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Things even my property manager didn’t know about tenant insurance

Recently, we had an insurance issue where tenants had left for a week on vacation and, when they came back, there was a water problem.

No one knows exactly what happened, but pipes froze, water went everywhere, and it had been leaking for days when it was discovered. Ceilings had collapsed. The tenants’ things were damaged. They couldn’t live in the house and, although the owner prorated the rent they had already paid for the month, they had a real emergency situation.

The hotel wasn’t paid for because their lease didn’t cover that. Their property wasn’t paid for because the lease specifically said if their property was not insured it wouldn’t be paid for.

And they didn’t have tenant insurance.

These were two professionals— they do OK for themselves— but they didn’t have a lot of extra money to spend on all of these things that needed to be repaired or replaced. And they lost some important things.

Not only that, but they weren’t able to come back to the house for a month and a half. They had a very rough time and there was nothing we could do to really help ease any of it. The owner didn’t have the money to pay for everything— they weren’t covered for it all either— and the tenants had been advised in their lease that they needed to invest in tenant insurance.

They didn’t.

So a bad situation was made worse because there was no tenant insurance.

Tenant insurance is very inexpensive. It usually costs between $9-$15 a month and it really gives the policy holders a lot of peace of mind.

We had another situation not long ago where there was a sewer backup and raw sewage flooded into a basement. Contractors came out and fixed the issue but the tenant had some of their private property in the basement and it was damaged by the leak.

But that tenant had tenant insurance. An adjuster came out and wrote them a check. They were able to restore what they’d lost.

Tenant insurance can help with hotel expenses if there’s an emergency and oftentimes tenant insurance will also cover animal liability. If you have a dog and it bites somebody you can get sued even if the person wasn’t hurt. Tenant insurance in Cleveland, or elsewhere in Ohio will cover that where an owner’s insurance policy wouldn’t. In addition, it’ll also cover things like damage to the landlord’s property, depending on the policy.

You need your own insurance to cover you and that’s not to mention your personal property. Personal property is only one part of it, but in a bad situation you need some peace of mind that these things are going to be taken care of.

It’s not something you really need to think about all that often, but, trust me, you’ll be happy you have it if and when you need it.

In the past, our leases here at Realty Trust Services didn’t require tenant insurance, but we’ve seen how much more smoothly things go— when something does go wrong— because of tenant insurance.

Tenant Insurance Is A Must 

Because of those experiences, we’ve decided that— if a tenant signs a lease with Realty Trust Services— we now require them to have tenant insurance. It’s good for the owners, it’s really good for the tenants… it’s good for everyone involved.

This requirement isn’t something we make any money on, but we do have a vendor that offers tenant insurance and its set up right inside of our tenant software. Tenants can click it and get it. Very easy.

If you’re a Realty Trust Services tenant, you can find the tenant insurance on our website. There will be a little advertisement when you log in.

If you don’t have a login, call our office at 440.427.0423 and ask for a login to your online account.

If you’re a new tenant, we welcome you and we look forward to working with you to have a safe experience renting our houses with total peace of mind, contact us by clicking here or call us at our office anytime.

How to handle utilities on single family rentals in Cleveland Ohio

 

Cleveland is a great cash flow market for investors looking to purchase property. However, there are a wide array of intricacies involved in handling the utilities for these homes.

One key issue is the difference between public utilities and City of Cleveland utilities.

Gas and electricity aren’t city utilities, so they can be put in the tenant’s name pretty easily. There’s no real issue in doing this and once the utilities are in the tenant’s name the landlord isn’t really responsible.

On the other hand, water and sewer are very different issues because— even if they’re put in the tenant’s name— they’re ultimately the responsibility of the owner. And, in the event that the tenant doesn’t pay, that can stick to the owner’s property tax.

Left unpaid, the house can be foreclosed on years later for non-payment of utilities.

So, as you can see, dealing with water and sewer— and other City of Cleveland utilities— can be tricky.

And, another important aspect of this issue is that, in Cleveland, the water bill only comes out every 90 days. Which, for a lot of tenants, can be very difficult to pay. Many of them end up getting behind in their utility payment for any number of reasons. They may not be great at managing their money and when that bill comes every 90 days it completely throws off their budget.

Here at Realty Trust Services, we deal with this situation in four different ways.

1. The tenant puts the utility in their name. Usually there’s a large deposit and we’ve found that many tenants can’t afford that. They can afford the deposit when they move in— they can afford their rent— but they can’t afford the large deposit required by the water department, and that can create a problem when you’re trying to get someone moved in.

Here at Realty Trust Services, we have a checklist that we use before the tenant gets the keys. They have to show us that the utilities are in their name if that’s required.

So, for some tenants, that means they thought they could afford the house, but they can’t move in until they satisfy the conditions of that checklist.

2. The second way we handle City of Cleveland utilities here at Realty Trust Services is that we have the bills forwarded to our office. We then send it directly to the tenant. We also save a copy online on their account.

The beauty of this is that we can actually see the bill. It doesn’t have a chance to rack up. We’ve seen some tenants run up bills over $2,000 that we had no idea about because we weren’t seeing it.

This method lets us see the bill; lets us know if the tenant doesn’t pay it; and we’re also able to see any abnormal usage, like what might result from a leak or someone else staying in the house and using more water than usual.

This helps us manage the property more effectively and, if the tenant doesn’t pay, it will usually get shut off sooner rather than later this way.

Which is a great benefit for the owner because we’ve seen water bills get up into the thousands. More often than not, the City will shut off the water when the bill gets to around $700. Which works out in our favor because our only way of collecting the amount due if they don’t pay is to evict them, send them three day notices, call them… But, ultimately, if they still don’t pay we have no other choice but to evict them.

Eviction isn’t a great option…

Eviction isn’t really a great option or something we want to rush into doing. It’s not the best course of action for the owner or the tenant. But we’ve found that if the utility company shuts off the water, the tenant oftentimes pays it and the City restarts the service. That’s a much better alternative than losing a tenant that was otherwise paying all of their other bills except the water bill.

You might ask, “Can you, as the management company, or I, as the landlord, turn off the water?” No. That’s illegal. You can’t turn off the water because doing so is actually considered a self-serve eviction. The water company can turn off the water, but neither the owner nor the management company are legally allowed to.


3. Another option some landlords prefer is to keep the utilities in their name, they pay the water bill, and then the management company collects reimbursement from the tenant. Some landlords will go this route because they worry that— since the water bill is in their name— if it’s not paid, it will reflect badly on their credit.

Water Bills Are Not Reflected On Credit Reports 

I can tell you from a wealth of personal experience (I’ve seen many hundreds, if not thousands, of credit reports), that I’ve never once seen a water bill on anyone’s credit report.

The reason why unpaid water bills don’t affect your credit score is pretty simple. The water company is always going to get its money because they go in as a first lien— before a mortgage, before judgment, and before a lot of other liens— right alongside property taxes. They’ll get their money eventually.

Truth be told, unless there are some unusual circumstances— the property is worth $0 or its a toxic waste dump and it won’t sell for anything in a foreclosure sale— the water company will get their money. So they tend to not worry too much about whether or not its paid when its due.

But that’s an option a lot of landlords choose to use. They pay the bill and then we, as the property management company, collect reimbursement from the tenant. It’s handled just like rent.

But, if the tenant doesn’t reimburse the owner, the owner is out of money. That can start to build up over time and eventually the owner has the problem of, “Do I want to evict this person because they didn’t pay their water bill?”

There are times when that’s the only real choice an owner has to get the tenant to pay what they owe. It’s not a good position to be in and I personally think people should avoid ever going down that road. It can cause a needless complication. Make the tenant pay their own bill directly to the water company. It’s ultimately much easier for everyone involved.


4. The last option I want to talk with you about is budgeting.

As I mentioned, in Cleveland the water bill tends to come out every 90 days and the amount can substantially accrue in that time period.

One option we here at Realty Trust Services have for our clients is that we can set them up on a budget. On this budget, they pay a certain amount every month. This amount is based on what we think typical water use would be each month for that property.

Then, when the bill comes in, we pull from the amount the tenant has paid in.

So, for example, let’s say the bill came out and the total was $250. Well, for the last three months the tenant was paying $100 a month. So when the bill comes in on that 90 day mark, the tenant has $300 in their account. We pay the water bill out of that and the tenant has $50 left to roll over to the next water bill cycle.

This way, the tenant is happy that we provided a service to them, we can verify that the bill is getting paid, and it’s a win-win situation.

These are just some of the methods you can use to manage the water utility for a single family property. If you’re dealing with a multi-family property, there’s an entirely different set of techniques for dealing with this. We’ll look at those in another blog.

Contact Realty Trust Services

To get started with effective Ohio Property Management for your rental property contact us today by calling (440) 220-7300 or click here to connect with us online. 

Realty Trust Service Company Mission And Values

images I wanted to take some time today to go into a little discussion on our company mission statement and our values here at Realty Trust Services. Whether you’re a new employee, a potential owner who’s considering using our property management services, a current owner we work with, a tenant, a potential tenant… whatever the case may be, this is meant to be an exercise in one of our guiding values: education.

Mission

Our mission here at Realty Trust Services is to deliver peace of mind. Why is this our mission and how do we work towards it? Well, there are two reasons why it’s our mission. One, I think it’s what people want more than anything when they deal with our company. Two, I couldn’t remember anything longer than that. So it had to be something simple and direct that we could focus on and strive to deliver. I want to create a certain end effect when anyone associated with Realty Trust Services dealt with other people. Whether those people be owners, tenants, co-workers, vendors… whoever it might be… when they go to bed at night— at least if they’ve just interacted with us— to hopefully sleep a little better; a little more peacefully. Now, obviously, achieving peace of mind is a little more complex than interactions with your multifamily property manager at whatever level you’re interacting with them on, but that’s the idea. easy way hard way I believe that, if we can deliver peace of mind, it’s kind of a win-win solution. It’s something that we can give to others that they can, in turn, give back to us. That’s a lifestyle choice and that’s what I want. Everything we do at Realty Trust Services should be focused on creating a positive feedback loop. We can all accomplish so much more if we’re in that mindset as opposed to the less-than-positive interactions that often pervade this industry. So how do we deliver peace of mind? To that end, I came up with three values that I feel are foundational. I believe these three things will help us to accomplish that mission of delivering peace of mind. This is how I visualize this system… The mission is a golf ball sitting on a tee. Or, in this instance, a T.E.E. T.E.E. stands for Transparency, Empathy, and Education. Let’s break that down.

TRANSPARENCY

Transparency means that you tell the truth, even if it’s bad news or no one wants to hear it. You know people will be upset by it, but you tell them anyway because they need to know. You tell the truth even though it might be painful at that moment. Transparency gives you the freedom to get on with finding a solution. There’s no need to avoid or doge or hide from the issues. And that’s important because trying to avoid dealing with an ugly truth just fuels negative energy. Instead of being a positive cycle or productive change, it becomes a negative cycle. It becomes all anyone thinks about. “What’s wrong?” “What aren’t they telling me?” “What do I need to hide?” “What don’t they know? What do they know?” All of those things are distractions from providing the excellent service it takes to create positive, trust-filled interactions. So the idea of transparency is that we admit our mistakes. There’s no room for ego in a high-performance team. Once we agree that everyone is on the same side and we’re all trying to provide each other peace of mind, we can bring people together. So owners aren’t just trying to operate their property for the cheapest price possible, tenants aren’t just trying to get whatever they want out of any given transaction, but everyone’s actively trying to work together. At first, that may seem a little more expensive one way or another, but, when you’re working together for a common purpose, things start to happen that are synergistic. Maybe the tenant takes care of the property a little bit better so the owner is a little more willing to see to the tenant’s concerns and spend money to make things better for them. These things work in a positive circle. If you look at it systematically, oftentimes what you do will be different and the vision and values are what organize the system and allow us to get the result we’re after. That’s why it’s so important to talk about it and think about it. Ultimately, the effect of high transparency is that the trust in a relationship is much higher and that gives us the framework to work together more effectively.

EMPATHY

“People don’t care what you know until they know that you care.” Empathy is when you have a sense of what others are feeling. And many people don’t know how to experience empathy, for a number of reasons. Sometimes it’s just how they grew up. You model certain things from your parents and other sources and they may not have demonstrated empathy for their own unique reasons. Trauma can be another reason why a person isn’t good at empathizing with others. Trauma can create the inability to have any kind of feeling, let alone an empathic one for someone else. If you start to feel like emotions are painful in general— positive or negative— you make yourself disconnect. That happens to more people than you might expect. But we always seek to insert empathy into our interactions. Empathy is one more thing that increases the trust in the process of what we’re trying to achieve. And trust is so vital. It makes everything else better. download I recently read a book called The Upside of Irrationality by Dan Ariely. One of the interesting experiments he did was he would intentionally irritate people. The opposite of empathy. They created these situations where people had the opportunity to take advantage of them and they tested whether or not being intentionally rude to the person beforehand affected their behavior. What they found was that 70-80% of people wouldn’t take advantage of a difficult situation if they were feeling respected and there was a trusting, empathic relationship. On the other hand, an overwhelming majority of the people they irritated took advantage. These were ordinary people who weren’t really bad— you wouldn’t consider them to be dishonest or anything like that— but the same person that was not irritated would not take advantage of a situation where the irritated person would. My point here is that empathy is important, especially for landlords who offer property management in Ohio. It’s important that we show empathy to our tenants because it’s going to make a big difference in how they treat the property. Because if they’re feeling taken advantage of or that someone was rude to them or didn’t take care of their needs, they’re going to want to exact revenge. Revenge doesn’t have to have anything to do with killing someone or drastically hurting someone in order to get even. It might not even be a particularly rage-filled action they take, but— at least in most cases— people who feel slighted will still engage in vengeful behavior. Relationships mitigate risk. Having that empathic relationship and caring makes a big difference for everyone involved. Yet there’s this fear of empathy. Some people feel like they have to be mean or rude to someone if they disagree with that other person. Say, for example, that a tenant is being unreasonable in asking for something. One of the rules that I’ve created to help us maintain a high level of empathy is that we will always seek to find a solution, even if we aren’t it.

To illustrate this… Today, a tenant asked me to come plow their driveway. There was a foot of snow out in front of this duplex. Well, we don’t operate plowing services for properties under five units. So I had a choice… I could have said, “screw you, we’re not doing it,” or I could try to identify with their concern. I chose the second option. I expressed my sympathy with their situation and then I provided several potential solutions. I tried to provide some ideas on how he could solve the issue of needing the driveway cleared and I even sent him over some tips on driveway shoveling. The tenant came back to me and said, “You know what, I would be willing to pay for it. Could you provide the service and I pay for it?” So I provided him with some vendors who could do the job and, in the end, everything worked out as a win-win. I could have just said no. And, I suspect that, if I had done that, he might have dug in and started looking at city regulations trying to find an angle to force us to do what he wanted. There are two ways that scenario could have gone and I’ve seen it go the other way too many times because people weren’t thoughtful enough to make an empathic response. It’s not that hard, but it makes a huge difference, and that’s why I say empathy is such a big part of our mission here at Realty Trust Services.

EDUCATION

Education is a long-term effector. It usually doesn’t get immediate results, but, over time, education improves us all. It improves the quality of our relationships, it improves who we are as individuals, it changes our character, it changes our skill level, and it changes our interactions. It gives you more options for doing more and getting more accomplished. And, on top of all of that, it makes people feel that you’re dependable and concerned with improvement and it gives them a little more peace of mind. Most of the time, education is an upfront expense. You have to spend time and— sometimes— money investing in resources and you have to put in the hours to get the work done to learn whatever it is you’re working toward. But it’s a worthwhile investment because it’s an investment in people. And education is universal. Employees should be educators, just like the business owners themselves. I’m doing putting together this blog to educate and I’m actively trying to get the people I work with to do the same and provide their knowledge to tenants and owners. Avon Lake Ohio Education happens at a lot of different levels. Sometimes you’re just educating people on the fact that you know what you’re doing and that they can depend on you to do it well. Manuals and processes are education because they let us learn important systems. By creating a manual that anybody can use to do something we can easily get everyone in an organization armed with knowledge that lets us deliver a consistent service and, thereby, peace of mind. If something is consistent, you can trust it to work out. Here at Realty Trust Services, we offer incentives to employees who actively read books and work to improve themselves with various training materials. I particularly recommend business-related and self-help materials that help people grow and interact more effectively. Education sharpens everything it touches and makes entire systems work better. The last piece is the systems we use to keep everything running smoothly. Having these systems in place makes our business much less chaotic and lets us set parameters on how we start and end certain relationships and how we do everyday tasks. CONTACT US Covering our T.E.E. with a “club” of streamlined systems takes us further and faster towards achieving our mission than we could ever do alone. To learn more about our property management services contact us today by calling (440) 220-7300 or click here to connect with us through our website.

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.

The Lean Property Manager?

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Let’s face it, property management tends to be a backwards industry. Both in the USA and even mores so in Cleveland Ohio.  In fact there maybe one or two property management companies that have been in business more than 5 years in this area.

At Realty Trust Services we are constantly looking at ways to be more effective and innovative.

In the last 30 years major innovations in manufacturing have been coming to united states from Japan, which incidentally got its start from the leading united states statistician Edward Demings. Toyota innovated Deming’s teachings into the Toyota Production System (TPS) and as American companies have adopted techniques from the Toyota Production System this series of ideas and techniques has been called “Lean” because of the obsessive focus on eliminating inefficiencies / waste or any financial or energy expenditure that doesn’t directly provide value to the end customer. 

As business becomes more competitive and transparent and consumers more demanding, service companies are also starting to look at the techniques and philosophies from Lean Manufacturing to bring Lean Service offerings.

At Realty Trust Services we have begun a journey towards improvement using lean techniques. All though any mode of improvement is a never instant we wanted to talk about some of the things we are working on to improve.

What allows lean to take hold in a company is that it is part of the culture. To that end it is something that we talk about daily we study it together in daily meetings.

According to Paul Akers, author or “2 Second Lean” the highest pillar of lean is the ability to “see waste.” Lean systems all are designed so that waste and inefficiencies are immediately visually apparent company wide. This then allows the workers within the company to immediately respond and keep processes running smoothly and allows us to make full use of the “human resources” of the company. Examples of how we are exposing the business processes in a visual way is that have 4 LCD’s displays on our main office walls as dashboards for essential company processes. Data connectors to display tenant charges, maintenance work orders, indicators of email backlog for each employee, and rental market times are all being created so that the entire team is up to date on every part of the business


 

Lean companies use cross functional teams arranged together in work groups to increase efficiency in communication and we too have adopted this in our work force.

Let Us Help Your Grow Your Portfolio

As a Real Estate investor your goal is to grow your portfolio of income producing Ohio Rental Property and generate more monthly cash flow.

Realty Trust Services is continually improving ourselves so that we can help improve your business and profitability. We are not comfortable simply being better than the very low standard this industry has set.

Doing all of this means that you (landlord) can count on us to help you efficiently grow your portfolio of rental properties in Westlake Ohio and generate more cash flow from those properties than you may have in the past.

From our innovations we have even created an alpha version of a program that we are releasing here which we believe could change the way businesses use the internet. See the video on this below and a link to the website for this product here: http://Snapextual.com

We aren’t perfect and we have plenty of “waste” to eliminate. However if you’re not satisfied with your current property management company, or are frustrated with managing your Ohio Rental Property yourself, consider joining a company that will continue to grow and improve with you and consider your suggestions.

Get Ohio Property Management

To learn more about Realty Trust Services, or how we can help you contact us today by CLICKING HERE to connect with us through our website or by calling (440) 220-7300.

Why Cleveland Ohio landlords need insurance

This past winter was a difficult one for a lot of landlords in northeast Ohio. I’ve seen ice dams, water backups, freezes on houses while tenants were away. And damages ranging from a few hundred dollars all the way up to $30,000 plus in terms of what insurance would pay.

So I figured now would be a great time to talk about insurance for landlords.

In the past, here at Realty Trust Services, we didn’t always require owners to provide us with copies of their insurance policies. However, we’ve learned from experience that it’s vitally important that owners have a copy of their policies on file with us. That way, if we have an emergency, we aren’t having to make a guess about which contractor use and delaying essential services that need to take place ASAP to stop any further damage to the property.

If we’re not sure what contractor to use and we’re calling around trying to get in contact with a property owner late at night or get in touch with an insurance agent about what’s covered and what’s not… that’s eating up precious time and potentially costing everyone more money.

Not an ideal situation at all.

So, by having that policy information available, we can make better informed decisions.

Regardless of whether there’s a policy on file or not, the first step is normally doing whatever may be necessary to prevent further damage to the property. Then there’s restoration. Information makes both much easier, more efficient, and more easier to afford.

One thing that we offer here at Realty Trust Services— that we recommend to other property management companies— is a 24-hour dispatch for emergencies. If something happens, we’re ready to go and we have a network of contacts with restoration contractors that work with insurance companies. That’s proven to be invaluable for us.

A while ago, we started contacting owners and asking them questions about their insurance policies for our database. As it turned out, most of them didn’t really have very good information about what their insurance even offered. They didn’t know the deductible— what they paid out of pocket before the insurance kicked in— or what their insurance covered and they didn’t know that they weren’t covered at all when their property was vacant. Some didn’t know if they had insurance at all.

Which is to say that now might be a good time to call up your insurance agent and have them look at your policy to find out what’s on it.

One thing that’s nice to have is loss of rent coverage. It’s a little more expensive, but, if you can get it, at least if something happens and you lose rent for 5 months, you’ll have a cushion.


 

Another thing you really need a firm grasp on what happens when a tenant moves out because coverage changes and— more often than not— you need a new policy for a certain period afterward.

And you should make it a priority to find out if the policy has water damage coverage because we do have a lot of issues— especially with older homes— with water in northeastern Ohio.

There’s no getting around the fact that sewer backups happen. Roots grow in the drains or what have you. It’s just the nature of owning a home in this area.

Insurance is a classic issue for landlords because a lot of insurance underwriters don’t even want to touch rental properties. It’s a specialized niche and you definitely want to find an agent that has some knowledge and can assist you and educate you a little bit about what you’re getting and what you should get.

Something we’ve just recently added as a standard policy— based on our experiences— is that we’re requiring all tenants to have tenant insurance. Here at Realty Trust Services, we offer tenant insurance through our software. It’s quite a nice policy and it runs between $9 and $15 a month. So it’s a nominal fee that enables us to make sure that the tenant has named the landlord in the policy.

And for owners, there’s even coverage for damage to your property caused by tenant negligence.

Let’s say, hypothetically, that there’s damage to the roof from a storm which causes the house to leak and the tenants have to go to a hotel. You can set up a policy so the tenants aren’t asking you to pay for that hotel stay.

Having that insurance in place keeps you from getting sued for the price of that hotel stay. And the possibility that the tenant might sue— in some instances— to be reimbursed for that trip, even if you’re not contractually obligated to provide for that.

So you can certainly see the appeal of insurance in that case… and there’s a lot of cases that are very similar to those circumstances.

Insurance companies have learned the hard way that some tenants will use tenant insurance as an ATM machine to get money for their stuff in situations like the one above. So the insurance companies have stopped providing for that and personal belongings are no longer covered.

For all of those reasons and more, we strongly recommend any owner— whether they’re with Realty Trust Services or not— require tenant insurance. It just makes good sense.

If you’re unsure about your insurance policy, the team here at Realty Trust Services would be happy to refer you to several professionals that can give you quotes and talk you through the best policy for your needs contact us today by calling (440) 220-7300 or click here to contact us through our website. 

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