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Elementary but often forgotten things every property manager should do as part of their ongoing commitment to being a great property manager.
1. Touch base with your client, the property owner, on a regular basis, even if and especially when everything is going well. Property owners are used to that sinking feeling when seeing an email, or their property manager’s phone number pop up on their phone. They assume there is going to be yet another crisis that needs attention and money. Ask yourself if this is the relationship you want with your clients. Most people don’t want to be only the bearer of bad news in any relationship, so be the bearer of good news once in a while and call your property owner client to let him or her know that you still appreciate the business; ask if there is anything that you could be doing better or to be more helpful; and, reach out with good news. It will help establish a relationship that is not all about what went wrong, but also about what is going right. It will also help a broker/manager to be foremost in the minds of owner clients when a client seeks to sell a property.
2. Drive by the properties you manage. Just because a tenant has not contacted you with a problem, does not mean that one does not exist. There may be issues that not even the tenant is aware of. Shingles that have blown off the roof in a storm, for example. Another is when a tenant is responsible for the lawn maintenance. Sometimes the tenants need to be reminded to maintain the lawns in a responsible manner and to mow regularly. Lawn maintenance is a chore and not a particularly cherished chore. It must be done, but you won’t know if it is being done if you have not driven by the property. Driving past the rental properties you manage should be done regularly, but especially after nasty weather which could have caused exterior damage that tenants may not have noticed. One of my tenants is responsible for snow removal. When I drove by the property a couple of days after a rather large snow storm, I noticed that the snow had accumulated three-quarters of the way up the front door and he had not cleared it yet. This can cause damage to the structure and to the wood of the door, or a glass storm door. He may not have seen the urgency of rectifying the situation, but upon me becoming aware of it, I placed a call to request that it be taken care of right away and he complied. Protecting your client’s investment is important and regular, exterior inspections go a long way to further that goal.
3. Foster tenant goodwill with a box of cookies at Christmas/Holiday time. Acknowledge other holidays, like New Years, 4th of July and Memorial Day. A quick note to wish your tenants well on these occasions of celebration will encourage a cooperative relationship between you and the tenant and will help to make you approachable by the tenant, should issues and maintenance problems arise.
These are three simple things a property manager can do to make himself or herself a valuable partner to a investment property owner.
How to find out who owns a property.
By: Eveline Brownstein (c)
There are many reasons why a person might want to know who the owner of a property is, but did you know that the owner of a property is a matter of public record? Every county in the United States has a property tax assessor whose job it is to establish a value for every single piece of property in their counties. The assessment will include assigning a value to the land and all of the structures on that land. If deemed appropriate by the county and the state in which that assessor is located, it is also the job of the assessor to collect the property taxes for the properties in that county for the county and also for the state.
As a result of the meticulous job assessors are charged with to both identify properties, assign value, assess taxes and collect the taxes, assessors must keep thorough records regarding who owns each parcel of property within a county. In some states, there are both county and city tax assessors. Cities collect taxes for their local government purposes, including police and fire departments, park upkeep and other infrastructure, etc. In order for assessors to know who is responsible for paying the property taxes on the parcels of property within their jurisdiction, it is imperative they know who owns the property.
So, if you want to know who owns a property, the local assessor in the city or county where that property is located will have that information and since this is tax collection information, it is a matter of public record. This means that anyone can have access to that information upon request.
These days, most assessors’ offices have interactive websites that make obtaining the information regarding the name of the owner of a property easy to achieve. In areas where the assessor does not have an official website with the information readily available, an interested person can either visit the assessor’s office and request the information in person, or can mail a request for the information. In some instances there is a charge for the assessor to provide the information, but in many cases information obtained via the internet is free.
By: Eveline Brownstein (c)
Tenants should know what a landlord is not responsible for, and should act accordingly.
Local regulations differ widely nationwide, but there are some basic requirements of a landlord and there are some areas that leave a tenant vulnerable. Tenants should plan for, and cover themselves, for those things a landlord will not be responsible for, or they risk having losses that they will have to pay for out of their own funds.
1. Theft of a vehicle. A recent article on Heraldnet.com covers one such instance. A landlord is not responsible for a car stolen from the property. As a driver, you are required to carry insurance to cover accidents. In most states it is not necessary to carry vehicle loss insurance. However, if you do not cover your vehicle for theft and it is stolen from the property, you are personally responsible for that loss. Such a theft loss is not the responsibility of the landlord.
2. Theft of personal property inside the home. A landlord is not responsible for a tenant’s personal property, stolen from the home. Renters are wisely advised to purchase a renter’s policy to cover a theft of personal property. These policies are, generally speaking, affordable and they will give a tenant peace of mind. One of my properties has an alarm system that I installed when I was living there. I have had a number of subsequent tenants in that property, all of whom have elected not to activate the alarm system. While this is clearly a choice my tenants make voluntarily, since I have provided access to an alarm and it has not been activated by a tenant, my responsibility for any thefts at the home is greatly diminished. Tenants should especially consider purchasing renter’s insurance that includes valuables, if the renter intends to keep jewelry or collectibles on the premises. A landlord will only be responsible for a theft loss if the landlord is directly responsible for the theft, for example: When giving workers access to the property for repairs and failure to lock the door when leaving the property.
3. Flood damage of personal contents. A landlord is not responsible for damage caused by a flood to the personal contents of a tenant. This means that even if the landlord carries content coverage on a flood policy, that coverage will not cover a tenant’s possessions, should those be lost in a flood. Renters who purchase renter’s insurance will also be able to purchase flood damage coverage to cover their personal belongings, should there be a flood in the home.
4. A guest who experiences a personal injury. While most landlords carry personal liability coverage that covers losses in the case of the personal injury of a tenant or a guest at the property, this does not eliminate the liability of a tenant from being also named in a lawsuit or a claim for personal injury, especially if it can be shown that the tenant negligently contributed to the injury. For example, if the tenant personally places a large rock in a pathway where it can be tripped over. Renters should exercise caution when inviting guests to the home, but should also cover themselves in the event that a guest is injured on the property as a result of an act of theirs and not the landlord’s. Sadly, we currently live in a litigious society and forethought and protection from money judgments and lawsuits must be a part of what we consider when we make decisions about what we need.
These are just four reasons why a renter should consider purchasing renter’s insurance when renting a property. A landlord’s policy will simply not cover areas that a landlord is not responsible for and a renter must decide what losses he or she can comfortably afford and what losses to protect against.
Why you should not neglect the exterior of your rental
By: Eveline Brownstein (c)
1. Landscaping. Most rental referrals are from yard signs and people who drive past the property to view the neighborhood and the property itself. Don’t underestimate the power of a pretty yard. Frequently mowed grassy areas, clean flower beds and property trimming of trees and shrubs can go a long way to make a strong and positive initial impression of your property, making potential renters more interested in seeing the interior of the property.
2. Exterior condition. If the paint on the exterior of your house is peeling and faded, the initial drive-past could make a potential renter drive away permanently. Maintaining the exterior of the home by touching up the trim paint and painting the exterior when necessary will make your rental home a place renters want to call home.
3. House numbers. There’s no point in advertising a property if your rental home cannot be found or can easily be mistaken for the property next door. In addition, emergency personnel need to be able to easily identify your property (this is a good tip for owners and renters). Make sure that the property numbers are clearly displayed and easily readable, from the street. This can be achieved by regularly painting your curb numbers and by erecting onto the house some large house numbers that can be seen from the street. Make sure your rental can be found and identified by potential renters and the people they may invite as guests and the emergency personnel, who may need to find the home.
4. Don’t neglect the mailbox. A leaning, missing or broken mail box can send a message to a potential renter that you do not care enough to make minor repairs to the property. After all, new mail boxes are not expensive investments and repairing the posts for them are generally simple and easily done. A sad mailbox could signal to a potential renter that the interior of the house is as sad and that a landlord will be difficult to deal with when it comes to making home repairs.
Don’t neglect the exterior of your rental home. It is the first impression a renter will have of the type of landlord or property manager you are and what they can expect in the future. Sadly, you will never know if a potential renter was disappointed with the exterior of the home as most will not bother contacting the leasing agent if they were put off by the home’s exterior. A renter may even overlook minor imperfections in the interior of the home, if the exterior makes them interested enough to enter the home for a viewing.
Why what you buy is as important as where you buy.
So you’ve decided to buy a rental property and you are working with an agent to find that “right” property to purchase as a rental for others to live in. What makes a good rental? A lot of real estate agents appear to believe that distressed properties that they are not having much luck selling to others make good rental properties. Even when I worked as a licensed realtor in California, I would never have encouraged an investor to invest in distressed property for a rental, unless that investor was willing to restore the property to pristine condition after a thorough home inspection that identified all of the issues with the property and a commitment to restore and repair those as new.
Any work not done on a distressed property, has the potential to create a habitability problem for a renter which will cause a landlord numerous headaches. Habitability includes heat, ability to cook, hot water for showers and a leak-free, safe shelter, though most local municipalities add substantially to this list and a rental owner must know what the local regulations are before proceeding to list a home for rent. It has been my experience that one of the first major items that is neglected in a distressed home is the roof. Roofs run in the tens of thousands to replace and most owners of distressed homes find that they are unable to pay for the basic repairs and maintenance to a home, let alone a several thousand dollar roof. If a roof is leaking at all, a home is uninhabitable and the roof must be water tight in order for it to meet the habitability requirements of a rental.
Another neglected area of a distressed home is the electrical wiring. As homes age, the electrical wiring often needs updating and repair. Many distressed homeowners neglect the wiring in their homes or can be unaware that there is even an issue with wiring. I purchased a three-floor, Victorian home where the third floor had not been used or lived in for decades. In fact, it had been sealed off to preserve the heat on the bottom two floors. When I opened it up to reveal the most beautiful rooms with authentic, Victorian wood details, I had to remove the old knob and tube wiring in order to make the third floor safe for habitability. The wiring problems were only apparent when we removed the old lathe and plaster (which was falling off the walls in chunks). The rest of the house had been rewired, but since the previous owners had no intention of using the third floor, they had not bothered to remove the old wiring and rewire that floor. Had I not engaged in the renovation of the third floor and left it sealed up, I may never have become aware of the old wiring issues on that floor of the home. Even though it may have been attractive to have tenants on that floor, without engaging in a proper restoration and removal of potentially dangerous conditions, it would have been irresponsible to have anyone residing in that portion of the house, even a family member.
These are just two examples of why purchasing a distressed home for a rental may actually be inadvisable. I sympathize with real estate agents who struggle to sell distressed homes, but they do not make suitable rentals unless the investor is willing to invest all of the money necessary to make the home completely habitable. It should also be a concern for an investor that even if a home is brought to code for habitability according to local regulations, parts of the home may become uninhabitable within a very short period of time after the tenant is permitted to move into the home, simply because of the age of the home and the lower urgency of those particular repairs. While the local government has regulations describing what constitutes a habitable home and those do protect tenants, rental income real estate investors should make sure that they always have the financial ability to maintain and repair a home within those regulations. That financial ability can become more challenging when a home is purchased with existing repair needs.
So, here is my list of what to do to make it easier for you to purchase a great rental property:
- Enlist the services of a real estate agent who understands what your financial ability to pay for repairs now and in the near future truly is.
- Be very clear about what repairs you are willing to make and what repairs you are not willing to make. While a distressed home may seem like a great deal, the longer it takes to repair the longer it will be before you can generate income and, even after the home is generating income, it is more likely that a larger percentage of that income will have to be set aside each month in order for an owner to anticipate and pay for repairs that will need to be made.
- If you cannot afford a home in your “preferred” neighborhood, try the neighborhood next door (assuming it also meets the “best places to invest” criteria, of course). A great real estate agent will never allow you to be narrow-mindedly specific about a neighborhood in which you should purchase a rental property, but will go over the pros and cons of investing in a general geographic area. This will help you find the best rental home your money can buy for the best rental return you can expect to achieve and without the headaches associated with major repair costs.
- If you are not a contractor, a lack of contractor knowledge can make a distressed home a money pit, rather than an income-generating investment. So, if you are still determined to purchase a distressed property, engage the services of a trusted contractor who can give you realistic and practical estimates for the necessary repair work to the property. Don’t allow the contractor to suggest cutting corners. Most reputable contractors will not allow you to do this, but investors are sometimes so concerned with the cost of repairs that they will ask a contractor if there are short-cuts to the repair issues. Don’t ask. In fact, someone without a construction background of any kind is well-advised to avoid a “fixer-upper,” in the first place.
- Buy the most house you can for the dollars you have and be willing to make minor repairs to bring the home up to code and fully habitable. Your tenants will appreciate a clean and safe home. One of the biggest errors a landlord can make is assuming that if the rent is low, a tenant will be willing to live in less-than-favorable conditions. This is not only short-sighted, it is illegal and can lead to a landlord being cited by the local authorities. If a home is cited by local authorities, the tenant may be asked to vacate the property, engage in repairs to the property at the cost of the rental income, or be due monies from the landlord. None of these situations is consistent with rental income property investment goals and should be avoided at all costs.
- Always keep in mind that your rental property is your tenant’s home. Yes, it is true that some tenants abuse rental homes and damage them without concern for the cost to the landlord, but if a landlord or property manager has done his or her due diligence with regard to tenant screening, then it is safe to assume that most tenants want a comfortable, clean and safe home for themselves and their families. We tend to have an emotional attachment to that place we call home and we deserve that place to be safe and secure. Great landlords can achieve long-term, tenant retention and timely rent payments by providing a home for a tenant, rather than simply a roof overhead (especially if that roof is leaky!)
Why you shouldn’t believe everything you read on the internet when it comes to real estate.
Indeed.com did a survey of the job opportunities offered in the most populous areas of the country and several publications used the survey information to write articles, based on this survey. However, the most populous cities in the country tell a very small part of the story and the caveat here is that by the very virtue of these areas being the “most populous” it suggests that no matter how many job postings per 1,000 people there are, there will be much more competition for those jobs both within that metro area and from outside of it.
One such article, written by AOL.com, used the information to make suggestions regarding which the ten best towns were for working toward home ownership. http://realestate.aol.com/blog/gallery/10-towns-for-working-towards-home-ownership/
However, I suggest that there are smaller, less populous towns that provide better opportunities for employment, lower median home prices and a lot of the things that people look for in a neighborhood. I will let the big media companies tell you the large metropolitan areas where they believe you can get a job and afford to own a home, even though the one on the top of the list at aol.com has a median home price of $369,999, with a 20% down (in this very difficult mortgage market, most buyers are required to have at least 20% down) of just about $74,000. This target down payment is tough, especially since the mortgage repayment, plus taxes, insurance, etc. may end up costing the homeowner around $3,000 a month. Given that many lenders require that a mortgage be no more than 33 to 36 percent of one’s income, the income a prospective homeowner (or homeowner couple) needs to earn each month is in the range of $10,000. This cuts most of middle America out of the ability to own homes in these so-called desirable work areas as one must clearly one possess advanced degrees, extraordinary experience and unusual skills in order to compete for these $120,000 (or more) a year jobs.
So where can the rest of us hope to get jobs, purchase homes and live in safe and desirable neighborhoods? I believe that the best way to evaluate these are to look at various factors, including: the cost of housing, the property tax rate, the cost of living, the crime rate; and, educational statistics, such as, the school expenditures per pupil and the teacher to pupil ratio. Using these criteria, here are my top three picks for areas where home ownership is still possible for middle America and where there is a quality of life that is desirable:
Sioux Falls, SD: With a median home price of $137,200, a low unemployment rate of 5.70%, which is lower than the national average, and a property tax rate of just $15.92 per $1,000, Sioux Falls makes sense. Here it is possible to have a lower paying job and still afford to own the home you live in. Salaries paid range between $60,000 and $300,000, but owning a home is still possible if you are in that lower than $60,000 a year range. Heck you could probably save enough for the 20% down payment on a home and still meet the earnings criteria for a mortgage if you earn $30,000 a year. Of course, you will be giving up great weather in exchange for a job and a home, which for some is not negotiable, but for the practical, well it’s definitely worth another look.
State College, PA: State College is in the center of the state. It has a median home cost of $215,000 with a low per $1,000 tax rate of 12.65% and an unemployment rate of 5.4%. Earnings are lower, spread pretty well between $15,000 per year and $150, 000 at the top end. Expenditures are $7,046 per student, higher than the national average and a pupil to teacher ratio of 13.5. As a bonus, the air quality and water quality are good. 45 inches of average snowfall each Winter, balanced against an average July temperature of 82 degrees.
Centerton, AR: A small city of just over 6,000 people, located in the county of Benton, Arkansas, right next door to Bentonville, home of Walmart. With a really low crime rate and a low cost of living, a property tax rate of $7.85 per $1,000 and a median home price of $147,000, Centerton is a great place to call home. The unemployment rate is 6.2% and being located near Walmart headquarters contributes not only to available jobs, but also a low cost of living, especially in food and clothing. 21.11% of people earn between $50,000 and $75,000 a year, making this the mode salary range. The balance of salaries are fairly evenly distributed between $15,000 and $150,000. Houses in the $110,000 range are abundant, so qualifying for that mortgage and saving for the downpayment is still realistically viable. Being so close to the larger city of Fayetteville and the ever-growing Rogers, as well as a short distance from the Oklahoma and Missouri borders, means opportunities for employment and fun traveling are readily available nearby, if not actually in the city of Centerton.
By: Eveline Brownstein (c)
The recent Hurricane Irene flooded one of my rental properties. Despite our best efforts to prepare, and all of the efforts of my tenants, the Sandy Hook Bay rose approximately one foot into the home. There was plenty of despair to go around. My tenants have lost their home (temporarily) and I have investment losses. The losses do not compare to the relationships I have come to learn are really important.
As a property manager, during the years, I have had the opportunity to foster good relationships with various contractors. The obviously necessary ones: a great plumber named Al Quackenbush, a great electrician, named Steve Douglas; a super dependable and fair demolition and hauling company called Jersey Shore Hauling; and, my buddy at AT Heating and Cooling. I also have worked to foster a level of trust and honesty with my tenants. My tenants know that if there are issues with the home, I can be depended upon to rectify them and see to them promptly.
Have you ever walked into a flooded home? It’s pretty depressing. The city where the home was located was under evacuation orders, so our tenants were safely removed from the home before the flood. I was in constant communication with them and told them that if evacuation orders were given, I urged them to comply. After the flooding receded we went over to the home to assess the damage. Some furniture losses for my tenant and some more significant losses to the home. I was faced with how to rectify the issues to give my tenants back their home, or face losing a two-year lease tenant. We had to wait till the power was turned back on to evaluate what could be recovered and what was lost.
Not being all that familiar with flood issues, I called a company who stakes its reputation on a slogan of making restorations to the home “as though it never even happened.” Mine was not the only home affected in this way. The company was very backed up and wouldn’t make it out to even take a look for several days. Concerns over mold and bacteria growth began to nag at me. I needed to get action on the home immediately. I made a few more phone calls. All the dry-out, restoration companies were swamped with appointments several days out. I’m simply not that easily defeated.
I called Jersey Shore Hauling. We’ve had a positive, ongoing relationship for several years. Frank told me that he could see the home right away and start demolition the next day…and he did. Even though there were a few surprises, he and his crew worked liked crazy and got the damaged drywall, wet insulation and all the damaged cabinetry out of the home in a single day. It was two dumpster’s worth. The same day, Juan of AT Heating and Cooling was out at the home looking at the air-conditioning unit, which sadly could not be recovered, but together we figured out a strategy to raise the new condenser by two feet and a day when the old one would be removed so that I could begin building a raised slab.
Al Quackenbush, my plumber, not only replaced a lost water heater in the basement of my own home when the power went out during the Hurricane, rendering the sump pump useless, but the same day he went over to the rental property and assessed the boiler and the water heater. Thankfully, they are fine.
While out at the property, I ran into a neighbor who is also a licensed contractor. I offered him to bid on the property repairs and he was pleased to work with me. He sees my vision and is practical. He will have a crew there the day after Labor Day to start the washing and cleaning process and then we will fully dry the house out, make framing repairs and replacements, install the new insulation and then start putting back up the new drywall. The big advantage to using this contractor is that he lives two doors down. He can monitor the job and be very “hands on.”
Today, I ordered replacement kitchen cabinets made of solid wood from www.greendemolitions.com. They recycle entire kitchens when homeowners decide they want a change or kitchen displays are renewed by kitchen remodeling companies. I also ordered waterproof, mold and mildew resistant insulation called Prodex, the best product I know of for insulation, which I get from www.insulation4less.com. It’s cost effective, has a high R-rating for its insulating properties and if the home should ever flood again, it can be dried, rather than removed, but should it need to be replaced, its reasonable cost makes even replacement affordable.
As things stand now, my tenants are extremely happy with my prompt response and are complimenting me as a landlord They are excited to move back into their home as soon as it is once again habitable. Compliments aside, this is what I do and this is what makes me a first-class property manager. I problem solve and I am relentless until the job is complete. I never lose sight of the fact that the house I am renting out is my tenants’ home a well as an owner’s investment; both aspects are vitally important to the success of my business.
In a crisis, the relationships you have fostered with real people, be they tenants, contractors or owners, will serve to ensure that your company’s property management reputation shines. Taking the time to build those relationships in a positive and productive way in ordinary times will serve your company really well when it really matters.
By: Eveline Brownstein (c)
Do your tenants know how to operate the dishwasher? Do your tenants know where the circuit breakers are? Do your tenants know who to call in an emergency? Do your tenants know what days to put the trash out?
These and many other questions can be answered by referring to a Home Handbook that you maintain on the home, and which is given to a tenant upon move-in. Newly acquired tenants generally have lots of questions when they move into a property and property managers must answer many of the same questions, repeatedly, with each new tenant. Not all of these questions come up during the walk-through and property managers tend to field a lot of new tenant questions about “how to” and “what if” more than actual service, maintenance and rent payment issues.
In order to alleviate this, a few years ago I prepared a Home Handbook for each rental property. If you have been a diligent manager or home owner, you likely already have most of the items that will go into this handbook. My handbooks are large binders with plastic sleeves inside so that I can easily change the contents as the information changes. These are the items I place into the binder:
Appliance Manuals. Appliance manuals fit neatly into the plastic sleeves. If the manuals are only available online (a practice being followed by some appliance manufacturers) I print it out so that I have a hard copy. If you rely upon your tenant to refer to an online manual, you might be erring. Giving your tenants access to the operation manuals for each of the appliances in the rental unit will likely save a service call or the need for you to demonstrate how to use the appliance. It will also help to alleviate any misuse damage, for example: if you have a high-efficiency washing machine and it requires the use of high-efficiency detergent. If any of the appliances are still under warranty, a copy of the warranty information should be in the handbook. This will be useful when the appliance needs to be repaired under warranty. Having a copy of the warranty at the home means that the tenant has it on hand when the repair professional makes an appointment to undertake the repair or when the property manager needs to meet the repair professional at the property to supervise the repair.
Emergency Phone Numbers. I generally place a list of emergency phone numbers in the very front of the home handbook. Besides the obvious 911, the list includes the local police department phone number, the fire department, the nearest hospital and of course, my 24 hour phone number.
City Policies. If there is a curfew policy in your city, it’s a good idea to tell the tenant. Other policies that may require your tenant to behave in particular ways should be written in the home handbook, for example: if there is a policy regarding noise after certain hours; parking restrictions; traffic ordinances peculiar to your city, etc.
City Council Information. Even tenant residents of a city are entitled to representation by their local city council and a voice in what happens in their community. Knowing who is who in the local city council and when meetings are held is information a tenant should have. People who feel that their issues are of concern to their local legislators feel more connected to the community in which they live and become positive partners for the betterment of neighborhoods. Encouraging your tenants to become involved in the local community is a good idea.
Rent Payment Options. I always add a page into the handbook with the rent payment options available to my tenants. This includes: a way they can pay their rent directly into the bank account by walking a payment into the bank; the address to where payments can be mailed, and the forms of payment that I will take.
Trash Pick Up Procedures and Policies. Does the city recycle? Do they use separating bins? What is the pickup schedule? What is the policy with regards to bulk pickup and yard waste? The answer to all of these questions should be in the home handbook. Even if you go over this as part of your move-in/getting acquainted walk-through, expecting a tenant to remember all of these policies is unrealistic and having the information handy is one less phone call a tenant has to make.
Approved vendors for repairs and maintenance. If you have a policy that tenants can call service or maintenance companies directly, the numbers of those approved service people should be in the handbook. If you prefer the tenant call you first, then add a page in the handbook that directs a tenant to call you if there are maintenance or repair issues that need to be taken care of. I also add the same text that is in my lease which says that the tenant may not repair or engage the services of any repair professionals without my prior consent.
There are lots of useful items you can put into your home handbook, but do not forget to have your tenants sign for their receipt of the book. Also, do not forget to make sure that a tenant who is moving does not accidentally pack it with other belongings when moving out. The book should always stay with the home and be updated on a regular basis.
Finally, make the first page your welcome page. Welcome your new tenant to the property and let the tenant know you are happy the tenant decided to rent your home or the home you mange. There is nothing more heartwarming than moving into a new home, sitting down to read the home manual and being greeted with a warm welcome when you turn to the first page.
By: Eveline Brownstein (c)
Yes, I have used them. As to whether or not they have actually worked. I am not so sure. If you are going to use move-in incentives, here is my best advice:
Move-in rent reductions. A lot of property owners and managers reduce the first month’s rent as a move-in incentive. I don’t think this is a wise idea. I do not care for the rent reduction incentive, especially if it occurs at the beginning of the lease period. It can send an unintended message to a tenant that you can afford to not receive the full amount of rent under a lease. By sending that message, a tenant may be more likely to approach you for a reduction or release from rental amounts owing later in the lease period. A wiser strategy might be to offer a final rent payment reduction, but this is not likely to encourage a tenant to move into a home.
Gift Certificates. I have used this strategy with limited success. Instead of a rent reduction of say $100, I have given a local grocery supermarket gift certificate, in that amount, as a move-in incentive. I am not convinced it made my property more attractive to move into. I still firmly believe that renting a home, like buying a home, is an emotional decision, based less on price than on how one feels about the layout and offerings of the home. Nevertheless, in a rental market where there are an abundance of available and vacant properties, a move-in grocery gift certificate could tip the scales in favor of your home. I would also consider offering a Home Depot or Lowe’s certificate, or a Bed Bath and Beyond one. Even a restaurant certificate would work in this instance, but I still do not truly believe a move-in incentive, even this one, would cinch the deal if the property is not appealing in the first place.
Rental Negotiation. Being wiling to negotiate the rental rate to lower than is advertised in the listing is probably the most effective move-in incentive. In a market where most rents are priced approximately the same, offering a small, negotiated reduction in order to close the deal makes sense. To renters, $25 to $50 per month represents a large annual savings. Being willing to negotiate can lead to a completed application on the spot, rather than the experience of the tenant leaving to look at other properties, sometimes never returning.
Upgrades to the property. If you were planning to upgrade anyway, this is a good strategy to let a prospective tenant know that you care about the property and that you will be responsible when it comes to maintaining it. It also lets the tenant know that you expect the tenant to take care of the upkeep of the property. If other properties in the area are being updated, you may not attract as many tenants to your property if it is looking outdated and in need of sprucing up. Letting a tenant know that you will be charging the same rent, but would like to upgrade various items while the tenant is occupying the property can help to keep the rental income flowing as you make the repairs. Never promise to make repairs or upgrades you have no intention of making. Make a list of what you will be doing to the property and ask the tenant to sign a copy of the list. This does not apply to items that you are obligated to repair for habitability of the property. Those are legally required before a tenant can move in, or as soon as possible when you become aware of them, after the property is occupied, so check your local ordinances carefully.
Lease Renewal Incentive. This is probably the best tool for property owners, landlords and property managers. Offering a lease renewal incentive ensures an ongoing tenant and a lower risk of vacancy. Any one of the above incentives can work to encourage a lease renewal. Offering a lease renewal bonus of $50 or $100 is common. Again, I don’t care for the rent reduction incentive, but a refund check after the first rent payment under the new lease, or a gift certificate, are great ways to avoid giving the appearance of not requiring full rent payments, while rewarding the tenants you want to keep.
Despite the tools available and the popularity of move-in incentives, I personally have had mixed results when using them. For the most part, they are neither expected, nor required by tenants and occasionally, have had the effect of making a landlord seem somewhat cavalier about rent collection. So, if you are considering this approach, use it carefully and wisely and really get to know the market in which you are renting out properties.