Incentives? Here are three ways to generate interest in your rental property.
By Paul Branton, Director of Investor Services for Home Rental Services
In a marketing cycle that’s experiencing fewer qualified applicants than you would like to see, what are some ways to spur new interest and activity for your rental? There are actually a number of things you can do, but for the sake of this conversation, lets focus on just a few of my favorite INCENTIVE options.
Incentive for the LEASE START DATE
In this scenario, you offer a concession on rent for a lease that starts on a certain date. This creates a sense of urgency for the prospect to sign a lease in order to secure the lower price. For example, you might be advertising your property for rent at a rate of $1,750 but advertise that you’ll drop the price to $1,650 for a lease that starts by a certain date. Another option is to offer two weeks or one month of free rent.
Incentive for the LEASE END DATE
This scenario is basically the opposite of the one above. In this situation, you’re wanting the prospect to sign a lease that will end in a better time of year based on renewals. (Typically this means May, June or July.) In this example, if you have the property listed at $1,750, you would offer a lower rate with a lease that ends in your preferred month. (Generally only offered as an option to secure a lease that is longer than 12 months.)
Incentive to provide a PROPERTY IMPROVEMENT
With this promotion, you can combine the timing scenarios above (lease start and/or end date) and instead of a lesser rent, you offer to provide an upgrade or amenity to the property. For example, with a lease that starts by _____ or ends _____ we will install a WiFi thermostat or WiFi doorbell, you pick! This is a great incentive option as the improvement becomes an added value to the property in the future.
The first two of the above incentives are geared more toward securing a new tenant. While the third option can also be utilized to secure a new tenant, we have found it’s also a great way to motivate a current tenant to renew their lease.
If you haven’t tried using a leasing incentive, I encourage you to do so. These have all proven to be quite effective for our investor clients!
Lunch in Omaha – The Importance of Investing in Relationships
By Paul Branton, Director of Investor Services for Home Rental Services
A few weeks ago, I was traveling with my family to Omaha for a quick three-day weekend getaway. If you haven’t heard, they have a pretty great zoo (www.omahazoo.com) among other attractions. With our travel plans scheduled, and knowing I would be in Omaha…. I reached out to my friend Bob, a client who lives there and has been with HRS since the very start. He confirmed that he would be in town that weekend and we scheduled plans to have lunch.
This lunch appointment reminded me how important it is in business as well as personal life to build quality relationships. The kind of relationships that are not simply transactional. The kind of relationships that are worth the effort to stick with, develop and grow. Over the course of nearly 30 years, quite a bit has changed about the way we conduct business here at HRS. Given the advancements in technology, we’ve benefited from efficiencies in communication. And we can process more information at a quicker pace. Unfortunately, I think some of these changes have brought about a shift in our culture that seeks to speed up business activities and completely skip the relationship aspects.
Keeping that in mind, one thing HRS is determined to keep the same is the focus we have on developing relationships. We appreciate getting to know our clients. We enjoy the opportunities to “slow-down” and meet for coffee, lunch or talk on the phone. We have the privilege of working with so many great people, why wouldn’t we want to know them better?
Toward the end of our lunch appointment, I asked Bob, “What advice would you would give to a younger real estate investor?” He replied to me by saying, “First, there are deals to be found in any market. Be patient and find a deal. Second, leveraged money is okay, but minimize your debt as much as possible. Finally, hold for the long haul.” While those nuggets of wisdom aren’t new to me, they certainly mean more coming from a man I respect, that’s been doing it longer than I have.
I’m so glad Bob and I took the time and were intentional about having lunch together. Thank you Bob!
Wishing you and yours a safe and happy holiday season!
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
Visit Website
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
Visit Website
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
Visit Website
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
Visit Website
“Revert to Owner” Option with Utility Companies
Did you know about the “Revert to Owner” option with utility companies?
Electric companies and gas companies offer a free service called “Revert to Owner.” This is very helpful when you own an investment property.
What happens is that any time a renter calls the utility company and asks for the electric or gas to be turned off, the utility will automatically be switched to your name (the owner) so that there’s no interruption in service.
Think about that. Your renter is moving out in December and you’re on a skiing trip with your family. You don’t want to sit on the phone with KCP&L while you’re on vacation, making sure the utilities don’t get shut off when the current renter moves out.
Even worse, if your power or gas are shut off in the heat of the summer or the cold of the winter, you might have thousands of dollars in damages due to freezing pipes or mold depending on the time of year.
All you have to do to get this set up is fill out a form with your utility company.
In an effort to get you started in the right direction, here’s a link to the utility sheets that we have for most major cities in the Kansas City metro:
Utility Sheets in Kansas and Missouri
If you own an investment property, we recommend that you get this set up as soon as possible!
Home improvements for renting? Material choices matter.
By Paul Branton, Director of Investor Services for Home Rental Services
When it comes to making home improvements with renting in mind, there are certain choices that can help reduce your maintenance costs. One of the important choices is the type of materials to use. The most common are found in the flooring department. The initial costs for “upgrading” may not be attractive at first glance. But if you run the numbers on how much longer it should last, that is where you see the value.
Here are a few areas where material choices matter:
Carpet vs. LVP (Luxury Vinyl Plank)
- Life Expectancy of Carpet = 5-10 years
- Life Expectancy of LVP = 15-25 years
Treated Lumber vs. Composite Decking
- Life Expectancy of Deck = 10-15 years
- Life Expectancy of Composite Deck = 20-25 years
Carpet vs. High Traffic Carpet
- Life Expectancy of Carpet = 5-10 years
- Life Expectancy of High Traffic Carpet = 15-20 years
While most of the “upgrade” options should last nearly twice as long, they generally don’t cost twice as much… which means you come out ahead!
Replacing a deck with a concrete patio
Another area that we’ve been helping investors reduce maintenance costs over the long haul is by way of replacing decks with concrete patios. If the deck is low enough to the ground that it wouldn’t require a long flight of stairs to reach the patio, we recommend tearing off the deck and installing a concrete patio. As I’m sure you know, wood decks require annual maintenance and deteriorate much more quickly than concrete patios. Surprisingly, they cost about the same to install.
What other areas of home improvement do you consider “upgraded” or “alternative” material choices to reduce your maintenance costs?
If you have any questions about making a property rent-ready, please feel free to give us a shout. We would love to help!
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!
The Laws of Attraction in Investment Properties
By Paul Branton, Director of Investor Services for Home Rental Services
Over the years, I’ve been involved in hundreds of leases. It’s interesting to see how varied the outcomes are between how quickly a home is leased and the quality of tenants you attract, when compared to the state of the property. Also, it’s obvious that the condition of the property has a direct impact on the monthly rate that can be charged.
I believe in the “laws of attraction” theory when it comes to marketing your property.
In other words, updating an investment property to current standards when you turn a renter will determine:
- How quickly you lease to a new tenant
- The quality of the tenant (in terms of paying on time and taking care of the home while they are living there)
- The amount you will be able to charge each month
Here’s a more technical explanation about how these mechanics work:
- Improved Market Rate Properties attract Higher Credit, Higher Income, Lower Risk Tenants who will want the property properly maintained (higher standards) and will generally do their part to help maintain the property. (They will maintain, or even improve, the overall condition of the property either at their expense or the owners.)
- Quality Market Rate Properties attract Quality-Marginal Credit, Qualifying Income, generally low risk tenants who will not expect “perfection” but will want the property to be well maintained and may do a little bit themselves to help but just enough to keep it in the same condition.
- Under Improved Below Market Properties attract Marginal Credit, Just enough income to qualify, somewhat risky tenants. These folks typically don’t want to do much in the way of taking care of the property, but will have relatively high expectations of the landlord since they’re paying a high percentage of their income to rent the property.
- Unimproved Below Market Properties attract Marginal-Lower Credit, Qualifying Income, somewhat risky tenants who will not worry about the property as much since it appears the landlord doesn’t. This negatively impacts the property from performing well as a rental. This ends up costing the landlord more than if they had been willing to do ongoing maintenance and improvements.
With that in mind, I would suggest taking time to think about how you’re maintaining and marketing your properties. Keeping your investment property in good condition will allow you to stay in the Improved Market Rate and Quality Market Rate brackets, attracting the caliber of tenants you desire. A+B doesn’t always equal C, but the general trend is there.
If this all seems a bit overwhelming and you would like help evaluating your rental portfolio, please feel free to reach out! We would love to help!
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!
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