Celebrate Black History Month

February 16, 2016 by Author Posted in Property Management Blog

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February is Black History Month; the annual recognition of African-American history and accomplishments. Originally created in 1926 as a week to coincide with the birthdays of Frederick Douglass and Abraham Lincoln, it was officially expanded to the full month of February in 1976. At the time, President Gerald Ford urged Americans to:

“Seize the opportunity to honor the too-often neglected accomplishments of black Americans in every area of endeavor throughout our history.”

While the month allows reflection on the past, present, and future, it’s also a time to celebrate accomplishments. There will be celebrations of African-American music, literature, art, science, food, film, politics, sports, human rights and so much more.

Simply Residential Property Management is proud to recognize and celebrate Black History Month in February.

Pricing Your Rental Property

It’s one of the most common questions we get as a property management company: How much will my home rent for? That’s an important question to ask, because ultimately it affects your ROI and ability to attract and keep renters. If the price is too high you will struggle to fill the property, which will also end up costing you money because you won’t be collecting rent. If you price it too low, you’ll be missing out on potential profit. There are a few key items that make up the complex issue of price when you are dealing with rentals. The desirability of the rental, length of lease required, and location of the property all come together to make up the price.

Desirability
The degree to which people want to rent your property makes a big difference in how much you can ask for it. It can be difficult to be unbiased with what your own property is worth, so using a property management service, realtor or other professional can help give you good feedback. Here’s a simple list of a few main items to look at when trying to determine the attraction of your place.

Age/Condition of fixtures and appliances. Take a look at all the fixtures and appliances in the bathroom and kitchen. If they are new or in like-new condition you can bump the price up a little. If they are older, damaged or out of style, the price will get dragged down.
Layout of the home. Have a walk through the rental. Is it sectioned off into small rooms and hallways? Open throughout? Does the layout make sense for modern living or is it set up for a lifestyle gone past? Generally open, modern floor-plans tend to fetch a higher price than sectioned off ones. This is especially true for the kitchen and living areas. An open kitchen with access to the main living space will be worth a premium.
Storage. Homes with lots of storage, whether it’s through a garage, storage unit or closets will always get a higher rent than those without.
Amenities. Often amenities are only thought of in a rental community, but even a single family home has them. Homes and apartments with pools, balconies, extra windows and dedicated entertainment or workout space tend to be worth much more than those without.
Initial Impression. This last one is harder to quantify. It is be a combination of the landscaping, entry way, and impact of the front entrance. Homes that have that something special, whether it’s lovely landscaping, a fantastic front porch, or a beautiful front entry will leave a favorable impression on potential tenants, meaning the price point can be set a little higher.

Lease
The length of lease required for a rental can help to determine its price. Simply put, unless discussing vacation rentals, it’s better for the landlord to have a long-term lease. That means that the shorter the lease length, the more you can increase the price. The same unit that is rented with an annual lease at $1000 a month could get $1300 if the lease is only for 3 months. It’s important to consider the potential pitfalls of short-term leasing however, since you could have to do repairs between tenants, have the property sit empty, and have to go through credit and background checks more frequently when screening tenants.

Location
The final, and often most determinate factor, in deciding a properties price is its location. Check out other rentals in the same neighborhood. Check out realtor sites and Craigslist to see what the going rate is for a comparable home in the area. No matter how beautiful your home is, if the area only supports rental prices of a certain amount, you are likely not to get a whole lot more than that for your place. Also pay close attention to its location in reference to transportation, shopping, dining and entertainment. People will often pay a premium for homes close to main areas of these attractions.

Can You Charge a Potential Tenant for Their Credit Check?

February 4, 2016 by Ron Huckabee Posted in Property Management Blog Tagged Landlords, Pricing Strategy, Tenants Leave a comment

Renting out your property to new people can be somewhat unnerving. While you want them to enjoy the property, you want to be sure they’re going to take care of it like you would. Not only that, but you need to trust your new tenant will pay their rent in full and on time every month. Most landlords or property management companies choose to run a credit check on new tenants to ensure they’re dealing with a legitimate prospect for a property.

After all, this is a property you own with the intention of turning a profit, and the repercussions for choosing a tenant on sight alone can be serious. But you don’t want to alienate real tenants by charging them too much in fees before even moving in. It’s important to be honest about running a credit check, but it’s often more difficult to justify slapping a new tenant with a hefty credit check fee. Here are some tips to how best to deal with the issue of charging tenants for their own credit checks.

Be up front about your decision
The most important thing to do when choosing to charge a credit check to a new tenant is to be up front about it. If you have chosen to charge the full price of the credit check to that tenant, you need to make them aware of this before they agree to rent the property. Nobody likes nasty hidden fees, and it can be worth a few hundred dollars to keep them content when renting your property.

Offer perks and other ‘discounts’ as a sweetener
If you feel like a prospective tenant could be lost by charging them the full amount, try offering discounts on other aspects of the rent. Offer to take it as part of their deposit, and lower the deposit to a suitable alternative. A compromise could result in your property being inhabited a month earlier than if you refuse to budge on the fees, meaning you would save money in the long run.

Include it in the total First month’s rent
Many landlords choose to include fees for moving in, performing a credit check and taking a deposit as one. Compiling them all into one payment can help both tenant and landlord keep track, but giving them such a large fee, even if it is the only payment, can be off-putting to unsure tenants. It’s often better to break down the fees and explain each of them to your potential tenants.

Use Simply Residential Property Management
If you don’t like the hassle of the moving process, and aren’t sure about credit checks, deposits and moving fees, we at Simply Residential Property Management are here to make your life easier. We perform our own credit checks, criminal checks and verify income/employment to make sure we get the best of renters in your property.

Credit checks are an important aspect of the renting process. Don’t take a risk when it comes to your own property.

Classic Mistakes to Avoid as a First-Time Landlord

January 28, 2016 by Ron Huckabee Posted in Property Management Blog Tagged Landlords, owner, Property Management Leave a comment

The right property for the right price
Location is one of the most important aspects to bear in mind as a landlord. It’s important to consider the type of rental income you will get in an area as well as the overall return you will get on the property.

While it’s tempting to look for properties in close range of your own home, your particular neighborhood may not be suitable for your unique requirements. It can be worth looking further away for better rental returns, and you can always look to a property management company like Simply Residential Property Management to take care of the property if accessing them personally is too time-consuming.

Remember to balance the demand and the strength of your rental returns against the cost of investing.

Don’t be afraid to ‘upgrade’ your property
Speak to your leasing agent about refurbishing the property and renting it for a higher rate. This could increase your yield considerably with only a little extra spending comparatively. You could also consider renting the property as a multi-unit or house of multiple occupancy.

Be firm on rent payments
While it can benefit you to be flexible on rent levels, it is never advised to be lenient on late rent payments. Remember, as a landlord, your main source of income comes from the rent, so it is vital to make sure this is paid in full and on time. This requires a clear rental agreement and time taken to ensure your tenants are paying punctually and enforcing repercussions if they are not.

Talk to Simply Residential Property Management about taking out an insurance policy against your tenant failing to pay the rent, or rent your property with Simply Residential Property Management and let us deal with late payments for you.

Don’t jump straight to eviction
As a landlord, you must be prepared to work with a tenant when they are required to repay any debts. Opting for immediate eviction will cost you money and time, not to mention the prospect of your property sitting vacant for weeks or even months. Many property management companies will help alleviate some of that stress with an eviction protection plan. Ask us about ours for more information!

Choose a good property manager
As long as a tenant is paying the rent and bills on time, they are entitled to live in a safe and well maintained property. It is vital to maintain a good relationship with your tenants to ensure the rent is paid and they don’t just leave the property in disrepair. If you rent with a property management company like Simply Residential, they can usually guarantee repairs are carried out quickly, efficiently with minimal disturbance to the tenant.

Ensure all repairs are done before renting a property out
As a landlord, one of the most important aspects of your job is ensuring the property is fit to rent on day one. This will reduce overall maintenance costs throughout the tenancy. At Simply Residential, we perform regular checks and send you regular status updates with regards to your property. This way, you can rest easy as the landlord knowing your property, and your investment, is being properly cared for.

Purchasing Your First Rental Property: What to Look For

January 21, 2016 by Ron Huckabee Posted in Property Management Blog Tagged Investors, Landlords, Pricing Strategy, Property Management Leave a comment

Investing your money in property can be a hugely rewarding venture. Regular income, consistent potential to increase your monthly yield and the prospect of a major profit when you sell all make for good arguments. That’s not even mentioning the potential tax deductions. But do you know what you’re looking for when considering your first investment property? Simply Residential Property Management has compiled a handy list of the most important criteria to look for.

Price
Obviously price needs to be one of the key considerations. Expensive properties usually give you a higher monthly yield, but less expensive properties can be just as rewarding. If you’re willing to put in some time and effort rehabilitating a property, you could dramatically increase its rent value and improve your chances of a healthy profit when or if you choose to sell. But beware; properties that seem too good to be true often reveal themselves to be just that in time. If you do your research and follow the market trends closely, you have a better chance of finding the right property for you.

Location
This doesn’t just mean finding a property with good views. A first time property buyer needs to consider what kind of tenant they’re likely to get based on that area. Buildings located close by to schools and hospitals will likely appeal more to young families, so the potential for long-term tenancies is increased. This is usually preferable because it limits the amount of time your property sits vacant, meaning you go less time without collecting rent.

Resale value
Most first time landlords had to take out a mortgage on their first investment property. This means relying on a consistent yield in order to keep up with repayments. If the payments stop or the profit becomes too untenable, you may have to consider selling the property and moving on. But you want to know that you won’t be selling at a major loss. That’s why you always have to take the resale value into account when considering a property. Try to find out about any future plans for regeneration projects or upcoming attractions that could increase the value of your property further down the line. If a unit is situated in an area with increasing levels of crime, it could lead to house prices in your area dropping to a level below your profit margin.

Property condition
The condition the property is in should always play a decisive role in whether you go for it. Ask about every aspect of its structure, plumbing, wiring and anything else you consider relevant. It’s important to know everything you can about a property before purchasing. This can include investigating similar, nearby properties and comparable, as well as establishing potential issues. Anything from potential damp spots to an outdated heating system could go on to become a massive headache if you were to choose to become the landlord of this property.

There will always be exceptions in the property world, but if you try to follow these rough guidelines, you could find purchasing your first buy-to-rent property is easier than you think.

In Focus: How Can Family Lawyers Benefit From a Partnership with Simply Residential?

January 19, 2016 by Ron Huckabee Posted in Property Management Blog Tagged Legal, Partners

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Our family law partners get to experience a rare benefit that many overlook when dealing with divorce and other contractual negotiations — when your client has a real estate asset that neither party wants, or one that is undervalued, the services of a property management company can make a bad situation much better. Your client will actually be able to profit from that decision, and will give you the strategic upper hand when it comes to dividing up assets.

Not sure if this kind of partnership is right for you? Ask yourself the following:

Do you want to improve your strategic negotiating position?
Is your client’s mortgage underwater?
Does your client have a residential property that’s undervalued?
Does neither side of the negotiation want to keep a residential property?
Do you have a personal relationship with a property management company that benefits you and your clients?

If you answered yes to any of these questions, but no to the last question, you may be missing opportunities to help your client experience the maximum return on their real estate assets, while building a trusted referral network for yourself.
The kinds of situations that call for legal consult aren’t always the most pleasant for your clients. In addition to improving your negotiation position, hiring a property manager for your client can also give them a nice ‘cooling off’ period before they make any hasty decisions regarding their property. This is especially helpful when one party is awarded the house but cannot afford or doesn’t want to pay the mortgage payments. Property management companies can peel back that extra layer of financial stress.

As the busy season approaches for family lawyers, our partners would agree that now is the time to make sure all of your negotiation strategies and tactics are sharpened and tightened up. We’re more than happy to help you make that happen!

Are you ready to see how you can benefit from a partnership with Simply Residential? We’re here to help, so contact us today!

If you want to learn more about partnering with Simply Residential, visit our partner page or contact me at 952-831-5300 or via email at partner@simplyres.com!

So, You Want to Purchase Your Second Investment Property

January 14, 2016 by Ron Huckabee Posted in Property Management Blog Tagged Investors, owner, Property Management Leave a comment

Owning investment rental properties can be trying. It requires patience, research, excellent interpersonal skills and a financial stability that allows for things to, on occasion, go wrong. But if you find yourself successfully balancing all the aspects of being a landlord and want more, then you might want to think about investing in another property. It may be tempting after you’ve already cut your teeth as landlord of the first property, but there are several new things to consider before investing in a second property.

No two properties are ever the same
While you might be thinking you have a strong understanding of what being a landlord requires, you have to go into the venture of second properties with your mind open to every possibility. So your first property was a dream; it didn’t require much maintenance, you had model tenants, it was within easy reach of your own property. You need to bear in mind that, while your first property was easy, there is still a chance of your new property causing you problems. Obviously you have a better knowledge of what to look for, and you will be going into the venture with more understanding than a first time landlord, but this is no excuse for leniency. That’s why so many experienced rental property owners choose to utilize the services of a property management company.

Try to remember what caused you the most time, money and effort to correct your first property, and prioritize these aspects in your search for a second property.

Don’t always buy close to your first property
While it may be tempting to purchase that property just down the road from your first, this should not be your number one reason for purchase. Remember, it’s still important to do your research into the current housing situation. If the properties close to your first are not doing well, then it may be worth looking a little further away. While it does mean more time driving, it could actually save you money in the long run. However, that doesn’t mean you shouldn’t look nearby, especially if your first property is a good area. This also helps you get a rough gauge on extras, like the most likely tenant type in that area and possibly housing bills such as heating and electricity.

Markets fluctuate, so can your property value
Although you will be more experienced than a first time landlord, it’s important to remember that there’s no guarantee the experience of buying a second buy-to-rent property will be the same. The housing market can fluctuate dramatically, lowering the value of your properties. With two purchased properties, it can mean losing double the amount of money should housing values drop. Take some time to research the market, and the area you are considering. If a new transit route has been built near the property, this could increase its value over time. Simultaneously, a new building appearing nearby could obscure views from the property and bring its value down.

The most vital aspect to remember when considering the purchase of a second buy-to-rent property is that you already have a strong grasp of the fundamentals, so use this to your advantage. Remember what worked for your first property and avoid making the same mistakes. If you’re unsure, or you don’t want to take on the additional responsibility of managing a second property, it’s wise to consider investing in a property management company to take care of the minutia.

Understanding Minnesota’s Cold Weather Rule

January 12, 2016 by Author Posted in Property Management Blog Tagged Landlords, Legal, owner

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This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

In Minnesota, when temperatures dip in late fall, a law known as the “Cold Weather Rule” kicks in. The Cold Weather Rule set forth in Minnesota Statute Section 216B.096 is designed to protect tenants and homeowners from having their heat source permanently disconnected in winter (defined by law as October 15-April 15) if they are unable to pay their utility bills. The Rule, implemented by the Minnesota Public Utilities Commission, provides that a utility may not disconnect and must reconnect a customer whose household income is at or below 50 percent of the state median income if the customer enters into and makes reasonably timely payments under a mutually acceptable payment agreement. It does not, however, prohibit shut-offs, and a tenant who fails to comply with the agreed upon payment agreement could trigger a shut-off which, depending upon the utility involved, could result in damage to the property due to pipes freezing and bursting.

Utility customers whose household income is above 50 percent of the state median income also have the right to a payment agreement to prevent disconnection or get reconnected that takes into consideration the customer’s financial circumstances and any other extenuating circumstances of the household.

The Cold Weather Rule applies to all natural gas and electric utilities. It does not apply to delivered fuels like fuel oil, propane and wood. The Cold Weather Rule requires a utility company to notify its customers in writing before it disconnects their heat. The notice must be in easy-to-understand language and must contain the amount due, the date of the scheduled disconnection, the reasons for disconnection, and options to avoid disconnection.

A regulated public utility must notify a customer of disconnection at least seven working days in advance. An unregulated utility; i.e., a cooperative or municipal utility, must notify a customer of disconnection at least 15 days in advance. A disconnection may not generally happen on a Friday, Saturday, Sunday, a holiday or the day before a holiday, while an appeal is pending, or after the close of business on the scheduled day of disconnection.
For landlords, it is important to note that the Cold Weather Rule does not prevent a landlord from evicting a tenant or refusing to renew a lease that expires during this “cold weather” season. In fact, if the lease requires the tenant to pay utilities and the tenant fails to make timely payments pursuant to the agreed upon payment plan, such nonpayment could constitute grounds for eviction.

For questions about the Cold Weather Rule, contact your local utility or call the Consumer Affairs Office of the Minnesota Public Utilities Commission at 651-296-0406 or 800-657-3782.

For questions about how to handle an eviction during the cold weather months, be sure to contact a knowledgeable attorney.

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. and a MSBA Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at jobrien@lommen.com.

Temporary Housing for Your Tenants: A Guide

January 7, 2016 by Ron Huckabee Posted in Property Management Blog Tagged Landlords, Legal, Maintenance, owner Leave a comment

Life as a landlord can be stressful at times. Take the temporary relocation of tenants as an example. Despite your best efforts to prevent or foresee an issue arising in the property, something has come up that requires your tenants to temporarily relocate. You’re already worried about the cost of repairs to the property, but now you have to worry about a whole heap of other things; will they be paying rent while they’re relocated? Where will I be able to relocate them to? Should I keep them happy with a plush hotel room or risk finding them a budget motel, as it’s only temporary? All these questions and more will likely come into consideration, but it’s important to bear certain facts in mind. Your tenants are entitled to temporary accommodation, and as such it is your duty to find, reserve and show them to their provisional property. Simply Residential Property Management has compiled a few handy tips to help you with the process.

Give advance warning
If moving your tenants to temporary housing cannot be avoided, then it is important you go out of your way to limit the disturbance to their lives. Any notice alerting your tenants they will have to temporarily relocate from their property must be given at least 60 days in advance. Failure to do so could end with the tenants refusing to pay your rent for the time they are at the property, or even for that particular month. If the case should go to court, your inability or unwillingness to supply them with adequate notice will reflect badly on you.

Reasonable replacement accommodation
You must provide clean, suitable replacement housing for the entire duration of the property’s reconstruction period. Failure to do so could result in your tenants taking the matter to court, and the state of Minnesota tends to favor the tenants over the landlord, particularly when the relocation is due to a fault with the property. It’s not unreasonable to expect you as the landlord to provide comfortable and safe accommodation, but it is also important you try to find something in close proximity to the original property, so as to cause as little disruption to your tenants’ lives as possible.

Be prepared to pay for travel/transport expenses
While this may seem like a trivial issue, you have to remember that it is your responsibility as the landlord to provide these things. If the temporary property you have assigned to your tenants requires them to travel to work, college, school, etc., then it is up to you to pay for travel expenses. Of course, a two minute move down the road does not warrant you reimbursing any of your tenants on travel costs, but anything that could warrant an extra bus journey or substantially increased car journey could justify your tenants requesting you cover travel expenses. The same applies to any increase in utility costs or an increase in rent while they are based at this temporary address.

Remember, it is your duty as a landlord to provide alternative accommodation if repairs or reconstruction is required for the original property. How you decide to provide this alternative accommodation is up to you, but it is best to keep the tenants happy, even if this means paying a little bit more money. This eases tensions, shows you’re caring for the needs of your tenants and means future interactions should be a little bit easier.

Who’s Responsible for Home Repairs During a Tenancy?

December 30, 2015 by Ron Huckabee Posted in Property Management Blog Tagged Landlords, Legal, Tenants Leave a comment

Determining who is responsible for repairs to a property during a tenancy can be a divisive issue, but it’s important to know where your responsibilities lie. While clear guidelines for the process of repairs should be laid out in a tenancy agreement, these can vary from property to property. If you’re not sure what your responsibilities as a landlord are, you’re not alone. As property managers, we hear this question a lot. If you’re among the many who could use a little clarification on this issue, why not take a look at the quick guide below? The most important thing to remember is that communication with your tenants is paramount, so discuss these matters with them, and lay down your argument for your involvement. It could save you money, time and acrimony further down the line.

What is it that’s damaged?
Mainly, if it’s the tenant’s property that’s damaged, it’s their responsibility to fix it. If it’s your property as the rental home owner, you’re going to want to handle the maintenance yourself of leave it to your property management company. Allowing tenants to do their own maintenance opens up the floodgates of liability in the event they’re hurt or the property is further damaged. We all have that ‘handy’ person in our life who ends up blowing fuses or completely destroying some drywall. That’s much less charming when your property ends up damaged.

How urgent are the repairs?
Another vital consideration is just how badly the tenants need the repairs. Any electrical appliances (such as washer, dryer, oven, etc.) must be fixed by the landlord in order to adhere to the landlord and tenant insurance policies. Do not allow tenants to repair these things if they are damaged, as they could receive injuries which could lead to legal ramifications for the landlord. Likewise, any attempted repairs by an unqualified tenant could lead to further damage to the property. As such, any repairs on fixed appliances must be repaired as soon as possible. If the boiler in your property breaks down in winter, it is important you have it repaired as soon as possible, whereas if a fuse goes on a bulb, this could take a lesser precedent. However, it’s best to be punctual with your repairs in order to keep your tenants happy and prevent any further damage.

How to avoid in-tenancy repairs
You can take steps to avoid making repairs while tenants occupy your rental property by regularly doing pre-tenancy inspections of a property. This is required following a tenancy in order to ensure there is no superficial damage, but it’s good to check the wiring, plumbing and general functioning of a property before renting it out again. This can help avoid any rancor between you and future tenants if a fault is found, although it will mean the cost of repairs fall to you and you alone.

At Simply Residential, we offer a quarterly furnace filter change and lease violation walk through to help us determine if there are any immediate needs or violations to the property. We also offer an annual maintenance walk-through to help us determine what may need work in the coming year so we can help our owners financially plan their maintenance needs in a way that makes sense for them.