All Forum Posts by: Greg Weik

We list properties on the market about 30 days before the lease end date.  Here are some techniques we've developed:

1) Our lease has language indicating that we will provide 24 hours written notice for entry (standard) but further, that if tenant refuses entry, they will be charged $150 from their deposit per occurrence.  This is what we call "teeth" and we've never had a problem since this clause has been in our lease. 

2) You won't be able to control human behavior, in terms of the condition the departing tenants keep the home in.  But this is exactly why you hire professional property management.  Our biggest value add is predicting human behavior -and I don't mean whether tenants will pay rent.  I mean how they will LEAVE the property.  Statistically, well over 99% of our tenants pay rent on time each month, so it's the turnovers that pose the biggest potential problem (or solution) to the landlord. 

3) Tenant placement and setting clear expectations save the day most of the time at turnover.  We typically have good relationships with our tenants, and they are happy to comply and tidy up for showings.  Our lease is very clear and we send move out instructions prior to lease end, reminding tenants of the standard for which the property is to be left.  Some tenants, however, couldn't care less and live like slobs.

4) If we have a showing of an occupied property and it's a train wreck, we will pull the listing and advise our client we have to wait until it's vacant, clean and we know we can make a showing count.  

5) Our standard "listed availability date" is 5-7 days from the day the lease expires.  Ideally we have a new lease in place, with tenants to move into a property with only 7 days of down time. We put a lot of pressure on ourselves and the contractors with whom we work to make sure the move-out is done, turnover work is done if needed, and a move-in inspection is done, all between tenants.  We do this with nearly 1,000 doors, but it usually goes great based on the careful work we do for tenant screening and placement. 

@Jay Sing a photo would be helpful here.

It's hard to say how obvious or egregious this is without seeing it firsthand. 

I'm a little biased, being in the PM industry, but I will tell you that not everything that CAN be claimed at a move-out, always IS claimed.  It's not an exact science. 

We manage a lot of doors.  I have to send my agents to do move-out inspections on a tight schedule, typically allowing about 30 minutes to walk, see, smell, type up a template and take a lot of photos. The data the agent acquires is processed back in the office, where we can compare move-in and move-out photos and details.  While my field agents have a very specific list of things to look for and photograph and document, it's never going to be perfect. Maybe they miss a stain on a granite countertop.  

I also don't believe that a mistake of this nature should put the PMC on the hook for financial liability.  It's my view that a security deposit claim or non-claim can probably be modified if new information comes to light.  Whether or not to travel down that road would depend on the severity of the newly discovered issue. 

I love the people on here who say "Charge your PM."  Ha, ok.  Let's play that out logically. If you want my PMC or any other PMC to make a perfect move-out analysis, be prepared to pay about 10X what we charge.  There simply is no market for a PM to spend hours pouring over every fine-grain detail of a property.  

I think we represent the state-of-the-art at my firm when it comes to turnover analysis.  We have sophisticated systems and processing and we discover most issues.  But depending on this ink stain on your granite countertops, I will tell you straight up there's a good chance we miss it if it's not obvious.  

Remember that ultimately, you're not paying your PMC for "perfection."  Chances are, you would see no value in paying the amount of money you would need to pay to demand perfection. 

You're paying them to manage your asset effectively and to add value.  What that means in practice encompasses a lot more than whether they performed a perfect move-out evaluation. 

Thanks @Jordan Malara!  And @Thomas Carter, we would be happy to help you with your property management needs.  

I see that you contacted us from our website and we've reached back out to schedule a call, so looking forward to that! 

 Now your tenant knows a little something about you.  I wouldn't be surprised if she moves out even if you back off the renewal increase.  

If you have a great tenant, the smart money is on keeping rent a little under the market, not pushing for "top of the market."  

 Hey @Jennifer Ndunda, I agree with @Matt Devincenzo that this is a tenant responsibility (new locks).   I think there are two takeaways here though:

1) Make sure your lease clearly addresses this scenario, as it's not uncommon, and 

2) I highly recommend installing DDL's (Digital Door Locks) and giving tenants only a user code and no keys.  We started doing this about 10 years ago and we've never looked back.  We change codes between tenants, and there are never lockouts and never rogue keys.  We keep the master key in our office in case the lock fails (which is rare.) 

 Hey Ben, as a 15 year professional in the field, I would stress that property management is not something anyone can simply start doing.  I'm consistently surprised at some responses I see on BP acting like property management is just something one starts doing.  My background is in law and I consistently draw upon that in the daily execution of my duties.  

No offense intended, but I strongly believe that no Realtor without experience and training should try to handle PM.  It's one of those things where maybe you get lucky and everything works out, but quite possibly things can go off the rails.  People can end up hurt if properties are not appropriately rent-ready, and it's the area of real estate people are most likely to end up in court. 

It's an incredibly difficult profession in which to become an expert.  The legal landscape alone is daunting to those paying attention to existing laws and proposed legislation. 

My advice for you and your friend is twofold:

1) Hire a property manager. They are not that expensive and it is worth every penny.  Check google reviews, find one you're comfortable with. 

2) Never rent to a friend unless they are thoroughly vetted by the property management company.  I've seen so many relationships implode over renting houses.  The PM in this scenario is a much-needed filter to ensure the lease goes smoothly.  After all, who knows if this will just be a 12-month gig or much longer.  

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $469,000
Cash invested: $230,000

This is one we never really thought would be a rental. We purchased it back in 2012 as an owner-occupied house and made a lot of updates over the years. Rental rates in the area for single-family homes have skyrocketed due to a lack of supply, allowing us to rent this one in a single day for $4200/month.

What made you interested in investing in this type of deal?

Single-family homes are my specialty. Appreciation and stability are king.

How did you find this deal and how did you negotiate it?

Paid market pricing for it back in 2012.

How did you finance this deal?

Conventional

How did you add value to the deal?

We re-did most of the property just for our personal preference, but it ended up helping on the rental side and the appraisal side.
We could have rented it for close to the same amount without all the added extras. Cliff's notes on what we did - Renovated kitchen, renovated master bathroom, renovated garage, renovated basement, new paint, new roof, new slate floors, artificial turf front and back.

What was the outcome?

The property appraised for exactly $1,000,000 just a couple of weeks ago, thus appreciating over $500,000 in a 10-year timeframe. Now that it is a rental and a great cash flow property, we are excited to add it to the portfolio. For those interested primarily in cash flow, I would urge them to look at appreciation much more closely. If you can acquire single-family homes in the right areas, appreciation is typically excellent.

Lessons learned? Challenges?

Buying a single-family home in an established suburban neighborhood is, IMO, the best investment you can ever make. It's one we have repeated a number of times now. We only own 7 properties, but the wealth-building upside from buying the right single-family homes can't be overstated. The challenge is of course acquiring the right property in the right area, but if you know your numbers and if the homes will break even with rent, they tend to be great investments.

 Hi Lacey, just ask the tenants for it. 

The number one issue we hear from new clients to RES, who came to us from other PM Companies is: communication. 

More than mistakes, more than fees, more than anything, it's just clear and timely communication.  

Deceptively simple, and yet most PMs just can't get it right. 

Of course, if I were hiring, I would not set the bar so low. Communication, yes, but also I need a great fee structure, a sense of urgency and a team of competent professionals who have an "own it" mentality.  As I get older and wiser (hopefully), I would also want a PM company staffed by property owners (at the least) and ideally investors themselves.  

As for this "They tell me the tenant is breaking the lease and how they are going to handle it before the tenant actually leaves and I'm stuck with a surprise vacancy." @Nathan Gesner it's actually our company policy to NOT inform clients if a tenant tells us they are breaking their lease.  A couple of main reasons:  1) They often do not end up breaking their lease, and 2) When they do, the full security deposit plus the balance of the Improper Termination Fee goes to the client making them more than whole and it's a more impressive communication from RES to say "Here's what happened, here's what we did, here's a bunch of extra money for you."  No need to rattle a client with the news that a tenant "might" be breaking their lease.  

This is a fun conversation for me, personally.  We manage rental properties all up and down the I-25 corridor so I have a great front-row seat on development.  

Right now, I think Colorado Springs is the next explosive market.  Development is moving ahead, full-steam, areas east of I-25 off of Interquest and Briargate.  Rental rates are still pretty low, but so are purchase prices.  We see most of our CS single family inventory rent quickly and to qualified tenants.  

The affordability gap between Denver and CS can't be overstated.  This will continue to drive people from Denver metro areas and down to CS.  

The 5 rental houses I own currently are all in suburbs of Denver (1 in Aurora by Southlands, 2 in Littleton, and 2 in Centennial) but my next acquisitions will be in CS no doubt.