Thursday, August 26, 2010

Sarasota - Best Place to Buy in Western World!

This was the headline in International Property Journal, an independent, authoritative source of news and information for agents, investors, and industry executives working in global property markets.
The story which appeared on June 17th 2010, cited a report published by Global Edge, ranking popular resort and second home locations around the world.

IPJ reported that Sarasota was the cheapest western holiday home destination, crediting the fact that the market has fallen over the past two years and the number of distressed properties available for sale to foreigners.
What does this mean to our clients? Now is a great time to buy another rental investment!

US Census Statistics on Renting

US Census Bureau Statistics on Housing Regarding Renters

According to the 2009 American Housing Survey the median amount of rent is $808 vs the medial housing cost for property owners is $1000. This means it is still cheaper to rent than it is to own which is good for our industry. However, the bad news is that the renters devote 31% of household income to housing costs vs 20 % for property owners.

Wednesday, August 18, 2010

Are Your Available Rentals Reaching the Masses?

Here are a couple of important statistics in regards to how prospective renters find available properties:

90% of people researching rental information use the Internet as a resource.

84% use more than one site.

Here's why renters prefer the Internet:
78% say it is the most useful source for information regarding the property
77% say it is the easiest to use
74% say it offers information not available elsewhere
63% say it has the most up-to-date listings.

In our market I feel we have pioneered the use of Internet for available rentals. We were the first to use it extensively and currently have the widest marketing distribution across many sites. The last time I checked we were advertising on over 30 different rental web sites. And also the last time I checked we leased about 20% of all rentals on the MLS.

The key to getting properties rented in a timely fashion to quality residents is to price according to the market (This takes constant research), and then to get it out to the widest distribution possible so that anyone who is searching for rentals will come across your property listing. Usually we can get over 100 detailed clicks per week. You would be surprised to know how many available rentals languish vacant on the market month after month. It is actually a majority of available properties. It is always our goal to have a property rented in 30 days.

Monday, August 16, 2010

What is OPD?

I was just reminded over the weekend (my wife and I were cleaning one of our properties) of the concept of OPD. I first coined this phrase early on in my property management career and having a good understanding of this concept is key to starting out a new residency on a good footing.

OPD - Other Peoples Dirt. It goes like this: No one is more picky about cleanliness than someone moving into a new home. At first I was puzzled after experiencing extra picky tenants at move in who I later discovered were not the greatest house keepers themselves. It comes down to who's dirt it is. At first I thought they were just hypocritical and difficult people. However, the more I thought about it, I think this is a natural characteristic of all of us. If its other peoples dirt we don't know what it is and our minds go to the worst extreme. We are often repulsed. Even people who are immaculate housekeepers have an even higher disdain for OPD.

That helps explain why one speaker I heard who's topic was "The Top 10 Rules of Property Management" stated that one of the worst things you can do is turn over a property to a tenant at move in which is not well cleaned (professionally). The reason for this is we now have an angry new tenant. Not a good way to start out a relationship. Worse yet, we have now established in the mind of the resident that we do not have very high standards and our credibility is shot. Now try to lecture them on anything having to do with the maintenance of the property and it will always get thrown back in your face.

Many homes can look clean at first glance, but once a dirty corner in the floor is discovered by a new resident (or a potential new resident), now the white gloves and magnifying glass come out and you are busted. On the contrary, if someone views a property and it smells clean and genuinely is clean you have earned their respect and often times this will be the main reason why you have just found a good clean renter.

This may seem obvious to a landlord from afar, but in practice it brings up a few challenges: If we turn over a property to a tenant which is professionally clean, do we have a right to the same expectation of cleanliness when they move out? Of course landlords do not want to pay to have a property cleaned if the tenant is responsible. Also, if a property was clean, but has sat for 3 weeks waiting for a move in (enough time for some bugs to accumulate, or have workers in and out), should they expect to pay for a second cleaning?

Our lease requires residents to surrender the property in "Good, clean condition. Normal wear and tear excepted." In all likelihood it will not be clean enough. We frequently make claims against security deposit for cleaning. This can cause arguments if the tenant felt it was cleaned, and often they will feel insulted that we would consider their level of cleanliness sub par. Angry tenants mean potential legal challenges. (At this point we had better hope it was clean when they moved in). If in the rare chance it is left in professionally clean condition, then it will probably need at least a wipe down prior to the next move in.

The point of all this: As a landlord, you can expect to pay for at least some minor cleaning between tenants even if you have the best property manager in town (like us).

Friday, August 6, 2010

What is Normal Wear and Tear

This question is bound to come up at the end of most rentals. How much should the tenant be held responsible for and how much should the owner accept as a cost of doing business?

Is it reasonable to expect a tenant to leave the property in rentable condition? The law says no. Florida law allows the tenant the leeway of "Normal Wear & Tear". Any damage which is considered Beyond normal wear and tear can be charged against the tenants security deposit (hopefully there is one) (and presuming you know the law well enough to follow it to the letter in claiming a deposit).

Sounds pretty cut and dried, huh? (Right). So this leaves us a lot of arguing room (the bane of a property managers existence). The owner wants tenants to take responsibility for something they caused and the tenant wants their deposit back. That is the reality so how can we address it?

Well, lets begin by trying to put a definition to Normal Wear & Tear. It has to be reasonable in case we get before a judge and it we define it at the beginning of a tenancy, then no one can claim surprise at the end. Here is a definition which comes not from statutes, but case law seems to support:

Definition of Normal Wear & Tear:
Anything that can be covered with one coat of paint is normal wear & tear
Any carpet stains that come out with a standard steam cleaning are normal wear & tear
Any dirt that can be removed with a standard maid service cleaning is normal wear & tear

So there we go. Pretty simple actually, but by applying this definition and laying out expectations at the beginning can go a long way towards eliminating aggravation at the end.