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All blog topics pertaining to buy and hold long term investments.

CategoriesLong Term Rentals Real Estate Investing

Screening Criteria: The Best Line of Defense

By brioproperties,

Screening criteria is always important.  You should always be following your screening criteria every time you process an application or talk to a prospect. But nowadays I find myself pontificating more and more about screening criteria on investor forums. Why? Because in the midst of these eviction moratoriums and other restrictions, our screening criteria now is our most important line of defense.

One of the things that has fundamentally changed for us is how much weight and significance we place on our screening process.  In a way we have tightened our screening criteria. Now this isn’t to say it was loose and wild before, because it certainly wasn’t.  We’ve made small tweaks that have made the difference in what applications are accepted and what ones are not.

I’m not going to go into specifics in our screening criteria because what is permissible for us here in Wisconsin can be vastly different than what you can do in other states.  Even your county or city can have a say in what is legal for screening criteria.  This is more to get you thinking about your own screening criteria and pondering how you can make it more ironclad to get the tenant you want for you unit. 

I should stop and say that of course with a more stringent screening criteria you may face a slightly longer vacancy BUT would you rather have it sit an extra 3 weeks for a highly vetted tenant versus roll the dice and possibly get stuck with a tenant who can’t pay in a city where judges aren’t giving evictions of any form the light of day?

#1 Consider Adjusting Your Credit Score Parameters

Our screening criteria uses credit score as one of the main determining factors.  One of the ways you can help reinforce your first line of defense right now is shore up your credit score requirements.   Increase your minimum score requirement. What class of property you are renting out will play into how much you might want to adjust the bottom score.   Consider a tiered credit score system where a credit score in this range is X% of deposit more.  Tier systems usually have the denial score, 2 middle tiers with additional deposit, and the top tier which is standard accept.

#2 Collect First, Last, and Security Deposit

This is something I have personally never done yet it is a practice that is used a lot by large complexes or bigger rental owners sometimes.  You may have heard the term “first and last month’s rent” from a renter when they are inquiring about  move-in terms.  That is different.  (I also could go on a separate rant about why this turn of phrase is horrible.)  In this equation we are collecting the first month, the last month as well as the standard deposit.  (CAUTION: Check your state statutes on how you are permitted to record this.  Some states won’t allow you hold future rent payments so you may have to refer to it as a security deposit in your records and possibly your ad as well.)

Now if you think this is crazy because “the economy is rough and people don’t have savings”.  Numerous banks are pointing to a record high of savings in their bank accounts. Also, when the economy is rough that is when you want to protect your investment the most. 

#3 Get Those Employer References

I prefer employer references over rental verifications any day of the week.  A landlord or management company may have a vested interest in embellishing the facts to get rid of their not so great tenant. Employer references rarely have anything at stake in their report on an employee in a screening process. Throw in a question like “Is there any reason this person may not be employed by the company in ____ months?”  Place more weight on the employer’s reference than a stellar rental verification.  

#4 Stick Your Criteria Like Glue

Now is not the time to make exceptions to your screening criteria.  You set those parameters for a reason. They are meant to help you locate the ideal tenant for your property. Why during uncertain times would you suddenly view the document as guidelines?  During tough times is when you should look at your screening criteria as iron clad.  It’s what you created to bring you the tenant you wanted to rent to in the first place.  Don’t get desperate and lessen that criteria.  (Not to mention getting flexible with your criteria may cause Fair Housing issues.)

CategoriesLong Term Rentals Real Estate Investing

COVID-19 & Tenants: We’re Not Done Yet

By brioproperties,

Tenant Communications during Covid-19

By Kim Schmitt

Operations are still changing by the minute. Landlords and Property Managers have had to make quick business decisions and establish a clear plan for communication with tenants.

First and foremost, Landlords and Property Managers need to collect and properly disseminate all available contact information for your staff and tenants. Have alternative communication methods established (website, app, text), in case physical contact gets disrupted again as Covid-19 mandates change. 

Remember that Covid-19, social distancing, and isolation will affect everyone differently.  You will have tenants that lose jobs, that get sick, that may lose loved ones, are forced to homeschool their kids, or become extremely depressed.  With this said, it is important to realize that these are not “normal” times and understanding this will make you a better Landlord or PM.

Your tenants will continue to have many concerns, so sending reminders via email can help ensure that scheduled appointments are kept and rent payments are under control. Do not look at this as “babysitting”.  Look at this as protecting your interests, being proactive and showing that you have a good understanding of where we are today as a whole. 

As you communicate with your tenants, think about the following questions:

Have you communicated changes in operating hours, available services, scheduling maintenance repairs, communication channels to the Property Manager, and safety protocols to tenants?

Have you communicated protocols for when maintenance goes into your tenant’s homes and during workorder scheduling? Are you asking if anyone has been sick or are currently sick in the home? Are you asking outside contractors what their protocols are during Covid-19 so that you can relay this to the tenant during scheduling?

If a Tenant or Staff Member Gets Sick

If tenants or staff members are diagnosed with COVID-19, your obligation to notify tenants will vary according to lease terms, public health mandates, state regulations and industry standards. 

Rent Payments

Your online services are a keystone of keeping up with rent payments as the world reacts to the coronavirus. Instruct tenants to use web-based services, apps, and portals to make rent payments whenever possible. 

Rental owners and managers are STILL facing the reality that many residents will not be able to make their rent payments – likely through no fault of their own as businesses are closing once again across the nation. Your tenant communications plan should include instructions for tenants with economic hardships to contact you to discuss options.

Effective September 4, 2020 through December 31, 2020, there was a federal moratorium on residential evictions due to failure to pay rent put into place because of the impacts COVID-19 for tenants that meet certain criteria.  I would not be surprised if this gets extended well into 2021. 

The federal moratorium order offers five reasons evictions can move forward: criminal activity, threats to other residents, damage to property, violation of building codes or violation of any other aspect of a lease.  With this said, use caution and pick your battles wisely. Make sure that you fully understand what this moratorium means as a Landlord or Property Manager.

As a side note, have you reviewed your property insurance coverage so that you understand specifically what types of incidents are covered? (What will happen, for example, if a tenant receives a positive COVID-19 test and the virus spreads? Could you be held liable and if so, how can you prevent it?)

CategoriesLong Term Rentals Real Estate Investing

The Beast Of Exterior Paint

By brioproperties,

EXTERIOR PAINT

Painting the exterior of your rental is a very daunting task.  No matter if it’s one color or 3 colors it’s a big commitment of time and or money.  It’s something you hope to not have to repeat within a few years. I’ve recently delved head first back into the realm of exterior paint.  I made the decision to paint a porch on my Victorian rental, which meant selecting colors that would eventually be carried through to the exterior of the home.  During the time I became reacquainted with the tips and tricks of painting as well as learning some new information that I find highly useful.  Regardless of whether you plan on doing the work yourself or hiring out it’s a good idea to have a base level of knowledge so you can properly evaluate contractors and their plans.

Tip #1 Pick Your Colors First

This is especially true with exterior painting.  Before you do any surface prep, before you get bids, pick your colors.  If you tend to be color indecisive (my hand is raised) getting your wood prep done first may leave your colors vulnerable to further decay from Mother Nature.  If it takes  you 2 weeks to commit to colors, that’s 2 weeks that your porch is unprotected to elements that use and weather throw at it.  Second, if you are hiring out, the colors (and how many colors) you use may impact the final price of the work.  (There are a lot of intricacies to this topic so we can’t go into it here.)

Tip #2 For every hour you spend painting you should spend 2 hours prepping

This was something I learned as a child working on my parents rentals.  Before I learned to write cursive, I knew how to hold a paintbrush and paint a porch spindle.  One of the lessons I learned from my parents was the importance of preparing wood properly.  I believe the tip about a 2:1 ratio of time came from my other Grandfather who wasn’t an investor but an avid woodworker and restorer.  

Most people spend little time on the prep because they hurry to the finish line of getting the color on.  How you apply the color only has about a 30% effect on the way the paint wears.  The other 70% is everything you do beforehand. Don’t be the person who sprints to the end.  Spend your time carefully preparing the wood surface so that your hard work will pay off and stick around.

Tip #3  Scraping & Sanding Is King

Before you put down the primer, take a scrapper and remove as much of the chipping and peeling that you can.  How much of this you have, depends on how old the paint is.  The goal is to remove any paint that isn’t properly adhering to the surface anymore. 

Once you’ve scraped the surface then you need to sand the surface.  Sanding the surface does a few key things.  For surfaces that are exposed wood it removes the top layer of sediments and other elements that may prevent the primer from properly adhering.  This includes mold and mildew.  Sanding the surface also provides a little grip to the exposed wood, giving the prime something to stick to.  If you ever have been able to peel paint off a surface like sunburnt skin, then you know it is important to have a finely roughed up surface.  When you are sanding, if you arent going down to bare wood everywhere (a debate for a later time) you will at least want to accomplish 2 things when sanding.  First, smoothing the edges of the paint “splotches”.  Creating a slightly neater finish than leaving the rough edges created by chipping paint.  Second, removing the very faintest top layer of color thus roughing up the surface so the primer can stick easier.  You know you will have achieved this level of roughing up when you have seen a slightly color change in the sanded area.  

Tip #4 Don’t Forget To Wipe

Okay, sorry for the crude statement but it got your attention.  After you’ve finished sanding the surfaces, wipe them down with a slightly damp cloth.  You don’t want to soak the wood or get it any discernible level of wetness with the cloth.  It’s just barely on the side of damp so that it can easily collect dust and debris off the surface.  Give the surface about 5-10 minutes to air dry before priming.  

You also should repeat the above if you’ve left the surface primed or painted for more than 4 hours and are doing another coat.  If that’s confusing, try this: If you apply primer, let it dry overnight then come and do a first coat of color, wipe before you paint.  If you paint in the morning and come back 6 hours later to do another coat, wipe it down quickly. It’s a good rule of thumb to wipe down the surface again if you can graze your hand along the surface and not disturb the paint.   Of course we are gently wiping. 

Tip #5 Earth Tones Don’t Fade As Quick

This was news to me.  When I went to get quart samples of my colors (more on that next) the paint tech told me that when painting exterior surfaces consider using earth tones for as much of the surface as possible regardless of color trends.  Why? Because earth tones are made using naturally occurring elements rather than highly synthesized elements of lighter colors.  God, the Intelligent Designer, Allah, whoever you believe in created things to stand up to..well..nature.  So it goes that paints made with naturally derived elements will hold up against nature a little better.  How much better is hard to say.  But earth tones fade less quickly when exposed to sun and rain than lighter synthetic colors do.  Now if you get your paint from the dollar store, disregard this tip.  Nothing is going to change how freaking quick your paint will fade.  

Tip #6 Sample The Milk Before You Buy The Cow

Before you commit to gallons of your paint colors, buy quart samples.  Most people buy gallons of their colors and the paint all of color one, all of color 2, etc only to realize they don’t like color 2, or 3 doesn’t go with two 2 well, etc.  

Use your quart samples in a small area where you can get a reasonable indication of how the colors will look together on the surface.   But don’t don’t judge until you’ve done all the steps.  Properly prep your paint surface,  prime it, apply one coat of color, and your second coat before you judge the color scheme.  Do this in a nearby area for all your colors, remember a small area.  Then once its fully dried, take a step back and judge the colors then.  If you don’t like something it’s easy to make color adjustments at this stage when the worst you will have to do is prime a small area back to neutral.  

CategoriesLong Term Rentals Real Estate Investing

Reasons Why You’re Tenants Are Moving

By brioproperties,

Reasons Tenants Move Out of Their Apartments

By Kim Schmitt, Managing Broker

As a Landlord or Property Manager our goal is to minimize unit turnover rates to insure a steady passive income. Unfortunately, turnovers happen, and they occur due to a multitude of reasons. Let us look at the most common reasons that tenants move out.

  1. The Tenant Cannot Afford the Rent
  2. Apartment Size
  3. Job or Relationship Status Change
  4. Neighbor Issues
  5. Maintenance Issues

Throughout my years in this industry I have found the above reasons for tenants moving out to be the most common. As a Property Manager when I received a notice that a tenant was vacating, I would not just mark it on a calendar and call it a day.  I would follow up with the tenant to get a good idea of the reason why they want to leave as they do not always disclose that information in the letter. More times than not I have been able to keep the tenant by offering an alternative idea. With this said, there are instances where both the tenant and manager have no choices and the tenant ends up moving out.  However, it is always worth the time to look at the big picture and see what can be done to keep a good tenant. 

What can we do to keep these Tenants?

The Tenant Cannot Afford the Rent

Reasons that cause tenants to no longer be able to afford rent are usually completely out of our control and often out of the tenant’s control. So, what can we do if we really want to keep the tenant? We have two choices; both may be worthy of consideration. The first is that we could offer to relocate the tenants to one of our lower priced vacancies if one is available. The second would be that we could reduce the rent in order to keep them. If you choose this option, you will want to compare the rent decrease to the cost of preparing a turnover and the time the unit could sit vacant. Say you can keep the tenant by reducing the rent by $50 per month, this comes to a loss of $600 over a 12-month lease. I guarantee that the preparation for the turnover usually costs more than that, plus the loss goes up if the unit sits vacant over an extended period. 

Apartment Size

This reason comes up when the size of the family changes which causes the tenant to need either a larger or smaller living space. Empty nesters, having babies, new couples or a tenant is becoming single tend to move due to apartment size. Here is what we can do in this scenario to keep the tenant. Offer the tenant a smaller or larger unit if one is available. This would be our first and best option. If this is not possible, offer an incentive such as upgrading their apartment by repainting or new carpet, give them a garage at a discounted rent or for free for one year, or lastly offering a reduction in rent to keep them.  This is where we can get creative to keep the tenant!

Job or Relationship Status Change

This is a tough one but not impossible. There is little we can do if a tenant needs to relocate for a job but what if the job change is only financial? Say they are going to have a decrease or increase in salary. In both cases, once again our choice would be to offer them another available unit that would fall within their new price range. This works for increases in salary as well. Maybe they want something bigger and newer. If we have a vacancy that fits their desire, we should offer it to them at this time. Relationships changes such as separation, divorce or marriage could be the reason. If this is the case, then offer any available rentals you may have so that the tenant has the option of staying. 

Neighbor Issues

While we cannot always control the next-door neighbors, we can control the type of tenant we move onto the property by utilizing good tenant screening procedures. It is so important to put quality tenants in your rentals. One bad tenant could quickly cause good tenants to move out of your property. In issues such as this it is always a good idea to try and get the tenants to talk out their issues, if they cannot do it on their own then you may need to mediate the situation. If this fails, you can offer a unit transfer to one of the tenants.

Maintenance Issues

Maintenance issues can cause a tenant to move. Tenant’s can quickly become tired of dealing with ongoing maintenance issues such as leaky roofs, pest problems, mold, clogged drains, etc. This is the one issue that we have complete control over by providing an easy way for tenants to report maintenance issues, quick response time and doing periodic maintenance upkeep.  

Summary

The takeaway from this post is to follow up on notices to vacate, you may be surprised at how your turnover rate drops if you think outside the box of ways to keep your tenants. We at Brio Properties are always looking at the big picture! Visit us often for more tips and tricks of the trade to ensure the success of your rental property investments. 

CategoriesLong Term Rentals Real Estate Investing

Navigating Security Deposits

By brioproperties,

By Kim Schmitt, Managing Broker

As a Landlord or Property Manager one of the most important processes we do is collecting and reconciling security deposits.  The purpose of this blog post is to provide direction to help you successfully navigate the security deposit process and to avoid possible pitfalls.

The Purpose and Collection of a Security Deposit

As a landlord or manager, we are entrusting a property to the care of a tenant, and many things can and do go wrong. Obtaining a security deposit is one of the most important things we can do before renting out a property.  A summary of reasons to always collect security deposits include financial protection against tenant damage to the property, early termination of a lease, non-payment of rent and unpaid utilities upon move-out.  It is advisable to confirm with your state, city and county of any laws that you must follow. Before a landlord can collect a security deposit from a tenant in the state of Wisconsin, he or she must provide a few disclosures to the tenant as well as a written receipt upon receiving the tenant’s security deposit.  It is strongly recommended not to allow a security deposit to be used as the last month’s rent.  That’s the same thing as returning the deposit early in which case the funds will no longer be available to use should the unit have damage upon move-out inspection. 

Determining the Amount of Security Deposit to Charge

The characteristics of the property itself often determines how much a landlord or manager should collect as a security deposit. For instance, a single-family property may have added amenities like a hot tub or expensive landscaping which would warrant a higher deposit than, say, a standard studio apartment in a multifamily building.  Most often, the security deposit is equal to the first month’s rent. 

Storing a Tenant’s Security Deposit

In the state of Wisconsin, there are no specific requirements about how a landlord must store a tenant’s security deposit. The security deposit does not have to be placed in a separate account or earn interest.  With that said, please confirm with your state, county and city as their laws on the storing of security deposits may differ. 

What Can Be Withheld from A Security Deposit?

The general rule is that a landlord or manager can only withhold security deposit monies for actual damages, material or financial. Meaning, you can deduct money if they owe you past due rent and fees or caused damages beyond normal wear-and-tear. Normal wear and tear are the expected decline in the condition of a property due to normal everyday use. It is deterioration that occurs while living in a property. It is not caused by abuse or neglect. In the state of Wisconsin, a landlord can keep all or a portion of a tenant’s security deposit for the following reasons:

• Damage in Excess of Normal Wear and Tear

• Unpaid Rent 

• Unpaid Utilities

• Money Owed for Violating Nonstandard Rental Provisions (fees, etc.)

In Wisconsin, a landlord can include additional reasons he or she can make deductions from a tenant’s security deposit. These additional reasons must be included as a separate written statement called Nonstandard Rental Provisions. The landlord must show and explain these provisions to the tenant before entering into a lease agreement with the tenant. The tenant must sign this provision. Note It is illegal to deduct for routine carpet cleaning from the security deposit even if the tenant signed a lease that states that they must pay for carpet cleaning. The exception is if they damaged the carpet beyond “normal wear and tear.

Defining Damage That Can Be Deducted from Security Deposits 

Damage is not naturally occurring. It is harm that affects the value, usefulness or normal function of property. This damage can be committed on purpose or through neglect.  

Examples of damage might include:

• A smashed bathroom mirror

• A broken toilet seat

• A hole in the middle of a door

• Damaged or missing door handles/locks

• Carpet soaked with pet urine, rips from pets/furniture, multiple stains and cigarette burns

Is a Walk-Through Inspection with the Tenant Required?

No. A walk-through inspection with the tenant is not required in the state of Wisconsin when a tenant moves out. A tenant can request that a landlord do a move-out inspection, but it is not required by law.

When Must a Landlord Return the Deposit?

Each state may have a different timeframe to follow. In Wisconsin, the landlord has 21 days after the lease ends to send the full security deposit and/or an itemized list of deductions.  

Who Should the Deposit be Returned to?

The landlord should return it to whoever the tenants told the landlord in writing to make the check out to, or whoever the landlord chooses to return it to if there were no written instructions. The regulations no longer tell the landlord they must put everyone’s names on the check, so tenants who rent together should think carefully about who they want the check going to and getting cashed by. It is easier to have it be just one person, but there is more accountability if everyone has to sign it.

Can a Landlord be Sued in Small Claims Court Over Security Deposit Deductions?

Absolutely yes, in the State of Wisconsin if the landlord does not return the security deposit and/or list of deductions within the required 21 days, or if the landlord took out money for things the tenant disagrees with, the tenant can end up suing the landlord for double the amount wrongfully withheld, plus court costs and reasonable attorney’s fees.  If the landlord returns the money before the tenant files in court, the tenant can no longer sue since now they are not owed any money. Double damages only apply if the case goes to court.

Summary

In my experience, I have seen cases where Landlords have charged items against security deposits that would have never made it past a judge had the tenant taken them to court.  It is extremely important that as Property Managers and Landlords we fully understand security deposit state laws, requirements and the definitions of normal wear and tear to avoid legal action.  Visit Brio Properties regularly to learn how to successfully manage your properties. 

CategoriesLong Term Rentals Real Estate Investing

The Do’s and Don’t of Heat

By brioproperties,

It’s the time of year where landlords in colder parts of the United States are talking about furnaces.  We’re entering the throws of the cold weather season and what is historically the harshest parts of our winters.  It’s the time of year that we dread a tenant phone call the most. We’re always panicking (unless you have new furnaces) about if they’ve lost heat.  Then what if it’s more than the wall thermostat and we need a part, how much is that going to be? Even worse…what if it’s dead. Given all of this, it’s a good idea to have a discussion about furnace…etiquette.  

What do I mean by furnace etiquette? It’s not just about maintenance and keeping it in running order, it’s all about protocol of heat settings, and the advent of new technology. Not only are furnaces more complicated in themselves, but everything surrounding them is too.

Etiquette Lesson 1: Furnace Check Ups

Furnace check ups are a great way to shore up your defenses before the storm.  Have your trusted HVAC company come out in August/September and give your furnaces a good ole check up.  They’ll check over all your components and make suggestions on possible repairs ahead of the season. Best part is some companies will waive the service charge for the repair because you did a furnace check up. You are required to do whatever work you want within X days of the service check up to get the savings.  (You can’t just wait until January to get the igniter replaced and expect to get the discount when it was mentioned it in August.)

Etiquette Lesson 2: Smart Thermostats Don’t Give You The Right To Police Their Heat Usage

Smart thermostats are arguably one of the best inventions we’ve seen in a long time.  They help us control our heating and cooling costs by being able to adjust the temperature remotely.  Instead of only using programming we can now control our thermostats from our phone. You can adjust the heating and cooling from the restaurant table as your plans change. For our primary residence it’s an amazing piece of technology. Yet for rentals, its fraught with ethical complications. 

There are landlords out there who want to install smart thermostats not to keep an eye on the temperature when a unit is vacant (the legitimate reason in my book), BUT INSTEAD WHEN IT’S OCCUPIED. This is I have a problem with. Regardless of whether you include heat or not in most circumstances what your tenant sets the temperature at is none of your business.  We’ll chat in the following sections about minium and maximum temperatures. 

An argument could certainly be made (and is appropriate) for making sure the tenant keeps the heat to 55 (the accepted practice to prevent pipes bursting).  Yet I would caution to be sure you can retrieve reading reports from the smart thermostats app for documentation as to why you had to manipulate their settings remotely.  (Note: Some smart thermostats allow you to set a minimum temperature that kicks in regardless of the programming. Making sure it doesn’t slip below 55 would be an acceptable use of this.) 

NOTE: Most smart thermostats require a wifi connection to be remotely controlled or monitored.  Some wireless providers are selling smart thermostats that can work on data when wifi isn’t available (i.e. when its vacant).  But you pay big moola to get that.  Plus there is the continual data usage the thermostat uses whenever you want to check the thermostat. 

Etiquette Lesson 3: If The Tenant Pays The Bill You Can’t Tell Them How To Set It

It seems that at some point landlords got confused and began to believe they have an interest in policing the thermostat programming of an occupied unit even when the tenant pays the utilities.   They “justify” their interest by saying that it’s to avoid excessive wear and tear on the unit. Here’s the holes in that justification.

The tenant is still paying the utilities.  99% of judges will say that when the tenant pays the bill you have no right to police the thermostat settings (with the exception of the 55 setting for heat). Since the burden of the utility expense is on the tenant, there is less justification in your mandating temperatures.  

As for the argument about excessive wear and tear…that’s buckus.  To the furnace and a/c there is no difference between 70 and 75. If you are concerned about the wear and tear on your furnace install an energy saving thermostat that only changes temperatures when it varies more than 3 degrees around the target temperature. This will more adequately protect your furnace without upsetting your tenant.   (Most tenants will like this thermostat as well because it will save on their energy bill.)

Etiquette Lesson 4: Even if you pay the bill a judge will only give you so much leeway on mandating unit temperature. 

If you read the above section thinking you were in the clear because you do pay the gas and electric…you are kind of right but also not. You have a little more interest in what they are keeping their apartment at because you are footing the utility bill BUT you have to keep in mind the tenant still has certain rights, including right to enjoyment without excessive interference from you as the property owner. 

As an owner providing the heat you may be able to get away having a clause in the lease that limits the winter temperature to below 70. Anything less and it’s going to look like an infringement. In the same way you are unlikely to get away with having a clause that says the A/C can only be kicked in if the unit temperature rises above 80.  

Etiquette Lesson 5: Cold snaps wreak havoc on your HVAC system. 

Your furnace will thank you for this next piece of advice.  When temperatures get into the single digits ask your tenants to turn down the heat by 5 degrees and wear an extra layer or use blankets.  

When temperatures dip below 10 degrees any HVAC system will have a hard time keeping up.  Pretty much as soon as it stops going it will need to turn on again (or at least in under 3 minutes).  Give your furnace an extra breather by dropping the thermostat about 5 degrees. (Dropping it somewhere between 5 and 7 degrees is optimal.)  Your furnace will appreciate the extra breather time between when it shuts off and starts up again when its limits are being tested by extreme outside temperatures. 

Hopefully this blog has given you a few ideas or new perspectives on furnaces in rentals.  Keep in mind with the new smart thermostats an argument could be made for invasion of privacy. So it’s best to consult with an attorney before you make a wide change to your thermostats.  Smart thermostats aren’t cheap so if you end up having to replace them it’s going to be a pretty penny sent down the toilet.

CategoriesLong Term Rentals

Why Hasn’t My Property Rented Yet?

By brioproperties,

By Kim Schmitt, Managing Broker

November 21, 2019

“Why hasn’t my property rented out yet?” As a property manager, we dread questions such as this from our investor clients and thankfully it rarely happens!  At Brio Properties, we utilize our experience in the rental market to keep our investor’s cash flow moving.  

This article is for the investor who manages their own rentals who have found themselves having difficulties getting their vacancies filled.  

In my experience, usually the reason for a continued vacancy is due to one or more of these reasons:

  • The rent price is too high for the current rental market
  • The condition of the unit isn’t up to par or has an undesirable feature
  • The property location is a problem
  • Security deposit is too high
  • Tenant screening expectations are not realistic
  • Poor marketing or poor applicant response time

SO, WHAT DO I DO?  Well, here are some of my suggestions…

Adjust Your Rental Price 

How did you come up with your rental rate? To help with deciding, you can get a VERY general idea by researching ADVERITISED rental rates for similar properties in your area via classifieds, Zillow, Trulia and even Craigslist.  Please remember that just because these rent rates are advertised does not mean that they’ll get rented. This is just to give you an idea of where to start. Generally, you’ll want to pick a starting rate somewhere in the middle between the highest and the lowest.  

Remember, the market will always drive the price.  If you’ve had your property listed for a week and have not had anyone apply for it, drop the price a little.  Then, drop the price again after two weeks if you still have no interest. You’re losing money when your home sits vacant. Don’t wait too long to drop the price. You must adjust the rent based on the competition and the market.

Improve Your Property Condition

You may be having difficulty getting your property rented because of an undesirable feature of the rental unit or of the property condition in general.  If your rental’s condition leaves a lot to be desired, you shouldn’t be surprised that it isn’t renting. No tenants want to walk in and see stains on the carpet or messy touch-up paint on the walls.  The exterior of your property could be keeping tenants from even coming inside to see the property. Undesirable features may be no laundry onsite, too may stairs, room size, not enough bathrooms, etc.  

When it comes to the condition, it’s a better idea to spend a little money and improve the condition of the home so you don’t lose thousands while it sits vacant. Fixing it up will help you attract better tenants. The changes do not have to be complex or expensive. Paint, clean up the exterior, replace carpet and make sure the home is clean and presentable.  In most cases, just as with location issues you may not be able to do anything about undesirable features other than price the rent accordingly.  

Location of Rental Property

You cannot really do much to change the location of your property, but you can often work around it.  Ideas would be that you may need to lower your rent rate, offer a 1-year lease signing special when advertising (Example: $200 off 2nd Month’s Rent), provide a washer and dryer, ETC.  Where there is a will, there is a way!

Security Deposit Overkill

Tenant prospects may be fine with the monthly rent you are charging, but they may be turned off by a security deposit that is too high.

Two- or Three-months’ rent may be overkill, especially if all the other landlords in the area are only charging one month’s rent as security.

Tenant Screening Expectations

Tenant screening (Criminal, Credit and References) are very important and should be conducted by EVERY landlord! 

It is important to have reasonable screening expectations based upon the property class in which your rental falls under. Property classes are defined as classes A, B and C or below and are based on a combination of physical, geographic and demographic characteristics.  Just remember to have your screening policy in place and presented to all potential applicants. Stay consistent and stay within the federal and local laws to avoid Fair Housing violations!

Marketing and Responding to Applicants

It may be time to reassess your marketing strategy.  Good marketing is yet another important consideration in getting your rental filled.  You will want to use every available avenue to provide the most exposure. You will also want to make sure you take pictures (please make sure they’re not blurry or too amature looking) and write up a good description of the property and use a catchy tag line/heading to draw attention to your listing. 

Communication is also important. You need to be prepared to answer questions from prospects and show them your rentals as quickly as possible once they show an interest.  Remember, if you can’t, they’ll move onto something else. In this rental market, tenants have multiple options and they will not wait for you! 

Summary 

If your property isn’t renting as quickly as you’d like it to, consider working with a professional investment management company such as Brio Properties.   Professional management companies have the knowledge, experience and resources to keep your rentals producing cash flow. 

CategoriesLong Term Rentals

Communicating With Problem Tenants

By brioproperties,

By Kim Schmitt, Managing Broker

I am often asked, “How do you effectively handle difficult tenants?” First, I prefer to use the term challenging rather than difficult. You’re probably asking, “why does changing a word make a difference?” It’s important that our attitude is not negative going into communications with a challenging tenant, as our goal must always be to deescalate the situation and solve the problem.

A few of the most common issues that arise with what we call challenging tenants include late or missing rent payments, unauthorized occupants or pets, parking violations, tenants not getting along with neighboring tenants and the condition of their unit.

As a property management company, we encounter challenging tenants all the time. It is important that when communicating with these tenants we practice professionalism, listening skills, problem-solving skills and have solid policies in place to try and prevent bad behavior before it starts.
As a landlord or property management company, it is important to make effective communication your priority before resorting to more drastic measures. So, how do you communicate better with challenging tenants?

Clear Rules and Guidelines
Make sure your tenants have a clear written guideline outlining your property standards and what your expectations are during their tenancy. It is our policy that prior to accepting money to hold the unit, we provide a sample copy of the lease and rules. This packet also includes a signature page in which the tenant signs confirming they have received it and have read through the documents. At the actual lease signing, we take our time outlining our property standards in detail. These procedures cut down the
possibility of our policies being misunderstood or ignored.

Be consistent with rule enforcement and penalties. It is important that within your policy you also let your tenants know what the penalties will be. Remember, what you do for one tenant, you must do for all.

Multiple Ways to Communicate
Provide tenants with multiple ways to communicate with you. We like to provide an online tenant portal, emailing, calling, in-person meetings and an emergency after hours phone number. When setting up ways to communicate with your tenants, you must remember that not everyone is computer savvy.

Patience is a Virtue
Whether you are handling a disruptive tenant who causes drama or a forgetful tenant who missed a rent payment, both situations can be irritating. This is where you must find your patience and handle them
professionally.

It is never a good idea to approach tenants with hostility. Remember our two main goals? We want to deescalate the situation and solve the problem. If we lose our patience, we lose our goals. Explain to the tenant what the violation is and discuss with them how to fix it. If after a set number of warnings with no success, it may be appropriate to start eviction proceedings.

Stick to Policy!
In other words, your policies are in place for a reason. For example, if you have specific dates in your policies for rent collection, grace periods, late fee, etc. Stick to them! You need to provide consistency by upholding your policies so that your tenants know there are consequences for not following them.

RESPECT Goes Both Ways
You may find that you just do not like your tenant. They’re just not someone you would invite over to your home for a cup of coffee. Well, that’s okay. Nobody said you and your tenant need to be friends.
However, you and the tenant do need to provide each other with a level of mutual respect. Again, the tenant needs to know what you expect while they occupy your property, and what will happen if they disrespect it.

It is important to remember that unless the tenant is engaging in illegal activities, disturbing other tenants or causing property damage, you must respect their privacy. Remember to provide appropriate notice of entry per your state statues, don’t just drop by without notice. Tenant’s have rights and you do not want to risk legal action. Tenants may have issues that are significant to them even though they seem minor to you. It is important to respond within a reasonable time frame to their concerns and
requests.

Summary
Good communication is key. Whether it is with your “perfect” tenant or with your “challenging” tenant. The end goal is to create a property where tenants want to stay long term, pay rent on time and follow the policies and guidelines you put into place. It is up to us as the property manager or landlord to handle situations as they arise, take appropriate action when necessary and keep the lines of communication open.

CategoriesEntrepreneurship Long Term Rentals Real Estate Investing

Quick Tips For Less Stressful Bookkeeping

By brioproperties,

Do you dread bookkeeping? Does your accountant audibly sigh when you bring in your paperwork every year?  Here are 4 quick tips to remove some of the pain and delirium over bookkeeping.

1) Set an appointment every week for bookkeeping activities.  

Block 60-90 minutes every week at the same time. Make it a time where you concentrate because if you already detest bookkeeping getting interrupted or being able to postpone in lieu of something else will only make it worse.Use that time for entering your purchases, filing receipts, and completing monthly bank reconciliations.   Having this consistent time keeps us on track, ensures we have up to date information, and helps us catch errors quicker.

Make receipts and accounts payable weekly activities in whatever time block makes sense.  A smaller portfolio may only require 40 minutes a week for these. Then once a month set a specific day of the month (10, 13th, 23rd) where you are reconciling the previous bank statement and allow yourself 30 minutes for this.   (If you are on top of your bookkeeping even the most active account takes less than 30 minutes.)

2) Create an electronic file of your receipts.  

Receipts fade, get spilled on, get torn.  It’s your responsibility to maintain a good record of your accounts.  This includes preventing against receipt fade and life accidents. Scan your receipts into an electronic file weekly.  

Pro tip: To make audits (eek!) easy, your receipts should be filed by year and accounting category.  Accounting category is whatever account you assigned the transaction in your bookkeeping software. Paint, repair, advertising, etc.  On a computer (which I highly recommend your digitize your receipts) your main folder would be the year and your subfolders would be your accounting categories.  (2019-postage; 2019-cell phone, etc)

Bonus: If you still use a flatbed scanner, receipts can be trimmed and more than one in the same category can usually fit in a file. 

3) Have receipts with mixed accounts on them? No problem. 

You can create one file category you name as “mixed”.  On your receipts itemize each item by category and calculate the totals for each account.  (Want to earn extra credit, you could even color code your account on your mixed receipts.) 

4) Do quarterly company cash flow checkups. 

Every quarter pull up your company or property cash flow statements and just do a quick audit.  Do you have any accounts that suddenly appeared out of the blue? Any numbers seems abnormally high?  These may be signs of clerical errors you need to adjust. Doing this quarterly will prevent hair-pulling and headaches for you (or your accountant) at tax time. 

5) Make A Checklist Of What You Need For Your Taxes.

I also felt like I was shooting fish in a barrel when I sending documents in for my taxes.  I would send the business statements, husbands w-2, my 1095-A from the marketplace, mortgage statements.  I’d think I was on the ball. Then I’d get an email from my accountant. You missed [mileage, car insurance payment, payroll docs, student loan docs, etc].  

One year I was done feeling like a headless chicken and sat done with my accountant to create a checklist of the docs I should have every year for all my companies.  I then took that checklist and make it a Google Note checklist where I copy the master every year and check items off as I send it to him. I know I’m happier and I think my accountant is happier too!

Make tax time less stressful by being ahead of the game and on top of your books. Keeping your books organized makes you life and mind seem less cluttered.  Mistakes caught early are easier to fix and receipts nicely categorized make auditors…almost smile. Those are some pretty good reasons to stop putting off bookkeeping and start making it a routine priority.

CategoriesLong Term Rentals

Keep These Questions To Yourself

By brioproperties,

When we are showing a vacancy, we are usually in one mode: get it rented.  We want the best qualified applicant as soon as possible. We want to find out as much about the person either prior to completing the application.  It saves us time right? The more we know sooner, the easier it is for us to weed out the bad candidates. So we ask questions to get some answers and satisfy our curiosity.  

Sometimes we are just making friendly conversation and we tend to forget that in the role we are as landlord, what we say to tenants and prospective tenants is scrutinized.  So what was meant to be a friendly conversation point about the person may turn into a complicated Fair Housing complaint down the road.   

Here’s a list of questions that will you should avoid asking potential renters.  Some seem innocuous but can be construed as seeking for discriminatory information.  

Where were you born?

This seems harmless but since its asking for information about a protected class (national origin) and it has no bearing on their possible performance as a tenant it’s on the no-no list. 

Tell me about your children.

Familial status is a protected class. Phishing for information about the children’s age, grade, etc is a potential Fair Housing lawsuit  Wait to find out information about the kids from the application. 

Do you need to know where the nearest [mosque, temple, church] is?

No. No. No.  You are inquiring about their religion, which again has no bearing on the application.  If they ask you where the nearest worship location is, that’s different because you are answering their question.  When you someone appears at a showing in unusual religious clothing, don’t make it a point of conversation. 

You have a nice accent. Where are you from?

This is also a question that inquires about national origin or ethnicity.  Your finding out someone is Welsh, Russian, etc which is something that should not have any bearing on their application.  This is a hard one for me to follow because I love accents.  

Do you have a disability?

….No. Just no   It’s rude. It’s common courtesy.  It’s a violation of Fair Housing.  

Do you have a service animal?

You can ask if they have pets but not specifically service animals.  Let the conversation flow naturally. Ask if they have pets, then if they do inquire about the breed, weight and other characteristics you want to know.  If the pet is something you don’t accept you can say so. That is when most people will tell you it’s a service animal. You are still getting the information about pets but you are letting them tell you its a service animal.

You can still find out a decent amount about your applicants without probing in areas you shouldn’t.  Be methodical with your questions and don’t forget as a landlord doing a showing you are held to a higher standard with your conversation. 
Here’s a list of common questions that are still ok to ask:

  • Do you have any pets
  • When are you looking to move?
  • How many vehicles do you have?
  • Why are you looking for a new place to live?
  • Do you smoke?
  • Does your current landlord know you are thinking of moving?
  • Do you have any questions for me about the process?

That last one is a GREAT question to ask.  It opens the door for them to tell you what might be concerning them about the application. If they are offering you the information without you phishing for it it becomes fair game.  

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