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Rental Fraud in Real Estate

1 in 3 people who have been impacted by fraud in renting has resulted in more than $1,000 in losses.

I read an article in the Wall Street Journal that suggested that “More than two-thirds of teens say they would rather communicate with their friends online than in person”.  Watching girls at a baseball game, this is obvious, yikes.  Property management and real estate are going through technology transformations. Online applications, performing primary searches online, paying rent through Venmo and team communication through Slack are just a few of the major technology uses. It makes life so easy signing documents without having to meet in person. Wouldn’t you rather see your account balance go to “$0.00” immediately than hope your check doesn’t get lost in the mail?

All of this technology stuff is hard for me to see as anything other than the second coming of Jesus.  So just as I tell you how much I love technology, I need to tell you to STOP!!! For at least 5 minutes and read this blog post.

Online Fraud

Online fraud grows with the growth of online usage. Over 5 million renters effected by fraud in some way:

 

  • In a new study, Apartment List found that an estimated 5.2 million U.S. renters have lost money due to a rental scam. In addition, 43.1 percent of surveyed renters, have encountered scam listings or contacted fraudulent properties while apartment hunting.

 

  • The issue is especially prominent among millennials, who although generally tend to be more tech-savvy than their older counterparts, often lack the necessary skills to recognize fraudulent postings.

 

  • Renters aged 18 to 29 years, are 42 percent are more likely to fall victim to fraud, probably due to a lack of renting experience or moving quite far from home and not being able to visit their new places before the move-in date.

 

This results in an estimated 88.3 percent of renters with negative renting experiences, changing how they search for their future home.

1 in 3 impacted lost more than $1,000 due to fraud:

What Can You Do?

Awareness

Understand that not everyone out there is good. You need to know that just because someone promises you a “deal of a century”, it might be false. If you and the listing representative e-mail back and forth, follow-up with a phone call.  If it is a private property owner/manager, verify information on the county records or google the person/manager in question.  The ability to research online has never been easier. Use it.

Request Seeing The Property

Site unseen is not a good practice. Unless you are using FaceTime for a showing, never sign a lease site unseen. Routing you through an application process and online payment schemes won’t be easy if the property in question doesn’t actually exist.

Use the Triangle

“This is an A to B conversation, C your way out.” Actually C, make your way back and see if I am being an idiot. When you are conducting business with just one other person, it is easy to get scammed. Using Google is a great start to verify, but asking an expert is never a bad idea either. Call a local property manager and check to see if what you’re doing sounds legitimate.

The Don’ts

  • Don’t give your credit card over the phone
  • Don’t take anyone at their word
  • Don’t give any personal information through e-mail or texts
  • Don’t open any e-mail attachments without knowing exactly what they are

Rental fraud will continue to increase as online usage increases. The fraudsters are getting more and more creative. It always seems like we are on the responsive side of the defense and not proactive. We have Lifelock to help stop identity theft before it gets too bad. We have information that we share to help inform the public. It is ultimately up to you to make sure you do everything you can to make sure your financials and identity are safe. Online fraud is scary, but if you go into it with your eyes wide open, you can possibly prevent it.

Property Management and The Power of Technology

If you’ve had a sewer back up or any type of flooding in a house, you absolutely know how crucial time is. Seconds can save you thousands.  Water is fast moving and extremely damaging. Technology and my software system recently saved me thousands and weeks worth of remediation.

The other week I was at home watching my 3 month old daughter as my wife had a meeting she needed to attend. I was a little late getting home at 4:30 and my wife left ten minutes later at 4:40. My daughter and I started as we usually do, dancing, singing, me trying my best to make her smile and laugh. It was 5:15PM and I got the call.

The Call

“I have water coming up out of my utility closet.” -Tenant Unit #1

Now when you have water coming up the toilet, or shower, it could just mean those specific lines are clogged. Utility closet drains should not have water coming out of them. That is a main line clog. You don’t mess with main line clogs, ESPECIALLY in multifamily. In a single family, you have a single family that would be using the main line for all of your used water to get out and into the city main. In a multifamily, you’ve got multiple families using that same line. That means you could have multiple people showering, pooping, washing their dishes or washing their clothes. All of that water has to have a place to drain and if the main drain has a clog, it will make its way backwards.

Immediately I called the neighboring tenant to see if they had any water issue, but no answer. I signed into my property management software system and was able to “text property”, meaning I was sending 8 texts to all tenants.

The Text

“Everyone stop using water. There may be a main line clog. Call XXX-XXX-XXX if you have water coming out of your drain.”

Looking at my daughter, I yelled “Lets go! It is due time you get introduced into the world of Property Management.”

I packed her diaper bag, got some milk and bottles ready, as this could be a long night, strapped her in her car seat and we were off to the races to the property. I had called my wife, who ON THE BALL, knew I wouldn’t call her if it wasn’t an emergency, called me right back.

“We’ve got an emergency and I’ve got little girl. Can you meet me at the property?”

My wife actually beat me to the property, where we handed off our daughter and I began investigating the situation.

When I viewed the situation, a puddle the size of a large pizza was in both utility closets. Everyone received the text and had stopped using their water. Thank goodness!!!

The Situation Resolved

The night was long, because with a main line clog, you want to ensure the line gets cleared. Eventually, the rooter cleared the line (tree roots) and was able to get all water flowing in the right direction.

Water back ups usually result in water extraction, dehumidifiers and possible removal of drywall and carpet. It will require the current residents to find alternative living arrangements.  After all of the removal, you then begin making all of the necessary repairs and remediation. Water back ups become expensive FAST.

The Technology

It was amazing to hear from all four units that they had received my text and immediately stopped using their water. That quick text to the four units and 8 tenants saved me thousands of dollars in repairs.

The day immediately following, I took the opportunity to thank my tenants through the same software technology. I thanked them for their patience to build tenant relations, and I also reminded them about the importance of renters insurance.

My insurance representative Seth Gilbert, through Country Financial stated that “The cost (of renters insurance) is roughly $10-$20 per month depending on the coverage.  For that minimal monthly cost you are potentially saving thousands in losses.” I had a tenant respond that, yes indeed they were seeking more coverage.

Technologies ROI

My property management software costs me around $4,000 a year, in one night, in my mind, had a 100% ROI.

If you can garner the power of technology to its fullest, it can absolutely be a lifesaver financially and emotionally. Technology is property management is just scratching the surface. It will be fun to see what and where it goes from here.

The Greeley Flip

The MLS doesn’t supply many deals, but sometimes you get lucky. We closed on the Greeley flip on June 13, 2018 for a purchase price of $260,000. Below, is the time frame and costs assocaiated with this flip.  I don’t do very many flips, but when I come across something that make sense I pull the trigger. I felt the “after repair value” (ARV) was $330,000 and expected to put about $15,000 into the deal. It was actually a pretty “clean” property, in that it did not have a major layout flaw or structural/major mechanical issues. New carpet, new paint, a major clean and throw her back on the market. Here is the actual numbers and timelines for those who have not yet done a flip, or are so in love with HGTV’s glamorization of house flipping.

Timeline

5/25/2018 Original Offer$245,000.00
5/27 Fully Executed Contract $260,000.00
5/30 Inspector and Floor Measurements
6/13 Close on Property $260,599.54
6/14 -6/17 Maintenance in Property
6/15 -6/18 Painting
6/20 – 6/21 Carpet/Flooring
6/22 – 6/26 New Sod/Landscape
6/27 HEAVY Clean
6/28 Professional Photography
6/29-7/4 Final Details Prior to List
7/5 Live on MLS
7/9 Under Contract
7/24 Inspection Objection – 14 Items
7/25 Inspection Resolution
8/10 Closed on Sale $335,000.00

 

Total days from going under contract on the buy, to closing on the sell: 76 days

 

Repair Items and Cost

Item Cost
Purchase Price $260,599.54
Maintenance $6,417.20
Flooring $7,369.90
Painting $3,950.00
Cleaning $720
Landscape $2,745
Utilities $579.93
Holding Cost $4,119.45
Marketing Cost $250
Total ALL IN COSTS $286,751.02
Sales Price $335,098.63
Less Closing Costs of $24,247.28 $310,851.35
Net Proceeds = $310,851.35 – $286,751.02 $24,100.33
% Return 8.4%
Annualized Return 46.86%

 

Before

After

We didn’t have as much foot traffic as we would have liked when we put the property onto the market, but we did have the right traffic. Ultimately 12 people came through the property in the 5 days. We received one offer, which we accepted.

Our budget going in was $15,000 which quickly moved to $20,000 with an idea of it possibly hitting $25,000.

Although we made $24,100.33 on the deal, we had to risk $286,751.02 to get it. You have to ask yourself if it is worth the risk to sit. Every day we sat on the market was $54.20 in interest. Without the right buyer coming through the door and receiving that offer, the property may have sat. At which point, it begins to start accumulating interest. At that point you would have to ask yourself if you need to upgrade anything else, which costs more money and time.

What made this flip extra appetizing was that we were going to be able to take the commissions on the buy side and the sell side. At 3% that was $7,800 on the buy side and $10,050 on the sell. Without the extra commission dollars, this deal may have not been a deal. It is easy to look back now and see that at any time there could have been an unforeseen item pop up. The property could have sat for 30-60 days on the market. Although the money we made was good, we had some good luck on our side as well.

Flips are fun and the before and after are always great to see. If you’re not flips on a regular basis maybe think of another way to make a “quick buck”. Having the right vendors and processes is essential. Stress is a part of the process and also part of the fun. Be prepared to be flexible.

 

 

The Excitement of Hell Week

Hell Week

You wake up Monday morning July 30th and you know for the next 120 hours, you are going to be going nonstop. That’s what it felt like this morning and I am pumped about it. Hell Week is my favorite week. This is my 8th year of Hell Week and we probably have one of the easiest weeks ahead of us, yet the excitement is the same. This week is about all the work prior to this week.

Vendor Relations and Preparation

You need to have a team of vendors who know your system. Floor installers, painters, cleaners, steam cleaners and maintenance techs are the vendors who make the magic happen. Without these vendors, your turns won’t turn and your tenants won’t be happy. Do your vendors know they are going to be working in the unit with other vendors? Have you provided them a rough estimate of about how many turns they are going to have? Do they know the locations of their turns and the layout of the property? If you’ve done all of this, at least your vendors are gonna rock it.

Tenant communications

Although the lease terminates on the 31st at noon, the 31st is a Tuesday and no one likes moving on a Tuesday. Most folks work, or only can move on the weekends which means early move outs. It is imperative that you’ve called all of the tenants moving out weeks in advance to inquire if they are planning on moving out early. If so, hopefully you can get into the unit to begin work. On the flip side, know if your future tenants plan on moving in the 1st or 5th or if they’re going to be a late move in. If so, one less property you have to turn with the others, set it aside.

Employee Job Tasks

Although your accountant, secretary, maintenance supervisor, property managers all have daily tasks. Turn day is a day where no one job is more important than the next and everyone needs to be working together towards a common goal. Secretaries may still be answering phones, but then relaying the needed vendors to the maintenance supervisor. Property managers may be driving the properties to inspect work/units/employees. Accountants may be doing checkouts.  It has never been truer on turn days “One for all and All for one.”

Temporary Help

Friends, family and random college kids may all get involved on these days.  Extra helpers may do all of the following: Deliver work orders, do checkouts, weed whack back yards, pick up dog poop, collect rent payments, deliver lunch to techs or any number of other random tasks that the company/the system needs help with on these days.

Positive Attitude

I can’t emphasis this one enough. If you’ve been around a stressful situation and others are in a frenzy, it never helps the situation. These days are going to be crazy nuts and the only thing you can do to help both your sanity and the company is keep a completely positive attitude, no matter what. If a unit was missed and there is going to be a late move in, it’s okay, what do you do now? Is there a tenant that is refusing to move out, it is going to be okay, follow protocol and begin the process of getting them out. There are SO many unknowns on these two days and being ready for the unknown is all you can do to be successful. In the meantime, stay happy and positive and think creatively to find solutions.

Systems Systems Systems

Over the 8 years I’ve been here we have fine tuned the process while I am leading the charge. Each individual team member must know their roll but also be willing to help where needed. The process of turnovers start months before the 31st, but the 31st is where it all comes together. Step 1, check out units; Step 2, call in vendors; Step 3, turn over units; Step 4, unit checks prior to move-in; Step 5, collect rent, provide new keys. Essentially the 24 hours of turns consist of these 5 steps, but you need to know who is doing what, where and when.

I created a video for our maintenance techs a year ago to help them visually see how it goes. I don’t want calls from new vendors not knowing what is going or when to expect calls. This video has helped. A video like this could be applied to leasing agents checking out units, accountant taking in new rents and providing keys, but everyone needs to know what they need to do without any hesitation. A phone call of “what am I supposed to do?” is never a good phone call on these days. Know the system and fine tune it annually.

Step 6 – celebrate the end of turns!

Hell Week and turn days are my favorite part of the year. The excitement of working as a team and getting SO much accomplished in such a short time never ceases to amaze me. Whether you are turning 1 unit or 200 units, you too probably have those turn day jitters. As long as you’ve got all of these ideas lined up, you should be golden. Good luck to all that are doing unit turnovers!!

Stacking Showings

When I entered into Property Management, my first title was that of leasing agent. With over 400 residential units to keep rented over the years, I’ve learned a few tricks to get properties leased and in the shortest amount of time. One of those tricks is stacking showings. Stacking showings is about creating urgency, saving time and being efficient with your time. Turning those prospects into buyers or renters.  Stacking showings is essentially setting a time where there are either showings back to back, or all at once. There are three reasons I like stacking showings.

Create Urgency

Have you ever been to an auction and see that someone else is interested in the same item you are and bidding on? It’s time to make moves, are you going to get it or not. It is the same when you stack showings. These people who are attending this showing, see others at the same property, given the same information as you need to decide and decide quick, if they want to make moves to lease the property. Buyers will delay if they feel they can. Provide them with a reason to make a decision.

Save Your Own Time

Stacking showings will not only create urgency on the buyers side, it will also save you substantial time. If you have a showing set for 4, 4:30 and 5PM for 3 different groups, you’ve committed 2 hours of your time. Drive time, prep the property, and drive time home included. If, rather, you set all three groups up for 4:30PM, it should only take you about 1 hour. 1 hour at $50/hour = $50 saved. Take this over multiple properties and you’ve saved yourself hundreds of dollars. Save yourself time by stacking showings.

Never Miss an Appointment or be Stood Up

You may have a Google calendar where you put all of your appointments. But what if you have 10 showings over 2 days? If you time block and stack, you can decrease the likelihood of missing an appointment. Not saying that missing appointments should happen, but when you have a high demand property, you’re going to have a lot of traffic and tons of phone calls, mistakes happen. You should be confirming all of your appointments day of, but there will always be those renters or buyers who skip appointments even after confirming. If you stack the showings, at least one of the three groups you show, hopefully shows up.

Ultimately, you will have to consider whether stacking appointments are best for you and the property.  You may like the personal touch, to sell the renter as to why they should rent here. Personally, I’ve never had to be sold on a property. I know what I want and what I can afford. I don’t need to be sold. Tenants and buyers know what they are looking for, know their price point and will make the decision as to whether or not they are going to take the property themselves. That is why I choose to stack showings.

Pre Walking Rental Units Before Turnover

Shooting blind may be a fun magic trick, but when it comes to rental turnover, the time between the old tenants moving out and new tenants moving in, you want as much information as possible. You want this information with as much time before the turnover as possible. Besides the fact that you should be getting either yourself, a maintenance tech or someone into the unit twice a year, pre walking units gives you a great opportunity to get eyes on the project at hand. You may have recently walked the units while showing to perspective tenants, but did you walk it with the idea of turnover? Where were your eyes? Were you inspecting the flooring for possible replacement, or if the unit needs to be painted? There are so many reasons that pre walking units is of the upmost importance, but I will give the the most important 3.

The Tenant Prepares Their Unit

Due to the fact that you have to post your tenants with the intent of entering at least 24 hours prior to entry, they will most likely scramble to get the place in a relatively clean state. This reminds the tenant of how serious you take your job. This is not passive management, but instead actively picking up your duty and preparing yourself and your vendors for what’s to possibly come. Also, the tenant may be in the middle of moving out already and thus presents the opportunity for you to ask if you can begin the turnover early. It never hurts to ask.

The Vendors Get a Heads Up

Although it is an imperfect science “estimating” how heavy a clean the unit is going to be or if the Carpet is going to need replaced, it is better than blind day of turnovers. Sure the tenants could put a rug over a 3 foot stain and a poster over a hole in the wall, but hopefully you can see the overall condition of the property. Based on your experiences, you can determine how heavy of a turn the unit will be. The vendors will appreciate you for doing some initial leg work so they in turn can prepare materials and subcontractors for the potential work. You will be a super hero in their eyes. Well, maybe.

You Get Prepared for What Kind of Turnover to Expect

Whether you have 1 high end single family unit that you’re turning over or 78 apartment units. Preparation is key. Mostly for yourself. Get eyes on these units to determine how long you’ll be working these turnover days. Determine how many floors need to be replaced and if you could get into units early with tenants moving out early. How many cleaners are you going to need or if the yard needs to be weed whacked down from the jungle it has become. Without pre walking the units, you won’t know what you’re getting yourself into and may cause yourself far more headaches than you need to.

We started pre walking units 5 years ago and I don’t know how we ever completed turns before then. We have had upwards of 80 units turning over in a 24-hour period and as few as 35. But how could you even begin to think about turning over 80 units without SOME  idea of the condition the units are in.

It takes about 15 minutes per unit to pre walk and make estimations but can save you or the owner time, money and headaches. Good luck and pre walk those units!

Landlord Reviews – 3 Ideas to Help

If you’re a landlord or property manager and you’re doing your job and treating your tenants fairly and honestly, go ahead and skip this article. If you are a scrupulous landlord and have been slumming it up for the past 20 years because “don’t fix what’s not broken”, you should read on.

The power of the internet. The power of social media. They will be your downfall if you continue to operate a business with the “who cares about the tenant” attitude.

Take Whose Your Landlord for example, whose company overview is “We were built to weed out bad landlords. Join us as we bring quality to the rental experience…” They have over 19,000 likes on Facebook. Or locally, here in Fort Collins, Northern Colorado Property Rentals. Mostly, it is folks looking for and connecting each other to rental opportunities. It is also a platform where unsatisfied renters will dish on  landlords/property managers whom they’ve had conflict or problems with.

The community has always talked about poor landlords and frustrating situations, but now there are platforms and abilities to broadcast their concerns. Facebook, Twitter, Google and Yelp just to name a few are commonly used to review landlords.

Fortunately, I have been able to have some pretty great renters who in turn are very easy to work with. By the time they move out, I never think twice about asking for a review. It is important to me and it should be to you to get those good reviews. “90% of renters are looking online first” when exploring their next rental option. You could get away without any reviews, at least they aren’t bad, but with each passing year and more and more Millennials and Gen Z’ers renting, it is just a matter of time before you get a review.  Hopefully it will be a good one.

I also want to point out that it is not always a big bad landlord who is the bad guy here. There are PLENTY of times or situations where a renter has destroyed a property. Then the landlord has taken the proper steps to be made whole and the renter flips out when they receive a few thousand-dollar bill and takes his/her “atrocity” to the internet. That happens and that isn’t fair.  What you can’t do, though is ignore these reviews. You need to address them.

Transparency alert!! I just dropped the ball as a landlord a couple of weeks ago. I had a commercial tenant who was out of A/C for 5 days. Although we were working on the problem every day possible and my maintenance technician was communicating to the tenants, I did not communicate to the tenants. They felt in the dark and were upset. Rightfully so. All I had to do, was send an e-mail, drop by the store, or even text them.

To address the poorly handled situation, I had a meeting with the commercial tenant and we addressed all the issues at hand. Hopefully, going forward it will be a smooth flowing line of communication.  It is important to hold yourself up to high standards in an industry that has few.

Property management is a pretty softly regulated industry. There are no exact rules to play the game besides providing minimum standards of habitability, no discrimination per fair housing but other than that, the ground rules are few. Institutions such as IREM and NARPM along with others try to raise the bar on these property managers with ethics, education and best practices.  Ultimately though, it is up to us, the industry to raise the bar of property managers.

Here are 3 Ideas on How to Better Your Reputation Online:

Ask for Reviews

Although it is some times awkward asking for the sale. You’ve got to do it. If you feel you’ve handled your job to the best of your ability, ask the previous tenant OR owner, for a review. Send them the link to your Facebook profile or Google profile. Make it as easy as possible for them to give you a review.

Monitor your Social Mentions

There are websites out there that actually monitor when and how your name was used. Try it. Other than that though, a simple Google search, Facebook search or Instagram search with you or your company name will bring up whatever information is out there, good or bad.  If you find negative reviews and it makes sense to address it, do it, tactfully.

Be Proactive About What Information is Out There

Are you blogging? Tweeting? Facebooking? What content are you putting out there? These are all things that can be a “self help” way to address your social presence on the internet. Take these blogs that I’m writing for example. I know I’m not the best writer, but I am passionate about the industry and like putting out content about me and my company for others to “enjoy”.

When it comes to your business practices, they are no longer secret. If you take 2 months to address a leaking ceiling. Your tenants will talk about it. Not just to their mom or dad, but to their friends, Facebook, Google, everybody.

With the paradigm shift happening of more renters, there will be more entrants into the landlord and property management business. Activists for landlords as well as renters and everyone in between. This is a good thing. Competition brings out the best in businesses.

Good luck and understand the power of these reviews and the power they will have when these companies gain more traction.

Acquire Rentals by being a Nomad

I’ve talked to my wife the other week about “if we ever went bankrupt” what would we do. How would we get back to where we are now? A technique to acquire rentals with little money down by being a nomad. Essentially, buying a house with the benefits of owner occupied financing, living in it for a year (per HUD financing guidelines) or longer if needed and then moving into another home while keeping the original as a rental. The benefits of owner occupied financing are that you can put as little as 3.5% down to obtain a loan. The 8th wonder of the world, leverage.

The extremely hot real estate market we are in makes it difficult to nomad though. You need to be diligent about what property you purchase and willing to take a property that may need some TLC. In Fort Collins as of June 14th, there were 25+ homes that sold for at or under $300,000 that had at least 3 bedrooms and 2 bathrooms. Below are three examples of purchasing a property with a different percentage down on each deal. The areas highlighted in yellow are the years you must remain a homeowner due to the assumption you would have negative cash flow. You never want negative cash flow as an investor.

As you can see if you put the minimum 3.5% down it will take you 4 years before you should begin to look for your next owner occupied home. As you increase the amount you put down, your debt service decreases which allows the rent to produce positive cash flow sooner. Becoming a landlord is about cash flow. Some ill fated investors begin investing with negative cash flow in hopes of hyper positive appreciation. That is a losers game that I don’t want to get involved with and neither should you.

Assuming that you put 20% down on each deal, here is a nomad scenario over 10 years looking at three properties.

Even when you put 20% down there could be years that you may have to wait a few years before you could see potential positive cash flow.

Some years and times in the cycle are easier to become a nomad than others. When the market is hot and people are bidding over the list price, you need to be patient yet aggressive. Deals are there to be found. It is good to include proper expense items and assume inflation and thus an increase in those expenses. You can, on the flip side also assume an annual increase in rents. I used 5%.

Being a nomad real estate investor is a great way to go to acquire rental properties over time. The area to also look at in the calculations are the equity in the property. That could be used to put your kids through college, sell when you retire to move to the Bahamas or whatever else. Or you could keep these properties as legacy properties and live off of the cash flow.

There are many ways to invest in property and more opportunities are becoming available with crowdfunding, tiny houses, Airbnb etc. This is one way that young people could use minimal money down to acquire property over time.

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.

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