FORBES: Eight Reasons You Shouldn’t Manage Your Own Investment Properties

1Purchasing an investment property is an exciting business venture. If your building is in good shape and you find the right tenants, you stand to earn a lot of money from your rental units.

At first it may seem like a good idea to manage your own property and retain full control over costs, tenants and income. However, self-management can often be a headache: When something breaks down or your tenants are late with rent, you bear the sole responsibility to address it.

Hiring a third-party property management company can be worth every penny, especially if you’re looking to grow your investment business over time. Members of Forbes Real Estate Council shared eight common scenarios in which it makes more sense to outsource your property management tasks.

1. If Real Estate Investing Is Your Side Hustle

If an investor has a full-time job and they are investing as a side hustle, I would suggest hiring a property manager from day one. If the investor is fully focused on real estate investing, it makes sense to bring in a third party once they reach 10 units. At that point, their time is better used looking at more deals versus collecting rents or dealing with tenant maintenance issues. – Ali Jamal, Stablegold Hospitality

2. If You Lack Housing Expertise

Investors should not manage their own properties in situations where they are not familiar with the type of housing being managed. For example, with affordable housing, there is much compliance involved and making a mistake can result in fines. In that scenario, property management is best left to third-party companies that specialize in affordable housing. – Nathaniel Kunes, AppFolio Inc.

3. If You Want To Maximize Your Time As A Passive Investor

Your time is valuable, and technology is opening up many outsourcing options by connecting investors with qualified professionals in property management and skilled labor. Take advantage of every opportunity to maximize yourtime. In fact, investment platforms are allowing people to diversify across several properties without ever picking up a hammer. – Nav Athwal, RealtyShares

4. If You Need To Fill In Skill Or Resource Gaps

Each investor’s access to resources and prior skills and knowledge needs to be reviewed before providing this type of recommendation. It needs to be personalized. An investor who is a handyman likely doesn’t need to pay someone to make repairs. Finding the right tenant can make or break success, so evaluating candidates may be the best area to have help, particularly at first. – Michelle Ames, HorsePower Team Texas/Independent Realty

5. If You Don’t Have Time To Learn The Laws And Run It As A Business

Outsourcing will avoid legal liabilities from Fair Housing and Fair Credit Reporting Acts, state landlord-tenant laws and local regulations. Property managers will have resources that can perform services for less. You’ll also be less likely to lose income from tenants who don’t pay their rent or rents that end up being below market. – Alex Hemani, ALNA Companies

6. If Your Properties Are Located In Different Markets

Using third-party management is usually advisable when properties are located in different markets, as well as when owners don’t have the time or skills required to manage the property effectively. While it is tempting to save the 7-8% management fee typically paid to property managers, there are a host of tasks they take care of to keep the property occupied, cash-flowing and maintained. – Gary Beasley, Roofstock

7. If You’re New To Being A Landlord

You should hire a third-party manager if you’re new to being a landlord and don’t completely understand local ordinances and leasing practices, or don’t have all the contacts needed for repairs and maintenance items. A good third-party manager will know all of the above and you will learn them over time. – Lee Kiser, Kiser Group

8. If You Want To Scale Your Investment Business

If you want a large income property portfolio, don’t self-manage beyond one to two years. After that time, you will be better able to understand “a manager’s perspective.” Your highest and best use isn’t faucet repair or replacing bathrooms. It’s researching geographic markets and establishing competent teams. If you self-manage, ask yourself better questions like, “How scalable is this?” – Keith Weinhold, Get Rich Education

Source: forbes.com

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How Tenant Screening Changed In 2017

1One of the most important things that property owners and landlords can do to prevent problems with renters is to conduct a thorough tenant screening. The best tenant screening reports cover areas like criminal record, eviction history and credit score. Without it, landlords increase their risk of dealing with tenants that have a history of unpaid rent, costly damages and evictions.

However, there were two major changes in 2017 that affected the way that landlords get information from tenant screening efforts.

National Consumer Assistance Plan

The National Consumer Assistance Plan (NCAP) is a joint venture between the three credit bureaus, Equifax, Experian and Transunion. The plan stems from a settlement in 2015 between more than 30 state attorneys general and the three major credit bureaus.

The goal of NCAP is to boost the accuracy of the information on the credit report, among other things. One of the ways they plan to do this is by decreasing the reporting of such public records such as tax liens, parking tickets and civil judgments. So how does this affect landlords?

The new reporting changes are especially critical for landlords because evictions are civil judgments and as of July 1, 2017, they disappeared from credit reports of any prospective tenants. If tenant screening companies provide landlords with just a credit report as part of an applicant’s background check, the landlord will have no insight into that person’s rental history.

Landlords need to check with their tenant screening service to ensure that they are now using an alternative source to discover any eviction judgments on an applicant. There are several national companies that do provide information on forcible detainer and unlawful detainer judgements for tenant screening companies. It’s now the only way that landlords can get information on prior evictions.

Because of the extra cost involved in using a national eviction search, many tenant screening companies are increasing their fees and passing the cost on to their clients. Landlords may have to charge more for their application fees (if allowable in their state) to cover their own costs.

Any landlord that wants a thorough background check on an applicant must ensure that the tenant screening service they now use includes this separate eviction search.

Equifax Breach

One of the country’s largest credit reporting companies experienced a data breach that compromised information for more than 145 million customers. The company experienced unauthorized access to data from May through June and key identity information was accessed, including names, birthdays, social security numbers, driver’s license numbers and more.

Because of the massive potential for identity theft, many consumers placed a freeze on their credit report. With a freeze, potential creditors are unable to access someone’s report without the consumer removing it temporarily. This prevents anyone from opening a line of credit with that information, including identity thieves. However, it also prevents landlords from accessing the info they need to get a complete picture of their applicants.

Landlords need to be aware that identity theft and fraud will be on the rise as a result of the data breach, affecting innocent applicants. They should also know that because many people have put a freeze on their report, their tenant screening company may not be able to access anything without consent.

During the application process, landlords can make things go a little more smoothly with any applicants that have set up a freeze. Many tenants don’t think about unlocking their credit report for a background check on a rental home. Landlords can ask applicants or include a reminder on the application about lifting the freeze temporarily. If the applicant can’t or won’t lift the freeze in a timely manner, landlords may have to move to the next applicant.

Despite the freeze on a credit, landlords should never change their tenant screening practices. When looking for the best tenants, landlords need to get a good idea of what kind of renter an applicant will be. Proper tenant screening will always save landlords time, damages and money. However, in 2017, these two factors just made it a little more difficult for landlords and tenant screening companies to get the background information they need.

Source: realtybiznews.com

Abandonment of Rental Property

bill-new-100What to Do if a Tenant Abandons the Property


by Attorney William BronchickLegalwiz.com

Have you ever had a tenant leave in the middle of the night or the middle of an eviction?  Did you ever wonder what to do?

Basically when a tenant abandons the property, you do not need to file an eviction or wait for the sheriff.  You can change the locks.  As for the tenant’s stuff, in most states you can simply toss it.  You should check your state or local law to see what your legal obligation is to store the items for the tenant.

HOWEVER…

If you are not certain whether the tenant has abandoned the property, you should not change the locks.  If you have the keys, you could enter the premises, but KNOCK FIRST.  Whether or not the tenant has abandoned is often a judgment call, looking at a combination of factors, such as:

  • Did the neighbors see them move?
  • Are the utilities shut off?
  • Did the tenant put in a change of address at the post office?
  • Is there any significant furniture left?
  • If you have access, are there sheets on the beds?

In some cases, the tenant has been arrested or is in the hospital, which would explain why he hasn’t been around.  Or, maybe the tenant has moved, but left behind some furniture to pick up later on.  Even if the tenant is not sleeping there, they are still “in possession” if they have their personal belongings in the unit and have not shown an intent to abandon these items.

Some states have specific laws regarding PRESUMPTIONS of abandonment.  For example, Connecticut law states:

Sec. 47a-11b. Abandonment of unit by occupants. Landlord’s remedies.
(a) For the purposes of this section, “abandonment” means the occupants have vacated the premises without notice to the landlord and do not intend to return, which intention may be evidenced by the removal by the occupants or their agent of substantially all of their possessions and personal effects from the premises and either

(1) nonpayment of rent for more than two months or
(2) an express statement by the occupants that they do not intend to occupy the premises after a specified date.

You can find a state by state guide to landlord tenant law by clicking here. If you do intend to claim abandonment, take pictures, gather evidence and cover all bases to prepare for a possible wrongful lockout claim.  If you have ANY doubts, call your landlord-tenant attorney and do the proper legal eviction proceeding.

The Landlord Protection Agency would like to thank William Bronchick for supplying the article above.

About the author…
William Bronchick, Esq. is an author and attorney who regularly presents workshops and do-it-yourself seminars at real estate and landlord associations around the country. He is the president and co-founder of the Colorado Association of Real Estate Investors. Bill specializes in all forms of asset protection and is the author of several great home study courses.

Read more articles by William Bronchick at Legalwiz.com.

Source: The Landlord Protection Agency, Inc.

Trulia’s Hottest Real Estate Markets to Watch in ’18

See which cities are making the cut this year.

If you’re thinking about where to move next, you’re probably considering a wide array of factors like work, family, and the start of a new chapter. Every home purchase is also a huge investment—possibly the biggest you’ll make in your life. Looking at the markets poised for growth can ensure your new home is also a good investment. To help, Trulia looked at the 100 most populated metros in the country, then used five key metrics to determine the 10 real estate markets with the highest growth potential in 2018: strong job growth, affordability, low vacancy rates, home search rates on Trulia.com, and a high population of young households (you can find our full methodology below). It may surprise you—it did us—to learn that Texas and Ohio are home to more than one fast-growing city. See where else made the cut below

1. Grand Rapids, MI

On the mighty banks of the Grand River, Michigan’s second-largest city is at the top of our list largely due to its strong employment growth, which is up 2.5 percent year-over-year. Grand Rapids also has a relatively low vacancy rate (ranked 16th overall) and a high share of households with residents 35 years and under (22 percent). A full two-thirds of Grand Rapids’ residents own homes, and the median home sale price is a friendly $163,750. Living here means enjoying the waterfront, the Frederik Meijer Gardens & Sculpture Park, and the Grand Rapids Art Museum, which spotlights Michigan’s artists. A bubbling brew scene doesn’t hurt either.

2. Nashville, TN

Next on our list is Nashville, also known as Music City. But you don’t have to be in the band to love it here. Home of the famous “Grand Ole Opry,” residents in Nashville are always down for a good time. Need more evidence? Just walk through The Gulch, a trendy Art Deco-inspired neighborhood. Not surprisingly, Tennessee’s capital has a high share of households under 35 years old (23 percent) and the strongest job growth in the country (3.1 percent year-over-year), luring people from all corners of the nation to relocate. But taking the top spot in job growth may come at a price: affordability, where Nashville is ranked 58th overall.

3. Raleigh, NC

North Carolina’s capital, Raleigh, is known for the bright minds of North Carolina State University and the Research Triangle (together with Durham and Chapel Hill). But it’s also beloved for its wealth of culinary and cultural cornerstones, like the Oakwood historic district, designated on the National Register of Historic Places, where homes date back to the 1800s. This City of Oaks made our list due to its strength in two categories: job growth (ranked 3rd overall) and low vacancy rate (ranked 15th overall). Its popularity, though, leaves the city lagging in affordability—the median sales price in North Carolina’s second most popular city is $250,000—where it ranks 43rd overall.

4. El Paso, TX

This Southwestern city on the Rio Grande is loved for its incredible Tex-Mex cuisine, a wealth of locations for outdoors lovers to explore, and a rich downtown artist community and farmers market. Major employers in El Paso range from the US military to the University of Texas at El Paso, healthcare corporations to major retailers. The average price of a home here is just $186,611, and it’s a hot market for the social young and single set: the median age is 33, and 24 percent of residents are single. You’ll find many of them moving to the up-and-coming Mission Hills neighborhood. “The fantastic weather, developing downtown area, and affordable price range of housing speak to younger buyers as well as just about everyone,” says Laura Baca, an area real estate agent.

5. San Antonio, TX

San Antonio is known for its River Walk, an oasis of cypress-lined paved paths and lush landscapes where locals and visitors alike go to relax. But the city is bustling, too. In 2017, job growth rose 2.2 percent, and the national homeownership rate increased significantly for the first time in more than 10 years. In fact, homeowners make up two-thirds of the city’s population, at 65 percent. San Antonio’s top employers are a mix of military, city, and school districts, as well as private and public businesses, making this 300-year-old city flush with new job opportunities. These trends are expected to continue into 2018, with homeownership outpacing renting for the indefinite future.

6. Fort Worth, TX

This city of cowboys and culture is a hot destination in the Lone Star state, welcoming 8.8 million visitors annually. Fort Worth is comprised of seven primary entertainment districts, each offering dining, shopping, entertainment, and cultural amenities—offering mass appeal for a new generation of residents, allowing the city to lay claim to the youngest population of any major metro in Texas. It’s only 17 miles from the DFW International Airport, ensuring personal and business travel is extremely convenient. The city also has an impressive percentage of homeowners (68 percent), and with popular employers such as Lockheed Martin Aeronautics, American Airlines, the Naval Air Station, and city and school district offices, it’s a solid place to set down roots.

7. Austin, TX

Capital city Austin, with its legendary live music, burgeoning restaurant scene, cool culture, and vibrant community is a draw for everyone—even those who aren’t coming to listen to tunes in the Live Music Capital of the World. Austin’s also a university town, and many folks stay on after school. The national homeownership rate ticked up both for households under 35, as well as those aged 35-44, with the former showing a substantial increase from 34 percent in 2016 to 35 percent in the second quarter of 2017. Though home buying among millennials is likely to be sluggish in the short-run, the long-run potential for this generation to support housing consumption in the United States is big.

8. Columbus, OH

Big things are happening in Columbus, Ohio’s capital and most populous city. It’s booming, and not just in population. There are 33 acres of new riverfront parkland in downtown, cultural institutions are adding to their offerings, neighborhoods are bursting with new places to eat and shop, and the innovative food scene gives residents plenty of options. Trends in Columbus show a 12 percent year-over-year rise in median home sales price, and even with the upward trajectory, the average home comes in at just $159,900. “Our urban areas are booming with renovation and new build projects, and our suburbs maintain their investment values very well,” says Cheryl Chapin, an area real estate agent. “We have a lot of areas across the city that are walkable, have great dining and shopping, yet they’re close to downtown amenities.”

9. Madison, WI

Madison is Wisconsin’s second-largest city and state capital. It’s also home to the state government and the University of Wisconsin-Madison, the city’s largest employers. The town’s amassed a treasure chest of kudos, from most-walkable and best road-biking city, to most vegetarian-friendly, LGBTQ-friendly, and environmentally friendly city, too. Of the places on this list, Madison has the highest percentage of college-educated residents (60 percent). The up-and-coming Tenney-Lapham neighborhood houses lots of young families and hosts a popular annual art walk.

10. Cincinnati, OH

Resting along the banks of the Ohio River, the vibrant Cincinnati region spans portions of three states: Ohio, Kentucky, and Indiana. The third-largest city in Ohio has dedicated homeowners, with 63 percent of the population owning homes and its home sales price slowly growing, up 4 percent year-over-year. Cincinnati’s popular Over-the-Rhine district, which includes Findlay Market and food and craft vendors, is a favorite place for locals to spent the weekend, as is Cincinnati Zoo and Botanical Garde.

Source: trulia.com

Southwest Wake County’s growth spike shows it’s no longer a bedroom community

What used to be a mere cluster of Triangle-outskirt towns is now one of North Carolina’s centers for economic growth. Even by Triangle region standards, which have been significant, Southwest Wake County’s growth has spiked over the last two decades.

The Census Bureau recently reported growth rateCaptures of approximately 26 percent in Apex, 35 percent in Holly Springs, and 44 percent in Fuquay-Varina, outpacing Raleigh in 2016. Residential growth in Holly Spring

 

s alone is expected to grow so rapidly that for every three residents today, there will be five by 2025.

As a site selection specialist and a local resident, I have seen the impact this has had on the workforce. Joanna Helms, Apex Economic Development Director shared, “Most people don’t realize that Apex has over 50 thriving companies that range from advanced manufacturing, wholesale distribution and precision machining to information technology, computer gaming and software development, as well as micro brewing.”

 

Following the population growth, retail market vacancies have been competitive, and are currently at 2.8 percent according to CoStar. It seems that almost every week, another grocer, restaurant, or other retailer announces an opening. As of November 2017, Southwest Wake had almost 30,000 square feet of retail space under construction, as well as five shopping centers proposed. Current mixed-use developments in Holly Springs and Fuquay-Varina create tremendous retail and mixed-use opportunities for business owners and consumers alike.

While retail development will always follow the rooftops and urban areas continue to thrive and grow, a new trend is emerging where many companies are migrating closer to their workforce. This has not only reduced geographic and traffic concerns during the recruiting process, but has also developed a quality of life for employees that, in turn, improves the quality of the company. Names such as Dell Inc., Rovisys, and Sequirus are located in the heart of Southwest Wake, producing thousands of jobs and catalyst for economic growth.

 

“Town leaders have strategically positioned the assets of the community to attract more life science companies. Highlights include: more than $100 million has been invested in roads, water and sewer projects and parks and recreation facilities in the last 10 years,’ said Holly Springs Economic Development Director, Irena Krstanovic.

Southwest Wake currently has over 75,000 square feet of industrial and flex space under construction. These properties are in addition to almost one million square feet of proposed development. Local municipalities are looking to grow their commercial tax base, as well as offer incentives for businesses to join their communities.

This, along with land availability, provides development opportunities for any

 

thing from spec space to owner-occupancy. Additionally, the construction of “Complete 540” project going through the southwest, there will soon be expedited access to RDU and other parts of the region. According to Economic Development Director, Jim Seymour, “Fuquay-Varina continues to see strong growth in the expansion of our medium to large manufacturing firms. Our geographical location is one of our community’s greatest assets for manufacturing and distribution.”

Source: https://www.bizjournals.com/triangle/news/2017/12/12/southwest-wake-county-s-growth-spike-shows-it-s-no.html

 

Raleigh rent increases below state average

Rents in Raleigh are up 2.7 percent over the past 12 months, but the rate of growth remains below the state average and the city is still among the most affordable metro areas in the country, according to recent reports from Apartment List.

The rental website crunched the numbers and found that across North Carolina, rents are up 3.3 percent for the last 12 months. Cary is the most expensive place out of the state’s 10 largest cities, with a $1,210 median rent for a two-bedroom apartment in November.

Rents in Raleigh are the second priciest in the state. The median cost of a two-bedroom was $1,120. But that doesn’t necessarily mean the city is pacing to be any more unaffordable than other metros across the country.

Rents are increasing nationwide, at the same time that the overall number of renters is nearing 44 million households, or about 37 percent of families. But Raleigh rates fairly well in terms of the number of renters who are severely burdened when they write a check to their landlord.

An Apartment List report released in November found that 42 percent of city renters qualified as “cost burdened,” which counts anyone who pays more than one-third of their income in rent. Many other comparable metro areas had higher rates, including:

  • Nashville, Tennessee: 45 percent;
  • Portland, Oregon: 50 percent;
  • Austin, Texas: 47 percent; and
  • Richmond, Virginia: 51 percent.

Researchers at Apartment List attributed Raleigh’s relative affordability to moderate rental rates and strong wage growth.

https://www.bizjournals.com/triangle/news/2017/12/01/raleigh-rent-increases-below-state-average.html

Ask the Attorney: Replace the carpeting?

ask-the-attorneyThe Landlord Protection Agency®presents John Reno, Esq.,a highly experienced Landlord – Tenant attorney based on Long Island, NY.

Q:  Dear Mr. Reno:

If the carpet in my rental home is 10 yrs old but in good condition, do I have the right to demand our tenants to pay for the replacement of the carpet if they allowed their dog for 2 1/2 yrs to urinate all over it throughout the entire house so much that it went through the padding into the sub flooring? Professional carpet cleaning services said it would be impossible to clean it.

Dean Loftis, Mississippi

A: Yes, you can, but why change it if they’re still there?

Legal Disclaimer
The Landlord Protection Agency’s “Ask the Attorney” column is for informational purposes only. The questions answered by Mr. Reno on this site do not constitute an attorney – client relationship and are not to be considered legal advice. Not all questions will be answered and some may appear in the LPA Q&A Forum.
The Landlord Protection Agency recommends that you seek legal advice before using any of the material offered on this web site, and makes no guarantee on the effectiveness, compliance with local laws or success of any of the material offered on this web site. The Landlord Protection Agency is not engaged in rendering legal advice.