You Get What You Pay For!

By Robert L. Cain, Copyright 2011 Cain Publications, Inc.

Do you see what they see? Do you see the dirty front walk? How about
the untrimmed yard? What about the trash-strewn front entrance? Or are
you so focused on why you are at your properties and what you need to
do that the rest is just a blur? If it’s all a blur, the next time you
go by, over or around, spend a few seconds looking at what prospective
tenants see.

The US Census Bureau asked tenants why they chose the home they are
living in. One in eight, 12 percent, admitted that his or her choice
was based on exterior appearance in some respect or other. That was
the main reason. Still more cited exterior appearance as a
contributing reason for their selections. On the flip side, many
prospective tenants rejected homes because their exterior appearance
didn’t meet their standards for one reason or another.

But just being conservative, are you willing to lose one out of every
eight of your prospective customers just because your property looks
sloppy, unkempt, unpainted or ill-maintained?

Many times we aren’t much of a judge of how one of our properties
looks. After all, we’ve seen them so many times that we don’t think
much about it. If you believe it couldn’t hurt to run a quick test,
here’s a trick to show your properties to you in an entirely different
light. Take a picture.

Actually, take several pictures. Take two or three from across the
street so you see the first thing a prospective tenant sees. Now get
out of your car and take pictures as you walk up to the property.

Next, find on your digital camera where you can change the pictures to
black and white. Look at the pictures you took in color, and then
change them to black and white. Is your first response, “Oh, no!”? If
so, maybe it’s time to make your properties more marketable.

It just makes good marketing sense. When you walk into a grocery store
and look up the aisles, are they neat and tidy? Is the floor mopped
and shiny? Look at the items on the shelves. They are all different
colors and designs. Do you know why?

Manufacturers spend millions of dollars marketing their products. Part
of the marketing goes to designing their packaging so it is most
appealing to their prospective customers. They study people’s buying
habits, why they buy, and what attracts them psychologically to a
package. As landlords, we don’t need to spend several thousand dollars
to have some marketing magician tell us how to make our properties’
packaging look appealing. We already know what qualities attract the
best tenants: neat, tidy and clean.

A good tenant will run for her life when she drives up in front of a
property that shows little or no pride of ownership. Possibly it is
too bad that many landlords simply don’t pay much attention to how
their properties look. Or maybe not. That gives an edge to the
landlords who do pay attention, but that’s a story for another day.

My point is this. We all need to be constantly marketing our
properties to prospective tenants even if we don’t have any vacancies
now. You see, we also market to our current tenants by showing pride
of ownership and making their homes look the way that encourages them
to continue to live there. People do judge a property by its cover,
even the ones currently living inside that cover.

Do you see what they see? Get your camera out and drive by a property
or two. Take pictures. Does what your photos show make you beam with
pride? If so, great. You have done an important part of your marketing
and that one tenant out of eight who chose her current home because of
its exterior appearance might well be your next phone call.

“Robert Cain is a nationally-recognized speaker and writer on property

management and real estate issues. For a free sample copy of the
Rental Property Reporter call 800-654-5456 or visit the web site
www.rentalprop.com <http://rentalprop.com>
.

What is WEAR & TEAR when a tenant moves out?

A hole in a plaster wall, a broken window, crayon marks on the ceiling, cabinet doors torn off their hinges–those are obviously above and beyond normal wear and tear. But how about a worn place in the carpet, what about tiles on the kitchen floor cracked or missing? That is where the tenant can claim that he doesn’t owe a dime of the security deposit, because that was just normal wear and tear and you can’t charge him for that.

What follows is a list of common things you will find around the house that a tenant might have some affect on and a range of life expectancy. For vinyl and wall-to-wall carpets you should get a pretty good idea of the life expectancy when you buy it, but for other items you may not.

A rule of thumb to follow, whenever there is a question about who should pay for damage, is that the landlord should pay. In this article, however, I will attempt to remove some of the question and possibly enable you to get an better idea of when you should deduct money from the security or cleaning deposits.

The first step in determining wear and tear is good record keeping. You need records, as complete as possible, of when you purchased items and/or when you installed them. If you don’t have a starting point, you certainly will have no way of knowing with any accuracy how long they should be expected to last.

If the fixtures or appliances were in place when you bought the property, try to find out from the seller their history. Many times the previous owner will have all the warranty and product information, including manuals.

The other vitally important thing to have is the tenant move-in checklist, signed by the tenant. Without that, the tenant can claim, often successfully, that whatever the damage was, it was there when he or she moved in.

In addition to that, some damage is the fault of the landlord for not checking the property regularly. As you well know, you cannot expect a tenant to take care of a property the way the owner does. Tenants just don’t notice things that can do major damage to a building.

For example, few tenants would think anything about earth to wood contact. They will shove dirt up against the side of a house and not even notice when the wood on the side of the house starts to rot. That is the fault of the landlord. A tenant will probably not notice a bad roof until it leaks, despite the fact that it shows all the signs of being on its last legs.

There is simply no way you could collect damages from a tenant for dry rot due to earth-to-wood contact: you should have seen it. Once you have noticed that a tenant is piling dirt against a building, though, it is up to you to tell him not to do it anymore. Once you do, and you have left a paper trail proving that you have, then the tenant would have some responsibility. Even so, it is up to the landlord to take care of his investments.

When a tenant moves in, make it clear to him or her that you want to be notified of damage and that you don’t want things let go.

How tenants damage things

Dishwashers–they use the dial to run them through their cycle. This will strip the timing mechanism. Dishwashers should be allowed to run through their cycles fully, not set to rinse again or dry again. Since a dishwasher should last between five and twelve years, if the control knob breaks before that, it is above and beyond ordinary wear and tear.

Water heaters–do not wrap them in an insulating blanket, no matter what the environmentalists claim. Doing so voids their warranties and the Underwriter’s Laboratory certification. The insulating blanket makes them too hot and can overheat the wiring. If a tenant wraps a water heater, thinking they are saving energy, and the water heater goes out, that is beyond ordinary wear and tear. Tenants will sometimes drain an electric water heater without turning the electricity off. That will burn out the elements.

Water heaters last from eight to twelve years. Burnt out wiring or elements are beyond ordinary wear and tear.

Ranges–gas ranges will last indefinitely. About the only thing a tenant can do to damage one is break a knob, and it happens. But accidents happen, and it is probably ordinary wear and tear.

Electric ranges, on the other hand, do not last as long, about 15-20 years. Tenants will remove elements to clean and not put them back in properly, shorting out either the element or the entire wiring on the stove.

Furnaces–It is important to change the furnace filter once a month. Leave a dirty filter in and risk ruining the fan motor. If necessary, get the tenant a supply of filters with the instruction to change it the first of every month, whether he thinks it needs it or not.

Storm doors–tenants remove the wind spring and the door flies open, breaking the glass, springing the hinges, or whatever. With no mistreatment, storm doors will last until they are too ugly to leave up. If a tenant breaks one, it is above and beyond ordinary wear and tear.

Driveways–Concrete is damaged by something known as “point loading.” That happens when a heavy vehicle is parked on the same spot for a long period of time or over and over. Eventually that weakens the concrete in that spot and it cracks. The cracks radiate out from the spot of the point load. If your tenant has a heavy vehicle,, ask that he park it in different places on the driveway. Point load damage could be considered above and beyond ordinary wear and tear.

Cabinets–most tenants will not pick up a screwdriver and tighten a screw that is coming loose. Many don’t know what a screwdriver is. Then, when the door comes loose from one hinge, they will let it hang from the other one. Cabinets should last for 20 to 30 years. If they are damaged from tenant neglect such as that, it is above and beyond ordinary wear and tear. It doesn’t cost a tenant anything to tighten a screw. At the same time, though, a periodic inspection would probably have discovered a loose cabinet door.

Floors, hardwood, tile, vinyl–You know what the life expectancy is when you buy the flooring, and it varies by quality. If you buy cheap vinyl, and a tenant’s high heel pokes a hole in it, you got what you paid for. But if a tenant drags something sharp across the floor and scratches or cuts the flooring, that is above and beyond ordinary wear and tear.

Doors (hinged)–tenants have been compared to teenagers: if something doesn’t work the first time, force it. Things get caught in doors, such as broom handles on the hinge side of the door, and then the door gets sprung. Screw holes are stripped and hinges get bent. Doors last indefinitely, if used properly. Damage to them is above and beyond ordinary wear and tear.

Doors (sliding)–These come off their tracks, and despite the fact that it is easy and costs nothing, tenants don’t put them back on their tracks. Then they come loose and get banged around, damaging the tracks so they have to be replaced. Take the cost of damage out of the security deposit.

You can’t be there all the time to watch to see that a tenant doesn’t do anything stupid or destructive. Previous landlords can often give you some insight on how well a tenant took care of a property. Some tenants are simply unconscious: they don’t mean to do any harm, they just have no way to connect what they have done with the damage. One of the mysteries of life.

Deciding whether damage is beyond ordinary wear and tear often boils down to a landlord basic, deciding if something was used in a way it wasn’t designed for. If it wasn’t, it is damage which should be paid by the tenant.

Thanks to Don Crawford of Crawford Home Inspection Service for much of the information contained in this article.

“Robert Cain is a nationally-recognized speaker and writer on property management and real estate issues. For a free sample copy of the Rental Property Reporter call 800-654-5456 or visit their web site at www.rentalprop.com.”

Pro-Rate the RENT…it’s easier than you think!

By Whitney

If you start the lease for an apartment or rental house anytime except the very first day of the month, you’ll pay prorated rent. Prorated rent is a good thing; it means you only pay for the days that the lease is actually in your name rather than for the entire month.

As a renter, you need to know how to prorate rent so you can budget accordingly. This calculation is not to be used for when you move into an apartment or rental house, only when you actually have possession of the apartment. Often, your lease begins before you can actually move your stuff into your apartment. If your lease term begins on the first of the month, but you choose to move in later, you’ll still owe rent for the entire month. When you signed the lease, you agreed to pay a full month’s rent in return for a full month’s use of the apartment.

To prorate rent, you need your lease start date, which you and your landlord will agree on. Then:

1. Determine how many days are in the month in which your lease begins. For instance, if your lease starts in June, there are 30 days in June.
2. Divide your monthly rental payment by the number of days in the month to find the cost of rent per day. If your rent is $600 per month and your lease starts in June, for example, divide $600 by 30 days ($600/30 = $20 per day).
3. Determine your lease start date. For example, say that it’s June 14, which means that for the month of June, you will pay rent for 17 days (June 14-30). At $20 per day, you will pay $340 for the month of June ($20 per day x 17 days = $340).

Or, visit Mr. Landlord for a prorated rent calculator.

Keep in mind that in some cases, particularly if your credit isn’t good or if the landlord has never rented before, the landlord may choose to prorate the second month’s rent rather than the first. From a landlord’s perspective, it may be best to receive a full month’s rent and deposit upon move-in and then prorate the second month’s rent, unless the tenant has extremely good credit and references. In other words, in some landlords’ eyes, if a tenant can afford the full amount up front, the tenant is more likely to continue paying rent.

Protecting the World from Rental Scams (via Rentmarketer’s Blog)

If it’s too good to be true, follow your gut! By the way, renters and lease option candidates should be screening the landlords and investors as much as they do you. Know who you are getting into bed with (so to speak)!

Rental Scams hit the rental market in alarming numbers every single day.  To help stop these rental scammers, we released an informative blog called RentalScams.org. This free resource is meant to help educate and protect the World from rental scammers.  Their mission is below: Our mission is to educate renters, property managers, agents and owners on the many different types of rental scams that are on the internet today. The only way to defeat … Read More

via Rentmarketer's Blog

“The 7 attributes of an Extraordinary Human Being”

From the Landmark Group:

1. Integrity: Honor your word.  That is, do what you said you would do
by when you said you would do it.  And when you don’t clean it up,
make new promises and keep them.

2. Give up being right.

3. Being Powerful: Be straight in your communication and take what you get.

4. Being Courageous: Acknowledge your fear and then act (one of my favorites)

5. Being Peaceful: Give up the interpretation “there is something
wrong here” (another favorite of mine)

6. Being Charismatic: Give up “in order to” and trying to get
somewhere (be present)

7. Being Enrolling: Share your new possibilities in such a way that
others are touched, moved, and inspired by that possibility.

Hope you get some value out of these

–
Demitri V

Mortgage delinquencies continue to climb in 2010

According to credit reporting agency TransUnion, 6.89% of mortgage payments were 60 or more days past due in Q409 – up from 4.58% in the final three months of 2008. The previous record delinquency rate was 6.25% in the third quarter of 2009.  FJ Guarrera, vice president of TransUnion’s financial services business unit, says the fourth-quarter uptick was due in part to normal seasonal spending shifts.

Consumers are more likely to have trouble paying bills during the last few months of the year as they run low on cash because of holiday spending.  But he says that even accounting for normal season patterns, there is some reason to be concerned about the pace of increase moving higher. “To see continuing growth in the first quarter would certainly raise an eyebrow.”

TransUnion tracks mortgages that are two months past due as an indicator of potential foreclosure, because of the difficulty involved in coming up with three payments to bring an account current. The agency said the delinquency rate stayed highest in Nevada, at 16.2%, and Florida, at 14.9%. Arizona and California, the other two states hit hardest by the housing crisis, were third and fourth, at 11.3% and 11% respectively.

The highest growth rates compared with the third quarter were in the District of Columbia, Louisiana and Delaware.  Guarrera noted that many homeowners still have adjustable rate mortgages written in late 2006 or early 2007 due to reset to higher rates in coming months, and that could drive foreclosures even higher, especially in areas where home prices have fallen to the point where values are lower than mortgages. “We’re not out of the woods yet,” he said.

DSNews.com – 33 months of coming foreclosures

The Standard & Poor’s (S&P) report we mentioned yesterday in connection with short sales also said the hidden supply of REOs and pending foreclosures will likely take 33 months – or nearly three years – to clear if liquidation rates hold steady.

Even more unsettling is that S&P called its estimate “conservative” because the company’s analysis was based on the number of properties the company believes to be lurking in the shadows right now – repossessed homes that banks have not put on the market and already delinquent mortgages that will likely turn into foreclosures. S&P’s assessment does not take into account any loans that have yet to show serious signs of distress.

The ratings agency did not give a specific number of loans in its calculated shadow supply, but said the original balance of currently seriously delinquent and REO loans stands at $426.3 billion. An earlier study by Amherst Securities estimates the dark cloud to hold about 7 million loans, while First American CoreLogic puts it at 1.7 million.

Analysts at Standard & Poor’s said in the report, “It is our opinion that recent positive housing reports should not be construed as a sign that the distress in the residential housing market is abating, but rather should be attributed to the temporarily limited supply of homes on the market.”