These 5 Things Cost Landlords The Most Money
The following list includes what we consider to be the biggest potential costs a landlord may face. Yes, these 5 things are required expenses for any rental property. But minimizing the exposure to these costs can make a significant difference on the balance sheet at the end of the year.
One: Vacancy
When a home is vacant, no rent is being collected. And that’s a bad thing for landlords. An industry standard of measurement for this situation is called “Days on Market.” The fewer days on market the better. The national average for days on market is 30 days. That’s a full month of rent lost at every turn! On top of lost rent, you also have turnover costs like painting and repairs.
Two: Not Having a Strong Lease
Having a strong lease is key to protecting yourself, and your investment. You want to make sure that it outlines who is responsible for what, and properly covers your liability. Then you must hold renters to the contract that they sign. If you allow them to pay rent a day late, you become the first one to violate your own contract!
Three: Not Screening Renters Properly
Accepting a bad tenant can be costly. They may not pay their rent on time. They may not pay their rent at all. They may not take care of the home, or even worse cause damage.
The best way to minimize the chance of getting a bad tenant is through a professional screening company. Bad credit? Criminal background? Bad leasing history? You can only make an educated decision if you have all the facts.
Four: Maintenance
Every home requires maintenance. The best plan is to set aside a reasonable amount of money every month to pay for things when they break or need to be updated. It’s not about if something is going to require maintenance, it’s about when something will require maintenance. Being prepared financially is the best defense for maintenance costs. You also want to make sure to perform regular upkeep maintenance on things to avoid costly emergency repairs.
Five: Lack of Knowledge
Renting a home is not a simple task. There are so many things a landlord needs to understand to be successful.
What price will the market bear for monthly rent? Too low and you aren’t getting what the home is worth. Too high and you may force longer than necessary vacancy until the price is adjusted.
There are many laws that must be followed related to rental homes. Fair Housing when interviewing and selecting renters. Understanding local laws about the process for evicting a renter. Understanding how to handle security deposits so that you aren’t commingling funds. Getting into legal trouble is expensive and time consuming.
We wrote this story because we manage hundreds of homes and know what it takes to do it properly, safely and successfully. If you need help managing your investment property, please give us a call today. We can help!
When Was the Last Time They Saw Your Face Instead of Your Email?
By Sandy Fisher, Director of Business Development for Home Rental Services
I get to do a lot of the fun parts of our company’s business! I get to foster great relationships with all kinds of people including owners, Realtors®, investors, and our vendors. Some of this is done via phone and some via email. My preference is face-to-face.
Since we’re a property management company, most people in our office can rattle off property addresses like their children’s names. I can’t. I do the front end of our business, which is talking to people. So when someone asks me a question about an address, my response is, “I need a name please!”
I take and make phone calls on a daily basis with these relationships. I love connecting this way. I also receive and send a large amount of emails and texts every day. I’m okay with that too. Again, my preference is face-to-face. And those of you with an iPhone, I don’t mean “face-timing” someone. I mean in-person, face-to-face connecting.
You might think face-to-face connecting isn’t efficient, or a bit “old-school.” Sure, it’s more time consuming, but we think it’s incredibly important.
We welcome new clients to our office all the time. We want them to see we have a fully-staffed office with regular business hours. This is often very different than their experience with our competitors. Someone is here to help them in person.
In this crazy world of instant gratification/communication, it’s refreshing to actually see who you are talking to occasionally. I think it makes a bigger impact because it is increasingly rare to do face-to-face time. I’m glad that’s part of my job.
Taking the time to meet people face-to-face and getting to know them has had a significant impact on growing our business. I encourage you to add a couple of face-to-face meetings this week and see what happens!
Cheaper is better… right???
By Paul Branton, Director of Investment Services for Home Rental Services
We’ve all heard it said before, “If it sounds too good to be true, then it probably is.”
Recently I was working with an owner on his vacant property. He insisted on subbing out the flooring job to “his guy” instead of using one of our professional vendors. The reason he made this decision was solely based on cost, and the hope that he could “save” some money. That’s when I wish I would have told him, “If you think it’s expensive to hire a professional, wait until you hire an amateur.”
The money he “saved” was lost in the extra time it took for his guy to get the job done. (Additional days of vacancy due to project work means lost potential income.) The situation got even worse. The job wasn’t done well, which required us to have professionals come in and fix the problems at additional cost. This resulted in even more vacancy.
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- Yep, nails.
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- Woah.
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- Close enough?
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- Was there an earthquake?
When hiring a contractor, you typically get what you pay for.
You can typically choose only two of these three categories: Cheap, Fast and Great
- You can have Cheap and Fast but the results will likely not be Great.
- You can have Cheap and Great but it likely won’t get done Fast.
- You can have Fast and Great but that doesn’t usually come Cheap.
Don’t focus solely on the cost… consider the rental ROI.
In business, there are times when you have to spend money to make money. When it’s time to spend, you shouldn’t dwell on how to save money but focus on how to spend your money wisely.
If you have questions about what improvements might bring the best rental ROI for your investment property, give us a shout. We’d love to help you figure it out!
The Summer Adventure and Two Hungry Boys
By Sandy Fisher, Director of Business Development for Home Rental Services
Every year at Home Rental Services, we anticipate late spring and all of summer to be a busy peak season.
We lease homes every day, all year long. If people get to choose when they’ll move, late spring and summer is the time of year they do it. Whether it’s for warmer weather reasons or having to uproot children’s environments, summer break is often the most convenient time to move. Because of this, our typical day at Home Rental Services in the summertime turns into a bit of organized chaos. We love it, and we’re always ready for it.
It reminds me of my family, and the dynamics that change at our house in late spring through summer. My husband and I have three kids ages 15, 19 and 20. Our 15 year old daughter is still at home full-time. Our two oldest boys are in college and have full-time summer jobs. This allows them to move home for their summer breaks. So the same thing happens to me in my personal life and professional life as spring approaches. Things get busy.
This is my second summer of having the boys home, so I was more prepared. Last year, when my oldest came home, I left it up to him to unload and organize his belongings. Long story short—that didn’t work out well. A big pile of his stuff lived in the same spot in his room all summer long. Kinda gross.
This year, I was bound and determined not to let that happen again. My boys share a room (decent-sized, but they still share.) There was no way I was going to let two huge piles of college stuff sit in that room all summer long.
Prior to them getting home for the summer, I cleared out two areas of our storage room. I created space for each boy to NEATLY place things they didn’t care to see again until fall. The rest was to be unpacked in their room. I told them I wanted them to act like they live in their room again and not like they were just visiting. It’s been about a month and so far things are working out pretty well. (My weekly grocery bill to feed my two giant boys, however, not working out so well.)
I continue to improve at home every summer, just like we continue to improve in the business. Each spring, I prepare my office and my calendar, much like I prepared for the boys to be home for the summer. Clearing mess, creating space and welcoming the upswing of activity.
We’re constantly looking for new technologies and programs to make it easier for renters to find your home and sign a lease. We wouldn’t be nearing our 30th year without well-oiled gears that can handle the non-stop merry-go-round of property management and leasing.
Home Rental Services Turns 28 in September
HRS will be 28 years old in September! That’s a lot of years of making sure we’re ready for our busy summer season. Would you believe we’ve written and managed over 10,000 leases since we started? We’re well into July at this point and we are successfully conquering our 28th busy summer season. We hope you’re conquering and enjoying your busy summer as well.
Distracted Living: Do You Look At Your Phone 100 Times a Day?
By Paul Branton, Director of Investor Services, Home Rental Services
Do you feel naked when you don’t have your phone with you? Do you find that you always have an electronic device on around you?
If so, you aren’t alone. Would you believe that the average person checks their cell phone over 100 times per day? Wow, it’s no wonder that we feel strange without the devices we’ve come to rely on so heavily.
When I say heavily, I mean that here at HRS, we take technology seriously. We utilize a plethora of databases, apps, websites and tech tools to help increase business efficiency and enhance our client/customer experience. Here is a look at the dedicated folder of “Work” apps I have on my phone!
As this was a growing problem for me personally, and our culture as a whole, I wanted to take a moment to encourage everyone to reduce the attention we give our devices.
You Have to Start Somewhere
Each and every weekend when I get home, I go into my phone settings, select my work email account and click the toggle button that turns it off. This allows me to avoid stress over the number of emails that come through over the weekend. Believe it or not, 100% of the time, the emails are safe and sound… waiting for me in my inbox on Monday morning.
Consistency is Key
Every January for the past four years, my wife and I have taken the month off from social media. We’re not against social media. We realized that keeping up with social media was consuming more of our time than it should. It was distracting us from living. In January this year, I went as far as deleting the Facebook app from my phone entirely. It felt like I got a bit of my life back. And I’ve had no desire to install it again.
Taking it to a Whole New Level
I recently took a three day weekend trip with my family to the lake. I decided I would turn off my phone when we arrived. (I couldn’t turn it off prior because my phone is also my navigation device.)
I powered my phone down and left it in a safe place for the entire weekend. Yes, there were there times when I felt naked because it wasn’t in my pocket. Yes, there were times when I wanted to check the weather or Google something. Or take a picture. But guess what? I survived. And better yet, I was engaged and present with my friends and family the entire time.
Funny side note, when I powered my phone back on, I had a few texts, zero missed calls (ironic) and quite a few emails. Here’s my favorite text message… “Are you alive?”
Its good to know my friend cares… He also sent a text to my wife since I had not responded for a couple days! Thanks Mike!
The Challenge
My challenge to you (and for myself) is to become less distracted by our electronic devices. To be present and “in the moment.” Stop pulling out your phone every time it rings, bleeps or vibrates.
Strike up a conversation with the person on the elevator or in the long line at Chipotle. I bet you notice the difference. And I bet you like the change. Good luck!
Have you found your tribe?
Author: Sandy Fisher, Director of Business Development
I have several family members and good friends who I chat with occasionally for support, guidance, learning opportunities, etc. I don’t know what I’d do without those regular or random chat sessions. Whether or not I want to hear what they have to say, it’s such great support for my personal life for sure.
However, I also have this little professional life to which sometimes my friends and family can’t really relate. Lucky for me, one of my job “duties” is attending a once a month small group session with a great bunch of Realtors®. We offer that same support, guidance, and learning opportunities to each other for what we do each day in our businesses. There are about ten of us who meet, and we have a leader who tries to keep us on a positive and productive track during our hour and a half long sessions.
Initially, when I became part of this group, I really didn’t look forward to it. Everyone was incredibly nice and enjoyable to be around, but I thought I had too many other work-related things I needed to be doing and just felt this was holding me up. A couple of months of meetings went by with me dutifully attending all of them, and I slowly felt myself looking forward to being there. I was learning names and personalities to go along with them, and they were learning and knowing more about me as well.
And now, after a year and a half of almost 100% attendance, I can’t wait to go. We all have the monthly assignment of bringing new ideas and problems to the table. We all take our turns sharing and giving feedback to each other, and then we all leave with our work tanks full and ready to go for the next month.
Our group does have the benefit of a successful process that helped us all find each other, and systems within that process that help us move forward with each meeting. But it’s not that hard to put it all together, and to be honest, we don’t follow the plan we are supposed to as there’s usually so much we want to share and learn.
The benefits of this professional support definitely outweigh the little bit of time away from my desk, and certainly make my desk time much more productive. If you are not currently in a support group for professional reasons, I’d highly HIGHLY recommend it.
Summer Brings us Blockbusters. Here are Two Cinderella Stories.
Author: Paul Branton, Director of Investment Services
It has arrived! Summer 2017 officially starts today, June 20th! I can hardly believe that its already here, can you?
If you can recall, back in March I authored a post asking “Who’s ready for the Madness!?!?” and in May I wrote “You have to spend money to make money.” Well, I’m happy to report that the Home Rental Services team was ready for the madness! (and now we’re ready for Summer!)
Over the past few months, we’ve had the privilege of helping quite a few investors do exactly what I discussed in my previous posts. We’ve been able to help these investors in a number of ways such as: identifying properties, preparing renovations budgets, coordinating renovation work and of course, professionally leasing and managing the properties as long term rental investments.
In order for you to have a better idea of the process, here are a couple of examples:
Investment Property Example #1
Location: South Overland Park
Under Contract: 3/16
Closed: 4/27
Purchase Price: Low $300’s
Home Specs: 2 Story Plan with 4 Beds, 3.5 Baths, Finished Walkout Basement, Approximately 3,000 Sq. ft., 2 Car Garage
Rental Rate Projection: $2,300-$2,500
Renovation Budget: $13,693
Projects:
- New Deck w Cedar and Composite Materials
- Adjust Doors
- Glaze Hall Shower
- New Tile Floor in Master Bath
- Demo Fluorescent light in master and install LED can lights
Work Started: 5/1
Work Completed: 6/2
Lease Starts: 6/12
Lease Term: 3 years
Rental Rate: $2,395/month
Investment Property Example #2
Location: South Olathe
Under Contract: 3/27
Closed: 4/28
Purchase Price: Upper $200’s
Home Specs: California Split Plan with 5 Beds, 3 Baths, Finished Walkout Lower Level, Approx 2,500 Sq. ft., 3 Car Garage
Rental Rate Projection: $1,950-$2,150
Renovation Budget: $15,439
Projects:
- Mudjacking
- Junk Removal
- Extend downspouts
- Demo Concrete pad and install sod
- Paint Garage Walls and entry door
- Remove Curtains and Install 2” White Faux Wood Blinds
- Install new Hardwood flooring at front living room area
- Misc. Painting
- Tile Master Bathroom
- Install new Vinyl Plank Flooring in Lower Level Rec Room
Work Started: 5/1
Work Completed: 6/3
Lease Starts: 6/30
Lease Term: 2 years
Rental Rate: $2,250
On new acquisitions, I tell Investors to plan for about 45-90 days of combined renovation and marketing time. As a frame of reference, in 2016 our average combined renovation and marketing time for new acquisitions was 59 days. This means that once the home closed, it was placed on the market for rent, renovations completed, the lease was executed and tenants moved in, all in under 60 days!
If you or someone you know is interested in learning more about real estate investing in Kansas City, please let us know! We would love to help!
Now I’m headed to the driving range… right after I grab my first Quik Trip Dr. Pepper for the summer of 2017! Have a fun and safe summer everyone!
A Cautionary Tale: The Day Jennifer’s Water Heater Almost Burned The House Down.
This is a guest post from our very own Jennifer Hermon, Administrative Specialist for Home Rental Services.
The day after Memorial Day, we learned that our smoke detectors are functioning well. Thank goodness. It took a while to realize that the water heater was the potential ignitor of a house fire.
Five a.m. on Tuesday morning, the sound of ten smoke alarms screeching throughout the house launched me out of bed, into my robe and stumbling out the bedroom door. I ran recklessly through the house trying to locate the source of what was surely a malfunction or false alarm.
I could hear one of the boys banging on the other’s bedroom door and noticed that the dogs were frozen in place. Still, I kept looking for what had caused the smoke alarms to go off. It wasn’t until I opened the storage room door that the shrill sound finally ceased.
I was stumped. I’ve been in the property management industry for almost 20 years. I know the cautions, the signs and hazards. Or so I thought.
The air conditioning was on, so the fan was running. I thought maybe something was wrong with it and turned off the power switch at the unit. After all, it was at least 16 years old. But my detectors weren’t carbon monoxide detectors. Only smoke. There’s no smoke in the house.
The Water Heater
Thankfully a person taller than I am noticed an old paper manual of some sort on top of the water heater. The edge was brown, warm and crisp like it had been smoldering. And two 1 foot sections of floor trim were also on top of the water heater. They were warm and showing signs of browning.
My stomach turned when I realized how close I was to leaving for work with my kids at home and a potential fire situation. Even worse was the thought of what might have happened if the smoke detector in the storage area hadn’t worked properly. I had visions of a roaring fire filling our house with smoke before we could see or hear that anything was happening.
Did you know that most people who exit the house during a fire don’t have shoes on? I was brought up in a family of American Red Cross volunteers and I still wasn’t ready. PJ’s with no shoes, no glasses on. It’s easy to overlook. You think it won’t happen to you.
Morals of the story:
1) Nothing should be placed on top or near your water heater. It’s not just the furnace that needs to be clear of items.
2) Always test your smoke detectors twice a year. When the clocks change is an easy reminder. Fall back, Spring forward – change your filters, check your detectors, change your batteries (in smoke alarms and flashlights).
3) Make sure you have fire extinguishers that haven’t expired. Do you or your kids know how to operate an extinguisher?
4) Practice fire drills with your family! You might avoid 30-60 seconds of confusion if you practice, and that could make a big difference in the event of a real fire.
Each year, Home Rental Services helps place quite a few families who have lost their home due to a fire. That fact alone proves it can and does happen. Please take time today, or this weekend, to make an emergency readiness plan with your family. Commit to practicing fire drills. Check with your Department of Public safety for fire, tornado and other safety tips for the whole family. Be safe!
What Do You Mean I’ve Been Fined For Not Registering My Rental Property?
Author: Joshua Volland, Property Manager
What do you mean I’ve been fined for not registering my rental property?
This has been the reality in the past for some landlords who have failed to update the county with their new mailing address. Most cities use the county records office to mail important notices to owners, from code violations to taxes or in the case of this story; rental license applications.
Rental Registrations
There are several cities that have rental registrations in place. This article will focus on the process for a rental home in Overland Park.
Although Overland Park had rental registrations and then did away with them, they’ve created a new rental registration and inspection program that they’re rolling out in July.
I and others from Home Rental Services have been attending public meetings held by the City of Overland Park over the past year plus. The way the new program is being rolled out is confusing. We’re here to help guide you through the process and help you understand what to expect.
For the city of Overland Park…
If your rental home is in Overland Park, you need to ensure that the Johnson County records reflect your correct mailing address on the property records page.
- You can do a quick search of your rental property at: http://ims.jocogov.org/locationservices/
- When you input the rental property address in the search box and click Go, you will see detailed results for your rental home. (There’s a lot of helpful information!)
- Navigate to the listed Owner Information. If this doesn’t have your current mailing address, it’s important to get this corrected promptly with the county.
- For Johnson County, this can be done by completing the Change of Address: Real Estate & Personal Property form at: http://www.jocogov.org/dept/treasury-and-financial-management/real-estate-and-personal-property-tax/change-address
Why is this so important for rental homes in Overland Park?
It’s important because the city of Overland Park has decided to send all rental home owners the new rental registration form directly to the published address found in the Johnson County records as mentioned above. Although we’ve tried to work with the City to proactively get them a list of the homes we manage in Overland Park, they’ve insisted their method is the only way they’re willing to send the new rental registration forms.
If you don’t complete the new rental registration form, you could be fined. And if your mailing address isn’t correct, you might not even see the new registration form!
ePLACE – An alternate method for Overland Park Rental Licenses
Alternatively, the City of Overland Park has given you, the property owner, a second option. You can apply for a rental license using ePLACE (https://energov.opkansas.org/CSS/SelfService#/home), the City’s online portal for permitting, licensing and inspections. You need to set up an account with ePLACE to start, and if you need help using their system, you can email ePlaceHelp@opkansas.org or call 913-895-6000.
When to Apply
Overland Park has advised not to apply for a rental license earlier than two months prior to your pre-scheduled inspection date, which can be found online at: http://www.opkansas.org/resident-resources/neighborhood-resources/rental-licensing-and-inspection-map/
How the Program Works
The program requires owners to obtain and maintain a valid rental license and pass an exterior inspection of each rental property.
The $60 per building fee funds licensing, inspection and code compliance for rental properties annually. Rental licenses will be good for two years, making the minimum fee for a single rental dwelling unit $120.
- Two months prior to a property’s scheduled inspection date the City will notify the owners of rental dwellings of the need to file a rental license application.
- Property owners should return the completed application to the City.
- Upon receipt of the application, the City will make note of the appropriate contact information for the property and schedule the inspection.
- The City will generate an invoice and send it to the appropriate contact person.
- Upon payment of the invoice, the City will send a Rental License Permit to the owner.
- The City will conduct an inspection sometime within the month that the property was scheduled for inspection.
- The City will notify the appropriate contact person of the inspection results. If inspectors find deficiencies, the owners will be notified of the need to bring the property back into compliance.
Inspection Cycles
The program will be phased in on a month-by-month basis over a two-year period. Inspection phases will be:
Phase One: July 2017-April 2018
Phase Two: July 2018-April 2019
Inspection cycle restarts: July 2019
Landlords and other interested parties are encouraged to use the interactive map (http://www.opkansas.org/resident-resources/neighborhood-resources/rental-licensing-and-inspection-map/) to see when their properties are scheduled for inspection. The map will show the month and the year of the inspection.
When completing your application, you will want to be sure to provide Home Rental Services as your property manager if you are a current client.
Home Rental Services
6900 College Blvd Suite 990
Overland Park KS 66211
Phone: 913-469-6633
Email: propertymanagers@home4rent.com
If you do find yourself with any questions or concerns or needing assistance with navigating the process, please do not hesitate to contact me and I will be happy to assist.
Home Rental Services is Taking the Show on the Road!
Author: Sandy Fisher
That’s right, folks, we’re officially on tour… book your 2017 dates now!
What am I talking about? Well, a little over a year ago Home Rental Services launched our Investor Services program starring our Director of Investor Services Mr. Paul Branton.
(Note: This service costs nothing for Owners or Realtors®.)
We’ve done one show and we’ve got a few more booked in the months to come. Although Paul is the star of the show, Kandy Meehan, our owner and president, is the M.C. of our little gig, and I’m the production crew. I’m sure Paul and Kandy really can sing and dance, but that’s not what our show is about.
We’re making scheduled appearances at area Kansas City real estate broker offices to give a ten-minute presentation on Paul’s unique Investor Services program.
Many Realtors® work with investor clients, and they’re certainly the experts in the purchasing of the investment property. However, what happens when the investor wants to know things like projected rents of properties, vacancy rates, or what kinds of properties rent well in the Kansas City area?
What does the Realtor® do? They call Paul!
Paul will step in at any part of the investment purchase process to help that Realtor’s investor client make the best investment purchase. We want Realtors to leverage Paul and Home Rental Services’ experience as an ancillary service for their investor clients.
Is there a catch? There’s no catch, especially for Realtors. We don’t list homes for sale, and we don’t work with buyers. If during the process the investor decides to have Home Rental Services work for them for their leasing and property management needs, then that’s a bonus for us for sure.
A couple of other fun parts about our Home Rental Services 2017 Investment Services tour… we don’t only feed the crew, we feed the audience as well. We bring a spread of morning snacks and some pre- and post-show conversation. And secondly, you might just see the star of the show pull up for his rock star parking spot in our newly wrapped HRS company vehicle. It looks great, and you’ll notice Paul’s entrance for sure.
But what we’re really hoping you notice, is our commitment to helping our Realtor friends help their investor clients.
Here’s to a successful HRS 2017 tour!
