Are Your Tenants’ Candles Burning up Your Profits?
A couple of years ago we had three apartments turnover, all about the same time, and they all had a sort of black soot on the walls and ceilings that made the apartments look dark and dingy and depressing.
I was standing in one of the apartments with my mouth open, and my maintenance contractor said: “they must have been burning candles 24-7.” He then showed me that the soot couldn’t be washed off…it had to be repainted. Ugh.
This can be a big expense for landlords, and forces you to keep the apartment off the market longer to get painting done. So here’s a great solution to cut this damage off at the pass:
Promote soy wax candles to your tenants!
Here’s how green and sexy soy wax candles are:
- Paraffin candles are petroleum-based products. They are full of toxic chemicals and additives, and they are unhealthy to breathe. They leave an icky black soot on the walls and ceilings of living spaces, and in your lungs.
- Soy candles are biodegradable, are non-toxic, are made with renewable energy resources, burn 30-50% longer, are healthy to breathe, and don’t leave soot and residue on the walls.
- Soybeans are part of the world’s sustainable agriculture program, so you’ll be investing in a valuable product that is helping the environment.
- Many soy candles are beautifully hand crafted by small American businesses and come in a large variety of appealing aromas.
I now attach a written info sheet to each new lease, and I pitch each new tenant on the joys of soy candles.
Lemons to lemonade.
Soy candles are available at Whole Foods and Amazon dot com.
Does Your Credit Score Affect Your Insurance Cost?
As landlords, we all know how important it is to run credit checks on rental applicants. I’m looking for the words “As Agreed, As Agreed, As Agreed” down that right hand column. I want to know if the applicants keep their agreements.
As investors, we all know how important it is to maintain a great credit report to get the lowest loan rates.
But did it ever occur to you that your credit report affects your insurance premiums?
Carrie Van Brunt-Wiley, Editor of the HomeInsurance.com blog gave permission to reprint her great article on the subject. Enjoy!
“Your credit score and your insurance payments- what’s the connection?
“You’re likely not surprised when your loan officer asks for your social security number- a thorough credit check is standard when applying for a loan. However, many consumers are caught off-guard when a homeowners insurance agent asks for their social security number. It’s widely debated, but quite commonly practiced- for an insurance carrier to use a customer’s credit score to determine their insurance premiums.
“What does your credit score really mean to your potential insurance carrier?
“While many businesses will use a consumer’s credit score to determine eligibility for a line of credit or to discern whether a deposit should be held for an advance of services, insurance companies actually perform a different type of credit inquiry that they use for a very different reason.
“A “Soft” Credit Check
“First and foremost, it’s important to know that when an insurance company runs your credit they are actually performing what is called a “soft” credit check which accesses only your credit score and is not reflected as an inquiry on your credit report. As you probably can surmise, this is different from a “hard” credit check that a lender, for example, may run which does show up on your credit report as an inquiry. Since credit inquiries from “hard” credit checks can hurt your overall score it’s good to limit these types of credit checks when shopping for a mortgage, for example. However, since insurance carriers only perform a “soft” credit check you can feel free to shop for multiple insurance quotes without worrying about hurting your credit rating.
“What they use it for
“Here’s where a lot of confusion, and sometimes even frustration, can set in from a consumer’s perspective. Once an insurance company has your credit score, they use it (along with many other factors about you and your home, car, etc.) to assign you an “insurance score”. This insurance score reflects your potential risk to the insurer.
“The insurance carrier then takes your risk potential and calculates your premiums. The more risk you pose, the higher your premiums will most likely be. This is where the real question comes in:
“What does poor credit history have to do with my potential to file a claim?
“If you’re asking this question, you’re not alone.
“There is much debate over the use of credit scoring as a way to determine risk, and therefore assign rates to insurance consumers. However, insurance companies defend the practice saying that studies have shown a direct correlation between a person’s credit score and their likelihood to file a claim. Therefore, consumers with a lower credit score often pay higher rates for insurance.
“Whether you agree with the practice or not, qualifying for better insurance premiums is just one other way that you can save money by keeping a good credit rating.”
About Carrie Van Brunt-Wiley
Carrie Van Brunt-Wiley, is the Editor of the HomeInsurance.com blogs. Carrie graduated from the University of North Carolina at Wilmington with a BA in Professional Writing and Journalism. She has been managing research and content development for the HomeInsurance.com network of sites since 2007.
“Biggest Mistake New Investors Make in Due Diligence”
Thanks to attorney and multi-family investor Charles Dobens for this excellent and insightful article on due diligence, which we found on the MultiFamily Insight Blog:
“What is the biggest mistake new investors make in multifamily due diligence? Due diligence is where many new investors start to go astray. They find a deal, make offers, get an offer accepted, put it under contract and then start the due diligence process. During the due diligence process their entire focus is centered around the real estate. They interview and negotiate rates with property inspectors. They set up a date and time that they will go through each and every unit looking for the most egregious example of poor management so that they can go back to the seller and negotiate a repair allowance.
“The owner of a bad property will see this coming a mile away and be prepared for it. They will inflate their purchase price to make you pay the repair allowance WITH YOUR OWN MONEY. They will play hardball with you and structure the terms of the repair allowance such that the dollars come out of the deal in an in-kind transfer and not in cash. You, at the end of the day, end up with a property that has a list of needed repairs and no cash to fix it.
“But that is not where your focus needs to be. Here’s where the new investor goes astray. After the property inspector has completed his task and submits his beautiful 100-page report that you pay for, you will review it and look at the last page that gives a dollar amount as to the needed repairs. You then go back to the broker and open the negotiations all over again and I can assure you, they are lying in wait for you to return.
“But the problem with this over-dependence upon the inspection report is that, no matter what the inspector finds, it can be fixed with one thing – Money. Just name your price and the roof is fixed. Get three bids and the foundation is fixed. The brokers focus, along with yours and everyone else is on the real estate. This is exactly where you should not be focused. More…
Tell Your Tenants: DO NOT TURN OFF THE HEAT!
Be sure to tell your tenants: PLEASE DO NOT TURN YOUR FURNACE OFF OR WAY DOWN during this very cold weather!
It’s amazing (and embarassing) that landlords would have to tell their tenants not to turn off their heat when the weather is freezing, but you may as well learn from our mistakes so you don’t have to suffer what we just went through:
We just had residents on two different properties cause severe and costly damage to the property by turning off their heat “to save money.”
In one apartment, they turned off the heat to save money over the holidays while they were out of town. When they got back in town they called to say that they had no water and their tub drain was backed up…..as in frozen solid! It took our maintenance contractor about five hours to get the pipes unfrozen.
In another apartment, the tenants also turned off their heat over the holidays to save money because they were out of town. When they got back we found out that every single appliance had been frozen and had to be replaced: the water heater, the dishwasher, the garbage disposal and the furnace all were frozen and failed. The cost? Approximately $3,000.00 so these tenants could save maybe $30.00 in heat costs over the holidays. (By the way, the boyfriend had the chutzpah to call and tell us what crappy landlords we were for renting an apartment with all the appliances dead and dying).
Last year we had a tenant who complained that her walls and windows were sweating and causing water damage. Our maintenance contractor found out that she was turning her heat off in the day time while she went to work to save money. This caused the walls and windows to condensate and “sweat” when she came home each night and turned the heat on because the walls the windows were ice cold.
Last year we had another couple who turned their heat down as low as it could go every day when they went to work. Then they would call and complain repeatedly that there was something wrong with their furnace because it kept shutting off. We had several furnace experts come out and inspect the furnace at high costs. The experts figured out that the furnace’s safety mechanism was repeatedly shutting the furnace down because it was working so hard to reheat the apartment that it was overheating itself.
Hopefully, this will help you learn vicariously from our misadventures!
Smokers suck!
I don’t know why a landlord would put up with smokers.
Smokers cause huge damage to property and they stink the place up and scare away nice tenants.
I just got an apartment back that reeked. It took a full paint job and a ton of chemicals to finally make the apartment livable. We lost a couple weeks rent because we had to shut the apartment up and bomb it with anti-smoke concoctions, clean every square inch, and then air it out.
By the way, the lady that lived in that apartment, who repeatedly lied when we tried to find out who the smoker was after numerous complaints and notices, wanted her deposit back!
Luckily, we were able to save the carpet.
We have a little complex in escrow at the time of this writing, that is full of smokers. It’s nasty. We have a big job ahead of us. But we’ll be able to raise rents significantly just by getting rid of the smokers and the stench.
That’s what real estate agents call upside potential!
My Tenants Have Piercings, Tattoos, Blue Hair & Great Credit!
(I also rent to some really hot bachelors – in case some of you ladies want to get on my waiting list!) 😉
Some landlords shoot themselves in the foot by trying to prejudge which prospective tenants will be good, based on physical characteristics. This will get you into discrimination trouble, and it’s unproductive.
I remember many years ago, when my Mom managed a 90-unit complex that my Dad built. There was a club-house with an office. I think the statute of limitations has run out now so I can tell you that once my Mom locked the door and hid under her desk when a “skuzmobile” full of smokers pulled into the parking lot. This is not advised!!! (But it is a pretty funny family story.)
I have a system (for apartments) where I don’t even meet my prospective tenants until I’m there to sign the lease. So I have various funny stories about that.
One day, a few years ago, I arrived to sign a lease. There was a girl with blue hair and her hippy boyfriend waiting at the door. I said, “Wow! You have blue hair……but I could care less because I’ve seen your awesome credit reports so you can have any color hair you want.” They were my great tenants for about 3.5 years.
(I asked her what was up with the blue hair, and she said she was just trying to freak out her parents. She also worked in the prop department at the University Theater so it was part of her shtick. The hippy boyfriend was a registered nurse.)
I fell in love with them on paper (good credit, good rental history, good employment, no criminals or sex offenders). We don’t have a hair color requirement! More…
How to get the gov’t to pay you $1,250 every month
Here’s a terrific article from Mark Ford in DailyWealth:
“Every month, the government deposits $1,250 into my bank account. But I’m not collecting Social Security. And I’m not talking about tax refunds or municipal bonds.
I’m talking about Section 8 housing.
Section 8 housing (officially Section 8 of the United States Housing Act of 1937) is the government program that helps about 3.1 million low-income families pay rent. It operates through several programs, the largest of which is the Housing Choice Voucher program. It was meant to pay for “a portion” of the rents and utilities of those in its care. But often, as you will see, payments are greater than competitive rental prices.
Here’s a real-life example…
Peter, my partner in local real estate ventures, recently bought a house in a working-class neighborhood. In 2008, the house sold for $500,000. Three years later, we bought it for $80,000 and renovated it for another $15,000. It’s a three-bedroom, two-bath house with a fenced-in yard, new appliances, and tile floors.
Instead of renting it on the open market, Peter offered it to the local Section 8 housing authorities. They found a young lady with three children to take it. She seems to be an upstanding citizen – she is clean and sober and holds down a steady job. Her only “issue” is that she’s had three kids from different men who don’t feel it’s their job to provide for their children.
The Section 8 people offered to pay us $1,500 a month for this property, which is about $300 more than it’s worth. After Peter and I cover the monthly expenses – the mortgage, maintenance, and taxes – we are netting more than 12% on our cash. That’s darn good money in today’s world. So there must be a catch, right?
I figured the catch would be…”
Using Rental Criteria to Avoid Violating Fair Housing Law
Here is a really great article recently published in “The Landlord Times,” a monthly publication circulated to more than 6000 Utah apartment owners, property managers, and other members of the Utah Apartment Association. I am re-publishing it here, with permission, because it discusses Federal Fair Housing Law in an interesting and understandable way. Each and every landlord should read it:
“[It’s always] a good time to brush up on ways to avoid discrimination claims. One of the best ways to avoid discrimination claims is to have a list of the criteria you use when evaluating a tenant. It is better to have objective criteria and use those than to compare people to each other or use you “gut instinct” to evaluate if someone is qualified to rent from you.
It is natural for owners to want to compare prospects against each other. But BEWARE! Because of Federal Fair Housing Laws this can get you in trouble. Here is an example: More…
Here Comes Spring Turnover!
Can you feel it? Spring is appearing and change is in the air. Our landscape contractor has already begun to clean up and beautify each of our properties. We’ve had a bunch of residents respond happily and thank us.
The last two years were “lean” so we skipped adding new black soil to the planter beds and raked them out instead. We also planted fewer new flowers and perennials. But this year we’ve budgeted for a little more beautification because we intend to compete like crazy for the great tenants that will be looking for a fresh new apartment.
Spring and summer are a residential landlord’s biggest turnover months, so get ahead of the curve with your marketing plans, and don’t forget to also do everything possible to keep the great tenants you already have!
Most of the turnover will be done by the end of July, so work smart to have every vacancy filled by then. August vacancies will be much more difficult to rent because of the reduced demand, and by September it will be super difficult to attract the few tenants that will be moving in the fall and winter months.
Now is the time to prepare to compete for the great tenants that will be in the market for a fresh new apartment in the next few months!