Management Mondays Blog

Should I Raise Rent?

Whether or not to raise rent is really a matter of personal philosophy. We have investors that rarely if ever, raise the rent once they have a good, low-maintenance, timely-paying tenant. They rather take the monthly hit than risk losing one to two months of rent and spend the to clean, rehab, and remarket the property. Others raise it annually, even if just by one or two percent, to ensure that their property continues to cashflow in the face of inflation, increasing property taxes, and other expenses.

What we at 24 Hour Property Management recommend is not to get attached to one way or the other, but to examine each renewal in a vacuum and to use data to drive your decision making. We conduct a market analysis to see what the going rate of a property is, and that coupled with the tenant’s history, we make a recommendation to our clients about raising rent for the next term. However, the decision is ultimately theirs. Make sure your agent or property manager is providing the data you need to make an informed decision.

A couple of things to consider. For those that do not like to raise the rent, they usually bring their rent up to the market when they get a new tenant. But what if a tenant never leaves. It’s an extreme example, but we inherited a tenant that didn’t have rent raised in 17 years and they were almost $1500 under market. And on the other hand, for those that always raise the rent, is it worth the expenditures and losing a good tenant over what sometimes is $300-$600 a year?

Contact 24 Hour Property Management, Inc.

If you have questions about what 24 Hour Property Management might recommend in your situation, or if you have any questions at all please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

Can I Sell My Investment Property Mid-lease?

Can you sell a tenant-occupied property? The short answer is yes.  The terms of the lease may have some bearing on how you go about the sale, but as it is your property, there is no legal reason preventing you from selling.
 
 If your tenants are in a tenancy-for-years, which is an agreement for a fixed period—a year lease for example—then you may sell the property but only with the tenants still occupying the property according to the terms of the lease. Selling an occupied property may have a negative impact on the price of a single-family home or condo, but it may also positively affect the price of a duplex or other multifamily property. The only way to get the tenants to leave before their contract term is up is to have them agree to it in writing.
 
 If your tenants are in a periodic tenancy, one without a specified term (think month-to-month) then you must follow the state and local jurisdictional rules regarding notification terminating the lease if you want to move forward with a sale of a vacant property. In California, you must give 30 or 60 days depending on if the tenant has been there for under or over a year.

Contact 24 Hour Property Management, Inc.

If you any questions about how 24 Hour Property Management can help you buy or sell a property that is tenant occupied and how to negotiate things like staging and showings, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

Should I Manage My Own Property?

Oftentimes, investors ask us if they should manage their own property. It all depends on what your goals and bandwidth are. If you have a property or two that are near you and don’t have any issues with filling vacancies and managing the day-to-day, then managing yourself is totally feasible. Furthermore, it’s good for real estate investors to get exposure to and experience with the ins-and-outs of being a landlord.
 
 However, once you add a property or two or decide the hassle isn’t worth it, for a nominal fee, 24 Hour Property Management will handle everything from late-night maintenance requests to rent collection. Basically, you don’t need to do anything except authorize expenditures and collect your monthly disbursements.
 
 Most real estate investors enjoy the services of a property manager, while others are industrious and prefer to handle everything themselves. The answer to whether you should manage yourself depends on what you are willing to take on or delegate to a third party.

Contact 24 Hour Property Management, Inc.

If you any questions about 24 Hour Property Management, our services, or our methodologies, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

Do I Have to Reimburse a Tenant for Repairs?

What if a tenant makes repairs without permission… what are your obligations? It depends on the contract language.

Save for a very few specific caveats, the contract we use at 24 Hour Property Management in California states that the tenant may not make alterations or repairs without your explicit permission. And, if they do, they are not entitled to reimbursement through any means: “…without Landlord's prior written consent, (i) Tenant shall not make any repairs, alterations or improvements in or about the Premises […]; (ii) Landlord shall not be responsible for the costs of alterations or repairs made by Tenant; (iii) Tenant shall not deduct from Rent the costs of any repairs, alterations or improvements; and (iv) any deduction made by Tenant shall be considered unpaid Rent.”

However, it may be mutually beneficial to you and the tenant to allow the tenant to make specific repairs and deduct from rent. Whatever arrangement you have, whether you are the landlord or the tenant, make sure that it is clear and in writing in order to protect both parties from any misunderstanding. And if you choose to enter this arrangement, make sure that you collect a receipt for your records.

Contact 24 Hour Property Management, Inc.

If you any questions about your obligations to your tenant, legal or moral, or any other question related to property management, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

California Rent Control for 2020

Many investors and landlords are wondering what is going on with the new rent control laws in statewide California for 2020. As a landlord, you should complete your own due diligence on the matter, especially since your city or municipality may have stricter laws. However, at a macro level, these are the basics you need to know: the new laws are designed to affect multi-unit and corporate investors. These include du-, tri-, and quadplexes, as well as buildings with 5-units and up. There are a couple of exceptions: units built within the last 15 years and duplexes in which the owner resides in one of the units.

If you own a single-family home, whether detached or attached – like a condo or townhome – then you are likely exempt from the law. The only exception to this is if you as the owner are a corporation, an LLC with at least one owner who is a corporation, or a REIT; these type of ownership arrangements is not exempt. 

If you do not meet one of the exemptions, then you need to know that you may only raise the rent annually up to 5% plus inflation, not exceed 10%. There are also more stringent limits on the reasons that you may evict someone.

Contact 24 Hour Property Management, Inc.

If you any questions about 24 Hour Property Management and how we can help you navigate the new laws, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

Should I Hire A Property Manager?

Oftentimes, investors ask us if they should hire a property manager. Our response is: it all depends on what your goals and bandwidth are. If you have a property or two and don’t have any issues with managing the property or filling vacancies on top of your other daily responsibilities, then you may not need the services of a property manager. However, like flying first class, you may not realize how incredible a property manager is until you’ve tried one. For a nominal fee, property managers handle everything from late-night maintenance requests to rent collection. Basically, at least with 24 Hour Property Management, you don’t need to do anything except authorize expenditures and collect your monthly disbursements. Most real estate investors enjoy the services of a property manager, while others are hands-on and prefer to handle everything themselves. The answer to whether you should hire a property manager depends on what you are willing to take on or delegate to a third party.

Contact 24 Hour Property Management, Inc.

If you any questions about 24 Hour Property Management, our services, or our methodologies, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

Are the Holidays a Good Time to List a Home for Rent?

Ideally, you want to list a property for rent during the spring or summer months as this is peak real estate season. Typically, during this time, there is more market competition, but also more people actively searching for rentals. That said, when the alternative is a prolonged vacancy and loss of cash flow, we at 24 Hour Property Management would never recommend that you intentionally not market during the winter holiday season. Though there may be challenges and it may take a little longer to locate the right tenant than at other times of the year, it is absolutely possible to find a good fit between Thanksgiving and the end of the year. Besides, when you hire 24 Hour Property Management to fill your vacancy, we do not earn a penny until the first month’s rent is paid. So, you can rest assured that it won’t cost you any additional funds while we do our job and find you a qualified tenant.

Contact 24 Hour Property Management, Inc.

If you any questions about 24 Hour Property Management, our services, or our methodologies, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

How Often Do You Send Out Owner Statements?

Every month, once rents have been collected, fees, taxes, and expenditures deducted, and net proceeds have been distributed electronically, we will send out an owner statement that details the activity for the previous month. The statement is typically dated around the 7^th and sent around the same time. We generally send any associated documentation at this time, such as receipts or paid invoices.
 
The statements list the beginning cash balance, which may include any maintenance reserves we are holding, as well as additions and subtractions from cash. The second page also includes a detailed transaction list that lists the dates and amounts of rent, management fees, and owner disbursement, as well as any repairs or maintenance that may have occurred during the statement period.
 
Whereas we send these statements monthly, occasionally an owner asks for quarterly or semi-annual statements. We can accommodate any schedule as long it is not less than monthly. Furthermore, an annual statement is sent every January.

Contact 24 Hour Property Management, Inc.

If you any questions about 24 Hour Property Management, our services, or our financial reporting, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

How Extensively Do You Vet an Applicant?

We’ve found that the majority of landlords, landlord agents, and property managers find that a credit check is sufficient to qualify an applicant. This level of investigation is sufficient for 97% of applicants. However, at 24 Hour Property Management, in addition to the standard credit check, we perform a background check that includes criminal and eviction histories. And it’s really that 3% you need to be wary of. Whereas we are primarily on the lookout for crimes that involve violence or theft, we do see a smattering of violations, misdemeanors, and other lesser crimes. Couple the background checks with the level of investigation we perform on each tenant’s financial health and character, you get one extensive and near foolproof screening process. 

Contact 24 Hour Property Management, Inc.

If you any questions about 24 Hour Property Management, our services, and our vetting process, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.

How Important Are Tenant Financials?

Just how important are tenant financials during the qualification process… very! First and foremost, you must ensure that a tenant has the financial wherewithal to be able to make regular rent payments. As discussed in previous Management Mondays, we recommend a gross monthly income multiplier of 3x the rent, though that can slide to 2.5 to 3.5 depending on the amount of debt.
 
 However, beyond just looking at the numbers, you must ensure that the documentation (paystub, bank statement, etc.,) is legit. We have seen an uptick in inauthentic proof of income in recent years. Applicants may be merely inflating their income to market themselves better. Worse, they could simply not afford the rent or be obscuring income from illegal activities. Regardless, you should do everything possible to verify the source of the income. We here at 24 Hour Property Management conduct research and call employers to verify the information submitted firsthand. 

Contact 24 Hour Property Management, Inc.

If you any questions about 24 Hour Property Management, our services, and our vetting process, please contact us so that we can answer your questions and advise you. You can reach us seven days a week at 949-409-8585 or you can check us out on the web at 24hourpm.com.