Choosing Property That Will Grow

Whether we are choosing property to live in or renew and sell, an investment needs to grow. Since a home is a major investment, where it is located plays a big role if you want property that will grow. Here are a few tips to help you make the right selection: • Chose the Right…

Whether we are choosing property to live in or renew and sell, an investment needs to grow. Since a home is a major investment, where it is located plays a big role if you want property that will grow. Here are a few tips to help you make the right selection:

• Chose the Right Location

When it comes to holding a home retaining its value under pressure of downward prices, location matters the most. If a property is rare, scarce, or there's a low supply of it, the cost will be maintained and can even increase.

You can always build a new one, but you can not replace the land underneath. Pick a spot everyone wants. The demand will be stronger, and the value more than similar homes in other locations where demand is low.

• Chose property that is unique

Even in a development where every house has been built by the same contractor and has the same floor plan, the landscaping is usually different. Uniqueness counts! Property that is large land size, has gorgeous views, is on the waterfront will have higher value than next-door generic housing.

• Chose the right infrastructure

The property surrounding a development such as: streetscape, facilities, transport, shops and schools is called the “infrastructure.” It can affect the home's value.

A property close to public transportation, good schools, good medical care, and good shopping places will always be worth more than those very far away. They retain a higher value than those that are in remote areas.

If you select a suburb close to a planned infrastructure that is not built yet such as: a planned new hospital, shopping mall, or highway, will increase in value around the time these things are announced and more when completed.

• Renovate well

If you can renewate to improve a home's energy uses, a buyer pays attention. The Federal Government encourages us all to do it. These are the types of renovations that increase the value of your home the most. Lavish renovations may decrease the value if a buyer is not interested. A swimming pool might be a luxury to you, and a liability to a buyer. They may feel it has to be removed and at a great cost.

• Choose the right cycle

Right now, property experts agree the top end of the market is suffering more than the lower end, where property is concerned. Low interest rates and first home buyer grants help the low end to suffer less.

Each property responds differently to market forces. If you already own your home, there's nothing much you do if the market drops your property value. Just remember the market always operates in cycles.

Wait until the cycle swings to a more stable level. If you buy a new home and sell the old one in the same market conditions you should have the same bottom line result, whether the market is up or down.

How to Terminate Your Rental Property Management Company

If you are the least bit concerned about the management of your investment property remember the old adage, “Where there is smoke, there is fire!” Nine times out of ten when there is a significant lack of communication, if the results in your monthly statements continue to disappointment, and if your property manager has overpromised…

If you are the least bit concerned about the management of your investment property remember the old adage, “Where there is smoke, there is fire!” Nine times out of ten when there is a significant lack of communication, if the results in your monthly statements continue to disappointment, and if your property manager has overpromised and under-delivered it is time to say good-bye.

Read the Contract – It has Important Information

A famous lawyer once said to his client who called asking for an answer to a question about a contract, “[R] ead the bleeping contract.” Rental property management contracts are not that complicated. Hopefully you read and understood the rental property management contract you signed in the first place. You need to review that document for a couple of important clauses (if they exist). Take some time and review the agreement or contract you have executed with the rental property management company and look closely for any termination clause language, and any “for cause” clause language. Moreover, it's important to know if the initial term of the contract was set forth, or if it is really a month-to-month type of agreement.

Understand the Clauses or Hire an Attorney to Help You Understand

Typically, the initial period of the contract will be some determined amount of time, like one to three years. Once this initial period has expired you may or may not have signed a new contract which will determine how long it will take to rid yourself of the rental property management company. If the initial term has expired you are on a basic month-to-month agreement with your manager or company.

Some contracts have a 30-day to 90-day termination clauses which requires the terminating party to give written notice of termination for some set period of time to the other party.

Other clauses require “for cause” for the contract to be terminated during the initial contract period. If you terminate a property manager or a rental property management company without cause and a “for cause” clause was included then the property management company could potentially have a cause of action against you for breach of contract. Thus, it is important to be mindful of all of the clauses in the agreement or contract before making any rash decisions. Again, read the contract.

Follow Termination Procedures Accurately

It is paramount that any and all termination procedures are followed accurately. For example, make sure to follow the writing, notice and mailing requirements that are dictated in the contract for termination.

In the event that you resort to this procedure you must realize there may be costs involved including a termination fee in the contract, or paying the property manager all of the fees they have earned to that point. Some contracts will even have a clause which requires full payment of the entire contract period fees. Thus, again it is important to read the contract and understand it before you execute it or terminate it.

An exception to this would be if a property manager or rental property management company was stealing money or materialally breaking the contract in some way and there was a 90-day termination period in the contract. As an owner you would have the right to immediately terminate that contract due to the property manager's conduct and you would not have to wait 90-days in that situation.

Tenants Need Notification

Once the decision to terminate has been made and a change has occurred the sooner the tenants are informed the better everyone will be. Read the contractual obligations imposed upon the property manager in this situation. If the contract is silent about this procedure then take it upon yourself to contact the tenants and notify them of the change in management whether it is a new manager or yourself.

Make sure that your outgoing property manager has agreed to provide you with all of the tenant and property paperwork. Make arrangements to have this information communicated to your new manager or to yourself with expediency. If trust funds are to be transferred make sure that your new manager is with you during those conversations involving transferring monies including the all-important security deposits.

You Are in Charge – You Call the Shots

Remember that as the property owner and hirer of the rental property management company you are the Boss and you call the shots just as if they were your employee. If you lack confidence in your manager, even for one moment, it is probably time to start paying close attention to how your manager is treating your property. If repair bills are larger than normal, if information about tenants are being communicated to you on an untimely basis, or if no communication is occurring it is time to make a change. Do not hesitate to take charge and help prevent your return on investment from being hijacked.

Property Managers Should Make Suggestions To Help Improve Your Return On Investment

Property managers and rental property management companies should help owners and investors improve their return on investment with every action that they take with the owner's properties. A prudent property manager will make suggestions on improving the exterior of the house with cost effective suggestions. Improvements will help retain existing tenants and will make the…

Property managers and rental property management companies should help owners and investors improve their return on investment with every action that they take with the owner's properties. A prudent property manager will make suggestions on improving the exterior of the house with cost effective suggestions. Improvements will help retain existing tenants and will make the property much easier to rent if vacant. If your existing manager does not make these types of suggestions maybe it's time to look for a new property management company. The following is a list of six (6) easy and cost effective exterior improvements.

1) New Front Entry Appearance. If the front entry door on your property has not been changed in a while, it may time for a new paint job with a new color. Additionally, changing out the hardware is also a cost effective appearance improvement.

2) Improve Landscaping. If the outdoor landscaping is not on a consistent maintenance program it should be. Drought resistant plants, hardscaping, and other low-maintenance improvements will help improve the aesthetics and reduce maintenance costs.

3) New Exterior Paint: If your property has not been painted in 7-10 years hopefully you or your property manager was prudent enough to have you budget for a new paint job. A quality freshly painted exterior will help improve and energy and vitality of your investment property. Make sure to pick a natural earth-tone color which will be attractive to potential tenants.

4) Improved Outdoor Lighting. Quality new exterior light fixtures will add safety, drama, and interest to your investment property. A path lit by some exterior lighting will also improve overall aesthetics, but may not make sense in all instances and properties.

5) Update Inefficient Windows. If your property has older single-paned windows a prudent plan will be to budget for the installation of dual-paned windows to reduce heating and cooling costs for your tenants. This will also help you when the property is vacant and a prospective tenant who has lived with single-paned windows knows the difference.

6) Plant Trees For Energy Efficiency. A properly-located tree will provide shade in the summer and allow sunlight in the winter which will make your tents happy. This energy saving addition is also aesthetically pleasing and will make neighbors happy as well.

Tax Savings For Improvements

Even though these above items may cost some money to implement the return on investment should be measurable. Moreover, every dollar spent improving the property will be a deduction off your taxable income for the rental property tax return.

If your property manager is not making suggestions like the above six (6) item list they should be. The property manager should be your partner in helping you drive maximum return on investment and should be looking out for an owner's best interests. Without making suggestions to improve the property with cost effective suggestions the property manager may be looking elsewhere when they should be looking at your property.

How Property Managers Can Maximize ROI and Keep Properties Looking Good by Improving the Landscape

First impressions matter immensely, so a property owner should never neglect their investment property's landscaping. A real estate agent who is getting a property ready for sale spends time, energy and effort making the most of a property's curve appealing to entice a potential buyer to buy for the highest possible price. A rule of…

First impressions matter immensely, so a property owner should never neglect their investment property's landscaping. A real estate agent who is getting a property ready for sale spends time, energy and effort making the most of a property's curve appealing to entice a potential buyer to buy for the highest possible price. A rule of thumb is that a realtor who invests $ 1 dollar of curve appealing improvements will gain their clients $ 3 of return at close of escrow. In the same vein, a property manager should counsel his clients to invest some time, energy and effort in sprucing up their rental property exterior landscaping to help attract more potential renters or keep the ones they have. The art of providing just enough curve attractive, just the right balance of attractive landscaping, while maintaining a fixed maintenance budget can be achieved through education, experience, and common sense. Experienced property managers should be able to put together a plan for their owners at no additional expense.

Long Term Landscaping Planning for Your Portfolio of Properties is Key

An experienced property manager can and will help their clients improve their exterior landscapes with just the right balance of attractive components while not breaking the bank. A proper mix will help the owner keep the property rented, while at the same time reduce the monthly maintenance of the property, which in turn reduces costs. For example, although lush, cool, beautifully manicured green grass is very attractive, the cost of installing and maintaining the grass is not as cost effective as keeping a small patch of grass with other Drought resistant groundscape like gravel, bark, mulch and wood chips . These other ground cover alternatives also help keep moisture in the ground to reduce water consumption. An experienced property manager can evaluate and help an owner make some design changes to improve aesthetics and reduce maintenance costs.

Trees, Trees, and More Trees

Other than the property's building a well-thought out scattering of trees are by far the most valuable asset a property exterior can have. Mature, gorgeous, and sky-reaching trees can also help reduce cooling costs for a rental property which in turn makes the property more attractive to rent. If your investment property lacks trees considering having an arborist or landscape architect suggest some different species of trees and locations to plant them on the property to maximize their possible benefits.

Seven (7) Ideas for Low-Cost Landscaping

When you have an opportunity you should get together with your property manager and try to implement a long-term plan for landscaping improvement and maintenance with the goal being to improve aesthetics and reduce maintenance costs. The following list includes some low-cost ideas to think about and brainstorm with your property manager:

1) City Tree Program – Some cities and towns actually give away trees for property owners as long as the owner follows certain guidelines;

2) Look for Sales – Wait until the end of the growing season to go shopping for trees, shrubs, soil and mulch because the retailers that did not sell all their inventory will be looking to get rid of these items at a discount;

3) Demolished Buildings – Look around your neighborhood for demolition sites as there are often free bricks or other building materials which can be used in your landscaping designs;

4) Work Your Existing Plants – Educate yourself to help keep and shape the trees and shrubs you already have to give them new life and vitality, or even relocate them.

5) Buy Small – Buy smaller sized plants, shrubs, and trees which will be less than larger ones.

6) Make Your Own Compost – You can easily build and maintain a compiler on your rental property where you or your gardener deposits all of the grounds clippings, waste, and leaves. This compost will eventually produce fertilizer which is one more thing you will not have to purchase.

7) Use Drought Resistant Plants – Not only is water scarce, but it is getting more expensive on a monthly basis, so a collection of drought resistant plants is important for long-term maintenance cost reduction.

Be Patient and Watch Your Property ROI and Exterior Improve

When you have slowly but surely implemented a long-term plan for exterior landscaping improvement and maintenance your reward will be improved aesthetics, reduced maintenance and reduced costs. More importantly your investment property will be more attractive to potential renters and those renters who do live there will not want to leave. Finally, the improvements and maintenance expenses are fully tax deductible provided you and / or your property manager has saved the receipts and properly recorded them.

Remember, first impressions make a huge difference. A property owner should get together and implement a plan with their property manager and never neglect their investment property's exterior landscaping and overall appearance. If your property manager is not making these types of suggestions maybe it is time to begin looking for a new property manager.

Property Management, Investment Property Tax Deductions, and Strategies for Real Estate Pros

The cost of hiring a property management company to handle investment properties is significantly less than most property owners believe. Investment property owners who manage their own property with the idea that property management costs are too much might be mistaken as to the actual real costs. Additionally, a large percentage of property owners do…

The cost of hiring a property management company to handle investment properties is significantly less than most property owners believe. Investment property owners who manage their own property with the idea that property management costs are too much might be mistaken as to the actual real costs. Additionally, a large percentage of property owners do not take advantage of all of the tax strategies available to them. For example, if a property owner manages their investment portfolio out of their home office there may be some business related items that are not expenses. Interest in all forms including mortgage interest, equity lines of credit interest, and any business loan interest are all expenses which are typically deductible. Losses like casualties, disasters, and thefts are expenses which are properly accounted for are deductible. The most overlooked deduction is depreciation on investment properties, and for real estate professionals as defined by IRC 179, an investment property owner can supercharge their depreciation obligations. To maximize one's return on investment each property owner should educate them about tax strategies, and thoroughly evaluate their own tax planning roadmap with a tax attorney or competent certified public accountant.

Combined Tax Bracket Percent Identifies the True Cost of an Expense in Your Investment Property Business

First of all property owner must fully understand this basic concept. If their annual income from all of their activities placed them into the combined, federal, state, and local tax bracket of 50%, then their regular and necessary business expenses are in actuality fifty cents ($ .50) for every one dollar ($ 1.00 ). It's simple to think about it this way: If a dollar ($ 1.00) is spent on advertising then that one dollar ($ 1.00) is legally expired. If a person is in the 50% combined tax bracket then they have actually only spent fifty cents ($ .50). This is due to the one dollar ($ 1.00) they spend actually reduces their taxable income by one dollar, thus, reducing their tax liability by fifty cents ($ .50). So each ordinary and necessary expense is strictly only 50% of the actual cost.

Now that you have your mind around that concept if a property manager is charging you $ 200 / month to manage their single-family residence rental property the actual (end of year) cost to the owner is only $ 100 / month because the property management fees are an ordinary and necessary business expense and fully deductible. Now consider that 50% reduction in your perceived cost and maybe property management does not seem so expensive anymore. Add to that the impact on your time, energy, effort you spend managing that property. Add to that the gasoline expense necessary to drive by that property once or twice a month. Finally, add to that the comfort of knowing a professional property manager could in fact be taking care of your property and you would not have to have all of these expenses, time, energy and effort and maybe, just maybe, you would reconsider using a property manager going forward because you now realize that they really are not that expensive for the services they provide.

Home Office Deductions are Tricky, but can be Legitimate

If a home office is used 100% for ordinary and necessary business reasons then there is no reason a person should not be taking advantage of increasing the home office square footage, the equipment, the materials, the supplies and any utilities paid to help operate the office. The problem lies when the home office is used for personal reasons because it is difficult to prove what percentage of the home office is actually an ordinary and necessary business expense. There are many Internal Revenue decisions on this vary issue, and each one shows the difficulty in achieving the correct balance between business and personal expense, and more importantly, being able to prove it in an audit. If you are considering running your property management business out of your home office be careful. Although there are a lot of legitimate expenses which are clearly available to you, there are several that are not.

Interest Expense is Sometimes Overlooked

When you are evaluating your interest expenses do not forget to expense any interest from your home equity line of credit as this can be easily overlooked. Also, if you have a small business loan that interest is deductible as well.

Disaster, Theft Losses are Deductible

In the event that a loss occurred during your business cycle those expenses are deductible provided you had a good record of the items that were lost. There would almost always be an offset as well for any insurance reimbursements, but the point here is that losses must be fully evaluated while you are preparing your tax strategies.

Depreciation and the Real Estate Professional Internal Revenue Code

When planned properly the “non-cash” expense of depreciating one's rental property can be the difference in paying taxes or realizing the benefit of a tax-loss. Most residential investment properties are depreciated over 27.5 year period. Commercial property is depreciated over 39 years. However, if a person were to be classified as a “Real Estate Professional” pursuant to Internal Revenue Code 179, then the benefits of owning investment property become much greater. Without going into great detail a real estate professional's own personal property portfolio is treated differently than a typical investor. If this is enticing enough one should investigate the benefits of this little known exception in the IRC and real estate industry.

Contact a Competent Tax Attorney or Certified Public Account to Review All of Your Current Tax Strategies and any Planning Going Forward with Your Investment Properties

The information contained in this article is by no means tax advice, but strictly certain ideas to contemplate the next time you consider your tax situation. Every person who owns a rental property business should consider tax planning and tax strategies with a competent professional specializing in tax. There are numerous legal ways to take full advantage of tax laws and your professional status within the property management context, however these decisions need to be considered carefully with a tax professional.

Using a Dehumidifier to Prevent or Correct Moisture Damage

It's not only for the sake of your building that you really need to keep tabs on moist levels, a living or working space that's too moist has the potential to lead to some serious health complaints. Which is why investing in a dehumidifier is the best way to arrest the moisture levels from going…

It's not only for the sake of your building that you really need to keep tabs on moist levels, a living or working space that's too moist has the potential to lead to some serious health complaints. Which is why investing in a dehumidifier is the best way to arrest the moisture levels from going too high. Moisture damage can be minor or intensive, but in any and all cases it will blossom into something far more severe if not addressed quickly. This is something that can be done with a dehumidifier; these devices have the potential to save you a small fortune in building repairs, while at the same time caring for your health. So with this in mind, how can you find out whether you, your family and your home could benefit from the purchase of a dehumidifier?

Condensation on Windows and Doors

It is sometimes impossible to avoid a certain amount of condensation on windows and doors — especially during winter months when it is cold outside and warm indoors. However, when condensation is present most of the year or seems to be in any way excessive, this is a sure-fire sign that there is too much moisture in the air. This is the kind of moisture that can lead to rotting of window frames, discoloration appearing in corners and severe structural damage over the longer term. Be sure to place your dehumidifier in any areas where condensation seems to be heaviest.

Dark Spots or Signs of Mold on Walls or Ceilings

It's important to keep an eye on what's happening above you as steam and moist, warm air in general rises. What this means is that in areas where steam and moisture are particularly heavy, the moisture can build up around the ceilings — especially in corners, initially leading to mold and mildew that can cause serious problems if left untreated. Worse still, chances are the mold you can see representatives only the tiniest bit of the problem you're facing.

Musty Odors

Everyone knows that must smell that signifies a damp room. In some place this is not the end of the world, but around the home any smells that indicate there could be mold must be taken very seriously. Mold can be caused by so many things — ranging from faulty windows seals to leaking. A dehumidifier will help keep excessive moisture at bay and prevent further damage where possible.

Recurrent Respiratory Irritation

And finally, this is something that must be checked out. There's always a chance that a home that's too humid could be the cause of long-standing respiratory complaints. From the gentle of coughs to full-blown tight chests and right through to any number of allergies, if it's the humidity levels in the home that are causing the problems, no amount of conventional medicine in the world will help you out. By contrast, a simple and inexpensive dehumidifier could just be the ticket for restoring exceptional health to anyone affected by the overly moist air. Of course, a dehumidifier can not be thought of as a quick-fix solution to the more serious moisture-related problems around the home, but is a never-ending essential tool for maintaining balance. The majority of homes these days are prior to excessive moisture and, given the relief and protection they can offer, dehumidifiers are often worth their weight in gold.

Great Advertising Attracts Great Tenants

What's in an ad? Everything! Where you should you advertise for tenants? Online. When you advertise to find new tenants for your rental property, your advertising accomplishes 2 things for you; first, it is a screening tool that let's prospective tenants know what you're looking for and second, it allows you to be very descriptive…

What's in an ad? Everything! Where you should you advertise for tenants? Online.

When you advertise to find new tenants for your rental property, your advertising accomplishes 2 things for you; first, it is a screening tool that let's prospective tenants know what you're looking for and second, it allows you to be very descriptive which brings more and better potential tenants to you.

When I advertise for new tenants, I use online sites exclusively. I have never advertised in the newspapers because it's very expensive for very few words. A typical newspaper ad might read “house for rent, 3 bdrm, $ 1000 / mo + SD, avail Jan 1/14. it provides very little information to attract new tenants.

Online sites are cheaper (often free) and give you unlimited space to describe your property and provide multiple pictures. Prospective tenants are much more likely to look online for a property because it is more convenient and they also can find a better description before having to go and see a place. Here's an example of an online ad I've placed in the past:

We have a beautiful 2 story home for rent that is bright with a very open concept. There are 3 bedrooms with 2.5 baths including a full ensuite off the master. The main floor has a great room and big kitchen with lots of cupboard space. There is a bonus room above the garage with a cozy gas fireplace and the basement is also developed for added living space. The garage is oversized and finished. Relax in your fully fenced back yard that contains a huge deck, RV pad and shed. There are 3 schools nearby as well as a park and recreational facility. You'll love living in this spotless house. Call Paul today to book a viewing time at 403-555-5555.

I've had people say, “Well what if someone does not have a computer?” and honestly, in this day and age, they would certainly be a very small minority. Finding online sites in your area is easy, just do a Google search for rental properties + your city. Many of these sites earn their revenue by offering you the ability to highlight or bump up your ad in the standings. These are usually small fees and I use them frequently to attract more people to my ad.

Writing a great ad takes a bit of skill but if you're successful, great tenants will always come in great numbers! The secret is to be very descriptive and provide many pictures of a clean, inviting living space. Need some help? Just let me know.

What Property Managers Must Know About Fair Housing Laws, But Are Afraid To Ask

Fair housing laws were implemented in the US during the Lyndon Johnson Administration of the 1960s to help prevent discrimination towards minority and underrepresented groups in housing or renting. Some fifty years later we are still faced with it on a daily basis. According to recent data there were close to 30,000 housing discrimination complaints…

Fair housing laws were implemented in the US during the Lyndon Johnson Administration of the 1960s to help prevent discrimination towards minority and underrepresented groups in housing or renting. Some fifty years later we are still faced with it on a daily basis. According to recent data there were close to 30,000 housing discrimination complaints filed in the US in 2012, which is an increase of nearly 5% from 2011. As a property manager or a property management company it is paramount to understand these basic financial laws to avoid any violation and potential liability for you and the property owner.

Advertising Must Complain with Fair Housing

The following language should be communicated on all advertisements, websites, marketing materials, and communications:

“ABC Property Management and our clients do not discriminate on the basis of race, color, religion, national origin, sex, disability or familial status.”

By displaying this language you are communicating a public acknowledgment of the Fair Housing laws and the concomitant restrictions. Property managers need to be mindful not to use language which although is seemingly innocent actually discriminates against its perceived audience. Some examples of these are phrases like, “great for a young couple,” “family-oriented neighborhood,” or “perfect for single female.” Words which appear harmless like “safe,” and “exclusive,” also implying that the property is not available for certain groups based on stereotypes. A prudent practice for property managers and property management companies would be to describe the neighborhood, its location, and attributes of the surrounding areas instead of being exclusionary towards individuals.

Screening Policies Requires Precision in Communication

A written policy for minimal tenant standards is critical such that a bar is set and can not be overlooked in qualifying tenants. The exact items to have in a written screening policy include employment history, present income, credit worthiness, criminal background, eviction history and any other red-flags on a screening report. This information should be communicated to the prospective tenant immediately and be front and center in a written policy such that a tenant that is denied for meritorious reasons will not be able to argument discrimination. These standards must be clear, concise, and unambiguously communicated to the potential tenants.

House Rules Must be Consistent

All rules in an apartment house or complex must be compliant with Fair Housing laws and mustertain to everyone, not just a few. Rules must not single out children, unless the rule is designed as a life safety issue such as children being supervised at a community pool. Any violations of the rules must be documented with the date, time, specific violation, violator described, and remedy underook by the property manager. Property managers must keep accurate and complete records of these instances, circumstances and conduct.

Eviction Process has to be Detailed

Fair Housing laws allow for tenants to be evicted for meritorious reasons such as non-payment of rent. There are other acts and conduct that can result in a tenant being evicted; however, these standards must be detailed, consistent, and non-discriminatory. A property manager must keep detailed records of each and every conversation, act, confrontation, or circumstance which leads to an eviction. The documents which should be included in a tenant's file in chronology include but are not limited to:

1) Warning letters and / or eviction notices

2) Written complaints by neighbors to city police

3) Writing logs maintained by property manager

4) Police records

5) Photographs

A property manager's website or tenant pack must include with specificity a list of conduct which a tenant may not engage in. Eviction is the ultimate owner remedy for removal of a bad tenant, however, the property manager's goal should be to maintain a personal working relationship with the tenant and resolve any issues that could result in an eviction.

Employee Training is Critical

For those property managers who employ staff to deal with tenants it is imperative that the employees receive Fair Housing education and training. Each employee should be required to read and be familiar with Fair Housing laws and should be required to maintain a Fair Housing manual. They should also be required to sign a commitment to comply with Fair Housing laws and non-discriminatory practices to help prevent any situation from occurring. This is for everyone's protection including the tenants, the employees, the property manager and the owner.

Real Estate Attorneys Can Help Property Owners with Fair Housing Laws

Property management companies who have a real estate attorney on staff can help owners with their Fair Housing questions. A real estate attorney familiar with Fair Housing laws has the expertise, training and procedural knowledge to help keep owners on the right side of the law.

Things to Consider While Choosing a Real Estate Appraiser

When buying or selling a real estate property, an accurate evaluation of the property is very important. Especially, when there is a tough competition in the real estate market. Proper real estate appraisal often helps in finding out the real market value of the property. Therefore, you need to find a good real estate consultant…

When buying or selling a real estate property, an accurate evaluation of the property is very important. Especially, when there is a tough competition in the real estate market. Proper real estate appraisal often helps in finding out the real market value of the property. Therefore, you need to find a good real estate consultant / appraiser.

Appraisers are the real estate agents / consultants who are experts in finding out the accurate market value of a property. There are a number of appraisers in the market and choosing a good one is not an easy job. Following are some points you need to consider while choosing an appraiser.

License and accreditation

Before hiring a real estate appraiser, make sure you check the license, and find out whether the appraiser has a license for carrying out an assessment in the state where your property is. This helps in hiring a valuator, who is authorized for carrying out the appraisal process potentially in a particular state.

Education and training

While hiring an appraiser, the educational background as well as the training the appraiser has undergone to satisfy the state's appraiser requirements should be considered. Many good appraisers carry a professional design issued by the Appraisal Institute, which is a proof of an appraiser's commitment to ethical standards.

Each design requires different education and experience, and most designations apply to a specific area. Research on various designations and choose one that is appropriate and matches your specific needs.

Service area of ​​the appraiser

Make sure that an appraiser you are choosing specializes in your area, as the appraisers from other areas may not be as knowledgeable as the local appraiser. Some appraisers serve two or three areas, whereas others specialize in a single area. Local appraisers have more firsthand knowledge compared to non-locals.

For residential users, considering a local appraiser would be more appropriate as the properties that are commercial have more common aspects of value requiring an appraiser to research outside the market area.

Experience in real estate transactions

An appraiser's profession is not an easy job. It takes years of work experience to get the right exposure and to become a competent appraiser. So, make sure that the appraiser has enough experience in real estate transactions. Hiring experienced appraisers will be beneficial as they do their work quickly and effectively compared to those who just started their career.

Experience in handling various properties

Even if an appraiser has a license for all residential or commercial type properties, it does not mean that he / she is experienced in handling all types of properties. See to it that an appraiser you are choosing has experience in handling various types of properties. Essentially, make sure that he has experience in evaluating properties that are similar to the property you want to get appraised.

Good market data bank

Good appraisers need to have two or three market data sources and other MLS (multiple listing services used by all real estate agents / appraisers). This serves as a means for finding out the recent and similar sales available and should be able to cross refer the information for each property comparable, as to ensure maximum efficiency.

Fee structure

Check how much the appraiser charges for carrying out the valuation of a property. Make sure that the appraiser is charging fair price for performing the valuation process. Research online. Remember, there is no set fees for an assessment process and all the appraisals are negotiable.

Make this your consideration, keeping in mind that you get what you paid to receive.

Choosing a right appraiser helps you get the right valuation for your property. Not only that, a professional appraiser will also guide you properly through the process and makes sure that you get a profitable deal.

Property Managers Need To Be On Lookout for Potential Water Intrusion Issues

During winter and rainy months property manager and professional property management companies need to be mindful of potential water intrusion problems with each and every property in their portfolio. Many buildings start leaking right after construction, but do not manifest the water intrusion and building damage until years after the leakage has started. Water intrusion…

During winter and rainy months property manager and professional property management companies need to be mindful of potential water intrusion problems with each and every property in their portfolio. Many buildings start leaking right after construction, but do not manifest the water intrusion and building damage until years after the leakage has started. Water intrusion can lead to structural damage, rot, mold, termite, sick building syndrome and eventually significant mitigation repair costs. A prudent property manager will spend time during periodic inspections of the property to help prevent these issues from occurring and also ferreting out any existing and ongoing issues. A property owner should expect nothing less than their property manager.

How Serious is Water Intrusion in Buildings?

Every year hundreds of millions of dollars are spent investigation, diagnosing, repairing, and mitigating water intrusion problems in all types of buildings. Environmental environmental problems such as mold can occur if the conditions are ripe, water intrusion occurs, and the interior mechanical systems do not mitigate the moisture creating a potentially toxic concoction and consequent mold production. The mitigation efforts required after a mold infestation are significant including typically displacing any occupants of the building. The environmental companies must scrub down the interior, must prevent mold spores from moving from room to room, and must remove and clean interior components which have become contaminated. This is not a small effort, nor an inexpensive one.

Water intrusion also can cause significant damage by rotting of structural members and interior components reflected by floor or wall coverage which can go undetected for many years. Other areas consistently exposed are the window and door openings where framing and window / door flanges intersect. These intersection, if not properly flashed and sealed, are water entry points that also are sometimes difficult to detect.

Why do Buildings Leak?

There are many areas of potential water intrusion points of entry into buildings including the roofing systems and appurtenances, the angled intersections of the building systems including wall to roof intersections, the building openings like doors and windows, and the sub areas, foundations, and downspout discharge locations. Gravity, building intersections, kinetic forces, wind, rain, air currents, pressure differentials and lack of maintenance all play a part in water intruding into buildings. Property managers need to be familiar with the tell-tale signs of potential water intrusion points, specifically they should be mindful of all of these areas during their periodic inspections of their portfolio of properties.

What is the Best Way to Diagnose a Leaking Building?

The best way to diagnose a leak is to identify the area which is affected and single out each and every component that is attached to the area which has identified the leakage. If the property manager can not specifically identify the precise cause of the leak they should immediately contact a competent licensed contractor to evaluate and correct with expediency. Any delay in repair can result in increased costs, and possible loss of rent due to a tenant being displaced.

Speed ​​is Critical in Mitigating a Leaking Building?

Even though a property manager can not prevent all of the possible water intrusion problems with a property they can be mindful of the potential areas which are susceptible to leakage and monitor those areas during their periodic inspections. The old saying an ounce of prevention is worth a pound of cure is never as true as in preventable water intrusion problems. Prudent property managers spend significant time during their periodic inspections of their properties to help their owners from having to deal with water intrusion issues. Ultimately these leads to a greater return on investment for the property owner which is the ultimate goal for the property management company.

Your Homeowner’s Association Financial Review

Associations with a gross income over $ 75,000 are required to annually prepare a financial statement on an accrual basis and distribute it to the membership (homeowners in the hoa). That statement must be independently reviewed by a licensed certified public accountant (other than governing documents call for an audit instead of a review). The…

Associations with a gross income over $ 75,000 are required to annually prepare a financial statement on an accrual basis and distribute it to the membership (homeowners in the hoa). That statement must be independently reviewed by a licensed certified public accountant (other than governing documents call for an audit instead of a review). The financial statement must be distributed to members within 120 days of the close of the fiscal year.

If your HOA is on a calendar year you should be receiving your financial disclosure by the end of April and follow up with your management agent if you do not receive one. If your HOA is a mid-year (June) you will receive you disclosure by August.

As a homeowner or board member that lives in an HOA, be sure to look closely at your financial review and be sure to ask questions. Residing in an underfunded HOA can have negative impacts that can lead to:

  • Special Assessments
  • Inability to sell
  • Declining property value
  • Inability to secure financing

Quick tips to Evaluating the Financial Health of your HOA:

  • Make sure that you are given annual financial reports, especially the delinquency report and those relating to the adequacy of the reserve account.
  • Do a physical review of the property and observe how the common areas are maintained. For example, assess the condition of exterior paint, amenities, roads, roofs, drives, fencing, etc.
  • Be involved with the board and its decisions, especially when you see deferred maintenance of common areas or are subject to special assessments.
  • Attend meetings and listen to the deeds report.

The Board of Directors are entrusted with the money and property of the association and are held to a higher standard. The homeowners or members of the association are responsible to choose qualified Directors, if you feel that your board or even your management company is misguiding the Association's finances, you have the right to take action.

Because HOA's are considered a non-profit, they should never really have more money then they are budgeted to take in and can lose their non-profit status if they do. At the end of the fiscal year, any money in the operating account that exceeds what is needed for that monthly budget, should be transferred to reserves. This step at the end of the year can help your financial review.

Remember there are multiple resources available to you as a Homeowner / Board Member in an HOA that can help you during your financial review period.

CA Water-Saving Plumbing Law Effects Investment Property Owners, Sellers, and Property Managers

A California law enacted in 2009 is finally taking effect and causing concerns among property owners, sellers, buyers, and realtors. California Civil Code Section 1101.4 requires owners of single-family residences which were “built or available for use on or before January 1, 1994” which will be altered or improved on or after January 1, 2014…

A California law enacted in 2009 is finally taking effect and causing concerns among property owners, sellers, buyers, and realtors. California Civil Code Section 1101.4 requires owners of single-family residences which were “built or available for use on or before January 1, 1994” which will be altered or improved on or after January 1, 2014 to install water-conserving plumbing fixtures only when the existing plumbing fixtures are “non-compliant” by certain dates specified below.

A noncompliant plumbing fixture is defined by California Civil Code Sec. 1101.3 as:

1) Any toilet manufactured to use more than 1.6 gallons of water per flush;

2) Any urinal manufactured to use more than one gallon of water per flush;

3) Any showerhead manufactured to have a flow capacity of more than 2.5 gallons of water per minute; and

4) Any interior faucet that emits more than 2.2 gallons of water per minute.

Single-Family Residences are Required to be Compliant by January 1, 2017

California Civil Code Section 1101.4 requires that if a single-family residence is altered or improved on or after January 1, 2014, the installation of such fixtures must be a condition of the final building permit approval. In addition, all single-family residences must generally be equipped with such fixtures by January 1, 2017.

Multi-Family and Commercial Properties have Similar Requirements for Compliance

California Civil Code Section 1101.5 states that all multi-family residential properties and commercial properties with noncompliant plumbing fixtures must comply with the following requirements. As of January 1, 2014 all such properties must, as a condition of final building permit approval, replace all plumbing fixtures with water-preserving fixtures if:

1) Permits are obtained to increase the floor area of ​​the building by more than 10%; Egypt

2) Building alterations or improvements exceeded $ 150,000 in costs; Egypt

3) Permits are obtained for a room with plumbing fixtures.

In addition, by January 1, 2019, all multi-family and commercial properties must comply with this law by replacing all noncompliant plumbing fixtures. Sellers of such properties must dispose to the prospective buyer wherever the property includes any noncompliant plumbing fixtures.

Effect on the Transfer Disclosure Statement (TDS)

A disclosure related to this new law was added to the California TDS in the form of a check box on page one where a seller must dislose wherever the property has water-conserving plumbing fixtures or not. As of now there is no requirement for the entire property to be compliant without a triggering event occurred prior to sale, thus, the TDS has an explanatory note on page two: http://www.car.org/legal/disclosure-folder / water-conservation-plumbing-fixtures /

What This Means During a Sales Transaction

Because the law does not fully require all properties to be fully compliant each seller, buyer, real estate agent, and property manager must fully understand the details, the deadlines, and the nuances of this law. If a seller checks the “Water-Conserving Plumbing Fixtures” box on page one of the TDS that does not mean that all of the plumbing fixtures are compliant. Thus, it is imperative for each seller, real estate agent, and property manager to be fully aware of the deadline dates and that details of this law such that a proper disclosure can be made to a prospective buyer.

It is also a prudent practice to provide a prospective buyer with an Advisory or a disclosure representing the law (California Civil Code Sections 1101.1 through 1101.9) and the information available to the seller and / or the seller's agent when entering into a sales transaction with a prospective buyer. It is also prudent to recommend that prospective purchasers consult with a competent California Real Estate Attorney prior to purchase. Professional property managers and property management companies must be mindful of this law to prevent the temptation of having work or repairs performed which does not comply with the new law.

Local Jurisdictions May Adopt Stricter Requirements

Finally, California Civil Code 1101.8 allows local jurisdictions like cities, counties, and towns to adopt stricter requirements. It is important to stress the possibility that local ordinances and laws may be stricter than California law and as such each prospective purchaser should also check with the local building department or community development department for the latest local plumbing requirements. Property managers who manager multiple residences for their clients should be out front on this new law as they are typically involved in the renovations and remodels of these types properties.

Real Estate Attorneys Can Help Property Owners in these Situations

Property management companies fortunately enough to have a real estate attorney available can help owners and sellers in these circumstances. A real estate attorney typically has the training, expertise, and procedural knowledge to help keep owners and sellers abreast of these changes in the law which seemingly exist each and every year.

How a Property Manager Can Be Prepared When They Get Sued

Withholding of a tenant's security deposit is probably the number one reason a property manager can end up on the other end of a lawsuit or even in court. There are many precedences and procedures which a prudent management company or manager can implement which will help prevent this situation from occurring. Moreover, a property…

Withholding of a tenant's security deposit is probably the number one reason a property manager can end up on the other end of a lawsuit or even in court. There are many precedences and procedures which a prudent management company or manager can implement which will help prevent this situation from occurring. Moreover, a property management course or continuing education in the nuances of proper statutory procedures can go a long way in preventing a lawsuit and subsequent lost time, energy and even money. Finally, an owner is liable for the acts of a property manager and could find themselves in court as well if the manager has violated the law, has not properly counseled the owner or properly handled the tenant's security deposit.

Implement Minimal Procedures to be Prepared

A prudent property manager has been educated to take the necessary precautions and follow the statutory guidelines for tenant's issues like the return of security deposits. The necessary property inspections, the data collection of the condition of the property, the amount of money a manager is allowed to deduct, the statutory procedure for obligations, and the proper method of communicating all of these steps to the vacating tenant is tantamount to a successful defense against tenant lawsuits. If a property manager has done all of these things with diligence there is a very good chance that they will have the ultimate preparation in the unfortunate occasion when they get sued.

Pre-Tenancy Property Inspections Help Prevent Post-Tenancy Problems

Prudent property managers walk-through the property with the new tenant while there is no furniture or obstacles in the unit. The property manager takes photos, logs inspection data about each and every room in the unit, details the exterior of the property including any issues that exist and gets the new tenant to sign off or agree to the condition report. This same report is used at the end of the tenancy to compare and contrast the pre and post condition status. With photos and a signed inspection report it is difficult for a tenant to claim that conditions that exist now were not there when the tenancy began. Moreover, in some states notice of a pre-inspection at the end of the tenancy is given to tenants such that they are allowed to take advantage of the pre-inspection to repair or clean the unit which would otherwise be a deduction against their security deposit . This procedure, if properly connected, actually advances a lot of post tenancy issues as the tenant is fully aware of any conditions which may result in a deposit deduction, and they are given ample time and opportunity to correct the issues.

Pre-Tenancy Property Inspections Help Prepare Property Managers for Court

In the unfortunate event that a tenant disputes a property manager's security deposit deduction and actually files a lawsuit the manager who has taken the time to takes photos and log inspection data will be amply prepared for the litigation. The manager should prepare their file in chronological order, should print out each and every photograph and date and label each condition. Importantly, each person who witnessed any conditions at the property like the gardener, the painter, the cleaner should all be contacted and asked for a witness statement. It is easy to get a statement via a sworn affidavit and at the same time ask these people to make them available available to be witnesses in court. To be clear each property manager should have the following in preparation of any hearing:

1) A complete property file in chronological order including photos, invoices, and paid receipts;

2) A complete history of the written communications with the tenants included in the property file;

3) A list of witnesses with contact information;

4) Sworn affidavits from each witness; and

5) A thorough review of the facts and circumstances surrounding the issues, facts and tenant complaints by the staff members who deal with the tenant.

Preparation is Powerful and Usually Successful

Professional property managers who take the time, energy and effort to adequately keep records of their properties and tenants will find that this preparation is worth its weight in gold come litigation time. Once a tenant becomes familiar with an exceptionally prepared option they may think twice about their attempts to sue. The best defense for managers or management companies is educating themselves in the proper procedures and record-keeping that will help them prepare for this process. If the manager has followed the law, has followed a detailed record-keeping system, prepares and presents an immaculate file to the hearing judge or court then the likelihood of success of defending one of these lawssuits is much higher than if they had not.

An Owner May be Liable for the Acts of its Agent

Both statutory and common law principals state that a hirer or principal of an agent may be liable for the acts of the agent. Property management companies who fail to follow the statutory guidelines regarding landlord contracts laws may find themselves in court on occasion. If a manager has attempted to take advantage of a tenant (not uncommon) or has committed statutory violations that could lead to liabilities for the unsuspecting owner. Even though the owner would absolutely have a remedy against the property manager this would be a very unfortunate situation for the owner. The owner can file a cross-complaint against the manager, but in either case the owner gets drawn into a suit because the manager was negligent or careless. Needless to say an owner or property manager does not want to be in this situation in the first place, so, it is important that the manager follows statutory guidelines and proper inspection procedures.

A Real Estate Attorney on Staff is Ideal and Can Keep Owners Out of Trouble

Professional property management companies who have a real estate attorney on staff have an advantage in these circumstances. A real estate attorney has the training, expertise, and procedural knowledge to help prevent these situations before they get out of hand. Moreover, in the event that these cases escalate an attorney will be able to prepare and handle the situation much better than someone without those type skills.

What You Should Know About Applying for Consent?

As the needs of a tenant's business in real estate change, it may well be necessary to dispose of the property. However, what should be a straightforward process of obtaining landlord's consent to a disposal can often become complicated, and is actually one of the most hotly contested areas between landlords and tenants – highlighted…

As the needs of a tenant's business in real estate change, it may well be necessary to dispose of the property. However, what should be a straightforward process of obtaining landlord's consent to a disposal can often become complicated, and is actually one of the most hotly contested areas between landlords and tenants – highlighted by the mass of case law on the point.

Steps a landlord should take when receiving an application for consent

When the application for consent is received by the landlord or their agent, there are several steps which should be taken in order to ensure a smooth process.

Key steps and tips from a landlord's point of view:

-If a written application is received from a tenant, be sure to act quickly. The obligation to give consent within a reasonable time may be measured in days or weeks rather than months – time limits appears to be getting shorter. Time starts to run when the landord receives the written application – you should always check whether the application specifics any particular urgency or timescales which the tenant is trying to achieve, as this will influence how quickly you have to act in the eyes of the court

-Make sure you check the lease and do not make assumptions about what it says

-If further information is needed to make a decision, then request the information as soon as possible. It is the landlord's job to ask for the information that is required

-When coming to a decision to refuse consent, always analyze what it is that you are objecting to and do not have an ulterior motive for refusing consent. If the tenant challenges the decision, then the landlord will need to show clear evidence for his reasons, and prove that it is reasonable

-Ensure that notice of your decision is given in writing, and that the letter is carefully drafted. If consent is refused, then all reasons must be set out in the initial letter. Likewise, where consent is given subject to conditions, then these too must be set out in the letter.

What a tenant should do when making an application for consent?

The more prepared a tenant is, the more difficult it will be for the landlord to delay consent. All too often, applications are made with little or no supporting evidence; this can cause significant delays in the disposing frustrating all parties involved and sometimes resulting in the buyer walking away.

Key steps for tenants:

-Always ask for consent in writing.

Although the landlord may agree to the proposals during informal discussions, things may not always go to plan when it comes to getting the formal documents in place. Time periods for responding will not start running until the written application is made

-Consider wherever it would be easier to get consent for a subletting

-Include as much information as possible with the application. The information should show that the proposed assignee or subtenant is financially capable to comply with their obligations, and is likely to be a 'good' tenant. It is usual to supply three years' audited accounts and bank references for individuals. Bank references should confirm that the tenant can meet the rent payable under the lease. If necessary, also provide references from former landlords or suppliers, which will support the status of the proposed assignee

-If the proposed assignee is a weak covenant, consider whether extra security should be offered – eg a rent deposit or guarantor

-To restrict the possibility of the assignee walking away before consent is given, consider entering into a conditional condition upon obtaining the landlord's consent

-Make sure you give a deadline for the landlord to respond and let them know if there is any urgency. If they have not responded then make sure you chase, but do not pose further deadlines as this may prejudice the argument that the initial time limit has passed

-If the landlord does not comply with its statutory obligations, then there is no harm in reminding them. Consider whether proceedings should be threatened.

When it comes to applying for consent, it is important for both parties to get the process right from the start, and avoid what can otherwise become contentious and long-running disputes which can damage relationships.

Screening Tenants and Reporting Credit Issues in Today’s Marketplace Requires Care and Intelligence

Property managers, or rental owners who manage properties on their own, who fail to take the necessary precautions when screening tenants are asking for headaches and potentially long down time for their rental properties. Cutting corners in this process is a nightmare waiting to happen which will only increase the amount of time one will…

Property managers, or rental owners who manage properties on their own, who fail to take the necessary precautions when screening tenants are asking for headaches and potentially long down time for their rental properties. Cutting corners in this process is a nightmare waiting to happen which will only increase the amount of time one will spend in pursuit of quality long-term contracts and diminish overall return on investment for the portfolio. Today, background checking screening software available from a professional property manager can quickly and accurately paint the prospective tenant's employment background, criminal record (if any), eviction record (if any), and credit history. Without using a professional property manager to help in this process is like dancing on a tightrope which could lead to problems. In today's marketplace where property values ​​and rental rates are higher than those in most parts of the world, it is imperative that property owners and property managers be aware of these issues, pitfalls, and procedures.

Accurate Credit Reporting is Important

Importantly, if you end up in a situation where you have to evict a tenant (because you failed to properly screen), or have to report some other credit appropriation the federal government Fair Credit Reporting Act (FCRA) is also another potential land mine which property managers and unsuspecting rental property owners need to be aware of. The FCRA is worth looking at and getting a grip on because it very well can affect how you treat your late paying or breaching tenant. Moreover, the Consumer Financial Protection Act of 2010 (CFRA) is another set of hurdles of rules and regulations that owners, property managers, and property management companies need to be aware of and ideally become intimately familiar with – without this knowledge would be considered below the local standards set forth in the San Francisco Bay Area.

Debt Collection May Be Necessary Step

After you have evicted a tenant for non-payment or break or even property damages you may end up in court trying to get a judgment against the tenant. The Fair Debt Collection Practices Act (FDCPA) governs what can and can not be done against a defaulting tenant. Unfortunately, California and federal laws have become increasingly debtor friendly. Tenants have sometimes been able to turn the tables on a landord that violates these laws. Claims arise from oversight, imprecision, or failure to stay informed of the latest changes in the law. A slanderous or libelous communication could result from failure to be aware of the proper reporting procedures for breaching tenants. Some of these claims come about because of harassment actions by the collector including threats to take action, reporting of debts to third parties not privileged, or other similar acts. Having taken appropriate steps from the beginning towards obtaining quality, qualified incentives helps to prevent these types of situations. Hiring a professional property manager goes a long way towards that goal.

What Happens When Someone Violates FCRA or CFRA?

The FCRA was drafted and implemented to provide protection against the misuse and misreporting of consumer credit information. The FCRA governs the behavior and polices of consumer reporting agencies. Improper credit reporting can result in dire consequences for consumers. If creditors, debt collectors, credit reporting agencies violate provisions of the FCRA can cause a lower credit score, it can lead to a denial of credit, and can lead to higher interest rates on loans and credit requests. Thus, the law provides for remedies to prevent these types of occurrences from happening. For every violation of the FCRA a consumer can sue the reporting agency and / or any person or company that reported the inaccurate information in both state and federal court for statutory damages in the amount of $ 1,000 for each violation, punitive damages (if warranted due to egregious acts), court costs, and attorney's fees.

Conclusion

In communities where property values ​​and rental rates are higher than those in most parts of the world, it is extremely important that property owners and property managers be keenly aware of these issues, pitfalls, and procedures. Unsuspecting property owners who do not know any better can find themselves leasing or renting to an undesirable tenant because they failed to use due diligence and proper screening tools to evaluate the prospective tenant. Even some property managers who try and 'get by' without the latest screening software can find themselves with a bad tenant – “the old high price to the low bid scenario.” Investing a few extra dollars to have the proper and prudent tools available to do the professional screening is worth its weight in gold. Just ask a property manager who has been down this road to eviction and see what they say.

Finally, it is tantamount that both rental owners and professional property owners be aware of these issues and laws, beware of the pitfalls, and make sure any information that is communicated properly from both sides of the transaction.