HOW WE HANDLE RENTAL PROPERTY VACANCIES

Welcome to the real estate property update: the project manager edition. Many people get so caught up in the work that they fail to step back and analyze the work, which was completed. In the past month we bought a new property, and we evicted two tenants. Meaning we have 3 vacant properties :-). I thought it was the perfect time to do some reflecting and assure we were going in the right direction. More importantly, what did we learn from all the recent actions?

 

My Email to my Property Manager

 

Property Manager,

When you get a chance can you provide an update on the properties for me. In particular answers to the following questions

 

Property 1 / Property 2

 

Are the tenants both set to move by the end of the month? Did we identify tenants for the properties? How does the eviction of both tenants affect us with section 8? Is another section 8 inspection needed?

 

Property 3

 

What is the estimated completion dates on the repairs? How much did we save on the sewer work? When is the C of O and Section 8 inspection? Do we have a signed lease with a tenant? How much are we renting it for?

General

What are some lessons learned from our issues from property 1 and property 2? Is there anyway we can implement a pay rent via credit card program? (I would be willing to take a deduction in rent for payments via credit cards)

Just a head up. I’m cutting ties with the insurance company. It’s been a month since I asked for a policy, and I haven’t received anything yet. I can’t even get a return phone call or an email answered. I value customer service above everything. If they are not willing to give me the common courtesy of a return phone call I’ll take my business elsewhere. Thanks for the referral, but they the worst.

 

Property Manager’s Response

 

Hello Dominique,

Both tenants are scheduled to be out by the end of the month, and I have told them both that we have already identified two new self-pay tenants that are going to be moving in on the 1st. We have shown the property 14 times, and I have a sweet older lady on Section 8 that would like to see property 2 again once the tenant is out. I hate showing places when I’m evicting the tenant because of bad experiences in the past w/tenants talking negatively about the owners, the house, etc. Property 1 is very cooperative, but Property 2 is immature.

I’m not rushing the process on either one, just to make sure we get good quality tenants. I don’t want to be in this position again w/one of your houses in 6 months from now. Credit cards? Dom, these people are on Public assistance. They don’t have full time jobs 90% of the time and wouldn’t qualify for a credit card 99% of the time. Both the direct deposit and credit card ideas are awesome for a house in the high-rent district with working professional renters, but we are in the ghetto. People are struggling to get by if they are on Section 8. So we have to look at incentives like the “cash-off if paid early model”, or if you pay on time for 5 months then every 6th month your portion is free.

That’s the only thing that’s realistic for them. It’s an eye-opener understanding that most of the tenants’ children don’t sleep on beds and instead have old mattresses on the floor. Many times they don’t even have matching shoes! It’s a tough reality. I’m not saying I won’t ask if they do have credit cards or bank accounts in which to do automatic withdrawals, I’m just saying you need to have a better understanding of the Section 8 population.

 

As for the overall effect with Section 8:

 

Both houses will need inspections anytime there is tenant turn-over.

Property 3 will be completed by Thursday. The C of O is tomorrow at 10 a.m., so that we can be there until Thursday to address anything else they question. All that’s left is to put on the switch plate covers and paint the porch. We may need to re-construct the railings on the porch as well, so I will see what they say.

I would rather them sight it than do something that wasn’t necessary. We have SO MANY people wanting that house because of its size. I’m asking 1050.00 a month for rent. We will probably get it, or at least 1,000.00. It will also depend on any “wiggle-room” you and I want to consider, as everyone’s budget that we like may not cover 1050. For example, if a tenant is receiving 980.00 from section 8, and section 8 says that they won’t allow the tenant to go any higher than a maximum rent of 980.00, and they are a great tenant/ we won’t have to worry about their portion, then we may consider them.

What you also have to understand, and we have discussed this several times before, is that Section 8 isn’t about everyone receiving the same assistance amount towards their rent based upon the size of their family. It’s about several factors that determine how much they will give to that person.

So, everyone will qualify for a different amount, and many times neither they, or us, will know what they qualify for until they submit an application. I like DSS for that one difference. With DSS you know exactly what that person is good for from the start. With Section 8, the tenant will say “I have a max-benefit of 1,300.00 but a portion of that is utilities, food, etc. It’s a crazy system, but it pays higher than any other assistance except for SSI or SSD. We don’t have a signed lease because we don’t have a C of O. Therefore, Section 8 won’t approve it until we pass the C of O.

I had scheduled this inspection quite a while ago, however, the inspector whose case property 3 is assigned to was not available. Also, we had to wait on the sewer, which we ended up saving 600.00 on. I noticed a problem with the laundry sink drain line, so I had him re-construct that one to tie in with PVC as well, rather than the existing galvanized piping that was there for 100.00. Therefore, we ended up saving 500.00 total on the plumbing. I kept track of all the items that we discovered during the renovations.

1- Installed new shower/ bath surround: 240.00

2- Upon removing the old linoleum floor in the bathroom, we discovered that approx. 1/2 the sub-flooring in the bathroom was rotted. We installed new plywood, and had to pull the toilet and re-set it. 330.00

3- We discovered that four cupboard doors where falling off/ falling apart and needing new hardware. We re-built those. 110.00

4- We had to pull the upstairs front bedroom door d/t the studs used to frame the door in with where cut off at the bottom, and didn’t go all the way to the floor! We pulled the studs, re-framed the door in, and then installed the door. 145.00.

I’m really sorry to hear about the poor service you received from the insurance company I referred. It makes no sense to me why they didn’t respond!! Who was the person you were working with? Were you trying to get market-value coverage or replacement cost? They don’t usually like to write anything less than replacement cost which tends to be a bit pricey on this type of property approx 800 a year for single families. I’m really sorry that they didn’t respond man I’ve never had that problem with them before.

Not to “beat-a-dead-horse” or anything, but I think we both agree that the lesson learned was to not let the tenants get to the 15th of the following month without having paid their portion before we file an eviction. They get to do that once with paying after the notice and the second time they do it we file a 30-day notice and terminate the lease. That way we keep it moving. You are a great customer, and I don’t want this to happen to you again!

Best,

Property Manager

 

Conclusion

 

As you can see we are looking to be in great shape. I’m excited to get rid of the old tenants, update our old non-working way of doing business, and start fresh. Looks like we will have 3 new tenants by September. In my normal transparent fashion, I will let you know all the juicy details.

I’m thinking of testing out the pay on time incentive, but only if they fail to make rent the first time. Also, no more are we allowing tenants to go several months without paying their rent before starting the eviction process. The government faithfully paid their portion, but it sets a bad landlord / tenant relationship to let the tenant get by without paying.

With that said, despite a temporary setback, it’s great to know that my team is on the same page and willing to adapt to the ups and downs of the market.

 

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0 comments

  • Dom- first I have to thank you for opening up your business and email so that we get an idea of how much work goes into being a landlord. It seems like your property manager is fantastic and well informed. Best of luck to you renting these 3 units. The incentive to pay early makes a lot of sense. Incentives change behavior more than penalties.

  • URFinanceSimple /

    No problem! Writing about this stuff, keeps me accountable. There is a lot of project management that goes on in the background. It's more than just collecting rent 🙂

  • Elvira /

    I think that some more transparency would needed in this process, this way isn't professional and honestly, it's insane. Why aren't clear the circumstances on which the amount of the assistance depends? I can picture myself now how complicated must be being a landlord.
    My recent post Sport rteiben in der Hitze kann gefährlich sein

  • Jen /

    The Property Manager and landlord seem to have a great handle on managing these there properties. Dealing with Sectino 8 housing is clearly no easy task and the two of them together seem very understanding and accomodating. It is tough to be the bad guy and evict those less fortunate from their living situation, however in this case appears to be necessary. Following the rules of real estate seems to be working well for these properties, and can only bring better and more reliable and responsible tenants. The world needs more people like you!
    My recent post Welcome

  • URFinanceSimple /

    Thank you for the kind words. Hopefully the changes in our processes results in long term tenants..On Thu, Aug 9, 2012 at 6:07 PM, YFS <yourfinancessimplified@gmail.com> wrote: approve

  • Sam /

    I like your property manager's thoroughness! How much does he earn managing your properties may I ask?
    My recent post Taking Money For Granted: What To Do If The Money Runs Out?

  • URFinanceSimple /

    He earns 10% of rents received and 22/hr for repairs…

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