Month: November 2021

2021 brought new challenges to long-term property owners. In January, I paid 10% additional costs to turn-over (rental move-out and re-lease) for necessities such as paint, new carpet, and basic light and plumbing fixtures. At year’s end, landlords need to anticipate into the mix:

• locating available contractors,
• higher rents due to a housing shortage,
• shorter timeframes in which available housing units await new tenants
• advances in technological innovations remote management easier (Zillow’s ‘average’ rental price, doorbell monitors, clandestine door locks)

There is no need to panic despite these opportunities. The number one enemy of a long-term owner is a vacant rental. Conventional wisdom says your renter is anticipating a hefty price increase. The term ‘Inflation’ headlines every tweet, blog, and news podcast. As such, it is in your interest to make a win-win for both you and your tenant by keeping them in. Here are a few suggestions I tried this year:

1. Nearly 100% of my renters accepted a 2-year lease. This is a sign of the times. Not once in 2 decades of owning properties and managing them has this happened, ever. For them, it is means housing security. For you, it is delaying an otherwise challenging & costly make-ready turnover.
2. Provide them, in exchange for the higher rent, a new needed appliance, overdue repair, or, my favorite a stunning Kohler kitchen sink with a touch-sensitive, wi-fi enable faucet.
3. Don’t leave out your loyal and hardworking landscapers and regular maintenance crews who expect a raise. Anticipate this. Grant them this. It is in your interest to keep them (and keep them happy). Finding suitable alternatives may be an expensive and time-consuming option.

Finding Savings

Your bottom line should not however be disregarded. If your finances are stable, then everything else functions. Here are a few money saving secrets for your long-term rental.

a. Refinance your property. Baron will be saving over $600 monthly on just two properties. Rates continue to remain at historic lows. Until this year, Baron discovered leveraging multiple refinancing was a possibility.

b. Get new quotes for your hazard insurance. One property in a high-tax state demanded a 25% renewal increase even though I had been a long-term client. After scouring multiple sources and asking other property managers, I managed to obtain a 10% reduction in the prior year’s insurance price with a national carrier. (Secret: The zip code where you receive your mail is equally important as the zip code where the rental property is located.)

c. Be your handyman. When repairs or construction occur, be present and ask questions. Engagement with experts who work on your home opens more and better possibilities. This year, one contractor sought $1,600 to repair two small panels of a wooden fence. After politely telling him that I would get back to him, I purchased some lumber and a Ryobi air compressor. After a few mistakes, I managed to repair the two panels for less than $250. The result is that I now have a strong sense of accomplishment, and the squirrels can better navigate between the neighboring property lines. 

d. Last but not least, fire your property manager. This has always been a standing mantra of Baron Prop Mgt. Why give someone 10% and have them stand in between you and your tenants. Yes, it is scary at first to consider taking on this responsibility. However, if your ‘managed’ property is turning over, 1) visit the property on the move-out day of your tenants. 2) Call a Thumbtack handyman and walk the property. 3) Hand the contractor the keys after receiving an estimate, and be on your way to becoming an independent owner.

Baron welcomes any comments or suggestions or if you just need a little bit of coaching, feel free to write at info@baronpropertymanagement.com.

Of course, when all goes well with your vendor remedies become unnecessary. However, occasions arise when you are faced with engaging with an unresponsive, incapable, or unreliable professional. If you paid upfront for the repair refrain from legal action, initially. Baron suggests landlords employ the following remedies in an effort to minimize unnecessary lost time and money.

1. Immediately search and hire a new contractor. This puts you in control of the situation and may have the unintended result of shaming the first contractor. Hiring 2 contractors for the same job simultaneously (for example to see which one arrives first, or produces a higher quality estimate) is a good problem to have. Landlords can always thank the lower quality vendor saying they will keep them in mind for future work. Find and employ a 2nd vendor even if this is an insurance repair. The problem of resolving duplicate vendors outweighs stalled or poor-quality work.
2. Don’t worry too much about the lost time, paying a second estimate, or even paying the full price to someone who is unresponsive. Cut your losses. Move on. Once the repair is completed, most jurisdictions have a 3-year property damage statute of limitations for legal recourse. (although I do not recommend civil litigation due to the high hassle costs. Yes, it hurts to lose money, but sometimes it is the cost of doing business.)
3. Do the work yourself. YouTube, Hardware Superstore, and even neighbors can lend a hand. Don’t be afraid to ask. Painting-, Drywall, Plumbing repairmen are plentiful on local sites like Thumbtack, Craigslist, and HomeAdvisor (Angie’s List).
4. Explain the situation to the incoming tenant. Having them move into an incomplete is not ideal. If you have a good relationship with them, discuss alternatives such as seeing whether they can perform the repair and move-in at the same time, or a reduction in rent. Be honest. Let the tenant come up with an acceptable remedy.
5. Salvage any tools, supplies, and equipment that you have paid for. You may use them for the next job. Document the poor workmanship. Take photos using your smartphone. Obtain statements from others verifying the shoddy workmanship. Obtain a copy of your check or money transfer to the vendor which will document payment.
6. If you must fire a vendor, ask to meet them in a neutral area. Come prepared. If it comes to this point, they must be already expecting this, so be firm. If they become unhappy may litigate (unlikely), or place a lien on the house (also unlikely). Performance contact litigation costs them time and money, just like for them. If you wish to settle at that time, consider paying them in cash. Do not allow them onto the premises again, and also do not provide additional contact info. In my experience, it is better for you to control the time, place, and circumstances of cutting a vendor. Be firm. Bring a friend if you need to. Offer no second chances.
7. Most importantly, give them ‘an out’. They need to be respected. Tell them you changed your mind, or that your timeline changed, or you decided that you want to go another direction. Be honest. If they feel you are cheating them, or are unhappy with their work then moving from this point will be more difficult for both of you. It’s fine to have them hate you because of you being ‘fickle’ or ‘mercurial’, even if the real reason for the firing is due to something else.

Legal liability

Civil litigation may result. If the dollar amount is in the thousands, it may be worth it to document the poor performance. Have the new contractor take photos and explain deficiencies. * Remember, your homeowner’s insurance will cover these cases. Also if you have other insurance, such as an umbrella policy, send the service notice to them immediately. The most expensive part of litigation is not the payment of the work, but rather the court/attorney defense costs. Let the insurance pay for this.

Liens

Each jurisdiction differs in how to contest liens. Here are some important things to know: Firstly, investigate the steps and apply to contest the lean with the county. Often contesting is procedural and does not require litigation. If successful, then good. If unsuccessful, ask the county to provide the evidence presented to them, and thereafter, dispute this. Things to remember:

a. you must have a valid contract/agreement. (a written contract is preferable).

b. document any payments. If you paid them, send this info to the county records.

c. check the county records to see when the lien expires.

Contractor Certification – State Licensing Board

Often, skilled tradespeople have a certification board that handles complaints regarding their workmanship. File one if your vendor is licensed. Use the documentation in step 4 above for this purpose.

Better Business Bureau or if using a web app service, filing a complaint

The BBB has teeth with established brick & mortar companies. In my brief time as a landlord, I’ve received full and satisfactory resolution using this service. The BBB’s effectiveness lies in tenaciously asking the business questions about the specifics of the issue, and following through over time. An adjudicator takes up your case at no charge and works with both parties until resolution.

Thumbtack, HomeAdvisor, and other larger contracting applications are not as effective, but can sometimes push an unresponsive contractor to refund part of your money. Giving a vendor a 1-star rating followed by a detailed account sometimes does wonders.

Baron welcomes information you might share. Feel free to email at info@baronpropertymanagement.com.