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Three Interesting Housing Articles(1) I found these very interesting housing articles recently published. BofA developing foreclosure rental programs to deal with distressed properties-BOA, Fannie and Freddie are trying to figure out how to move some of these non-performing mortgages or worse these REO properties that they own. Banks have an estimated $50 billion worth of REOs on the books right now. The thought is that banks may rent the house back to the people that lost it to foreclosure. They would do a short sale on them to an investor and rent it back to the previously owner. Interesting, but I think some of these people need to downsize and move out. Plus the emotional attachment to the house has to be severed. As a landlord, you can’t have someone remodeling their bathroom because they still regard this house as theirs. Residential Housing Ready to Awaken-As we have seen over the last 5 years, you get 50% of the “experts” saying we are in a recovery and 50% of the other “experts” saying we have time to go. This article suggests that some of the important pieces are falling into place for a 2012 slow, but steady recovery. How Can Renters Solve the Housing Crisis-This article perfectly articulates what my customers have been seeing over the last 5 years. The market is going to recover, put your money in rental properties, and you will see a gain. The mindset of people has shifted. It is OK to be a renter and not a homeowner. |
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Cheap Locks and Such(7) **Update: See the below comment from EG, who tried these locks. In retrospect, I was wrong on this article. Paying more for locks is the smart thing to do, because I have found that the front doors on my rentals take a lot of abuse. A cheap lock is going to just result in many services calls.** So even after being an investor for this many years, I still learn something occasionally. It can either happen because the world has changed or maybe my view of the world has changed. This is a small one, but it was definitely a Homer Simpson “Duh” moment with the traditional slapping of the forehead. As I bought all my rental properties years ago, I made a point of changing all the lock sets. I standardized on a Quickset deadbolt and then I would always remove the locking knob (so that no one could lock themselves out-requiring me to come over with a key). I bought the locks from a little locksmith in NE Minneapolis on Central. They were very helpful and as I was a newbie landlord, I had not been in the trenches very long. I had all the locks keyed with a master figuring that it would be easier to open and change them out if all I needed was one key. Unfortunately, this locks and the master key system cost me about $55 per deadbolt. To me this seemed like the right way to do it. Yesterday I was working on a new listing and realized my inventory of lock boxes was at zero. I had heard of REO agents getting cheap lock boxes on-line for 50% the price that you pay at Home Depot. I found the site and while I found the cheap lock boxes, I had that paradigm, “DUH” moment. Here are deadbolts that I see on every foreclosure home that I go into. They cost $3. I could have purchased 14 of these for every one of those expensive deadbolts. Frankly, I have paid more than $3 for just new keys in the past! This paradigm shift could have allowed me to have boxes of locks with keys and very easily (and less expensively) changed them out simply. I always try to run my rentals better than most landlords, but here is a situation where I was wasting money. I guess the moral of the story is to stick your head up occasionally, look around and see if there is a better/cheaper/faster way to manage your properties. |
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Fall Projects for Your Investment Property(1) Fall is a great time of year. The grass slows down growing, I can open the windows and not have to run the A/C. Kids are back in school. I am realizing I like fall because of all the things that I don’t have to do or take care of! Oh well. This is also a great time of the year to get in and take a look at your rental properties. If nothing else, it is an excuse to tell the tenant that you need to do your bi-yearly inspection so you can go in and take a look around at how they are treating your property. Here are some other items that are worth doing as a preventative maintenance to potentially prevent emergency calls later:
While all of these items may not be necessary for every property you own, getting into your units twice per year (once in the fall and once in the spring), can help you head off other maintenance calls and keep an eye on how your tenants are treating your investment property. |
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Landlord/Tenant Law Training(7) I was thinking about using some cliche’ to start this post off with like: “You can’t teach old dogs new tricks” or “you are never too old to learn”, but I just couldn’t bring myself to do it! I was invited to a training course about a month ago that was sold as landlord training. The cost was $45 but the speaker wanted me to attend to see if it was something that I could recommend to my investors and blog readers. I attended this seminar last week. I was very skeptical that this wasn’t going to be much more than a very basic landlord class. Boy was I wrong! This class was informative and interesting, even for me (a guy that has owned lots of rental properties and helps investors get started as landlords almost daily). This class is actually taught by an attorney from the Home Line Tenant Hotline. They provide free legal advices to tenants and will even help them in court in certain situations. The speaker was one of the attorneys from Home Line. He was engaging and interesting, but what I found fascinating was how he and his peers looked at different situations that we as landlords encounter every day. He was able to show how they defend the tenants by using the landlord’s ignorance of the laws and statutes. A couple quick examples were:
These and many more gaps/problems in landlord procedures were pointed out to us in class. I was writing furiously because I could see places that I needed to shore up my processes to keep myself protected. Not only could this information help you be a better landlord, it may help you stay out of court! I recommend that every landlord take this class. It was invaluable. |
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Tips for First Time Landlords(2) When it comes to being a first time landlord, there are plenty of things that need to be considered aside from purchasing flats to rent. Being a landlord is a great way to bring in some extra money and even make a living; this, however, is not to say that it is easy or stress-free. Dealing with tenants can be rather difficult, and ensuring that they pay on time and do not cross you can be plain impossible. Fortunately, proper planning will ensure that you can make a prosperous career out of being a landlord. That said, here are a few tips for first time landlords. 1.) Purchase the Right Properties 2.) Choose Your Tenants Wisely 3.) Be Firm |
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Raising Rent on Your Section 8 Tenants(1) Despite being a landlord for over 6 years, I swear I learn something new in this business every month. Have you ever leased your property to a tenant (Section 8 or not) for less than you were really trying to get? Most of us have. Maybe it is a slow rental time of the year, maybe you just haven’t had many calls on the apartment, maybe it is 2 weeks before the first of the month and you just want to get the place filled. I bet every landlord has done this at one point. So then, how do you get the rent back up to where you want it to be without upsetting anyone? With non-Section 8 tenants, I tread lightly. I would rather sacrifice $50 per month than have them decide to start looking and move out. Each turnover costs me $1000-$2000 in painting and property repairs, even when they leave the place perfect. Plus, that is assuming that I will NOT have any vacancy time. In my book, that $600 that I am losing per year is cheaper than a turnover. A friend of mine that does property management for about 250 units (60% of them get some rental subsidy like Section 8), told me something I never knew. You can raise the rent on a Section 8 tenant dramatically in one year or every year and Section 8 will approve it. This is even if it goes over the maximum rent amount for that unit. Me and another landlord just sat there with out mouths open, about to cry over all the money we had left on the table over the years! Here is an example of how it works:
One question that got asked was, why would the tenant agree to a large increase. The answer is that they may not feel the increase as Section 8 may simply pay the difference. While you can’t guarantee this, it is worth mentioning. Alternatively, I do know that Section 8 will mostly ignore smaller yearly increases of $25-50. These just fly under the radar. So…..Watch for your lease renewals on your Section 8 properties and bring your rent up to market standards. |
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Copyright, Scott Ficek-2011 Re/Max Advantage Plus MN Real Estate Team 17850 Kenwood Trail Lakeville, Mn 55044 952-898-5800
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