All Forum Posts by: Lisa Doud

Aaron,

  It is really your Property Management company, and or Your Real Estate Agent that is listing the property for you.  I have a Sales Agent here that has her licenses with my company, and I get her to list properties for Sale while I put them up for rent.  It worked out great for my last owners,  We only had the property vacant for 30 days and when the tenant signs the lease, the property gets withdrawn.    Some agents won't do it because they don't feel that they can sell a house as fast as a property can rent, however since you have had your property on the market for a while, you might be better off taking to your sales list agent and see if they are agreeable to having you hire a property manager and listing it for rent.  Also don't feel pressured to use the property manager in their company,  you need to shop around and find the right property manager that is a fit for your needs.

I am not going to speak for every state, but here in Virginia licensed agent (sales or broker) may manage rental property.  The only difference is the money has to go through a licensed real estate firm, which is required to maintain the escrow accounts accordingly.  I would suggest  you check the North Carolina here is the link to NC licensing law http://www.ncrec.gov/pdfs/studyguide.pdf

I tell all my potential clients that they need to ask these following questions of every property manager they interview and I suggest you interview 3-5 just so you know what you are getting in to.  

1. How much is your management fee, and what other fees can I expect?

2. Do you require a minimum Reserve? (minimum reserve is a designated amount of money that your property manager wants to hold incase the rent doesn't cover any bills).

3. Where are you going to advertise to get my property rented quickly?

4.  How is maintenance handled, can I do my own repairs, or do I have to use their preferred vender, and also ask if there is any mark up's on the bill...

5.  How do you keep track of the ins and outs, do you a property management software, or is done by pen and paper?

6.  When I should be getting paid?  

7. What happens if the tenant doesn't pay rent?

8. Do I have to sign a long term contract with this company?  

I always say that if you sign a property management agreement, it is kind of like marrying someone, it is easy to get hitched but  gets bad it is harder to get unhitched.

Michael,

Sadly you get what you pay for and I have never heard of any property managers coming down to 5% on a single family house.  

You say that you are under water, but what you have to look at is the tax perspective, if you hire a property manager and yo have an accountant that knows how to do a deprecation schedule the negative that you have on your property income will reduce your tax bracket thus you would possible get a larger return.  I had an owner go to japan and he was concerned because we had to rent the property for what his mortgage was and after paying me and having an accountant here do his deprecation schedule he actually broke even, plus when the hurricane came threw and blew his roof off I was here to get the roof replaced and he didn't have to worry about anything.

Also the quality of the property, location and list price of the house determines the speed in which the property is rented. I can have a 2300 sQFT beautiful house but if it is not in a desirable neighborhood it is going to sit there.

I think the best approach is just to let the tenants know what is going on, and you would like to fix this so that it won't be a problem and you will be upgrading the bathroom.  If the tenants think they will get something nice out of the deal you might not have to do as much as you think to accommodate. 

 I had a bath tub where the only thing holding it out of the crawl space was literally  the cast iron drain pipe.   I had a fully furnished apartment over my office that I was able to let the tenant stay in for the weekend, and we had the entire bathroom (new sub floor, new 2 piece fiberglass tub/shower unit, vanity, toilet and ceramic tile all installed in one weekend. She was so happy with her bathroom she didn't need any other compensation...  

I had been using Buildium for my property management software prior at Gallery of Homes Realtors In Virginia Beach, I saw how they charged you for every little service, for instance I believe we were at $125 a month for 99 units, and if you wanted your tenants to pay online you had the option of $.50 per transaction (5 day deposit to your account), $.75 (3 day post to your account) and $1.00 and, but what was even worse is if there were multiple tenants in the property.  For each tenant that paid online you were charged either the $.50, $.75 or $1.00 what ever your level you chose.  This would actually equate to 2.26 per unit or if you were at the higher scale it would put you at $3.26 per unit.  Also When it came time to filing the 1099's they made a big deal how easy it was,  all you had to do was hit the button and then there were transmitted to the IRS, but that ease came with a $15.00 batch feel and I believe that was $1.26 a per line each owner in the batch.   

Before I started my company in 2012, I did my research and I decided to go with Appfolio.  Their pricing is as far as I am concerned very reasonable for all that they offer. The Appfolio property management software runs $200 a month (they charge this for 1-200 units and it is a flat fee and has not changed in 2 years). I know they charge you a larger fee than most to start up, I believe I had to pay the $600, and another $400 to set up the electronic banking portion, but it was well worth it, because you are not charged anything else for those things. I also paid for their website services, (which was ok to start, however I don't like having to send my changes in and wait for them to take affect, so I took it back over ). The website set up cost me $1000 and nothing else.

As I started using the software I started reading how we could have tenants fill out applications online, and all we had was hit the convert button and we didn't have to go through the hole process of putting all the information about their families in as well. they charge $15 per credit report, and I was using background Info USA and they were the same cost, but I had to manually put all the tenant information in, and I just wanted to work smarter so I chose to discontinue using Background Info and go with Appfolio for the background. I am very glad that I did that, because we do all our screening through Appfolio, which uses Experian for credit checks, and we also report to Experian Rent Bureau, which records lease dates, owed balances, and also can help boost or drop a credit score based on the tenants payment history. This has turned out to be such a wonderful tool because tenants are coming back to me paying debt because they can't get the apartment they want because their outstanding balance was reported to Experian Rent Bureau.

So roughly the only reoccurring costs you have is $200 (up to 200 units) a month for the software, and $15 per each credit report that I run. When I left Gallery of homes I was sent the bill for the software, and I find it ironic that for the month of may 2012 (99 units) their cost was $249.00, But their monthly subscription costs was only supposed to be $125, but as you can see the extra were all the incoming and out going payments.  

Just when you are doing your research,

1.take a look at your growth,  I was only at 89 units  when I started with Appfolio and I now have 197 units. 

2.  Make sure that the company you go with does not have a static product.  You want something that will evolve and be enhanced as new technology is enhanced.  

3.  Ask people how easy the software is to use

4.  Find at least one company that uses the software and ask them if you can call for advise if you are having trouble (preferably in your same time zone) A lot of the PM software companies have a 24 hr wait on support, so you either have to go to their support page and read to find your answers, or find a buddy you can call.

 Most of the time the banks just want to fix them up to be habitable enough for the current tenants and package it as a investment property with paying tenant.  We don't flip houses for the bank, if a property is beyond livable, I find a different property that the family would be agreeable to move in to and let the bank sell it as is with no repairs.  

Hi Ryan,

  I started my company June of 2012, and I had been using Buildium for my property management software prior to that at Gallery of Homes Realtors In Virginia Beach,  I saw how they charged you for every little service, and I knew I didn't want that with my company.  I did my research and ended up going with Appfolio.  

To answer your questions It doesn't matter what kind of software you are coming from they are going to tell you to export your data and fit it in to their google spreadsheet.  Since I was a new company, I didn't have to import any historical data, but I had download the data from Buildium, copy it in to the Google Spread sheet and submitted to the Transition team, and they put everything in for me.  

Their pricing is as far as I am concerned very reasonable for all that they offer.  The Appfolio property management software runs $200 a month (and has not changed in 2 years).  I know they charge you a larger fee than most to start up, I believe I had to pay the $600, and another $400 to set up the electronic banking portion, but it was well worth it, because you are not charged anything else for those things.  I also paid for their website services, (which was ok to start, however I don't like having to send my changes in and wait for them to take affect, so I took it back over ).  The website set up cost me $1000 and nothing else.  

As I started using the software I started reading how we could have tenants fill out applications online, and all we had was hit the convert button and we didn't have to go through the hole process of putting all the information about their families in as well.  they charge $15 per credit report, and I was using background Info USA and they were the same cost, but I had to manually put all the tenant information in, and I just wanted to work smarter so I chose to discontinue using Background Info and go with Appfolio for the background.  I am very glad that I did that, because we do all our screening through Appfolio, which uses Experian for credit  checks, and we also report to Experian Rent Bureau, which records lease dates, owed balances, and also can help boost or drop a credit score based on the tenants payment history.  This has turned out to be such a wonderful tool because tenants are coming back to me paying debt because they can't get the apartment they want because their outstanding balance was reported to Experian Rent Bureau.

I can honestly say that there is no one calling my office and trying to get us to use different add on services that they have, but they will send out an email and if you are interested in it  then you call them, which is what I did when we started Tenant liability insurance.  We actually implemented tenant liability insurance with appfolio because we had a tenant caused fire in a property and after all was said and done the owner's insurance company went after the tenants for the fire damage, and they did not have the money to pay it.  Appfolio charges $9.50 for every unit covered, but when you have a stupid tenant that doesn't hear a toilet running all night and wakes up to water through the entire kitchen and bathroom of her apartment, that is what it is for.  They paid out the claim and we never called the owner's insurance company.  

So roughly the only reoccurring costs you have is $200 (up to 200 units) a month for the software,  and $15 per each credit report that I run.  When I left Gallery of homes I was sent the bill for the software, and I find it ironic that for the month of may 2012 (89 units) their cost was $249.00.  

The only negative that appfolio tells you that the electronic bank set up only is for incoming transactions and does not go for paying out owners.  But that also includes Multiple bank accounts, ( main operating accounts, and Security deposit accounts), and also Credit card processing, 24 Hr Cash payments with 7-11 and Ace Cash advance.  

If you have any further questions just let me know.... As I said we have been using it for 2 years and have been thrilled with all the new tools they have implemented and not changed our pricing structure.   

Sorry for the slow delay I didn't realize that you had posted a question to me.  

What I do with City National Bank, all the Rent that I collect is my Funds to work with for any repairs or maintenance. Since that bank is in the foreclosure process they have me hold all the funds and wait until more properties come in. Off the top of my head I have about 6K sitting in my escrow account now for any large repairs or small ones that need to be done. It is a very wonderful relationship for the bank because they don't have the nightmare of managing the unit or worrying about did the grass get mowed, or did the repairs get don. The bank loves the fact that no one is coming to them screaming about getting paid for services to an REO property, and they don't have the accounting software to handle payment for repairs and maintenance. All they tell me is when it goes to closing, I send a letter to the new tenants that thee property has sold and to wait from instructions as for payment from the new owner.

When you have REO foreclosed properties that are tenant occupied, you have to remember that a lot of the times the reason why the owner's are in foreclosure is because the owners have been missing rent payments from tenants, or the owners are slumlords and used the rental income on something other than the property.

 I have walked in to one property in the middle of winter here I believe the high was around 20 degrees that day, and apparently  the owner told the tenants he was installing a new package unit prior to the foreclosure, and pulled off the unit leaving the giant opening to the outside where the cold air was running through the duct work through the entire house.  The tenants were using space heaters and covering the ducts, but their electric bill was over $400 a month.  

I got a phone call from one lady after she contacted the bank because she didn't know who to call she had not had hot water in 4 months.  Apparently the thermocouple went out and the owner keep telling her the part was on order.

My favorite one was I walked in to one property and I found it very odd that the front door was unlocked in a very shady side of town.  I started looking around and someone had enclosed the arch ways and added a door between the main entrance/ hallway and the living room, but what fought my eye is that on that make shift door there was a key lock on it, and it was locked.  I continued down the hallway and found that there was another closed off area with a doorway and a lock door.  I found the kitchen and I just had to double take because I thought i was seeing something wrong, but the key insert portion of the door know in the kitchen was facing in the kitchen.  It wasn't locked and when I opened it I woke up the person that was living in the Laundry room and he told me he Paid his $100 for the month of rent and I couldn't be in his room....  it was at that point I realized that the person on the lease was only supposed to be paying 800 a month for a 3br house, she charged rent to all the other rooms in the house, including the living room and dining room which she turned in to bedrooms.  Talk about fun trying to evict them,  when I scheduled the eviction I explained the situation and they sent a crew of 4 deputies over which had to remove all the occupants that were not on the lease..

You are missing the most important information on here.  What is the current rent roll not rent income how many vacancies, and what is the adverse market rent for the units in your area.  You can't begin to understand if this is a good deal until you know where those numbers are and if there is room to improve.

I had an owner purchase a 20 unit apartment building in Norfolk and the purchase price was 829k, but it was under managed, there were 4 vacancies, and the expenses were outrageous.  When I took over in August 2013 income for that month  was $7,858.00 (not including the mortgage payment).  This year I was able to reduce the trash bill by about $300 a month, converted each tenant to my new lease and had them start paying their own water bills, rehabbed the 4 units that were vacant, raised the rent in at least 50% of the units, and I just cut a check to the owners for August 2014 as $10,587.00. 

@Marcia Maynard is right on when she stated Stated you have to start out with very direct and clear expectations.  About 2 years ago I had a property that had a large rent of $2700 a month, and they had issues with paying rent.  All I wanted to do was collect that rent, and I would talk to the owner and relay their sad sob story that they told me and the owner was a nice guy and waived the late fee.  So after a little longer we ended having to go to court because they vacated in the middle of the night.  They told the judge that they were never late because they never paid a late fee.  It was obvious that that was an inaccurate statement based on the fact that you could look at the Tenant ledger and see the date they paid rent and anything after the 5 was late.  I won the case, however the judge suggested that if someone is late you have to charge some sort of late fee even if it was just a $1.00, just to show it on the tenant ledger.  

By allowing the tenants to pay rent without a penalty, you are not putting a precedence on paying rent, which i believe it the problem that you currently have.  If you want them to change and pay rent on time you have to make it "hurt" in the wallet before you will get some action.  

I also have a habitual lateness clause which states that if a tenant is late 3 consecutive times the rent goes up $30 to the end of the lease.  I know that sounds harsh, but when you are dealing with young people, you have to remind them that they don't need cable, electricity, or even water if they don't have a roof over their head.  Also if they call they can make payment arrangements with the utility companies and not always you.