TOP 10 QUESTIONS TO ASK PROSPECTIVE PROPERTY MANAGERS

Are you ready to take the plunge into multifamily real estate investing, but you’re a little hung up
on the whole property manager thing? You might be thinking: Do I need a property manager?
How do I choose one? What questions do I even ask? Are they going to know I’m a beginner?
What if I sound ridiculous? Phew! Believe us, we know it can be daunting and even a little scary,
but in order to build your real estate portfolio, you need to have a system in place for property
management.

First things first. Yes, you probably do need a property
manager, especially if you are remote investing. There
is no way to avoid it; you just need to rip off that
Band-Aid, start calling around and get your interview
practice in. The good news is that we are giving you
our top 10 most important questions broken down into
5 categories to help you know exactly what to ask your
potential property manager. By the end of this article,
the hard part and thinking will be over. All you have to
do next is pick up the phone and start practicing.

CATEGORY 1: EXPERIENCE
Let’s start with some of the obvious questions for your potential
property manager. Finding out their experience in and around
property management is going to be essential.

1 How long have they been in the industry?

2 What types of properties do they manage?

The first question is pretty self-explanatory and helps you
determine if they know the ins and outs of the business.
Question #2 gives you, the investor, insight as to whether or not
they will even be a good fit for the properties you are going for.
For instance, if you need a 20-unit apartment building managed
and they only have experience with single family homes or
duplexes, that is not going to be a good fit. The same is true the
opposite way around.

CATEGORY 2: SERVICE
The next category you want to consider is service:

3 How do you market vacant units?

4 What is the typical tenant placement timeframe?

As an investor, one of your biggest expenses is vacant units. This
is why it is extremely important to find a property manager who
is super proactive at marketing vacant units for you. You will also
want to find out the typical amount of time it takes them to place
a tenant into a property on the market. This allows you to plan on
vacancies when you are running your numbers.

CATEGORY 3: FINANCIAL
Without a doubt you should be in alignment with your financial
figures, which is why you need to ask your property manager
about their fees and other financial questions.

5 What are your management fees and are they based

on a percentage of the rents collected or are they based on scheduled rents?

6 What are your tenant placement fees?

The difference between collected vs scheduled rents is
essentially incentive vs indefinite. The first one, collected, bases
the fee off a percentage of the rents collected so the property
manager only gets paid if you get paid. They have a little more
motivation to collect rents in this position.
If the fee is based on scheduled rents, the more common
practice, the property manager receives their fee whether or
not rent is collected. Similarly, the tenant placement fee varies
throughout the industry. Some charge one half of one month’s
rent, others charge a little more based on a monthly percentage.
Other property managers (that we don’t use) charge a full
one month’s rent. As you are analyzing your deals, you will be
building these numbers and amounts in, so it is helpful to know
when deciding on one property manager vs another.
CATEGORY 4: OPERATIONS
As the investor, you will not be the one talking to your tenants
and handling day-to-day upkeep of the property. As your property
manager, they should have a system in place for any accidents,
predicaments, or repairs that come up.

7 How are maintenance requests handled? What is the process?

8 What happens if there is an emergency at the property?

One of the biggest things that will create turnover for your tenants
is when the landlord doesn’t take care of the property. So, ask
your property manager, “When the tenant calls and has an issue,
what is the process of getting it taken care of?” The second thing
you want to ask about is how they handle emergencies, such as
hurricane, fire, flood, POLAR VORTEX (been there, done that) and
what is the standing procedure for those scenarios?

CATEGORY 5: POLICIES AND PROCEDURES
If we had to pick our favorite category, it would probably
be policies and procedures. The reason we invest in real
estate is to create passive income and cash flow, right?
Well, if either of those becomes obstructed, then your
investment starts to turn into a money hole, so you want
to find out:

9 What is your move-in/out process?

10 What are your eviction policy and process?

By having a solid system in place for both of these
questions, it leaves no room for gray areas when it comes
to policies. A property manager who does not have a
specific procedure dealing with evictions can lead to
contradictions and headaches. If the rent is due on the
3rd of the month, then they need to deliver the message
to all the late tenants to pay or quit on the 4th. Wishy
washy decisions and behaviors are taken off the table
immediately by following a system.
We hope these questions and tips have helped you. We
recommend interviewing at least 3-5 property managers
in the market you are looking at. Take some time to
compare and contrast which property manager will be
the best for YOU. Do what you can to practice: roleplay
an interview call, outline these questions, and get
comfortable with the words coming out of your mouth.
As soon as you know it, you will be making calls without
thinking twice about it.
The agonizing state of analysis paralysis can hit hard
throughout your investing journey. Hiring a property
manager can be one of those times, and a lack of
knowledge and feeling out of place can leave you
feeling defeated before you even start. We understand
the intimidation can be heart pounding BUT this might
be the very thing you need to do to get unstuck and into
action. If you push through the fear, you will start to see
a HUGE difference in your profitability and portfolio.

Source: https://learn.american-apartment-owners-association.org/link/889444/72/

10 Repairs That Aren’t Your Landlord’s Responsibility

One of the benefits of being a renter as opposed to being a homeowner is that the landlord is responsible for many costly home-improvement projects, like replacing a leaky roof or updating dying appliances. But not all domestic damage is his or her responsibility. What exactly are you on the hook for? Find out which home repairs are not your landlord’s problem — and start saving up for them now.

1. Replacing light bulbs, batteries, and HVAC filters

The landlord can’t control how much you run the lights, so replacing bulbs when they burn out is your responsibility. The same may be true for replacing batteries where necessary, including those in smoke and CO2 detectors, which should be outlined in your lease so that there’s no confusion about who’s supposed to keep up with home safety. Many leases will also require tenants to replace air filters in HVAC systems on a regular basis (ideally every three months, but landlords often supply the filters).

2. Unclogging backed-up drains that you caused

Here’s what I’ve learned from personal experience: Don’t put egg shells or potato skins in the garbage disposal if you don’t know how to unclog the sink. Otherwise, it’ll cost you a visit from the plumber, because this is definitely not your landlord’s problem. Same goes for the toilet — you do the crime, you do the time. Unclog it yourself or call someone ASAP before the problem turns into more damage from overflowing water and other “stuff.”

Practice other considerate grooming habits, too — like cleaning your hair out of drains to keep pipes in working order. If your landlord has to come over to do this for you, he or she has every right to tack an extra fee onto your rent that month.

3. Certain pest infestations

Assuming that you’re moving into a rental unit that doesn’t have any existing vermin problems (you should verify this independently before signing a lease; don’t just take the landlord’s word for it), you may be responsible for any rodent or bug infestations that occur after you move in. Be sure to check the terms of your lease as well as any state-specific laws regarding pests such as bedbugs.

Certain living habits, like leaving old food out or failing to regularly take out the trash, can attract ants, cockroaches, or even rats. If your landlord finds you responsible for the infestation, you will likely have to pay up to get rid of the problem.

Other bug or rodent infestations can happen naturally. Termites, for example, can infest any building regardless of your living habits. In this case, it’s on the landlord to get an exterminator.

4. Lawn care and snow shoveling at single-family homes

Unless your landlord has agreed to handle the mowing and snow shoveling in the single-family home you’re renting, you’ll need to get out there yourself. While you can let the lawn go for a little while, you’re legally required to have your sidewalk shoveled within a few hours after a snowstorm ceases. Fail to do it and you could face fines from the city, which also will be your responsibility. If you live in a multiunit dwelling, however, the landlord generally takes on this responsibility him or herself or hires someone to do it.

5. Damage to property due to your negligence

Being a decent human being means taking responsibility for damage caused by your own negligence — accidental or not — and that of your family, friends, kids, and other guests you invite into the home. Your landlord is not responsible for anyone’s carelessness; you can’t punch holes in the walls during an argument and expect them to fix it. And please, don’t lie to get out of whatever it is you or they did to damage the property. Be an adult, pay for the repairs, and move on (ideally with people who don’t destroy things).

6. Carpet cleaning and repainting

One of the biggest costs to landlords is replacing carpet ruined over time by tenants. I’ve seen some of this damage myself, and I’m frankly baffled by how disrespectful some people are and the lengths they’ll go to try to skirt the cost of cleaning or replacing the carpet.

Repainting the walls their original color (if you’ve painted them) is also your responsibility. This should absolutely be a clause in your lease, but you should always contact your landlord before making any paint decisions.

7. Pet damage

I once had a tenant who was not authorized to bring an animal into my rental but did so anyway. When I questioned her about it, she denied it. I explained to her the strong smell of feline urine upstairs, at which point she revised her story to having a dog in the house briefly. I wasn’t born yesterday, lady. The dog bit was a lie, too — but it didn’t matter what kind of pet was in my house. It was unauthorized, and I passed the cleaning bill right along to her.

8. Misuse of appliances that cause them to malfunction

You break it, you buy it — that’s the rule with appliances in your rental that you’ve damaged. Whether you’ve caused a dryer fire from neglecting to clean out the lint trap, burned out motors from working appliances too hard, or caused the dishwasher to overflow because you thought laundry detergent would work in lieu of dishwashing liquid (shout-out to my ex-husband), it’s all your responsibility. If any appliance just stops working, however, it’s probably on your landlord — so give ’em a call.

9. Holes in the wall from frames and shelving that you hung

Before you can get your security deposit back, your landlord will want to make sure a few tasks are completed, including patching up holes you’ve put in the wall from frames, shelves, and other damage you may have caused to the drywall and paint from adhesives. Skip out on it and you can kiss your money goodbye.

10. Anything else outlined in the lease

Read your lease closely before signing. Most issues of landlord/tenant responsibility are outlined in the document. Keep it on hand to go over again if issues arise so you can quickly determine whether or not the burden and financial responsibility falls on you. Once your signature is on the lease, you’re legally bound to it. If you feel like something outlined should be the landlord’s responsibility, discuss it beforehand to revise if necessary. After that there’s no wiggle room — it’s either your problem or not.

 Source: wisebread.com

North Carolina rental prices increasing faster than national average

By Samantha KummererWednesday, February 2, 2022 8:02PM

RALEIGH, N.C. (WTVD) — Rental prices continue to skyrocket across the U.S. The average monthly rent cost increased by 16% nationwide, according to an ABC11 I-Team analysis of Apartment List data.

The increase was even higher in North Carolina. Since last year, the average cost of rent increased by 20% or $200 on average across the state. Just in the last six months, many areas of the state reported a 10% spike in monthly rent.

The Asheville, Burlington and Greensboro metro areas reported the largest increase in rent with monthly prices increasing by more than 30% in each area since January 2020.

Rent in the Raleigh-Cary area is the highest in the state at around $1,484 a month.

“The increase in rental prices is tied to the increase in home prices. They’re really two parts of the same market,” explained Michael Walden, a North Carolina State University economist. “When home prices skyrocket, which they have been doing, many people are priced out of that market, so obviously they have to go into the rental market.”

Both the Raleigh-Cary and Durham- Chapel Hill areas fell in the top 25% of metro areas in the country with a 20% spike in monthly prices over the last year.

Fayetteville reported some of the lowest increases in average monthly rent since June 2021 with just a 3% increase.

Many Florida cities ranked at the top of rental spikes, according to the analysis. The Naples – Marco island area reported a 52% increase in rent during the past year; the highest in the nation.

Walden said it’s unlikely prices will drop, especially as inflation remains high and the state continues to face economic growth.

“As long as North Carolina is a growing state and particularly the metro areas are growing, this is going to be a problem,” he said. “It’s going to be a problem because housing is tied to land and in any given metro area, there’s only so much land, specifically the land that people want to occupy.”

Habitat for Humanity in Wake County has seen firsthand the ripple effects of the increasing cost of housing.

“If you are not able to access stable housing that’s going to have long-term consequences for you and your family, particularly for children. I think we’ll see, you know, unfortunately, worse health outcomes, worse educational outcomes, and then you get to a position where it’s really hard to support people who need help, said Jacquie Ayala, the director of advocacy at Habitat for Humanity of Wake County.

Twenty-six percent of Wake County households spend more than a third of their income on housing, according to the North Carolina Housing Coalition. This percent is higher in Durham County (32%) and Cumberland County (36%).

Nationwide 25% of renters spend more than half of their monthly income on rent, based on a 2018 analysis of Census data by Harvard University’s Joint Center for Housing Studies.

As monthly expenses go up, many are not seeing an increase in wages to assist with rising housing costs, which leaves many families dedicated more income to housing.

“When you have inflation of 7%. The way to look at this is if your pay is not going up 7%, you’re falling behind your standard of living and unfortunately that’s the case for a lot of people,” Walden explained.

Ayala said options for low-income families are continuing to diminish. Ayala estimated around 900 affordable housing units in the Wake / Johnston County metro area a year.

Her nonprofit is aiming to help with the supply by building 50 affordable homes a year, however, she said it’s not enough.

“When you’re losing nine units a year, building 50 new houses really it’s just a drop in the bucket. So we really need those policy interventions to help all of the affordable builders be able to scale to meet the need for affordable housing in our area,” she explained.

She and Walden encourage local leaders to take action.

Ayala said one of the most important things local governments can do now is to buy land and offer it a free or reduced cost to affordable builders.

“The number one cost for affordable housing right now is the land and being able to provide that land at a discount or for free to affordable builders makes a huge difference in our ability to support and build affordable housing for the long run,” she said.

The nonprofit is also advocating for changes to zoning to allow for more density, expanding rental assistance and offering more property tax relief for homebuyers.

Walden pointed to the COVID-19 relief money state and local governments received as one opportunity to begin to stabilize the market.

“People who are seeing their rent increases by 10, 15 20% that’s obviously presenting them with a very big problem. And I think the best short term solution would be to take some of that $350 billion that are nationwide and perhaps allocate that to help defray some of those expenses for renters, at the same time that localities look about what can we do to increase the supply of rental units,” Walden said.

Ayala said without policy dedicated to expanding affordable options, it’s likely evictions and homelessness will increase.

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https://abc11.com/rent-prices-increase-north-carolina-affordable-housing/11533489/