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Could your rental home be held hostage?

Could your rental home be held hostage?

Property Management

This happened recently in outside of Fort Collins last month, and sadly, it is not the first time we have heard of rentals and vacant homes being taken hostage by unwanted visitors. There are some tremendous real estate scams out there. Here are a few we have heard of just in the Denver, CO area.

Tenant Bait, Switch and Extortion

In this story, the tenant posed as a real estate agent looking for a property for his clients. The tenant, ‘Garcia’, was not really and agent but was given access to the property, where he promptly began a marijuana growing operation, unbeknownst to the property owner who resides in California. The owner was told that the agent had an organic produce farmer looking for space. Marijuana is legal to grow in Colorado, but, it is still not considered produce. Seven Hispanic men took over the property without permission from the owner and then threatened a racial discrimination lawsuit against him if he didn’t comply with their demands, which included providing a lease to them.

The 40 acre land was converted into a marijuana grow center and Garcia, the mastermind of the extortion deposited over $8,000 into the property owners bank account to force the owner to sign a lease, even though Garcia wasn’t able to provide the required contract documents. The owner felt the issue was resolved and wasn’t willing to be bullied into a lease. He didn’t know that Garcia and his crew had already moved into the property with 245 pot plants. It wasn’t until the out-of-state owner was notified by another real estate agent interested in the property, nearly 3 weeks later, that there were unauthorized tenants, sometimes referred to as ‘squatters’, which is the next story.

Lesson for Landlords gained from this story:

Be certain the person claiming to be an agent, is one. Make sure, especially if you are an out-of-area owner, that you have a good property manager working on your behalf to schedule showings and manage leases.

Read the related article about tenant extortion

It’s Mine Now

Wikipedia describes squatting as: “an action of occupying an abandoned or unoccupied area of land or a building, usually residential, that the squatter does not own, rent or otherwise have lawful permission to use.”

However, there are laws involving ‘adverse possession’ that could potentially allow a squatter to be awarded ownership of a property they have been occupying.  In the state of Colorado, and the cities of Aurora and Denver, this law allows the property to be taken over after 18 years of occupancy or 7 years if they pay property taxes. This sounds like a very long time, and it is. The spirit of adverse possession was to reduce litigations over property usage and ownership. For example, if homeowner Jerry has been allowing neighbor Tom to use a portion of Jerry’s land for farming and then decides he wants to build a barn in that same area Tom can actually use adverse possession to claim he has openly without contest, used the space for 7 years. The court would likely favor Tom over Jerry under these laws.

The main point here is that the possession needs to be uninterrupted in the time period stipulated, and that the owner is aware of it. Homeowners, especially those from out of state, are being required to evict squatters from their properties, at their own expense.

Lesson for Landlords gained from this story:

Make sure that you are doing a regular inspection of your property to ensure there are no unwanted visitors. Consider using alarms, security and/or a property manager if you aren’t able to do an inspection yourself at least monthly.

Read the related article about Colorado homeowner evicting squatters.

Don’t be a victim of tenant scams. A good property management company will screen potential tenants, be there for showings to prevent fraudulent agents or squatters from taking possession of your home and costing you money.

Call 720 989 1996 and let us know your home rental situation.

3 Asset Protection Tips for Property Owners

3 Asset Protection Tips for Property Owners

Property Management

Whether you are a homeowner or a landlord or both, you have a tremendous asset in the property you own. And protecting those assets is essential to the goal of increasing value, rather than losing the time and money you have put into the investment of ownership. Just like in the stock market, where you learn a balance in when to buy and sell, protecting the asset that is your property, allows you to keep the most of your money.

  1.   Be Honest

Lying didn’t work for Pinocchio and it won’t work for you.

Protecting your assets, as is everything in life, starts with honesty first. Attempting to hide assets is asking for problems. Full disclosure with your bookkeeper and trusted CPA is the first step in making sure you are covering yourself and fully taking advantage of legal deductions. Basically, without honesty, any advice given by professionals is moot. They simply can’t advise you well, putting you at risk, if you aren’t honest about your assets and goals.

It is also important when setting up insurance to practice full disclosure. If a claim against you were to arise, it is important to know that you are protected, and it can’t protect that which is unknown. Be transparent about your assets so you can have the proper coverage.

  1. CYA: Cover your assets   

No insurance “wardrobe malfunctions”.

Proper coverage with Homeowner and Renter’s Insurance are both very valuable for property owners. Insurance coverage can assist in recovering loss after catastrophes, whether man or nature made. As a landlord, it is important that you are included as a covered insured on the renter’s policy. This is important, for example, if a tenant where to start a kitchen fire. Their assets would be protected, but also the home itself, which is your investment, is also protected.

Liability, business, personal and umbrella policies are all options to be considered when shopping for proper insurance coverage.

  1. Keep your hands out of the cookie jar   

Don’t make business personal and visa versa

Business entities are meant to be for business, not be a second “checkbook” for personal use. Be sure to keep any assets designed for business, separate than personal ones. Protect your personal assets in a trust and use the expertise of your CPA to help with your business entity and the ways to properly administer the funds.

Using a property manager to work with your tenants and direct the relationship with the tenants is one way to keep it objective. If we were to invest in something we had an emotional tie to, we may not make the best decisions, especially the more difficult, complicated or expensive they are. For example, giving $1 to a kid with a lemonade stand because it brings back the nostalgia of your younger entrepreneurial days, is easy.

However, choosing to rent your home to Cousin Lou when he lost his job, but has another lined up and just “needs a break” to make it through, is much more difficult. Especially when you need to show up to Christmas and look his children in the eyes.

Be rich in mind and pocket

“A successful team is a group of many hands but of one mind” ~ Bill Bethel

As your assets grow, it is becomes even more important to build a good team of trusted professionals around you. A certified financial planner can help you with tax savings options such as IRA’s. Talk to them about your unique situation. A CPA is valuable for getting the right deductions and directing you in giving of gifts, whether to family, charity or more. A property manager can make sure your return on investment is hitting the goal you established by retaining quality tenants, eliminating bad ones, maximizing the rent value and saving you money with quality contractors.

At the end of the day, it comes to scalability. Can you continue to expand your assets? What is the best way to do that? Who do you need to surround yourself to support that?

Fill out the form below or call 720 989 1996 and let’s have a conversation about your property in Colorado and your assets.

Have a question? Ask us anything.

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Ask Us Anything About Being A Landlord For Your Rental Property

Ask Us Anything About Being A Landlord For Your Rental Property

Property Management

You did it. You decided to become a landlord by investing in an income property. The return on investment sounded perfect. And, mostly, it is. But there are a few things that aren’t. The washing machine broke down and flooded the carpet and you didn’t know who to call. The tenants didn’t pay and it’s three days past the due date. The tenants refused to spray the weeds or mow the lawn and the city gave you a violation notice. You received an 11:04 pm call with an unreasonable request.

 

You have now come to the conclusion that you may need some help. You don’t want to throw the baby out with the bathwater. You know investment properties work. You just didn’t know it would be so much work. Not all the time, just some of the time, being a landlord feels like more work than you want it to.

 

Legacy Properties-PM has created a series of blogs to help answer your landlord questions. We are also happy to take your call if the answer isn’t there. Just ask us. If you have the question, it is likely another landlord does too, and we’d like to address it publically. We want to be a resource in Aurora, Colorado and beyond. It’s one way that we are unique.

 

So, here is our ear, ask away…

 

Want to know the best way to find a quality vendor? A quality tenant?

Want to know what you can legally ask of a prospective tenant? Or what you can require of one that is currently living in the property?

Do you need answers on how to conduct an eviction or how to use a security deposit?

Are you needing to know what you can charge for rent?

Resources for background checks? Employment verification?

Wondering if it is okay to rent to family or friends?

Regardless of your questions, we would like to be a valuable source of information for you as a landlord. Questions about investment properties, income property, rental trends, quality vendors and more are welcome. Call us at 720 989 1996, or use the form below to ask my any question you have about being a landlord or property management. We look forward to building a relationship with you.

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Pets in your Aurora Home rental: Should you allow it?

Pets in your Aurora Home rental: Should you allow it?

Property Management

With an estimated 72% of renters having pets, it seems homes that don’t allow pets are really disallowing themselves from getting, or keeping, renters.

But the concern is the damages pets can cause. And, if not damage, animals can lead to smells from carpet and padding stains, marking and more.

Apartments.com did a survey and discovered:

“…nine out of 10 renters have told us pet policies played a deciding role when choosing where to live.”

[source: http://corporate.apartments.com/press-room…]

Of pet owners, seventy-three percent own a dog, forty-one percent have a feline family member and thirteen percent have a small mammal, bird or other pet.

With many Americans finding value in having a pet, it seems better pet policies and planning that actually encourages pets in your rental, could be the more profitable way to go. We are also not suggesting you go at it haphazardly, however.

Tips for allowing pets in your rental

  1.   Collect a pet deposit.

Most tenants expect to pay an additional charge for their loveavble pets. The deposit shouldn’t be usurious, but rather appropriate for possible damages that can be incurred.

 

  1.   Consider creating a welcoming environment.

When an environment exists to encourage desired behavior, rather than discourage poor behavior, people are more likely to use it. Installing dog doors, doggie poo pick up bags and more can help people feel trusted.

 

  1.   Consider pet friendly yards

Using concrete paving stones rather than gravel will allow a nice looking yard without a bunch of mess. Use ornamental grasses as a fun pet area that doesn’t require a ton of upkeep.

 

  1.   Give resources

A great value you can offer is listing dog parks and pet services in the area. People who care for their pets and know they are welcome, will be more relaxed and happy in the space. Plus, well exercised dogs are less likely to cause damage. (More stable renters who stay longer? Sounds good to us!)

If you have comments, suggestions or tips on what worked or didn’t work for you in allowing pets in your rental, we would love to hear from you. Legacy Property Management specializes in helping landlords better manage their properties and we would love to hear from you. Contact us today with questions or more.

 

Free Property Assessment

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Being a Landlord Means Having (and Managing) a Team

Being a Landlord Means Having (and Managing) a Team

Property Management

Being a landlord in Colorado can be a very lucrative venture. It can mean a passive income (or at least semi-passive), but it can also mean calls outside of business hours for emergencies (real and perceived).

Legacy Property Management has learned that being a landlord in Colorado means having and managing a really great team. What do we mean by team? Well, just like any business venture, and yes, being a landlord is a business venture, you need the support of a team to be successful. Here is a list of the resources you will need in order to be successful as a landlord:

Lender

A lender will understand the complications of loans on a home that is not owner occupied. It is important that the lender understand this scenario and be able to communicate the financial component to you. It is not the same as simply buying a home you will be living in regards to putting a down payment on the loan and making a monthly payment.

Real Estate Agent

A good real estate agent who deals with income properties is ideal. They are not helping you personally find a home that meets your needs, they are required to consider your return on investment and the best fit for renters in the current and future markets. If they are not able to have that investment mindset, find someone who does.

Insurance Agent

Insurance coverages are different for income properties then they are for owner occupied homes. Your current coverage may not be enough, or they may be unwilling to accommodate the change in your policy. Shop around for an independant agent. These agents can help you best by building a relationship with you regardless of changes because they can shop more than one carrier. They can also help you set up umbrella policies to protect you personally from being sued because of something a tenant did.

Lawyer

diverse property investment teamAccess to a lawyer is very important when dealing with tenants. It is important to follow anti-discrimination laws, real estate law and contract law. Interviewing and conducting background checks on potential clients, writing up leases, navigating an eviction, late payments, security deposits and more, all need the foundation set with support from a lawyer.  You are also required to know about posting notices, when you are allow to show up on the property and how to notify the tenant of work being done, and the work they can or cannot contract on their own.

Lawyers help to ensure your assets are protected from a legal standpoint, just as insurance protects you from a loss standpoint.

Accountant/Bookkeeper

The main role of the accountant is to help you understand, create and manage multiple accounts. A portion of tenant income is to be reserved and gaining interest. It is their money, not yours. Understanding what is yours and what is theirs and how it can be spent, is done with the accountant. The accountant will also help with maximizing tax deductions for end of year reporting, as well as filing all appropriate quarterly taxes and reports on the rental income.

Vendors

Every home has upkeep. Homeowners know how important regular maintenance is and they understand sometimes things break and things go wrong. Being a landlord means you need a great vendor team. This team includes:

Plumber

Electrician

Roofer

Landscaping, snow removal, sprinklers, tree trimming

Handyman

Garage door repair

Masonry/Concrete

Windows and Siding

Exterminator

HVAC

Well and septic (where applicable)

 

For each vendor you need to know:

Hours of operation

If they offer emergency service

Fees

Additional fees for holiday/weekend/emergency services

Payment terms (COD or Invoicing)

Types of payment accepted (this is important for bookkeeping)

Rules/Policies they have regarding pets, landlord/tenant relationships, vacant/occupied property, etc.

 

Consider using a Property Manager

In some ways, and some days, being a landlord is it’s own job. A Property Manager can take over this role on your behalf. Typically, they are able to properly price a home and adjust amenities to create more profitability. This usually offsets the low fees they charge to manage the property and is especially beneficial to people just entering the landlord world or those who have multiple properties. A good property manager already has a list of vendors so the owner doesn’t need to waste their valuable time trying to find them.

 

If you have questions about being a landlord or want more information about the roles, responsibilities and fees associated with outsourcing the landlord work by hiring a Property Management company, call 720 989 1996 and use the form below to contact Legacy Properties-PM.

Free Property Assessment

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Income Property Investors Use This Sneaky Trick

Income Property Investors Use This Sneaky Trick

Property Management

Income property investors are a brave breed. They have to stay on top of the market, have large sums of cash at their disposal, and be lucky.

Right?

Well, luck never hurts, but a great team, is really the sneaky trick income property investors use. Here are the four main things savvy income property investors know, and the team that is needed to create “luck”.

  1.      Income property investors know the reasonable costs

Understanding the costs associated with having a renter is important. These need to be measured to allow for a reasonable reserve of money for repairs, maintenance, insurance and the ‘unknown’. Much of this comes from experience, and if they are new and don’t have it yet, it is a good idea to have a Mentor- someone who has done it before. A good Home Inspector and reliable and reasonable General Contractor, must make the team. Without a clear understanding of reasonable costs, getting funding, from any source, will be difficult.

  1.      Understanding the market

Over or underpricing the rental can be very detrimental. It is important that the rental is priced correctly. At minimum, it needs to cover costs, however getting fair market value for the rent is the goal. Additionally, understanding how changes to the property can affect the rental is important as well. For example, if adding a washer and dryer hook up for $350 will bring in an additional $50/month is rent, that is valuable to know. A Property Manager understands the market and what is going to bring in the most bang for the buck. Their small management fees are typically offset by the value they bring in proper pricing to maximize profit.

  1.      Having access to legal support

Legal support is a normal part of any business venture. From reviewing contracts/leases to dealing with ending a contract, a lawyer is a key component to protecting your assets. Being on top of the law will help in resolving conflicts before they happen and having proper remedies if they escalate.

Rental income text on blackboard with 3d houseIn this category also fall a good Accountant, an investment focused Real Estate Agent and an ethical Property Manager. All three have a valuable component to offer in transacting business as an income property investor. The accountant is going to help you best discover tax savings and keep you compliant with laws around that. The Realtor is able to help protect against purchasing the endless “fixer upper” with an investment mindset. And finally, the Property Manager is going to manage the day-to-day business of managing the income property or properties. Which brings us to…

  1.      Using a Property Manager

Property Managers are like the General Manager of a business. They allow the owner (the income property investor) to focus on growth (like searching for another income property), or enjoying the growth (like playing golf Thursday morning). Property Managers manage the biggest part of the “team” which are the vendors.

Plumbing will fail. Grass will grow and snow will fall. All the needs of the homeowner, such as windows, siding, roofing, electrical and more, don’t go away. They still need to be handled and one of the roles of the Property Manager is to get good, qualified vendors in place to handle the maintenance and emergencies that come with living in a home.

The additional benefit of a Property Manager is that it their primary goal to protect the real property- the home. This means they are on top of laws and they manage the tenants themselves- from applications and background checks to making sure the home is in great condition when the tenants vacate the property. And, in the worst of scenarios, they manage an eviction, late payments and the rest of that “stuff” owners don’t want to deal with.

Income property investors can have a good business of passive income. With a great team in place to help with the business of running the day to day operations, it can be a dream lifestyle. If you have questions about becoming an income property investor, or if you already are and are looking for the support of a great team, call 720 989 1996 and contact Legacy Properties-PM today using the form below.

Free Property Assessment

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