When you want to maximize the income potential on your rental property, the first and most important thing you can do is minimize vacancy. It’s well known that the longer your property is vacant, the more money you are going to lose. When you work towards keeping those vacancy periods to a minimum, there are a couple of things to consider.
First, a lot of owners like to do their own repairs. This is certainly understandable – why pay a vendor to do what you can do yourself? Doing your own repairs can save you money as long as you do them right away. If you don’t have the time to make those repairs quickly, your home is going to stay vacant longer. Maybe you only have weekends to do the work or one day per week. If that’s the case, it will actually save you money in the long run to have a vendor do the necessary work. It’s a deterrent during showings when there are repairs that need to be made. Every day your property is vacant, you’re losing that rental income.
You also have to set the correct rental price. Sometimes, just a difference of $50 will leave your property vacant longer. We tell owners that it’s okay to set your rental price at $50 or $100 above the market for one week. However, if you don’t get any hits from qualified tenants, you want to bring it back down to what the rent should be according to the market, and it will rent much quicker.
When you get your applications in from interested tenants, it’s imperative to screen them properly. This will save you time and money in the long run and it will also save you from damage to your property. Stick to your guns on your qualification requirements and you’ll have great, high quality tenants.
Owners often ask if they’ll get more rent by changing the counters in the kitchen to granite or by remodeling the entire home. Typically, the answer is no. If the property looks clean and it really shines, it won’t matter if you have tile from the 1980s. As long as it’s clean and it looks good, you’ll get a good tenant. You won’t get that money back that you spend on an expensive remodel and granite countertops aren’t going to bring you $10,000 in extra rent.
If you have any questions on maximizing your rental income, or you’d like to discuss these tips in greater detail, please contact us at Sacramento Delta.
Screening and processing applications requires a lot of time and attention, especially if you want to get good residents into your property who are going to take care of the home and pay rent on time. As property managers, we know that a lot of evictions can be prevented with extra precautions during the screening process. Here’s what we do at Sacramento Delta Property Management to ensure we are putting the best possible renters into our properties.
- Run a credit check
It’s important to read through the entire credit report. This will tell you whether an applicant’s credit history is acceptable for our standards. You want to be careful about renting to people who have a hard time managing money and credit or who demonstrate a history of not paying their bills.
- Verify income
You want to find out how much money an applicant makes, and then you want to see documentation that proves what the applicant says is earned. You can do this by talking to the employer or reviewing pay stubs and tax forms. We require a renter to make at least three times the amount of monthly rent. Make sure the applicant earns enough money to pay rent every month.
- Verify rental history
Whether the applicant was a renter or a homeowner previously, you need an idea of how that person treated the properties he or she has lived in. For renters, we always contact the applicant’s current landlord as well as one previous landlord. It’s important to get a rental history that is actual and factual. If the applicant was a homeowner, we check county records to ensure they did own the home listed on the application.
- Look for red flags
Always pay attention to any red flags that come up during the screening process. These will tell you if the person wanting to rent your home is truthful. You want them to be honest, and you also want them to be reliable. Take red flags seriously.
If you have any questions on tenant screening, or you’d like information on how to handle the application process, please contact us at Sacramento Delta.
At Sacramento Delta, we are property management experts who know a lot about insurance. But when it comes to insurance matters, we want you to hear directly from an expert in insurance. So, we’ve invited Kurt Bullock with Bullock Insurance to talk to us about what it means to add your property manager as an additional insured to your policy. It can be difficult for a lot of our new clients to understand, especially if they’ve never heard of it before.
Liability Coverage for Owners and Property Managers
If you have an income property and you hire a property manager, you’ll usually end up signing a management agreement. In that management agreement, there is usually an indemnity clause. When you add your property management company to your landlord policy as an additional insured, you’re protecting everyone who deals with the property and the tenants.
For example, if a tenant had a party and a guest was injured and there was a lawsuit, both the landlord and the property owner would be named in the lawsuit. So, when that lawsuit gets turned over to your insurance company for representation, you want all parties to be protected from liability. This is called premises liability. A few carriers will include this for you without any charge, and it’s the best way to protect your property.
Property owners have a laundry list of policies available to them when they’re buying insurance to protect their investment property. As property managers, we provide our owners with eviction protection. We don’t cover the loss of rent because there’s an insurance rider for that. When you have lost rents, you can recover that money through your policy.
Serving Tenants Better as an Additional Insured
During the fires in Paradise and the floods in Houston, we also found out that property managers who were listed as an additional insured on the owners’ policies were able to get help for their tenants faster. We have a lot of investors who don’t live in California, and getting to the site of a disaster right away is impossible. When the property manager is an additional insured, we can act on your behalf immediately. That’s an added benefit that we didn’t know existed until we saw our fellow NARPM members go through it. It’s another good reason to add your property manager as an additional insured.
Additional Insured versus Additional Interest
Sometimes, a landlord insurance policy will add a property management company as an additional interest. That is different than additional insured. They kind of sound the same but additional insured means the property manager is covered under the liability section of the policy. Additional interest simply means that when the policy experiences a change, such as a renewal or cancelation notice, the property manager will get a copy of that notice. It does not offer any liability protection at all. There is no protection when a management company is named as additional interest. It’s a huge difference, and you want to make sure you’re adding the company as an additional insured.
If you have any questions about this, please reach out to us at Sacramento Delta Property Management, and we’d be happy to share more information.
Rental property maintenance requires responsiveness, budgeting, and a great network of professional vendors and contractors. All of us work at Sacramento Delta Property Management to ensure the properties we manage are well-maintained. Today, we’re talking a bit about our process as a professional property management company.
Working with Trusted Vendors
You need to always be on the lookout for good vendors. In our industry, if someone hears about a great vendor, everyone tries to get to them and they get booked up quickly. We’re constantly looking for competitive rates with our vendors, and we do work with some awesome long-term vendors. Many of our maintenance partners have even been with us for over 35 years. Some will only work with Sacramento Delta and smaller companies. This makes it easier to keep the rates low. They don’t have to advertise or market themselves because they get enough business from us.
Maintenance costs are always on the rise. We do our best to keep costs contained, but there is always inflation, and repairs and parts are not going to cost what they did five years ago. Many of our owners benefit from our discounted pricing negotiations with our best vendors. When you work with us, you get a much better price than you would if you were self-managing or getting your management services elsewhere.
Invoicing transparency is important to property managers. As an owner, you’ll receive the original invoice with the exact information from the vendor. There is no hiding anything and we don’t have any hidden costs or upcharges. The owner gets the exact original invoice and we only keep a copy of it for our records. Transparency is important and so is documentation. We like for each property to have a detailed record of exactly when and how things were repaired.
Comparing Maintenance Prices
We also have a long list of licensed and insured contractors to choose from for our bigger ticket items. We will always get second or third opinions when necessary. These vendors are insured and licensed and bonded, so if something is not done completely or correctly, we can always go back to them and have it handled. They are liable for the work that they do, and a lot of times we won’t even pay an invoice until we get a clear photo of the completed work.
For larger projects, we keep things as cost-effective for our owners as possible. We are always looking for ways to save money for our clients because at the end of the day, we want the best-case scenario.
It’s not uncommon for our clients to send one of their own vendors out to get an estimate after we have provided our own estimates. Usually, our vendors are more affordable.
Gathering competing quotes isn’t always possible. If it’s an emergency and a new furnace or HVAC system needs to be repaired immediately, we get it done because it’s a habitability issue. We can’t have tenants without a place to live.
In-House Maintenance is not Always Best
In-house maintenance is always an interesting process for repairs, and it has both benefits and drawbacks. There can be some pretty high bills when companies use their own maintenance teams. Having a neutral third party take care of these repairs will provide more accountability. And, it reduces liability.
The main goal is to get the item fixed, not to make additional money off our owners. Upcharges and additional fees just for coordinating maintenance is not something we agree with as a company. This is included in your management fee and should not be charged additionally.
We are very transparent, and we are never going to throw in hidden fees, especially for maintenance. Our clients also appreciate getting to know our vendors. They know our HVAC guy or our plumbing guy and they know they can trust the work.
At Sacramento Delta, we have a motto that deals with the four “F-s”. Those F-s are:
- Be Friendly
- Be Flexible
- Follow Up
- Fix the problem
If you’d like to know more about our maintenance process, please contact us at Sacramento Delta Property Management.
Security deposit disputes can be quite common, especially if there’s a lack of communication and expectations are not discussed ahead of the tenancy and the move-out process.
Today, we’re talking about how landlords can avoid security deposit disputes with their tenants and how a property management company can help with documentation and distinguishing damage from wear and tear.
Treat every move-in process like you are going to end up in court.
In that head space, you are documenting everything as if it’s going to be presented to a judge. Photographs are always the biggest benefit you can offer when it comes to move-in inspections. You want to thoroughly document how the property looked before move-in so you can compare it to how things look at move-out. Open cabinets and drawers and take pictures showing that everything was thoroughly cleaned prior to the tenant taking possession. Really note every little thing. If it does not say it was cleaned on the move-in inspection report, then how do we really know it was?
Document everything no matter how big or small.
Wear and Tear and Life Expectancy
Property managers are good at taking into consideration the life expectancy of the household items that are worn down during a tenancy. If there is a hole in the door that the tenant caused but the hole is on an original door from when the home was built in 1950, the price of that door is probably $20 minus depreciation. When it comes to carpets, if the tenant was there for three years and had a pet that ruined the carpet, you technically can only charge them for the time remaining with the carpet since the life expectancy for the actual carpet is really only seven years.
Owners need to be aware of what they can actually charge the tenant for versus what is considered wear and tear. Fairness is important, and you have to know what you’re responsible for as a landlord and what tenants can reasonably be charged for after moving out of a property.
Re-Evaluate any Tenant Dispute
If the tenant is disputing some of the charges against them, you do need to re-evaluate. You should never just automatically assume you are right and try to nickel and dime the tenant. Always re-look at things and decide if the life expectancy of the items you are charging the tenant for has passed or if there is room to negotiate.
At the end of the day, our owners decide what should be charged, but as property managers we work hard to educate our owners. You need to know whether a dispute is really worth the $100 you’re arguing over.
Strong Lease Agreements are Critical
It is also important to have a really good rental agreement in place. This will tell you what you can charge the tenant for throughout the tenancy. Just yesterday, we had to refund a tenant a full deposit because there was no move-in inspection report from a previous management company. We couldn’t charge them for anything because nothing was documented upon move-in.
Conduct an interior inspection from time to time, especially if you have a tenant that has been in place for five years. Things may have gone wrong, and documenting them on an annual basis gives you a timeline to refer to so you know when things broke or needed repairs. It’s easier to distinguish wear from damage. Having accurate records of when things were repaired and replaced can always help when a dispute is present in regards to the security deposit.
If you have any questions or need some help with a security deposit, please contact the property managers at Sacramento Delta Property Management.
Vacancies are extremely expensive for landlords, and if you’re working with a great property management company, you can count on some strategies to keep your vacancy rate low.
Today, we’re discussing how we prevent and reduce vacancies in the properties we manage at Sacramento Delta Property Management.
Tenant Relations and Retention
Keeping tenants in place is an excellent way to reduce vacancy. This is why we are quick to build a strong relationship with our residents. Property owners and tenants have a partnership, and as property managers, we negotiate and facilitate that partnership. We are here to make sure things go smoothly and to take care of things inside the home. If we can accommodate your needs as an owner as well as the needs of your residents, we’ll reduce your vacancy. People undervalue their tenants sometimes, and that’s a huge mistake. These residents are paying part of your mortgage and helping you keep expenses down on your investment.
Provide a Rent-Ready and Well-Maintained Home
We always conduct an inspection before placing the property on the market so we’re sure it’s ready for great tenants.
The current condition has to be excellent. We look at cleaning, paint, flooring, etc. You don’t want to offer a home that isn’t move-in ready because a potential tenant is looking for their home. They want to be able to picture their family there or their friends there. They want to imagine their possessions inside that home immediately.
Make sure the home is rent-ready. Some people do not think having fresh paint on the walls is a big deal because new tenants will just hang things over the wall anyway. But, tenants notice the paint. Everyone has their own level of cleanliness, but you want to be able to eat off the floor when preparing for new tenants. You should walk into a bathroom and see the toilet sparkle and shine. Let prospective tenants envision themselves in that space. This will reduce your vacancy period.
Always have the place repaired and prepared. A tenant will not want to be told that the fence will be fixed before they move in or the walls will be painted. They might have heard that before from other landlords, and they won’t trust it. A property will sit on the market longer if the fence isn’t fixed and the walls aren’t painted.
The expectations are set from the beginning when getting a home rent-ready. You are setting a standard for the tenants when you provide a well-maintained home. If you provide a home that has clean carpets, fresh paint, etc., you are really going to have a tenant that values the time and energy you put into getting it ready for them. Cleaning is a one-time charge for the owner. After a tenant moves out, if they have not cleaned the home, they will be charged because cleaning is not a wear and tear item. So, having high cleanliness standards really pays off and the tenants will appreciate it.
We screen for the most highly qualified tenants. So, we want to provide a property that those tenants will want to live in. This keeps vacancy rates low.
Pay Attention to Property Pricing
Make sure the property is not overpriced. This can definitely cause long vacancy periods.
If the property has been on the market a few days and you haven’t heard anything or gotten any potential leads, get with your property manager about your price. We have had several properties in the same neighborhood just lingering out there for a while. They may all have different prices but sometimes there’s just no interest. So, we’ll adjust the price as necessary to try and get good tenants interested. Lowering the price will actually save you money because you’ll have a shorter vacancy period. A vacant home earns you no money.
If you’d like some help avoiding vacancy, please contact us at Sacramento Delta Property Management.
Achieving a great return on investment, or ROI, is the goal of every rental property investor. We’ve invited Bob, a real estate agent with Keller Williams, to talk to us about ROI on today’s blog. We will often have people buying rental property ask us about whether a particular property will provide a good return. We’ve asked Bob to shed some light on what that means and how to increase your own ROI.
Understanding What Factors Impact ROI
Whether you’re buying an investment property or selling one you currently own, you’ll want to know what kind of value it holds on the market. Rental projections are important numbers, and so are numbers like what the property could rent for and how long it may remain vacant before you earn any money on it. Those are two key factors.
Other areas to look at when figuring out the ROI would be the costs to remodel or clean up the home before it’s ready for the rental market. You would have all of that answered after the property inspection or the home inspection was performed. Other items on the list that may impact your ROI include property tax including assessment taxes, management and maintenance fees, and insurance expenses. Once all that is put together on a spreadsheet, you should review it and maybe take it to an accountant or a CPA. The amount of ROI you can expect often depends on your financial situation at the time.
Working Together with Real Estate and Management Partners
At Sacramento Delta Property Management, we do not sell real estate. At Keller Williams, Bob helps people buy and sell homes. When you’re planning to buy a rental property and you need to know what you’ll have to spend and what you can expect in terms of rent and ROI, it’s important to talk to both of us. We each do different things every day, and you’ll need a lot of expertise in order to make the right decision and have a successful investment experience.
Keeping the buying and selling part of your transaction separate from the property management portion of your investment will help you gain as much expertise and as many resources as possible during this process. I love referring clients to Realtors when they want to buy something, because they really are experts at what they do. Bob knows how to buy and sell solid real estate property and he knows how to deal with non-owner occupied properties. He definitely gives us a lot of support on the investment side, which is great.
Property management that’s professional and experienced allows you to earn more on your rental property. We keep your tenants happy and paying rent. The last thing we want are hostile tenants. We want to get a good understanding of how they feel. Tenants are just as much a part of earning more ROI as your rental value and your vacancy rate.
We’d love to tell you more about how to earn a better return on your Sacramento investment property. Please contact us at Sacramento Delta Property Management.
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- How to Get the Most Money for Your Rental Property
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- Sacramento Delta Property Management
- Sacramento Delta