All Forum Posts by: Greg Weik

I posted this on FB also, but I think it was a TL;DR situation, and/or no one really wanted to "go there."  :) 

If housing assistance, such as Section 8 is designed to help tenants, why not give them the funds directly? I'm open to the possibility that I'm missing something, please set me straight if that's the case. 

The current law in Colorado is such that landlords or property management companies are required to accept Section 8 tenants if the applicants are otherwise approvable. What this actually means is a lot more than just simply "guaranteed rent" for the landlord, as some might think. 

We have to complete an 8-page document and jump through all sorts of hoops to "get the money." 

For example:

-We have to accept direct deposit directly from Section 8. We manage over 500 doors and having rogue deposits into our rental account is a nightmare from accounting, bookkeeping, and efficiency perspectives. 

-We have to tell Section 8 Big Brother if we post an "eviction notice." Again, more work for us, and not part of our standard process, which leaves room for human error and more expense.

-We have to tell Section 8 if the unit becomes vacant. Not part of our standard process, more opportunity for error/non-compliance, more expense.

-We have to include Section 8 language in my lease. Our people are trained on our standard lease clauses, more error potential and potential for contradictory clauses. More expense.

-We have to have Section 8 inspect the unit prior to rental (despite other existing laws protecting the public, such as the Warranty of Habitability) - again, more headache for us, as we have to send an agent to babysit the inspector. Recently, the inspector was over 20 minutes late, we had to pull our Team Member to a different property, and the government agent could not comprehend why we could not afford to have an agent camped at a property indefinitely. More expense.

If you want to take my tax dollars and re-distribute them to others, fine. But don't take my money via taxes to redistribute it and then double-dip by also requiring my private company to jump through all of the above hoops. 

If you've ever run a business or had to make payroll, you understand what I'm saying. If you don't have this background, you may not understand why this is such a big deal to me. 

Keep in mind that this kind of red-tape actually prevents me from adding more jobs, which would, ironically, lead to fewer people needing assistance in the first place. 

If you're trying to help people, then simply help THEM- give them the money directly for rental assistance. Don't make it my problem too. 

There's more to this rant if you can believe it. Some context to what is going on in Colorado in the rental housing world -

What turnover work are you doing?  

Our approach is to list and show properties 30 days out if we believe they should be reasonably close to rent-ready (i.e., will need cleaning, carpet cleaning, minor issues) but if we believe there will be new paint needed, new flooring needed, or other work, we do not list the property until it's rent-ready. We get all new marketing photos/videos at that time as well.

Every few years (depending on tenants and condition) you'll have to bite the bullet and let the unit sit empty while making it rent-ready.  

If they are willing to sneak in a pet this quickly, they are not tenants you want to keep.  

Standard procedure is to post your state-specific notice of lease violation, and then perform a follow up inspection at the expiration of said notice, to determine if the violation is cured.  If it's not cured, then you can file an eviction.

That said, the pet can also magically turn into an ESA.  I'd suggest just riding it out, and non-renew their lease when it comes up for expiration.  

Curious - what was their credit score? 

We actually require landlords to include utilities when there are not meters for each unit.  There is no equitable way to split the cost otherwise. 

My advice is to include the utilities as you planned, but two things:

1) Do not make the utility charge a separate charge.  Rent is rent - do not have rent as $X and utility charge as $X.  Logistically, this could make your worst-case-scenario of having to file an eviction, extremely difficult. 

2) You may consider adding a rent escalation clause at 3, 4, or 6 month intervals depending on overall utility usage.  Assuming you have a 12-month occupancy lease, you could indicate the rental charge can "reset" at periodic intervals based on utility usage.  Similar to an adjustable-rate mortgage.  Be transparent and share the utility bills so the tenants understand any change in rent.  Consider even dropping rent $25/month or so if utilities are used lightly. 

Good luck! 

I would echo the comments of others on here, but also add that there is no real money in property management unless you're in with both feet and you can scale the operation.  

It's a completely different world than anything else in real estate.  You have to have a mind for processes, efficiency, systems, and logistics.  If you don't, you will hate property management.  If you do, you will love it.  

Good luck! 

Correct.  Really, there are just not that many things you need to worry about in a given house.  

-Furnace/AC

-Hot water heater

-Appliances (stove, refrigerator, dishwasher, and washer/dryer if supplying those.) 

-Plumbing generally, but specifically the mainline that ties into the public sewer.

-Roof

-Windows

-Siding/exterior

-Electrical (not really a wear-and-tear item, but a good inspection will tell you what you're working with on the home and whether it needs to be upgraded.) 

Other things I would generally lump into the "minor repairs" category: things like garage doors, garbage disposals, sprinkler systems, etc. 

I don't find the percentage approach to be particularly helpful when anticipating a property's maintenance needs.  What you really want is a probability and price analysis.  I.e., how OLD is this system (furnace/AC/hot water heater, etc.), what's the expected lifespan, and what's the cost to replace it if it fails?  

If you use this approach to repairs, and if you're conservative (and somewhat knowledgeable or able to research the average lifespan of various systems), you'll be a lot closer to reality than just tossing a percentage to the wall.  I manage hundreds of properties: some have no maintenance for years, and some have maintenance every month.  Gotta know the systems. 

Vacancy times are another one where clients often ask the wrong question, which is "what are your average days on market?" 

The right question is "what are the average days on market for my property, located here, in X condition, this time of year that will/will not allow pets."  That is the question you're really asking anyway, so just ask it.  :)  

Your management company cannot speed up the eviction process if that is what is going on.  

If smoking marijuana is illegal where you are, you should contact the police.  If it is legal, you should speak with your neighbors to try to work this out (this piece is absent from your post.)  

In property management, there are only two options to get rid of tenants:  1) Non-renew the lease, and 2) Eviction.  Both of those are slow-moving, but it is what it is. 

@John Woodington Your premise seems to be that all leases must start and end on the last day/first day of the month.  This is not the case, and I would strongly recommend always giving yourself a 3-5 day buffer between all tenants. Collect the first full month's rent at move-in (regardless of the day) and then the pro-rated days are due on the 1st of the following month.  This avoids having someone move in on the 29th and paying $30 to take possession of a property. 

You really never know exactly what you're walking into until you go in and do the move-out inspection.  We stagger lease end dates throughout the entire month, and at our scale, this is an absolute necessity. 

I do recommend that you give your outgoing tenants the contact information for vendors who you know will do the best work (cleaning, carpet cleaning) and give them every incentive to make sure at least those items are addressed. 

@Patrick Britton you may have spent $40,000 in property management fees, but that means you received $40,000 worth in property management services.  You didn't give that money away.  Your sleep, your sanity, your legal health and your pocketbook all probably benefitted if you had a good property management company.  

Property management only exists because it needs to.  Landlords need professionals to handle the myriad tasks associated with their rental, as well as professionals who acquire the knowledge and expertise to be truly effective.  The public needs to be able to trust that the home they are renting is safe and that any repairs, lease enforcement, and other issues such as their security deposit will all be handled ethically. 

I used to think it was a casual choice, whether a landlord elected to hire a property manager or self-manage. It's really not. While professional property management should provide solid ROI (including a return on stress and time), it also helps ensure public safety. That should play a significant role in the decision on whether or not to self-manage.