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Do you manage your Cleveland Ohio property or does your property manage you?

Do you manage your Cleveland Ohio property or does your property manage you? This is a question you may ask yourself. Being a landlord can be hard and time-consuming. Tenants may feel the need to call you at all hours of the day and night. they may or may not pay their rent on time. Things get damaged. Neighbors fight. The life of a landlord is one filled with uncertainty and surprises.

This can put a big burden on a landlord trying to handle everything on their own, and It can play havoc on their life. It can negatively impact relationships, finances, and peace of mind. It is why many landlords leave the business or fail to make their business profitable.

When you feel like your properties are managing you, it may be a good time to look at what a property manager can do for you. Here is what we do for our property owners.

  1. We manage. This one may sound like common sense, but managing properties is our business. Our sole focus is on managing properties and making the property-owning experience as stress-free as possible, we have gotten quite good at it. How do we manage? Through the use of procedures, checklists and more checklists. We have learned that while following checklists may feel tedious, it actually saves time in the long run. It eliminates forgetting to do things. We never have to stop and wonder if the unit is completely ready for rent We don’t have to leave a lease signing wondering if we remembered to tell them everything. There are procedures and checklists in place for everything we do. This includes collecting rent, accepting maintenance requests, dealing with after hour’s emergencies, preparing rental units, and showing apartments. If we discover an area or process we don’t have a checklist for, we create one.
  2. We set tenant expectations. Not setting tenant expectations from the start leads to unneeded drama. We communicate with tenants. Set times they are welcome to call as well as acceptable topics to call about. We accomplish this with our tenant expectation checklist. This starts with requiring new tenants to watch a video that goes over the lease. It also covers how and when to report problems. This eliminates the Sunday morning calls to complain about the neighbor or the 3 a.m. calls to report the toilet is clogged.

One of the greatest challenges for landlords are dealing with “emergencies.” We have learned that setting expectations and following our checklists and procedures eliminates emergencies. Eliminating the emergency calls also eliminates a great deal of the stress. We work hard for both or local property owners and our out-of-state property owners. We can manage your properties, and we can provide you peace of mind.

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

Do You Have Hoarders Living in Your Property?

Have you seen the show Hoarders?

It depicts people with compulsive hoarding issues that cause them to collect things…lots of things. Hoarding leads to a home filled with trash and clutter. So much so that rooms get blocked off or it becomes unsafe to navigate the apartment.

Hoarders can also lead to damage to the structure of the building. There can be issues like water leaks that go undetected due to the hoard. Hoarding can also lead to damaged floors and walls. It can lead to bugs or mold, which cause additional damage.

The bottom line is you do not want a hoarder renting one of your properties. It leads to a very expensive move out when the apartment will need emptied, cleaned, and repaired before it can be rented again.

What can you do to prevent a hoarder from damaging your properties?

This one is difficult because you do not know when meeting the perspective tenant that they are hoarders. We work hard to help our landlords avoid having a hoarder take over a property. We do that in two ways.

  1. Careful screening. Screening for hoarding is not as easy as screening for other issues. It is not something that will show up on a credit or criminal background check. What we do is get the contact information for a couple of their previous landlords. While this is not a foolproof approach, it helps in avoiding the situation altogether
  2.  Three-month inspection. Three months gives a new tenant time to get settled in their new home. If there are hoarding issues, they will likely start to show by three months. Identifying the problem early gives us the opportunity to work with the tenant to set cleanliness expectations and to follow-up to ensure the mess is handled.

Again, there is no sure-fire way to avoid having a hoarder damage your property. However, through careful screening and follow-up inspections, you can mitigate the risk and hopefully reduce or eliminate any damage to your property. We freely do this for all the property owners. It is always our goal to provide them with the most stress-free and cost-effective experience possible.

Dealing with a hoarder is a situation where before and after video inspections may become highly critical to establish the extent of the damage caused to the property. Watch for our upcoming post on the value of video inspections.

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

Why property managers require additional insurance…questions about insurance and landlording

Why would a property manager require additional insurance?

Well the big reason is to protect you the landlord client. There are many risks when managing and owning rental property. If you are sued for any reason we will most likely be sued. Yet when you agree to work with our company and most any other manager we are indemnified by our clients for these risks.  The main problem is that if we are not named on your insurance policy the attorney your insurance policy appoints will only represent you and not us and we will have to incur a separate attorney to represent us. Those attorneys may then fight or might work together. Either way we end up no longer being in the same corner and our clients could find themselves in the positions of paying not just the insurance deductible but also our attorneys fees. Our clients don’t want that to happen nor do we.

 

Why do we have to have your insurance information as an owner?

Winters alone in Northeastern Ohio have been fairly difficult this year for landlords. Between ice dams, water backups and freezes in 2015, I’ve seen damages from just a few hundred dollars all the way to $30,000 PLUS! When an emergency arises property managers need to be able to contact the contractors covered, we need to know what is covered, and what can we actually pay for. You don’t want to call an owner in the middle of the night or an insurance agent for that matter asking a million questions. That would just delay the whole process and possibly cause more damages to the property. To be prepared for an emergency you need to have a copy of the owner’s insurance policy. Make this a requirement and add the copy to the property file.

Do you know what your policy covers?

Many homeowners don’t. I suggest calling your insurance company and asking what your coverage is. Somethings you want to try to purchase is the loss of rent coverage. It is a little more expensive to purchase but definitely worth it. If a tenant moves out a few months before their lease is up then your policy covers those months of rent that you would lose. You also want to make sure your policy covers water back up, for when the sewer gets backed up. We all know this is just something that happens.Another requirement we have added is tenant insurance.

Why do we require your tenants to purchase tenant insurance?

It is very affordable ranging from $9-$15 a month. We are able to ensure the landlord’s name is included on the policy. Require your tenants to purchase a policy through you. You will be able to ensure the landlord’s name is included on the policy. Requiring this will add double coverage to the home. As well as take care of a lot of issues when you have an insurance claim. For example, if your tenant has to stay in a hotel for a night due to a water leak  Who doesn’t want that? Your home should also be covered if there is damage caused by tenant negligence. It will also help you take care of several issues when tenants do have a claim. Hotel stays, for example, are one of the coverages that many tenant insurance policies include.  Many insurance companies will give a discount on your policy when you require tenants to purchase insurance. This is one way we help landlords when they need it most!

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money!

Call us today at (440) 220-7300 to see how we can help you!

 

Multifamily Utilities In Cleveland Ohio

Multifamily Utilities In Cleveland Ohio

If dealing with utilities for single family homes in Cleveland, Ohio wasn’t complicated enough, the process for multi-family homes is even more intricate.

Now, you may have a multi-family property where the utilities are split. That is, they’re metered separately for each unit within the property. Multi-family properties like that aren’t altogether different from single family properties.

But you run into a completely different situation if the utilities are not split. And, unfortunately, you’re going to run into a lot of Cleveland, Ohio multi-family properties where this is the case.

For whatever reason, when the vast majority of duplexes, quads, triplexes, and even larger multi-family buildings in the Cleveland, Ohio area were built— 50 to 100 years ago— the people who built them didn’t sub-meter the utilities. So the landlord paid everything as one lump sum.

And, obviously, one of the major differences between when these multi-family buildings were made and now is that utilities back then were a lot cheaper. They weren’t the huge expense they’ve become, especially in the last few years.

So now you have landlords with these multi-family buildings that aren’t sub-metered and they’re actively looking for a way to increase profit by shifting the cost of the utilities to their tenants.

When utilities aren’t split you really only have a couple of options to divide the cost.

  1. The owner pays the utilities. This is probably the easiest option and it’s the cheapest in terms of upfront costs.
  1. Another option that people are asking about— and we’ve been experimenting with this method here at Realty Trust Services— is called “RUBS.” RUBS stands for Ratio Utility Billing System. And, basically, what RUBS does is it gives the property manager a ratio to use when they divide up the utility bill.

Normally when you use RUBS you divide a water bill among three tenants. It can be divided any number of ways: based on the number of tenants; the square footage of the different units; sometimes owners will even factor in a little bit for a common area and they’ll pay a portion and add that in as well.

The benefit of RUBS is that its quick and easy to set up. It can be complicated if you’re factoring in a lot of different figures, but there are a number of property management software that will compute the RUBS formula.

But, by and large, it’s usually best to use as simple a formula as possible if you’re going to split the total charge between the tenants. Primarily because you want it to be as easy as possible for them to understand why they’re being charged whatever they are and you don’t want to invite an unnecessary hassle on yourself by having to explain a needlessly complex formula.

As you can imagine, the downside to RUBS is that tenants have a tendency to distrust it due to the fact that it’s not based on true usage. So if they get an extra big bill you’re probably going to hear, “I know I didn’t use extra water this month,” “I think it’s a leak and I shouldn’t have to pay for this,” or, “I think that the tenant upstairs had a boyfriend that was staying overnight and using all this water,” or, “It’s [RUBS] not on the lease and it wasn’t calculated properly.”

So there’s a definite downside in the fact that it can seem unfair.

When we’ve done it here at Realty Trust Services, we’ve had a lot of push-back from tenants. And that happens because you’re fighting against two things…

  • The fact that a lot of tenants are used to not paying some utilities when they move into a multi-family property;
  • The perceived unfairness factor

Personally, I don’t recommend RUBS. It’s something you can do, but you have to be very careful with how you do it.

  1. The third option is to meter or sub-meter the property manually. Which means going to the utility company and asking them to put more meters in.

Now, depending on the utility company— because the fine details are always different— that may or may not be possible.

If it is possible, it’s probably going to be very expensive. Prohibitively expensive. To the point where you might as well just continue doing whatever you’re currently doing. You may be required to get city permits, special permits, variances… and sometimes it’s just not possible. There are properties where it’s just not allowed to put a new meter in.

Sub-metering is much less expensive. Sub-meters are put in after the main meter that links back to the utility supply. You can sub-meter for electricity, water, and gas, but— more often than not— you just do it for the water because that’s the one that tends to become a big issue when meters aren’t split.

You can usually get a water meter for $90-$100. So, if you have a triplex, you’re going to be out around $300.

You need a licensed plumber to install a sub-meter because there’s usually more to it than just cutting out a piece of pipe and dropping a meter in. There’s some rerouting that has to be done and you may have to bring the main line down closer to where the water line is to make it split accurately. So there’s some extra plumbing work there in some cases, but oftentimes the actual metering itself can be pretty inexpensive.

There are also options where you can get online readings. To get access to these you can add a module to the meters and that makes the readings available through a WiFi system. And this helps a great deal with the fact that, when you’re sub-metering, you have to split the bill based off of the readings. The proper way to accurately gauge each tenant’s utility charge is to apply the ratios of the different usages on the sub-meters to the main bill. Online readings help you get that much closer to accurate.


 

One thing that we’re experimenting with here at Realty Trust Services is a billing method where, when the water bill comes in, we split it equally between the tenants and then whichever tenant wants to will take a picture of all the meters, mail it to us, and we’ll issue credits based on the ratio. We write that agreement into the lease and then everything is fair and equal and you also know if there’s any unusual water usage. It allows you to quickly ferret out issues with leaks or what have you.

We’re also experimenting with free cellular WiFi that’s put into the meters. You just pay for the unit and, if you go over a certain amount in a month, you’re notified immediately. Another upside is that it doesn’t use that much data, either.

So there are a number of ways you can work with our clients— and we work with ours here at Realty Trust Services— to split utilities and make your properties very profitable.


 

CONTACT US

To learn more about how we can help you with your property management needs contact us today by clicking here or call us for a free consultation at (440) 220-7300.

Helping Landlords Weather the Storm

Isn’t it nice when other people handle your problems?

As is the case with many storms, the recent super storm Sandy had homeowners and landlords alike concerned about their properties and the possible damage being caused by the storm. At Realty Trust Services, we are happy to provide our landlords with the peace of mind knowing their properties are being taken care of in every way possible. Here are five ways we were able to help the landlords that have trusted us with the safe keeping of their properties.

Fielding Emergency Calls – During major storms, tenants call with a wide variety of concerns. Their power is out, there is water leaking in through one of the windows, a tree just came down in the yard. Regardless of the problem, we are here to take the phone calls and handle the problem. Our landlords do not have to deal with taking phone calls at all hours of the day and night. In addition to providing the landlords with peace, we make sure the tenants feel heard, which promotes retention and word-of-mouth referrals. When tenants feel ignored, they will find somewhere else to live.

Assessing Property Damage – Following a big storm, any damage to the properties needs to be assessed and plans need to be made. This is also something we do for our landlords. Instead of heading out as soon as the storm breaks to see what can be done to preserve their investments, our landlords get to stay in the comfort of their homes with the families. We make sure the repairs are made as quickly as possible.

Make Needed Repairs – Whether it is resealing windows or replacing blown away shingles, we make sure the needed repairs get done. Our landlords do not need to waste their time or energy taking care of their investment properties, so they can focus on their personal properties. In addition to the practical advantage of having us do the repairs, we once again provide our landlords with the comfort of knowing their investments are being protected.

Tree and limb removal – A common problem during storms is trees or tree limbs being blown down. The day after a big storm, we travel from property to property assessing needs and cleaning up properties. We remove all down trees and limbs, and we handle any damage they may have caused. We also inspect the trees still on the property to see if any of them were damaged and now in danger of falling.

We act as liaisons – Everyone likes to know their concerns are being heard and their complaints are being handled. We act as liaisons between the landlord and the tenants, as well as the landlord and outside contractors or vendors. When there are repairs we can not personally fix, we contact people who can and we make the appropriate arrangements for them to make the repairs. We stay in contact with the tenants, so they are aware of when repairs will be made and when people may be coming to the property. We keep our landlords up to date on what is being done at their properties.

Storms can cause a great deal of damage, and when you own multiple investment properties in the same area, you may have damage or issues to deal with at all of these properties. There is only so much one person can do. We have the people and the resources to handle multiple properties simultaneously. We provide landlords with peace of mind, and we provide tenants with the confidence of knowing their home is being well taken care of. The benefits we provide are both practical and intrinsic.

About Realty Trust Services
Realty Trust Services is a licensed brokerage and property management company in Lorain County. Their team includes: Andrew Morris, Kari Taylor, Steven Taylor, Matthew Harkins, Greg Zadorozny and many more. For more information on Realty Trust Services and how they can help with your property call 440-220-7300.

5 considerations before jumping in with the sharks to buy a rental property

Buy a home in Lorain Ohio

Lorain County Investment Property can feel a bit like swimming with sharks! Yes even at these great prices you can lose an arm!

If you are seeing all the great deals out there and want to get a great rental property before all the deals disapear, my advice is not so fast. The waters here are great for surfing but they are infested with SHARKS.

For instance it is not entirely unheard of to purchase a rental in Lorain County for $10,000 put $10,000 into it and be able to rent out the property for $700 per month. At first glance that means you will get your original investment back in 2.3 years.  Not bad.  We have seen better deals than that come across our desk and lesser deals (See our web form below join our investor list. ). However if you don’t know the area you might be in for some 30% plus vacancy that could significantly effect your profits. Or maybe you thought you could get 700 but after 6 months of trying you have to lower it to $450. Still not a terrible deal compared to many investments today but maybe not as good as you could have gotten.

1. Location, location, location.
Carefully consider exactly where you are buying. There are many out of town investors that look only at the numbers. However if you don’t know location you need to make sure you have someone who does helping you understand the benefits and drawbacks of a specific location. Some areas look great but simply are not desirable for a whole lot of reasons. Other areas don’t look good but actually are in demand.

One strategy for evaluating location is to consider the target market you think a home will be for. Is this home likely going to attract a you family based on the lay out and size? If this is the case then proximity to good local schools will be something for you to evaluate.

Other factors for your consideration are:

  • are crime rates
  • percentage of owner occupants on the street
  • vacancy rates in the area
  • are neighboring properties well maintained
  • availability of parking
  • is there any good public transit nearby
  • what are the local amenities (shopping, recreation centers, parks, golf courses, restaurants, banks)
  • how nearby are public service hubs like fire stations and the police station

Also consider location in the cost of landlord insurance. Your zip code effects your insurance rate big time.

2. Get on the knowledge train…
Make sure you understand the processes and legal obligations involved in renting out a property. One small slip up in how you advertise can mean a fair housing violation for you. Fair housing violations are very very expensive. There are also numerous requirements for paperwork to cover your tail and make sure you you have expectations properly set with your tenant. Do you know what lead based paint disclosure is? Ohio law requires it in properties built before 1978.

Make sure you understand the true costs when purchasing a rental property. They can bite your arm off. One benefit of the current market is that the low prices of homes are making cash purchases a reality for many potential investors so the risk of jumping in is much lower. Even if costs eat you alive your return on investment will likely be better than than the stock market or a CD.  Still it is very possible to lose money with an investment property and it is important that you do your research (hint- an investment property specialist can really help here- see below).

The following should be factored in:

  • Vacancy rates for the area
  • Security system while renting
  • Eviction costs
  • Cost of getting property ready for rent
  • Marketing cost
  • Maintenance cost
  • Management cost (You can do it or someone else can do it but it is still cost to factor in either way.  Keep in mind the cost you incur when you hire someone who isn’t a professional or do it yourself.  It dwarfs the cost of professional management which we believe will pay for itself many times over.)
  • Landlord insurance
  • Money cost- If you are getting financing (which we don’t recomend) then you will have your interest cost as well as payments on principal (which eat into cash flow).  If you use cash then you have to consider the oppurtunity cost of tying up your money in a property.
One excellent place for landlord knowledge locally here is LELA, however

3. Insurance

Rental property insurance is an absolute must.  If you are renting your property out then you certainly will not qualify for a standard home insurance policy.  Vacant homes that are not rented are even a bigger insurance hassle and you want to make sure that you are on board with a good insurance agent.  Email us for a referral (pm@rtserve.com).

Also you want to make sure that you are properly insured to protect your assets.  Although there are many other asset protection strategies in the form of separate entities like trusts, LLC’s etc (contact us if you want an attorney referral for this at pm@rtserve.com).  Our company has a $1,000,000 E & O policy and our Investment Property Management Company has $1,000,000 in insurance for repairs made to our clients properties as well.  For a Landlord an inexpensive umbrella policy would help protect against the freak lawsuit that could otherwise wipe away all the assets you have worked so hard to acquire.

4. Maintenance and upkeep
You’ll need to inspect your property at specific intervals and make sure that the tenant is not destroying property faster than what you might expect from normal wear and tear.  It is vital to make sure that a property is inspected reasonably soon after a tenant first moves in just to make sure they aren’t quickly destroying it.

Failing to maintain a property can result in injury to the occupants and then a lawsuit.  Also an unmaintained property is difficult to rent out to good paying renters.  It helps to have a reliable contractor on hand who can quickly do any work necessary (hint, hint… we can help with that- this is one benefit of professional maintenance.  and you won’t have 1AM calls for help).  For instance plumbing repairs and furnace repairs must be done immediately in order to avoid a certain and expensive vacancy.

5. Finding GREAT tenants
Promoting your property is an art in it self.  Different areas need different marketing techniques to find the best tenant for the area.  Also some areas will simply attract a different kind of tenant than other areas.  It is important to understand various areas and the best marketing for each area as well as how to screen tenants(see our tenant marketing strategies article here).

Find a great investment property

Let us know your investment property needs. Our specialist will contact you to assist you.
  • Let us know any questions you have or special requirements. Do you need a specific return?

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With more than 45 years of investment property management experience our expert team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

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