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While dealing with Investment Property Owners some similar themes rise to the top of their minds. Here are some of these top tier questions we frequently hear, and our answers to this fairly common thread.

Why is in depth evaluation of the potential rental revenue for a property or group of properties based on current and past so vital to rental property owners?

Determining the amount to charge for a rental property is one of the most important aspects of being a successful investor.   For one, it is the starting point for the property owner’s cashflow estimates.  Secondly, the correct rental asking price can mean the difference between attracting a tenant quickly and having a vacant rental property.  It is important to find the balance between a price that limits time on the rental market but that also guarantees a good return for the property owner.   Either way, you don’t want to give money away by having a property sit vacant for too long or by charging a very low rate when you could have gotten a much better one.   We have the tools to help find that balance.  I have lived in the greater Houston area my entire life, so I also know Houston well.

Why is it important to re-evaluate the rental price prior to renewing a lease?

The rental market is constantly evolving.  The lease renewal period can allow us to examine whether or not the rent can be increased.  Tenants often do not want to move if they are happy with their experience.  Moving presents an extra cost in both time and money for them.  When we have instances of market price decreases, our hope is to resign the tenant at the previous rate in order to lock in other 12 months of steady rent payments.

Why is important that the property manager make contact with current tenant at least 30 days in advance of the lease expiration in order to determine whether the tenant will sign another lease and to ensure that owner does not fall into a "month to month" lease situation?

I have had property owners tell me that they are in a month to month rental situation with their tenants because they believe that their tenant is paying above market rent.  More often than not, I have property owners tell me that they did not have time to have the lease renewed or that their tenant will leave if pressed for renewal.  I believe that it is always better to have an agreement that is up to date.  Tenants under month to month contracts can still leave and to make it worse, the property owner may not be entitled to the same amount or any amount of damages for termination.  By letting us handle the renewal, we can take the worry off the mind of the property owner.

Why is professional consultation with the property owner's Realtor, investment advisor, and tax preparer important?

I want our owners to be financially successful.  Our success depends on their success.  My financial background allows me to communicate effectively with REALTORS, financial advisors, CPA’s and tax professionals.  Most investors have other types of investments and income besides rental properties.  We want to be able to effectively communicate in regards to the client’s rental property financial results so that their other advisers can better help them in regards to business strategies including tax.  We only provide this with the client’s permission but we do acknowledge that while we are an important part of the client’s financial team, we are only one member of that incredibly valuable team of advisers.  

Why don't you buy or sell homes since you are also a REALTOR?

I am fortunate to meet many REALTORS in my role as a property manager.  They often ask me the same question followed by a question as to whether they should consider being property managers.  My answer for them and for myself is that both property management and the buying and selling of homes are important and time consuming real estate practices.  However, that is where the similarities end.  It is very difficult to manage more than a few rental properties effectively while doing the work necessary to buy and sell homes.  I would rather give all of my attention to the rental listing and management of my client’s properties.

Are your services affordable enough for me to use?

I believe our services are affordable enough for every rental property owner.  Most people believe that we are selling convenience.  That is one thing that we do offer for our owners, but there are other benefits too.  A rental property owner’s time is valuable whether they are full time investors or if they are busy working in other professions.  Managing their own properties can take them away from the professions that they excell in whether it is finding the next rental opportunity or their profession outside or real estate.  We are also able to leverage experience and resources to help reduce financial risk to property owners along with providing reduced maintenance costs that do not come at the expense of quality.  We are also help to find qualified tenants quickly in order to reduce vacancy expense.  Property owner’s should also ask their tax advisors whether our services are tax deductible.  In many cases they are.

Why is professional, yet firm communications with existing tenants regarding rental increases prior to signing a new lease after current lease expiration so important?

Many people are uncomfortable communicating rental increases with tenants.  For some this is the most uncomfortable part of property management.  This negotiation is often best handled by the third party property manager.  Our negotiation places an emphasis on communication in advance so that there are no surprises when it is time to resign the lease.  We are not required to tell the tenant that the landlord made the decision.  Price changes are a part of any business from time to time.  We would be remiss in our duty to the owner if we were not able to communicate these changes to a tenant.  Of course we will always consult with the property owner and get approval from the property owner prior to doing so.

Why are comprehensive listing services including video documentation, photographs, and digital marketing so important when listing a property for rent?

Many people are uncomfortable communicating rental increases with tenants.  For some this is the most uncomfortable part of property management.  This negotiation is often best handled by the third party property manager.  Our negotiation places an emphasis on communication in advance so that there are no surprises when it is time to resign the lease.  We are not required to tell the tenant that the landlord made the decision.  Price changes are a part of any business from time to time.  We would be remiss in our duty to the owner if we were not able to communicate these changes to a tenant.  Of course we will always consult with the property owner and get approval from the property owner prior to doing so.

Why is it important that your listed home showings are only performed by a licensed and on site Realtors?

I have noticed that some REALTORS are starting to use remote access systems that do not require the person entering to be accompanied by a licensed REALTOR.  I have noticed that this is done mostly with homes that are on the lower range of the price scale and for rentals.  Their reason for this is time and economics.  THEIR time and economics not those of the owners they represent.  My reason for not allowing it is RISK.  I will not risk an owner’s property, even if the risk is somewhat remote, by allowing a potential renter to view a property without being accompanied by a REALTOR.

Why don’t you charge the standard 1% fee on the sale of a property when you find the tenant for the property that later becomes the home buyer?

Many property management companies and REALTORS that list a property for rent, require that the property owner also pay 1% or more of the purchase price of the home in the event that the tenant decides to purchase the home from the owner.  I do not think that this is a fair practice, so we charge 0% in our contracts.  We get paid for listing the property as a rental.  While the practice of showing a home to a potential renter and a potential buyer might seem similar, the negotiation process is much more involved when you are intending to market the property as a buy and not a rental.  While we do have a small fee for the earlier termination of our management contract, we do not require you to give us 1% of the entire purchase price just because it later made sense to the owner to sell the property to the tenant AFTER we had been paid for finding that tenant.  Always check this part of the contract with anyone you are considering to use for rental property listings.  It might not seem relevant at the time , but it could cost you a large amount as a property owner.

Why is comprehensive tenant screening that is robust, yet compliant with current federal, state and local laws so important?

Renting to a tenant that does not have a good prior rental history or to one that does not have the ability to make timely rental payments can be extremely costly for the property owner.  In addition, violation of the law in the tenant screening process can also be very costly.  You should let us perform this process as part of our listing services.  Our process is compliant, but also stringent enough to greatly reduce the risk of signing a lease with a tenant that will violate it.

Why do you offer a placement guarantee that provides additional free listing services if a tenant placed by your company vacates for any reason within six months of signing the lease?

We do this because we do not feel like you should be burdened by additional listing costs should this happen if we list the property and find the tenant for you.  We realize that tenants are sometimes transferred and that life happens.  We will re-list the property at no additional cost to you.

Why do you offer quarterly, bi-annual and annual property condition evaluations with written reports and photos?

We do this for several reasons.  We want to make sure that the tenant has not damaged the property during the course of occupancy.  We also want to make sure that we are also able to provide the owner with information about any issues that we notice that involves needed repairs that the tenant may have forgot to mention to us.  We know that the tenants have busy schedules too and may not notice or get around to reporting items even if they are not at fault.  Our tenants are our clients just like they are the property owner’s clients.  In this regard the examination is a positive for both the tenant and the property owner.  We do go over this policy with the tenant prior to the signing of the lease agreement.  We also schedule these visits well in advance in order to limit tenant inconvience as much as possible.

Why do you offer pet screening and compliance follow up for owners who allow tenants with pets?

We love pets.  I also personally believe and have seen statistics that prove that allowing pets can make a rental property much more attractive to potential renters.  However, we also respect the wishes of the property owner and it is at their discretion in regards to whether or not pets are allowed.  If the property owner does allow pets, they should do so with the understanding that they can produce some increased risk in property damage, incease in liability and an increased workload for property managers when it comes to property access for repairs and evaluations.  We document the presence of pets with a photo and also charge a one time pet fee and a small monthly pet rent fee for each animal.  We do not want a tenant to have too many animals or animals that are a different size than we are aware of.

Why do you offer protection for properties where you find the tenant or where you have managed the property with an existing tenant for at lease six months?

We provide this service for an additional monthly cost to owners who want to participate.  We do this because we know that having to evict someone can be unpleasant and potentially expensive.  Our service provides piece of mind to our property owners who choose to participate.  We do not provide this protection in situations where we have taken over the management agreement where an existing tenant is already in place.  Since we did not find the tenant, we cannot take the risk of providing this protection until the tenant has been an occupant for six months under our management agreement.

Why is there a need for extensive real-time documentation of tenant late payments and other violations along with proof of contact with the tenant?

When the property owner does not receive their funds in a timely manner, there is more than just inconvience involved.  When property owners receive payments late, they might also have a difficult time paying vendors or lenders on time.  Even when the owner has no payments to make, they are still losing the use of their money and are basically providing short term loans to tenants.  I have not met a property owner yet who has told me that he or she got into the rental property business to provide interest free loans.  I have met property owners who have self managed and have left the business simply because they were tired of consistent late payments.  Therefore we document these items so that we can show a pattern of late payment should the need arise to escalate our demands for prompt and full payment.

Why is timely verbal and written follow-up on tenant late payments important?

Documenation is an important thing to have, but it is reactive in nature.  It is also important to contact the tenant by phone or email if needed.  Automated systems are great, but tenants tend to respond to a combination of automated documentation and contact from the property manager.  Once again our goal is to limit the time that it takes for our property owners to receive their payments.  If a more severe long term situation has developed, it is also important to know sooner rather than later.

Why do you provide comprehensive examination and documentation of property condition at tenant move-out?

As we mentioned above, this is a critical part of the process to ensure compliance, fair tenant treatment, and protection of the property owner.  But it also important to have a good feel for not only the damage but the general wear and tear type items that will need to be fixed to achieve optimum rental revenue in the future. 

Why do you offer quarterly, bi-annual and annual property condition evaluations with written reports and photos?

We do this for several reasons.  We want to make sure that the tenant has not damaged the property during the course of occupancy.  We also want to make sure that we are also able to provide the owner with information about any issues that we notice that involves needed repairs that the tenant may have forgot to mention to us.  We know that the tenants have busy schedules too and may not notice or get around to reporting items even if they are not at fault.  Our tenants are our clients just like they are the property owner’s clients.  In this regard the examination is a positive for both the tenant and the property owner.  We do go over this policy with the tenant prior to the signing of the lease agreement.  We also schedule these visits well in advance in order to limit tenant inconvience as much as possible.

20. Why do you offer pet screening and compliance follow up for owners who allow tenants with pets?

We love pets.  I also personally believe and have seen statistics that prove that allowing pets can make a rental property much more attractive to potential renters.  However, we also respect the wishes of the property owner and it is at their discretion in regards to whether or not pets are allowed.  If the property owner does allow pets, they should do so with the understanding that they can produce some increased risk in property damage, incease in liability and an increased workload for property managers when it comes to property access for repairs and evaluations.  We document the presence of pets with a photo and also charge a one time pet fee and a small monthly pet rent fee for each animal.  We do not want a tenant to have too many animals or animals that are a different size than we are aware of.

21. Why do you offer protection for properties where you find the tenant or where you have managed the property with an existing tenant for at lease six months?

We provide this service for an additional monthly cost to owners who want to participate.  We do this because we know that having to evict someone can be unpleasant and potentially expensive.  Our service provides piece of mind to our property owners who choose to participate.  We do not provide this protection in situations where we have taken over the management agreement where an existing tenant is already in place.  Since we did not find the tenant, we cannot take the risk of providing this protection until the tenant has been an occupant for six months under our management agreement.

22. Why is there a need for extensive real-time documentation of tenant late payments and other violations along with proof of contact with the tenant?

When the property owner does not receive their funds in a timely manner, there is more than just inconvience involved.  When property owners receive payments late, they might also have a difficult time paying vendors or lenders on time.  Even when the owner has no payments to make, they are still losing the use of their money and are basically providing short term loans to tenants.  I have not met a property owner yet who has told me that he or she got into the rental property business to provide interest free loans.  I have met property owners who have self managed and have left the business simply because they were tired of consistent late payments.  Therefore we document these items so that we can show a pattern of late payment should the need arise to escalate our demands for prompt and full payment. 

23. Why is timely verbal and written follow-up on tenant late payments important?

Documentation is an important thing to have, but it is reactive in nature.  It is also important to contact the tenant by phone or email if needed.  Automated systems are great, but tenants tend to respond to a combination of automated documentation and contact from the property manager.  Once again our goal is to limit the time that it takes for our property owners to receive their payments.  If a more severe long term situation has developed, it is also important to know sooner rather than later.

24. Why is a timely monthly reporting package that includes an operating statement so important to a rental property investor?

A rental property owner is a business person.  Anyone that is running a business needs to know how that business is operating every month.  We provide a monthly operating statement along with a reporting package that includes all invoices and charges relating to the properties that are managed on that owner’s behalf by us.  These statements also provide important information to our owner’s tax advisors, investment advisors, and REALTORS in the event they would like to share them.  These files are all electronic and easy to access.

25. Why do you require that rental payments be received via digital transfers?

We require that our tenants pay rent electronically through our tenant module.  We do this to eliminate time, potential loss and instances where tenants try to take advantage by consistently mailing or dropping off late payments that they say are not late.  Digital is easier, faster and generally better for all parties involved.

26. Why do you provide property owner's access to an online module that shows the updated status of their accounts?

We want our property owners to know what is happening with their accounts between month-end reporting periods.  This method provides an easy, mobile, and user friendly way of providing information.

27. Why do you offer 24 hour emergency service to handle major property issues?

We view our tenants as clients too, so we want to be as responsive as possible.  We also want to eliminate additional damage by being able to respond to an emergency situation as quickly as possible.  Finally we want to be compliant with various housing laws.  In addition, we work closely with vendors that are responsive and we have several on call vendors for each category that might be needed.  We take our role as protector of the property very seriously.

28. Why is the generation of IRS required Form 1099's an important service?

If vendors are paid over a certain amount per year, a 1099 must be filed with the IRS.  We provide this service in relation to services that are provided for our clients’ rental properties so that they can avoid potential costly non-filing penalties from the IRS.

29. Do you have a maintenance plan that includes the use of trusted and insured local vendors?

All of the vendors used under our maintenance plan must keep proof of adequate and up to date insurance coverage on file with us at all times.  We do this to protect our property owners from liability. We also routinely evaluate the cost and work product of our vendors.  We try to have at least three vendors for each category and we do not accept referral compensation or free services from any of our providers.  We are completely independent of the vendors that we use so that we can remain objective about their performance.  This is the same reason that we do not have “in house” maintenance service providers.  We are also constantly on the look out for new vendors, even if we already have three in each category.  It is our job to constantly search for vendors that do great work at a fair price.  For those vendors that have provided this in the past we need to make sure they are consistently exceeding expectations.

30. What is it valuable for a property owner to work with a provider that is a part of a large franchise system?

Using a provider that is part of a large franchise system allows our clients to leverage the value of the greater system while still having the benefits of having a responsive and flexible local friend in the property management business.   We are part of and use the systems of nationwide company that has 30 years of experience in property management along with 300 offices in the United States and Canada.  Real Property Management has been focused solely on property management since its inception.