By Ben Holubecki, STML Realty Group, Glen Ellyn, IL

As the weather warms up and the rental leasing season gets into full swing it is easy to get caught up in the rush of showing requests, rental applications, lease signings, and new tenant walk through appointments that usually fill these months for leasing agents and management companies. From what we are seeing in our area and what I have heard from managers and agents in other markets this is one of the more active springs in recent history for tenant moves and new leasing activity. We have seen our average vacancy time decrease from 30 days to less than 20 days over the last few months and some properties are renting as soon as they hit the open market. This is a far cry from just a few months ago when we were in the middle of one of the least active leasing winters that we can remember in the Midwest.

While this is all great news for those of us who earn a living filling and managing these vacant units, we have noticed one area where things have not picked up all that much. The “tough to rent” properties are still hard to move. The nice unit in the dirty building, the overpriced 1 BR apartment, the house with the crazy wallpaper, the home next to the hoarding neighbor, and other general nightmare rentals still continue to be issues. While the market seems to be increasingly active, I see the activity picking up for well maintained, clean, and competitively priced units. Unless the property is in a top-notch area, the properties with problems continue to be a tough sell but through some aggressive marketing and incentive offers we have seen even those properties move in a reasonable period of time. It takes a bit of creativity to get someone to look past things that they believe they can’t live with but sometimes it’s just a little bit of money or the structure of a deal that keeps things from coming together. Some of the more common and effective offers we see in our market lately have been:

- The waived pro-rated rent approach. While many property owners are opposed to waiving pro-rated rent for a mid-month move-in, we think it’s a great marketing tool. We try to explain to owners that the only true alternative is a vacant property and there is no upside in leaving the home vacant for 1-2 weeks while we wait for a tenant to move-in. By having the option to offer this as a bonus (free rent) to a potential applicant we have an advantage over other agents who do not have this option.

- The early move-in. Many moving tenants view the move as a stressful time where they have 1 weekend at best to finish packing, load a truck, move their items, and unpack before getting back to work on Monday. We have closed a ton of leases by just offering an extra week or two to begin moving items into the property. The tenants generally do not “live” in the unit during this time but use the time to bring in carloads of items based upon their schedule. They also have time to set up cable/satellite, utilities, etc. Cutting down on a potential renter’s stress is of great value to them. If a home is vacant and parties are agreeable to an early move-in period it can often make the difference.

- Reduced security deposit instead of reduced rent. We have dealt with literally thousands of tenants and I can remember only small percentage of them where we did not refund at least half of the security deposit to the tenant. In most cases we are returning 80-100% of the deposit upon move out but still we insist upon 1 month rent or more as our deposit guideline. Most renters are worried about the up-front cost associated with moving. They are less concerned about the amount of deposit that will be refunded 1, 2, or 3 years later. Instead of taking half off of the first month’s rent, offer half off of the security deposit. It accomplishes the same goal for the tenant by reducing up-front costs while keeping the rental income for the property fully intact. We even see $0 security deposit offers when times are tight although that’s more risk than we are willing to take on.

- Avoid psychological pricing barriers and rental search tiers. These are different in every market but they exist everywhere. There are cities where tenants won’t pay more than $X amount for a particular property type or location. You may be in a market where $1,000 for 2 bedroom apartment is the breaking point. No matter what you do you can’t rent units for more than $1,000 regardless of how nice they are. We have to be aware of these barriers and market accordingly. People in that market are not running online searches for properties $1,000-$1,499. They are searching $500-$999 generally and your property may not even be viewed by people searching in those ranges. The $995 or even $999 rental price is not only a psychological pricing issue for people who want to stay under $1,000 but due to the way that many rental website searches display listings you may be missing out on a huge number of potential tenants by overpricing units by as much as $1.

- Teaser or promotional rent rates. We only use these in times of high vacancy in larger multi-unit properties but this obviously works. By offering a significantly discounted rental price for 3-6 months which then re-rates to standard rental rates you can quickly fill properties with high vacancy rates. Now, the property owner must be prepared for the decreased potential cash flow in the short-term but if vacancy is an issue it should be considered as an option. We recently had a 72 unit property with 12 vacancies that we were having a hard time filling. We marketed $750 units for 2 year leases at $500 per month for the first 6 months and $750 for the last 18 months of the lease. We rented all 12 units in 30 days and they are now fully occupied. We had so much interest during that time that we now have 10 people on a waiting list although the promotional pricing program has ended. The owner’s potential income for the property was decreased by $3,000/month for 6 months but the 100% occupancy and longer term leases were well worth that risk in the short-term.

- Providing multiple payment options. A more recent option is the ability to offer multiple payment options. Offering online payments, weekly payments, accepting credit cards, Paypal, and other methods of payment open up options for tenants who otherwise may have to wait to sign a lease and move. The fact that these options are now being integrated and even offered by management software companies makes it all that much easier for us to implement these programs.

There are dozens of other tactics out there and every market and agent should have options suited to their area and business practices. The important point is that a bit of flexibility and creative structuring of leasing deals can make a big difference in leasing success and decreasing vacancy rates overall.

By Geoff Roberts, Buildium, Boston, MA

Unfortunately, sometimes tenant-related situations happen that require you to consider restitution: a tenant submits a bad check; causes significant damage and destruction to your property; moves out on the sly; or abandons his possessions on your property, leaving you to clean up the mess. None of these situations are pleasant, particularly because they generally leave you at best out some cash and, even worse, with a mess to clean up in your tenants wake (which, of course, may require even more expenditure). Of course you want to be paid the money you’re owed, but is it always worth pursuing such matters? Let’s take a look at some common scenarios.

Small Claims Court
Small claims court may be a good option in certain circumstances (note that some districts have a specific landlord-tenant court). Small claims complaints may be viable if your tenant does not pay rent, willfully damages or causes destruction to your property, or violates rules and regulations repeatedly after written notice to comply. Generally speaking, small claims courts handle matters under a certain dollar amount—usually $5,000 or less. All of the specifics vary on according to state, so be sure to check the specifics in your area.

In most states, you will have to submit a small fee to file a complaint (generally around $25). If the case goes to court, witnesses may be required to appear in person, and you should be prepared to provide relevant documentation, such as receipts, leases, estimates, bills, check copies, and photographs. Depending upon your complaint, a successful verdict may either result in the right to have the tenant removed from the property or to receive due payment from the tenant.

Selling a Tenant’s Property
Let’s say a tenant has left you high and dry, discarding his belongings on your property. Obviously, you must remove his possessions from the unit before renting it out to another tenant. Laws vary significantly from state to state, but in some states you may be able to file a writ of restitution, which allows you to have the tenant’s abandoned belongings removed from the unit and placed into storage, either at another location on your property or off-site. Subject to varying rules and regulations (again on a state by state basis), some of these abandoned possessions may ultimately be eligible for sale, allowing you to recoup (but not exceed) the costs due to you for storage and removal.

This process can be rather complex and requires adherence to specific laws as they pertain to tenant notification, removal of property, storage regulations, items that are and are not eligible for sale, and how proceeds of the sale must be handled. Make sure to carefully check state laws and to follow them precisely.

Filing Bad Check Complaints
Take heart. In this recent blog post, a Florida landlord explains how the law finally caught up with a flaky tenant two years after he fled his rental unit, leaving a lot of damage and a bad check in his wake. While this landlord didn’t take his tenant to court, he did file paperwork for a bad check with the state attorney’s office. When the tenant was pulled over for a traffic violation some time later, the charge showed up on his paperwork and the tenant was forced to pay up.

If your state offers a similar program (and many do), this is one way to pursue payments due to you. The upside to it is that the process costs you no more than the time required to fill out the necessary forms. The downside is that there are no guarantees such claims will ultimately catch up with your tenant—and, if they do, it may be at some point much later down the line.

While you can’t guard against everything, thorough screenings and credit checks are one of the best ways to ensure you don’t find yourself in a situation where restitution becomes necessary. If restitution does become necessary, be sure you have a thorough understanding of the steps required of you in your state—the guidance of an attorney may be necessary.

By Peter Lamandre, Better By Design Real Estate, Scranton, PA

“It takes many good deeds to build a good reputation, and only one bad one to lose it.” – Benjamin Franklin

We all work hard to build our reputations. I was speaking with a potential property management client yesterday, when I asked him if he had any questions about my firm. His reply was simple; “Yes, are you honest?” I chuckled and reminded him that he was a referral from one of our oldest clients. The fact of the matter is that people like to do business with those they know, like, and TRUST. In property management the TRUST part is a big piece — after all the owner of the property is basically saying here is my single biggest asset, you’re in charge; please make me lots of money.

In the old days you would go to a chamber of commerce meeting, or an apartment association meeting, or a similar in-person event (we still do these things). In today’s internet-driven world, clients often first find you online then send you an email or fill out an online prospect form. The consumer will then conduct research online to find out all they can about you and your firm. The hard part is knowing what is said about you online — have you ever given thought to how many websites are out there? Here are some quick stats from pingdom.com:

Websites

• 255 million – The number of websites as of December 2010
• 21.4 million – The number of websites added in 2010

Social media

• 152 million – The number of blogs on the Internet (as tracked by BlogPulse)
• 25 billion – The number of sent tweets on Twitter in 2010
• 100 million – New accounts added on Twitter in 2010
• 175 million – People on Twitter as of September 2010
• 600 million – People on Facebook at the end of 2010
• 250 million – New people on Facebook in 2010
• 30 billion – Pieces of content (links, notes, photos, etc.) shared on Facebook per month
• 70% – Share of Facebook’s user base located outside the United States

It would be impossible to independently search all of these locations to see if someone has tweeted, posted, liked or criticized you or your firm. Luckily you don’t have to, as there are services on the web like ReputationDefender.com that you can hire to keep an eye on things. These types of services can not only monitor your reputation, but can actively assist in promoting a good reputation and suppressing negative content.

Now if you’re frugal and have a bit of time on your hands you can do it on the cheap by utilizing a free service from Google called Google Alerts. Google allows you to have their server run a search for specific terms and have the results automatically sent to your email for review. You can enter searches for your name, your firm’s name, common misspellings, and anything else that might be posted in reference to your reputation. This will enable you to quickly respond to any info posted about you. Many companies are actively monitoring their reputation; in fact in my last post I mentioned “Tap Inspect” and whether it was via a manual, automatic or paid service they became aware of my post and actually commented on it. This a great example of a company proactively monitoring what people are saying about them and responding.

But how do you respond?

If someone posts a nice comment… thank them, people like to be thanked and it will only encourage more positive comments. It also shows that you care about what your clients think.

Don’t retaliate against negative posts. You are better off taking a deep breath and thinking about the post, admitting fault if there was indeed validity to the post, and demonstrating how you will correct the issue.

Lastly, write a blog fostering comments from clients, or create a Facebook page asking clients to make positive comments on your service. The best way to make bad comments less relevant is to promote the good ones.

By Geoff Roberts, Buildium, Boston, MA

When determining rental rates, you want to strike just the right balance between maximizing your profit and remaining competitive in your local rental market. Following are some tips for finding that magic number.

Look at rates of competitors
As a property manager, you want to create business strategies that work for you and serve your best interests. However, you still need to be aware of competitors and the marketplace around you. When formulating rent rates, make sure you know what you’re up against. And the quickest way to do this is analyzing competitive prices.

Rentometer
Rentometer is a great web-based program that will allow you to see how you rank in your neighborhood. Just enter your address, rental rate, and number of bedrooms to gain access to a computerized graphic showing where your rates fall in comparison to other rental rates in your immediate area.

Other Rental Listing Sites
While Rentometer is great for a quick overview, remember that it doesn’t take specifics such as square footage, upgrades, and amenities into account. To make sure you’re comparing apples to apples, also look at competitive rental listings on sites like Craigslist, Zillow, Rentals.com, Apartments.com, and local classifieds (both online and off). Look for places of a similar size, with the same amenities and upgrades and make sure that your rates are in the same ballpark.

If your rental rates are higher than those of competitors, make sure this is justified (for example, your units have more square footage or were recently renovated). When advertising properties to tenants, make sure that you tout those special features that make it worth more than competing rentals. It’s okay to have higher rates than competitors if the additional price is justified, but it should be clearly and immediately evident to potential tenants why your higher rent is worth it.

Listen to feedback from potential tenants/applicants
Pay attention to what applicants are telling you. If you consistently hear from those applicants that are out there in the field looking at other places that your rent is high, it may be time to do some research and consider lowering rents. Likewise, if applicants seem pleasantly shocked at your rental rate, make sure you’re charging enough. Sometimes the loudest feedback comes through vacancy rates—if you are having a difficult time filling units and know it’s a problem across the board in your area, do the research necessary to see if rental rates may be the culprit.

Keep your finger on the pulse of local events
Stay on top of what’s going on in your local market. For example, if you live in an area that is primarily driven by one key company and significant layoffs occur, be aware that this may well affect the local market to the point where you have to adjust rental rates accordingly. And, of course, remember this can work conversely as well. If a new company is moving to town and will bring with it an influx of new residents, this may present an opportunity to increase rental rates due to a more favorable supply/demand ratio.

Finally, remember that you want to re-evaluate rental rates on a consistent basis—doing so annually is generally a good rule of thumb. Also, always remain aware of what’s going on around you. If you notice that units are suddenly more difficult to rent out and you can’t attribute this to a normal marketplace ebb and flow (such as fewer potential tenants in town due to the end of the school year), evaluate your rental rates. As we all know from recent years, the market and economic environment can change quickly and without warning, which can impact rental rates.

By Ben Holubecki, STML Realty Group, Glen Ellyn, IL

I’ve always had a lot of respect for professionals who truly learn from their mistakes.  Many of the top companies and executives in the world admit that they have made plenty of them over the years.  What sets the successful companies apart from the unsuccessful ones is the ability to immediately make adjustments and avoid making the same mistake twice.  It can be costly to make an error on the job but it can be devastating to repeatedly make the same mistake over and over again.  That’s why I sat down last week to reflect upon a recent string of lost property management accounts.

Those of us who manage properties owned by others all have our steady, long-term clients.  These are the ones that we can count on.  We depend on them to provide the residual revenue that drives our business and allows us to operate on a monthly basis.  These owners generally defer to our decisions, believe in our process, and most importantly trust us to manage an important part of their investment portfolio.  In our experience we have found a common theme that runs along with most of these clients.  Ground rules and expectations were properly set at the beginning of those business relationships.  Although there are always ups and downs involved in managing any relationship when you are playing with someone else’s money, those hurdles can often be overcome if guidelines were properly established at the beginning of the relationship.  If those guidelines are not set up properly and early we are asking for trouble.  If we wait until a problem arises to set up those expectations the business relationship is ultimately doomed.

Property management is a high churn business by nature so there are a certain number of accounts that are going to be lost and replaced every month.  Property owners sell their properties, they get foreclosed upon, or they let their hard-on-his-luck brother move in.  We are used to this, but those transitions are generally friendly ones with property owners thanking us for our service and moving on.  What prompted this post was the fact that we began losing a few accounts that were not for these reasons.  We had three accounts last month choose to self-manage their properties rather than continue with our services.  I began to consider where things went wrong and why those owners no longer saw value in our services.  Once I asked a few questions and gave some thought to how things transpired I realized that it was not WHERE things went wrong that mattered.  It was WHEN things went wrong.  Every one of those property owners were signed and set up by a previous employee who was not terribly thorough during the setup process.  We failed as a company to compensate for that shortfall and allowed the relationships to begin and continue without setting up those ground rules.  As we faced typical challenges throughout the two years with these clients we were always butting heads with them about very minor issues.  The fact is that this conflict could have been avoided by properly establishing the program from the beginning.  Once we had already run into issues it was simply too late.

This doesn’t only go for the owner/manager relationship.  The same dynamics exist when we are dealing with our tenants.  There’s a reason why it is so much easier to deal with tenants that we have placed ourselves as opposed to inheriting a tenant placed by a property owner or another agent/management company.  When we place them ourselves we have control of that critical initial period where we can properly set expectations regarding rental payment, collections, maintenance, service calls, etc.  Once a tenant has had a bad experience with a previous agent or have become accustomed to poor payment habits it is extremely difficult to turn them around.

Some of the more important items to establish:

When managing the manager/owner relationship
- Clearly explain the service call process.  Walk them through a typical call from the tenant call-in all the way through paying the vendor for that service.  We will often go through this twice just to be clear.
- Explain spending guidelines, limits, and approvals in detail.
- Make it absolutely clear who the owner contact is within your organization.  Our firm typically has 2 contacts for each owner but we try to clearly explain when the owner should contact each of their contacts.
- Make sure owners understand how the money flows through your system.  They should be clear about how security deposits are held, how the tenants pay, how expenses are assessed and paid, when they get their money, and how they receive it.  Avoid the “where’s my money” call at all costs.  A quick tutorial regarding their Buildium online owner account is a great idea at this time.

When managing the manager/tenant relationship
- Explain rent payment options, terms, and most importantly the ramifications if rent is not paid on time.  Many managers are afraid to discuss late fees, 5-day notices, evictions, and judgments at this time.  There is no better time to set up these expectations.
-Make the maintenance request process crystal clear.  Provide appropriate phone numbers.  Let them know step-by-step what will happen when they call.  Will they leave a message or speak to a live person?  Should they expect a call in 5 minutes or 5 hours?  By setting the expectations properly you will avoid repeat calls and many complaints.
-Walk the tenant through the move-in process in detail.  They should know who will be contacting them and when.  They need to know what will happen during their move-in walk through, what they need to bring at the time of possession (rent, deposits, etc), and what is expected during their move-out walk through.

These are the basics that we establish for every account.  Every property and market are going to have their own particular set of rules that need to be addressed but the important thing to remember is that WHEN is the most important variable as you set the expectations for owners and tenants. Your best bet is to always act early.

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA

America is the greatest country in the world. There. I said it. Here’s why.

There is an urban legend, if you will, that tells of the story of a burglar who sued and recovered after he hurt himself trying to steal from a homeowner. The story goes something like this. The would be burglar is trespassing on the responsible citizen’s property. Since the responsible citizen had the good sense to lock his doors when he left, the would be burglar had to find other means to enter the property. So he went up on the roof and over to a skylight. There was a known defect in the skylight – the property owner knew it was not installed correctly. The would be burglar put some weight on the skylight and (instead of supporting him!) it gave way and he fell right through into the house and onto the brand new kitchen table. He broke several bones and, after he was released from jail, he sued the property owner for premises liability. And won!

Or so they say. Because I’m that kind of guy, I’m going to take the outrageous position of defending the result that is proffered in this urban legend. Wait… what?!? You are going to defend the burglar? No – that’s not what I said. I said I’m going to defend the result that is put forth as true in this legend. I don’t know if the story is true, but I’m prepared to tell you, in the context of California law, how such a result could, possibly, be reached. Not only will I do it, but I will be patriotic about it.

The first thing you have to do to understand how such a result could be reached is to get out of your head distinctions regarding the status of the injured person. California dropped such distinctions way back in the 1960s. In other words, I want you to ignore the fact that this person was a burglar. (How do we know he was a burglar, anyways? Did someone say that? Did he say that? Did he have an empty rucksack with him with a “$” on it and schematics of the house and location of the safe with him?) For purposes of his injury recovery, that does not matter – at least not much. It makes no difference with respect to the recovery to the injured person whether he was invited to the property for social purposes (licensee), whether he was on the premises to buy something (invitee), or whether he was a thief (a trespasser).

Why? There are two main reasons for it. First, in California, although the actions of the defendant are accounted for, the goal of personal injury recovery is to attempt to “make the plaintiff whole.” What this means is that all things being equal, what is important about a personal injury action is that the injured party be put as close as possible back to the position she was before the injury. This is why you hear about such victims seeking a “deep pocket.” There needs to be someone to pay for the injury. If it just so happens that the deep pocket is not as responsible as the small pocketed person, having the injured person recover is slightly more important than attaching responsibility for the harm on the party primarily responsible.

The second reason is that in imposing the duty on the landlord to maintain a safe premises, it should not matter what category we place the injured person in when she is hurt on your property. In California the general rule is that everyone “is responsible, …, for an injury occasioned to another by his want of ordinary care or skill in the management of his property or person.” California Code of Civil Procedure, §1714. There is nothing in that rule about being a trespasser, an invitee, or a licensee. Drawing distinctions based on the class of person injured isn’t necessarily consistent with this general rule, and in fact, doing so bears the vestiges of those very English and un-American activities of imperialism and feudal rule. These distinctions “were inherited from a culture deeply rooted to the land, a culture which traced many of its standards to a heritage of feudalism.” Rowland v. Christian, 69 Cal. 2d 108, 116 (1968) (citations and internal quotes omitted). Feudalism! Well, I’m American and I don’t like that. In other words, this is America and we do not need to put people in boxes or categories in order to make sure they don’t get hurt as a result of another’s negligence.

Now, this is not to say that the legislature is prohibited from making laws which might deny or limit the recovery of a burglar. California has. It limits the rights of a felon to recover “pain and suffering” damages for injuries sustained during the commission of a felony. There are also comparative negligence principles that come into play which would reduce and potentially eliminate a burglar’s recovery.

So if that urban legend took place in California, after 1968, it’s quite probable that even if he “won” on his negligence claim, he wouldn’t have recovered for his intangible “pain and suffering” and a good lawyer for the land owner would have further reduced the would be burglar’s recovery by proving to the jury that he was negligent in causing his own injuries. Now I wonder if there are any good lawyers out there . . .

This blog submission is only for purposes of disseminating information.  It does not constitute legal advice.  The statements in this blog submissions do not necessarily reflect the opinions of Robinson & Wood, Inc. or its clients.  No attorney-client relationship is formed by virtue of reading this blog entry or submitting a comment thereto.  If you need legal advice, please hire licensed attorney in your state.

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By Salvatore J. Friscia, San Diego Premier Property Management, San Diego, CA

As a property management company the majority of our accounts are derived from real estate investors but many of our accounts come from owners that have only 1 rental unit which is usually a prior primary residence. They may have self managed the property at one time but usually something occurs that invokes them to seek professional property management. There are many reasons why but for some the final straw comes after dealing with the aftermath of renting to a family member or a friend.

Rental real estate should be treated like any other business venture but if you’re not accustom to being a landlord it seldom is. Many new landlords make the mistake of filling their vacancy with friends or family members to avoid having to actually deal with finding a qualified tenant. At first the situation may seem like a perfect fit and a great way to reduce costs associated with vacancy and marketing. In most cases the owner/landlord will typically relax qualification measures and make concessions based on the relationship, including not requiring an application or security deposit. Right from the start this creates a relaxed environment and allows the family member or friend to perceive the situation as somewhat casual and flexible as opposed to contractual. Because they know the tenant the owner often develops a false sense of security and doesn’t anticipate any problems, “I know this person and I’m helping them out so why would they take advantage of me?” Unfortunately, the truth is that many of these situations are clouded from the start and consequently turn out worse than when a normal tenancy goes bad.

This clouded thought process is the failure of the owner to consider the consequences that things can and will go wrong. All tenancies, regardless of how good or bad, have a beginning and end, rent increases, repairs, and good as well as bad times. This is just the nature of managing rental property. How will you handle the family member or friend that can no longer pay their rent, consistently pays late, or worse damages your property? Are you prepared to increase the rent on Cousin Mary, impose a late fee on your friend Susan, or evict Uncle John? Will this cause discomfort and issues within your family or strain a long-term friendship? These questions must be considered first and foremost and should strongly be factored into your business decision.

Please understand these situations do not always turn out bad and end in disaster. Renting to family and friends is risky and the consequences should be weighed before hand but there is nothing wrong with helping out  family or friends when possible. If your situation and financial means allow you to do so without the concerns mentioned above then it is a judgment call on your part. Let’s face it — there is no guarantee that anyone will pay rent and be a model tenant but handling the recourse of a bad tenancy is very different when dealing with relatives or friends. Having a third-party property management company as a buffer zone can be a big help in avoiding these situations and mitigating them should they occur.

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By Peter Lamandre, Better by Design Real Estate, Scranton, PA

Whether your portfolio is made up of large complexes or scattered smaller units, performing unit and site inspections is an important value-added service that a property management firm provides to their clients. It is also one of the more time consuming aspects of our daily jobs. Performing the inspections requires scheduling with tenants, documenting observations, and follow-up on deficient items. It is also crucial to have the historic inspections readily available to reference changes in conditions.

Over the years my firm has tried numerous variations on a rather routine process; from the traditional pen and clipboard documenting observations on standard forms to utilizing digital cameras and even portable video.

Recently we have been testing and are just rolling out a new process for conducting inspections. A fully digital and paperless inspection process; allowing for a swift method to memorialize observations by following a consistent process.

With the advent and proliferation of smartphones and tablets in the marketplace this process is becoming more streamlined. As an avid iPhone user the apps we use are iPhone/iPad based. However searching though your application marketplace I am sure you can locate apps for windows and android based devices as well.

A few helpful apps that you may want to look are:

Tap Inspect. Tap inspect is a free app that allows you to customize the inspection process and deliver customized reports directly to your client from the field. You can include photos of the property and comment on your observations. The report is then transferred to a PDF and archived on their website. The reports are branded with your logo and name for identification. The app is text driven with a vast library of boilerplate comments. The app is free however there are pricing plans for the delivery and archiving of the reports.

Field Agent. Field agent is a free app that is more photo driven — a unique feature of Field Agent is the ability to overlay previous photos of the same area to compare condition. You also have the option of annotating the photo with comments. You can add some customization to the comments but as the saying goes “a picture is worth 1,000 words.” You also have the option of archiving your reports for future use.

Property Inspector. Property Inspector is a paid app which is a simple but effect interface — everything is rated thumbs up, OK, or thumbs down, with the ability to comment on an area and take a photo. You can customize the sections by changing the grouping of a specific area — for instance if you would rather have the lawn and grounds as a separate category or place them as a sub category of external features you can.

iInspect. iInspect is another free app. The advantage to this app is it’s extremely simple — if you are not looking for all the bells and whistles and just want to dabble in this type of inspection process it is a great way to get used to the whole concept.

All in all whatever route you take, inspections can prevent small problems from becoming big ones later on and you should have a consistent process to record and store inspections. They not only can come in handy during eviction cases, but can also help prove that you have taken reasonable care in the management of your portfolio should the need arise to defend that position such as during insurance claims.

Digitizing your reports can save you staff time and money, and help create a professional image for your firm.

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By Ben Holubecki, STML Realty Group, Glen Ellyn, IL

I was recently on the phone with a rental property owner who was considering utilizing our leasing and property management services and he asked me an interesting question.  He asked me how the downturn in the economy and the flood of foreclosures and short sales had affected the way that we make decisions about rental application approvals.  I had not given the issue a lot of thought as the housing collapse didn’t exactly happen overnight.  However, as I reflected upon the way that we used to process rental applications a few years ago as compared to the way we do today there is a big difference in our process as well as the information that we deem important.  There are several factors that have contributed to the change in the way that tenants are screened and selected.

The biggest factor that we have seen is that the market is now flooded with people who are converting from property owners to renters.  While a small percentage of these people are making this transition by choice, a huge percentage of them are being forced into rentals as a result of foreclosure, short sale, and the inability to procure financing for a home purchase.  This presents an interesting dilemma when reviewing a rental application as these applicants do not fit the typical renter’s profile that we are accustomed to making decisions about.  This has also forced traditional selling real estate agents into the rental market which causes its own set of hurdles.

We have also noticed that layoffs, cut hours, and job changes are increasingly common these days.  A large majority of the rental applications that we see include current job tenures of less than 1 year.  Total income numbers seem to be trending down for our lower rent properties which make decisions for those units increasingly difficult.

These issues and others have led to a fundamental change in the way that we screen tenants and make decisions regarding who is qualified to rent a property and who is not.  This selection process pertains to what we consider to be “marginal applicants”.  We typically categorize our applicants into one of three possible designations:

1. The absolutely yes category.  These are the easy ones to spot.  Credit scores in the 700s or 800s, high income, stable employment history, no pets, etc.  These are the easy ones that we race to the phone to approve before they start looking for another property.  In my market only about 10% of our applications fall under this category.
2. The absolutely no category.  These are almost as easy to sniff out.  Miserable credit, collections, judgments, no verifiable income, criminal histories, and the like.  These are easy decisions as well.  We just write off our time and effort showing the property and screening them and move on to the next.  In my market about 30% of applicants fall under this category.
3. That means that 60% of rental applicants that we see fall under the marginal applicant category.  These are applicants who have both positive and negative factors which have to be carefully examined and balanced to determine if they will be successful tenants or not.

Our opinion is that making the proper decisions regarding these 60% of the rental applicants is the single most important process determining how valuable a service we are providing to our property owner/investor clients.  Placing the wrong tenant can be a very expensive mistake for a property owner and a very big headache for us as a management firm.  The basic considerations that we make when selecting a tenant in this environment are:

Credit reports - Credit scores are only a small factor in our decision making process these days.  There was a time when we would automatically dismiss an applicant with a credit score under 600.  Those days are long gone.  Credit scores are not what they used to be.  It used to be a source of pride to have clean credit and a lofty credit score.  There was social pressure to avoid bankruptcies, foreclosures, and damage to your credit report.  The economic crisis the country has faced over the past few years has changed this completely.  Property owners are making business decisions to walk away from under water properties or sell short.  The social pressures have given way to acceptability as this process has become commonplace.  Scores are very often devastated by a short sale or foreclosure.  However, many of these people have pristine credit otherwise.  While a short sale/foreclosure can’t be completely overlooked we often discount them a great deal if credit otherwise is very strong, regardless of credit score.  For the career renters things have not changed quite as much.  We still look for average to above average credit although we seem to discount medical collections these days since they are so common.  We also consider non-payment of utility bills or a judgment/eviction from a previous landlord to be automatic disqualifiers in most cases.  Even for these applicants credit score is far less important than the details within each type of account within the credit report.

Income and employment - People are changing jobs, being laid off, and are having hours cut constantly.  While credit scores have become less important in our decision-making process we put a big premium on stable, long-term employment.  It is also increasingly important to verify income.  While we ask for contact names and number for employers it is often difficult to verify income with employers.  Paystubs are by far the easiest way to verify income and if the paystubs do not match the stated income it is an issue.  If the income can’t be verified it should not be counted for qualifying purposes.  While we are typically approving lower total income numbers we are much more stringent as it pertains to qualifying that this income is legit.

References – Personal and landlord references used to be a huge part of our decision making process.  A few years ago you could call a landlord and get direct answers to questions about your applicant.  This has given way to faxed tenant authorization forms and a lot of unreturned calls.  Landlords do not want to deal with the liability stemming from providing the wrong information, especially without tenant authorization.  There has also been an influx of recommendation letters from previous landlords, professional colleagues, and others.  What we’ve seen is that many landlords will provide a reference letter to a tenant that they are trying to get out of their property in a hurry.  What better way to get a deadbeat tenant out of your home than to highly recommend them to another unsuspecting landlord.  References from friends and family are truly useless and are not even considered.  While we still attempt to contact previous landlords we only consider the positive information we receive as supplemental information.  The negative factors do figure strongly into the process though.

Everything else – The other factors involved including criminal checks, pet and smoking details, number of occupants, and others will also contribute to the decision making process but really only serve as possible disqualifiers based upon owner preferences, HOA guidelines, and local laws/ordinances.

It is vitally important to constantly update the way that we as property managers evaluate rental applications and to adjust our practices to mirror the changes going on in the rental market and the economy as a whole.  By doing so, we will make better choices regarding our application approvals and denials and ultimately provide better service to our clients and investors.

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By Geoff Roberts, Buildium, Boston, MA

We all had it drilled into our heads as kids: Better safe than sorry! Whether it was through fire drills or being told to wear a helmet when riding my bike, hearing this phrase is amongst my earliest memories. It may sound elementary, but it’s still true. And the same goes for your property. Having property emergency preparedness plans in place will help mitigate damage and protect the safety of your tenants in case of an unexpected event.

What kind of plans do I need?
You will need to have a plan on hand in the event of fires, floods, earthquakes, and other unforeseen emergencies that may potentially apply to your region. Tenants need to know not only how to evacuate the building, but also what to do in cases where they must remain in the building as a disastrous event occurs (such as an earthquake).

In addition to outlining what residents should do in case of emergency, you will also need a solid plan of action for yourself and/or other responsible parties. Know what tasks must be performed and who is responsible for completing them.

How do I create emergency plans for my property?
Your insurance agent, local fire department, local police department, and Red Cross may all have resources that can help you formulate your own emergency preparedness program. Additionally, professional property management associations, networking groups, or colleagues may be able to provide guidance.

With that in mind, following are some items every emergency preparedness plan should cover:

• Know how 911 is notified in case of emergency—you may well have detection systems (such as fire alarms) that will trigger this but, if not, know who is responsible for contacting 911 and how to best ensure such calls are placed as quickly as possible.
• Clearly mark all emergency exits and fire-safe stairwells; if your property is large, place diagrams where tenants can clearly find them (such as near elevators).
• Make sure fire extinguishers are strategically placed throughout the property and are clearly visible. (Also be sure they are checked on at least an annual basis—your local fire department should be able to help with this.)
• Have explicit, easy-to-read instructions about how a fire extinguisher should be used clearly displayed next to extinguishers.
• In case of a fire, make sure tenants know to close all doors behind them to stop the fire from spreading and not to use elevators.
• Consider designating a fire warden on the property to account for all tenants and make sure necessary actions are taken (if a landlord does not live on the premises, these duties can potentially be designated to a responsible tenant).
• Identify “safe spots” (such as doorways) in case of an earthquake and disseminate this information to tenants (more on that in the following section).
• Make sure you are aware of any residents who may have difficulty evacuating, such as the elderly or handicapped.
• Suggest that residents with pets place decals indicating they have a pet on unit doors or windows so that emergency services know to look for pets should a rescue be necessary. Such stickers can be found at your local SPCA, fire department, alarm company, or online.
• Make sure all tenants have emergency numbers on-hand to reference. This should include the fire department, police department (a general non-emergency number for cases when 911 is not necessary), poison control, and a property management company number that can be used during off-business hours.

Additionally, you and other responsible parties should know:

• How to shut off water, gas, and electricity
• What to do in case of power failure (garage doors, elevators, etc.)

How do I spread the word to tenants?
Provide all tenants with pertinent emergency preparedness information upon move-in when all other paperwork is distributed. In addition to this, you will also want to update them in writing on an as-necessary basis when information changes. It may also be worth re-distributing this information on an annual basis to make sure it doesn’t get lost in the shuffle as time goes on.

Of course, we all hope that none of these plans will ever have to be put into action. But for your own and your tenants’ best interest, it’s vital to know exactly what to do … just in case.

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