Property Management Blog

reserve? it’s like a rainy day account.

When doing an analysis on a property, one of the things you should account for is a reserve fund. Our clients allow us to hold a reserve in their account for them. Actually we require it. It’s a relatively small amount but it’s enough to cover most any expense that comes up after we distribute their funds to them every month.   Read More »

it’s just a few coins

We have this little office pool going where you guess when the postage meter has to be refilled. Who ever guesses the correct date, wins. When we first started this, you just won bragging rights and you just had to get the closest to the date. We changed it to you have to pick the exact date and you would win money. If nobody guessed correctly, the pot grows. Where does this money come from? The money is found money. We do “move out” inspections once a tenant moves out. The tenant always has the opportunity to be present. Some tenants don’t bother showing up for the inspection. Probably because they leave the place a mess and they know the inspection report will come back not in their favor. It seems when we perform these particular inspections, we always find loose change laying around. And, I’m not talking about a penny here and there, I’m talking a lot of coins scattered all over the place. I’ve even found a roll of nickels once. Sadly it’s typically tenants that have financial problems. I truly believe that the fact that they leave money lying around, probably thinking that it’s just a few coins, is the root of their financial problems. When you treat money with such low regard, even if it’s just a few coins, your overall mentality toward money is not conducive to financial security.   Read More »

they had the money

This past weekend, I was scheduled to show a foreclosed property that one of my clients was looking to buy. I arrived about 15 minutes early and was walking through the property when someone knocked at the door. It was a neighbor who was a little curious about what was going on with the house because it had been vacant for so long. He gave me a pretty good history of the house. I told him that I had a client coming to see it and possibly buy it and that he was an investor looking to buy it as a rental property. This gentleman let me know that he had four rentals locally and how bad tenants were in that area. When I asked him to explain, he told me about all the bad things his tenants had done. Security deposit never covers the damages they create. I was a little blunt; I asked him why he rented to them in the first place? He said they show up and have the money so he rents to them. I let him know that I’m a property manager and we perform background checks on all tenants and asked him how he performed his background checks. His response was not surprising. He said he didn’t have time to do background checks.   Read More »

pawn star’s mentality

One of my favorite TV shows is Pawn Stars. If you don’t know it, it’s a reality show of a pawn shop in Las Vegas. It shows people coming in trying to pawn or sell items that they either bought from somewhere obscure or was left to them by a late relative. On occasion, someone will bring an item that they have no idea of its value. The question that’s always asked when someone wants to sell something is “How much do you want for it?”. Not knowing its true value, they come up with a number like $500. Rick the owner of the pawn shop appears to be an honest person and will tell a person if he thinks it may be worth more. As usual, Rick will call a friend that’s an expert. The expert will come in, examine the item and declare it a rare find and value it at some large number, let’s say $7,000. The seller is always shocked and elated. Then Rick will ask “Now how much do you want for it?”. The seller will inevitably say “$7,000”. Of course Rick will laugh and point out to the seller that the $7,000 is what the expert said was the retail value and he has to make a profit and offers $2,000. The seller almost always hardly budges from the retail price, and as Rick moves up in price they act as if they would be taking a big loss if they come down much more. Now wait a minute. Didn’t they originally ask for $500? And, when they came up with a price of $500, they were surely thinking that they would have to come down from that in the negotiation. Through Rick’s efforts, they are taking home a whole lot more money than they thought they were going to in the first place. Why not be happy with that?   Read More »

why is it still vacant?

We face this a lot. We market every property the same way, but some rent right away while others stay on the market for a long time. When a property stays vacant for a while, I get owners calling me asking me why we don’t have their property rented as if we’re not doing our job. I let them know that we’ve been showing their property to those who inquire about it, and for people that call wanting to know what we have available, we tell them about all of our vacancies. Sometimes I think that they want us to force tenants to rent the place.   Read More »

security deposits

One of the things a lot of landlords fail to realize or refuse to accept is that the security deposit belongs to the tenant. The landlord may be holding it, but it still belongs to the tenant. As a professional property manager and regulated by the state of Missouri, I’m required to hold the security deposit in a separate bank account. I suggest everyone do the same. That’s one of the reasons I require the tenant to pay their rent and deposit on separate checks at lease signing. This helps keep records straight. Our state has regulations regarding security deposits that help protect both the tenant and landlord. For example, you cannot charge the tenant for normal wear and tear. Normal wear and tear is very subjective and if challenged, you need to be prepared to defend your assessment. What I would suggest is to talk to other landlords that have been challenged in court and see what their experience has been. Another regulation addresses the use of security deposits for the last month’s rent. Unless the landlord agrees, the tenant may not use their security deposit as last months rent. If they try to, we consider the rent to be late and charge late fees. Doing so allows us to bill them for the late fee, show in our system that they did not pay the last month’s rent, and have an outstanding balance. You might say that it doesn’t matter, you probably won’t get the money anyway, but if the tenant ever uses you as a reference, you won’t be giving a very good reference. And, if you want, you could make a small claims case and have it on the tenant’s record. If another landlord does a background check, it’ll show up.   Read More »

yes it’s called fair housing

The other night I was at a social event. I ran into someone that I’ve met before but don’t know well. He informed me that he was one of my competitors. I knew that he didn’t hold a real estate license so I asked him how so? He let me know that he owned rental property and he self managed. Well that’s not really a competitor, but I understood what he was saying. I let him know that a lot of people self manage and I’m excited for anybody who’s successful. He proceeded to tell me a little bit about how he ran his business and how well he was doing. One of the things he told me raised a red flag. I won’t give any details but part of his screening process could easily be considered a violation of fair housing law. I let him know that he could be fined a minimum of $10,000 per violation. He told me of something else he did when approving or denying an applicant. Again, what he was doing was in some circumstances a fair housing violation. His response was “are you telling me that I can’t keep people out of my property that I don’t want?” I let him know that it depends on what it is that he doesn’t want.   Read More »

below market rent

I recently read an article about how to keep tenant turnover low. One of the suggestions was to not raise a tenants rent. The author commented that tenants do not understand that taxes go up or insurance goes up therefore won’t understand why rents go up. I for one am in complete disagreement with this concept. Everyone in this business has to understand that this is a business. It’s true that turnover has cost, but turnover is part of the business. Yes, keeping turnover to a minimum is something to strive for, but at what cost? I don’t buy into the concept of tenants not understanding that your cost goes up. Everything goes up, utilities, groceries, and rent. Keeping rent below market value only hurts property owners in the long run.   Read More »

you say you don’t want to be a landlord?

I just completed another weekend hosting a booth at the home and garden show. Having a booth at the home show is another way of marketing our business, to get our name out there and let people know what we do. Home shows typically are places for companies such as builders, landscapers, cabinet makers and anyone who has anything to do with improving your home or garden. So when people pass by our booth and don’t see a display of carpeting, cabinets, or cookware, they will ask “what is it that we’re peddling?” Our response is, we’re a real estate company that specializes in working with real estate investors. We help them find rental property to buy and can manage that property for them. Some people are polite, take our giveaways, some ask more questions and are truly interested in what we have to offer.   Read More »

cats and dogs

One of the questions I ask a client when we acquire a new property to manage is if they want to allow pets. Some are firmly against pets, while others are very open to them. Then there are those that are just not sure and want my opinion. When it comes to making a decision about their properties, I don’t like to give my opinion, so I just state facts to help them decide.   Read More »