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24 Hour Rental Turnover – How it is Done

If you have a rental that is getting $2,000/Month in rent, that averages out to be about $67/Day. Many property management companies and or owners have 5 days between when the old tenant moves out and the new tenant moves in. That is $335 of lost rent. If you have 5 rental units that are turning over, that is $1,675.  There are many reasons I got into real estate investing, and losing money is not one of them.  Rental turnover in owning investment property is part of the game. A major part of the game. You best understand how to operate them. 24-Hour turnovers are difficult, but possible.

Solid relationships with vendors is the key to every property manager. This business is built on relationships. The vendors need to be intimately familiar with how you turn properties over. When should they expect a call? Do you pre walk units prior to move out? Will they have to work around other vendors?

Here are the vendors typically needed for your AVERAGE turn:

Maintenance/Handyman, Painter, Floor Company, Steam Cleaner, Cleaner.

To accomplish a 24-hour turn, systems need to be in place and understanding that timing is crucial.

Rental Turnover

The most important step to a 24-hour turn is pre walking units. Set up a time with the tenants where you can come in for 15-25 minutes and determine the severity of the turn. Determine if 24 hours is even possible. Has this tenant destroyed the unit? Let the tenant know the repercussions of all the work that will need to be done.  Give him or her the opportunity to scramble to get the place in decent condition. Otherwise, you may need to make arrangements on move-in date with the new tenant. Ask the current tenant if he or she would be willing to allow you and your vendors to get into the unit early to begin the work. Or maybe, the place looks amazing and all it will take is minimal maintenance and a steam clean. You need to make these decisions and inform your vendors what is potentially needed.

You should also provide all your tenants (when they inform you that they will be vacating) what is expected of them upon move out. As discussed previously in blog on tenant relations, communication can go a LONG way in mitigating problems.  Have a check list of expectations. Have the tenant sign off that they have received this check list so that no “he said/she said” can be claimed.

The 24-Hour Day

When the day comes to turn the property over, you should have an initial “check-in” form of the unit. This should have been completed by the current tenant when they moved in. When the tenant turns in his or her keys AT NOON, you take this form to the unit and begin your check out. This is to determine what if any damage has occurred in the property while the tenant has lived there. This is also your opportunity to take 1-2 hours to inspect the unit for what is needed to put it into move in condition. Determine what vendors are needed and get it scheduled. If you properly pre walked the units, these vendors should be on standby and waiting your call.

The order of work to be done:

Maintenance

Maintenance should get into the property first after you have checked the unit out.  If the prior tenant has left the property in a condition where a clean is not necessary, inform your maintenance tech to please clean up after themselves. If the unit is to be cleaned, then maintenance can focus on getting the items to be repaired and let the cleaners do their job after they’re done.

Painting

Are you having to touch up paint the place? Careful, paint fades and touch ups, even if it is the exact paint can leave a polka dotted room. If the carpet is having to be replaced and the unit is to be completely painted. Painters can spray the walls. Which means saved time. A paint should take a team about 5-7 hours in a 1000 square foot unit.

Floor Replacement

After the painters and maintenance has been into the unit, it is time for those floor installers to get ripping and installing. A full carpet replacement in a 1000 square foot unit should take about 6-8 hours. Plan accordingly. Do they need to stay in after hours to get the job done? Let them know that it is okay to work past 5PM and what, if any quiet hours there are. We use Carla’s Sunshine Flooring for all of our floor installations. They’re amazing in Northern Colorado.

Cleaners

Cleaners, should be the LAST vendor in the unit (unless the property is to be steam cleaned). Cleaners can come in after maintenance techs, painters, floor installers and clean up after everyone. They can finally get to the drywall dust, pick off the pieces of masking tape around the windows and vacuum up the pieces of carpet left over. When the cleaners walk out the door, the place should smell pinesolly fresh and ready for the new tenant to move in.

Steam Cleaners

If the unit is to be steam cleaned, it should be absolutely last. Leave the new tenant those beautiful steam cleaner track marks when they move in.

I am not going to lie. 24-Hour turns are insanity. Sometimes, they just aren’t practical. If you’ve pre leased these units, you may be in for some rent concession negotiating because the unit is not going to be ready when you promised. Here is a fun video of the turn process!

On my personal properties, I give myself 5 days. But that is because I work a full time job and cannot dedicate my full attention to getting my properties turned over. If I was 100% focused on my properties turning over, I would most likely implement a 3-day turn over. Five days is far too many, 1 day is insanity (but can be done) and 3 days may be the sweet spot.

The more properties that you own and manage the more difficult doing 24-hour turns is. If you have just one and the tenants have meticulously cared for it, then 24 hours is a cake walk. If you have 20 beaters and 10 of them are turning over; good luck is all I can say. Take the proper steps above and give yourself a fighting chance.

I have had seasons where the rental turnover was 78 units, 64 units, 50, 24, 44 and 46 units over 6 years. All in 24 hours. It can be done. With the right processes in place.

Tenant Relations

Property managers are in a unique position when it comes client relations. Their clients are their owners, but who is ultimately paying the bills are the tenants. Owners want the highest rents and lowest maintenance costs. Tenants, want the opposite. Your minimum maintenance standards are that of Habitability.  On the other end of the spectrum is that of a 5 star hotel, daily turnover service, immediate maintenance and chocolate chip cookies. How do you comply with the wishes of an owner while maintaining relations with tenants and their needs? Enter, tenant relations. Here are some ideas on how to keep tenants happy besides a $20,000 unit makeover.

Communication

We’ve all been at the receiving end of a girl or guy we are pursing that just doesn’t responding to your text message. How frustrated are you? Annoyed? The landlord/property manager and tenant relationship can be just as infuriating. Whether that is the tenant not responding to your attempts to schedule an appointmnt. Or if you ignore the tenants text message or inquiry about a maintenance item. You can’t control a tenants resonse to you, but you can control your responses back to a tenant. Don’t ignore them, respond at MINIMUM within 24 hours, if not within the hour. ***Lay boundaries – don’t be responding at 11PM to a roommate change request – that is disrespectful and don’t tolerate it from the tenant***

Simple Gifts

How far can a $5 gift card to Starbucks go? Farther than you would think. Landlords and property managers are typically seen as the big bad wolves who eat the sheep. Collecting rent, ignoring maintenance texts etc etc. But what if you could flip the script and respond to the maintenance requests quickly and give BACK to the tenants in the form of a $5 Christmas gift or renewal gift. Put this into your marketing budget. Because word of mouth is going to pay dividends if you actually put this into play.

Lease Understanding

How often does a tenant get a late fee and call you pissed off because they thought they had “til Monday to pay” or “the 5th day of the month” or any other reason to have not paid rent? Typically a simple understanding of the lease and lease language will help the tenant avoid these late fees and other lease violations. Something that I have implemented lately is the “initial” tool from Docusign. We use a standard lease for all of our rental properties, but there are certain sections that NEED to be understood by the tenant. Steam cleaning the unit and providing a receipt once they move out. Putting utilities into their name prior to move in. Maintaining a clean and tidy property. Rent is due by the 1st and late after the 2nd business day at 5PM. Place initial tabs next to each of these areas. At that point, you hope the tenant will read these, but if they claim they had not, pull the lease and show them their initials.

Equal and Fair Treatment

Besides complying with Fair Housing Laws, it is just good practice to treat tenants equally and fairly. If not to comply with Fair Housing, do it for your sanity, because here is the deal. Tenants talk to each other. If you decide to waive the late fee for the third time for Tenant A and Tenant B is paying late for the second time and you charge them a late fee and they are neighbors. You are going to hear about it.  I also believe in the idea of treating long term tenants more favorably than short term tenants. That is okay, just have it in writing and in your policy as to avoid confusion from the tenants perspective. “At the beginning of the third year of renting, the tenant is allowed two late payments in a 12 month span so long as rent is in no later than the 7th day of the month.” Heck, it is better than one late payment per year and if you have a tenant living at the property for three years, you’re unit should be cash flowing greatly!
Essentially tenant relations come down to empathy. Although you don’t need comply with every request, you do need to understand what is fair and reasonable. On top of that, treat them like people. Say thank you when they pay rent, sorry if you made a mistake and show them you are grateful at other times besides when they pay rent.  Don’t be considered that big bad landlord, when all it takes is some easy steps to avoid that title.  Ultimately, the owner is your client. You need to adhere to the budget, provide the returns you are promising and take care of their asset as if it is your own. Don’t forget about who is paying the bills though. Tenant relations will go a long way in your business.

What is a Renewal Worth?

Should you raise rent to market rents if there is a strong risk of losing a renter? The market is hot, vacancy is low and inventory is low. It is easy to forget there are times in the market that getting a keeping good renters is difficult. Depending on what your goals are, sometimes it is worth considering if keeping that renter while “losing” rent due to loss to lease is worth it. In this article I will outline what the potential costs of a renewal vs. a new tenant are. What is a renewal worth?

On the flip side. What if your goal is to quickly flip the property. Buy, invest, raise rents and sell. There is nothing wrong with that, but while you hold the property it is still important to know what some of the potential costs are of a renewal vs. new tenant.

Renewal vs. Vacate Scenario:

Current Rent: $1,135

Market Rate: $1,250

5% increase = $1,191.75

Are you going to increase the unit to its market rent of $1,250? Here are some costs to consider when evaluating whether or not you should take the 5% hit.

Self-Managed Property

***Assumption: for all hours, we will use $50/Labor Hour***

Renewal:

  • 2 Hours’ time to negotiate, draw up and sign the lease renewal = $100
  • Lost rent assumption: ($1,250-1,191.75)= $58.25 * 12 Months = $699

Total cost for a Renewal (including lost rent):
$799

Vacate:

  • 2 Hours Initial renewal negotiations: provide paperwork for intent to vacate and process paperwork = $100.
  • 2-4 Hours to market property: drive to property, take pictures and list property on Craigslist and other marketing sources. Many free options, so I will not include the cost of marketing sites = $100 – $200.
  • 2 Hours to coordinate showings: Coordinate with current tenant – 24 hours’ notice, prescreen the potential renters. Text, phone calls, e-mails = $100.
  • 3 Hours to show property: Text/Call potential tenants to confirm showing, drive to property, pre-walk the unit and show property to potential renters. Try to get as many showings with an hour time span with each showing lasting about 15 minutes = $150.
  • 2 Hours to process applications: Hopefully you’ve received multiple applications, if not, repeat the previous three steps. If you have received an application, process immediately. Credit check, back ground check, rental verification and income verification. 1 Hour/Potential tenant with average of 2 tenants = $100.
  • 1-3 Hours to convert to tenant: approve tenant, draw up lease and sign. If you have the right processes in place, electronic signatures specifically, will save time. If not and you have to schedule an appointment to sign with the tenant, this step could take 3 hours = $50-$150.
  • 2 Hours to checkout out old tenant: walk through unit comparing the move in/move out form. Schedule work that needs to be done. Steam clean, touch up paint, flooring, maintenance etc. = $100.
  • Work to be completed: Paint every 4 Years@ $500/Unit; Carpet every 5 years @ $2,000/unit = $2,000. Miscellaneous maintenance – locks changed, drywall patch, bulbs changed, new blinds and labor $300. Cleaning of unit $150; Easy year turn (no carpet/paint) = $450; Carpet and Paint year turn: $2,950. ***It is very possible the tenant moving out may be responsible for some of these costs if the repair/maintenance is due to neglect/misuse.***
  • 2-3 Hours for final walk through/check in new tenant: walk the unit prior to move in to ensure all work has been completed. Accept 1st month’s rent in exchange for keys = $100-$150.
  • 5 Days of Vacancy – Days between when old tenant moves out and new tenant moves in. Median Rent $1,250/30 = $41.67 * 5 Days = $208.33

Total cost for a new move in:
$1,458.33 to $4,208.33

Professionally Managed Cost:

Renewal Fee:

  • $200-$350
  • Lost rent assumption: ($1,250-1,191.75)= $58.25 * 12 Months = $699

Total cost for a Renewal (including lost rent): 
$899 to $1,049

New Lease Fee:

  • 50-75% of 1 month’s rent (Median rent of $1,250) = $625-$937.50
  • Work to be completed: Paint every 4 Years@ $500/Unit; Carpet every 5 years @ $2,000/unit = $2000. Miscellaneous maintenance – locks changed, drywall patch, bulbs changed, new blinds and labor $300. Cleaning of unit $150; Easy year turn (no carpet/paint) = $450 + 10% mark-up = $495; Carpet and Paint year turn: $2,950 + 10% markup $3,245 ***It is very possible the tenant moving out may be responsible for some of these costs if the repair/maintenance is due to neglect/misuse.***
  • 5 Days of Vacancy – Days between when old tenant moves out and new tenant moves in. Median Rent $1,250/30 = $41.67 * 5 Days = $208.33

Total cost for new move in (Professionally managed):
$1,328.33 to $4,390.83

What was the difference of getting 5% or 10%? $58.25/Month or $699/year. But it would not be fair to only include cash flow.

What would the $699 of increased rent due to the calculated value of the property using a 6% cap rate? 11,650.00 of increased value!

GOALS, GOALS, GOALS. What are your goals? Are you planning on selling the property in the next year or two? That 10% increased rent may well be worth the cost if you have to get a new tenant. Even at the high end of a new move in of about $4,250, your additional cash flow nets you a loss of only $3,551. It then generates an additional $8,099 if you sold it.

If you are planning on keeping the property long term. Is the $699 worth of additional cash flow worth the $1,390 roughly of costs to turn the property over? That would be up to you to decide.

Some renters will move regardless of the price because of life’s circumstances. They have graduated, are moving out of state or maybe in with their boyfriend or girlfriend. These decisions from the renter are completely out of your control, no matter what renewal rate you set.

Industry standards for standard renewal rates are 40-60%. Meaning that every year you should have about 40-60% of your units turning over or vacating. That takes into account the people who would be moving regardless. It also takes into account increasing rents to increase NOI (Net Operating Income) and assuming this will force some tenants out. Statistics are a great yard stick to measure how you are doing. They are not law. Some owners want to have 98-100% occupancy and keep rents lower to ensure those numbers. Other owners (your “typical” institutional owners) will suggest a 95% occupancy level suggests the proper rental amounts to ensure highest possible NOI.

Again, what are your goals? Those are what should dictate your actions. Highest rents, highest NOI, 5% vacancy, sell in 5 years? Or 100% occupancy, strong NOI, 2% vacancy and hold as a legacy property? There is no right solution, but above will help you understand some of the potential costs of a renewal vs. a new tenant.

Use Craigslist to Market your Rental?

Since the dawn of time, Craigslist has been hotly debated as to whether or not it is a reliable source. Wikipedia too, was once considered a non reliable source. But now, is able to be used as a source for educational papers. The biggest issue with Craigslist, which is still a problem, is scams. To be honest, I’ve never been scammed by Craigslist, so I cannot attest to the frustration and lost trust that may bring. Over the past 10 years, I have rented property, sold iPhones and motorcycles through Craigslist. Here are three reasons why I use Craigslist to market my rentals.

 1. It’s Free

What is your main reason for being a landlord? Appreciation? Tax purposes? Cash flow? One of my goals of being a Landlord is to create passive income. Cash flow. So when I have the ability to market a property for free, I’m going to use it. There are services on Craigslist that require a pay to list, but renting and listing property is currently not one of them. Free marketing = lower expenses = higher cash flow.

2. Multiple Listings

Craigslist used to monitor how many times you could market a property or a similar listing. If you spam the website, they will monitor you and possibly not allow a listing to be posted. But in recent years, we suggest to post at 8AM, 12PM and 3PM the same listing. Get that listing to the top of the page. You need to stay on top of it though, because you need to do this every day until this unit is rented. Why not? See #1. It’s free.

3. Vet all Applicants the Same

Who cares if you have 20 people come from Craigslist to view your rental? That’s great! If they want to apply, you are still going to put them through the same hoops as you would any other applicant who applies to your property. Background check, credit check, rental verification and income verification. When you are 3 months in with a new tenant who is paying rent, taking care of your property and respectful, you won’t care where that tenant came from. Instead, you will be happy your property is rented and you went through all of the vetting criteria as you would have for anyone.
***Side note*** – The world of leasing properties is dominated by young women. I highly recommend that steps are taken to ensure that these women (or men) are safe when showing property. I.E. Driver’s license submission prior to showing the property.
Ultimately, I’ve come across different landlords who are pro or against Craigslist as a marketing tool. There are always new listing websites coming out Apartments.com, zillow.com etc. Many of these are free and have free options to list to multiple sites and you will need to find out what works best for you. Craigslist is a super local focused marketing website where MANY renters go in search of a rental. Just because someone 5 years ago had a bad experience with Craigslist doesn’t mean that the Craigslist of 5 years ago is the same as today. Protect yourself, protect your property, but if you are struggling to rent your property, give Craigslist a go.

Self-Showing Rental Properties

I was recently called by Rently to inquire if I wanted to integrate their self-showing technology platform into my business. Simple answer, no until further notice.

Don’t get me wrong. What Rently is doing is very cool! It is integrating new technology into the real estate and management industry. Self-showing vacant homes? How cool! But how many of your homes are vacant? Or how about, how many of your homes are vacant without a lease signed? Hopefully none.

We require a 60 day notice as to whether or not the current tenant intends on renewing their lease. Those 60 days allow our leasing agents the ability to show the property (with a 24 hour notice of course) to potential tenants.  There are pros and cons of doing leasing this way. Mainly, if the current tenant is dirty, the unit will show dirty and you won’t be getting those applications pouring in. The positive side of this, is that you can lease out a property while still collecting rent. If you have a unit that is well maintained, you’ve had a respectful relationship with the current tenant and they are willing to have the home “show ready” all sides are happy when your property manager is showing the home.

Rently is offering a system to where tenants can easily input their information, agree to terms and then are given a show code to a vacant home to self-show. No need to set up showings, to coordinate schedules or possibly miss showings anymore. WHEN considering vacant homes.

I asked the sales rep if they had the ability to do this for occupied properties. I was taken aback by such a horrible answer. “That’s not possible.” Wait, are we living in the same universe? Not possible? Really? We are living in an age where your average joe can be a taxi driver with minimal background checks. Where you can rent out a room in your house to someone who hasn’t gone through an application process. Where literally all of our personal information is on Facebook or Google, but it is “impossible” to have a tenant show themselves a home because it is occupied.

The personal property is an issue, yes. But why not have a waiver, or a NEST camera in the home to ensure nothing is getting stolen. Rently sales rep, you called me pitching a great service and product, but no imagination. It is not your company and you can’t call the shots, but really? Impossible?

It is a matter of time before someone is able to text a number, get an authorization request, agree to terms and show themselves an occupied property. Not if, but when.

At that point, I will sign up immediately and pay a pretty penny I’m sure. Wouldn’t you? No more coordinating schedules for viewings. No more leasing agents. Or at a dramatic decrease in their need. A 2 bedroom 1 bath home in Fort Collins? They don’t need me to tell them it hass a stainless steel fridge. They can see that. When we are talking about median priced rentals, where a top motivating factor is affordability, a tenant can most likely decide whether or not they like a place. They do not need someone to sell them on it. If they have questions, have a mobile chat capability with someone available to answer questions.

I digress. Ultimately, that is not where we are right now. Where we are, is having a discussion as to whether or not you should have a vacant property that needs to use Rently’s capabilities. A manager and I discussed moving our notice period to 120 days. Six months even has been tossed around in discussions with other companies. I don’t know how some of these renters know that far in advance what they are doing. But hopefully given 120 days, they may know their intentions. So, until Rently or someone else provides a service where potential tenants can show themselves occupied units, keep strong notice periods and actively and aggressively market notice to vacate properties before they are vacant.

What to do about the Small Balance Delinquency?

When is the last time you dealt with a small delinquency?

“But it’s only $300. Can I add it to next month’s rent?”

Small Delinquency balances are a source of headache for all landlords. They seem insignificant and not worth a fight. Over time, though, these small balances and headaches just set you up for failure.

Set a limit. $100/$200/$300 and if it gets above that. Your “small” balance is no longer small. It is significant. Because you made it significant. Or 10%/20% of your monthly rent amount so that it stays consistent across rental units.

I had a property manager ask me how I would handle this situation: a tenant who conistantly pays late, seemingly is always carrying a balance, but has lived there for several years and now has a $400 balance, what to do with him.

Answer: Set him/her straight and get a new habit set. This is a habit. You have allowed this to go on for years and now, he/she thinks it is okay.

Here is what is going to happen. This tenant is going to continue underpaying your rent. From there this tenant is going to lose his/her job and be unable to pay rent. At that point, instead of being out just 1 month’s rent + eviction fees and vacancy, you are out whatever balance you carried on top of all the other amounts.

From there, you are going to have to answer to ownership as to why you didn’t start the eviction process sooner and why he/she is now out a tenant plus all of that money.  If you own the property and manage it, you’re just hamstringing yourself and asking for financial hardship.

Policies are set for a reason. They are theory based without emotion. Because when the day comes that you have to enforce policy, emotion will be there. Answering with “I’m sorry, I can’t help you, it is company policy” is a simple solution to this problem.

Here is how to avoid this:

1. Qualify all renters through your application process.

  • Credit score, background check, rental reference and INCOME VERIFICATION.
  • 2.5 – 3X Rent should be your standard. Nothing less than 2.5X the rent (which would mean rent is 40% of their gross earnings)
  • 33% to 40% of gross earnings is a lot, yes, but if the renter is conscious with their money, they can afford your rent.

2. Have a “grace” balance. This is the balance talked about above that is the allowable amount of the balance to carry without processing an eviction.

  • This has to have a policy behind it as well. This balance can only be held for XX days per calendar year. After that point, the eviction process will begin.

3. Implement a 1 time only payment plan policy.

  • A payment plan allows tenants the flexibility to have that emergency once a year that no matter who you are, happens.
  • The payment plan needs to have strict guidelines and deadlines which will be up to you to enforce.
  • I would not make it more than 1X/Calendar year and make sure that you are documenting this on their tenant profile. Don’t fall for the “but this is my first time this year”.

4. Set precedent.

  • If you allow it 2 times and your policy is 1 time, your word and your policy are as good as dog sh*t. Be fair but strong. You qualified them based on their ability to pay, not their ability to convince you of their inability to pay.

When the property is yours and you manage it. Emotions get in the way, you bend your own rules. You make your own rules.  You created these policies for your own sanity and financial well being. Follow them.

If you manage other people’s property, the owners expect the policies you pitched them to be followed and if not followed, you may be the one paying that carryover balance.

Don’t let small balances become big headaches.

 

Squatters in your Rental. What to Do.

Twice in the last two months I’ve been contacted from 2 different people dealing with “squatters”. Squatters are people who have somehow taken possession of your property and now have legal tenant rights to the property. There are actually articles describing how to become and be a protected squatter.  The actual law is: Adverse Possession. The intention was to allow individuals to take over abandoned property with the intention to own it. That person could pay property taxes, maintain the land and if after 18 years, no other laid claim to the land, that person becomes the official owner of record. That is not the current popular use of the law. Squatting is.

Over my time being a Landlord and property manager, I’ve unfortunately dealt with a couple of squatters and have helped other Landlords deal with squatters. It is not a fun situation. You are loosing income, paying an attorney to process the eviction and who knows what is happening inside your rental unit and what damage is occurring. Here are some Do’s and Don’ts of dealing with squatters.

Here’s What you Can Do
1. Call the Police: If the individual has only been in the property a few days (less than 7 and you can prove it), they are considered a trespasser and do not have squatter rights. Call the police. If the squatter is smart, he or she may keep the door closed and then you will have to begin the eviction process.

2. Post a Demand of Possession. This 3 Day Notice will inform the tenant that they have 3 days to comply with your demand or legal action will be taken. If you’re lucky, the tenant will vacate the premise with all of his/her personal belongings. CAREFUL! A tenant could be baiting you. If they leave their personal property and you change the locks and discard of their belongings you could be held liable for their Grandmothers priceless antique 3 carrot ring that was in the unit. Not to say they will win in court, but don’t expose yourself. If they’ve vacated the unit but left their personal belongings, best practice is to proceed with the eviction.

3. Provide an Opportunity to become a Legal Tenant. Just kidding. Don’t do this. Someone who is willing to violate your trust once is going to do it again.

Here is What you Shouldn’t Do

1. Forcible Entry. We are not Joe Pesci in The Super. Don’t kick down doors or lower yourself to the level of these squatters. It is frustrating, expensive and time consuming, but you got into this business of being a Landlord. This is what you signed up for.

2. Turn off Utilities. Besides potentially harming your own property (Pipes freezing, candle started fires etc), judges will not look kindly at this. It could be seen as a form or intimidation or harassment.

3. Intimidate/Harass. Again, we aren’t Joe Pesci.  The best process is to begin the eviction process. Although these squatters probably don’t care about their credit or rentability, take the opportunity to submit the eviction and amounts owed to collections.

Ultimately the best remedy for squatters is to limit your vacant properties. Thoroughly screen your tenants. Have a leak proof lease which outlines subleasing/guests. Secure vacant properties and consider affordable video monitoring solutions for them. If you can catch them quick enough or can deter them altogether, you may avoid dealing with a squatter.

 

Are You Branding Yourself?

Gary Vaynerchuk is probably one of the biggest proponents of using social media and online platforms to build your own personal brand. There is no excuse these days not to take advantage of all of the free tools at your disposal. Your personal branding should use the social media arsenal daily.

It is interesting to see how people use social media. Some use it for business, some for personal and some maybe for games. However you choose to use it, I think it is important to realize its serious effects.

Personally, I want people to see me as a hard-working individual who is an expert in Real Estate and Property Management who is dedicated to health and fitness. That is my brand, that is how I see myself and how I want the world to see me.  I am diligent about what I post (though I do have lapses), but focus on my passions and what my brand is.

The impact of these social media platforms, immediately effects your brand. If you want to be seen as a professional, but are posting things that are in direct opposition to that, you have only yourself to blame for how the public sees you. Don’t tell me you are a professional and then post about how hammered you got last night and are so hung over all you are going to do is watch Game of Thrones all day.  For whatever reason, we remember those posts. Not the 10 other posts you put up about your company. Sorry.

Grant Cardone suggests that at all times you have the ability to dominate your industry. It has never been easier to dominate. Facebook, Twitter, Instagram, YouTube etc etc. these are all platforms, for free that you have the opportunity to dominate. Insurance, show me how to get better rates through article postings or YouTube videos. Carpet cleaner? Instagram your final product. Sports announcer, tweet all about the event you’re at. Cam Newton called out a “ghost follower” at an interview (a follower who saw the post but didn’t like the post). Just because you aren’t getting comments or likes, doesn’t mean people aren’t watching and paying attention.

That’s what I am doing right now, although poorly and not a very good writer, but with time and effort, I hope to be able to produce quality content.  My goal is to write 1 blog/week, increase my twitter and Instagram followers and be seen as an industry expert. Not just locally, but statewide, heck even nationwide. My personal branding will be directly tied to the content and activity I produce.

I gave a presentation to a group of 30 residential property managers about 6 months ago about social media and its powers. To date, not one of the property managers have implemented a consistent system. About 2 to 3 of them began posting on Facebook for about 2 months and then stopped. Typical. When asked why he shares all of his secrets, Robert Kiyosaki replied “because only 4% of the people will act.”

There is nothing wrong with working 9-5 and making just enough money to feed your family and put a roof over their head. I don’t want that life. If you’re a business owner, neither do you.

It starts with your personal brand. Then your businesses brand. It is consistent perpetual effort over a long time that will pay dividends. Not a flash in the bucket.

What is your brand? Are you working on it? Consistently? If not and you don’t think people are paying attention to your Facebook posts, think again. When they have to purchase life insurance and they remember your post about the strip club you were at with your buddies and got kicked out for being too drunk, don’t blame them for not going with you.

4 Things To Do Before Busy Season

4 Things to Complete before Busy Season.

I typically tell people slow season in property management in Fort Collins is between end of September and beginning of April. Students are in school and people are not as excited about moving during winter as during the summer months, so we get a “slow season”.

With busy season beginning, here are 4 things to do to get ready for it.

Set Rents

We used to set these rents during March, but with CSU’s housing fair beginning earlier and earlier, we set them sooner and sooner.

This is always an interesting time for our property managers. Between the 2 of them, they have 40+ years of experience and still it is an anxious time because of the uncertainty of where the market is going.

We have so much new construction in Fort Collins.  Many of these newer apartment complexes are having their first “turn-over” of units.  We are fortunate that there are so many people moving to Fort Collins. If that trend stops and all of these units come on line, there could be many property owners and investors scrambling for renter and offering significant concessions.

Currently, the feeling is that it is still a hot market for landlords and rentals. A well-priced property will not sit long and should be leased within weeks if marketed properly and intentionally processed.  A year ago, a landlord could throw a property on the market with a random absurdly high number and have 4 people submit applications within 24 hours. We aren’t that hot of a market any more.

You should be gathering market information on rent prices, vacancy, absorption and new units being added. Hopefully you have some comparable properties you can contact the property manager/landlord to get rental rates from. Compile all of this information, use the technology you may have at your fingertips (revenue management systems, rent generators etc) and decide on your new rents.

Rent setting now needs to be strategically set and the leasing team should know that slacking will not be tolerated. It’s a new season and more competition = a higher level of work required.

Send out Lease Renewals

Once your rents have been set, it is time to send out lease renewals.  A trend I’m seeing is an increased days requirement for notice to vacate. We used to only require 60 days. We’ve since moved to 90 and 120 days, but landlords requesting 6 months is not out of the question. There are multiple advantages of having more notice of vacating units.

Aggressive rental pricing
If you have 180 days to get your property leased out, you can be more aggressive with the rental amount you are seeking.  Set your rent at a premium and then systematically decrease it if you are unable to get it rented.

Staffing
We will discuss staffing more below, but as it regards lease renewals, the earlier you know how many units will be vacating and renewing, the sooner you can understand your summer staffing needs.

Get the renewals sent out and once they begin rolling in you will get a sense of how much turnover you are going to have. This will help you decide how much maintenance is going to be required as well as the need for leasing consultants.

Walk of Properties

The summer months are here and with the 5-6 months of solid warm weather, comes the ability to get those exterior projects done.  Even with 300 days of sun, the cold weather and uncertainty of it, do not allow for extended projects to be taken on.

We walk the properties every month, but when spring comes rolling around, we walk them with a different mentality, that of improvement. What can be done to increase curb appeal? What needs to be done to ensure the integrity of the building? Are there any emergencies that have to be taken care of? What does your budget look like to be able to do these projects?

We just finished walking 3 of our properties and came up with a list of action items. Our must haves, our wants and our dream list. Our must haves include tree limbs growing onto the roofs to be removed. Our wants would be new concrete in certain areas where it may have shifted. Finally, our dream list is the large ticket items. The parking lots, new roofs and painting. Unless these items are needing to be done, or causing the building damage, these large ticket items are put on our list of dreams.

With our smaller operation, we do not budget in these items over the years. We signal the need for these items years in advance and inform ownership of the need.  Ultimately, each owner has his or her goals for each property and the investment into these repair categories need to be within those goals for them to be completed.

Summer Vendors/Seasonal Staff

If your rental property has an A/C unit, do you have an HVAC tech who you set up annually to service it? How about sprinkler/landscape techs?  Our techs are responsible for starting up the sprinklers, fertilizing our turf and also its aeration. We do this on all applicable properties even if the tenant is responsible for mowing their lawns. We also schedule pest control service at one of our larger complexes to mitigate wasps, bees, ants etc.

Summer is a busy time for all, so having reliable vendors who you have relationships with will pay dividends to both your stress levels and bottom financial line.

Do you need to bring on summer maintenance techs or leasing consultants to help with the additional work that is to be done? By now, hopefully you already have a leasing consultant working part time.  It is important to use the slow time so they can be taught sales techniques, property features and locations. If you haven’t hired your leasing consultant, start the marketing for hire.

Fort Collins is a great college town and there are always college kids looking for work. You could hire construction management majors for help with the maintenance side, or horticulture majors to help with the landscape side. We take full advantage of the resources Colorado State University has to offer. We have 4 full time maintenance technicians throughout the year and 2 part-time. During the summer, our part timers become full time and we bring on 1 additional full-time tech.

Although there are many things you can and should be doing during “slow season” to better both your company and the properties, it is getting warmer and soon is GO TIME!  These four things to do before busy season will set you and your properties up for success.

Good luck!

 

How to Raise the Bar on the Property Management Industry

Let me start by saying I love my co-workers and I love my competitors. I love how hard working they are. Side note: there is enough business for everyone to have a slice, so have integrity and play fair and it will all work out in the end.  That all being said, being full time working in the property management industry, I’ve noticed a lack of responsibility to the craft. We are the ugly step-child to the prom king, 4-year varsity starter real estate sales.  Real estate sales is sexy. Staging homes, drone videos for listings, nicely dressed agents and a professional presence online (most of the time), real estate sales gets you the big pay check and therefore people are competing to get it. Competition drives performance.

Not in property management though. We are the cash flowing, down and dirty operations side of real estate investing.  From my perspective, we (including myself) get lazy and don’t take our profession as seriously as it should be taken.

What can we do?

Get Educated

Of all the property managers I know, the best ones are the ones getting involved and getting educated. IREM, Institute of Real Estate Management and NARPM, National Association of Residential Property Managers are two great organizations to get involved in to evolve your career. This is a great cash flowing industry, but don’t just collect rents and binge Netflix. Further yourself, further your career.  Then, once involved with one of those organizations, volunteer in a position to give back. It is amazing how much you will learn about the industry by osmosis.

Embrace Technology

Are you accepting payments online? How about smart locks at your apartment complexes? Property management will be now and forever a service-based industry, but technology is disrupting how the day to day operations are playing out.  I’m not saying that you have to jump on every new tech bandwagon, but look at your business, the vision and goals you are trying to accomplish and implement the best tech that will help you meet or beat them.  We live in an exciting time where both the real estate industry and the property management industry are going through substantial changes, it will be exciting to see the future. The near future.

Simple – Better Photos

Are the pictures you are putting online done with you iPhone 6 on a gloomy day in a dirty unit? Are they pictures you’d show the owner of the property? If not, up your game.  Professional pictures can cost as low as $79 but return so much more. Offer the renter a credit of $20 to clean up the place for the photographer to come by, plan it on a bright sunny day if you can and throw out all the pictures that have any blur. Not only will this get the property leased out quicker, it will also provide you with great options to post to your social media accounts, to showcase your skillz.

There will be a large amount of property managers retiring the next few years. Michael Lanning out of an article from National Real Estate Investor stated “While the average age of an American worker today in any industry is 43 years old, the average age of a property manager is 50.1 and the average age of a CPM is 52.3 years old.” This industry is going to see a wave of younger entrepreneurs entering the field and when they enter, it is up to us to have a bar set so they know what they need to live up to.

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