All Forum Posts by: Michele Fischer

Congrats on your purchase!  May it bring you years of cash flow.

Hopefully you don't need it to be 100% at market all the time, because you will always be chasing market rent with a lag.  One issue is what you can legally charge.  The other is how willing or motivated you are to have turnover instead of a tenant remain.  Unless a tenant is destructive or a big PITA it is almost always cheaper to keep a tenant in place than have vacancy and turnover costs.

You've gotten good advice here.  The only thing I would change is that we have reno'd with tenants in place before.  It only works if the tenant wants to the upgrade, but if they do, it is nice to do it while they are paying rent rather than when it is vacant.  In that case I would start well before renewal, be upfront about the improvement, hassle, and higher rent coming, then have it done before they have to decide whether to renew.

It partially depends on how much time you can devote to it.  If you only have evenings and weekends I'd probably give a two week buffer.  If you have full time to devote and don't think you need other trades to come in, you could plan on 3-5 days and finish up anything after the tenant moves in.  Our tenants are normally anxious to get in and will forgive a few things not 100% ready, if we are clear and it doesn't jeapardize the move in inspection.    You can also offer half price rent for that first week or two if a bit more time is needed and it wouldn't be too problamatic to have the place occupied.  People are more flexible if they are getting rewarded.  We normally have a few things that didn't get done, normally due to missing parts or noticing a problem late in the turn.  We take care of things shortly after move in, which also gives a great chance to check in on the new tenant.  Agree that it is much easier to plan when you have a good recent idea of what kind of shape the place is in.  Not that you ever know for sure.  Imagine worst case and how much time you would want for it, and help that guide you.  You always have options, but you don't want to back yourself into a corner, turns are a lot of stress and work!

In my area, adjusting for utilities included or not is the biggest swing, since there is a not a standard. But I do look for other things and make adjustments. Maybe seeing my system would be helpful:

I base 25% of my calculation on $/square footage. For the bedroom count in question, I grab the low, high, and average $/square foot for the past 3 months, and apply that rate to the square footage of the new/vacant property, to get to an average to weight 25%.

I base 15% of my calculation on the average market rent for the bedroom count in my target neighborhood. So if others have been getting $750 for a three bedroom over the past 3 months, I give the $750 a 15% weighting.

And I base 60% of my calculation on geographical comps. I look for three or four listings with the same bedroom count that are one block either direction from the new/vacant property, making adjustments for features to make the properties comparable. For example, if the comparable listing has a garage but the new/vacant property doesn’t, I subtract $25/month to make them comparable. I use $25/month for all of the following features: allowing pets, garage, dishwasher, and washer/dryer included.

Your methods, amounts, or details may vary, but it is a framework to consider tweaking.  Our aim is to be in the middle, not the highest or lowest rent.  We want plenty of interest when a unit comes available, but to not be flooded with interest.

We've had a lot of great luck with cash for keys, I'm not sure why it gets such bad feedback here.  

We take cash to keys meaning that we are giving them extra money to get possession back.  Draft up a one page agreement explaining the amount and what it is for, have them sign it, don't let them leave items, meet them to get the keys in exchange for the cash and at that point it is yours to change the locks and clean up.  

You cannot recover any of the cash paid for keys, but you can deduct unpaid rent or damages from the deposit and/or future collections.  I would probably let it go, though, better to be thankful that you got possession back, because that is the most important thing.

Welcome to the risks of landlording.  A tenant that you did not choose is a bit riskier than one you put through your process, but all tenants at all time have the same opportunitites to cost you frustration and money.  You need to decide whether the risk is worth the reward.

Once the tenant stopped paying rent and communicating, they lost any preferential treatment or any considerations that don't completely align to your desires.

Agree you should be firm and at this point you need them to move out at the end of the lease.  You can give a 10 day notice to comply to get rid of the pet, a abandoned unit notice for them not being in touch, a 48 hour notice of intent to enter to show the property, and/or a 3 day notice for non-payment.  Of course, all contingent on your local tenant-landlord law.  Just showing that you have plenty of paths forward to signal that ignoring you is not going to work.

I would prorate the rent for the time her belongings were there and return the rest of the funds to the estate and move on.  It sounds like you got off pretty easy, count your blessings that the place didn't sit empty longer, and expect to not be made completely whole.

I don't ask the balance of accounts, but I do ask where they bank.  One, I want to know whehter they use a bank, since many of our applicants and tenants do not, and if we ever pursued a judgement it is easier the more information you know about their employment and accounts.

If the unit is empty, we do not prescreen to show it, we prefer to get as many people viewing the unit as possible.  If it is occupied, we would want some assurance that they might qualify before we disrupt the current tenant.

We also phone all listed prior landlords.  We normally can't really reach many.  We also, right away, look up the owner of previous addresses listed on applications and credit reports (through local on-line property records) and send a note that says "If you would not rent to this person again or have anything you'd like to share, please contact us at..."  It does not get a lot of follow-up, but it is very easy to do and might pay off big at some point.  The owners are not always the property managers, or maybe they weren't an authorized occupant, or maybe the provided contact info is all fake and you are talking to their friends and relatives.

Two pieces of advice here...

First, treat them the same.  If you raise rent for one, document your reasoning and how that same reasoning applies to the other property, with the reasoning not being ability to pay.  You don't want to open yourself to discrimination claims, especially in our crazy city.

Second, raise both to the midpoint between current rent and market rent.  If you do that consistently, you will make good progress toward market but they will still struggle to find a better place to live and are less likely to move our.  First tenant gets a $250 increase, second one gets $100 increase assuming the $200 reflects getting to market.

When we were self managing we would evaluate the gap each year, then consistently take action or consistently decide it is not enough money to justify the paperwork.  Now we leave it up to our PM.

Find other 3 bedrooms in your area, gather the information on them.  Calculate a $/square foot and apply that to your place.  If you have an extra bathroom or fenced yard or bigger yard or other features that set it apart, add $50/month per feature.  If it is missing features that most properties in the area have (such as a garage, etc), subtract $50/month for each one.

Advertisements are only part of the picture since you don't see what are happening with renewals or with properties that don't need to be advertised, but it will give you a pretty good view of market rent.