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Renting to Family or Friends.... Is it Ever a Good Idea?

Dan Stein - Wednesday, October 21, 2015

Renting to Family or Friends.....Is it Ever a Good Idea?

When you work as a landlord, it’s very important to keep your personal and professional life separate. A lot of landlords don’t do that, in that they choose to rent apartments to family members or friends. That might seem like a great idea on the surface. You already like them, so renting to them makes logical sense. You get the chance to help out a person you care about, and you’re able to have renters in your units so you have cash flow coming in. It would seem like the ideal arrangement, and an excellent way for everyone to benefit from the arrangement. Many landlords have rented to family members or friends, and some of those agreements have turned out well. Many have not.  Most propety managers will caution strongly against renting to family and friends.

Unfortunately, the way renting to friends or family often works out is far from what would be expected between people who care about one another. For the most part, friends and family members will actually make bad renters, because they’ll expect more from you than a tenant who doesn’t know you. You may get a lot of requests for maintenance and repairs, even for minor things, and you may also find that family members and friends think they should be entitled to perks because of your personal relationship with them. When they don’t get special treatment, they can get angry with you, and that hurts both your professional relationship and your personal relationship.

If you really want to help a friend or family member out when they need a place to live, there are other things you can do for them. Renting to them shouldn’t be on the list. It can be hard to say “no” when you know someone you care about is really struggling, of course, and some landlords do help friends or family members out with short-term arrangements, but even those can become problematic. Generally, mixing the business of being a landlord with personal relationships isn’t a good choice, and should be avoided. There are plenty of other ways you can help out someone who matters to you. You could even let them stay in an empty unit for free for a few nights if they really needed a place to go.

That would keep you from having a lease with them, but keep in mind that you would still have to evict them if they’d been there very long and didn’t want to leave. How long they could stay without needing to be forced out and what kind of agreement you could be said to legally have with them would vary depending on the state in which you live. It would still mean taking a risk, but that would be a choice that only you could make. Just be aware of the problems that many landlords can run into when renting to family or friends, and don’t think it can’t happen to you. Protecting yourself from a business standpoint is still very important, no matter who your renters are.

- See more at: http://www.american-apartment-owners-association.org/property-management/latest-news/renting-family-friends-ever-good-idea/#sthash.q8WRDfBp.dpuf

6 Reasons 'Nice Guys' Make Poor Landlords

Dan Stein - Monday, May 11, 2015

Successful property management takes more work than simply buying a house or condo and sticking a “For Rent” sign in the front. Being a landlord takes many skills, from handyman, to ambassador, to collection agent. Unfortunately, would-be landlords often make mistakes that cost them big time in both headaches and cash. Lots of these mistakes stem from operating their business as a nice guy. The Best property managers are experienced in developing friendly relationships with tenants while never becoming friends.

Now, that doesn’t mean landlords should forgo being cordial and helpful to their tenants. Property management best practices dictate there are boundaries that property managers need to recognize and respect. Crossing these lines can result in renters taking advantage of the situation.

Here are six reasons nice guys make broke landlords.

They take applicants at face value.

Landlords who believe they can go with their gut in choosing a renter will often end up paying dearly for that mistake. Failing to perform a tenant background check, review the credit report, and speak to the current landlord can result in renting to someone who is unsafe or won’t pay the rent. Avoid becoming a broke landlord by ordering a thorough criminal history records search, credit report, and reference check. Review every tenant background check to ensure a successful property management process.

They ignore negative information on the applicant.

A property rental best practice is to weigh all the information about a potential renter when making a decision. Sometimes, landlords will try to be nice by ignoring pieces of information that may be embarrassing to or reflect negatively on the applicant. Beware! Landlords who let a previous eviction slide or disregard bad credit or a shoddy work history can end up with an expensive disaster on their hands. Be consistent. Red flags in the tenant background check that make you not rent to one person should also be a factor in turning down another.

They break the rules for tenants.

Nice guys make broke landlords when they begin bending rules to help tenants out. Allowing a cat when there is a strict no-pets policy. Making room for an extra vehicle when the lease says otherwise. These actions may seem like no big deal, but they set bad examples.

They become too personally involved in tenants’ lives.

Saying hello during a property inspection is one thing, but visiting for poker night and pizza is quite another. Fostering a professionally cordial relationship and communicating effectively with a renter is a property rental best practice, but draw the line. Personal friendships with tenants can go awry fast, leaving the landlord with lost rent, an empty property, and possibly even a lawsuit.

They rent to friends or family.

It’s tempting to rent to a buddy or cousin who is going through a hard time. Landlords must keep in mind, however, that they aren’t running a charity. Renting to friends or family members sets a landlord up to not only lose rent, but face the horribly stressful idea of evicting them. Family poses an especially big issue, as this can permanently damage existing relationships. Aunt Edna will never forgive you for kicking her baby son Joe out on the street. If this situation presents itself, the best solution may be to assist the friend or family member in finding a residence. But don’t let it be on your property!

They forget it’s business.

The overall goal of a landlord is to make money on the rental property. As I mentioned above, successful property management is achieved when the landlord operates in a professional, businesslike manner. Issues arise when landlords forgo business protocol and forget it’s business. By always running a rental business as you would any other business, you can avoid potential tenant pitfalls that can be costly in time and money.

By ordering a tenant background check, landlords protect themselves from renters who won’t pay or will damage the property. Additionally, while landlords don’t need to be monsters, they must maintain a professional stance when communicating with tenants. Avoiding these six behaviors will minimize your chances of becoming a broke landlord.

site-iconamerican-apartment-owners-association.org/property-management/landlord-quick-tips/6-reasons-nice-guys-make-broke-landlords/

Enforceable Rental Agreements

Dan Stein - Tuesday, March 24, 2015

Being a landlord may feel like the culmination of a dream, but it can quickly become a nightmare if you end up with bad tenants who know how to work the system. Fortunately, one of the ways you can protect yourself is through property management firms that employ strong rental agreements where everything is enforceable. Too many landlords simply write something up that sounds good, or they buy a generic rental form online or at a local office supply store. That may work fine with good tenants, but what happens when a bad tenant moves in?

Your rental agreement should be unique

While there are plenty of clauses that can be the same in every rental contract, you want to tailor some of the agreement to be unique to your property. For example, you might have amenities that aren’t listed in a standard contract, or you might offer something that’s different from what most of the properties in your area have. Don’t ignore those facts in your rental agreement, as that agreement should cover everything to do with the property – including common areas and how they are to be used.

Legality is extremely important

Making your agreement unique doesn’t mean ignoring the law. You can certainly add clauses about particular amenities, and take out anything that doesn’t relate to your property, but there are still basics that should be left alone. You and your tenants are both entitled to certain things as part of your business relationship with one another, which is important to remember. Additionally, you want to make sure you understand the law, so you don’t try to include clauses in your rental agreement that aren’t legal. If you do that and your tenant takes you to court, you could end up in a lot of trouble.

Property managers can help protect your interests.

Paying fees to a good property manager might not sound like much fun, but it’s an excellent way for you to make sure you’re protecting your interests as landlord and property owner.

Having a strong rental agreement that you can feel secure about helps provide you with peace of mind as a landlord. It doesn’t guarantee that you’ll always get good tenants, but it does help ensure that you can take care of any bad tenants quickly and more efficiently. That’s good to know, and can make you more confident in your ability to be a landlord and navigate through anything that comes up with your rentals. Tenants may still try to argue about something in the agreement, but you’ll know that the law is on your side.

Source: http://www.american-apartment-owners-association.org/property-management/landlord-forms/creating-enforceable-rental-agreement/#sthash.FFrxEpk9.dpuf

Small Critters Make Big Problems

Dan Stein - Monday, February 09, 2015

Pests, Bugs and Vermin

Small Critters Make Big Problems

             

Mosquitoes       Bed Bugs       Ants       Rodents       Roaches

As a property manager, I know that it's never too early to be thinking about pest prevention methods. Not only are many of these pests a pain for residents, but some can even be transmitters of disease, according to the Centers for Disease Control. Rodents, bed bugs and mosquitoes are just some of the major pests that can appear during the warmer months of the year and terrorize residents.

 

A good property management company should be proactive in pest prevention. Waiting until the last minute to take proper precautions could result in a nightmare. Maintaining a safe and pest-free rental property will also keep both tenants and landlords happy.

Property owners can safeguard against pest infestations by following these recommended tips by Orkin and the National Pest Management Association:

1.      Remove all unnecessary food and water sources.

2.      Seal cracks and crevices around doors and windows. Roaches can squeeze through the tightest openings.

3.      Keep gutters clear, and always keep direct water from downspouts away from the structure. Mosquitoes thrive in standing, stagnant water.

4.      Install screen windows and doors.

5.      Keep mulch at least 15 inches from the foundation. Also thin out vegetation. This could provide a breeding ground for mosquitoes and access for ants, roaches and termites to enter your home.

6.      Keep tree branches and other plants trimmed away from structures. Ants can access structures by traveling across branches that touch roofs and sides.

7.      Keep indoor and outdoor trash containers clean and sealed. Periodically rinse out dumpsters and keep lids closed.

8.      Maintain a one-inch gap between soil and wood portions of a building and pay close attention to dirt-filled porches and crawl spaces. Termites could have easy access to wood through cracks in foundation walls or if wood is in contact with the soil.

Don’t let a mild winter turn your rental property into a scene from a bad B movie. If  you suspect a problem, contact a qualified pest control professional who can recommend the best course of treatment. Is your rental property prepared for the likely early emergence of freaky pests?

This article originally appeared in Property Management Insider

$$ Hidden Signs of Damage to a Rental Unit $$

Dan Stein - Thursday, January 01, 2015

Hidden Signs of Damage to a Rental Unit          

The last box has been packed, the moving truck has pulled away, and your now former tenant is on his way to his new home, so you are ready to return his security deposit, right? No, not so fast. Smart property managers at good property management companies know to wait a bit and do some checking. They know that some damage can’t be spotted during a simple walkthrough, so it may end up costing you money later as you get your home ready for new residents. Some wear and tear is normal, but here are some of the things you should check before returning the deposit.  

Vermin: Mice, bugs and even rats won’t be visible during a 5-minute walkthrough, but their droppings and signs may be. Learn what to look for, including mouse and rat droppings and where you’re likely to see it. Since you have some time before you are required to return the deposit, wait a few days to see if there are any droppings or bugs before refunding the deposit. Setting a trap or two may also let you know if your tenant has left any unwanted guests behind.

Hidden damage: Open every cabinet door and closet, and make sure any build-in features are still intact. A tenant who has broken the main shelf in a coat closet may have simply inserted the supports back into the wall; the first time you try to use the shelf, it will come crashing down. Check for cabinets and drawers that no longer close properly damage to build-in features and shelves and other problems that may not be immediately apparent.  Tenants can damage cabinets and doors by opening and closing with too much force, so make sure everything closes correctly before refunding a full deposit.

Look underfoot: Some rug and floor damage is immediately apparent, but move any throw rugs or area rugs to make sure the floor or carpeting underneath is intact. Find out about any carpet or floor damage now, while you still have the ability to charge your former tenant for repairs.

Normal wear and tear is expected, but damage that destroys the carpeting needs to be noted and charged to the former tenant. Typical carpet damage includes cigarette or other burns, pet stains (even if no odors are present), food or paint stains that can’t be removed by cleaning, and other permanent damage. If you see visible carpet damage, look underneath and make sure the subfloor hasn’t been damaged as well; water and urine can both soak into the floor and cause structural damage that may look minor on the surface.

Odors: Air cleaning products or room fragrances may mask pet or smoke odors; wait a few days for any fragrance to dissipate, and then take a good sniff. If you smell cat dander, urine or feces, or cigarette smoke after a few days, you’ll likely need to have the unit professionally cleaned. This damage can be deducted from your tenant’s security deposit, but only if you wait until any fragrances designed to mask unpleasant odors have dissipated.

Missing items: If you haven’t been inside your unit in a year, you may not realize that some items have gone missing. Review an inventory or video walkthrough of the unit before you evaluate it for the security deposit return. Blinds and fine draperies go missing most often, but make sure the appliances are still intact, and that they are the appliances the unit was outfitted with. In some cases, tenants have moved with high quality laundry or kitchen appliances and left inferior items in their place. Make sure that your original appliances are intact and still work before returning a deposit.

The water bill: In Maryland, all unpaid utilities follow the tenant except the water bill. The water bill stays with the landlord. Many a tenant has walked away with a large water bill outstanding, leaving the landlord with the burden to pay. Never return a security deposit without confirming that the water bill is paid or deducting the remainder owed from the deposit you are holding.

Maryland law allows 30 days to return the deposit. Don’t feel rushed, even if your tenant is anxious about getting a refund. Some signs of damage won’t be readily apparent or show up until a few days have passed. If you neglect to do a thorough check of your home before offering a refund you could make an expensive mistake.

Source: american-apartment-owners-association.org/property-management/latest-news/5-things-check-return-security-deposit/


Ten Top Benefits Property Managers Give to Homeowners

Dan Stein - Monday, December 01, 2014

Ten Top Benefits That Property Management Companies Provide to Homeowners

#1  Saving money with contractor relationships.

Good property management firms vet contractors, looking for the best prices and highly trained technicians who are licensed, bonded and insured. Outside services combined with an in-house maintenance staff and a capable supervisor to monitor routine inspections spot issues before they turn into major problems. Happier residents, fewer high-priced emergency repair bills.

#2  Increasing revenue with high-quality residents.

Screening residents preserves the revenue stream. Experienced property managers know how to spot red flags on applications and identify those applicants most likely to pay on time and take good care of the property. Advanced technology and screening tools allow leasing agents to evaluate dozens – or hundreds – of applicants thoroughly and quickly.

#3  Avoiding legal problems, financial pitfalls and scams.

Transunion reported that it costs landlords about $1,917 to evict a resident. The credit reporting agency recommends that property managers report rent payment history as a way to help renters improve their credit score and improve risk management for landlords.

A skilled manager understands landlord-resident laws governing resident rights, eviction processes and safety. A few other potential legal issues include:

  • · Discrimination(Delete extra bullets on each point)
  • · Leasing disclosures
  • · Rent collection and late fees
  • · Notification and access for inspection
  • · Licenses and permits

#4  Boosting occupancy numbers.

A veteran property manager understands the importance of short vacancy periods. Managers offer owners access to proven marketing strategies and rate comparison tools to capture the highest return on investment based on community standards.

#5  Stabilizing higher retention rates.

Keeping residents happy is perhaps the best way to improve occupancy rates. A good property manager looks for ways to enhance the customer experience. That means renters have access to resident portals that make paying rent efficient and convenient. Maintaining a safe, attractive community and building relationships are two other ways managers increase satisfaction to curtail frequent turnover.

#6  Simplifying accounting and oversight.

An experienced property manager shares information about tax deductions and investment opportunities for owners’ consideration. While most managers don’t help owners prepare tax returns – that’s a job left to CPAs and tax professionals – they do provide tools like on-demand owner's statements and reports that keep owners informed about the income, expenses and maintenance requests.

#7  Defining the rent capture process.

Efficient rent collection processes ensure financial success for property owners and managers. The management team assumes responsibility for establishing and enforcing strict payment guidelines. That means homeowners don’t have to spend time and money chasing down the rent every month.

#8  Enjoying the benefits of property ownership without giving up personal freedom.

Some people invest in real estate as a means of funding an active retirement. With a reputable property management team minding the fort, owners can travel extensively, spend more time with family, or explore other hobbies and interests – without worrying about their property.

#9  Increasing property value.

Annual preventative maintenance inspections, repair or replace policies for appliances, and property upgrades to stay competitive – these protect your assets and increase value. Property managers stay in constant communication with owners about steps they can take to manage property value in the marketplace.

#10 Reducing stress.

The nine benefits above all serve to reduce the stress of property ownership. It’s not easy to put a price tag on living a life free from the hassles of being a landlord, but most would agree that less stress is definitely a valuable benefit.

Handling Tenant Complaints

Dan Stein - Wednesday, October 29, 2014

The business of property management invariably means the necessity of dealing with tenant complaints. Even with the nicest tenants, and with very well maintained properties, there will be complaints. The scope of tenant complaints can range from the property itself to the neighbors. Whatever the case may be, property managers must know how to handle tenant complaints in an efficient and effective manner. Failure to address tenant complaints not only can lead to unhappy tenants who may move out but also can result in legal problems.

The first and most important step that should be taken in order to make certain that complaints are handled in the most effective manner possible is to establish and maintain good communication with the tenants from the very beginning. This is not to set the stage for tenants to complain about everything but to let them know that their property manager will be available in the event of a problem.

It is also essential to have some type of tracking system for keeping up with complaints. This can be particularly important when dealing with a large number of properties. Tenants should be asked to provide requests in a written form. The property manager must then make sure to always follow up. Written records can prove to be invaluable when needing to document how the issue was resolved.

In addition to actually recording the receipt of the complaint, it is also important to record details regarding how the complaint was handled. Records should include the dates and times as well as notes regarding the repairs that were made. It is also a good idea to include information regarding follow-up with the tenant. In the event that the tenant decides to withhold rent due to non-resolution of the problem, these details can be vital.

Handling complaints is part of the job of being a property manager. How complaints are handled can make a big difference in the relationship with tenants as well as the success of the property management business itself.


Source: Matt Angerer at http://www.letstalkpm.com

Tenant Screening: The Exhaustive List of 16 Red Flags

Dan Stein - Sunday, September 28, 2014
Tenant Screening:The exhaustive list of 16 red flags

Any property manager can tell you how critical tenant screening is to successful property management. The wrong tenant in a property can create enormous losses that could take a landlord years to recover. A good property management company cannot afford to take on risky tenants, and neither can a landlord. However, with proper diligence and knowing what signs to watch out for, the pendulum swings way over to the landlord’s side, making it possible for real estate to become a very successful investment.

Below, then, is our comprehensive list of sixteen warning signs when screening tenant applicants. Each of the following carries different weight in the screening process. Be aware that while some can be automatic deal killers, others must be considered only in conjunction with the other red flags.

(Dan: A note about edits below: Using “tenant” in the singular sounds good, but the problem is “he” or “she” must be used with it. The old style is to always use “he,” but this bias toward men can mislead owners to think women are more trustworthy – Not! So I chose to put “tenant” in the plural and use “they” rather than bounce back and forth between “he” and “she,” which is irritating to the reader.)

1. Bad credit. By far and away, the single predictor of tenants who will pay their rent on time is their credit report and credit score. A bad credit score is a deal breaker in itself. Bad credit score? STOP. Don't rent to these people! In general we look for a minimum credit score of 620. A credit score of 620 is like getting a C- in school. It's a passing grade but not great, so it must be supported by the absence of any of the other items on this list.

2. Low income. You don't have to be a mathematician to understand that if tenants are not making enough in their monthly paycheck, they will not be able to pay the rent. In general, look for a minimum income that is at least 2.5 to 3 times the monthly rent.

3. Criminal history. A criminal conviction can be a huge red flag. Get more information and evaluate carefully.

4. More than 3 convictions in 5 years. If has applicants have more than 3 convictions for anything other than traffic violations, it is an indication that they cannot obey rules. Do not look for them to obey your lease. This includes any disturbances, DUIs, driving without a license or insurance, or worse. Count all cases, including any that are “dismissed with conditions” or similar. Do not count speeding tickets or expired tabs in this category. Open and/or pending cases should be counted as convictions until they have been completed in their entirety.

4. A prior eviction. Such applicants might as well be wearing a sign that says, “I don’t care about ripping you off.” These are people who defaulted on their lease but would not make good on it by moving out voluntarily. Evictions kill profits, and you can’t afford to take the risk.

5. Bad landlord references. First of all, if this is your main indicator for determining eligibility of applicants, you are making a big mistake. Far too many landlords ask tenants to leave, only to give them a great reference. Further, tenants can ask friends to pretend they are a landlord and say great things about them. Still, sometimes you can get important information.

Was the entire deposit returned? If not, why? Not getting most of the deposit back is a huge red flag. Late payments are a problem. Terminating a lease early is a problem. Not giving proper notice is an issue. Move on to someone who understands how to be a renter.

6. Aggressive or large breeds of dogs. Pit bulls are illegal in Prince George's County. Tenants who own pit bulls, rottweilers, chows, akitas, any cross-breed with wolf, or any mix of the above could be a problem. Odds are, your insurance company doesn’t allow many or all of these types either. There have been studies about what kind of people are likely to own these breeds, and these people tend to favor riskier lifestyles. You do not want those types of people.

More people probably get bitten by chihuahuas than by other breeds, but they do not get killed by them. Make no mistake, the nature of the dog is built into the breed; all an owner can do is depress it or enhance it. If you are going to get killed by a dog, there is a near 70% chance it will be a pit bull or rottweiler. You will have a difficult time teaching a pomeranian to fetch a duck; you will also have a difficult time keeping a pit bull from killing with the right set of stimuli. Far too many young toddlers are killed by their own family pit bull, and the kid did nothing wrong except act like prey. If your tenant applicants have an aggressive breed of dog, avoid them at all costs.

7. Asking to pay the deposit after move-in. If tenant applicants don’t have the full deposit at move in, do not rent to them. You will likely never get the full deposit. And you will have a very risky situation.

8. Looking to move in less than a week. If tenant applicants need a place right away, it may not be a godsend for your vacant rental. Instead, it could be another red flag. Why do they need a place so soon? Did they just get a cure/quit notice? Did they realize they couldn’t pay their rent and needed to move out? Are they going to stiff their current landlord and move out without notice?

Yes, there are legitimate reasons for tenants to need to move in less than a week, but it is a bit suspicious so check out the reasons.

9. Living with relatives or in a motel. When people are living with relatives or in a motel, it is a red flag. Did they just need a fast place to stay because of a cure/quit and did not have time to look? This is a common theme among people who are getting evicted. They move in with relatives and try to save money. After a few months, they attempt to move out. Solid tenants always have a place, and it is usually not with friends and relatives.

10. Owing money to the state. If tenants have unpaid traffic tickets or fines, it is a problem. Do you think that they will pay your past due rent if they risk being arrested for having an unpaid fine?

11. A tax lien. This is a big red flag. If the IRS can't collect on your tenant applicants, how do you suppose you will?

12. Incomplete application. People who won’t fill out the complete rental application should be turned away. It’s a sign of false identity, a bad history, or just plain apathy. Whatever their reason, they are not the right applicants for you.

13. Needy, demanding. If your very first interactions with tenants leave you wanting to pull out your hair, just imagine what it will be like when they have a legal right to the property. Save yourself the headaches.

14. Planning to move mid-lease. If their rental application shows they are looking for a place well in advance of their current lease termination, they may repeat the pattern. Find out more before you get into trouble.

15. Not likely to follow your rules. If you smell cigarette smoke on applicants who are renting a non-smoking unit, or they are covered in cat hair but swear they don’t own a pet, you have a problem. Casual liars make bad tenants.

16. Changing jobs too often. Prefer applicants with careers, not jobs. Look for applicants who are employed at places that have paid vacations, sick days, health insurance and paid holidays. Otherwise you may find rent late due to Christmas, kids getting sick, taking time off to go to a wedding, etc. Prefer not to rent to applicants who are a cashier today, a tire changer tomorrow and a burger flipper in six months. If they change jobs that often, you will soon be without rent when they are between jobs. Look for at least 12 months at the same job or career. It is a lot tougher to track down a judgment and get a garnishment with a job hopper.

Property Maintenance -- The Achilles Heel of Real Estate

Dan Stein - Thursday, August 28, 2014

Property Maintenance Can Be the Achilles Heel of Real Estate Investments

In the realm of real estate investment, property maintenance can be the weak point where profits are eaten up and headaches abound. Thus, proper property maintenance is a necessary evil in the business of property management. Necessary because naturally things may break, get old, worn, or require repair or replacement. Walls may need to be painted, carpets may need to be replaced, appliances can break down, and systems need occasional maintenance. Evil because all these cost money, and no one wants to spend more than he has to.

Property managers know there is a delicate balance between when to repair and replace and when to leave things as they are, postponing the inevitable for another season. A good property manager with a good property management company will make every effort to maximize the highest returns on the property. 

A wall may be a bit spotted or an appliance may show some wear and age, but when these factors will not negatively impact the anticipated rents a property will produce, then there may be no need to invest the funds now. On the other hand, when these issues become so pronounced as to have a negative impact on the appeal of the property, to the point where tenants are not willing to pay market rate, it's time to invest in some maintenance/repair.

Some landlords think that when they hand over their property to tenants in impeccable condition, then that is the way it should look when the tenants move out three years later. They want to forget that if they themselves had been living there for three years, they could not have kept it in the same condition either. Things will happen. Carpets can get dirty and spotted even in the family where there is a standing policy to take off shoes. Walls get dirty by dust and dirt adhering to them, not to mention children's sticky hands. Ovens used for cooking will get used and dirty. Heavy duty appliances like washers, dryers, dishwashers and refrigerators will sometimes break down.


What can be done?

In spite of the above reality, there are things a good property manager can do to save on expenses. This begins with a thorough walkthrough of the property with tenants at the time they move in, noting any items that are not perfect. It should be explained clearly to the tenants that they will be held responsible for anything not listed on the walkthrough document. That is, everything except normal wear and tear. For example, tenants would not be held responsible for worn areas in the carpet in high traffic areas but would be held responsible for spotting and stains.

The property should be inspected at least once or twice a year during the tenancy to make sure the tenants are taking good care of the property. Then at the end of the lease term, once the tenants have moved out, the property should be inspected again, comparing the notes when the tenants moved in with the notes when they moved out. Any issues not attributed to normal wear and tear should be charged to the tenants and subtracted from the security deposit.

Another thing to help mitigate the expenses associated with property maintenance is to have in place a home warranty for plumbing, electrical and major system failures. Some home warranties are better than others. See my previous blog on home warranties for more information on this topic.

Last, it also very important to have a good vendor list of inexpensive handymen, painters, appliance repair persons and other vendors who can be called upon occasionally to help maintain a property. Good property managers will surely keep an updated list of such providers to support their property management company.

Home Warranties … The Good, The Bad and The Ugly

Dan Stein - Sunday, July 27, 2014

Home Warranties

The Good, the Bad, and the UGLY

The Good.

Home warranties are insurance policies sold to homeowners and property management companies to warrant a home against system breakdowns. A leak under the kitchen sink or a backed-up toilet? No problem. A call to the warranty company, and a licensed vendor is sent out to correct the problem. Landlords and property managers appreciate the convenience and the savings (sometimes) that these warranties provide. Items covered can include heating, air conditioning, water heaters, plumbing and electrical issues, and kitchen and laundry room appliances. 

When a breakdown occurs (a ceiling fan starts wobbling, a bathroom faucet is leaking, the A/C isn't cooling, the dryer starts making a loud noise, or the dishwasher starts leaking), one might normally have to start calling around to find the right vendor and take a chance with a stranger to fix the problem, all the while wondering what the total cost will be to get things right. This can also be very time consuming. But with a warranty, it takes only one call to the warranty company, and they send out the vendor to fix the problem.   

The Bad

The cost of these warranties range from $450 to $550 per year. Some (but not all) also require a deductible ranging from $75 to $125 for each call.

The Ugly

All warranties have their list of exclusions, that is, items that are not covered under the warranty.

For example, the refrigerator may be covered but not the ice maker, bathroom plumbing may be covered but not the whirlpool jets that come in some tubs. Any items that were improperly installed or not installed according to code may not be covered.It is usually a long list of items. –Also, any problem that pre-existed the purchase of the warranty will not be covered.

In Summary

Home warranties are an excellent way of providing homeowners with the security of knowing that most sudden or large repair issues in the home will be covered by the warranty. 

Not all warranties are Equal, however. It is important to shop around. Get recommendations from a property management company, as they are likely to know which ones are good and which ones are better to avoid.  Online reviews can also be very helpful.

Read the contract to find out the amount of the deductible, if any, and to see what is covered and what isn’t.


News & Current Events An Op-Ed of our local property management news.

Renting to Family or Friends.... Is it Ever a Good Idea?

Renting to Family or Friends.....Is it Ever a Good Idea? When you work as a landlord, it’s very important to keep your personal and professional life separate. A lot of landlords don’t do that, in that they choose to rent apartments to family members or friends. That might seem like a great idea on the surface. You already like them, so renting to them makes logical sense. You get the chance to help out a person you care about, and you’re able to have renters in your units so you have cash flow coming in. It wou...

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SILVER RIVER PROPERTY MANAGEMENT
14300 Gallant Fox Lane, Ste 225 Bowie, MD 20715
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