant fails to pay, or pays late. In some cases, eviction may be the proper course of action. However, eviction is not as simple and straightforward as asking your tenant to leave. There are many laws in place that must be rigidly adhered to. In the event that you have to take your tenant to court - you are responsible for all the attorney fees and court costs. This is another great time to have a professional property manager on your side.

5. Another wake up call to becoming a landlord comes when you realize that between tenants, you are not bringing in any money, but you are still required to cover all of the expenses of maintaining your home. If tenants damage your property, or you haven’t properly maintained it, you will have extra expenses to bring it back into proper condition for rental. Every day that your home is empty, it’s an expense that must be accounted for.

These are just the tip of the iceberg for those considering becoming a landlord. It’s been stated several times that there’s genuine value in establishing a relationship with a professional property manager. We stand ready to advise and assist you, should you desire our assistance. Contact us today, and let’s discuss your needs.

Why Renter’s Insurance is So Important

Property Management

Renter’s Insurance

Many times renters feel like they don’t need or want renter’s insurance. They view it as just another way for landlords to line their pockets with [our] good money. This article will clear up a few misconceptions about renter’s insurance, and why you really should carry it if you’re renting a home or apartment.

Most landlords make it mandatory for the renter to carry renter’s insurance. However, the fact is, they don’t see a penny of your monthly premium or any of the payout should there be a need to file a claim. So why make it mandatory? In this case, it’s really for your own good.

While it’s true that landlords carry insurance as well – that insurance covers only the structure and land. It does not cover any of the items or personal property within the home itself.

An often-quoted misconception is that renter’s insurance is an expensive consideration. In most cases, the monthly premiums are less than $20. That’s nothing compared to the average tenant’s “stuff value” of over $20k. You see, everything under the roof has value – and you have the right to claim it for it’s replacement value. That’s your entire CD collection, books etc. Even your kitchen appliances have a value – and you know you’re going to need that spatula sooner, rather than later after an accident.

Here are some of the questions that you should ask you insurance carrier:

Will my insurance cover items that I “share” with my roommate(s)?
Should I video tape or take photos of my possessions?
If so, which ones?
What is the difference between “replacement cost” and “depreciated cost” coverage?
Will I be notified of any rate increases, etc?

There are many places tenants can cut corners to save a buck or two. Renter’s insurance is not one of those places.

If you’d like help with setting up renter’s insurance, we’d be very happy to help make a referral to a quality insurance agent. Contact Us today.

Resources:

Lemonade.com

Eviction – When it Becomes Necessary

Property Management

We all want to believe the best of people – especially tenants who occupy your rental property. And whether the term of the lease has expired, or the lease agreement has been violated in one way or another; if a tenant decides to stop paying but wishes to remain in occupancy of the building – it pays to have a professional property manager to get them out legally.

In the state of Colorado, the first thing you want to do is serve the tenant with a Demand for Compliance or Possession Notice (JDF 101) or a Notice to Quit (JDF 97). You must then wait a certain period of time to go by.

If the tenant had been paying rent, there are differences in the timeline, based upon how long they have been paying. If they’ve paid for more than a year, then you must give them 91 days to vacate. If they’ve paid six months or longer, but not yet a year, then you must offer them 28 days to leave. If they’ve paid for a month or more, but less than six months, you must give them 7 days. If they’ve paid one week or longer, but less than a month, they are afforded 3 days. And, if they’ve paid less than one week, you may give them 1 day to vacate the premises.

In certain circumstances where the tenant has become belligerent, you may need to execute a Complaint in Forcible Entry and Detainer (JDF 99) plus a CRCCP Form 1A (Summons in Forcible Entry and Unlawful Detainer) as well as a CRCCP Form 3 (Answer Under Simplified Civil Procedure).

There will be various fees associated with the filing of these documents as well as associated copies for the court and the tenants. Once you file and pay these fees, the county clerk will schedule a hearing (typically 7-14 days from the point of filing). Tenants must be given a minimum of 7 days between the sate they are served the summons, and the actual court date.

The tenants must show up in court, or you may receive a summary judgment in your favor. If they do show up, they may request a jury trial. Here in Colorado, the judge may require you to enter mediation as well.

Once you do receive a summary judgment, you can file for possession of the property with a Motion for Entry of Judgment (JDF 104). If, after 48 hours, the tenants have still not vacated the property, you may complete a Writ of Restitution (JDF 103) and that’s when the court will order the Sheriff to execute a forcible removal from the property.

All of this is typically frustrating for the landlord, and is best handled by a professional property manager. Here at Legacy Properties-PM, we are well versed with the laws, and are able to handle all of these procedures, should they ever become necessary.

Renter Experience Sets You Apart

Property Management

According to the 2018 Buildium Renter’s Report, a majority of the 22 million new households expected to form by 2030 will be renters. The number of Americans who choose the renter experience over buying is expected to increase exponentially, and is currently nearing the highest historical rate of all time: 37%, set in 1965.

What can landlords and property managers learn from the information gathered in the Renter’s Report? This article will focus on what the report discovered as it relates to the renter experience, and which criteria directly affected a property’s ability to charge more for rent.

First, let’s address the neighborhood. Of the top five neighborhood characteristics that justify higher rents, safety tops the list. 66% of all respondents suggested that a safe neighborhood is the most important factor in choosing where to rent. Landlords would be wise to pay attention to this, and either provide or upgrade their existing security systems to meet renter’s expectations.

40% of respondents said they’d be more interested in a unit that is already equipped with smart cameras or a smart security system. Technology has advanced such to the point where the cost of installation of smart (Internet-enabled) security systems is negligible. And yet, once installed, the monthly increase in lease payments easily justifies whatever the amount.

Narrowing our consideration to building amenities that justify a higher rent, we discover that high-speed Internet attracted more than half of respondents. This was true across all age demographics. And while the FCC prohibits exclusive cable deals within apartment buildings, it may be wise to offer specially negotiated package pricing that your tenants can opt into.

Our biggest surprise came when we put the microscope to the individual unit amenities that most attracted the current batch of renters. Topping the list of desired elements was in-home washer and dryer. And while we certainly see how in-home laundry would make the top-5 list… the fact that it trumped central air conditioning completely blew us away!

Word to the wise landlords and property managers: the demographics of renters today are rapidly shifting, and it’s a brave new world for those who wish to heed the feedback and meet the needs of those who are increasingly demanding more for their rental dollars.

Legacy Properties-PM stands ready and willing to serve you, and all of your rental property needs. Whether you are a landlord or a prospective renter, we’ve got you covered. Feel free to contact us at any time.

Next article: Should I Stay or Should I Go?

Buying Your First Investment Property

Property Management, Real Estate Investing

When looking at getting into the investment property game, there are many things to consider before you jump in. This article is designed to be a helpful guide to considering some of the more important elements in real estate investment.

Start with a single-family home. In most cases, investing in a single-family home is a much safer, smarter way to get started. The upkeep of such homes is simpler than it is for multi-unit properties. When something breaks or requires replacement, you’ll only need to fix one thing instead of several. The management of a single tenant is exponentially easier than wrangling two or more.
Purchase a low-cost home. The more house you purchase, the higher your ongoing expenses will be. Many experts recommend starting with a $150,000.00 property. This keeps your mortgage manageable, perhaps even affording you the opportunity to pay a little extra every month with the intent of paying off the mortgage early.
Don’t buy a fixer-upper. This may seem a little counter-intuitive to the point just above, however it doesn’t have to be. One can find a decent home in good condition at a low cost – without it being a fixer-upper. It is much wiser to purchase a home that is listed below the market price and make only minor repairs than to try to fix and flip a property when that’s not really your skill set.
Location, location, location. The quality of the location you choose will influence the quality of the tenants you attract. Look for things like low property taxes, decent school districts, low crime rates and an area with a growing job market. You’ll also want to look for a strong list of amenities such as parks, shopping centers and restaurants.
Work with a property management company. As a new investor, it is easy to be overwhelmed by the myriad of questions, problems and unexpected events that always – ALWAYS – come along with becoming a landlord. You are far better off hiring a professional property management company, and letting them find and interview prospective tenants. They will handle the 2AM phone calls and they know the contractors to call when the furnace breaks down or the washing machine starts leaking.

There are many other factors to consider when thinking about jumping into real estate investment. We would be happy to engage you in a conversation, and, if it makes sense, to work with you as your preferred property manager.

Here are some resources to help you as you consider investing in property:

https://www.investopedia.com/articles/mortgages-real-estate/08/buy-rental-property.asp
https://fitsmallbusiness.com/buying-your-first-rental-property-tips/

3 Steps to a Fast Rental Solution

Property Management

Every landlord wants a fast rental solution. They want their rental property to lease out quickly because every day it sits vacant, it is an expense rather than an asset. We recently came across a great article posted by John Nuzzolese of the Landlord Protection Agency that addresses the question of why some homes rent quickly, and others don’t. The article is well written, and we’d like to add our perspective on this important topic.

In his article, Mr. Nuzzolese explains that the ideal rental experience involves three elements; all of which are essential to a quality rental property experience for all involved.

The three elements of a fast rental solution he cites are: A. it must rent quickly, B. to a qualified tenant and C. at the best price. Let’s break down each of these elements individually before tackling them all together.

In a competitive market such as Denver has been for several years now, it is to everyone’s advantage to rent your property quickly. That’s one of those statements that is truly so simple as to be profound. And yet, many landlords (and even some property managers) make mistakes in the way they market their property, thereby causing delays in the process of finding the right tenant. (More on that process in a moment.)

The good news is, when compared to selling a property, which usually takes at least a month – and often several; a tenant may be vetted, approved and signed into a leasing agreement within the context of just a day or two. But before you get your track shoes on for the big race, let’s talk a little bit about those tenants.

It would be a mistake of colossal proportions to rush into a leasing agreement with an unqualified, or otherwise undesirable tenant. It is critical that you perform your due diligence as you screen potential tenants for your rental property. All too often, landlords accept higher-paying rental agreements from people who are less qualified. The end result of this behavior is a whole lot of headaches trying to chase down the money that is owed, and in the end, you spend more of your own money having to evict a deadbeat tenant.

And the final piece to the puzzle is trying to figure out how much to charge for your rental property. Many landlords simply try to cover their own expenses plus a little more for themselves. And while there’s nothing intrinsically wrong with that model, it doesn’t necessarily take into account the current market rate of rentals in your area. It may be the case (and often is) that once you find the right tenant, you offer them a below-market amount for the first six months. Far better to get the right tenant in with the hopes of developing a long term relationship, than going for the low hanging fruit that goes rotten with the first missed payment.

Each of these three elements, when put into proper balance, make up a pleasant experience for both the landlord AND the tenant. If any one of them is out of balance, the other two shoulder too much of the responsibility, and you find yourself in an expensive downward spiral.

Our recommendation to find a fast rental solution is to align with a reputable property management firm, and allow the experts to do the heavy lifting. They are able to gain all relevant comparable rental rates, screen the candidate pool of potential tenants and get your property filled in the fastest amount of time possible. We’d love to serve you in this capacity. For more information, please contact us here.