Ethics in Property Management: What You Need to Know

business ethics property management

If you’ve been following the news this last week, you may have noticed that the property management industry has been getting some less than flattering coverage. Unfortunately, in a burgeoning industry, when one company behaves unethically it can tarnish the reputation and perception of the industry as a whole. Luckily, cases of bad business practices aren’t entirely common among property management companies.

As a consumer, it can be hard to decipher which companies are acting in your best interests, or strictly in their own. However, it is endlessly important to ensure that the property management company you choose to work with not only abides by legal standards, but high ethical and moral standards as well. It comes down to the idea that just because you can do something, doesn’t mean you should. There are several reasons why this rings true across industries and relationships, the risks of associating yourself with unethical or unreliable vendors or organizations are very real.

Guilt by Association

When you choose to do business with a company, especially when it comes to property management where the company represents you as the homeowner, it’s important to ensure that their organizational values align with your own. In business, as in real life, guilt by association is a real thing. Working with a property management company with questionable business practices is a lot like washing a brand new red shirt with your white socks. The red from the shirt bleeds all over the white socks, changing the way they appear to others. In this instance, low ethical standards are the red dye. You could potentially tarnish your reputation if you employ a management company that isn’t exactly on the up-and-up.

Financial Risks

Your home is one of the biggest investments you’ll make in your life. As with anything that you spend a considerable amount of emotional and financial resources on, you shouldn’t hand it over to a company you can’t trust. Even if they offer guarantees and assurances, chances are unless they abide by a strong ethical code, they’ll find a way to legally get around it in the interest of making more profit. Be sure to do your homework when choosing a property management company to work with, evaluate their claims and do some background research.

Additionally, hidden fees and up-front charges are often the hallmark of questionable business practices. When you’re working with a service-based company, it doesn’t make much sense to pay them up-front with the promise of continued dedication to your property. If all the money from the transaction is made up-front, where’s the incentive to truly care for your investment?

Safety, Protection, and Trust

When a business only holds themselves accountable to their interpretation of legal standards without showing much concern for the ethical implications of their actions, it’s ultimately the consumer who suffers. A huge part of doing business with another person or company is the element of trust. Companies that don’t have strict ethical standards simply aren’t trustworthy.

For the most part, laws are put into place for the protection of the consumer. However, laws are often up for interpretation. There are also some things that are technically legal but truly unethical. Working with a property management company that dedicates itself to the best interests of their clients is absolutely essential — there is a lot at stake on the part of the homeowner.

At Simply Residential Property Management, we dedicate our time to providing the best service we can to our clients, while representing them and their best interests. Integrity is a key pillar in the foundation of our organization and we take pride in the fact that we work well within legal and ethical standards. If you want to learn more about the way Simply operates, or you want to hear more about the services we provide, I’m here to help! Send me an email and let’s chat: amanda@simplyres.com.

The Facts About Security Deposits

7408506410_fbd7bc0fcd_k-1024x683

In the nearly ten years I’ve been in the property management business, I’ve helped my clients circumvent the myriad of lawsuits that seem to stem from one simple location — the security deposit. Of all the litigation that could possibly arise from the landlord/tenant relationship, this single factor has caused the most grief for the former. The argument mostly comes down to what is considered normal wear and tear, and what is considered excessive damage. Who is responsible for these damages? Luckily, we have the experience to protect the best interests of our clients. Here’s what we do to ensure that your investment, and your reputation, remain in good condition.

As a rule, property owners are responsible for normal wear and tear. This means that as a landlord, you may not use your tenant’s security deposit to perform routine maintenance or repair damage related to normal use. For example, if it’s your policy to paint or clean carpets between each move-out and move-in, that can’t be taken out of the renter’s’ security deposit. The trick with this language is that it’s fairly open for interpretation — just like there’s no baseline ‘normal’ standard for most things in life. A good metric is to consider whether the damage was caused intentionally or through reckless behavior, or if it’s simply from normal use of high-traffic areas. For example, small nicks and chips in paint on the wall, small holes from nails and pins, loose grouting and bathroom tiles, faded or thin carpet from foot traffic, or sun-faded curtains or lampshades are considered normal wear and tear. These things would have happened no matter what tenant was in your home, to a certain extent.

Alternatively, tenants are responsible for excessive damage. This damage is typically caused by abuse or negligence. In these cases, it’s perfectly acceptable to withhold some or all of the tenant’s security deposit to reasonably cover the cost of repairs. A few examples of excessive damage include large holes in the walls, broken windows, removed or missing fixtures, water damage on the walls from hanging plants, doors removed from hinges, or appliances malfunctioning from improper use. While much of this may seem like common sense, I’ve learned through experience to not take chances when it comes to ensuring that your property is protected.

Minnesota happens to be a tenant-friendly state as far as the courts are concerned, so it’s important to be extra vigilant. Especially with the language written in the state statute:

The landlord may withhold from the deposit only amounts reasonably necessary:

  • (1) to remedy tenant defaults in the payment of rent or of other funds due to the landlord pursuant to an agreement; or
  • (2) to restore the premises to their condition at the commencement of the tenancy, ordinary wear and tear excepted.
    • (c) In any action concerning the deposit, the burden of proving, by a fair preponderance of the evidence, the reason for withholding all or any portion of the deposit shall be on the landlord.”

For this reason, your best friend will always be ample evidence of the condition of your property. The burden of proof is on the owner. That’s why I always advise our new clients, or current clients bringing us new properties, to take photos independently of the condition of their property before anyone else has the chance to touch it. Of course, we always take photos of the property before any tenants move in, sometimes even upwards of 100. That’s also the time when we do a walk-through before the tenants move in. We have a thorough, room by room, floor to ceiling checklist that allows us to document the condition of your property in its entirety, and the tenant signs off on it. We repeat that same process when the tenants move out. This way, the risk of a lawsuit or complaint is mitigated. Even in the event charges are brought about, you’ll have enough documentation to make a strong case, including documentation that the tenant was present and agreed with the damages listed in the walk-through process. Additionally, doing walk-throughs with the tenant sometimes helps add a level of accountability that can dissuade them from doing something irresponsible and potentially damaging to your property.

Since protecting the best interests of our clients is our number one priority, we offer quarterly furnace filter changes and property walk-throughs, so we can help identify any potential lease violations or maintenance concerns before they become irreparable. Prevention, in our opinion, is always better than avoidable and expensive repairs. If you want to hear more about this optional service, contact us today at 952-893-9900!

[Image credit: Tax Credits]

6 Tips for Advertising Your Rental Property [Infographic]

6 tips for advertising your rental property (1)

Finding the right tenant for your rental property can be a challenge. These 6 tips can help you understand how to advertise your property to attract a great selection of renters.

1. Take awesome photos. Good photos can help bring your property to life, finding the best angles and showing off its best features. Try to make sure there are at least eight photos of your property, including a few exterior shots. It may be worth looking into hiring a professional.

2. Include a floor plan. Understanding the layout of your rental property will allow potential renters to visualize the space as their own.

3. Include details about local amenities. If your property is conveniently located near to schools, hospitals or shops, then say so. Features like quick access to public transit and shops can massively increase a property’s appeal.

4. Know your audience. Look at what types of property appeal to which kinds of people. For example, If your property is located in a student area, then tailor your message to emphasize the requirements you believe they will prioritize.

5. Be realistic about rent. Charging too much for rent can result in extended vacancies, leading to a loss of profit. Conversely, charging too little for rent can make you miss out on your max ROI.

6. Hire a management company. When you work with a property management company like Simply Residential, they handle the advertising from strategy through execution, leaving you with more free time to enjoy your earnings.

Advertising is key to the success of your property investment — make sure you’re doing it right! If you have questions about how to market your property, or want some help getting all the steps right, let’s talk: 952-831-5300!

Pets in Your Rental Property: Lovable or Liability? [Infographic]

Pets Infographic SRPM (4)

Whether or not you should allow pets in your rental property is a big decision. On one hand, irresponsible pet owners can cause more than their fair share of damage, and even well-behaved pets can have bad days. On the other hand, allowing pets in your rental home opens up a larger variety of potential tenants, and allows the property owner to charge more in monthly rent and in pet deposits.

At Simply Residential, we’ve worked with homeowners who allow pets, and those who don’t. This question comes up often. While we don’t have an official stance either way, we have found some helpful research. The infographic to the right details the current state of renting to pet owners.

Minneapolis and St. Paul are considered among the top 25 pet friendly cities for renters in the country, although comparatively fewer rental properties allow pets than there are renters who own pets. One of the most important things to remember when considering, or reconsidering, your pet policy is the anticipated amount of damage. This damage and the associated costs are often offset by a pet deposit and monthly pet rent. That information will tell you what the best and worst case financial situations will be if/when you decide to allow pets in your property.

To get a better understanding of what those numbers look like, contact us! We’re happy to discuss the pros and cons of renting to pet owners. Call us at 952.893.9900!

This article was originally published in Simply Residential Property Management Magazine.

3 Key Benefits of a Property Management Contract

property management contract

As consumers, we’re used to seeing ‘no contract’ as a benefit. Many of us even have our own horror stories about service contracts we’ve signed in the past — whether that’s for cell phone service, massage or beauty services, joining a gym, or simply getting water delivered to your office. Believe it or not, there are certainly still situations in which a contract is not only helpful, but necessary. It’s important to think critically about this concept when you’re making purchasing decisions — the first question you need to ask yourself is who is truly benefiting from the lack of contract, the consumer or the vendor?

When it comes to big purchases and big decisions, especially in the case of investments, you should take every precaution to ensure you’re protected. Your home is arguably one of the most important investments you’ll make, and it’s always in your best interest to protect that investment as well as you can. If you decide to work with a property management company and don’t sign a management contract, how can you really know that they’ll live up to your expectations and fulfill their duties and commitments? Before you make that decision, I want to tell you about three key benefits of entering into a contact with your property management company.

Protection

There’s a strange phenomenon between some property management companies that operate in Minnesota where they charge rental property owners the first month’s rent when they begin managing a new property as a placement fee. That’s not typical for the industry. Without a contract, especially if you’re paying up-front fees, what’s the company’s incentive to truly take care of your property? If you don’t sign a mutual agreement, you’re unprotected and so is your investment. Just like any big decision you make, especially one that relies on the promise of future services, it’s good business to get it in writing. You can hold your service provider accountable for the promises they make when you have them in writing, which leads me to the second benefit.

Accountability

Some property management companies run their sales process like politicians run their campaigns — they’ll tell you what you want to hear, but there’s no actual obligation to deliver. When you enter into a contract, the benefits and services promised are guaranteed in writing. That allows the property owner to hold their management company accountable for what they said they’d do. If you don’t sign an agreement, it doesn’t matter what was promised to you. If it’s not in writing, it doesn’t count — plain and simple.

Clarity

Deciding to rent out your property can be confusing, especially if it’s your first time. There are a lot of considerations that need to be made and some that aren’t immediately apparent. Your management contract should function as a guide through the process — what concerns can arise and how they’ll be dealt with. This will also help you decide what maintenance you want your renters to be in charge of, like mowing the lawn or removing snow, and what you want to take care of yourself or have your management company handle, like blowing out your sprinkler system or changing your furnace filter. When these considerations are put in writing, there’s no room for confusion.

While not being locked into a contract may be a benefit in some situations, it’s irresponsible to not sign one with  your property management company. Especially if you’re paying them up front costs for the promise of future services. In many cases, you’re not going to encounter trouble, but is it really worth the risk of being unprotected in the event something goes wrong? Personally, I’d rather be protected.

If you want to hear more about our property management services, give me a call and let’s chat: 952-831-5300!

How to Maximize Your Rental Property’s Curb Appeal

curb-appeal-residential-property-management

It’s common knowledge that first impressions are important, and that you never get a second chance to make it a great one. This fact holds true for your rental property as well. When prospective tenants first arrive at your property, many will have already made a decision about whether or not they like it by the time the get to the front door. While having a warm, welcoming interior is a must, your property must also have a certain degree of curb appeal to inspire potential renters to get inside in the first place. So, how do you up your curb appeal? Here are a few easy steps.

Clean Up Your Act

A clean rental property is a happy rental property! When considering your curb appeal, take a the following into consideration: Is your property in need of a new coat of paint? Do the windows need washing? Is the lawn trimmed to a level that makes your property look lived in? As simple as they are, these factors can mean the difference between a tenant walking away or putting down a deposit there and then.

It’s OK to Be Garden Variety, Sometimes

Not all of us have green thumbs, but if you happened to be blessed with the talent, having a garden at your rental property will make it look beautiful to future renters and will also add value to the property itself. Bright flowers, an open garden plan and a well maintained lawn can all go a long way in ensuring those viewing your home can see themselves living there. If you’re less inclined to garden, simple hanging plants or even some cool new landscaping can also improve the perception of your property right off the bat.

Don’t Keep Up with the Joneses

While you can make the exterior of your own property stand out with just a few quick improvements, it’s more difficult when it’s your neighbor’s property that stands out for the wrong reasons. Sometimes you’ll have a neighbor that finds stray auto parts and yard gnomes to be the cutting edge in exterior design. There’s not a lot you can do in the way of improving their taste in decor, but you can find a way to help detract the attention of your prospective tenant from the neighbor’s home to your own. If it’s truly terrible, you may want to consider erecting a partition or fence to help block the view from your yard.

The Rental Property Golden Rule

On the same ticket as ‘treat others how you’d like to be treated’ — make your rental property a place that you’d enjoy renting yourself. Remember, the same reason this property seemed so appealing you in the first place could be the same reason tenants want to live in it. When trying to increase your property’s curb appeal, think of what would make it more enticing to you. A garden chair swing, hammock or built in barbecue could add that extra allure to prospective renters.

Deciding how much time and money you spend on your property’s curb appeal is up to you, but my experience in residential property management has taught me that the more time and care you put into the exterior of your rental home, the more appealing your property is likely to be. If you’re wondering if updating your landscaping or sprucing up your paint job would be helpful for your rental, I’m here to help — leave a note in the comments or give me a call at 952-831-5300.

Love our blog content? Subscribe to our digital magazine for even more information and fun facts!

 

How Do You Determine the Value of Your Rental Property?

determine the value of your rental property

When renting a property, deciding how much to charge for rent can be deceptively difficult. Sure, charging more than surrounding properties might pay off if you own the most desirable property in the neighborhood, but this can drive potential tenants away. Remember, while you’re looking to turn the most profit, tenants are looking for the best property, at the best price. The decision to rent out your home is a business decision at its core. As with any business, your pricing strategy affects everything. If it’s priced too low, you’re not getting the maximum ROI, and it can negatively affect the perception of your property to prospective tenants. If it’s priced too high, you run the risk of it sitting vacant for an extended period of time, effectively preventing you from making a profit at all. Finding a balance that’s fair to owners and to tenants may be trying, but there are a few key points to consider that will help you in the right direction. Whether or not you’re working with a property management company, it’s important to know how pricing works so you fully understand what your potential return will be.

Free rental property analysis

Location, location, location.

One of the most important factors to consider is where the property is located. Look at surrounding properties to see what kind of rent they are charging. Try to keep track of which properties in your area are being rented quickly and which are sitting dormant, and try to figure out what differentiates them. Of course, the desirability of a property is affected by its proximity to local amenities, such as schools, transportation, local attractions, and hospitals. The closer a property to these facilities, the more youcan justify adding to a rent. This is one of the key benefits of working with a property management company like Simply Residential Property Management. We know the market and are always up to date on the latest trends in the industry because that’s our job. Our clients don’t worry about all the leg work, we find the information and explain their options to them.

Seeing is believing.

A good view can greatly increase the value of a property. Looking out over a garden or field, a property will feel more enticing to prospective tenants. Meanwhile, a property that faces a parking lot or a highway will sometimes struggle to justify a higher rent.

Extra, extra!

When considering how much to charge for rent, extra storage space, a washer and dryer in the unit, central air conditioning, a fenced in yard, balconies, being pet friendly and off-street parking can all help justify adding a few extra dollars. Prospective tenants will likely have seen several properties, and many will be willing to pay that little bit extra for the added benefits your property has to offer.

Try to find a balance.

If your listing is over 21 days old, despite regular viewings, then it’s time to consider if you have been asking for too much. While it’s tempting to leave a high rent rating on a property in the hope someone will snap it up, tenants are more likely to continue looking than settle for somewhere they feel is overpriced. Likewise, if you set the rent too low just to attract potential tenants, you’ll feel the pinch further down the line when you aren’t experience the greatest possible return. Also, it could negatively alter the perception of your property, or attract tenants that aren’t the best quality. Working with a property management company in this respect is also a huge benefit. They have the resources to do more marketing and thoroughly screen renters before they’re offered a lease.

Know your market.

There are very few properties on earth that will stay the same value forever. When you set your rent, remember that this will be liable to change according to the current property demand. If you leave the rent at a higher price during a dip in the market, then your property will be seen as overpriced in comparison to those around it. If you keep your rent at the same price when everyone around you is raising theirs, you could be missing out on the chance to increase your overall yield. There is no such thing as a set-it-and-forget-it rental price.

Remember what’s important.

The most important thing to remember is that each decision you make regarding your property is first and foremost a business decision. Your property is an investment, and so turning a profit is the most important aspect of your role as landlord. Many property owners, especially those with large mortgages or construction loans, do not see an actual profit until they sell their property or until they have owned the property long term. If the property is not helping you pay down your mortgage, reap tax benefits, or if it isn’t putting money directly in your pocket, you need to reassess the amount you charge as a rent or potentially refinance your home. This is yet another instance where working with a property management company is beneficial. Think of that relationship as a business partnership — at Simpy Residential we’re connected to many realtors, financial advisors, insurance agents, and even lawyers. When our clients need advice or help, we have a strong network to refer them to so they know they’re working with someone they can trust.

If you’re sick of self managing, or if your property management company isn’t doing everything they can to increase your ROI, it’s time to think about making a change. It all starts with the basics — understanding what your property is worth and how much a property management contract will cost you over time. If you want to take that first step, get your free rental analysis today!

To Our Clients: A Letter from the President

Ron Huckabee President Simply Residential Property ManagementWe are very thankful for each of our clients and associates. Your loyalty over the past seven years is much appreciated. 2014 was a transitional year with many positive changes. Our new look supports that 2015 is proving to be even more exciting! We have introduced more services. Allow me to name a few rolled out in the first quarter:

New Monthly Magazine! Our monthly magazine is created with the intent to educate our clients and partners about industry related information and trends.

Customer Satisfaction Surveys! We know we can’t be the best-in class property management company without your feedback! Expect to see a survey upon completion of all maintenance related work orders as well as twice during the lease cycle. The input from you via surveys ensures our ability to continually deliver top-notch service.

Complimentary Preventative Maintenance Walk-Through! In an effort to keep your property up-to-date, our Maintenance Team performed a review of your property early this year. This review resulted in a report back to you with recommendations on maintenance and updates that should be done right away or at some point over the next 12 months. Our goal is to help prepare you with a plan for repairs/updates over the next year versus having to worry about maintenance costs all at once. We’e being proactive, instead of reactive.

Increased Rents! Over the last seven years our economy has realized many ups and downs leaving many owners reluctant to raise rents for fear of losing a tenant. In the past year, we have focused on bringing all properties to fair market with great results. In completing a full market analysis on all properties that are due for renewal, we have raised rents anywhere from $50 to $300 per month. This focus has increased cash flow and profitability for many of our clients. We foresee more opportunity with this in the coming year.

The Property Management business has many moving parts. From marketing, leasing, maintenance, accounting to legal… I couldn’t do this without a great
team. I’m proud of each employee as they all work diligently to help provide best-in-class service day in and day out. Our upcoming magazines will introduce each one of our team members so, be sure to watch for that in the months to come!

I personally appreciate your business and the opportunity to serve your property management needs. If you want to stay up to date with the property management industry, our magazine will provide a higher level of communication with regards to new services, seasonal nuances, market conditions and trends. Subscribe here today!

If you have questions about your rental property, or want to learn more about the additional services we provide for our clients, call me and let’s chat: 952-831-5300.

Protect Your Rental Property by Being Proactive With Maintenance

Property-management-postit-scrabble-to-do

One of the toughest parts of owning a rental home is keeping your investment in good condition and looking good through the normal wear-and-tear of tenants. That’s why homeowners who rent out their homes will often perform basic upkeep tasks like painting and cleaning carpets between tenants. When faced with a property that isn’t rented, take that time to evaluate your property and determine what projects need to be tackled before the new tenants move in. Making a list of necessary repairs and replacements is a great way to keep this information organized and keep yourself motivated. If you’re using a property management company, making a list for them is a great way to hold their team accountable and keep yourself in the loop.

Who is moving in?

It’s often helpful for homeowners to consider who their usual tenant is or will be. For example, a three bedroom house is more likely to rent to a group — whether that’s a family or college students. A studio will more likely be rented by a single person. This information can help guide your decisions, because it will tell you how much wear and tear you can potentially expect. Each type of tenant will use a home differently and it will help you decide where it is important to spend money. Families tend to be financially secure, long-term tenants, but they can be damaging the property. After all, children aren’t known for their tidiness. If this is the case, consider replacing worn-out carpets with laminate creates flooring that cleans easily and is very hard to damage. It might not be worth the extra expense to put in hardwoods, since they can be damaged by kids. College students are notoriously hard on rentals, but some of the damage can be mitigated. Set the home up with hard to damage flooring like laminate or tile. Pins and nails can be a pain to fill in and students love to decorate their space, so put poster strips in the bedrooms and state in the lease that they are not to hang posters in the walls, only on the provided areas. Single professionals can be difficult in their own way. While they often are not as rowdy as their young student counterparts, they are often gone for large portions of the day, and sometimes even travel for weeks or over weekends. It might be wise to invest in a quality security system to make sure that the rental doesn’t suffer from damage due to theft or vandalism since the somewhat absent tenant can make it attractive to criminals.

What areas are used the most?

Take a look around the rental itself. How is it faring? Go back through your records and see if there is any one area that is a repeated problem. Sometimes putting a little extra money into one section of your rental property makes sure you save on costly repairs and service-workers later on. For instance, if the home is a family rental and the dishwasher keeps needing repair, it might be worth investing in a high-quality new dishwasher since families will inevitably use one heavily. Along the same lines, if the multi-family home keeps destroying the grass, try looking into a stone patio to minimize lawn space without minimizing the outdoor space for the families to use. If you work with a property management company, you will be able to bounce these ideas off of a maintenance specialist who can tell you whether or not you should invest in these kinds of changes.

When should you assess the property?

When a rental is empty, it’s a good time to truly assess its condition. Walk through and make a complete list of any and all cosmetic damages. Use all the appliances and make sure they are functioning properly. Note any plumbing or electrical issues that need to be addressed. If the property has a lot of damage, don’t simply blame bad tenants. Take a look at the quality of materials being used, and add it to the previously asked questions. If the home is not really set up to handle a large family, even though it’s attractive to them, make a note of that.

In a situation where the rental isn’t set up to withstand the market it attracts, you have two choices. The first is to screen tenants and select someone that will better suit the home. This can cause problems since it narrows the pool of potential renters and can lead to the property sitting empty. Or, you can make a budget, hire a contractor and re-finish the home with new materials that can withstand the tenants that the property attracts. With this option, you have to make sure that how much you budget will be absorbed into the rent to make sure you don’t lose profit, but rather gain it over time. Whichever one you choose, making the changes will make sure your rental looks good and wears tough for tenants to come.

At Simply Residential Property Management, we frequently advise our clients on how to get the most ROI for their rental property. We believe that there is no point in owning a rental property if there’s no profit to be made. If you have questions about how to improve your investment, or just want to bounce around some ideas, give us a call: 952-831-5300!

3 Ways Our Quarterly Furnace Filter Change and Lease Violation Check Programs Protect Our Clients

Why does Simply Residential Property Management offer a quarterly furnace filter change and lease violation check program to our clients? Because it helps them stay informed and protected, and helps us identify potential maintenance issues before they become emergencies! Here are three specific ways this program makes a difference in the rental properties we manage:

3 Reasons You Need Our Furnace Filter Walk Through Inspectio (1)

1. They extend the life of your HVAC unit. The most common reason a heating and air conditioning system breaks down is a dirty filter resulting in a lack of airflow. In our experience, 86% of tenants are not willing to replace furnace filters or don’t believe that it is something of concern. Thus, signing up for this added service is important.

2. They’re a great way to proactively review for lease violations. As we are in the home, we will check for any lease violations that need to be addressed. Possible lease violations include unauthorized pets and other occupants not named on the lease (possible occupancy limit violations).

3. They help uncover unreported maintenance concerns. Many tenants are not proactive, or are simply forgetful, when it comes to reporting maintenance issues and/or concerns. Often times when we arrive at the home, the tenant remembers to report any issues so they can be quickly addressed.

If you would like these services for your property, give us a call today! You can reach us at 952-893-9900 or email our maintenance department at maintenance@simplyres.com.