The recent hurricane on the East Coast may be over, but the cleanup process is just now beginning. Beyond debris pickup, property managers and owners across the area are learning what preparations worked well, and what they can do better next time.
Regardless of your location, this is a good time to ask yourself if you would have been ready to handle Sandy. While those of us who were just temporarily inconvenienced may be ready to thank our lucky stars and move on, disasters such as these should move us to preventative action.
Thankfully, the fourth edition of Before and After Disaster Strikes: Developing an Emergency Procedures Manual from the Institute of Real Estate Management (IREM) has arrived on the scene just in time to help property managers and other owners get started on this vital, yet daunting process.
Far from just counting fire extinguishers and first aid kits, this book offers checklists of the more obvious risk management activities (broken out by both disaster and building types), and a comprehensive look at the more esoteric, easily forgotten elements of disaster planning. Are you storing the right types of information backups, so you can get back to normal business operations ASAP? Do you have the right kind of insurance? How will you get the word out to tenants, as well as outsiders and the media? Continue reading »
By Christopher M. Leporini, REALTOR® Magazine
As stocks tumble, good investments are hard to find. But if you that investing in real estate is the easy solution, don’t be fooled. In many areas, market conditions, combined with a flood of stock market refugees, are making the search for undervalued investments more difficult.
The good news is that you hold several advantages over the average Joe Investor: you are already well-versed in the real estate process, you view properties on a daily basis, and you have the experience to evaluate how a potential investment will appreciate over time.
The bad news is that becoming a landlord involves more than market savvy to be successful. You’ll also need to understand tenant screening, lease terms, and maintenance schedules. Streetwise Landlording and Property Management: Insider’s Advice on How to Own Real Estate and Manage It Profitably (Streetwise, 2003; $19.95) by Mark B. Weiss and Dan Baldwin offers nuts and bolts advice on managing investment properties. It can get you up to speed on the new skills sets that you will need to become a successful rental property owner. Although it focuses mainly on residential, it provides some information on land development and commercial investment as well.
Before you start investing, you need to seriously ask yourself whether it’s right for you. “Chapter 2: The Pros and Cons of Being a Landlord” candidly lays out property managements’ rewards, responsibilities, and frustrations. The authors advise considering whether or not you have the thick skin and the ability to emotionally detach yourself you’ll need when dealing with demanding tenants or evicting a resident. Also, you’ll need to consider the time commitment that managing property will entail. You have to be on call 24/7; which may conflict with your real estate schedule. It does boast a positive similarity to real estate sales—your potential for success is unlimited.
The book also provides advice on the day-to-day aspects of landlording. “Chapter 14: Working With Tenants” helps you learn to manage the frustrations of working with tenants. The authors describe five basic types of tenants and how to handle them.
- Watchdogs—call the property manager to fix a problem; they are the proverbial squeaky wheel. They may be aggravating, but these tenants will often alert you about problems early, when it’s still inexpensive to fix them.
- Complainers—find fault in everything. Unlike watchdogs, who can help you spot problems, they simply like to complain. Establish rules early on about what times they can call to avoid being called day and night about mostly imaginary problems.
- Helpless—need someone to take care of them. They will tell you with a straight face that they don’t know how to plunge a toilet. Again, setting the rules early on, and in writing, regarding you responsibilities will keep them from monopolizing your time.
- Slow Payers—don’t seem to feel that you really need their money urgently. Getting the rent from these tenants on time is a hassle, month in and month out, but they always pay eventually. Charge a late penalty to deter this behavior, otherwise, grit your teeth and accept it.
- Non Payers—don’t seem to feel you really need their money at all. Serve them notice according to the timetable prescribed by local law, and evict them.
Of course, not every tenant is going to be a pain. The books also provides advice on steps to take to keep good rapport with tenants. For example, the authors suggest using a maintenance request form to avoid misunderstandings on repairs and to provide a record of when work was requested and completed. Another goodwill gesture is to give tenants information that they can use, such as emergency phone numbers, the number of your maintenance person, and tips on apartment living.
Later chapters address vital information on insurance, taxation, and finance issues that you’ll need to as a rental property owner. You might already know some of this from your real estate dealings, however, a refresher course certainly couldn’t hurt. For instance, “Chapter 19: Insurance Matters” teaches you about how to shop for the best deal on insurance, as well as various insurance options such as liability insurance (a must), umbrella coverage, extended coverage, and loss of rent protection, among others. “Chapter 20: Worrying About Taxes” covers state and local taxes, including topics such as building registration fees, signage fees, building permits, and transfer taxes that you may have to pay in your area. “Chapter 21: Legal Concerns” gives you a grounding in the numerous legal issues that investing in real estate properties entails. Among other subjects, it explains tenant responsibilities, entry rights, and eviction.
Leveraging your real estate knowledge can give you an edge in even the most-picked-over property market. And basic framework of knowledge provided by Streetwise Landlording and Property Management should keep you from regretting your move into real estate investing.
By Christopher M. Leporini, REALTOR® Magazine
Property management can provide a valuable sideline or post-retirement income source for real estate professionals. However, getting started isn’t easy. New owners must quickly learn how to screen tenants, maintain properties, and deal with taxes and insurance. Fortunately, Hungry Minds, publishers of the popular “For Dummies” is here to help. Written by property manager and real estate radio show host, Robert Griswold, CPM, Property Management For Dummies (Hungry Minds, Inc., 2001; $21.99) gives readers a ground-floor introduction to the skills and knowledge they will need to become successful property managers. The book will help real estate professionals bridge the gap between their own experience and the unique demands of managing investment properties.
The book is broken into ten chapters that offer a course in property management 101, including advice on how to handle tenants, maintain records, and advertise your property. “Part 1: So You Want to Be a Landlord” should prove informative for salespeople who are curious about property management but want more information before deciding whether it’s for them.
The section helps readers evaluate whether they have the skills and personality to make an effective property manager. Dealing with tenants sometimes requires exceptional patience, particularly in situations such as rent collection difficulties or disputes over maintenance. Additionally, you must also be prepared to keep meticulous financial records and become familiar with local laws regarding upkeep and repair.
The section also discusses the pros and cons of hiring a professional management company. This places a buffer between you and the tenant, as well as putting the bookkeeping in the hands of a skilled professional. However, it might not be cost effective for smaller properties.
The book addresses another essential skill for new landlords in “Chapter 8: Eenie, Meenie, Miney, Mo: Selecting Your Tenants.” As a real estate professional, you already know the importance of staying within fair housing guidelines. But Property Management For Dummies shows you how to formulate objective, written tenant selection criteria that establish minimum standards for accepting tenants and protect you from potential discrimination lawsuits. These guidelines lets tenants know what to expect and ensure that you evaluate applicants consistently and fairly. The book contains sample statements of rental policy, which outlines your screening process for tenants, to give you an idea of how to structure this document. Additionally, the book offers advice on checking rental history, reviewing credit history, and verifying employment and income.
New landlords also might find themselves unprepared to deal with a property’s physical upkeep. “Chapter 15: Maintenance” provides advice on fixing repairs promptly and otherwise keeping properties in tiptop shape. This includes placing an emphasis on preventive maintenance—fixing problems before they grow out of control—as well as developing a maintenance plan to promptly respond to tenants’ complaints. Slow response to maintenance requests is a leading reason for tenants to leave rental properties.
As in your real estate practice, you need to develop a system (whether its e-mail, cell phone, pager, or a combination of these devices) to make yourself as available as possible to your tenants. You may also need to hire a maintenance person to handle repair tasks, the book points out—particularly if your schedule prevents you from staying on top of these requests. Finally, it’s important to keep records of these requests to prove that you answer complaints in a timely manner, should a dispute arise with tenants later on. Once again, the book provides sample forms that show you the format for documents such as maintenance requests and notice of intent to enter residential units.
Managing a rental property also means tackling complex new financial responsibilities. “Chapter 17: Two Necessities of Property Management: Insurance and Taxes” breaks down how to insure yourself against loss and liability and explains your new tax responsibilities. The chapter explains the different insurance options that you can purchase for your rental property. Options range from basic insurance packages to replacement cost coverage, which pays the cost of replacing a property without subtracting for depreciation. The chapter also explores landlording’s tax burdens and benefits. For example, the income you receive from you rental property is taxable as ordinary income. However, you can deduct operating expenses, such as payroll, maintenance, management fees, property taxes, and insurance to lower your tax burden
Becoming a landlord is seem a logical progression from selling real estate, however, it means acquiring an some new skills. Property Management For Dummies makes it easy to get up to speed on what it takes to become a landlord, as well as evaluate whether it’s a good fit for you. If you are a wannabe landlord who doesn’t know where to start, you’d be a dummy not to check it out.
Reviewed by Alan A. Alexander, CPM®, senior vice president of Woodmont Real Estate Service, Belmont, Calif.
Every Landlord’s Legal Guide. Marcia Stewart, Janet Portman, and Ralph Warner. 496 pp. Nolo Press, 1996. $29.95.
Before I read this book–the three authors include two lawyers–I was prepared for a self-serving, better-call-your-attorney approach that would provide the reader just enough information to suggest that the only solution was to consult one’s lawyer. I was in for a pleasant surprise.
This book is a must for apartment building owners, on-site managers, and property managers, no matter how long they’ve been in the industry. With regard to apartment management, the authors have taken great care to suggest a “firm but fair” philosophy that isn’t altruistic but rather a “commonsense, make-it-easy-on-yourself” approach. They have considered the law in all states and, where possible, have pointed out the differences.
For me, the most valuable parts of the book are the examples that distinguish between run-of-the-mill problems and serious problems that are likely to cause the owners or property manager severe headaches or legal action.
This book isn’t written in legalese. It contains straightforward, easy-to-understand, critical information for the effective management and leasing of apartment buildings, no matter the size.
The book starts with the issues of tenant screening and proper compliance with fair housing laws. The authors provide not only sample forms of rental agreements and leases but also tear-out copies of the forms and, for the sophisticated, a computer disk that allows the reader to modify the forms to fit any specific situation. (The authors point out the need to consult an attorney if the forms are altered to any great extent.)
Even though setting the rent isn’t a legal issue, except in rent-controlled cities, the authors give excellent advice on setting rents to maximize the owner’s occupancy and income and on avoiding the common problem of asking too much rent and having long vacancies.
There’s an excellent section on the hiring of property managers, something that isn’t all that familiar to small owners, who need all the help they can get. The authors provide hints and sample agreements for the protection of all involved.
There’s a chapter on co-tenants and assignments, a very difficult situation that’s put in proper perspective by the authors, with a lot of good suggestions on how to meet the tenant’s needs while protecting the property owner. Additional chapters give suggestions on the landlord’s duties relative to dangerous conditions, criminal acts, environmental hazards, and day-to-day maintenance of the premises. Each chapter presents the legal side of the issues and gives very specific, practical ideas on how to deal with the potential problems and avoid legal action.
Toward the end of the book, there’s a chapter on how to deal with problems without having to hire a lawyer. The final chapter gives advice on how to hire a lawyer, if necessary, and what type of fees one should expect, how to minimize the expenses, and how to deal with the lawyer should you have problems with either the fees or the service.
Although I’ve been in the business of owning and managing apartments for the past 30 years, I found this book a top-notch reminder of many things I thought I knew well but didn’t. This is an excellent how-to book that will save the reader time, money, and aggravation.
Landlord’s 10 Biggest Mistakes
- Being in a hurry to fill a vacancy and not properly checking tenant’s credit history, references, and background.
- Not getting all the important terms of the tenancy in writing.
- Failing to establish a clear, fair system of setting, collecting, holding, and returning security deposits.
- Not staying on top of repair and maintenance needs and failing to make repairs when requested.
- Letting your tenants and property be an easy mark for a criminal—-or renting to one.
- Violating a tenant’s privacy.
- Failing to disclose and remedy environmental hazards such as lead—-even those you didn’t cause of know about.
- Hiring the wrong manager or providing inadequate supervision
- Having inadequate liability and other types of property insurance.
- Using a lawyer when you could do it yourself.
Adapted from Every Landlord’ Legal Guide.