Property Management and Investor Information: June 2008

When a landlord buys a rental property and has a home warranty included the nightmare begins for the local property manager.

Home warranties may have their place with owner occupants, but most property managers I talk to hate them when working on their rentals.  Even to the point of refusing to work with them.  Many tell their their clients that when problems occur, they will turn the issue back over to the owner.

The problem is that the warranty company sometimes takes an excessive amount of time to get to the property.  The warranty company also needs a copayment, and that can be an administrative nightmare for the property manager.  Who is to pay the copay?  How does the copay get to the vendor or warranty company?

Most property managers have a list of vendors that they like to use.  They use them for their reliability, speed, and good prices.  When a warranty is used, the vendor is chosen by the warranty company and the service levels can vary quite a bit. 

Landlords should keep in mind that warranty companies provide their service to make money.  That means they must try to save money on repairs.  They often prorate the value of a broken appliance if it cannot be repaired leaving the owner unhappy that they did not get a repaired unit for the cost of the copay.

We have had a few bad experiences with warranty companies, but we do continue to use them when our client has a home warranty.  We have a company credit card to pay the copay over the phone and then bill the owner back.  That keeps the tenant out of the financial loop.

Anybody have a different view on this issue?

www.HomePointe.com

Houses for rent, homes for rent, apartments for rent, rentals.

The central valley of Sacramento has been surrounded by forest fires for over a week now. 

The sky is hazy and sometimes it seems like you can see the smokey haze laying on top of the ground.  I noted that my car was getting dirtier outside and that got me thinking that my lungs are probably taking a beating.

The governor of California has asked us to not buy fireworks this year.  Boy, did that drive the charities that sell them crazy.  I agree with him, who needs more smoke?

One of the joys of being a registered voter is the chance to be singled out for jury duty.  In the past I have been a jury foreman and after that, was excused by an attorney, possibly for having been a foreman. 

I got the letter again last week and must report at 8 am Monday for possible selection to a jury panel.  In Sacramento County, if you are called in and do not end up on a jury by the end of the day you are excused for at least a year.  But if you are selected you could end up on a panel and would  be committed for the full length of the trial, civil or criminal.

It is never easy to be pulled from work without much notice. 

I do feel that jury duty has its merits, but I have heard that professional jurys, kind of like grand jurys, would better serve the community.  That way experienced people would be listening to the arguments instead of novices of the legal system like me and my peers.  All the money spent to gather us all up would be diverted to professionals that would be trained to be good jurors.

One of the joys of property management in Sacramento is being able to help an owner rent their property in Land Park and in McKinley Park. 

Both of these Sacramento area neighborhoods have older homes that were mostly built prior to, during, and just after World War II.  I have personally lived in Land Park for many years and the last two homes I owned there were built in the 30's.  The streets are tree lined and each has an unique & fantastic  urban park as its' centerpiece.  Both are walkable neighborhoods with small commercial areas right along side.

Current rents in Land Park and McKinley park for a 3 bedroom home range from about $1300/mo up to over $2,000.00.  The problem with pricing these classic older homes for rent is that not too many come up for rent.  These are mostly owner occupied homes. 

If you find yourself either needing to rent your home in Land Park or McKinley Park or if you want to rent a house in either neighborhood, give me a call or visit our website at www.HomePointe.com to see what is on the market.

For a variety of reasons, many owner occupants decide to rent the home they live in rather than sell it. 

If you decide to do this, be sure to notify your fire and liability insurance carrier as soon as you rent the property.  The type of policy for a rental is different and your insurance agent will fill you in on all of your options in placing a commercial policy in replacement of your current homeowners policy.

One important difference is that a homeowners policy will cover the contents of the home and a commercial landlords policy will not.  Also, the liabilities will change.  Your tenant may trip and fall while living in your home, and you need coverage for that possibility.

I strongly suggest you wait to make the change until the last minute.  You might change your mind while trying to find a tenant or if you vacate before locating a tenant the insurance company might not like an extended vacancy for a rental.  So, do not make the change until you have a lease signed and paid for.

www.HomePointe.com

The last two times I had my hair cut the barber answered their cell phone during my session. 

In the first case, the call was personal and the barber began speaking in her native tongue.  As the call progressed she continued cutting my hair with the phone tucked between her cheek and shoulder.  I was so incensed, I decided to switch barbers the next time I needed a haircut.

So, this morning I went to a completely new shop.  I am glad to say that the barber was friendly.  Her cell phone rang during my time in the chair and she proceeded to talk to a customer that was making an appointment.  I was relieved that she had the courtesy to stop cutting my hair during the call.  She made the appointment and promptly hung up.  She then resumed her cutting.  I found this a little annoying, but acceptable. 

In our business dealing with customers, I think we all have to be aware of when it is appropriate to take cell phone calls.  Many customers may judge  us based on how undivided our attention is to their time with us. 

I have to remind myself, that a bird in the hand is worth two in the bush.

www.HomePointe.com

When one tenant moves out how do you really know that that past resident has given you all the keys?  They could have made a copy during their tenancy, so there is no real sure way to know they have not kept a key.

If the past tenant does have a key, and you use the same old keys for the next tenant, what do you think will happen when there is a theft (or worse, an assualt) at the house with no forced entry?  I think you could be questioned on what you did to protect the new tenant.

The accepted procedure is to change the locks or just rekey the existing locks between tenants.  This could be done on move in day so the new tenant sees it happen.  That way no vendor could hold onto a key during the rehab and get in. 

There is a lot to think about when managing your rentals, and the safety of your resident should be at the top of the list.

www.HomePointe.com

Houses and Homes for rent.  Property Management for homes, duplexes, condominiums, and apartments. 

An owner recently came to see me about their property.  They had several rentals and the portfolio was in disaray.  Vacancies, deferred maintenance, many delinquencies, poor cash flow was the result.

The way to fix the problems was to implement rules and procedures and then follow through on them. 

Let the tenants know when the rent is due and when late.  If late, serve notices to pay or vacate.  If not paid after that, evict.  Most of the time, after the first eviction, the rest of tenants either pay or move voluntarily.

Inspect the units and get them fixed up to meet normal habitability standards.  Keep the buildings in good repair. 

Set the rents on vacancies at market rents that will get them rented to good tenants in 30 days.  Lower them as needed to get the units filled up.

Sounds simple.  Many owners do not have the systems and determination to see the job through.  But, to be successful, the person running the property must have that resolve no matter where you start from. 

I like property management because I have seen this systems approach work time after time. 

www.HomePointe.com

You need a residential property management company that has property management services that can be customized for your home, rental, or rentals. We are a Certified Property Manager and a member of the National Association of Residential Property Managers.

I am trying to visualize gas at $5, $6, maybe $10 a gallon.  Can you imagine having to pay $200 for a tank of gas?  We are already paying $4.75 for premium in Sacramento.

As the price rises for all of us, we will have to make some tough decisions.  Less eating out, fewer trips to the store.  Food prices will be rising too as food must be transported.  So more of our money will be going to energy and food.

I also see small businesses struggling especially restaurants.  Many may close.

We will, as a result,  have less money for mortgages and rent.  If we have less money, buyers and renters will not be able to pay current prices.  Prices may have to fall, especially in outlying areas to attract buyers and renters.  If prices do fall, the mortgage crisis may continue as more people will go upside down and walk away.   

Some real estate may become more valuable.  Real estate close to city centers and mass transit for instance.

I am just trying to think this through so I can be prepared.  Of course, other unexpected things may happen, including the price of oil stabalizing and dropping.  These are interesting times.

There are so many essential things that make up what a good property manager is, that I hesitate to pick one item as the most important.  In fact, I think it is a mistake to do so.

But, Picking Good Tenant is certainly in the top ten of essentials.  The ability to screen out the bad apples and pick the good ones, is at the foundation of a good property management operation. 

The hard part for a landlord that hires a property manager is figuring out how to separate the property manager that can pick good tenants from the ones that are not so good.  It must also be factored into the equation how good the property manager is at taking calculated risks especially on marginal property.

I have this tip if you are trying to select a property manager.  Find out how long the company has been in business and find out how many properties the office rents out on a monthly basis.  Why?  Because if the company you are considering rents ten or more properties per month, and has been in business for two or more years, it is likely that they pick good tenants on a regular basis.  If they didn't, they would have so many eviction problems they would likely be out of business.  All things being equal, pick the busy and longer lasting company over the small newer one.

www.HomePointe.com

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