MRLANDLORD.COM MONTHLY TIPS ON MANAGEMENT

FORMULA TO DETERMINE HOW LONG TO HOLD A PROPERTY FOR AN APPROVED APPLICANT A landlord asked: How long do you typically agree to hold a property for an approved rental applicant who is willing to give a deposit or fee for you to hold the property and take it off the market? This is with the understanding that during the holding period, you, the landlord, will not get rent. Actual Rent will not start until the resident moves in. One seasoned landlord gave the following recommended formula: “The time I will hold a unit off the market waiting for someone to pay rent is a function of my market. I take it as a function of the local vacancy rate. Here it’s around 4% which translates to about two weeks (think 2/52 is 0.038 or 3.8% which round to 4%). If I hold a unit longer than 2 weeks at the current local vacancy rate I am a sub par performer. I won’t do that. Now if local vacancy rates are 12% (6 weeks) then I would easily be willing to hold for a month. If the unit is highly desirable then I would lessen the time and correspondingly if it’s hard to rent I would increase the time.”

BEWARE OF TENANT CAMERAS! A recent discussion on MrLandlord.com about entering a rental property to do maintenance (with permission but without the resident present) reminded me of two online videos. 1. Resident had called with a stopped drain. Repair tech entered, checked the drain, needed a plumbing snake so he called his helper. While he waited he got a drink of water, used the toilet, checked the plumbing behind the washer, then thumbed thru the resident’s magazine on the counter. Tech did not know he was being videoed the entire time by the resident’s motion activated camera. Think Nanny Cam. The resident was FURIOUS and posted this online. Got TONS of comments about how lousy that apartment complex was, etc. 2. A local landlord was “outed” on a local Facebook gossip site with a video of his short outburst toward a tenant. To his credit he shouted then walked away. But his shouting was posted online. Remember, the world has EYES and can post it for the world and history. Another experienced property manager added: “I have long held that this will happen…I ALWAYS caution rental prospects and owners who go into occupied homes to also NOT discuss furniture, personal items, housekeeping, etc…wait until we are outside and on the curb…. While in rentals, occupied or not, do-it-yourself landlords should always believe someone can record every thing they say and do. To think otherwise, is putting yourself at risk.

SCREENING TIP – VERIFY EMPLOYMENT BY CALL   Just wanted to remind landlords to check on employment status by calling to verify (if possible), not just by seeing a pay stub. Got an application back two  weeks ago, we ask for copies of pay stubs and copy of license to be turned in with it. Two pay stubs were there, no ID copy. The pay stubs were from Jan & March. She didn’t fill out employment section on application (red flag). I called employer expecting to get no info and having to fax in authorization, etc, but no need, she was no longer employed there since April. Emailed her stating this, she said,  “Oops must of given you the wrong ones.” I said fine, get me April and  May pay stubs and photo ID and we’ll see. Never heard back. The funny thing is, we got an email from her today (mistakenly to us), applying for a job posted on craigslist. Too funny. Check their references! LANDLORDING AND THE TEXTING GENERATION Are you keeping up with the times? The vast majority of young adult renters use text messages as their primary method of communication. Do not miss out on potentially good prospective residents or not stay in communication with good current residents by avoiding or ignoring texts.  As suggested by one professional property manager; “I routinely respond to voicemail messages with a text and have my website in my text signature….Texting is the NEW BLACK!” DON’T RELY ON RESIDENTS TO CHANGE FILTERS If residents don’t change the filters, stop trying to prove to residents that it is their responsibility to change the filter. As one landlord advises, “That dirty filter is ruining YOUR A/C system. If you, or your resident, do not change it, this will cause a premature and very costly failure that can end up costing far more than the tenant will/can pay. SINGLE FAMILY RENTALS VERSUS MULTI–UNITS, WHICH IS BETTER?  This is a question that is often asked by real estate investors, especially those who started with single family rentals, and want to know what they are missing.  One landlord who owns both single family and multi-units gave the following assessment based at a half dozen or so different factors. “I own both Single Family Homes (SFHs) and multi units or “plexes”.  There are pluses and minuses to each type of property. Here are the few I’ve experienced: 1) SFH – the one tenant doesn’t compare rents to what the other renters are paying. 2) SFH  – no one should expect you to do anything about “the noisy or problem neighbors” unlike a plex where the neighbors are also your tenants. 3) SFH – easier to schedule work on since you only have to coordinate with ONE set of tenants vs. two. Can’t go into unit A of a PLEX at 6 AM Saturday morning to swing a hammer if tenant in unit B sleeps until 9 AM unless you work it out. 4) SFH – tenant usually responsible for their own utilities, lawn care and is not as quick to look to the landlord for a lot of the minor upkeep. 5) PLEX – you often have some shared utilities, especially in the older style buildings. Landlord is often responsible for paying those utilities.  Be sure to calculate in cost to split water/sewer, etc., if practical. 6) PLEX – usually cheaper to insure PER UNIT. Example, I have two 2-bed houses that cost about $350 a year each. I have a duplex with two 2-bed units, cost is $500 per year for the same $$$ coverage and liability. $200 savings. 7) PLEX – costs to buy is cheaper per unit. Closing costs for 2 houses are more than for 1 duplex. Two houses have two sets of closing fees, recording fees, title search and insurance, etc. 8) PLEX – if you upgrade one side, they will talk to the other side. Other side may now demand the same upgrade. 9 PLEX – usually cheaper to maintain because of economies of scale. For example, only one roof for multiple units. And when sending over someone for maintenance calls, can respond to several service requests all at the same time, all in one location for a lower per unit cost.  General rule of thumb: Operating cost per unit decreases as number of unit increases.