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The COVID-19 pandemic strikes again. The housing market roared one year ago. Now weakness shows. The rental market (specifically, the demand for housing and the amounts charged by owners) followed this trend. At year’s end, demand for single family long-term rentals — while still at historic highs — appears to be slowing.

What quick gauges should one measure the inflation?

• Zillow’s rental prices on listed homes usually tracks with the 30 year fixed rate for 80% of the homes value.
• Another good index can be seen in the the 10 year government bond interest rate, which at the writing of this page hovers near 3.5%.

For lease renewals a virtuous landlord should also consider the benefits of retaining their current tenants. At the very least since the make-ready costs closely follow the economic trends: labor shortages, longer wait times for products, higher product and delivery costs.

In closing, before you as the owner take advantage of the generous increases your unit may allow at this point in time, you may wish to consider the softening economy, the heady ‘steam’ in the rental market and the time factor needed to turn your property to a new untested tenant.

One more piece of advice. Check to see whether or not rent control might limit an increase in your higher price. The one for Florida is listed here.

As always, feel free to hit Baron with any comments.

Hello Baroners: Should one ever have work done by someone sketchy? How comfortable are you with paying cash? Are there any pressing legal/tax or warranty issues?

It may not surprise many of you that qualified construction experts may not always have a bank account. Working with workers who provide a service to your home requires a few extra steps to ensure a satisfactory (or better) outcome.

First: Ask the contractor how he/she would like to be paid. I always front-load this conversation by stating early on, “Do you accept Zelle”. – If they accept this, it solves two major issues. The contractor knows you are a serious customer, and you have a pretty fair idea about receiving an invoice and ensuring you don’t have to run to the ATM upon job completion. * prompt vendor payment builds good relationships and makes for an excellent conclusion of work. * Baron also suggests never negotiating the price offered by the vendor. It is advisable to seek out a new vendor if any aspect of the offer is unreasonable.

If they accept cash only, there may be a good reason for this (other than the suspicion that the job may be ‘under the table’). There is no good reason to explore this with the vendor. However, the next statement from you should be something like, “I’ll probably need to go to the ATM to pay you.” As before, this sets the mind of the contractor at ease. A personal check may be another option based on your preferences.

Baron recommends a more thorough project explanation with any contractor so that both parties know what to expect. Ask about the completion timeline, the specific part name, his/her availability, and my favorite: cause/prevention/their opinions about how best to maintain the completed job. State-licensed individuals usually are worth the extra costs. However, if you both are satisfied after these discussions, then paying with cash is the least of your concerns.

Some property owners cringe at paying in cash. This is understandable. However, Baron’s experience — especially now with the shortage of qualified workers who can match your timeline — is that cash-only workers require a bit of extra work and should not be dismissed by this factor alone. Keeping records of the payment (screenshots of the vendor’s texts and even shots of invoices) is of greater value than overcoming the payment method. Baron recommends keeping an electronic folder with payment information for each property. ** Also, if the worker performs exceptionally, keeping their contact information for future work could save you time in the future. 🙂

Tax and legal issues

For federal tax purposes, records must be kept for several years. Also, the records must include information such as the vendor name, their contact information, the location of the work, the date, the costs, and ideally, a detailed description of the work performed and the parts included. * Big box hardware stores offer free ‘PRO’ accounts which allow the property owner to maintain surprisingly detailed invoices. That said, if you are wary about not receiving a ‘proper’ invoice, Baron suggests making one yourself and having the vendor sign “payment received” on it. (It may be that the vendor does not like the hassle of ‘writing’ or the chore of keeping records for small jobs.) In so doing, you will be able to keep the IRS satisfied and also save yourself from possible legal (warranty) implications down the road.

Perhaps individuals who ‘lord land’ must up their game. As a group, how does this group convince others of their past trials, traumas and tribulations, in order to gain ‘cred’. Let’s not forget, in the past landlords suffered greatly. The upbringing included horrific scars and bruises, until LLs came to a point where they.

Fast forward to the present where those who manage and own are nothing more benevolent and sanguine.

Of course, the set up for today’s article is fabricated. Still, like everything else, words mean different things to different people.

The following article from last year makes a strong case that the term ‘vilifies’ property owners.

https://www.dispatch.com/story/opinion/columns/guest/2021/06/04/roger-valdez-landlord-feudal-outdated-term-help-paint-housing-providers-villians/7476076002/

Still, it is something to consider.

Are we privileged? Probably.

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Should we do more to help those who are non ‘lords’? Absolutely!

Baron would solicits your thoughts. Drop a comment via email.

Until now, Baron blogged extensively about static- or traditional term leasing options for property owners. However, this focus on traditional leasing may have been short-sighted. ‘Hotel-like’ short-term rentals- and temporary property ownership transfer opportunities trend well in 2022. Below Baron outlines a few possible advantages and pitfalls of each of these markets.

hourly, daily rentals – AirBnB.com

If your home has a couch, and you manage to post it with an inviting photo, you may be able to rent it (just the couch), hourly. Expectations for accommodations continues to evolve, and these options are open in every neighborhood. Is this missed a rental opportunity some landlords would never consider, or simply a temporary social media phenomena? Baron encounters and ever-increasing group of satisfied landlords rave and rant about: meeting people, sharing experiences, and developing a social media presence with new market lessees.

payment upfront rental options – Scraye.com

Although several companies share the ‘cash upfront model, the main advantage is just that: It’s appeal is mainly for those needing a cash in a hurry. If a landlord searched and approved tenants, why wouldn’t it be better to cash-out the remaining lease term upfront (or for a small discount?) However, property owners should be aware of the disadvantages as well (see below):

• hidden surcharges,
• being locked into a 6 month, 1 year or longer contract.
• inability to screen tenants
• waiving rights to include/ or disallow leasing provisions
• negotiate exceptions/rent increases during the contract term
• possible secondary and/or tertiary subleasing of your rental

As a landlord, Baron recalls a negative final property inspection experience with a certain tenant who was screened and accepted years earlier by an ‘upfront-payment’ management company. Since Baron had no previous relation with the tenant during the move-in in, the outgoing turn-over-, years later did not go smoothly. The outgoing tenant sought the original company to mediate damages caused by the tenant. This is something to think about if a landlord ever desires to direct manage in the future.

sublease to others to manage – AirBnB and others

In this option, the expected functions of managing your property shift entirely to others. In exchange for these responsibilities, companies often guarantee income regardless of whether they locate tenants, handle cleaning/furnishing/turnovers and protect your property during transitions.
Rental insurance companies, on short notice, often need to find places for their policyholders. They will reach out to listings offering a sublease options. Making your property available to these firms provides guarantees for owners and those in need. It’s a win-win. Owners deal with a reliable company, help a family in need and the outgoing make-ready will be a smooth a silk: often including no-cost remodeling upgrades, and the ability to deal with a disinterested large company not willing to quibble about costs or unexpected exit timelines.

Considerations

1. Your comfort in allowing these attractive rental options. Would certain types of rental options cause anxiety? Would a live-in guest work well for your situation? What about personal timing in your life?
2. Do the math. Does it make financial sense?
3. Insurance. Is your homeowner policy silent or explicit on these matters? (certain pets, short-term rentals occupants)
4. Who pays utilities, taxes & other fees?
5. Home Owner Associations limitations on renters. City/Municipality limitations.
6. (to a lesser extent) your community relations. How would your neighbors react, and does this matter to you?
7. Ability to reinstate your ownership rights after the agreement is made.

Epilogue & closing remarks

As of the writing of this brief blog, both housing and rental markets are red-hot. Owners accept windfall profits when selling or leasing. Owners are able to raise both new leases and renewal old ones without objections. The market is changing. Expectations of leasing clients are also changing, and this reality will be a future focus in a forthcoming blog. However for now, life is good for owners. Baron suggests landlords consider and explore potentially exciting and flexible options of non-traditional leasing.

As 2021 ends, Baron Property Management conveys a few tips to make your current and future leases a bit more secure from malicious outside threats.

When purchasing our upgrading smart home devices for your rentals, be sure to:    

1. Do thorough research before purchasing IoT devices and select well-known, reputable, American-owned brands with good cybersecurity track records. Choosing generic or off-brand devices may cost less up front, but they may be more likely to have serious security issues.   
2. Do not choose devices with known vulnerabilities, limited security features, or poor consumer reviews. During your research, any mentions of buggy app interfaces, infrequent updates, or difficulty updating software should be a red flag.   
3. Avoid purchasing devices from the clearance section if they are being phased out, regardless of the manufacturer. These devices may belong to discontinued product lines or may be made by a company that’s going out of business. The device may stop receiving software or firmware patches and will be at larger risk of compromise.    
4. Avoid manufacturers and devices that are new to the IoT device market. Newer manufacturers may not have the same level of expertise and experience as well-established companies that have been producing IoT devices for years. Similarly, newly released IoT devices may pose risks due to rushed production or limited testing prior to entering the market.   
5. Before purchasing a device, review the user manual to ensure that it is easy to establish basic security settings like changing default credentials and enabling auto-updates. Opt for devices that offer multi-factor authentication (MFA), encryption, and regular software updates.  
6. Review the device’s terms of service and privacy policy to learn about how the manufacturer collects, stores, and uses your data on the device and any connected applications. If available, select a device that allows you to request your data to be deleted from the manufacturer’s servers. Mozilla offers a detailed guide rating the privacy of many popular connected devices.  

Remember fully disclosing all connected devices — including their maintenance and care — by specific lease references makes for excellent tenant relations. (It may also reduce any liability as a landlord).

I welcome your comments. Please email Baron at info@baronpropertymanagement.com. Happy 2022

Rents & property values increase. Renovation products and professionals now must be actively sought. Newer houses and apartments dwindle. Tenants, property managers, and owners desire to gracefully emerge from Covid-19. The inflation specter looms. Urban and suburban areas become more densely populated-with doorbell cams reaching near-ubiquity. These trends somehow managed to gain traction this year.
As such, Baron would like to share a few hopefully-helpful tips from the 2021 property management year in review.

• Renewing leases? Check Zillow or Redfin for current rental market rates

• Trouble locating make-ready or renovation professionals? Consider Craigslist.

• Your available unit on the market too long? Market to millennials.

• COVID-19 concerns? Wear a mask, consider allowing a self-guided tour, buy PPE for your cleaning staff. Be kind.

• Do your co-workers/tenants have COVID-19-concerns? Don’t sweat it. Be kind.

• Concerned with inflation? Refinance: again. Self-repair. Fire your prop mgr.

• Seeking additional rental income without buying additional real estate? Investigate AirBnB options or buy a prefab backyard tiny house.

• Fixed costs too high? Shop new fire insurance, question the county assessment, perform a cost/benefit analysis for new HVAC, water heater, etc.

• Worried about doorbell cams? Baron property management does not have a recommendation on this either way. However, you may be surprised how many videos of you exist.

Finally, BPM will share a story about something learned from another seasoned landlord. Every Christmas this individual would renew a hard-copy subscription of a home improvement magazine for each of his housing units. This was done in the hopes that the tenants would thumb through the pages, get ideas and keep the unit tidier. BPM would like to know what you think about this idea: Is it good or not-so-good.

Happy Holidays and a Wonderful 2021. As always, I look forward to hearing from you.

Baron Property Management

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.

as a way to differentiate yourself and your tenants

El Salvador now accepts cryptocurrency as legal tender. Whether the outcome of this policy succeeds in benefiting the Nation as a whole, time will tell. However, the country achieved two objectives sought by most property managers: 1) enacting this policy spotlighted the country’s desire to attract new sources of revenue, and 2) the policy differentiated it from everyone else.

So, as I sense your eyes rolling in the back of your head, I feel obligated to ask: Would you consider accepting Bitcoin (in addition to local currency) as a rent payment?

What if the process was efficient, made sense for your property, and allowed reaching new tenants in new markets who may otherwise not bother looking at your rental?

I’d be interested in your thoughts.

Baron always seeks \ new and better property management methods–especially ones involving interesting technology.

Should you sell or rent? With an average of 10 percent year-over-year residential real estate growth, it’s worth considering selling. Equally, the rental market, rocked by the pandemic shortages is nurturing unprecedented demand. Either way, property owners and management services remain (very much) in demand.

What happens when people telework instead of commuting? Home spaces have become more valued. People are bored. However, they must entertain themselves over long intervals inside your rental property.

The actual square footage matters just as much as the property’s geographic location since people are forced to spend 24 hours a day (every day) indoors. Yes, they are looking to improve their current situation, and this means the rental market is also in play.

A hot residential market also creates a demand for home improvement. Visited a Home Improvement store lately? The local news reports on shortages of grocery items, but fails to mention that unprecedented waiting lists and price increases in light-construction or handyman services. As I write this column, I am on a 3-week waiting list to have a professionally installed tack-strip in a recently renovated space. Baron advises new property owners to perform repairs themselves. Absent this, obtaining 3 quotes from vendors prevents overcharging (although in a hot market, your costs will increase due to high demand and scarcity).

This trend places a premium on homes with bonus features such as
* cleverly designed interior spaces
* fast and reliable internet service
* rooms with natural sunlight or painted in lighter shades
* landscaping or home-gardening opportunities
* clean and highly functional bathrooms and kitchens (for reasons mentioned above)

Zillow-lust
A new trend worth watching is online home shopping. Social media posts inadvertently make people fear they are missing-out if their current home is less-than-perfect. This discontent fuels the rental market as well. Your rental’s extra should be displayed prominently, in text, and in photos to attract millennial lessors.

Takeaways from an overheating residential market

Refinance as rates remain low
Avoid tenant turn-over as your time and costs to re-tenant will be high. (Consider a longer lease term, government stimulus may help avoid eviction)
As more tenants enter a high-demand rental market (in a soft economy), screening becomes imperative
If you have a turn-over and refurbish the unit, considering the ‘now’ and ‘future’ market, pass along turn-over costs to the new tenants.
If you sell or cash-out your property, be prepared to wait until market conditions change

As always, Baron welcomes your comments and contributions. Thank you.