Michele - Monday, July 10, 2017
One of the most important decisions that we made 5+ years ago was to become a member of NARPM. In choosing to do so, we have committed to holding ourselves to a higher standard of business ethics, professionalism and fair housing practices. We have also committed to additional education for our staff to ensure that we are providing the highest level of management service possible.
As a member of NARPM, our staff takes advantage of training, seminars, webinars, and online courses to keep up with market trends, issues, strategies and solutions. We interact with affiliate vendors to stay abreast of technology and outsourcing options. We also network with other NARPM members locally and nationally to share best practices and new ideas.
We often consider our fellow NARPM members as colleagues rather than competitors. NARPM members are truly committed to improving the property management industry, providing EXCELLENT service to our landlords and tenants, and providing support to fellow members.
Michele - Wednesday, July 5, 2017
One of the reasons that we are able to provide excellent management services is that we have developed excellent working relationships with a wide range of vendors to support all of the possible maintenance issues that could occur at our managed properties.
We have working relationships with three roofers, three HVAC contractors, three plumbers, three carpet installers, three cleaning companies, three landscapers, three tree trimmers, three garage door companies, three general contractors, three mold specialists, three paving companies, and many other specialty vendors. Before establishing a working relationship with these vendors, we test their services out on vacant properties or on the investment properties that are owned by the principals of our company.
Each of our vendors must provide prompt, courteous service including a positive interaction with our tenants. Vendors must provide quality workmanship and stand behind their work if any problems or questions arise. Further, vendors must provide competitive pricing. Each year, we research pricing by calling on other area vendors to price jobs and ensure that our pool of contractors remains compet...
Michele - Sunday, April 2, 2017
Since most of our new landlords are “Unintentional Investors”, many make an initial calculation of their projected cash flow by taking the expected rent and subtracting their mortgage, HOA fees, and property management fees. There is much more to determining your return on investment than that! So, as our new landlords are now becoming investors, intentional or not, we ask that they become familiar with the full scope of calculating cash flow and return on investment so that they can make better-informed business decisions.
There are five elements to analyzing whether your investment property is providing you with a positive rate of return:
Net Operating Income (NOI) – Income gained from rents minus operating expenses (not including your debt service or mortgage loan).
Cash Flow – Cash flow is calculated by subtracting the debt service costs from the NOI. Debt service includes the loan costs, such as interest, but not principal reduction. This is close to what most new investors assume to be their cash flow, but new investors often (incorrectly) include the ...
Michele - Thursday, February 23, 2017
Last week, a homeowner who is getting ready to move across the country for a job transfer contacted us to request that we procure a tenant and begin managing his property. Our associate broker prepared a rental market analysis and suggested that we start marketing the property at $1995 based on recently rented and currently active homes in the neighborhood of similar size, age, and condition. The highest price that any property had ever rented for in that neighborhood was $1995. There were several properties actively available for $1900-$1995. While the average rented price for homes in that neighborhood was closer to $1900, this property was an end unit in excellent condition. The broker felt that this property compared closely to the homes that had rented for $1995.
Despite our recommendations, the homeowner asked that we start with an initial marketing price of $2180 since the total monthly cost of his mortgage, HOA fees, and property management fees would be $2180. He also indicated that he’d like to have a tenant in place within 3 weeks.
We took the time to educate this homeowner on how important it is to start marketing at an appropriate...
Michele - Sunday, February 5, 2017
Over the past 9 years, we have placed over 700 tenants into our 350+ managed properties through our listing and vetting process. Only ½ of 1 percent of those tenants have been evicted. During the same time period, we began managing another 50 properties with tenants already in place. For the 50 properties where we took on management of a property with tenants that had been put in place by the landlord or another Realtor prior to our management of the property, we have evicted over 5% of those tenants.
While there is no organization that is compiling statistics on local or national average/expectation for eviction rates, I am confident that our success rate for on-time rental payments is due to our strict and consistent application process. We require applicants to earn a gross income that is greater than 3x the rent payment, to have paid rent on-time for the past 2 years, and to have paid all other bills on-time for the past 2 years. We also run a criminal history background check to further verify there have been no recent drug related or violent charges.
Once we process an application, we provide the owner with a Green/Yellow/Red risk indic...
Michele - Thursday, January 26, 2017
A straight shooting note to new landlords: I know that the garage door opener, the ice maker, the cook top vent, the dishwasher and the AC system were all working perfectly fine when you turned the home over to us and had worked perfectly fine for the 6 years that you lived in the house before you transitioned it into a rental property. But your current tenants are FULLY living in the house, and are wearing things out!!!!
Your tenants are doing 3 loads of laundry per week, so that dryer is handling another 150 cycles per year and is just going to hit its limit. The garage door is opened and closed over 900 times per year! Those tension springs and cables are getting a work out! Tenants, friends and family are putting tens of thousands of steps up and down those carpeted stairs, sometimes with their shoes on. The AC and the furnace are working overtime to keep the tenants comfortable during the extreme weather conditions we’ve been having. Tenants are changing the filter regularly but the HVAC system is now 15 years old and just can’t handle the hot-hot August days anymore.
As I mentioned in previous posts, 98% of our managed tenants main...
Michele - Thursday, November 3, 2016
Across our 350+ managed properties, 98% of the time the rent is paid on-time, the tenants fulfill their lease term, the property is maintained in good condition, and the landlords are happy with the performance of their investment property.
For the other 2% of our managed properties, there is a workload increase for our staff and a financial and/or emotional strain on the landlords. Our tenant selection criteria, along with our management practices, nearly always results in a smooth landlord experience. However, because “life happens”, I do want to share some of the less positive experiences so that new landlords have a realistic expectation of the risks associated with transitioning their homes into rental properties.
This month, we received an email from one of our tenants informing us that he had vacated the property halfway through the lease term. “Mr Smith” had lost his job, so he packed up his family and moved back to Ohio to live with relatives. With no notice, “Mr Smith” left the keys on the counter, left a refrigerator full of food, left several truckloads of personal property, and left the landlords with...
Michele - Thursday, October 20, 2016
New landlords often ask if we can use their favorite trusted vendor for any future maintenance needs. Of course we can! We already work with most of the larger local vendors and welcome the opportunity to meet new vendors recommended by our landlords. Landlords should provide us with a list of their preferred vendors before signing our management agreement so that we can contact the referred vendors to assure that they are licensed and insured as required by the Virginia Department of Professional and Occupational Regulation (DPOR).
Sorry, we can’t use your Uncle John, Cousin Bob, or Neighbor Ricky as a handyman to do minor repairs. While we understand that keeping maintenance costs low is an important goal, our liability insurance requires that we only allow properly licensed and insured vendors to enter the home. We do have an in-house property superintendent, who can address minor items such as changing locks, installing screens, replacing smoke detectors, installing microwaves or range hoods, and caulking tubs at rates less than would be charged by a general contractor.
As your home is a valuable investment, we require that any vendors tha...
Michele - Thursday, October 13, 2016
I’ve written several blogs in the past about the need for new landlords to budget for maintenance. I’m writing another, as I feel this is THE MOST IMPORTANT action that a landlord must take when transitioning their home into a rental property.
We have found that many new landlords have set aside funds to make mortgage payments during vacancy periods or if tenants are late with paying rent, but have not budgeted for required maintenance items that could occur at any time.
Regardless of the age of the appliances or the age of your rental property, maintenance problems happen! At any time, a faucet or angle stop can begin leaking, a toilet can run continuously, a main drain can back up due to tree roots, a AC condensation line can back up, an AC system can stop cooling, a roof can start leaking, a piece of siding or a shutter can blow off the house, a small decorative tree could begin leaning and trigger an HOA violation, deck boards could warp, split or splinter, a fence could begin leaning, a refrigerator could start leaking or stop cooling, a gas cooktop igniter could stop working, a microwave could start sparking, a basement could flood due to grading issues or sump pump failures, a hot wate...
Michele - Tuesday, October 11, 2016
When a landlord turns a rental property over to us, we’ll get started immediately with procuring a tenant and managing their property. At that point, we suggest that the landlord also contact their Certified Public Accountant (CPA) or tax preparer to ensure that they understand how their decisions regarding their rental property will impact their tax profile.
It is important that landlords understand which of their expenses will be tax deductible and which expenses will need to be depreciated over time. As some of the questions regarding limits on tax write-offs are dependent upon the rest of a landlord’s financial picture, only a tax professional can discuss tax implications and discuss strategies to maximize the financial benefits of owning an investment property. For long term planning purposes it is also important that landlords understand the requirement to live in the home for 2 of the last 5 years if they intend to take advantage of the capital gains exception.
For landlords who have prepared their own taxes prior to becoming an investor and do not yet have a CPA or tax preparer, we are happy to provide a recommendation to a local CPA with significant experi...