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

CategoriesLong Term Rentals

How Gen Z & Millenials Are Changing The Rental Industry

By brioproperties,

Millenials & Generation Z are bringing a wave of change to our lives.  From how they earn their money, to the places they work, to where they lay their heads at night.  As landlords we have to be ready for the massive shift our industry will be seeing in the next 7 years. 

They Want To Be Mobile

They want to be want to be mobile.  They don’t want to be tied to a mortgage, or even a year long lease in most cases.  It is the still accepted in the millennial community that the initial term of a standard lease is 1 year.  However the days of being able to leverage a year long renewal are fading. After the initial term (if they haven’t decided to move yet) M’s want the option to move freely with limited notice.  It’s not necessarily because they are indecisive or fly by the seat of the pants. They want to enjoy the opportunities and freedoms other generations only dreamed of or thought were absurd.

They Are Increasingly Self-Employed.

M’s & Z’s will have the highest percentage of self-employed under the age of 40 that has even been seen. Instagram, Youtube, Snapchat and the likes have created a billion dollar industry of potential income for those willing to push and make the effort (these people are called creators). In high population markets its not unrealistic to receive an application where the employment is listed as “Youtuber” .   It’s also common for creators to have their creation content as a income source in conjunction with a low stress flexible job like store clerk or wait staff. It doesn’t mean they aren’t stable or responsible or trustworthy. In fact what better way to handle your finances they find an income source you control and supplement it with a w-2 job just in case. They seems highly responsible if you think about it in those terms.   

Less Stuff.

These generations value experiences over items. They scrimp and save for experiences rather than making retail purchases  They’d rather drop money on food or live entertainment than a 6th pair of Nikes. They also do not create large emotional attachment to items that we saw in the Baby Boomers and Generation X.  Items are items. Their memories come from senses and their mind not the items. Packing their apartments doesn’t take an army. Usually just 30 boxes, a small uhaul, 2 friends, and 3 pizzas.

Internet is King. Convenience is Queen.

If it can be done on the internet, they will do it.  If they can’t, they very likely won’t. This isn’t to say they are going to become hermits.  If they can’t pay their bill online, you don’t exist. If they can’t schedule a viewing online, they will find a landlord who offers that.  If you’re listing says to call, they won’t. Why are they like this? Convenience. They don’t want to waste time playing phone tag, mailing a payment, or driving somewhere to get something.  They know time is a finite resource and don’t want waste it on certain things.

In the next blog we’ll take a look at specifically what changes the industry can expect as a result of the new generations. Changes are coming. Are you prepared?

CategoriesLong Term Rentals

The Quandary of Lease Lengths

By brioproperties,

Recently a client of mine asked for clarification of what our company policy was regarding lease renewals.  They were curious if we permitted (or even required) tenants to default to month to month after the original term was up.  Since we had no clear cut policy across the board yet for renewals I posed this question to my war council (a.k.a. my staff) and I was surprised at the differing opinions that existed on the subject.  Not only individual staff members but by property type. It’s a very passionate topic!

As a landlord I’ve normally preferred my tenants to default to month to month unless I’m really in love with them…in every fashion.  If you pay rent on time every month (and it doesn’t bounce!), I never hear a peep from you (or about you), and I believe you take good care of the place then I might offer you a full term.  As you can imagine based on my rather lofty criteria there, I don’t extend many year renewals. I generally prefer to hold the sword in my hand…and a 30 Day Non Renewal in the other.

The Disadvantages Of Freedom

This does have its disadvantages though.  For one, it leaves you slightly vulnerable at the same time  Though happy people (and tenants) are slow to move that doesn’t mean they won’t….especially if they have the freedom.  I’ve had some happy tenants stay month to month for up to three years and others that got the sweet smell of freedom and found a rosier garden within a few months.  If you are one to create budgets for your rentals, it makes it difficult to be confident in your income projection when you have ¼ or more of your residents on a month to month renewal.  When the confidence in your budget begins to slip it just snow balls from there. The budget becomes a guideline…then it becomes advice…then it becomes…scratch paper.

What Does Your Portfolio Have To Do With It?

You can probably think of the advantages of month to month on your own.  Some of them being legitimate..others rather Scrooge McDuck based. Should your approach be based on your portfolio?  If you have a smaller portfolio of 4 units, should you forgo the freedom of month to month in favor of some sort of term leases, even if they are 3 or 6 month? Possibly, what kind of position would be in if suddenly 2  of your month to month left in the same month?

Yet I think this varies more based on the types of properties that make up your portfolio.  Paying the mortgages on 4 single family homes with 2 month to month is much more daunting than paying the mortgage on 1 quad or two duplexes with the same month to month tenancy.  If your portfolio is of modest size perhaps it is best to consider the types of property that make up your portfolio when deciding your renewal policy. If your portfolio is larger, you have a little more freedom…maybe.  This is assuming your portfolio isn’t 50 single family homes….which is another blog in itself.

Bonus tip: If you own a commercial property (generally 5 or more units) and want to refinance, keep as many residents on term leases as you can.  Banks love the certainty of guaranteed income…on paper. As landlords we know better than to call that guaranteed income…

CategoriesLong Term Rentals

A Premier On Leases

By brioproperties,

Rental Investment Owners are constantly asking questions about lease documents.  Next to support animals it is the most frequently questioned aspect of being a landlord.  Below is a list of questions that have been splattered across rental investment boards from landlords everywhere.

How much should I include in my lease beyond the normal terms?

There is no perfect length for a lease.  Some landlords believe that too long of leases leads to tenants who don’t actively read them and are therefore ill-informed of the rules.  Others use the strategy of putting everything in writing you plan on enforcing and creating long leases in the process. They prefer being able to stand up in court and say with certainty their lease covers the supposed violation in direct language. You need to pick the length that works for you.

I see some leases that are one document and others that are multiple addendum. Which is better?

This again comes down to a matter of preference.  Some landlords and property managers find leases that are just one document too cumbersome and difficult to follow.  Therefore they create these common addendum to cover additional items: rules and regulations, pet policy, repair and maintenance charges, parking rules, washer/dryer agreement, etc.  The down side to this strategy is that you use more paper and it also requires a lot more signatures and dates.

Note: In Wisconsin you need to include a Non-Standard Provisions as required by state law.

Can I get by purchasing bulk lease products from online vendors?

Can you get by? Yes. Is it smart? No. It’s not smart because your state may have additional clauses that are required in every lease. If you buy a premade lease packet it’s likely not tailored for any particular state regulations.  Some vendors are tailored for specific states, others advertise attorney approved leases for every state, and others are simply generic. Buy with caution and read the leases before you purchase. Make sure there aren’t clauses that aren’t illegal in your state.

Do I need to have my tenants sign every sheet? Do I need to sign everything?

Simple answer: Yes.   Long answer: Anything paper that has rules on it  that you plan on putting in front of a judge should be signed by everyone. Those renting and the landlord or property manager (broker).    

Do I need to have children on the lease?

It is your preference whether you list children on leases.  However don’t be surprised if a resident comes and requests a copy of a lease with their children’s’ names because it is sometimes required for school registration  Remember you can’t enter into a legally binding contract with a minor so be cautious with where you place their names. Most attorneys don’t recommend listing them under “tenants” and suggest using terminology like “additional occupants.

CategoriesLong Term Rentals

30 Minute Insurance Audit

By brioproperties,

When was last time you evaluated your insurance policy?  I mean seriously evaluate it. Not just question your premium if it happens to go up.  Do you file your annual policy statements without a glance? I mean you didn’t ask for any changes so why look right? Wrong. Do you know for sure what coverage you have? Do you have the riders you need? When was the last time you evaluated your deductible?  Most of us probably have scary answers to those questions. Below is a 30 minute guide to do an insurance check up. (I tested this on my policies then also asked some of my owners to participate to be sure my claim of 30 minutes was correct.) First, grab a notebook and label it Insurance Action Items at the top then grab your policy statements.

What type of policy is it?

If you are renting out SFR, first be sure your policy is a dwelling policy (also called tenant dwelling policy).  A homeowner’s policy will be invalidated if there is ever a claim and the insurance company finds out you were using it as a rental property.

Evaluate your deductible.

Do you even remember what deductible you picked when you signed up for the insurance?  When you see the deductible is your reaction relief or terror? If it’s terror or nervousness write “talk to agent about deductible” on your action list.  Remember a high deductible means decreased payments but it’s not worth if the number makes you nauseous. Regardless of how you feel, do you have your deductible money in liquid form at this moment? If you don’t that might be a sign you need a different deductible as well.  

Check your policy declaration page.

Check if you have the policy riders that best suit your needs. Do you have riders that seem obsolete? Sometimes insurance companies send you updates on your policy and give you a certain number of days to waive the new riders they are adding.  If you failed to waive it, it was added to your policy. Below is a basic list of riders:

Terrorism (an owner’s choice)

Errors & Omissions (this may be useful for if you do your own leasing and bookkeeping)

Vandalism

Water/Flood

Burglary

If you have any riders that seem odd or are missing ones one listed above add “talk about riders” to your action list with the specific riders that concern you.

What is your liability limit?

I’m not talking about the maximum you can be held responsible for if you are sued.  What is the maximum your policy will cover on a claim if someone sues you for personal injury from your negligence (I.e. slip/fall).  If it seems low, write it on your Insurance Action List. Your agent will have their pulse on lawsuits and where settlements and payouts typically fall nowadays.

Is it an umbrella policy?

If you have multiple properties you should consider having an umbrella policy that would help insulate your personal assets from liability claims that exceed your policy.

 

Check your property damage declaration.

This is probably the most important step to take given some recent events in Wisconsin.  When Beaver Dam’s apartment complex went up in flames from illegal tenant activity the insurance company wasn’t very willing to pay out…and last I knew refused to pay out.  Does your insurance policy kick in if a tenant damages your property while conducting illegal activity out of it? What if there is property damage and a housing code violation is discovered during inspection by law enforcement or adjustor? Are you still covered?  Answers to these questions will involve a phone call or email to your agent. But it’s important phone call to make to be sure you aren’t caught in the dark when something happens and were expecting coverage.

There. In 30 minutes you have familiarized yourself with your insurance policy.  It is possible you have more questions than you did before, but that is a good thing.  Now take those questions to your agent. Bring specific questions to make sure you get the answers you desire and to keep the conversation on track.

CategoriesLong Term Rentals

3 Low Budget Spruce Ups for A Tired Apartment

By brioproperties,

 

 

 

Does your rental need some sprucing up but time and cash are low?  No worries, there are plenty of ways to breath new life into a rental without sucking the life out of your wallet.

Cabinet knobs and drawer handles

I feel like knobs and handles are overlooked and underrated improvements.  If your cabinets are in sturdy shape, hardware is a great way to add a new spin on them. Adding hardware even has a practical purpose: it helps extend the life of varnish or paint on the cabinets because it reduces the skin oil absorbed and fingernail destruction.   A package of 10-12 usually runs between $15-$20, this of course depends on the style you get. If you already have hardware (says dark 1970s hardware), swap them out for a more modern silver finish.

Outlet covers and light switch covers

Nothing makes a empty room pop like an electrical cover that is different from the wall color (but doesn’t clash with the outlet or switch color!).  You don’t have to do every room either. You can chose to only do the living room and kitchen (where people spend the majority of their waking time).  These covers run anywhere from .25 cents to $1.10 depending on the finish and type you need. A silver or black outlet cover is great way to add contrast to a white outlet and white-ish wall.

Showerhead

One of the best ways to make an old and tired bathroom sparkle is changing out the shower head and sink faucet. Oddly enough renters love shower heads that do more than just spray water. You don’t need to get one with a hand held adapter if the idea of a water fight in the bathroom scares you.  Many fixed ones come with 1, 2 or 3 alternative spray settings.

These are some low budget ways to spruce up the look of your rental. In a future I blog I will give you a review of the more expensive way to update an apartment using refinishing kits for counters, tubs, and cabinets. Yes, I’ve done all of them (not all in the same unit).

CategoriesLong Term Rentals

Tenant Proofing Your Units: Is There Such A Thing?

By brioproperties,

Most landlords would agree that the most aggravating aspect of being a real estate investor is tenant damage.  It is also one of the reasons most of us fear turnovers (preparing the unit for the next tenant).  Especially we have a gut feeling about the the unit condition.

I was listening to a real estate podcast a few months ago and the investor being interviewed mentioned he was attempting to develop a formula for “tenant-proofing” his rentals.  The idea is of intriguing.  He was quick to clarify that “tenant-proofing” did not mean making the unit (or an aspect of it) invulnerable to tenant damage. It was more about making a unit tenant-resistant as a more achievable goal.  My brain started going a flutter with the possibilities.  

After a few months of research and now implementation into my last vacancy I believe there are ways we can make our units tenant-resistant.  Part of it is due to better technology for flooring, blinds, etc.  Others are going back to the way things were “back in the good ole” days.  Yet some are simply thinking outside of the box for rentals.

Hollow Core Doors v. Other Doors

As landlords we do look at the price tags of items we buy for our rentals. It’s how we keep within a budget that makes our units cash flow.  Doors are not inexpensive especially when we may have to include staining or painting them in addition to simply buying it.  There are typically 3 kinds of interior doors to choose: hollow (least expensive), foam core (moderate price tag), and solid core door (most expensive).  The difference between a hollow door and the foam core door is like the difference between an spoiled apple and and ripe apple. The spoiled apple (hollow core door) easily gets dinged and punctured where as the ripe apple (the foam core door) can withstand a more pressure.  A solid core door would be the most durable option but I’ve been told the difference between foam core and solid core is not enough to justify the price tag.  There is usually a $15-$20 price difference between hollow to foam, then a $30-$50 jump from foam to solid.

Backsplash The Kitchen

One of my favorite things to do is to add a backsplash that runs the entire height of the wall space between kitchen counter and the bottom of the upper cabinets.  Its add dimension to the kitchen and also prevents wear and tear on a very tricky area to paint.  (It is the most annoying part to paint in my opinion.)  A backsplash can be individual tile and grout, a premade sheet of smaller tiles, or decorative tin or metal pieces.   The great part is that with the exception of tile and grout, the other options can easily be DIY.  

Get Rid Of Carpet

If you are still putting carpet in your rentals it is also one of the biggest ways you are inviting tenant damage and wear and tear.   Laminate flooring technology has increased greatly in the past 5 years so if you haven’t evaluated it lately at trip to your home improvement store is in order.  Now this isn’t to say laminate is foolproof.  You will want to be sure installation is done properly to avoid gaps.  It needs to be snug and tight.  If you rip up your carpet and find old hardwood flooring.  It may be salvageable.  You can rent an industrial floor sander for fairly inexpensive and cut your time and backbreaking work in half.  Best part is if you are a fan of golden tones you may not have to stain the floor. Poly brings out a warm golden hue in most wood floors.  Be sure lay down at least 3 coats poly.  After All, this is a tenant who will be living there and not you.  

Hinge Doorstops

For starters, if you aren’t making sure every door has door stop then that is an easy way to make your rental slightly more tenant resistant.  Yet baseboard door stops can easily get damaged.  Pets love to play with the baseboard door stops. Funny Fidos make it their mission in life to remove the nub (because its an awesome toy!).  Once the nub is gone your door stop is just a metal rod.   I like using hinge door stops lately.  I find that in combination with my foam core doors I barely have any door or wall damage from the opening of the door.  The nubs are also way to high for Fido turn into a toy.  

Heavy Duty Chair Rail Paint

As avid blog readers would know, all of my rentals that I own are old homes…I mean OLD.  So many of my units have items like chair rails, half wall paneling, and other wood details and accents not found in more modern rentals.  Needless to say these chair rails and paneling can take a beating.  I  took a suggestion from my handywoman and painted the chair rail and wall paneling with the epoxy shield-coating meant for basement floors.  Three months in it’s held up well where as with normal paint I would have had at least a half a dozen chips by now.  I won’t pretend it was easy to apply but the extra durability is proven to be worth it.

 

 

CategoriesLong Term Rentals Real Estate Investing

Real Estate Books To Grow Your Portfolio

By brioproperties,
As originally seen on waaonline.org

One of the first Facebook live events I did was a compilation of the best books I’ve read for real estate investors and entrepreneurs. At LED earlier in the month I was asked to do a series of blog posts on the books I’ve read and talked about either on FB Lives or in blogs.  I decided to break the series down over a couple of months because I don’t want it to detract from writing other timely blogs or more pertinent topics.  What better way to dive into this topic of educational reading than to start with books written on specifically on  real estate? These books are in no particular order and is by no means an exhaustive list of the awesome books I have read.

Millionaire Real Estate Investor by Gary Keller

You have probably heard me refer to Gary Keller a couple of times if you have been following my online content. He’s written a number of books for investors and entrepreneurs.  Two of his books have been game changers for my life.  His Millionaire Real Estate Investor book is one of those.

Millionaire Real Estate Investors is NOT a book written by a man spewing his philosophy on what has worked for him.  It’s a brain trust book.  Keller got highly successful real estate investors together (net worth of $1,000,000 or more) and broke them down into two groups.  What ensued was a forum of ideas, war stories, success stories and nuggets of knowledge which were transcribed into a real estate book that could easily be deemed a “bible” for real estate investors.  Its topics are expansive, including:  acquisition models, property criteria, vendor issues, investing myths, mentality and more.  As a warning though, Millionaire Real Estate Investor is not a light read.  You don’t curl up with a cup of tea and read it to relax.  You actively read it, more so than most any other real estate book out there  It’s best read in a style similar to your school days where you are focused, writing notes, and maybe even re-reading paragraphs to be sure you took it all in.  It’s a must read for anyone that wants go further than in their real estate career.

ABC’s of Real Estate Investing by Ken McElroy  

Straight out of the Rich Dad Authors series comes McElroy’s book on real estate investing.  The series offers a wide variety of books on most any topic involved in real estate. I would recommend you google the series and add a few to your reading list.

ABC’s of Real Estate Investing would more easily be classified as light reading compared Keller’s book.  McElroy’s writing style is a less dense style. McElory gives a detailed overview in simpler language of how to evaluate investment properties (one of the best overviews I’ve seen).  McElroy does focus on multi family properties so if you plan on investing in single family homes as rentals,  you may not get as much out of the book. While other business books may have more thorough discussions on negotiation tactics,  McElroy gives an overview of how real estate investors should handle price negotiations based on their evaluations.  It’s topics aren’t advanced but that doesn’t mean it isn’t worth the read if you are experienced.  (In that case you can consider this booker a primer for his “Advanced Guide to Real Estate Investing”. Which I didn’t put on this list because I didn’t want this to become The Rich Dad Authors blog.)

Landlording on Auto Pilot by Mike Butler

Out of all of the books on the list, this is probably the easiest read.  Butler writes about how he created a system to his managing his rentals while keeping his more than full time job as a police detective.  The reason I like this book is because it’s a reminder of how integral to success it is to have a good system in place.  As Robert Kiyosaki likes to say, very few people truly go to McDonalds for the food.  They go to McDonalds for the system that produces inexpensive, consistent, and predictable prices for food on the go.

Butler’s book details his own experience and what worked for him.  I encourage you to read this book as a jumping off point for creating your own automation to your landlording because his book goes into detail about aspects of our industry that are regulated by state and municipalities (i.e. eviction, law compliance, screening).  His book is full of hundreds of ways to create a well-oiled machine for managing your small or moderate rental portfolio if you prefer to be a hands on landlord.  The book was originally published in 2006 and unfortunately Butler hasn’t updated it for the Kindle version released this year.  This means that some of the information is a little out of date (i.e. pager system, marketing that doesn’t feature social media or a high concentration on web based sources). I wouldn’t say its information is ground-breaking but its a good read to motivate you to systemize your landlording as much as you can.  

The Book On Investing In Real Estate With Low Or No Money Down

by Brandon Turner

This book certainly gets the award for longest title in the list.  Turner is a seasoned real estate rehaber and buy and hold owner at the young age of low 30s.  His motivation and enthusiasm make him an addicting person to follow in real estate investing.  

His book is written based on the strategies he used to get involved in real estate with very little money in his bank account as a young adult.  Turner outlines all the strategies he has used to acquire properties without having to save up for a 20% down payment.  His strategies include: Buy Rehab Rent Refinance (his go to and today tried and true platform), live-in flip for buy and hold, master lease, owner financing, and partnership (one person brings the money the other brings the sweat equity per say).  Turner’s books are always easy to read and usually an enjoyable narrative.  If you like narratives tied into your real estate books, Turner’s books will be ones you enjoy.  His enthusiasm and dedication even jump off the book pages at you.  

You can pick up all these books on Amazon in Kindle or paper format.  

Corina Eufinger

Owner Brio Properties

Wisconsin Apartment Association Director of Records

CategoriesLong Term Rentals Real Estate Investing

Do Airbnb and Rentals Mix?

By brioproperties,

Written By: Corina Eufinger

Last week I attended a networking event for real estate investors in Northern Illinois and in the breakout session an investor was musing about her 1 bedroom being vacant over the holiday season unless she gets someone in there in the next month. Someone, intending well no doubt, said “I saw a video on Youtube where an investor rented out their vacant apartment on Airbnb for the holiday season and made a thousand dollars in one week.”  Danger Will Robinson, Danger.  I saw the stressed investor’s face light up at the suggestion of it so I immediately chimed in hoping to bring her back to reality and out of her Scrooge McDuck coin pool fantasy she was already imagining. I know it’s tempting when you are looking at having a vacancy through the holiday season to offer it up as a hotel like stay.  But there are many things to consider. It’s not as easy as you might first think.  It has its fair share of headaches and complications.

  1. Airbnb is still in a grey area and some places it’s illegal.

It’s been well documented that Airbnb’s in some locations are a legal grey area.  You aren’t a registered hospitality venue and (a point I will reiterate next) you are not a landlord.  In those geographic locations you are riding the rails between legal and illegal which makes knowing what is legally expected of you and what your rights are difficult.  Some municipalities have passed ordinances banning Airbnb’s all together. So it is important to find out your municipality’s ordinances. Hosts that obfuscated the law (whether they knew it existed or not) have been dragged to court and ended up paying triple or quadruple in fines than what they earned in one week of Airbnb.

 

  • As an Airbnb you are not a landlord!

 

One thing is for sure in Wisconsin is that for the particular unit you use as Airbnb, you are no longer a landlord.  Which means all the laws, regulations and codes you know (or hopefully know) like the back of your hand don’t apply.  In reality, you don’t know jack because your breadth of knowledge isn’t applicable.

 

  • Your existing tenants may hate you

 

[If you are considering renting your single family rental as an Airbnb replace tenants with “neighbors”.] Consider your existing tenant’s feelings when thinking about doing an Airbnb. How will your fixed tenants be affected (I mean really affected) by Airbnb guests? Holidays are stressful for everyone, including your renters.  Introducing an unknown like an Airbnb guests may make their holiday season even more stressful. That stress doesn’t tend be quickly forgotten January 1.  It may stick in their throats and sway the decision of renewal.

 

  • Most Airbnb’s come furnished

 

This is perhaps the biggest item to overcome logistically.  Most every Airbnb is furnished completely.  Most of don’t have a storage unit with a full spare of house furniture waiting to be used. Beds, dressers, kitchen table and chairs, couches, tvs, etc.  So that would certainly be a start-up cost.  Don’t think you could go to goodwill and pick up any old items and creating an eclectic look.  Airbnb’s rent on aesthetics like any other hotel guest so having a painted white dresser, maple tone nightstand and yellow lamp will work for selling your Airbnb.

 

  • Hotel guests tend not to care about utility usage…..in a worse way

 

Ever gotten to a hotel after a long road trip and just wanted to take a nice long shower?  I mean….l…o…n…g. That’s exactly what some Airbnber’s like to do.  They also like to unwind watching cable or streaming so you will have to do provide one or the other.  They also tend to use lights more.  If they are anything like me in a hotel, I always leave at least one on when even when I leave. Then there those who simply don’t care because they aren’t paying for it.  Long hot shower every day!  All these activities may create a higher utility bill than you are used to so be sure to budget accordingly.  

 

  • Increased traffic on the property

 

Think about the last time you stayed at a hotel? Chances are you came and went from the hotel without really thinking about it, and usually more than you come in and out of your own home.  Also consider your Airbnb guests may be more likely to entertain others (perhaps the locals they are visiting) since their lodgings have more of a homey feeling and they can cook in their lodgings.  Lastly, if you are a successful Airbnb host, you will likely having a revolving door of new guests every  4-7 days.  

 

  • What about insurance?

 

While this is last on my list, it should be one of the first things you think about.  How does your choice to Airbnb affect your insurance? Are you going to inform your insurance? If you don’t inform you insurance and something happens, what if the insurance cancels your policy because of unsanctioned activity? Can you get an insurance supplement that would cover you in case of an Airbnb catastrophe?

 

That might seem like a long list of negatives, but it’s merely a list of complications. During the U.S. Open at Erin Hills, property owners were raking in large cash for renting out their homes and rentals to golf patrons for a week or so.  Rates were anywhere between $1,000 and $4,000 for a week of moderate lodging. Which is a decent chunk of change, especially if you get great guests.

If you are considering doing this for the holiday period, definetly be sure there is a market for it.  It’s best achieved in a slightly populated area or destination area (like Baraboo, Sheboygan, etc). You can get an idea of how much you should charge by calling around to area hotels (think more Holiday Inn, Hampton Inn than Motel 6) and see what they are charging. Use that as a jumping block for your rates.  While a hotel may offer a pool, breakfast, etc you are offering a home setting with the ability to cook their own meals. So you aren’t necessarily offering less amenities.    

Final thought, if you do choose to convert a vacant to an Airbnb for the holiday season consider if the market is there for an extended stay year round?  Would local companies like having a place for their visiting contractors, executives and others to stay that isn’t a hotel environment? The best way to find this out is to start calling local large companies.

If you are wondering where I stand on the issue I don’t see myself becoming an Airbnb host.  I’m much more likely to create a duplex with extended stay than a permanent Airbnb mostly because I am familiar with renting out extended stays.

As originally posted on the Wisconsin Apartment Association’s blog.

CategoriesLong Term Rentals

Setting the Tone For A Tenancy (Pt. 3)

By brioproperties,

As Written for the Wisconsin Apartments Association

by: Corina Eufinger

In this final look at “Setting The Tone For A Tenancy”, we look at move in day and the successive first 60 days of the tenancy.  This article will put all the puzzle pieces together on how the pre-tenancy phase sets the standards for the tenancy. We will look at situations that often arise when a tenant has been able to assert dominance in the relationship and how difficult it can be to get it back.

Chances are most of us have had a tenant call us before the 1st to see if they can move in early. Sometimes they are looking for just a day or two so that the 31st they can turn over their previous unit to the landlord with time to clean it (or so we hope is the case).  Other times they are looking to move in more like 4 or 5 days early. I have no problem appeasing these phone calls if 3 circumstances are met: 1) the unit is ready at the time of their call (no exceptions); 2) I haven’t already set their move in appointment with them (one of my personal pet peeves is rescheduled appointments for move-ins because the beginning/end of the month is always jam packed); 3) I can reasonably fit their request into the schedule. Also, no matter how many days they move in early, I always charge a daily rate. The only day I don’t charge for is when they take keys on the last day of the month.

I cannot stress this next point enough: NEVER LET A TENANT MOVE IN WITHOUT FULL SECURITY DEPOSIT AND FIRST MONTH’S RENT PAID (in a non-bounceable form).  Even if you followed all the other pointers that I’ve laid out in this series, if you throw this one  by the wayside you have lost control, and control over the most important part of the tenancy for a landlord. Money.

Under most circumstances a move-in goes fairly smooth. In theory there shouldn’t be a long list of repairs because everything is already done. But s*&$# happens. One of the ceiling fan bulbs decided to burn out as you turned it on, the batteries on the hardwired thermostat aren’t working even though you just replaced them, etc.  I have been there and most tenants are extremely accommodating when it’s small stuff like that. So there is no reason to rush a maintenance guy over or quick grab your batteries.  It can be handled the next day. Responding like it’s an emergency to a standard repair on move-in day says to the tenant you react quickly to all maintenance repairs, all the time.  

If you find yourself with a tenancy where the tenant has seemingly taken control of the relationship Is it possible to regain authority in this relationship?  You can, but it is a painful and annoying process. You will need to be firm and use that backbone you hopefully have.  The tenant will complain you aren’t accommodating them anymore and accuse you of treating them differently. In reality you are treating them….more normally.  You’re not available at the drop of a hat anymore, you don’t respond to maintenance as soon as they call (emergencies excepted).  Other than how annoying this process is given the “lip” you will likely get, what is worse is that by changing your over-accommodating behavior after move-in you have also proven the idea that once you are a customer no-one really cares.  

If you have to regain control financially, it gets a little more sticky and…expensive. When you issue a 5-day notice they are shocked you would do such a thing. You likely got a less than pleasant phone call from the tenant telling you that you are a horrible person and why does it suddenly matter because it didn’t before.  If they don’t pay up during that period, they are trying to call your bluff.  You cannot back down from this.  You must file the 5-day.  File, get a process server, etc.  If you don’t follow through at this crucial stage you will never be able to regain control.  Your eviction threats will be hollow and meaningless. Don’t get caught in a trap where you chicken out of filing because it’s only one month.  If you have lost monetary control of the situation, you have lost control over the most important aspect of how successful your rentals are.  It doesn’t matter how safe and clean your housing is if you aren’t getting paid for it.   

Do yourself a favor and maintain control. Follow your rules and make your needs the priority (but not the need to fill the unit ASAP).  Be polite, but firm and accommodating when it fits your schedule.  Don’t place yourself in a rush or bind to appease the applicant or future tenant.  If you follow these rules, your future self may just build a time machine to come back and thank you for keeping their landlord life a little simpler.  

CategoriesLong Term Rentals

Why I Love Old Homes As Rentals

By brioproperties,

Last month at a local investor club meeting, I was asked by a fellow investor why I preferred investing in Victorian and Edwardian homes (built circa 1840-1920). He couldn’t understand why I would prefer properties that were older in age, most definitely contain lead paint, and usually come as properties protected by the state or local municipality. He’s not the first one to question my attachment to such homes, especially as rentals. There are some that understand my attraction to the properties but not in a capacity of renting them out. I have yet to meet an investor who shares my high level of passion for renting these homes out. I’m usually referred to as passionate, dedicated, and even crazy. What are my reasons for going through all these hoops and complications for my rental business?

For starters I am an avid history lover. My ideal vacation is to a destination of high historical significance. I’ve followed that passion to Spain, London, Paris and Washington D.C. and have a vacation to Montreal next September. One of my favorite things to do is to tour palaces, castles, estates and mansions. If allowed, I love to touch the walls, banisters, and doors hoping to feel some affinity to people and time periods.

Something that has been drilled into my head since high school is to find a way to incorporate your passion into what you will do for living. When I was entering the world of real estate investing I wasn’t sure how I would do this. At first I didn’t see how I could bring my passion to this. Then I felt so silly when it finally dawned on me. I could use my history passion to increase my excitement and drive for investments by specializing in Victorian and Edwardian homes. Even after I got into and realized all the possible deterrents, I was still convinced it was the real estate path for me.

When I drive around towns and cities, it breaks my heart to see older homes neglected and in severe disrepair. I often like to imagine what I could do to restore the home to its glory. It’s not easy to do things like restore a neglected building, especially to be as period accurate as its future purpose would allow. Your creativity is often limited by your desire to keep things like pocket doors intact, original doors and doorways in place, etc. Yet for me, I invite the challenge. If I can rise to the challenge it means I have saved a part of history all while giving someone a place to lay their head and call their own.

The Victorian homes known as “Painted Ladies” require 3 or more distinct color choices. Usually one for the largest portion of the home, another for window trim, and at least a third for the porches and embellishments. It’s a lot of coordination and decisions to repaint the exterior but the beauty in what you have created is irreplaceable. It’s a hugely satisfying sight to see it in its final state, especially when it may have modern homes as neighbors on either side. A well finished Painted Lady towers above the homes in the neighborhood in stature (and usually in size).

On the inside, details bring character unseen anywhere else. Each property is usually incredibly unique because of the personalization that happened when they were built. Most everything was handmade, which made personalization easy for the homeowner. In ways that today’s generic and pre-drawn homes can’t compare, each Victorian or Edwardian home is personal statement down to every detail. Those statements are what allows my property to stand out. When I renovate I keep as much of this character in place as I can.

It used to annoy me to see these large homes subdivided into triplexes and quads, but I eventually realized it was a better fate than the properties being razed in favor of newer housing. Give me the “headaches” of older foundations, cellar walls, and out of date electrical any day compared to buildings created after World War II. Sure they may be easier, but the joy and spark isn’t there for me.

Passion and joy are important as real estate investors. If you don’t love your property, your tenants won’t. I know they say not to buy with your heart, but I believe to a certain extent you have to. Your heart has to be in the property you are buying, but the numbers have to make sense as well. Don’t buy it just for heart. Love goggles in real estate won’t get you anywhere but a sad place with no extra cash flow.

Corina

Owner Brio Propeties

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