Over the last 15 years there has been a dramatic rise in the number of people who choose to invest in property for the purpose of renting. Buy to Let sales have become much more common. It is believed renting has become very popular among tenants due to the flexibility and freedom it offers, without the commitment of buying a home. For many, purchasing and letting property has become a very profitable investment. They provide a steady, reliable income as well as a steady rise in value of their property. The income from renting property should be enough to cover the landlords mortgage payments and make a profit.

Initially it appears that property investment and rental is a flawless way to a steady income and security but property management can be a complex area with its own set of risks and pitfalls but with the right knowledge and approach it can be very rewarding. Letting agents are a good way to have your property professionally managed for a small cost. They will generally take 10%-15% of your monthly rent, plus a one off management fee and will take care of all aspects of managing your property from arranging marketing, web site advertisements and property signboards, supervised viewings, credit checks, tenancy agreements and inventories, collection of rent, property inspections, and possibly a 24 hour emergency contact.

Reasons for Rental Popularity among Tenants

For tenants, renting has become a more flexible and attractive alternative to buying. There are several benefits that property renting can offer tenants. With job insecurity, many people now fear having the commitment of mortgage payments in the event they are suddenly out of work. It allows co-habitation of couples without the difficulties of a mortgage if there is a split. Divorce rates have become much higher in recent years and with an aging population where people are living longer, there is more demand for homes for people living alone. Getting onto the property ladder for first time buyers has become more difficult than ever, leaving some young buyers with no other option but to rent.

Reasons for Rental Popularity among Landlords.

For landlords, investing in property can provide a secure and steady income alongside an existing job or an alternative to other forms of savings and investment. Property rental in the UK has steadily become more accepted in the last few years, catching up with places with more established industries like Europe and the US. The demand for rental property is strong and with the guarantee that the landlord can have the property back at any time, as well as charge reasonable rent is very appealing. The option of Buy To Let mortgages has provided a profitable alternative to building societies, stocks and shares with far less chance of losing your money.

More Properties

Many landlords start their property rental investment with one property as a sideline income while keeping another job. However, this has led many to take on more properties, with some eventually owning a full portfolio, which can support them financially. Another area of investment which is rapidly gaining popularity is commercial property. Property management and Buy To Let is generally associated with flats and homes but with towns and cities full of shops and offices, the opportunity for investment in these areas is also being noticed.

With property investment comes a level of risk. The risk with property however, compared to the reward is far lower than the stock market, with a higher return than savings and building societies.

Glasgow, Cambridge and Ely Letting Agent | Landlord Property Management Services Glasgow |

James Duncan

http://www.youlet.co.uk

Consider the Maintenance

One of the first considerations you need to make when you buy real estate and decide to become a landlord is the cost of maintenance and upkeep. Remember, you still own the property and, as the landlord, you are responsible for maintaining it. If you are not a handy person or if you simply do not have the time it takes to complete repairs and perform maintenance on the real estate you buy, you will need to hire someone to do this for you. This might mean hiring a property manager, which will cost you about 5% of the gross income you earn from your rentals.

Learn the Law

The laws affecting real estate and rentals will vary from state to state. Therefore, you need to make sure you are aware of the laws affecting you in your state. Although there are some variances in these laws, the basics are essentially the same – your tenant has all of the same rights of ownership except for the right to sell the property. In addition, as long as the tenant pays rent, he or she has the right to live on the property. At the same time, they do not have the right to damage the property in any way.

The law requires that you keep the real estate in a “habitable condition.” Although there is a bit of gray where this is concerned, the law is understood to mean that the property must have working locks on its doors and windows, the heat must work, and the roof cannot leak.

Know How to Find Tenants

Before you sink your money into a piece of real estate that you plan to rent out, make sure you have a good idea as to how you will get tenants. In addition, be sure you are clear on the laws when it comes to interviewing and screening tenants. There are several discrimination laws in place that limit the types of questions you can ask a potential renter.

Before you purchase that real estate, set your standards so you know what you will and will not accept from a tenant – and make sure your standards are all legal. Some areas to consider include:

- The price of rent
- Whether or not you will accept pets
- The number of allowable occupants
- The amount of your security deposit
- Whether or not utilities are included in the rent
- Any minimum income requirements you expect from your tenants
- Whether or not you will accept HUD Section 9 participants

Make sure your standards are clear to all potential tenants before you even begin the interview process.

By carefully considering each of these factors before you make a purchase, you will be better able to determine whether or not being a landlord is the right step for you.

Eric Bramlett is the broker & co-owner of One Source Realty in Austin, Texas. Eric currently manages his Northwest Austin Real Estate Guide, his Lakeway real estate company’s website, & his Steiner Ranch real estate Guide.

The fact that the real estate market has cooled and is coming back to reality shouldn’t discourage anyone from acquiring rental property and becoming a landlord. The truth is some very attractive buying opportunities are being created for real estate investors who can (and are willing to) take advantage of them.

As of this writing, many of the top real estate experts believe that these opportunities will peak during the next six to twelve months before they begin to fade. They’re predicted to reach levels that haven’t existed for many years. The world’s greatest investor, Warren Buffett, has long practiced his famous philosophy: “Be fearful when others are greedy, and be greedy when others are fearful.” It’s the perfect investment acumen that also applies to real estate – buy low and sell high when the opportunities exist.

With that being said and with real estate prices currently on the decline, it’s hard to know just when prices will reach rock bottom before they level off and begin to rise again. However, no matter what the pundits may advise, trying to “time” and predict the future of the real estate market is impossible without having a crystal ball.

The truth is no one really knows for sure what the future will hold. But one thing is certain – real estate history has proven repeatedly that the markets eventually bounce back and reward those shrewd investors who had the wisdom to invest and take advantage of opportunities and low prices during weak markets.

But in the landlord business, buying investment properties at attractive prices, while extremely important, is not an end in itself. The other part of the equation that makes the business thrive is effective property management. Acquiring knowledge and learning how to manage the property effectively will make it operate smoothly and maximize its cash flow. And this is really the name of the game for achieving long term financial success in the business.

Time will take care of property values and appreciation – the longer an investment property is held, the greater its chance for price appreciation. And, effective property management is the key ingredient that allows a landlord to “hold onto” and operate a rental property long enough to let market forces work and increase its property value over time.

In summary, securing your financial future and maximizing financial success with investment property relies primarily on three factors;

1. Buying Property at Discount Prices (i.e., during “Buyer’s Markets”)
2. Learning and Applying Effective Property Management Techniques, and
3. Holding the property long enough to let “Time In the Market” perform its job of providing price appreciation.

All three of these factors will surely maximize your success in the landlord business.

About the Author:

John Turchetta has been an experienced diy residential landlord for more than 23 years. His website, http://Great-Landlord-Info.com/M features a wealth of terrific information on the residential landlord business that all residential landlords, from novice to experienced, can benefit from. He has also written the comprehensive “Landlord’s Library” series of e-books that cover the complete spectrum of subjects on the residential landlord business.

I’m a compassionate person, always trying to believe the best about people, and while I continue that philosophy, there have been times (this being one) where I was taken advantage of. There are two schools of thought; one being the tough and tenacious one, always keeping a certain distance between you and your tenant. The flip side is the compassion one, where you get to know the renter and their family (that’s the one I’d practiced in this scenario). While one will rarely allow a social interaction, the other can cause its own set of headaches.

What I’ll aim for in the future is a blend between the two. I refuse to change my philosophy about life (its keep me sane and happy) still I realize there are those who would take advantage of anyone’s kindness. In other words (as heard in political circles) “trust but verify”.

No matter whom the person is; family, friend or stranger, always get references and a security deposit. In my case, if I hadn’t had the deposit, I’d have been out the money to get the carpets cleaned, not the end of the world, but not good business either.

Here’s the policy I’ve adapted and while sometimes difficult, it’s kept me out of financial trouble and it’s really pretty simply. Be upfront with the renter and tell them what you expect. Is the rent due on the 1st? Then make certain they know you expect payment on or before that date. Do you give grace periods? If you do, then expect them to be used. Do you charge late fees; again make that fact known in the beginning. If you’ll do this, then it will be you who sets the rules and there will be no misunderstandings later.

Now this next one is very important and probably (depending on your personality) the most difficult. Stand behind what you say; if you charge late fees, then charge them, don’t let it slide. No one likes to pay extra. For example, when you get your bill from the electric or gas company, have you noticed if you pay you bill on time it’s one number, and if you pay after a certain date, the figure is higher. They are letting you know, emphatically, exactly what you owe and what you’ll save by paying timely.

Over a recent holiday I was fortunate to attend an Amy Grant concert, beautiful music, efficient staff and VERY good security. On the back of their t-shirts were written the words… “Polite but firm”. What a great slogan and perfect advice for every landlord. Everyone has difficulties in life, I certainly have had my share, and during those times, compassion is appreciated. Still, to keep their problems from becoming yours, you must be firm, not mean, but firm.

Doing so won’t hurt their feelings; instead you’ll find they treat you with respect, knowing their limits. This is your property, your investment, and your cash flow, and the FIRST person you must respect in these transactions is yourself.

June is a professional writer and Internet marketer. Her background is comedy and she always tries to include that in her articles. June’s site Wealth, Health and Success was created to help you achieve COMPLETE success in life. “I believe life should be balanced in order to achieve true happiness. Money is important, but so too are relationships and our health, which is often taken for granted till it is gone”. June recently created… Custom Written Articles which provides unique content to webmasters worldwide. Not busy enough with these tasks, she also contributes to Find-Read-Discover.com

When my father upgraded his computer, I reloaded his old one so the hard drive was clear and gave it to my one tenant’s teenage daughters so she could use it for school. It was the ‘caseworker’ in me that made me do it and from that gesture I felt good.

It seems that computer was a turning point for me in my career in property management. Not because of the incredible satisfaction I felt from helping someone less fortunate. Not because I gave a low income family a computer they could not have afforded otherwise. But it was a turning point because of the overwhelming sense that that teenage girl could not have cared one bit that her great landlord gave her a computer for free. This little teenage diva felt entitled to this hand out and in return didn’t have a thank you, or even a neck snap in return.

It was then I realized that I am a landlord first and “friend” comes somewhere down the list. I have to thank this teen diva for that awakening because it had made me aware of the line in the sand that I should never cross.

There are many tenants out there that feed off of landlords that want to be friends. Friends do friends favors… Like let them slide on the rent for a couple of days/weeks/months… They dismiss the hole in the wall from a frustrated fist. All this will lead you holding the bag when this pseudo friendship come to a halt and your nice little investment is looking very similar to a well partied college row home.

This do good, caseworker mentality that I had in the beginning was the reason my first troublesome tenants were able to string out their own eviction for well over 6 months. I did not want to be the one to kick this family of 8 out of the apartment. Notably, only 3 were present when they moved in. The rest of the family filtered in during the 9 months that followed. Claudette paid the rent on time the first month but when the bread winner boyfriend moved, out things went south quickly. Me, being in caseworker mode, tried to help her best I could but she fell 2 months behind in rent before I even considered eviction. I felt bad for them. I liked their little daughter who would hug me every time I came over. Looking back, Claudette probably put her up to it b/c she saw how children soften my heart. Eventually, Claudette was forced to leave and I was learning. As I was cleaning out, repainting and repairing the wrecked apartment I had lots and lots of time to think about those lessons I had learned.

Three years later and I have run across my share of “Claudettes” but now a big red flag goes up every time a tenant tries to get too lovey dovey.

Here’s an example. One day I was wearing an Eagles sweatshirt (the year they went to the super bowl) while fixing a leaky sink. The tenant, who already was on thin ice, saw her opportunity and seized it… “Eagles! Oh yea, a fellow Eagles Fan!”… With high five locked and loaded she came traipsing into the kitchen. Being a loyal E-A-G-L-E-S fan, I threw up my own high five…. CLAP! And I responded, “now Terry, where’s my rent?”

Long story short, as landlords we don’t have to be unapproachable and cold but we do need to be on the look out. We need spot the occasional parasite tenant who wants to feed off an over friendly landlord. The bank asks that you pay your mortgage by the 16th of the month. No amount of friendly chatter will get you out of paying the mortgage on time. And that same friendly chatter shouldn’t influence you in collecting the rent when it is due. Always be a landlord first, and a friend second.

Corey Bornmann is a Real Estate Investor and Web Designer. His latest project is www.FreeLandlordSoftware.com, a website that provides free resources for landlords including lease and other form downloads, tenant rental history database, web-based management software, articles and more.

* All applicants over eighteen should fill out and sign and date an application

* All applicants should provide current photo ID such as a drivers license

* Spouses should be considered as separate applicants for the rental process

* Be aware of fair housing and local discrimination laws. Do not write on the application or make any notes that could be interpreted as code words or marks used to differentiate protected classes.

* Time and date stamp all applications. Process them in the time/date order received to remain objective.

* Be sure that it is signed, that is where your permission to run a credit check and to check into backgrounds is given by the applicant.

* Have the application signed in your presence. Verify the signature against a drivers license.

* Use the same screening criteria for everyone

* Don’t accept incomplete applications

Verification

* Check the application signature against the photo ID

* Do a credit check and we suggest you buy the FICO score, the eviction report and the social security check. Any discrepancies or negative reports here are a red flag. Remember, you will have to deal with this person for a long time. OFAC or screening for terrorists is now mandatory.

* If you are renting a commercial space you may want to consider a business to business report as well as a credit report on the owners.

* Many applicants do not have a social security number or credit history. It will be difficult to get a credit report without this and you may have a legitimate reason to reject this applicant with no reflection on the character of the applicant, if you require credit reports of all applicants. You may also try to solve this problem by asking for an in-state guarantor.

* Always be aware of Fair Housing laws as well as your state and local laws.

* Consistency in applying your rules is key to staying within guidelines.

* Verify employment income using pay stubs and prior tenancy with landlords

* Use the tenant screening checklist available at www.yourpropertypath.com

Approval or Rejection

If the applicant(s) are approved you can notify them by phone or letter. Be sure to confirm the rent, the move in date and the security deposit.

Set up a lease signing appointment and be sure to give yourself enough time to go over the house rules and discuss any issues that may require written addendums prior to the signing. After a properly signed lease is complete, security deposit and first months rent is paid you may give the keys to the new tenants. Use the lease signing to get to establish a friendly relationship with clear expectations of the responsibility and the obligations of the owner/ manager and the new tenants.

If the tenant is rejected a rejection letter may be sent along with the applicants rights regarding a credit report. Many credit reporting agencies will offer a tenant rejection letter or you can use the one on our site.

Howard Bell for yourpropertypath.com

www.yourpropertypath.com

At Your Property Path we believe that knowledge should be free and freely shared.

Here’s a cautionary tale that will make my point clear. I knew a landlord who needed to evict a tenant. The only trouble was, he couldn’t find his copy of the tenant’s lease! He didn’t remember exactly what the lease terms were and certainly didn’t have the tenant’s signature on a document that spelled out the house rules. With no other options left, this landlord did something dangerous, unethical and even illegal – he entered the tenant’s apartment, poked around until he found the tenant’s copy of the lease, ran out, made a copy for himself, and snuck the tenant’s copy back in.

It’s easy to imagine what this landlord risked. If the tenant found out, he could have had the landlord arrested. Even if the tenant didn’t press criminal charges, a housing court judge would certainly have dismissed any eviction complaint. By using, and sticking with, a system of organizing his records, the landlord could have avoided all this.

I recommend using property management software to keep all of your records organized. At the same time, you should have a paper filing system so that original documents are available when you need them.

The most important part of my system is the landlord software. It keeps all of your documents organized automatically by tenant, building and owner; this means that you can find everything related to one tenant, for example, by simply searching on that tenant. When you go to a tenant record, you can click on tabs to see the tenant’s rent status, incidents, maintenance issues, lease document and so on.

Of course, you have to enter this information into the rental property program, which does take a little time. However, that’s nothing compared to the amount of time you save by having all of your records accessible any time you need them. Also, landlord software is getting better all the time. You can now import some information from other sources, like Microsoft Outlook email, to reduce your overall workload.

The other part of my organization is the paper filing system, which should be designed to match the computer system as closely as possible. It would be great if we never had to deal with paper documents. Unfortunately, legal authorities just won’t take our word for it that a lease document on our computers is exactly what the tenant signed. If we ever get audited, the IRS will want to see our actual bills, not what we recorded on the computer.

Because my computer organization is excellent, I almost never need to get anything from my paper filing system. The only way I would ever need anything from there would be if some third party, like my lawyer, needed an original copy of a document. It’s much more likely that I will just need some fact – how much was that property tax bill? – that doesn’t require an original.

My system starts with the premise that I will save every document I get or send out regarding my landlord business. I may not have time to file documents whenever I get them, so I have a “holding cell” where I put documents before I file them. My holding cell is a cubby on my desk. I put my receipts, bills and what have you in there as soon as I get them; this is usually at least once per day. I never put anything not related to property management in there. I never put anything related to property management anywhere else, and whenever I take anything out of there, I immediately record it in the landlord software, then put it in the proper place in my paper filing system.

At least once per week, I go through the “holding cell” and file each document. The system is a series of folders inside larger dividers. For example, I have one divider for each tenant. Within the divider are folders for photos, the rental application, the lease, any correspondence, and written summaries of any incidents that took place at the tenant’s apartment. Those tenant dividers go inside a larger section for each property, which also has dividers for (for example) bills from different contractors.

This system requires a lot of file folders and dividers, as well as a fairly large file cabinet. It’s not really portable and that’s on purpose. I feel like every time I take a document out of my office, I might lose it. On the very rare occasions when I take something out, I would prefer to photocopy it, give the copy to the lawyer or accountant or whoever wants it, and stick the original right back in the files, where it belongs.

On the other hand, my property management software is portable. It runs on the Internet and I can access it from my laptop, or any other web-connected computer. That means I can get to my important records from almost anywhere. And, if I need an original paper document, I can get it in a day or two without much searching or aggravation.

For example, I can pull up a bill from my electrician and confirm that payment was issued, all within my software. The convenience of my property management software lets me spend time on more important and fun jobs; making my properties more profitable, and finding new and promising deals.

The last step, of course, would be a backup schedule for my data. With my online rental property software, that’s not necessary; because it’s hosted on a web server with constant backups. I know that whenever I need some crucial fact, I can open up my laptop, and it’ll be right there in front of me.

Brendan O’Brien is the developer of Property Masterrental property management software. Our landlord software runs on any Web-connected computer with full accounting, alerts, nearly 50 reports, and many other great features.

http://www.pcpropertymaster.com

Now you have the property. Next step is to decide if you want to manage the property your self, or hire a property management company. If you want to manage the property your self, you should get training from your local apartment association. They have classes to help you. Also, you should read on property management. Don’t just jump in and start being a land lord and not know what you are getting your self into, and what demands/requirements are needed.

If you decide the you would like to get a property management they will take 5-10% leasing commission of annual rents. I suggest that you go to http://www.irem.org and find a property management company in your area. Once you have selected a group to call, ask them the following questions (or you can go to their web site and find answers to the questions below):

• How long have you been in business?

• What professional designations do you hold?

• What continuing education programs do you offer your employees?

• Can you call existing clients of theirs?

• What software do you use for managing property and why?

• Can you get a sample management agreement to review?

• What costs are included in the agreement and what is extra?

• How many employees?

• Who will be the main contact? How long have they been with the company?

• What cost saving techniques do you use?

Once you find a property management company, sign them for a 120 day contract to see how they perform. Assign maintenance issue on one of three levels of importance:

1. things that have to be done

2. things that should be done

3. those things that would be nice to have done

Once you find a property management, have the both of you brainstorm and ask figure out, “If some one were to buy your property today, what changes do we think they would make in the first 60 days”?

As soon as you control the property try to get a Cost Segregation Study.

Cost Segregation

The IRS has a ruling that allows commercial-property-owners to increase the amount of accelerated depreciation allowed in a tax year. These savings extend back to property acquired after 1986, and they apply to new or future construction. They also extend to existing buildings under renovation, expansion and leasehold improvements, as well as to property about to be acquired. It can also be used for financial accounting, insurance and property tax purposes. The primary goal of a cost segregation study is to identify all construction-related costs that qualify for accelerated income tax depreciation. Cost segregation is not a tax shelter and it is not tax evasion.

To get the benefits, you must get a “study”

A cost-segregation study analyzes taxes and costs incurred to acquire, build or renovate commercial real estate. Experts/CPA’s conduct these services. They break down the cost for the accelerated income-tax schedules. To qualify for a cost-segregation study, property-owners must be taxpayers or must intend to pay taxes. They must also operate as a for-profit entity. Study costs can range from $10,000 to $100,000, depending on the property’s size and complexity. In many cases, however, the benefits outweigh the fees.

These benefits of a Cost Segregation Study, can free up money used for other investments, paying down debt or making capital improvements. If you are interested in this study contact me and I will put in you touch with a credible company that can analyze your situation.

Advantages:

• Considerable return on investments property that do not need to be insured.

• Increased tax deductions for depreciation and reduces taxable income.

• Opportunity to correct misclassified assets and claim “catch-up” tax deductions.

• Ability to achieve faster building and acquisition cost write offs.

• Reduction in insurance costs by identifying the components of the property that do not need to be insured.

• Determine personal property versus real property for write off versus capitalization prior to construction. This allows you to write off these items opposed to capitalizing the assets. This can provide you with huge tax benefits.

• Defers taxes on capital gain amounts until the property is sold.

• Reduces real estate property taxes.

• Reduces federal income tax and increases depreciation.

Running the show

Owning and operating an apartment, is no easy task. There are a lot of procedures on analyzing the property’s functionality. When investing in apartments your priority may be one of the three: cash flow, appreciation or tax benefits. The great thing about apartments is that you can have “forced appreciation” by making changes to the property. Having an apartment is owning a business. So with any business, a way to increase revenue is to decrease expenses and to find more ways to earn more income. I have included some tips to benefit you as you attempt to maximize your investment on the building. Expenses you can expect while owning an apartment:

• Legal services

• Tax preparation

• Office equipment and supplies

• Property management

• Maintenance

• Credit checks

• Advertising

• City business tax

• Property tax

• Insurance

• Capital improvements (big expenses)

• Eviction services

• Utilities

Having proper management in place is key to running a successful apartment property. Depending on your level of time, experience and energy having a property management company oversee the operations may be ideal. Especially if the complex is big. Smaller apartments tend to be managed by the owner (along with an on site manager). Regardless who does the actual work on the property, I have included here a variety of tips to get the maximum return out of your investment.

Fair Housing Rules prohibits discrimination on a variety of things from race, gender, age, disabilities (including mental and physical) marital status, sexual orientation etc. Anybody who deals with potential tenants must follow fair housing laws. This includes owners and property managers. Be consistent when dealing with potential tenants. Set the same standards across the board. Such as, giving someone a pass, by lowering their security payment, or what you charge for late rent compared to other tenants.

Your rental/lease agreement sets the tone with your tenants. It is best to obtain a contract that a lawyer has written out because it is legal document. The rental/lease agreement should have the names of all adult tenants and they should all sign the rental/lease agreement. This makes each tenant legally responsible for all the terms and conditions. Should someone bail out with out paying rent, or someone violates a term, you can cancel their agreement and have them move. Your agreement should clearly specify that the rental unit is the residence of only the tenants who have signed the lease and their minor children. This will probably not stop people from moving in with out your screening process, but what it will do, is keep people aware and cautious. They will know if you found out folks where living there with out your screening, they could be asked to move. Every rental document should state whether it is a rental agreement (month to month) or a fixed-term lease (usually it is yearly).

Your lease or rental agreement should specify the amount of rent, when it is due, where to send it and how it’s to be paid (check, cashier check etc). For late fees, have when it is considered late and the amount of the fee. Also, have a fee for bounced checks.

The return of security deposits can generate problems. To avoid mistakes your agreement should have the dollar amount of the security deposit. In California, the maximum deposit allowed on an unfurnished property is not more than the amount of two months rent. The maximum deposit allowed on a furnished property is not more than the amount of three months rent. You may use the deposit for possible repairs. The contract with the tenant should state that they may not use it to apply for there last months rent. When they do move, you have to return their deposit in 21 days after they move (in California). If decide to take money out of their deposit when they leave, you will need a report showing the deductions on why.

Clearly set out you and the tenant’s responsibilities for repair and maintenance in the lease or rental agreement:

• Their responsibility to keep the rental clean and to pay for any damage caused by his/her abuse or neglect.

• They should alert you of defective or dangerous conditions in the rental property.

• You provide tenants with your work procedure for handling complaints/repair/requests.

• Have restrictions on tenant alterations on their apartment with out your permission, such as adding appliances, painting, etc.

You should include a clause prohibiting disruptive behavior, such as excessive noise, and illegal activity, such as drug dealing.

If you do allow pets, you should identify any special restrictions, such as a limit on the size or number of pets or a requirement that the tenant will keep the yard free of all pet manure. Important rules and regulations covering parking and use of common areas should be mentioned too.

Stay on top of maintenance/repair needs. To avoid problems with tenants, you should make repairs to rental units as soon as you can. Major problems, such as a plumbing or heating problem, should be handled within 24 hours. Always keep tenants informed as to when and how the repairs will be made, and the reasons for any delays. If the property is not kept in good repair, tenants may gain the right to with hold rent, deduct the cost from the rent, sue for injuries caused by defective conditions, and/or move out without needing to give notice. Some situations tenants can sue for the discomfort/distress caused by the poor conditions.

Your local building or housing authority, and health or fire department, can provide information on local housing codes (and penalties for violations).

The following are things you can do to limit crime and reduce the risk that you would be found responsible if a criminal assault or robbery does occur:

• Meet/exceed all state and local security laws that apply to the property, such as requirements for deadbolt locks on doors, good lighting, and window locks.

• Provide a security system that provides reasonable protection for the tenants. To get advice speak with the police, your insurance company, and private security professionals.

• Educate tenants about crime prevention/safety.

• Conduct regular inspections to spot and fix any security problems, such as broken locks, swimming pool precautions or parking lights.

• Handle tenant complaints about dangerous situations, suspicious activities, or broken security items immediately.

• If additional security requires a rent hike, discuss the situation with your tenants. Many tenants will pay more for a safer place to live.

While some of these tactics may be expensive, the money you spend today on effective crime-prevention/safety will be much less if something bad did occur on your property.

Drug-dealing tenants can cause problems. If other tenants feel threatened, the authorities may give you heavy fines and may seek criminal penalties for knowingly letting the situation proceed. To avoid trouble caused by criminal tenants and to limit your liability in any lawsuits that are filed: do a good job screening your tenants, don’t accept cash rental payments, in the rental/lease agreement have it clear that you will evict tenants who deal drugs, get advice from the police on what to look out for.

If you were negligent in taking care of your property and that negligence caused an injury, you could be liable for damages. After all it was your responsibility to maintain the section of the property that caused the accident and if you failed to take steps to prevent the accident, your chances of getting a law suit are increased.

A tenant can file a personal injury lawsuit against your insurance company for medical bills, lost earnings, pain, permanent physical disability, and emotional distress. A tenant can also sue for damage to personal property, which results from faulty maintenance or unsafe conditions (ex their car is damaged).

You can avoid many problems by maintaining the property in excellent condition. By using/having:

• A written checklist to inspect the areas and fix any roblems before new tenants move in.

• Encourage tenants to immediately report safety or security problems (not just their unit, but through out the property).

• Keep a record of all tenant complaints and repair requests with details as to how and when problems were fixed.

• Twice a year, give tenants a checklist on which to report potential safety hazards or maintenance problems that might have been overlooked. Use the same checklist to personally inspect all rental units once a year.

Here are some tips on choosing insurance:

• Purchase enough coverage to protect the value of the property and assets.

• Be sure the policy covers not only physical injury but also discrimination cases, unlawful eviction, and invasion of privacy suffered by tenants and guests.

• Carry liability insurance on all vehicles used for business purposes, including the manager’s car or truck if it’s used on the job.

If disputes arise between you and your tenants, try to resolve them without lawyers and lawsuits. You can try to put in your lease/rental agreement that all issues will be brought to a mediator/arbitrator. This can save you money. For information on local mediation programs, call your mayor’s or city manager’s office, and ask for the staff member who handles “landlord-tenant mediation matters” or “housing disputes.” That person should refer you to the public office, business, or community group that handles landlord-tenant mediations.

But if that is not possible and you have a conflict with a tenant over rent, repairs, noise, or some other issue that doesn’t immediately bring an eviction, meet with the tenant to see if the problem can be resolved informally. If your dispute involves money, and all attempts to reach agreement fail, try small claims court, where you can represent yourself. This will save significant money. Limit your exposure to lawsuits. Popular reasons are mold and fair housing. Mold starts with water. It is about prevention, controlling water and moisture intrusion. You should proactively attempt to identify potential sources of water and moisture intrusion before they occur. Such as old roofs, pipes that leak or sealed properly, toilets that don’t function correctly. If a tenant claims that mold is effecting them, you should take it seriously.

I once got and this email and I don’t know how accurate it is, but it does make you think.

• 5% of the world’s population is in the U.S.
• 70% of the world’s lawyers are in the U.S.
• 94% of the world’s lawsuits are filed in the U.S.
• There is a lawsuit filed every 30 seconds.

One way to protect your self is to form a LLC if you don’t have one. The LLC requires payment of an annual fee. It must be run as a business, that is separate from personal finances. I have resources that can get your property into a LLC. Contact me and let me know if you would like to talk to them about your situation.

Finding A Right Contractor

Having contractor’s assistance is important in running an apartment building. Picking the correct contractor will make your worries less. Have them meet you in person when they present the bid to you. Observe how their quote looks. This is a proposal, so critique the look and feel of it. Did they put time to put it together, or make it in two seconds? Also, have them physically show you a copy of their business license and ask for a copy of their insurance and bond papers. If they can’t, tell them to make like a banana and “split”

Have the contractor give you referrals. With the referrals and ask them do they:

• Return calls in a timely manner?

• Show up for work when he says and on time?

• Keep the job clean as he goes?

• Give consideration to residents?

• Perform inspections thoroughly?

• Alert you to potential maintenance problems?

Ways to increase revenue/save money while owning your apartment:

• Conserve water: Water saving toilets, shower heads, low flow faucets.

• Utilize new technology: System that converts salt into chlorine can cut thousands of dollars in swimming poll cleaning and maintenance costs.

• Bill tenants for utilities.

• Obvious…increase rents.

• Collect rebates and freebies: check with city about rebates on water savings and energy saving landscaping, heat reducing items, solar power panels.

• Close the swimming pool: If no one uses it, close it and fill it with dirt, or cement.

• Trim payroll cost: rather than pay, for a full time manager, have an onsite resident manager who receives free or cut rate rent in exchange for picking up trash, deliver tenant notices, etc.

• Manage the managers: make sure your property management company puts you the owner interest first.

• Hire moonlighters: sub out work, to independent contractors who have day jobs, that can bring an added service to you. Ex, someone who works at Home Depot, works for a city housing authority, or for a large apartment company.

• Automate accounting: get bookkeeping software can help identify unnecessary cost and keep track of income tax deductible expenses.

• Request discounts: you can get discount just by asking your vendors.

• Track vacancies: good data can reveal ways to reduce vacancies. Try doing an exit interviews, to understand reasons why people move.

• Review contracts: an annual review of the cost of all products and services used by the apartment operation can reveal opportunities for savings. Get at least three bids for each service. Work with providers/vendors who specialize in apartments, you may be able to get a lower price, plus they truly understand your needs.

• Cut insurance costs: To save on insurance premiums raise policy deductibles, eliminate unnecessary or duplicative coverage, shop around for cheaper rates, group buildings under an umbrella liability policy or make alterations to the building itself. Let them tell you what the issues are. After knowing that try to change the issue around modify the issue/structure and see if that would change your underwriting score.

• Buy wholesale: Avoid retail when possible.

• Raise rents: be sure to compare rents for apartments that are similar in location, size and amenities.

• Laundry rooms. You can have a company pay you a fee to have their products on your property that they install, you sign a lease with them, they service it and you both share profits. Or buy it your self and have contractors service it.

• Cable/satellite/Internet. Typically providers will sell their service to the owner at bulk at a discount, and then the owner resells the services to the apartment residents at a markup that generates a profit but is still below the retail cost residents would pay individually.

• Monthly pet fee.

• Vending machines.

• Maid services for tenants.

• Security alarms. Tenant will pay extra to have it on their apartment.

• Bicycle racks.

• Pay utility deposits over a 3-6 month period. Get a “between renters agreement” go to electrical company express tenants will/are paying their own electric bills and if they take off/move the electrical company can’t cut off power unless it notifies you/property management company.

• Get a large garbage container and empty it less.

• Have maintenance fee clause in rental agreement tenants pay $50 less each month in return for taking care of minor maintenance (this way management will not have to worry about minor things).

• Pay bills with in 10 days and try to get a discount @ least 2%.

• Lease garage storage.

• Have several apartments available for “corporate housing” that is fully furbished and have companies rent out the units for a temporary time period.

• Enforcing late fees.

• Always outline which repairs the company and responsible for up to a certain $amount. Ex have the management company handle any maintenance or repair cost that run less $200.

• Convert a master metered property to a sub-metered.

• Billboards (rent space on your property).

• Provide access to building rooftops for cellular companies.

• Consolidate 2 or more property managers to achieve synergies.

• Protest assessed tax valuations to have them lowered.

• Each time tenant moves out check faucet and toilets for drips.

You can create “forced appreciation” by rehabilitating a run down property and make it more expensive than the purchase price. You could also, convert it into condo’s. With instant appreciation, you can buy a property for less than the market value, fix it up, come up with more systems to increase revenue and sell it.

Management tips

• Have photo ID cards for on site staff, residents will feel safer. Especially if the person comes into the apartment to fix something. Having a standard polo shirt is good too.

• Send thank you notes to residents who keep their patio clean. On the flip side, notify them when it is dirty.

• Have tenants able to pay for their laundry by debit card, or have change on hand.

• 1 night a week, stay open to 8 pm. Have manger work one Saturday per month.

• Instead of giving away money for people that pay their rent on time, offer a coupon to a local merchant.

• Send anniversary gifts of occupancy.

• Extend your referral bonus to them for up to 12 months after they move out.

CYA… keeping files on all tenants

• Forwarding address of the tenant to which they have authorized the refundable deposit. This is key to have because if someone skips town and leaves with out paying rent. With this information, you have a person and address to find the person.

• Copy of the deposits form. What deposits were held back, if any, and for what reason (could prove handy if taken to court).

• Residential Lease Agreement.

• Lease terms, amount of rent, how long the resident stayed, what personal property, such as appliances, are included in the property and all deposits taken in.

• Credit Report received when the application was made this is good for recovering rent owed.

• A list of property improvements that were made prior to advertising the rental.

• Correspondence received or sent to the resident during their tenure.

To get forms (applications needed for running a property, check with your local apartment association.

By: Cordell Davenport
“Your Apartment Investment Resource, Who Is Determined To Create Value!”

http://www.cordelldavenport.com

cordell@cordelldavenport.com

I am a resource to investors who own, or want to own apartments. I provide the essential financing as well as knowledge on how to rent and retain tenants of the property.

The company I represent is Smith Craine Finance (http://www.smithcraine.com). The benefit to you is that I have two “Aces in the hole.” Theses two are the President and Vice President of the company. My VP is an inactive CPA, MBA and C.C.I.M. My president has a MBA in Finance and is on the board of Northern California C.C.I.M. and is the VP of the California Mortgage Association. So what does that mean to you? Well there is virtually no scenario that has not been encountered. A couple of years ago, we were awarded “Top five mortgage brokerages in Northern California” according to California Real Estate Magazine. The company’s motto is “we just don’t quote…WE CLOSE!”

Unfortunately, many homeowners don’t properly plan ahead, don’t have the budget to cover the costs and remortgage their homes or take out other home improvement loans to help. However, as the interest accrues on these loans, personal circumstances and finances change, and the unplanned projects run out of funding or mistakes are made during the work, resulting in some homeowners find themselves in serious debt, or even facing bankruptcy.

myFICO® is the consumer division of Fair Isaac, the company that invented the FICO® credit risk score that lenders use. Get FICO Score Watch Now!

The fact is that home improvement debts are easily avoided by simple planning. No matter how big or detailed the project, the best route is to research, get expert advice, plan and create a working budget, and avoid getting a loan unless you can absolutely guarantee that your project is something you are really capable of doing and that you can afford to pay off. Home improvement is something you can do yourself and it can work out cheaper if you plan it carefully and do it properly.

The free-lance writer Robert Carlton is particularly interested in things relating to credit consolidation and personal finance. You can see his abstracts on how to negotiate debt settlement at http://www.debtania.com and various other sources for how to negotiate debt settlement information.

Before you decide on a route to let your properties begin by classifying it on the following rules;

A) location – is there a lot of competition from other agents and property owners which may make your task harder – price and quality of property inc those vital “extras” such as pool, closeness to the sea and beach are all important in the eyes of the tourist seeking rental accommodation.

B) price – are you charging too much, or even too little? Ask high and the amount of rentals you get can be reduced, too little and you may be fully booked but the real profit may be much reduced as “wear and tear” and servicing costs can erode real-time profits.

C) condition – discerning tourists demand only the best, so avoid skimping on quality – a great let will increase the chance of a returning tourist and referrals to friends and relatives. Each let has the potential to introduce repeat business or new renters.

D) registered or accredited tourist awards? Does the property have any form of rating of quality? – if not get one and try and improve on the standard, this will improve rents and demand more income.

Self let or Agent?

Agents usually offer an established client base and mailing lists, perhaps an annual directory of properties which can include yours – but in the end they cannot and will not GUARANTEE any level of lettings or indeed ANY lets at all – results are based on “probability” if you have a good property in a desirable area in good condition at the right price it OUGHT to let – but may not, or enough to satisfy your needs.

Agents costs can be high 20-30% is typical of rental income, which is bit cut, but it does free you from the chore of doing your own marketing, BUT does your own marketing have to cost that much? We doubt it.

Getting your own lettings for sure is cheaper but can it be as successful as agent lets, or more so?

Without the internet self lets are pretty well impossible, and the growth of online property web sites for both sales, and rentals (permanent homes as well as vacation and holiday lets) has made DIY rentals a practical and economic proposition.

A) massive coverage – anyone who has internet connection can find your web page, view details inc photos

B) Fast, once the details are added it’s live, and you can change things as needed.

C) Low cost – many think free but it’s often worth investing in listing charges in the more popular sites which already has good audiences and an existing property base – free sites often have few properties off which can be a turn off for tourists.

D) You keep all the rental income less the cost of a simple web site and some listing fees on the better sites.

E) Response is fast – online booking forms and email can get results fast, but make sure you respond fast too – leave an enquiry a few hours or ignore it completely and the deal (and income) is probably lost.

Tips for DIY

A) Have an online availability calendar – potential renters NEED to know when your property is free, scripts such as Availcheck can give full control.

B) Have your own web site or web page separate from listings on travel and letting web sites

C) Use a web counter such as the free Site Meter to check response especially sources of site visitors, which can help plan your ongoing campaign.

D) Use top class PHOTOS – of outside and inside the property – leave off people from the pics and make sure lighting is top class – a horrible snap can send a tourist cold, despite a well located property at a decent price.

E) Write good “mouth watering descriptions” of the property and its location. Even add links to local attractions, make it EASY for the potential renter to WANT your property. Too many vacation property renters write 1 line and add 1 photo asking 1000 USD a week – what chance of a flood of bookings?

In the end you can edge your bets and use an agent AND get lettings yourself – BUT if you do make sure the agent “allows” you to market (your own property) alongside his contract – and you update the agent when you get a letting – nothing worse than letting the property TWICE for the same period.

Maurice Clarke is founding owner of http://www.internet-online-privacy.com a free and independent source of information about all aspects of online fraud and personal privacy issues. The site contains articles and web links highlighting the leading privacy issues and suggested preventions and solutions for both personal and business web surfers.