General Information
Happy Holidays from Home Rental Services!
The holidays are fast approaching. We wanted to wish everyone an early Happy Holidays! We also wanted to share some upcoming December events that you might want to consider enjoying with friends and family!
Trolley Holiday Lights Tours
Have you lived in Kansas City for years, but haven’t taken in all the great holiday lights? Enjoy the holiday lights that Kansas City has to offer, while riding in heated trolley’s. Listen to holiday music while being chauffeured thru Crown Center, The Plaza and houses all along Ward Parkway. And the tour guide share the history of the plaza lights and fun facts along the way!
When: Recurring daily, December 5th – 31st, 2018 at 7:00 pm and 9:00 pm
Where the tour begins: Union Station, 30 W Pershing, Kansas City, MO 64108
Phone Reservations: 816-500-5417
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A Christmas Carol at Spencer Theater
A Kansas City tradition put on by the Kansas City Repertory Theatre!
Ebenezer Scrooge, a miserly, cold-hearted creditor, continues his stingy ways on Christmas Eve. He rejects a dinner invitation and all the good tidings of the season from his nephew, Fred; he yells at charity workers; and he overworks his earnest employee, Bob Cratchit. Until he is visited one-by-one, by the ghosts of Christmas Past, Present and Yet to Come, who show him the errors of his ways. He ultimately discovers what’s really worth celebrating at Christmas-time and beyond.
When: Showings from December 6th – 30th, 2018
Where: Helen F. Spencer Theatre, 4949 Cherry St, Kansas City, MO 64110
Phone Reservations: 816-235-2700
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Winterfest at Worlds of Fun
Holiday cheer rings out at Worlds of Fun during the annual WinterFest holiday celebration. Thousands of sparkling lights transform the park with an inviting glow that warms the heart and lifts the spirit. Witness festive live shows, meet iconic holiday characters, join holiday activities like ice skating and cooking decorating, ride select park attractions, and create lasting memories with family and friends. This holiday event takes place on select nights in December.
When: Select Nights in December, see website for dates
Where: Worlds of Fun
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The Kansas City Southern Holiday Express Train
Back for its 18th annual run, the Kansas City Southern Holiday Express train brings Santa Claus and his elves back to Union Station. The Kansas City Southern Holiday Express is unlike any other train in the world!
One of Kansas City’s favorite holiday traditions, the Kansas City Southern Holiday Express Train brings Santa to Union Station just before Christmas. Guests can visit with Santa and tour the train for free. This magical holiday train will roll into Union Station for a four-day visit this year from Dec. 14-18. Led by Kansas City Southern, Southern Belle business train, the Holiday Express train includes a smiling tank car Rudy; a flatcar carrying Santa’s sleigh, reindeer and a miniature village; a gingerbread boxcar; the elves’ workshop; the reindeer stable; and a little red caboose.
When: Daily, December 14th – 18th, 2018
Where: Union Station, Sprint Festival Plaza, 30 W. Pershing Rd., Kansas City, MO 64108
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Free Resource: Homeowners Association Documents
Many of the homes we rent in Kansas and Missouri are in neighborhoods with a Homeowners Association.
These kinds of associations are a governing body for the neighborhood and have the power to enforce the rules and bylaws agreed to by all members of the neighborhood. Typical rules and regulations apply to the exterior appearance of homes, fences, vehicle parking, additional structures like sheds, noise levels, pool use and more.
We continually update the Homeowners Association (HOA) documents as we receive them.
Over the years, we’ve continued to add to our HOA documents repository. Today, there are 263 Homeowners Associations that we have some amount of documentation for.
As a free resource, we’re providing the list of all neighborhoods that we currently have HOA information for! Click the link below to access the list. Once you find your neighborhood, simply click on the folder to see the PDF documents we have that contain specific information about that neighborhood’s HOA rules and regulations.
Click here for all of the HOA Documents that we’ve compiled.
If your neighborhood isn’t listed and you know there’s a Homeowners Association, please email us at info@home4rent.com and we will do our best to get them and make them available!
Top 10 Tips – Preparing Your Home For Fall
We wanted to provide a great list of fall maintenance tips for our renters. Please look through the list below and let us know if there are any items that you need us to coordinate on your behalf with our property managers!
1. Change the air filters in your home: If you have a central air conditioning system, change the air filter regularly. If you have a window air conditioning unit, remove from the window or place a waterproof cover over it to prevent damage during the winter. Change the filters in stove vents, clothes dryers and room fans if applicable. (Clean air filters will keep your family healthier in the fall months!)
2. Examine your gutters and downspouts for debris: Clear any leaves and dirt from gutters and examine downspouts for damage or loose pieces. If the gutters on your home are too high to get to safely, submit a maintenance request so that we can have a company do the work on your behalf.
3. Check your faucets for leaks: Before the temperatures start to drop, be sure to look at your faucets for any leaks. If you find any problems, it would be better to get them fixed now versus dealing with a burst pipe in the middle of winter.
4. Remove leaves from the grass and flower beds: It is very important to remove leaves from the grass and flower beds as they begin to fall, before the ice and snow come. If you don’t pick up the leaves, there is a good chance they’ll kill the grass and landscaping which is expensive to repair.
5. Disconnect water hoses from exterior faucets: If you leave the hoses connected to your water faucets, you run the risk of the freezing which can break the supply line. The simple fix is to simply disconnect the hoses. We recommend that you store the hoses in your garage to help them last longer!
6. Prepare your fireplace: If you have a working, wood burning fireplace, make sure the damper is open to allow air to freely move through the chimney. Check the damper handle and springs to ensure the flue is operating correctly.
7. Have your lawn and garden power tools serviced: Once your grass begins to go dormant, take your lawnmower, trimmer, and other power tools to get their engines serviced, blades sharpened and fluids topped off. People are surprised when they take their equipment in and are told that it will take weeks to get them back. This happens because everyone else is doing the same thing. Get in early to avoid the delay and your tools will be ready to go! We recommend Smitty’s Lawn and Garden.
8. Clean and store seasonal outdoor furniture: Store cushions in a dry area to prevent cracking, and fading over the fall and winter months. Once spring arrives, you will be pleased that you stored them and they’re ready for use!
9. Examine the grounds of your property: Check walkways for cracks and loose paving material. Report any major problems with your walkway and entryway areas before slippery weather can cause someone to have an accident.
10. Check windows and doors for drafts: The conditioned air in your home is lost through leaky windows and doors. Go through your home and make sure the seal and caulking around the window frame is in good condition. Think of adding heavier drapery around windows that are extra drafty, to help block air loss. This will make a difference in your heating and air conditioning bills!
Real Estate Investing Lingo Defined – Part 2
By Paul Branton, Director of Investor Services for Home Rental Services
Welcome back! It was about a month ago when I introduced you to some terms used in real estate investing. To get you caught up, here’s a link to that post:
Real Estate Investing Lingo Defined – Part 1
As you saw at the end of that post, I said we would be breaking down this sentence:
Hey Suzy, check out this turn-key deal! I can get a cap rate of 8%, maybe 9% if I do a few things to force appreciation; would you be open to doing a JV with me on this deal?
Let’s jump right in!
Turn-Key: A “turn-key” property is basically what it sounds like… everything has been done for you. All you have to do is purchase it. This generally includes everything from the full scale renovation of the property to placing the tenant. With a “turn-key” property, you should be able to close on the property and have it be a performing asset. The advantage of “turn-key” is it removes you from holding the property during the renovation and marketing/tenant placement time.
Cap Rate: Cap Rate is short for Capitalization Rate. This is a common measure for evaluating the value of a real estate investment. The way you calculate the cap rate is by taking the net operating income and divide by the current market value of the asset. (Cap Rate = NOI/Market Value) For example, if you have a property with a NOI of $16,000 that is worth $200,000 then your cap rate is 8%. ($16,000 / $200,000 = .08 = 8%)
Forced Appreciation: Forced Appreciation is an increase in the value of the asset due to the intentional actions of the owner. (Not natural/market appreciation.) You can force appreciation in numerous ways. The most common being increasing rents and decreasing expenses… both of which will increase your NOI.
Joint Venture (JV): In its simplest form, a joint venture is a business arrangement where two or more parties pool resources for the purpose of accomplishing a specific goal. In a joint venture, each of the parties is responsible for profits, losses, and costs associated with the investment.
This is another example of industry specific lingo that can be intimidating to people getting into real estate investing. My hope is that these four terms make more sense to you after reading the definitions. If you have any questions, just give us a call! Home Rental Services has been helping real estate investors since 1989.
Summer Vacation? Awesome. Water Damage When You Get Home? NOT Awesome.
So here we are in the middle of July. Friends, family and co-workers are taking vacation and going to fun and interesting places. It would be a shame to end a great trip by coming home to a nasty surprise… running water dripping through your ceiling. Can you imagine how shocking and a little scary that would be? We have people on our team that have experienced that first hand, and it is no fun at all.
All you have to do to make sure this doesn’t happen is turn off the main water supply to your home before you leave for an extended period of time.
Also, be sure to turn your hot water heater to the “vacation” setting or turn it down to a lower setting. That way, you won’t risk damage to your hot water heater if the water level gets low, and you will also save money by not having to keep the water as hot while you are away.
First, you have to find where the main water line comes into your home. Usually, this is located in the basement along an exterior wall and enters your house close to ground level. You will see a pipe coming in and either a round, turn-type shutoff or a straight, lever-type shutoff. (See the pictures below for examples of both types.) All you have to do is make sure either type is turned from the open position to the closed position, and you have shut off all water to your house.
Our friends at Sage Restoration shared with us recently the three most common types of water damage they see:
1. Washing machine line bursts or was not connected properly
2. Dishwasher water line connection bursts or leaks
3. Supply line to the toilet bursts or leaks
Be sure to avoid this potential problem at the end of a great vacation by turning off the main water supply to your house before you leave!
Real Estate Investing Lingo Defined – Part 1
By Paul Branton, Director of Investor Services for Home Rental Services
You know how in most professions there’s a “language” that those inside the profession tend to know? Well, that certainly is the case in real estate investing.
To make this experience a bit more fun, lets breakdown this sentence:
Hey Bill, Do you remember that time I used $100k in OPM to do a BRRR, hit the 1% rule and make an 18% Cash-on-Cash return? Wow, that sure was a great deal!
Okay, so clearly there were a few words/phrases in there that are unfamiliar to those outside of the world of real estate investing. Here are some definitions for these commonly used terms.
“OPM” or “Other People’s Money”
This is pretty much what it sounds like. The concept of using borrowing opportunities to leverage capital for investing. In other words, borrow money to use as investment capital. This works well when interest rates are low, like they’ve been for the past few years.
See the difference between using cash or leveraging OPM in the cash on the cash return example below.
“BRRR” or “Buy-Renovate-Rent-Refinance”
This is a method that is commonly practiced in “Buy/Hold” investing where you BUY a property with cash, RENOVATE the property to increase its value, RENT the home to a tenant and REFINANCE to get back all of your purchase and renovation funds.
The “1% Rule”
This is an often used “target” for the ratio of money invested vs. the rental rate. For example, if I purchase and renovate a property with a total cost of $150,000, the 1% rule would say that I should look to get $1,500/month in rent.
It will depend on the market and asset class that you are investing in, as to how easy or difficult this ratio is to achieve. The percentage will usually be lower for investments in a better market or asset class. (Lower risk = Lower rate of return.)
“Cash-on-Cash Return”
This is a percentage that is calculated based on the annual before tax cash flow or Net Operating Income (NOI) as compared to the total amount of capital invested.
As an example, if you were to invest $150,000 in cash to purchase a property that produces $18,000/year after expenses, the Cash on Cash return would be 12%. ($18,000 / $150,000) In this same example, if you leveraged “OPM” and only put 20% down, you would be investing $30,000 with the potential for a greater “CoC” return.
That being said, you must factor in the added expense of the debt service payment on the $120,000 you financed. To do this, you would take the $18,000 and reduce it by the annual mortgage payments of lets say, $10,000. This leaves you with a NOI of $8,000 and gives you a return of 26%. ($8,000 / $30,000)
If you’ve made it this far, I hope that you’ve learned something new! Or at least understand some of the abbreviations that get thrown around. If you want to learn more, look for my next post where we will break down the following sentence:
Hey Suzy, check out this turn-key deal! I can get a cap rate of 8%, maybe 9% if I do a few things to force appreciation; would you be open to doing a JV with me on this deal?
Continue reading: Real Estate Investing Lingo Defined – Part 2
Fun Relationship Builders? The Move In Bag and Move Out Box!
By Oretta Croushore, Property Manager for Home Rental Services
Move-in appointments are one of my favorite parts of my job as property manager. It’s one of the only times I get a chance to meet our renters face to face. I love having the chance to shake their hands and put a face to the voice on the phone or behind the emails.
Let’s face it, moving is stressful.
I don’t care how you do it. We have renters who are moving across town and those who are moving across the country. I’m chatty and curious by nature, so this is like a mini Barbara Walters moment for me. I love to hear their stories. I recently moved in a couple who were moved to Kansas City from Kentucky by the military. They were married just a few short months before. Knowing they were going to move, they had not even opened most of their wedding gifts.
I was thrilled to think of these newlyweds starting their lives as a married couple in one of “our” houses. I don’t think I will ever forget the very large family who came to the move in appointment! We must have looked like a clown car unloading as we all filed out of the conference room after the move-in appointment. The kids were a delight though… It’s such a treat to hear them excited about their new house.
Our conference room has a beautiful view of College and Metcalf, and the office tends to be peaceful. I know the people I’m meeting with have been running from here to there trying to get everything ready for the past several weeks. Sometimes, they’ve even driven straight in from out of state to meet with me. When they walk into our beautiful conference room, and let out a little sigh, I feel like we’re already making them feel at home.
The Move In Bag
Once all the business is done and I’ve handed over keys, I have one more surprise for the renters. The move in bag! This is a reusable bag with the Home Rental Services logo on the front. I tell them it’s a goody bag with a few things to get them through the first few days in their new home. There’s some toilet paper, paper towels, hand soap, cookies, candy, pens, a chip clip, and popcorn. We also like to include local restaurant guides.
A lot of thought has gone into what we put in the bags. We wanted things which are portable, economical, and useful. The reaction is always so appreciative and often excited. There’s been talk of having these bags left at the house for when the renters arrive. However, the property managers enjoy the experience so much, we refused to give it up.
Move Out Boxes
The move in bags have been so successful, that we decided to implement move out boxes. These are delivered by the leasing agents when they go to the house for the walk-through at relisting time. We make no rash decisions at Home Rental Services. We spend a lot of time thinking about the right things to put into these boxes. The idea was they would be things to help the renter get the house ready for inspection and to help their move. We created a few documents to help walk the renters through the move out process and the reconciliation of the security deposit.
We’ve learned over the years there are a lot of questions at move-out. We included a checklist of things to remember to address before they leave. Are there burned out light bulbs? Have you mowed the yard for the last time? Is the furnace filter clean? These reminders benefit everyone (and help keep turn costs lower.) There’s a small roll of packing tape and a Magic Eraser as well as some candy in the box. We want to send our renters off onto their next chapter with as much care and consideration as we did when welcoming them to their new home.
It’s the little things that make all the difference in a relationship. Move-in and move-out gifts are good ways to show our clients that we really care about them!
Case Study: Understanding the appropriate pricing for your rental property.
By Paul Branton, Director of Investor Services for Home Rental Services
We recently had a client ask us if we were confident that we could place a new tenant at a rate that they had received three years ago. The amount they were asking for was 11% higher than what the current tenants were paying. To answer this question of pricing and confidence, we had to review the overall “health” of the property.
A couple of quick lessons to observe from this situation:
Lesson 1
Just because your home leased previously for a certain amount, does not mean that it will lease at that same rate in today’s market.
Lesson 2
The costs associated with turnover and vacancy can easily wipe out almost any rate increase.
Lesson 3
DO NOT ignore your properties marketing/leasing history.
What to learn from the lessons above:
While it is true that the home leased at a higher rate three years ago… It’s not an accurate indicator of what the home will bring today. The market conditions and competition are constantly changing. We must always look at the math behind the risk/reward scenario.
In this example, the owner would need to lease his home with less than 30 days vacancy and NO turn costs in order for his 11% rate increase to get him ahead financially. Is that realistic? The answer for this property is: No. The answer might be yes in a different market or for a different property. However, we know the leasing history on this property and it typically takes over 30 days to place a qualified tenant.
In review of this homes leasing history and condition in relation to the comps, we advised the owner to renew his tenants at a 3% rate increase vs. taking the risks associated with the 11% higher rate.
Ultimately, the odds of the owner breaking even or losing money was more likely if he tried to obtain that higher rental rate. And our owner was really happy that we outlined all the details so that he could make a more informed decision.
Breakfast of Champions: Top 6 Things That Define Good Leaders
On a quarterly basis, we host a Breakfast of Champions for our vendors. It’s an opportunity for them to network and get to know each other while having breakfast. We also bring in a speaker with the goal of providing education and thought provoking content that our vendors can use in their businesses.
This month, we were excited to have Jeff DeWolf speak to us about Leadership and Job Satisfaction. If you check out his profile on LinkedIn, you will see that he calls himself a Job Happiness Fanatic. Jeff talked about the correlation between job happiness and leadership. He made a strong case that they are directly related. The better the leadership, the happier the employees.
Here are the top six things that define strong leaders.
Communication – Strong communication includes clarity of direction, opportunity for input and the level of information flow between groups.
Relationships – Relationships are the glue that holds teams together when times get tough. It’s important to foster a teamwork mentality. It’s human nature to want to be accepted in groups.
Growth – Most people want to be making forward progress in their personal and professional lives. So making progress towards their professional goals and responsibilities is important.
Fairness – It’s incredibly important that employees feel treated fairly. This means no special treatment and consistent policy administration. It also applies to compensation for the work being done.
Accountability – When employees understand what is expected of them, and why, they are usually more committed and accountable for their results. A good leader will hold their team accountable, but this can backfire without the “what” and “why”.
Trust – Jeff defined this as confidence in management’s abilities and intentions. He also made a point that when there is trust, employees will have freedom to express ideas (professionally of course) without repercussions. Good leaders are focused on an employee’s best interests over personal gain.
Have you heard a leadership talk with good points? Any other traits that you think are exhibited by strong leaders? We’d love to hear from you!
Real World Scenario: What to do when your tenant drives through the living room?
One of our goals in writing blog posts every week is to provide useful education. We recently saw an excellent article on BiggerPockets.com that talked about “What to do when your tenant drives through the living room?” BiggerPockets.com is a website devoted to helping real estate investors.
Paul, our Director of Investor Services, checks articles on BiggerPockets.com every day, looking for helpful information for our investment community. We’ve learned a lot from the articles we’ve read and conversations we’ve had related to BiggerPockets.com.
In this article, Nathan Miller talks about the real world scenario where one of his tenants accidentally drove a car into the living room of their rental property. It was a 16 year old child and an unfortunate mistake. Nathan goes on to talk about the steps he followed to figure out what needed to happen next.
Three Steps to Take when a Tenant Causes Property Damage
- Talk to your tenants.
- Call your insurance provider.
- Contact your tenant’s insurance provider.
We liked this approach for a few reasons:
Communication is key whenever there is a situation. Talking with your tenants to understand what happened gives you the opportunity to set the tone. If they’ve been good tenants for a long time, it could be an opportunity to demonstrate that you are all in this together as you work towards fixing the problem. It would be understandable if you were upset and nervous about the damage… but talking with your tenant while in that frame of mind probably wouldn’t be helpful.
Calling your insurance provider is a great next step. You want your insurance provider to know there has been an event that could result in a claim. In this case, the tenant’s auto insurance provider would be responsible for covering the damages, but what if the driver was not insured? This story might also be a good reminder to double check with your provider that you have the appropriate coverage in place for a rental property. If you haven’t done so in a few years, we encourage you to call your agent for a quick review.
Finally, contacting your tenant’s insurance provider in a timely manner is the next step. This should happen as soon as possible once you’ve been made aware of a problem involving damage to your property.
We’ve never had a tenant drive a car into a property we manage. Knock on wood. But we thought it might be helpful to share it with anyone that owns an investment property because it makes you think about, “what if?” Making sure you have the right insurance in place before you have a problem could save you many thousands of dollars due to a claim that isn’t covered.
