5 Helpful Tips to choosing a good property manager

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Here are a few things to remember when choosing a leasing and property management company:

1) Experience matters : Experience matters when choosing a leasing and property management company.  Property management, while it may seem easy and straight forward is actually a pretty difficult industry.  Many circumstances and problems occur with different properties that only an experienced manager can catch and or deal with.  There are many legal ramifications also involved and a good property manager must be familiar with legalities issues and knowledgeable in handling any issues that arise

2) Location served; are they in my area?: Many management companies are constantly advertising and looking for perspective clients in areas they do not typically serve.  A company that specializes in the area in which a property is located is most likely going to be the best bet because that manager is familiar with the local market, but more importantly, have relationships with local vendors and should be able to get better pricing on repairs and maintenance.  Proximity to the property is also important so that a manager can keep a good watch on the property.

3) When and how are owner distributions made?:  This is a very important factor that is often overlooked when choosing a management company.  Typically rent is collected during the first 5 days of each month and owner disbursements should be made soon their after.  Most property owners are using rental income to fund mortgage and tax payments so prompt payment is a necessity.  It is good to know exactly when owner distributions are made.  Will the management company be sending this by “snail mail” or do they offer a direct deposit solution?  Any good management company should offer a direct deposit option, often times for a small fee.  For a property owner this means that payment should be expected the same day or within 24 hours after the transaction is made.

4) In house maintenance vs. independent contractors?:  Another important question to ask is, “who handles and performs maintenance on the properties you manage?”.  There is not one right or wrong answer here but it is important to know what to expect.  In house maintenance staff are typically paid as a salaried employee and this means that they are being paid full time no matter if they are working on a specific property or not.  For a property owner this could lead to excessive maintenance or repairs during slow months to “fill” employee time.  However most companies that hire in house maintenance personnel can have work performed much cheaper than an independent contractor.  Independent contractors are paid per job and thus cost is typically higher.  However, when a company uses independent contractors you can be sure that each issue that comes up is handled by a specialist.  For example, if your a/c goes out, the property management company should be calling an HVAC certified company rather than a “handy man”.

5)  Up charge on maintenance:  Property owners should be careful and weary of any company that “up charges” maintenance or repairs.  In a situation like this the management company is being incentivized to perform maintenance and repairs and thus a conflict of interest is presented.  Most property management companies do charge for this, however I strongly encourage any property owner to work with a company that does not.  If a company “up charges” maintenance and repairs, what is the monthly management fee for?  Property owners should also be aware of any charges associated with in house personnel performing maintenance, repairs, or any additional services beyond the normal scope of a property management contract.  Sneaky property management companies will hit property owners with additional fees if one is not careful.

The above mentioned tips will help any property owner effectively choose the right property management company.  Knowing what to expect and the questions to ask will allow any owner to make an educated decision that will maximize their return on investment.

Make it an investment!

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With today’s real estate environment making it very difficult to sell a home many homeowners are considering the option of renting out their property and holding it as an investment.  Just the same as investing in the stock market or other financial instruments real estate can be a very strong investment to keep in your portfolio. 

When facing a decision of selling a home now, for 30k less than was paid for it or renting the home to offset monthly mortgage payments, taxes, and repairs/maintenance one should really consider the possibility of investing in their home.  Imagine a scenario, 10 years down the road, in which you have paid down 20% of your mortgage, your homes value has increased by 30% and the monthly rental rate produces a positive cash flow of $500 per month.  Could that help out with your retirement? Help pay for your children’s college?

Too many times we see homeowners wanting to walk away by selling their homes at a deep discount or even short selling or losing their home to foreclosure.  Why isnt anyone interested in holding property as an investment?  Real estate is one of the few investment instruments that is an actual tangible asset with real value and utility.  Real Estate offers an investment that one can see and touch.

With everything, their is a cycle, “ups” and “downs”.  Currently we are in a down part of this cycle which makes it a horrible time to sell but a great time buy.  Holding assets for the “up” cycle is a wise move and with rental income this is possible.  Would an investor sell a stock of a company that he/she believes in, one day after the stock market took the biggest dive in history?  So why sell a home in a similar scenario?  Better than a stock, real estate has rental potential and using that rental potential to survive the storm can be a very profitable investment decision.

When is the best time to find a renter?

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Finding a renter is much easier during certain times in the year.  Aligning your rental property for this rental cycle will typically lead to higher rental rates and shorter days on market.

Most people move during the summer months.  June through September is usually a great time to have any property on the market.  With school out for the summer, this is when most people can find the time to make a move.  These summer months are also a “high season” for finding renters because universities typically began classes in late August or early September which means that renters must find a place to live in order to be ready for the new school year.

Another good time to rent a property is around the start of the new year in early January.  After the holidays many people start new jobs and make transitions.  Universities also go back in session and transfer students or new attendees will likely need a place to call home.  While this is not as busy as the summer months we still see a strong demand for rental properties during this time.

Once your property is rented out during these months we recommend having your lease expire in late July or the first week in August.  Even if this means you will have to offer a 10 or 11 month lease, your property will be much easier to rent if it is available during the peak months.   If you are unsure as to rather you will rent your property out again, leave your options open because you just might have a great experience with your rental and decide to do it again!

If this time frame is impossible based on your current situation you are still okay.  Most quality properties will be leased during the peak months so if your property comes available in an off peak time, but is a quality property, it will get rented.  If possible, transition your leases to match this cycle to maximize rental income and decrease vacancy.

It just doesnt feel right……go with your gut!

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When choosing the perfect tenant for your rental property it is important to go with your gut feeling.  If something does not feel right, deny the applicant.  This is your property and your investment and sometimes your gut feeling is the best indicator of a good and bad renter.

It is however important to differentiate between a bad feeling and nervousness about renting your home to anyone.  With proper tenant screening techniques and thorough due diligence the risk associated with renting can be minimized.  When renting your home for the first time you will most likely be nervous and have some doubts about the entire process.  Don’t let this feeling cause you to pass up a great tenant for your property.

Many times when home owners get in tough situations economically there are a wide range of emotions that enter the context. These emotions can really hinder one’s ability to think things through rationally.  This is why hiring a qualified property management company can be very valuable in this type of situation.  Property Managers are able to approach these situations objectively and without bias to your feelings and emotions.  A good property manager will handle all of the tenant screening, background checks, employment verification and rental history verification.  They should then present you with the information, if requested, and help you make an informed decision. If you do choose to handle this on your own you can use a company like CBC Innovis for your tenant background checks.

Often times when properties have sat on the market landlords will get antsy to find a tenant and get income rolling in.  Just remember that a bad tenant can cost you more, in the long run, than a vacant home.

Use your head and your gut to make a sound choice regarding your tenant and maximize your rental income while minimizing your risk.

Inexpensive, durable flooring, great for a rental property….And it looks great!

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I thought I would share some info on a type of flooring that I have had great success within in rental property.  Traffic Masters (http://www.TrafficMastersupport.com) offers a great flooring option for any rental property in the Allure Resilient Vinyl Planks.  This flooring is easy to install because of its unique gripstrip that requires no glue!  This floor can be installed directly over another floor type with a small amount of prep.  I do recommend scraping any surface prior to install and sweeping away any dirt or loose debris.  Did I mention its water proof and comes with a 25 year residential warranty?

I installed this flooring 3 years ago in one of my client’s rental properties (here we used the Country Pine).  This property is in Austin, Texas near the University of Texas and lends itself to college students, so durability and style is a must.  After 3 years this floor looks just the way we did when it was installed.   Since then I have installed the flooring in my own house and most recently our new office (Cherry). 

With so many color options ranging from cherry to country pine, this floor can be installed anywhere, and it looks like real wood! Installing this floor is a huge upgrade that will allow you to increase revenue on most rentals.  

This product is sold at Home Depot (Home Depot) for $1.79/ft ($42.69 per case of 24 sq ft).  Because our company purchases in volume we can get the flooring at a cheaper price for our clients. 

When replacing the flooring in any rental property think Traffic Master Allure Resilient Vinyl Plank flooring.

They will destroy my home!

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Many property owners will not even consider renting their home because they have heard the horror stories of bad tenants destroying rental property.  This common fear is one that should be put to rest.

I have been working in the leasing and property management industry since 2002 and have dealt with many landlords and renters in that time.  I have witnessed some awful experiences but more frequently I have experienced some incredible ones.  By incredible I mean tenants that care about a home as much or more than the property owner.  A tenant that has respect for their living conditions and environment as well as the property owner.

These “incredible” experiences are most often seen in situations where the home owner actually rented their house out and never expected the property to be a rental.  The reason this happens is because these homes are typically in nicer neighborhoods where their are less rental properties available.  People moving into these place are, most often, trying to move into a certain school district or area.  These renters are not typical tenants and may have never lived in a rental property.

Proper tenant screening, an ample deposit, and good tenant relations can make this a delightful experience.

1) Tenant Screening- When choosing a renter(s), landlords should always have each applicant fill out a full residential lease application.  This application will give the permission and ability to run a full credit, criminal and background check on the potential renter.  Here one will be able to contact previous landlords, employers, verify bank information and see full credit and criminal reports (www.cbcinnovis.com offers a great service)  It should be a pretty straight forward decision to accept or decline each tenant once the homework is done and information is received.  Things to avoid would be felony charges, bad credit history (although given the current economical environment exceptions shall be made), previous evictions or past due balances to previous rental properties.  It is also good to talk with previous landlords if these are available.  Asking questions like “would you rent to them again?” and “did they leave the property in good condition?” is a good start.  Landlords should be cautious about the information you get from the applicants current landlord.  These landlords could really want these tenants to move out and could talk highly of them to get them out of their own property.  Any good property management company will perform ample tenant screening as part of their service.

2) Collect an ample security deposit-  This is a very important and can be a good sign of quality tenants.  Requiring a security deposit equal to one months rent is standard practice in the rental industry.  Even if this amount seems outrageous good tenants should have no problem coming up with the money to ease landlord worries.  Tenants that cannot come up with the money are typically tenants to avoid because this is usually a sign that they have no cash savings and an unsteady income stream.  Depending on the property and market exceptions can and should be made here.  A large security deposit will ensure that the tenants will take care of the property in hopes of getting the deposit back.  This will also give some security and risk mitigation in the event that the property does have some damage.  Taking plenty of before and after pictures of the property noting everything in case disagreements arise.  If pets are occupying the property an additional pet deposit should be required.  This pet deposit normally ranges anywhere from 300-1500 depending on the pet type, history and elements of the property that will make it more or less conducive to animals (i.e.-wood floors, carpet, fenced back yard etc).  Many people have pets and allowing pets will make any property that much more marketable (especially in Austin, Texas!).  I have had some very good experiences with pets but it is important to be cautious.

3) Good tenant relations- This is a very important element of the rental process that is often overlooked.  Good relationships between tenants and landlord is a necessity in order to minimize risk of damage.  Knowing the tenant on a personal level and being attentive to their needs (within reason) will ensure a successful rental experience.  Taking care of necessary maintenance issues and setting an example that the landlord cares about the property and tenant will likely produce a tenant that returns the favor.  Not correcting issues and requests sends a message of “Landlord  does not care about tenant concerns and only cares about maximizing income on the property”.  This will likely create a hostile situation in which the tenant will lose respect for the landlord and the property.  Many landlords want to constantly visit the property and check on the property but I do not recommend this.  Certain situations and tenant/landlord relationships will permit but invading ones privacy is not a pleasant thing.  I recommend holding announced and arranged property inspections every 6 months.  A little “trick of the trade” is to include a monthly house keeping service as part of the rent.  This should be a company or person chosen by the landlord with the understanding that they will report back to the landlord, any issues or concerns they see.  This also works well because when a tenant’s home is cleaned by someone else they will likely work to keep it clean between scheduled services.

Its time to put the common fear to rest!  Not all tenants will destroy rental homes and proper screening, ample deposit and good tenant relations can minimize this risk and create a pleasant and profitable rental experience.

Home not selling?

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Is your home listed for sale but not selling?  Are you needing to move and feeling the pressure of your once sound investment?

In today’s economic environment it is important to be open to new ideas and change and move from your traditional methods and ideas.  Leasing your property can be a very viable option for any homeowner and can actually be very profitable.  With the credit crunch and mortgage markets remaining tight, many “once buyers” are now looking to rent as an alternative.  Whether they are unable to qualify or fearful of the economic crisis, these qualified individuals are paying max dollar to rent homes.

Each day that your property sits on the market it is costing you: 1) Your time keeping the property in showing condition 2) Interest on mortgage payments 3) Taxes and Insurance 4) Maintenance and upkeep and of course 5) a ton of stress!  If your home is sitting vacant you can be sure you are racking up an additional list of expenses because a vacant home can be very costly.

What is there was a way to find a renter that would take great care of your property and treat your home as if it was their own?  How about using someone else’s money to cover the above mentioned expenses and prevent additional costly repairs?  Renting your home in Austin, Texas is always an option, and often times a great one.  With many new jobs being created every day, we see new renters moving into this market looking for nice homes and condos to lease.  These people are professionals that have money and care about their home environment and how they live.  This means they will take care of your property just as you would if not better.  In fact, they will probably let the landlord or property manager know every time something goes or seems wrong.

Renting out your home in today’s economy also has an additional benefit, one that I think is most important.  Renting out your home today allows you to hold out for a better market and time to sell.  Today’s qualified buyers are aware of what is going on in the news and around them.  They understand that there are many struggling homeowners out there that want or need to sell.  They expect a “great deal” which means that any offers you will receive on your property will most likely be significantly lower than what you feel your home is worth.  According to Realty Times (http://realtytimes.com), in Austin alone, we have seen an increase of 35% from January in the amount of homes listed for sale.  You try selling a home in this market for a good price.  You have invested in your home and in this wonderful city, so why sell yourself short?  Haven’t we learned that the best time to sell is when the market is hot?

Consider leasing your property in Austin, Texas to a qualified tenant and use their money to cover your expenses.  This will allow you to hold on to your real estate investment and sell at a better time when the return will be much more favorable.