Posts Tagged Real Estate

RENTAL PROPERTY MANAGEMENT – TENANTS BREAKING THEIR LEASE

Tenant Breaking Their Lease

Life happens and Tenants break their leases for many reasons . . . they can’t pay any longer and are skipping out or something as innocent as getting a great deal on a short sale and just learning that they have to close in 2 weeks . . . YIKES!!  Either way, you have to know the Tenant’s and your responsibilities when this happens.

As you probably already know, the Tenant has the responsibility for the rent through the end of the term of the lease as stated in their lease agreement . . . and to leave all the utilities on and pay for them until the property is re-leased (if you used our lease form).  You, as the Landlord, if you want to be able to collect any rent through the end of their lease term, must immediately and diligently market the property for lease again.  Be careful not to market the property at a higher rent amount than the previous Tenant paid or you may have difficulty in collecting money for lost rent in court if . . . you “Jacked the Price up” which is how a judge may see it.  You will only be entitled to the lost rent between the time your previous Tenant vacated or last paid rent and the beginning of a new lease with your new Tenant . . . no double dipping!

One other very important detail, as soon as the Tenant vacates the property, do an “Estimated” final accounting of their security deposit . . . or Move Out Statement.  Of course you won’t know all the final numbers when you prepare this and that is why it is called an “estimated” statement.  But, in this statement, you are going to assume that you will not find another Tenant for the property before the end of the lease term.  You will also estimate the costs of any repairs over and above “normal wear and tear” the Tenant may have caused.  This will show a worse case scenario.  Send the statement out within 21 calendar days (in the State of California) of the Tenant moving out with a check for any amounts left over from the funds (typically security deposit) you are holding for the Tenant.

Within 21 days (calendar) of all the repairs having been completed and either the end of the lease term has come or your new Tenant has moved into the property, you will need to do what I call a “True-Up” Move out statement.  This will show all of the actual costs to your Tenant, giving them credit for any time of their lease that the new Tenant will be in the property (you can’t double dip on rent) and cut a check for any differences.  Oh yeah, be sure to include copies of receipts for all work performed that you are charging the Tenant for.

The subject of Tenants breaking their lease along with many other property management challenges are covered extensively in the new Property Management Training Program; Manage to Make Money . . . . the Real Estate Series.  This new series has been developed around the book: Manage to make Money . . . Your Guide to Profitably Managing Rental Properties (available for California, Oklahoma, Kansas or Missouri) written by Pat and Kris Larkin who are seasoned real estate professionals and specialists in the area of Property Management.

 To visit their website and see the full spectrum of Rental Property resources; Books, E-Books, Documents, Forms, Form Letters for nearly every occasion, Checklists, Videos more money saving tips and tools . . . and the list goes on and on, go to: ManageToMakeMoney.com

 For a short video on this subject CLICK HERE

Thank you for reading!

Pat and Kris Larkin

 

 

 

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RENTAL PROPERTY MANAGEMENT – 24 HOUR NOTICE OF ENTRY

What do you do when need to access your rental property but are unable to coordinate schedules with your Tenants? There are times when you need to get into your property to make repairs, show it to prospective Tenants, show it to prospective buyers or just to inspect the property and you can’t get a hold of your Tenants. We suggest that you go by the property and post it with a “24 Hour Notice of Entry” This is a legal document which tells the Tenant that in approximately 24 hours, you will be coming into the property to; and then you state your purpose.

Now you have to be judicious with the use of the 24 hour notice and not use it every week to go into your property. Your Tenant is entitled to the quiet use and enjoyment of the property. If you are using the notice to have repairs done… always accompany your workmen into the property. Also, it is a best practice that if/when you enter a Tenant’s property, that you have someone accompany you. In our our litigious world, this is for your own protection. It is also a good idea to try to contact your Tenant “one more time” before you enter the property. Also, document all the attempts you made to reach them or access the property.

You will be amazed at how when your Tenant receives their 24 Hour notice, they are miraculously available to meet you there!

In conclusion If you can’t reach your Tenant for access to the property, post a 24-Hour Notice of Entry, document all attempts to communicate with them and be sure that you accompany your workers when you/they go in.

To view a short video on this same subject CLICK HERE

For our 24 Hour Notice of Entry form or more down-to-earth tips on how to effectively manage your rental property, visit our web site at: ManageToMakeMoney.com.

Thank you for reading!

Pat & Kris

 

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RENTAL PROPERTY MANAGEMENT – DEALING WITH “CHALLENGING” TENANTS

When my wife, Kris and I were traveling and staying with some friends, we walked into the room they had prepared for us and on the lamp was an antique looking sign which read: “Our guest bring us great joy… some when they arrive… and others when they leave!” I felt that way about our Tenants… sometimes, it’s the waiting for the joy at the end!

We are all challenging people to live with… some more than most! We categorize our challenging Tenants into three primary categories: 1.) Students 2.) Entitled Tenants and 3.) Those Tenants who upset the neighbors around them. In a way, they all have similar attributes… they want to live their lives… any way they choose… regardless of how disruptive they may be to others around them. Many of these Tenants “bully” their way through life… pushing their way through. Our tip for dealing with all types of challenging Tenants is to show respect to them, but also show your resolve. Be assertive in requiring that they go by the same rules that most others on the planet go by. We have developed what we call a “No” letter and it very respectfully says something to the effect of “Thank you for your concern about (whatever the concern is). However, this is not a situation in which we will be able to meet your expectations at this time.” (then state whatever clause in the lease which applies). Another option, if they are disturbing the neighbors or causing damage to the property is to threaten them with a notice to comply with their lease or move. There is a very strong chance that your Tenants won’t like either response. But with your resolve… you will get this challenging situation under control.

In summary: Don’t allow your Tenants to get the upper hand in your relationship… push back with respect and their legal obligation of their Lease Agreement.

To view a short video on this same subject, please CLICK HERE

If this tip has been helpful to you, please visit our website at: ManageToMakeMoney.com where you can find our “No” Letter and many more tools, tips and techniques for managing your rental property profitably.

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RENTAL PROPERTY MANAGEMENT – RETURNING SECURITY DEPOSITS

Many people don’t know that if you fail to return your Tenant’s security deposit within the time frame allotted by your particular state . . . there can be some very serious consequences.  As an example, let’s assume that your state mandates that you are to return your Tenant’s security deposit to them within 21 days (3 weeks).  In many states, if you fail to return the deposit within that time frame then first, you will lose the right to charge the Tenant for anything!  It doesn’t matter if your Tenant owes you for three months of rent, late charges and they tore up your property . . . by returning the money late . . . you waive your right to charge the Tenant for anything at all.  But wait . . . there’s more!  Also, in many states if you miss the deadline, your Tenant is entitled to TWO TIMES the amount of security deposit.  Translation: if the Tenant paid a $2,000 security deposit and you miss the return date, you could have to pay them $4,000 AND not be able to charge them for any back rent or late fees owed or for repairing any damage they may have done to your property!   So be sure to check the specific laws in your state.  A good place to start is to google “tenant landlord laws (insert your state’s name)”

This tip is part of the scores of information contained in our Property Management Training Program; Manage to Make Money . . . . the Real Estate Series.  This new series has been developed around our book: Manage to make Money . . . Your Guide to Profitably Managing Rental Properties 2nd Edition.

To view a short video about returning security deposits click on this link.

To visit our website and see our large selection of books, e-books, downloadable forms and documents, videos and tips go to: www.ManageToMakeMoney.com

Thank you for Reading!

Pat and Kris

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RENTAL PROPERTY MANAGEMENT – EARLY TENANT MOVE IN

Few of us would ever allow our Tenants to move in before their lease begins but . . . many of us do unwittingly!

Would you ever knowingly allow your Tenant to move into your property early?  Perhaps unwittingly.

Think about this scenario for a minute:  You have rented your property and the lease begins on the 1st of the month which is a Sunday.  For our convenience, many times, we may be inclined to give the Tenants the keys on a Friday or Saturday, so that we don’t have to do it early Sunday morning.  What happens so many times is that the Tenant is excited about their new place and now that they have the keys they go by just for a look . . . just to “breathe it in”.  When they get there, they remember those two boxes in the back of the car . . . “Gee, if I get those out, then I can start with an empty car on moving day.” Once those boxes go from their car to the house or condo, technically, they have “moved in”!

Now, let me ask you, what is the effective for their renter’s insurance?  Chances are, it doesn’t take effect until the 1st.  why would it start sooner?  Without that date (the now NEW move in date) being covered in their lease or their renter’s insurance being in effect . . . you, the Landlord, are liable for any damage, or injuries they may occur during that time between when they moved the boxes in until the lease start date on the lease!

To solve this issue, we always wrote the lease to begin on the day we gave them the keys and, required the Tenant to have their renter’s insurance effective on that date also.  You don’t necessarily need to charge them for the extra days rent . . . just cover yourself legally and from a liability perspective.

In summary, think through the date relating to move in dates and “possible” move in dates.  You might just save yourself some heartache.

To view a video on this same subject click on this link:  Early Move In

If you have any questions about this subject, fell free to contact us via our free service; ManagementLink.  Simply click on the link and type in your question or issue.  We will get back to you within 24 hours with an answer.

Thank you for reading!

Pat & Kris Larkin

We have founded and developed “Manage To Make Money” which is a resource for anyone, novice or professional who manages rental properties.  We provide Books, Documents and Forms, Live Seminars, E-Books, Free Webinars, Tips and Private Consulting.  Check it out!

Manage To Make Money – Cottonwood Falls, Kansas 949-689-4344, Info@ManageToMakeMoney.com

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RENTAL PROPERTY MANAGEMENT – SYSTEMS FOR THE PROS

SYSTEMS FOR THE PROFESSIONAL PROPERTY MANAGER

 Any business, in order to operate and deliver its products or services, must have systems and processes.  In this chapter, I will be sharing with you many of the systems and processes we implemented to manage the 320+ properties we were responsible for.  The process is like any other . . . it is never finished.  There is always something that, while it works better since you changed it, is still not working as smoothly as you would like.  What I am sharing with you is basically a snapshot of where we are in this ongoing process.

Filing

 Every organization has to do filing.  It is simply a way to put important documents and information away in such a manner as to be able to find it again with you need it . . . and that is the acid test!  You may have an awesome filing system that you have implemented but if you can’t find what you need when you need it, you have to ask yourself: is this really working for me?

The starting place for us in dealing with our properties was to assign a property number to each property.  This number is used in paying invoices; in setting up our property management software and . . . you guessed it . . . in setting up our filing system.    We start out arranging all of the properties in alphabetical order, by their street name and then begin assigning property numbers to them.  Under this convention all of your properties on numbered streets would come before your named streets in the order of your streets: 6th street, 10th street and 27th street, then Apple Street, Boston Street then Orange Street.  If you have more than one property on the same street; the ones with the lowest house number would come before those with the higher ones.  As you are designing your property numbering system, one thing to think about is to allow enough unassigned property numbers between the assigned ones to allow for some growth.  We only re-assigned property numbers once in the five years that we owned the company.  This was mainly due to the fact that we more than doubled our number of properties during that time.  As you can imagine, because we had outgrown our numbering system, we had a lot of property numbers with decimal numbers so that we could fit them between two consecutive whole numbers:  #110, #110.2, #110.5 & #111.

Here is an example of a numbering convention which works:

Property #               Property Address

1

623 E. 6th Street

2

Unassigned

3

Unassigned

4

842 So. 18th Ave

5

622 West 120th E. Ave

6

Unassigned

7

Unassigned

8

123 Apple Street

9

129 Apple Street

10

Unassigned

11

Unassigned

12

855 So. Boston Street

13

Unassigned

14

Unassigned

15

27 Highland Ave.

OK, now that we have figured out how to number our properties we are ready to set our filing system.  We recommend that you use a three folder system for each property.  One is a colored folder; red, blue, green or even electric colors are available at your local office supply store.  The other folder is a plain-Jane manila folder.  The two folders rest in the third folder, which is a hanging folder.  All three folders have the property number and address on it.

The Colored Folder – The colored folder is for all of the legal documents relating to the property, or you could also think of it as housing all of the long-term documents.  On the left side as you open the folder, we keep all of the documents relating to managing the property; Management Agreement; property set-up sheets; Owner information, and copies of any letters to or from the Owner of the property, etc.  On the right side of the folder, keep all of the information relating to the current Lease.  On this side you will keep the Lease itself, the rental application, any Change of Terms, any Three Day Notices or written correspondence with the Tenant or notes of communication with the Tenant.

The Manila Folder – This folder is for all of the day-to-day stuff that goes on with the property.  On the left side, you will keep all of the HOA documentation; newsletters, notices, etc.  On the right side is where you will keep all of the paid invoices for anything on the property: mortgage statements; HOA statements; and paid contractor statements, as well as the work orders for that work.

Another thing that we put in the manila folder is the Lease.  I know, I just said that you will keep that in the colored folder . . . whassup with that.  If you re-lease the property during the year, we put the new Lease in the colored file and move the outdated Lease into the manila folder.  This way, you will still have access to this information without having to go to your archives.

As I have mentioned before, I tend to be an efficiency-driven sort of person.  When I first saw this filing setup, I pushed hard for going to the multi-tabbed, all in one folders.  The reason that doesn’t work as well for this system is that at the end of the year you will want to purge your files and essentially the entire manila folder will go into to your non-active file storage.  This becomes a very efficient process when all you have to do is remove the manila file, mark it with a colored tab with the year it was for and make a new manila folder to replace it.  Also, if you don’t purge your files each year, they would become so fat and cumbersome that you literally would have to rent a larger space to house all of your files!

Archiving – If you are going to keep physical copies of your old files, you will need to maintain a storage facility where you keep all of your file archives.  Typically this is for files on properties that you no longer manage, or for files on properties that you do manage, but the files are so old that the likelihood of needing to access them is minimal.  A good rule of thumb is that you maintain records for 10 years and then have them shredded.

Depending on how long we have been managing a particular property, we would generally keep all of the past year’s files for that property in storage in our office.  Now, if you have been managing a property for 15 years, that doesn’t make sense; information that is 3 – 5 years old is only going to need to be accessed once at the most, during a given year, so it really doesn’t make sense to use your valuable file/office space for that and it goes to storage.  At any rate, this three folder system is working well for us.

Physical Hard Copy Filing vs. Electronic

With all of your current year files and three–five year archives, your filing will require a lot of space.  That is valuable and expensive office space.  If you can eliminate several file cabinets then you could add more work stations and not have to rent larger space in order to hire new people as you grow!

I recommend that you start out scanning all of your documents that you would normally file . . . as they occur!  This will start to build your filing system and when it is time to purge your physical files and move them to another cabinet you can skip that step and move them to archive.  You will have the electronic files on your computers (don’t forget to have an off-site backup!)

 

We hope this posting has been helpful for you.

Thank you for reading!

Pat and Kris

 

For a virtual goldmine of  resources for time and money saving systems and secrets of the pros, visit our website at www.ManageToMakeMoney.com

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MANAGING PROPERTY FOR OTHERS – DELIVERING STATEMENTS AND PAYMENTS TO OWNERS

Delivery of Statements – Mail Hard Copy vs. e-mail

 When our company started all of these processes and procedures . . . it seems bizzare to say it but . . . there was no internet or e-mail.  All of the monthly statements along with all of the backup copies of invoices were packaged, posted and mailed out to each of our Owners.  With the advent of e-mail and good quality scanners, we were able to move toward e-mailing our monthly statements to our Owners.  The only thing that held us back was our Owners; many of whom were a bit technologically challenged and “didn’t do e-mail”.

As we moved forward though, we pushed to make the change.  I am a big believer in processes and the more processes you have for the same outcome, the less efficient you are.  I know that the time is quickly approaching when this will no longer be an issue and electronic delivery will be the standard for all property owners.

If you are just starting a property management firm, this is an awesome opportunity for you.  You can start from the beginning sending your statements out electronically . . . and not be faced with converting to the new technology that will undoubtedly be here all too soon!

 

Payments to Owners

 Assuming that our Owners’ property had a positive cash flow, we paid a disbursement out to each of our Owners at the time we issued the statements.  Our software had a default setting that basically told it to send the Owner any remaining cash in the account after all expenses have been paid.  This is not always a good thing; if you have a system like this, you want to be diligent to keep an eye on future anticipated expenses.  Let me tell you it is not fun to have sent an Owner a bundle of money one month, then the next month you are trying to pay his real estate taxes and you don’t have enough money in the account.  You then have the opportunity to ask the Owner to send the money back to you.  This is not good for your credibility!  We could also go into our system and set a cash minimum that we wanted to maintain in all of our accounts and it would automatically send the Owner anything in excess of that amount.  It is all a matter of how you want to set it up.

Like mailing out hard copies of statements and technology marching on, making payments to our Owners has also undergone some changes.  In the early days, we sent out live checks each month to our Owners.  Now, with the advent of ACH or; Automated Clearing House, we can electronically transfer funds from our trust account to our Owners’ bank accounts, minimizing live checks, mail problems, etc.  Again, we still had those Owners (probably the same ones that “don’t do e-mail”) “who don’t do electronic deposits”.  We continued to work with them knowing that “someday . . . this too shall pass!”

 

Our hope and prayer is that this information has been helpful and sparked some thought processes for you.  To discover more resources for managing rental properties for yourself or others, visit our website and check out our Books, Documents, Forms, Checklists, Videos  . . .  available in hard or immediately downloadable versions.

Thank you for reading!

Pat and Kris Larkin

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