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.
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.
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
- How to Properly Screen Sacramento Tenants to Avoid Eviction
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- Sacramento Delta Property Management
- Sacramento Delta