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

CategoriesLong Term Rentals Real Estate Investing

Slightly Less Offensive

By brioproperties,

The most underrated topic in buy and hold real estate investing is Fair Housing.  In fact, its staggering how many investors don’t bother learning much if anything about Fair Housing. I was flabbergasted when I read a recent thread on a national FB group for landlords where half a dozen people were commenting that Fair Housing only applies to applications…once the person moves in it didn’t apply.  What the….. Are you serious? Let’s get this out of the way: Fair Housing Always Applies. Every. Stage. Of. Tenancy.

But let’s start at the beginning of the tenant process because most Fair Housing violations occur prior to the tenant moving in. Our first interaction with potential renters is usually a written ad.  This is where problems can quickly begin, even if we didn’t intend it. Remember: With Fair Housing violations, your intent doesn’t matter.  

In Fair Housing we have federally protected classes, state protected classes and sometimes county and city protected classes.  As a refresher, here’s our protected classes down to the state level: Race, National Origin, Ancestry, Gender, Familial Status (including Marital), Sexual Orientation, Lawful Source of Income, Status as a victim of Domestic Abuse, Age, Color and Disability.  The language in our ads should avoid presenting the appearance of either appealing to OR detering anyone in those classes. An example of deterring a class would be the signs from the 1800s that said “Irish need not apply”. Having that line in your advertisement would certainly be grounds for Fair Housing violation.  Yet as we said it above it’s not just exclusionary statements that create trouble. Informing people in the ad that a Kosher deli is located on the bottom floor of the building can be seen as encouraging interest and even stating that the building is perfect for those of Jewish heritage. This would violate Fair Housing because it’s encouraging one group of people to be interested over another. 

Let’s Try Read An Ad

I pulled this ad from a FB group where it was screen captioned for discussion.  Using both federal and state protected classes, see how many violations you can pick out:

Spacious 2 bedroom upper duplex available for rent.  Fridge, stove, and microwave included. Off street parking and laundry in the basement.  (Laundry requires going outside in the cold and down 2 flights of stairs. Not ideal for those with mobility issues.) Located within walking distance of stores, Chinese food, and St. Patrick’s Catholic Cathedral. I don’t provide a/c so not ideal for the elderly since they need a/c.   Lower unit is occupied and there isn’t much noise dampening between the apartments. Energetic kids might cause problems between tenants. Rent is $905. Security deposit is one months rent or $1200 if you have kids. 

How many possible Fair Housing Violations did you find in the ad?  There were 6 immediate violations.   

What Went Wrong…

Laundry requires going outside in the cold and down 2 flights of stairs. Not ideal for those with mobility issues.  

While the landlord may have had good intentions of warning those with conditions that are aggravated by stairs or excessive movement, that is not how it will be interpreted by the HUD.  HUD will view it as they are discouraging a protected class from viewing the property. The decision of whether or not something constitutes a burden because of their physical ability should be up to the person.  

Located within walking distance of stores, Chinese food, and St. Patrick’s Catholic Cathedral.

This might appear innocuous because it’s a statement of the amenities located close to the unit.  However because it mentions a particular religion it can be construed as encouraging Catholics to apply and discouraging those of other faiths because it implies the neighborhood might be a Catholic neighborhood.  Also mentioning a restaurant based on its national cuisine is not a good choice. Even though its a type of food widely available in the U.S., it appears as though that one particular type of ethnic is food is being singled out.  

I don’t provide a/c so not ideal for the elderly.

This again may be well intended but it violates Fair Housing because it’s discouraging people of a certain age from seeing the unit.    

Energetic kids might cause problems between tenants. Security deposit is one month’s rent or $1200 if you have kids.  

These statements both violate the rights of those protected by familial status. The first statement is insinuating that the unit is best for well-behaved kids or families with no kids at all.  The second statement is a more clear violation. You cannot charge someone more security deposit simply based on their status in a protected class. 

How To Fix This…

So how could the landlord have written the ad and still provided all the same information? 

Spacious 2 bedroom upper duplex available for rent.  Fridge, stove, and microwave included. Off street parking and laundry in the basement.  (Laundry requires exiting the building and 2 flights of stairs.) Located within walking distance of stores, food, and a place of worship. A/C not provided.  Lower unit is occupied and there isn’t much noise dampening between the apartments. Please be conscientious of whether this may present an issue. Rent is $905.  Security deposit is one months rent.

They have still informed people about the laundry location, the lack of a/c, and the inadequate noise dampening between units as well as listing what’s local.  But they’ve avoided trigger words like “kids”, “Catholic”, “elderly”, and “Chinese”.  

It Doesn’t Take A Complaint

To have a discrimination case lodged against you doesn’t require a person to lodge a complaint, especially with advertisement wording.  HUD and state agencies can initiate action if the discrimination is visible. The ad above has visible violations of Fair Housing therefore HUD or other agencies could bring charges against the landlord.  So don’t think as long as no one complains that it won’t be an issue.

CategoriesEntrepreneurship Long Term Rentals Real Estate Investing

Real Estate Expansion Lessons From Corporate America

By brioproperties,

Growing a real estate portfolio with a large purchase is a daunting task.  It has the thrill of a successful outcome tied with apprehension of taking on something so large, usually in debt form.  For many investors its the apprehension that prevents them from acting on it. There is a limited few that dare to go big in this industry.  This is why most larger buildings end up being owned by “the same four people” in a certain town or city. People usually end up admiring these people saying “If I only had the guts” or “Man I wish I could that” as they walk by the buildings.  But they never will. Because these are the same people that focus on the failed expansion stories that seem to be routine in corporate business news. 

At one point in our lives, we’ve likely read a news story about “Company X” going out of business because they expanded too quickly. The story will tell you that 3 years ago Company X bought “Y Company”. It will state that Z number of people that are currently employed by the now merged company are out of work and have lost their pensions. But yet they won’t offer any true explanation as to why it occurred beyond the expansion being “too quick”. In reality it wasn’t that the expansion was too quick it’s because it was executed sloppily.  There’s no calendar time frame on being successful in expansion. It comes down to execution. A failure to execute the merger effectively by proactive and changing things that don’t make sense or they sink the success of the acquisition afterwards by paralyzing themselves with fear. What kills many of these companies are the same things can kill real estate entrepreneurs when they expand. 

#1 Expansion Without Forethought

In the business world and as real entrepreneurs some people tend to approach expansion…well…like a bat of hell. Out of the gates they are zig-zagging around, reacting to the major urgent items that are thrown at them that need to be done to close the deal.  They’re gathering documentation, signing papers, reviewing final drafts of contracts. They are reacting to what the transaction needs to happen. They aren’t taken any time to look ahead and plan for the day after the acquisition. They believe they have all the time in the world to change things after the ink is dry.  

What they should be doing is reacting to the urgent items in tandem with proactively working towards things that need to be done to set-up a smooth and successful acquisition.  As a real estate entrepreneur being proactive may include things like creating your property plan and evaluating the current logistics of the property. I.e. On-site staff, door key systems, storage spaces, recurring expenses.  Looking at all areas of the operation for efficiency and redundancy as well as how to best adapt the property to your current administrative operations.    

When buying a new property don’t fall into a pattern of doing things or keeping things only because it was established under the old regime.  ‘They used it/did it so therefore it must be necessary for you.’ This one way to inadvertently leave money on the table or lose money on unneeded services or overpriced vendors.  It might be administrative tasks that don’t meld into your process so they should be eliminated or modified. Or contractors that you don’t communicate effectively with so projects are taking a little longer or not being done to your standard. It also creates a more cumbersome operations system that decreases the entire portfolio’s efficiency, not just that one property’s.  If you fall into the trap of “there must be a reason it was done this way” or “they used this person because they knew the building” you’re starting down the path of the many failed mergers of Corporate America.  

#2 Expansion Paralyzation

The other reason for expansion failure arises from the after acquisition glow which turns into acquisition terror. They wake up one day rather sobered from what they’ve done.  They’ve purchased a $500,000 property….*gulp*. In this sobering light they become scared, fearful of failure. They are so obsessed with the risk they have taken that they become over-determined not to become a statistic of a real estate failure.  This usually presents itself in cult-like worship of their bottom line. They begin pinching every penny to build that nest egg to astronomical sizes so they can pay the bank if (god forbid) the property starts to fail. They opt for cheaper labor and forgo regular maintenance for the $75 here or $400 there all to ensure that they don’t fail.  They put laser like focus on reducing cost. Overtime, as they had predicted when they started their Rainy Day Crusade, their property does begin to fail. People are moving out, vacancies are taking longer to fill, and the rents are slowly, slowly going down. It’s not the economy or the market. It’s the consequences of the real estate entrepreneurs overzealous attempt to not fail. The quality of units has gone down and the property has a new less desirable reputation.  The rents they had when they bought the place now become overpriced. And it spirals from there…

Being overly focused on the bottom line can create low tenant satisfaction. Cosmetic repairs aren’t completed on the building, or broken items are replaced with inferior quality items. Tenants become increasingly inconvenienced by mechanical breakdowns because of routine maintenance being put off in addition to buying inferior products.  They are no longer getting “what they pay for”.

Reaction Mixed with Proaction While Avoiding Paralyzation  

If you decide to make a large move, plan your expansion and don’t just react to it.  Make sure you are doing more than just reacting to demands of the transaction and are actually evaluating and creating plans.  Don’t do certain things because that’s how they were done prior, evaluate everything in the potential acquisition’s operation. Once you’ve acquired the property don’t over-correct out of apprehension.  Refuse to allow yourself to be so focused on the bottom line that you neglect other critical areas that determine the property’s success. Trim costs when it seems reasonable but don’t become a penny pincher that drives your own property into the ground. 

CategoriesLong Term Rentals

Bringing Back The Human Element

By brioproperties,

“Sometimes I show apartments. Sometimes I’m the enforcer. Most of the time though I’m a psychologist who provides housing to people.”

In a moment of bold zaniness I described my profession this way at a networking event last week. It got some good laughs. On the way home it reminded me of how much this business is about personal connections. Not just with our vendors or colleagues but also with our tenants. It’s easy to get caught up in the robot mode of the business. Where in a way we forget we are dealing with people.

I’ve talked with tenants over cheating spouses, divorces, life traumas, milestone events, promotions, demotions, and more. I’ve learned so much about thought patterns and societal norms from these conversations. The conversations that I’ve been privileged to have with my tenants, when they have confided their worst life stories in me has made me a better person…and better investor.

I’m not changing my mantra. Our industry is still a business and we need to run it as such. Yet there are times when the human element is applicable. We are different than big corporations like Chase, CitiBank, or any other big name vendors people use on a daily basis. Why? Because we as property owners interact with our tenants on a consistent basis. Emails and texts are exchanged. Property visits are made where we cross paths. Their lives play out in a building we own. All of this creates an environment where we find ourselves as the sounding block, consoler, and therapist.

How does one walk the line between business robot and business with people skills? Well there are obvious ways we can do this. When we hear a tenant has lost a loved one (and it’s not a story…) send a condolence card in the mail. Go the extra mile and google “sympathy messages” to include a handwritten sentiment of your own. Some owners send birthday cards, congratulations on your baby or promotion cards as well. These are easy every-day ways to remind your tenants that you know they are more than your mortgage payment.

Yet, at times you may be forced into a situation that requires more than a sympathy card. About 6 years ago I got a call at 11:35pm from the police that my tenant a 24 year old with a 3 year old son had been killed in a drunk driving accident. (I know exactly where I was and what time it was because you don’t forget things like that.) I went over to the unit to be sure it was secure and wait for the police who needed locate her son yet. With the police presence, neighbor’s slowly started to congregate outside the building near her apartment. Then a police transmission gave away what I hadn’t said yet. “…Be advised decedent’s son is at her mother’s currently. Officers just verified location.” At that moment to the crowd gathered around with me I became the therapist. I kept that role for months. When they came in to pay rent (just a few days after her death) they were all still in shock. I’d be at the property and I’d stop and chat about Jessica for a bit as part of their healing process. Listen to their stories, tell one or two of mine. When one tenant moved out because she couldn’t handle the daily memories 4 months later, I hugged her and consoled her one last time as I took the keys from her.

I’m a counselor. Therapist. Life coach. Cheerleader. Property owner. I don’t mind being these things and I don’t let what I know interfere with it being a business. If I show sympathy it doesn’t prevent me from being the enforcer who still needs the rent paid. If I congratulate them on a birth it doesn’t mean I can’t critique them when their children leave toys in the hallway. If I show empathy and sympathy I am creating a bond which ultimately creates a sense of loyalty. Those that I’ve been there for have not been the ones that “screw me over” by skipping or getting behind or damaging the property. They end up being my most respectful tenants and sometimes long lasting ones.

CategoriesLong Term Rentals Real Estate Investing

5 Reasons Why Your Portfolio Isn’t Growing

By brioproperties,

1. You Aren’t Protecting Your Time.
It’s a common thing in real estate investing and business in general to jump as soon as a potential or current customer needs something. It’s our natural instinct. But have you stopped to consider that your reaction to jump is probably preventing you from focusing on the tasks that grow your portfolio. When a prospective calls for a showing our instinct is to ask if they are available at that moment or within the hour. It’s great customer service right? (It actually sets a bad precedence as a rental investor which I talk about in my blog “Setting The Tone For A Tenancy”. #shamelessplug)

What makes the most successful people in the world…successful, is how they protect their time. They set a schedule (which we’ll talk about next) and they have spaces where they can put appointments. They do not deviate from this schedule, especially with appointments. They protect their time. If Bill Gates were a bootstrap real estate investor he wouldn’t look at his schedule as an investor and say “Well I can read about syndication deals later. I’ll go do this showing now.”

When we push something off, we often don’t get back to the task pushed aside for awhile. We’ll quickly get into the pattern of dealing with urgent rather than the important. What’s important doesn’t get done. The successful people we admire protect their schedule, they protect their time, and this provides them with maximum productivity.

2. You Don’t Have A Set Schedule.
It doesn’t matter what size portfolio you have or if you have a day job, you should have a schedule (at the very least) for Real Estate. I argue it’s infinitely more important if you do have a 9 to 5.

Your schedule should look like a template. You should have set hours and days where certain categories of things happen. I.e. Bookkeeping 3-5pm on Monday; appointments 12-3 Mondays, and 4-6 Thursdays. So on and so forth. If you do your own maintenance include times on certain days that you will do repairs at your units. Everything you have to do should have a block of time assigned to it every week. This includes ‘growth activities’.

The key is to only schedule appointments during the specific time period and stick to the category your suppose to be working on per the schedule. The blocks of time should be viewed as mandatory. If the time block arrives and you have no activities associated with it (i.e. repairs or showings) you can then decide what to do with the time block. I suggest using it for items that will make an impact on the future growth of your portfolio and not using it for the ‘urgent’ or routine.

3. Finding And Evaluating Deals Isn’t On Your Schedule.
You should be blocking 1-3 hours per week to find and analyze deals. This may seem silly because the best deals are off market and found at networking events. But if you make it a habit to look for and analyze deals during the week, you’ll be current on the market, evaluations will seem routine and it will be easier for you to do it quickly when a deal is in front of your face.

4. No One Knows You’re Looking To Buy.
One of the biggest ways to self sabotage expansion is to not tell people that you were looking to buy. Telling other investors that you’re looking to make a purchase is the most effective way to find out what’s available. When an investor asks you ‘what you’re up to’ or ‘how it’s going’ your first instinct should be to tell them what you’re looking for. If no one knows you’re looking, how are they going to know to tell you when they find something? Don’t assume everyone knows your looking to buy just because they know you invest.

5. You Aren’t Networking Enough.
In the digital age networking is more than just going to in person events. In-person events are where you will get the best connections but they aren’t the only piece of the puzzle. By being part of digital networking groups on Facebook, Bigger Pockets or others opens yourself up to the possibility of getting deals or working with people who do not live in your state. Chances are you won’t meet them at a local meeting. If you aren’t where they are, they won’t be able to find you, and you won’t be able to do business with them.

Stop sabotaging your own expansion. Implement these tips, stick to them and you will see how expanding your portfolio is quicker than you think it is.

Corina Eufinger

Owner of Brio Properties

CategoriesLong Term Rentals

It’s Okay To Let A Good Tenant Go

By brioproperties,

A very good long-standing tenant of mine recently gave notice to move.  Of courses I’m not thrilled at the prospect of having to find another renter but I’m accepting it and a little excited about it.  Why on earth am I excited about having a long-time good tenant leave? Market rent.

For starters, this tenant has been in the property for 8-9 years. A good tenant. Quiet. Very few work orders.  Does random acts of kindness for me as the owner. Great guy. I’ve been in this guy’s shoes before. I remember when I was renting I got a version of the seven-year itch.  I started to dislike going home. I started spending more and more time away from home (much to the displeasure of my disabled husband). I was actually depressed by my environment I’d been there so long.  When I got my tenant’s notice, a little of my personal experience played into my reaction. But even more was the realization that I could now more easily get the unit up to market rent.

The market I invest in is changing.  Big time. In a good way. Rents are going up almost exponentially.  For those of use operating middle class rentals, it’s great news. But it’s “appreciated” so much that it’s difficult to keep up when the units are occupied. Very few people will stick around when you get a $25 or more rent increase.  They will instinctively move-on.

Part of the logic is “well if I’m going to be paying more…I may as well move somewhere else because I want to be closer to Target…[or on the other side of town, etc]”.  Basically they will rationalize their reason for moving with anything that could possibly be out of your control. They just don’t like spending more money on the same thing. It’s like when you get a notice from your cable company that your bill is going up.  Your getting the same services, but your bill is going up.

I know I will have to put money into the unit.  I will have to get carpet and vinyl but in my mind it’s for the better of the portfolio.  I’d rather spend $1200 getting the unit ready, bring the unit rent up by $100 and be at market rate sooner.  Even if the tenant only lasts one year I will have the unit revamped and have paid off the turnover. If the market goes up again, I can tack another $10 on if the tenant stays.

Plus, I won’t lie.  I’m a little excited by the creativity and possibilities that come with a unit rehab.

CategoriesLong Term Rentals

Forgotten Property Purchase Lessons

By brioproperties,

I recently had the opportunity to network with about a hundred real estate investors from the Midwest.  The most entertaining part of the gathering was the “purchase war stories” we shared in the lounge. Not only were investor’s having fun making jokes about their failures but we were learning from their mistakes no matter how mundane or…odd their mistakes were.  Here’s a few of the reminders we got over drinks that night.

Lesson 1 (and 1 ½) Decide (or reaffirm) what type of property you want to invest in before moving into a new market (and take off your love goggles).

Joe had spent the first 10 years of his career as an investor in Joliet, IL.  He had focused on single family homes in the city, mostly by accident. He was ready to expand into another market so he started looked at Schaumburg.  He quickly fell in love with Schaumburg but was having trouble finding SFR deals that made sense. So he changed his approach to invest in what was available.  His eyes caught a mixed use building within his price range. A fixer-upper with 3 residential upstairs and two commercial downstairs. The commercial units were a mess and vacant.  The residential had one vacant and 2 occupied units in…decent condition. Despite not having any knowledge or passion for commercial Joe proceeded with the deal. He rationalized it as a way to get his footing in Schaumburg. His excitement for the market got in the way of him making a sound investment decision for himself.

Lesson 2: Visit your new rental markets…more than once and at different times during the day.  

Mallory and her husband moved practically cross country for his job with a news corporation.  They decided to sell their rental properties in North Carolina where they had been living and buy new ones in Minnesota, their new home.  They were invited out to a co-worker’s house for a Saturday afternoon barbeque in a suburb of Minneapolis. During the 4 hours they spent their midday, Mallory and her husband really liked that area of town and decided to start buying rentals there.   It had local amenities including restaurants, grocery and chain stores. A few weeks later they found a deal on a triplex with 2 vacants and went to view it Saturday afternoon. Mallory and her husband quickly moved forward and closed the deal. Due to the old house set-up there wasn’t a driveway which they didn’t think would be a problem.  Until a couple months after their first tenant moved in the tenant began complaining about not being able to find parking when they got home from work. The triplex was situated in a 3 block radius that was very popular with the after-work drinks crowd who frequented the pubs and bars. Their tenant was having to park 4 blocks away most nights.  

Lesson 3: Know thy neighbor’s….even businesses.

Steve and Karen regaled us with their property “horror” story purchase in Des Moines area.  Steve and Karen made their first purchase 17 years ago with a quad located in the suburbs of Des Moines.  It was a beautiful ornate turn of the century home previously converted into 4 apartments. When viewing the property they noticed the bank a block over, and the fast food two blocks over.  There was a commercial property with a medium sized parking lot located next door. The business was quiet didn’t seem to attract noise and usually had no more than 5 cars in the parking lot when they drove by.  A few weeks after viewing the property they made an offer and closed. What was the issue? Their commercial neighbor was a business named “Closet Trinkets”. Steven and Karen never went into the business prior to purchase. They thought they were covered because they drove past at different times as suggested by their mentor at the time. Steve & Karen learned the truth about Closet Trinkets when Karen dropped in hoping to buy a birthday gift for her mother.  It wasn’t a place she was going to find a gift for her mother, but it was definitely items you keep in a closet…or nightstand. It was an “adult goods store”.

CategoriesLong Term Rentals

Three Common Listing Mistakes By Owners

By brioproperties,

Too specific screening criteria in the ad

Many investors thinks it saves time when they extensively list their screening criteria in the ad.  Some ads will include specifics about credit score, income requirements, job stability, background check, eviction or foreclosure history, etc.  Here’s an ad I just pulled off an ad on Craigslist out west:

“ You must meet the following: credit score above 650, income must be 3xs the monthly rent, must be in current position at company at least 2 years, no felons or misdemeanors, no evictions, no foreclosures within last 5 years…”

The problem with this ad is it actually discourages people from being interested.  The rental investor looks demanding and difficult to please, not qualities a tenant wants in a landlord. The rental investor is better off trimming the ad for the necessities of qualification and leaving the rest for when the tenant has seen the property.  If the tenant views the property and falls in love with it, they might not be as turned off by the requirements (and by how the investor comes across in person versus on paper).

What are the necessities to have in your ad?  You still want to include things like no pets, no cats, etc.  If you feel you want to include some screening criteria steer clear of income requirements or credit score.  List 2 qualifications from criminal background, foreclosures, or evictions. Whatever you view is highest in priorities.  

Out of Date Pictures

The only thing worse than no pictures is out of date pictures. If your pictures show incorrect flooring, countertops or vanities you’re misleading the prospect about the unit. When the prospect arrives and the flooring  or other items are different your showing may have already ended before it started. Your pictures should be redone every 3-4 years depending on the work you do in between vacancies. If you change out any of the above new pictures are best.  

No electronic forms of contact

In today’s society it is increasingly important to have electronic means of communicating with your prospects. No one sits down at a table after eating dinner scouring listings to make a call list for the next day anymore.  If they can’t send you a message the moment they view the ad, they move on and forget about you. You can go the “low-tech” way and allow responses via email. Or you can go more high tech and list the vacancy on websites like Zillow or Trulia that have features where prospects can ask for more info or request a viewing.  


CategoriesLong Term Rentals

Don’t Leave Your Unit Condition to Chance

By brioproperties,

Documentation is always your best friend in rentals and definitely with security deposits. For security deposit documentation is often key to prevent losing a ton of money from a security deposit return contested in court.

The one we always think of first is the move-in and move-out condition report.  The sheet which represents a written list of the condition of the unit when the tenant took possession and surrendered it. This the form where the tenant should write down the nicks in the countertop or the scratches around tub drain.  Be specific with extent of the existing damages: how many cigarette burns are in the carpet in the living room, how many bleach spots on the countertop, etc. Whatever form you do use, be sure it is has ample writing space. If you accidentally write beyond the section dedicated to move-in condition, your problems could snowball at move-out and you might find yourself with a perfectly legal form that has been invalidated by writing outside the boxes too much.  

Incorporated into your lease as a signed addendum should be a list of possible move-out charges.  Consider it the warning shot across the bow of a ship. It should lay out what the charge would be if: the cabinets are not cleaned properly, the walls are scuffed, smoked in, and need to be painted, the toilet is dirty with urine spots, etc.  Having the maximum charge amounts noted in the lease will make sure the tenant knows the monetary consequences of a poorly kept unit and it may limit move-out inspection surprises. Doing this reinforces in the beginning how serious you are about move-out condition.

It also helps to give them some direction as to your expectations in the lease as well.  Unfortunately “give it back as you got it” may not cover you in court. Phrases like “no hairs in the refrigerator” or “no sticky residue” help create expectations for condition. Also, make sure your maximum charges are reasonable.  You don’t want your security deposit or lease being invalidated because you had a possible fridge cleaning fee of $150.

Also consider  incorporating a clause which lays out what is proper surrender of the unit and where the responsibility lies for scheduling a move-out appointment.  We now require our tenants to use a standardized move-out form which includes the options to be present for move-out appointment within 2 days of the move out OR to waive their move-out appointment. We also lay out what constitutes as surrender: “When surrendering your unit return your keys to the office either in person or in the dropbox. Surrender only happens when this done.  Failure to do so can result in daily charges of rent if keys are left in the apartment.”

An integral part of a thorough security deposit procedure should include move-in condition pictures.  When you have finished getting the unit ready for the new occupant, take pictures of the rooms in general (for flooring and wall condition shots) then snap zoomed shots of things like the inside of the refrigerator, oven, tub, etc. Make sure your lighting is good so it correctly reflects wall colors (especially important if you use lighter shades or white or ivory).  If there are damages that are existing make sure to document that in the pictures as well. For example, if the countertop has 2 sections with nicks get up-close pictures of both sections. Pictures should be taken again up on move-out regardless of the whether your tenant is present for move-out.

Happy Move-Out….err….hope this helps.

CategoriesLong Term Rentals

Normal Wear and Tear & the Security Deposit Dilemma

By brioproperties,

As a landlord and property manager I look at security deposits with two different hats from time to time.  I will admit the views can be stark different at times. As a landlord I tend towards the view of maximizing cash and going heavier on security deposit deductions (I’ve had my own management company employees lovingly call me Scrooge McDuck).  As a property manager I lean towards making sure a reputation is not developed for being a company that doesn’t return security deposits or handle them unfairly. I recently went through security deposit boot camp per say. After talking with a colleague and meeting with a real estate attorney I began to see the reality of security deposit confusion regarding normal wear and tear and how in reality it may come down to having a precise procedure in place.

I was one who used to charge for any crumbs in the cabinets even if it was just a few.   Or charge for cleaning the mirror when it wasn’t spotless or dust on the closet shelves.  My attorney called me on it when a tenant decided to contest her security deposit.  I asked my attorney to step in hoping to avoid the hassle of a court case. I was surprised when my attorney informed me that my charges were a bit steep for the condition the unit was left in.  He urged me to settle with the tenant outside of court because he believed a judge would award the tenant more than what the tenant had wanted back.

If you remember back to your school days, your English teacher told you the worst way to give a definition for a word is to define it by using phrases that describe what it is not. I.e. bad definition of liquid would be “It is not a solid matter.”  The Wisconsin State Legislature did not listen to their English teacher: 704.28(3) Normal wear and tear. This section does not authorize a landlord to withhold any amount from a security deposit for normal wear and tear, or for other damages or losses for which the tenant cannot reasonably be held responsible under applicable law. Thank you for….nothing.

Judges in various states have issued opinions declaring that anything a landlord does as a routine procedure for a “make ready” cannot be charged to the tenant if the time or cost was not significantly increased.  This may still seem a little vague but it begins to make sense if you think it out a little. Consider this: If you normally wipe out the kitchen cabinets before a tenant moves in it may not may make sense to a judge if you charge a tenant for a few lone crumbs in a couple of the cabinets.  If the cabinets were sticky, goopey, or every cabinet had multiple crumbs and debris in them then it would be reasonable to charge them. If you normally paint every unit top to bottom after move-out, you may not be entitled to withhold money for scuffs or hand prints on the walls. If the tenant’s child left their interpretation of Picasso as finger painting on the bedroom wall, you can charge.  The key to remember is: if it adds significant time to your routine procedures then you may have grounds for charging.

Yet the key to having a smooth move-out and security deposit return goes beyond knowing normal wear and tear versus damage.  A smooth move-out begins days before the tenant moves in. In the next blog, we will look at security deposit procedures that will save you hassle and grief.   

CategoriesLong Term Rentals

Generation Z Brings A Wave of Changes

By brioproperties,

In the last blog we covered some of the differences we can expect to see with Millenials and Gen Z.  In this blog we specifically at how the rental industry will be affected. You are probably wondering how quickly these changes will take place.  Within the next 5-10 years the majority of how we have conducted our business for 70 years will no longer be applicable.

#1 New generations are increasingly entrepreneurs. Interiors become more important.

The newer generations will have nearly 50% of their working force as describing themselves as self-employed entrepreneurs (even part-time).  Many of them will be internet based entrepreneurs that don’t have a brick and mortar office. This means that your tenants are no longer spending 50-65 hours a week working somewhere else.  Interiors will thus become a priority for these new generations. Afterall, they will now spend around half of the 50 hours dedicated to a career from home.

#2 Being self-employed means newer generations will have increasing means to afford the rentals they want.

This is not to say you can arbitrarily raise rents because they can afford it.  In practice it’s the exact opposite of that. This means competition will get tighter to fill your units because unlike having to go a boss and ask for a raise (and get approved) to afford something, the entrepreneur can simply sell a couple more online courses a month or take on a few more clients and meet the difference. Suddenly that other duplex on the cross side of town which is $50 more per month and has updated kitchen and bath is in the price range for more tenants. They will look it at and say “How can I afford it?” and they have many solutions to making it happen.     

#3 If they can accomplish something without talking to someone that is the route they will go.

These generations want to be able to pay their bills without having to go an office, or drop something in the mail. Online payment is a necessity.  Whether it be Paypal, Google Pay, etc. They want to be able to view their ledgers and contact you through the internet. Having a bookkeeping service that provides for online access for tenant is a must.

#4 Location matters…but not for work.

New generations want to be close to their stores and restaurants.  This why we are seeing a trend of condo and apartment developments within man-made minitowns.  (Google “The Corners of Brookfield” or Drexel Town Square” to get an understanding.) This doesn’t mean that you need to sell your duplexes and quads so you can build a development.  If you understand that the newer generations want close amenities, your online listing can read “Walking distance to 3 restaurants, pharmacy, and Aldi’s.”

#5 All of this means their priorities are shifting.   

When apartment searching previous generations usually followed a priority list like this:

  1. Price
  2. Location (ease of commute; proximity to job)
  3. Amenities

With the new generations it’s shifting where price is number 3 on this list and amenities and location to restaurants and retail is taking priority.

How On Can You Be Ready?

Starting making the small changes now.  Don’t wait until the market requires to make the changes and you are losing ground.  Get ahead of the curve and start updating your interiors. You can start with new light fixtures at the next turnover. Start researching the most economical way to introduce online portals and showing scheduling to your services.  (If you are stumped on this Google “property management apps” or “property management software” and start comparing features.) Lastly, prepare your mindset. Understand that you will likely see more and more applications that are “self-employed” and likely have description lines of “Youtuber” or “social media influencer” or “freelance entrepreneur”.  Remind yourself that your industry is changing and what you did previously won’t mean survival down the road. Be open to the changes and seek advice when you feel lost.

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