Monthly Archives: February 2014

Signing a Check

The Move In Process and Ideas

Signing a CheckSigning the lease paperwork and handing over the keys sounds simple enough. So why is it that so many problems happen when the tenants move out and their idea of what they moved into does not match your own? Did you have a detailed move-in process checklist completed? Perhaps you didn’t think it was necessary because they were so nice, or you just ran out of time while doing turnover repairs, they were in a hurry to move in, you were busy cleaning or you were in a hurry to move someone in. Whatever the reason, this simple task is often overlooked or not completed in a satisfactory manner.

When Tenants Move Out
Have you ever heard a landlord who had moved in their own tenant and they basically gave him a free month of rent and no security deposit requirement because the condition of the property was not ideal. So what happens when the tenant moves out?

If there is any damage to the unit, you cannot recover any of that money you’ve paid for repairs if they never completed a move-in inspection sheet. The tenant does not have to pay a thing because you cannot prove anything. Meticulous documentation is absolutely necessary — all parties must sign a move-in inspection form and show that everyone is in agreement on the condition of the place.

Tenant Move-In Process
I have found it often difficult to coordinate the documenting of the move-in inspection, failing to do things properly, and then wishing I had done better in the beginning. Now I am doing the move-in inspection first before signing any lease paperwork and then following with the lease paperwork so that it is fully complete without exception.

The lease paperwork will also state the following:

  • Every occupant that lives there
  • What the prorated rent is
  • A receipt for the security deposit
  • The term of the lease
  • What will be accepted as far as payments
  • All of the rules and addenda required for that state and age of property
  • Whether there are any pets, what pet fees are paid, and what is nonrefundable

If something is not spelled out at move-in, then it will undoubtedly cause potential arguments later.

Tenant Screenings are Vital
You can set whatever screening criteria you want as long as it is followed consistently, complies with state rental laws, and is not discriminatory. If an applicant cannot meet those requirements, I send them an adverse action letter explaining why they’ve been declined, similar to the letter you might get if you are denied credit. For my own tenants, I require:

  • three times the rent in gross income
  • a credit score of 650 or higher
  • no criminal history
  • a year of positive rental history
  • no more than two occupants per bedroom

Your own criteria can be more or less restrictive, as long as the tenant or tenants understand it before they apply. Read more about our tips on doing good background checks.

owners

How to Find a Good Property Management Company in Chico

Do you have any concerns handing off your property to a Chico property company? How do you search a qualified property management organization, trustworthy in the Chico area? What rates are reasonable? Do you have low budget for management your property in Chico? And how do you search a firm that will be financially answerable? How will a company reduce your risk and maximize the return on your asset? What questions do you have to ask to search the correct organization to defend your real estate assets?

Here are a few some helpful tips and questions which help you to search a dependable Chico property management organization for your property.

1. Who own multiple properties; ask for references from other owners. If your management company is also an investor, that is a great sign.

2. In this present market, where demand greatly outstrips availability, the vacancy rate should be very low. So please inquire about the firm’s borrowed to vacancy ratio and policy.

3. Is the company able to and willing to make timely and full accounting reports, which stop working exactly how the Broker grips all of the finances as well as property?

4. What do they do when they get ready for a new renter? What result will these charges have on your base line revenue? What is their tenant turnover rate?

5. What types of properties? Commercial or Residential or both? Do they have the essential equipment to grip any problems reasonably and rapidly that happen. How many properties do they handle and what to they specialize. Do they turn away some owners?

6. What is their screening procedure? What techniques do they employ to safe qualified tenants? How will they endorse your possessions? These are significant issues to stay the rate of your tenancy high with well-qualified occupants.

Make sure to ask these questions of any property manager you are thinking of employing in the Chico Area.

cash-flow

Managing Cashflow as a Landlord

cash-flowPoor cash-flow management is causing more business failures today than ever before. These failures are often attributed to a lack of cash flow, but it is the mismanagement of the cash flow that poses the real threat. This is an especially common issue for property owners and managers who, in spite of a full building or multiple Chico rental properties, may be facing empty bank accounts in the middle of each month.

Target the Cause of the Leak
Before you can fix your cash flow problems, you need to figure out where the leaks is. Are tenants refusing to pay the rents or are the rents too low? Look at other rentals in your area and make sure that your prices are comparable. Keep in mind, however, that a responsible tenant can be worth more than a couple of hundred dollars each month, and try not to drive away any stable tenants with aggressive rent increases.

Are your buildings only half full? Vacancies are your worst enemy, and if your building is harboring a lot of empty space, it may be time to mix up your advertising strategy.

Perhaps maintenance issues are causing the issues. Can you save costs by doing some of the work yourself? Do you need to spend more on routine maintenance so you can spend less on repairs?

Tighten Your Application Process
When you rent a property to a tenant, you are essentially offering them credit. If they fail to make good on that arrangement, you are left holding the empty bag. The process of removing a delinquent tenant is long and cumbersome in many areas, and property managers typically lose money in the process. Halt this progression before it even starts by taking Inc.com’s advice to increase cash flow by tightening credit requirements and ensuring that you have responsible tenants. If you do have delinquent tenants, use a service like the American Apartment Owners Association to report them to credit bureaus and inform them you are doing so. It might serve as extra motivation to pay on time.

Engaged Management
Property is not a passive investment, and if you are not engaged with your investment, that may be the reason your cash flow is suffering. The benefits of an engaged management style, including a stable tenant base result in lower turnover and ultimately results in less cost and effort on your part. When tenants know you are there to help them out with routine maintenance or to answer questions, they tend to take better care of the property. That results in boosted property values, safer properties, and more appreciative neighbors.

Keep Your Receipts
A big part of property management is fielding calls from little old ladies with broken faucets and clogged toilets. Although you may just be spending a few dollars on a couple of parts, you need to track these expenditures. RoofTopInvestment.com suggests collecting every receipt and reminds you to claim those expenses on your taxes. By being meticulous about your records, you will lower your tax burden and thus augment your cash flow. We know this is important, part of the reason all owners have instant access to all their invoices bills and more.