Tuesday, December 19, 2017

Why Your Repair Deductible is Doing More Harm Than Good

When talking to a potential client, we are often asked, “Do you charge a tenant for a repair deductible when they submit a maintenance request?” The simple answer is “NO!” - here‘s why repair deductibles actually do more harm to the preservation of your rental property than they do good.

Benefits to forgoing the repair deductible:

Preservation of your investment.

The idea of repair deductible is great. The purpose is to prevent a tenant from calling frequently about frivolous issues such as burnt out light bulbs or loose door handles. However, what actually ends up happening is that the tenant will see something like a small drip under the sink and will put off reporting it to the landlord to prevent being charged the repair deductible. What was originally a small drip that could have been easily repaired with a service call by the plumber has now turned into a cabinet replacement and possible mold concerns from the ongoing leak that was never initially reported. The simple solution: don’t give the tenant a reason not to report the problem!

The tenant is basically the grounds-keeper of your property. They are there almost every day to keep an eye on the day-to-day functionality of your investment and when something goes wrong, you want them to let you know! Having an effective property manager to sort out the frivolous calls will prevent you from spending unnecessary repair dollars, and in turn, alleviating the concern that drove you to the repair deductible in the first place.  It is important to mention that excluding the repair-deductible requirement from your lease does not open you up to paying for damage caused by the tenant. If you send a plumber out to repair a garbage disposal and they find broken glass inside to be the cause of the failure, your tenant should still be held financially-responsible for the cost.

I can’t say this enough: It is important that the landlord maintains an open line of communication with the tenant in order to ensure the preservation of the investment. No one likes to get a maintenance call, but it is what we sign up for when we purchase as rental property.

Increased desirability to potential renters.

When a potential renter is choosing between similar properties, one having a rent deductible and the other not, which do you think they’ll choose? Ensuring the tenant that they will not be held responsible for normal maintenance/repairs of the house will give them peace-of-mind and will make your property more marketable.

Positive tenant-landlord relationship.

The tenant will appreciate not having the feeling of being nickel-and-dimed at every turn during their residency. While the allure of having extra cash to reduce your maintenance expense is tempting, a good landlord will think long-term and know that the tenant will end up staying longer in a home where they aren’t charged every time there is a common repair.

SUMMARY: The imposition of a repair deductible will make the event of a preventable and expensive maintenance nightmare much more likely. Keeping an open line of communication with your tenant will not only prevent small issues from becoming expensive ones, but it will also strengthen the relationship with your tenant and will result in a much more positive experience overall.

Lauren Ford
Advanced Property Management, Inc.

Tuesday, January 12, 2016

Turn Your Home into an Income Generator

Life happens. Jobs change, families grow, kids move-out: no matter what the reason, you are at a crossroad where you now have to decide on what to do with the home that you live in. The first reaction is to sell, but have you considered the possibility of turning your home into another source of income? The thought of becoming a landlord is scary to most people, but done correctly, it can bring in an additional $12,000 – 18,000 in yearly passive income for most homeowners.

There are many instances where renting can be a better option than selling. Underwater mortgage? Even 7-8 years after the housing market crash, there are many homeowners that still have mortgage balances higher than what the home is worth. No need to feel “stuck” in your home – you can rent your home to a qualified tenant and have the rent cover your monthly ownership expenses, giving you the freedom to move. On the flip side, maybe you have a lot of equity in your home and life is simply giving you a reason to move on. Renting your current home instead of selling can give you additional income for retirement, paying off debts, or just to have as extra fun money, all while your home continues to appreciate in value.

Extra income and covering ownership costs sounds great, but how do you make sure to get a good tenant who is going to pay rent on time and take good care of the home?  Thorough due-diligence is the best defense against bad tenants. Doing credit checks, criminal background checks, and rental history checks will give you a very good idea of the type of tenant that you are going to be dealing with. Spending a few extra bucks to get detailed credit and background checks done will be well-worth the money and can give insight into how responsible a potential tenant has been in the past. If you are looking for a more hands-off and stress-free approach, it is best to enlist the help of a professional property manager with experience in your area.

THE BIG IDEA: Find freedom and extra income in turning your home into an investment property. Educate yourself, take the time to do proper due-diligence, and enjoy the financial freedom that a rental property can give you!

Lauren Frost
Advanced Property Management, Inc.

Tuesday, February 17, 2015

How to Freeze-Proof Your Rental Property

Most of us here in the US of A have to ensure freezing temperatures at some point in the year. Cold weather can cause thousands of dollars of damage to property, so it’s important to protect your personal home and rental properties with these very simple steps!
  1. Heat
Probably common sense, but ALWAYS leave the heat on! If you are going away on vacation or the house is vacant, leave the heat set to 55 degrees so that the house remains well above freezing. If you don’t have the option of having the heat on for some reason, you will have to completely dewinterize your house – see number 5.
  1. Exterior Water Faucets
This step should be done in the fall well before the temperatures start dipping. However, make sure that your hoses are completely disconnected and that you have turned off your exterior water faucets from the inside. Once you have turned them off from the inside, drain the left over water from the outside. If you have an older home or no interior water shut-off valve, go to the hardware store and pick up some insulating foam faucet covers. They are only about $4-5 apiece and they will help protect your exterior faucets from wind chill and general cold.
  1.  Open your under-sink cabinet doors
Even if you have the heat on, the area inside your cabinets can be exposed to cold spots, especially if they are located along an exterior wall. When the temperatures are frigidly-cold or if the house is vacant, leave the under-sink cabinet doors open to allow heat to come in. This will help prevent your pipes from freezing.
  1. Let it trickle!
You have to be especially careful with drafty homes that have any pipes that run along an exterior wall, especially in an older home. Even if your home is fully heated, a cold draft in a wall can cause your pipes to freeze and burst without warning. The best and most permanent solution is to add insulation where needed. If you don’t have that option, let the faucets that are hooked up to pipes running along exterior walls trickle just enough to keep the water moving through the pipes. Running water makes it much harder to freeze, so having even the smallest of movement through the pipe will help you prevent freezing.
  1. For vacant houses with no heat….
You will have to completely shut off the water to the house and drain your water heater, toilets, and pipes. Any water sitting in any fixtures or pipes will freeze in a house with no heat and will cause immeasurable damage if they burst while no one is there. A lot of banks with vacant foreclosure properties also put antifreeze in the toilets and other fixtures as an extra measure of caution. If you really want to be careful, you can hire professional companies to dewinterize your home. 

So there you have it! Follow these tips to protect your investment from damaging cold temperatures, or you can always choose to live and/or invest in warm year-round climates :)

Lauren Frost
Advanced Property Management, Inc.

Monday, January 26, 2015

8 Tips for Showing Rental Property

Property Management in Maryland

Turning your home into a rental property can be a great option for covering your ownership expenses while allowing your house to appreciate in value. Rental income is considered “passive” income, which means that it’s regularly received and requires little effort to maintain. Sounds great, right? Even though the rental income may not require much effort once the house is occupied, you still have to rent it before any income starts coming in. The leasing portion will take up the majority of the time involved with the rental process but it doesn’t have to drive you to pull out your before finding a great tenant. Here are 8 tips to help you streamline the leasing process while maximizing the hairs left on your head:
  1. Safety first!
Before you start showing your rental, take your personal safety into consideration.  Realtors, property managers, and landlords get hurt, sometimes fatally, every year by people who they were showings houses to.  When you receive an inquiry about your rental, ask for the person’s full name so that you can run a quick background check on your state’s public record website. If the person has a common name like John Smith, try to get their current address and date of birth. Here in Maryland, the public record’s website can be found by Googling “MD Judiciary Case Search” or you can click here. The way someone sounds on the phone doesn’t always reflect who they really are – you’d be surprised to see what lurks in a person’s past!

Real estate professionals and landlords are targeted more than you would think.  In 2012 alone, there were 50 fatalities that were related to the Real Estate industry according to an article written by Andrea V. Brambila from InMan.com. It’s always easy to think that it won’t happen to you, but it’s simply better not to take the chance!
  1. Pre-qualify, Pre-qualify, PRE-QUALIFY!
Somewhat related to Tip #1; always pre-qualify potential renters over the phone before even scheduling a showing. This will save you time, energy, and gas money and will ensure that you are only showing the home to qualified applicants. When someone calls wanting to schedule a showing, let them know that you have to ask them a few questions to make sure that the property would be a good fit for them. Your parameters may vary, but I always ask about their credit scores, time frame for moving in, and whether or not they have pets.  I also let them know exactly what I am looking for so that they aren't surprised when they submit an application.

Always treat each potential renter exactly the same and apply the same parameters to each caller to make that you aren't violating any Fair Housing laws – before you start advertising the property, come up with a list of qualifications that you are looking for in a renter. This can be credit score, move-in date, pets versus no pets, no smoking, etc. Even as a private landlord, Fair Housing laws still apply and it’s very important to educate yourself about what is expected. Go to the Dept. of Housing and Urban Development (HUD) website to learn more about the Fair Housing Act. Each state or local government may also have its own set of Fair Housing laws, so make sure to do some research about the laws that apply to your specific area.
  1. Schedule showings in a block
Lucky you! You started advertising your rental and now you’re getting tons of calls! Instead of doing showings every day at all different times of the day, try to schedule a block of showings on one or two days of the week, if possible. I usually schedule showings in 1-hour blocks, 15-minutes apart. If you’re REALLY lucky and have so many showings that they don’t fit into a 1-hour time frame, double up! The possibility of doubling up your showings will depend on the size of your home – if you have a house that doesn't accommodate multiple people at once very well, doubling may not be the best option for you.  Having potential renters see other renters coming in and out of your home will indirectly tell them that they need to make a quick decision if they are interested in moving forward. It also shows a high demand and they will be less likely to try to get you to lower the price. Either way, block scheduling will save you time and gas money without compromising the visibility of your rental.
  1. Confirm scheduled showings 3-4 hours ahead of time
This technique alone has saved me an invaluable amount of time. Even when you have pre-qualified someone on the phone, sometimes their priorities change or they forget and as a result, they don’t show up for the scheduled appointment (and usually don’t call). Instead of burdening yourself with a string of no-shows, call each scheduled renter a few hours before the appointment to confirm. When I get the voicemail, I always leave a message stating that I have to hear from them by a certain time (usually an hour before the appointment) or I assume that they won’t be able to make it. It’s easy to feel like you have to show up even if they don’t call back, but I can guarantee you that if they plan to be there, they WILL call you back. If not, don’t sweat it!
  1. Show up early and primp
So you’ve pre-qualified and confirmed your appointment – now it’s time a make a great first impression. Arrive at the rental 5-10 minutes early to turn on all of the lights, open the shades and curtains, and to do some last-minute dusting. The details may seem small in the grand scheme of the process, but they make a huge difference. Imagine you’re a renter and you enter into a dark home with cobwebs in the corners – what would your first thought be? Probably not a good one. The 5-10 minutes that it takes to primp the house will allow the potential renter to see the positive features of the home rather than focusing on trying to find the light switch in each room that they stumble into.
  1. Stay out of the way!
Potential renters prefer to tour a home at their own pace – it allows them to take it all in at their speed so that they can make an educated decision. When I was a renter myself, I remember when the professionals would walk me around to each individual room while talking about all the great features of each room. All I was thinking the entire time was “All I want is a quiet moment and 15 minutes to walk through this house.”  You want the renter to focus on the features that THEY see as special instead of being rushed around by someone else. Some renters breeze through and others like to take their time, but regardless of the time it takes, you want the renter to remember the house and not the person showing it to them.

If your rental is occupied and you’re concerned about security, walk behind the renters to each floor of the home to observe them from afar – this allows them to still see the home at their pace without you having to compromise on security.
  1. Ask for honest feedback and have applications on hand
When the showing is over, casually ask the renters what they honestly thought about the house. As the landlord, you want to hear the good AND the bad. Good feedback is a great thing, but you want to know the bad feedback so that you are able to make adjustments where needed in order to make the house more appealing to potential renters. Sometimes the negative feedback is very simple items that can be easily addressed, but other times it will be items that you really can’t control, like location, parking, and size of the house. If you get negative feedback, DO NOT argue with the renter! Their opinion may be completely different than yours but in the end, they would be the ones living in the home. Instead of bickering, just thank them for their honest feedback and let them know what you’d be willing to do (if anything) to counteract their concerns. It may not make a difference, but at least you have proposed a solution rather than making the situation worse.

Always have applications on hand and give one to the potential renter on their way out, even if they don’t seem very interested. Some people don’t show emotion as much as others so it can be hard to tell which renters are interested. By giving them an application regardless of whether or not they ask, you are making it easy for them to simply fill it out and send it in if they decide later that they want to move forward.
  1. Follow up
A day or two after the showing, send a follow-up email or call to make sure all of their questions were answered.  This is more of a courtesy than a sales pitch, so keep the conversation short and sweet. Let them know that you’re available if they have future questions and wish them luck with their future home search. No one wants to hear another sales pitch but kindness can go a long way in the real estate industry.

So there you are – 8 tips to hopefully save you from going bald during the rental process. Having rentals can be a great way to set yourself up for retirement or to have a reliable income to fall back on, so enjoy it!

Lauren Frost
Advanced Property Management, Inc.