Wednesday, November 9, 2011

How should you price your rental?


As a professional property manager, I have had years of experience in pricing rentals.  The best and most obvious way I do it is to look at what has rented in the local area and how the property compares. I also look at how long the comparative properties took to rent and the time of the year.  In my experience, the Brevard county rental market slows down around the holidays.  So a property that may rent for $1,000 in July or August, may only rent for $900 (or less) in November.  This may not always be the case, but more often than not, it is. 

I have had owners that have a rental price in their head, that they must have.  If this price is higher than what the market reflects, it usually takes a lot longer to rent it. I have had experience with owners that would not budge on their price, and had the property sitting empty, with no rental income at all for several months. They end up eventually lowering the price or negotiating down to the market price anyway. They don’t realize that they lost more in those few months the property did not rent, then they would have had they have rented it at the market price to begin with. 

I have also had owner that wanted to price their property so high above the market price that I have had to decline listing the property. It would have been a waste of everybody’s time and in most cases those are the owners who would be calling and complaining that their property hasn’t rented. For me it is just not worth it. 

If a property is priced correctly, it should rent relatively quickly and the owner should start receiving rental income in a shorter amount of time. 

Friday, October 21, 2011

It’s a Great time to buy a rental property in Brevard County


The record low interests rates as well as the low sales prices for properties, makes it a great time to invest in a rental property in Brevard County, Florida.  The need for rental homes has increased in the last few years, with all the unfortunate foreclosures and short sales. 

Many people, who are considering taking advantage of the opportunity to get a cheap investment property, may be wondering where to start.  They may ask themselves “Should I buy a really cheap property that needs a lot of work?” “Should I buy one for more money, but could potentially have a tenant in sooner?”  “Should I buy one with a tenant already in place?”

The most important thing to do to start is to work the numbers on paper first.  Then you should weigh all of the options. Which is the best type of house to buy?  What are the plans for the future?  If the numbers don’t work, don’t even go to look at the property. It’s not about buying the prettiest house on the street. It’s about buying the house that brings the most money on the initial investment. How much cash flow will the house bring each month?  You will need to understand the rental market in the area and what similar rental properties rent for. A few years ago, investors would buy properties for their potential appreciation and were not too worried about cash flow. Now that appreciation is probably nonexistent in the foreseeable future, purchases must be made on the basis that they will at least cover their own costs with the rent received.


Sometimes it may be better to pay a little bit more for a property, than spending months fixing it, while it sits empty. Buy one that doesn’t need a major overhaul, but perhaps just some elbow grease and a coat of paint. Get the work finished in a couple of weeks, and get a tenant in as soon as possible, so there’s money coming in. For some people, it pays to save the headache of trying to do the work themselves. They’ll save in fix up expenses and many extra months of holding costs.

Why not buy a house with a tenant already in place?  Collect rent from day one. The tenant will be paying the mortgage, taxes and insurance. If the tenant is in place, money won’t always need to be put in immediately for fix up. If you choose this option, keep in mind when negotiating the contract, to include a clause that states,  that the tenant’s security deposit is to be transferred to the buyer, at closing and last month’s rent (if there is any). Consider what date your closing will be, for a closing in the middle of the month  (provided rent is due on the first), that the seller will have to credit the buyer with a prorated amount of  rent at closing.

Keep in mind, that from finding tenants to fixing faucets, renting out a home can be a lot of work. Yet perhaps the biggest reward for being a landlord isn't the rent checks, but rather the considerable tax deductions for rental homes.

The tax code permits most owners of residential rental properties to offset income by writing off numerous rental home expenses. IRS Publication 527, "Residential Rental Property," has all the details.

Remember, all rental properties are not the same. Location and age of property are key considerations. Renting older property will mean landlords will likely incur higher maintenance expenses. A property for rent in a high crime area will likely require more safety precautions than say a rental in a gated community.  Working with a knowledgeable property manager, who is familiar with the areas,  the rental market, and the current laws could make the difference between a successful investment and a bad investment. 


Sunday, October 9, 2011

How's Your Credit Score?


Your credit score is a review of your years of credit history.  The scores range from 300 to 850, the average credit score is about 600.   Unfortunatley, more people these days are experiencing job loss, short sales and foreclosures which adversely affect their credit scores. Some of the other factors that affect your credit score include:


  • Credit Inquiries — Do you have too many open accounts?
  • Types of Credit — Do you have a healthy mix of loans and credit cards?
  • Payment History — Do you pay your bills on time each month?
  • Credit to Debt Ratio — How much do you owe versus your available credit?

In reviewing your credit history, you'll find that you actually have three reports. Experian, Equifax and TransUnion, each uses a slightly different model to develop your score. You have a credit score with all three of the bureaus. At Wolters Rentals, we use Trans Union to pull credit.

Most people want a stronger score, but how do you get there? Building your credit score takes time. At Wolters Rentals-A Property Management Company, LLC, we know it's difficult to make a large-scale change in your number with just small, simple changes, but your score can improve in a year or two by keeping tabs your credit report and by using your credit wisely. The best way to do this is to know your credit score. You'll improve your credit score by using these helpful hints:

  • Correct any errors on your credit report: If you find incorrect items on your credit report, contact the bureau requesting that the item be removed. If you have a common name or the same name as a family member, you'll want to pay extra attention to make sure the activity reported is correct.
  • Even out your debt: At first, this doesn't sound like a good idea. But, you want to avoid of having one card that is maxed out and have your remaining cards at a zero balance. It's better to have each of your cards at an even balance than to have all of your debt sitting on a single card. 
  • Use Your Credit Cards: Keep your cards in rotation. Whether you're just getting started with credit, or if you've got older cards, be sure to use your cards so that your accounts maintain an active status. But, pay them off in no more than two or three payments.
  • PAY YOUR BILLS ON TIME!   How often you're late with payments greatly affects your credit score. It's one of the reasons people who have recently been unemployed see the biggest hit in their credit score. Yes, it takes longer to build up your credit with payment history, but it's the surest way to prove that you're responsible enough to make payments to a bank.

If you have no credit
  • Apply for gas station cards or retail credit. For those who have no credit or less-than-stellar credit, department store credit cards and gas credit cards are ways to repair credit, increase your credit limits and have a solid payment history, which will raise your credit score. Just beware of maintaining a large balance for more than a couple of billing cycles because these types of cards normally have a larger interest rate.
You can learn more about credit scores at www.myFICO.com, Fair Isaac's informational site and once per year, for free, you can review all three of your credit reports at www.annualcreditreport.com.  this gives you your report, but not your acores.  You can get your scores, for a small payment from each bureau on their websites: www.equifax.com, www.experian.com and www.transunion.com.

Thursday, September 29, 2011

Fair Housing

As Landlords and property managers, we have laws that we have to follow to ensure that we treat everyone fairly.  One of those is The Fair Housing Law.  The primary purpose of the Fair Housing Law of 1968 is to protect the buyer/renter of a dwelling from seller/landlord discrimination. Its primary prohibition makes it unlawful to refuse to sell, rent to, or negotiate with any person because of that person's inclusion in a protected class. 


When the Fair Housing Act was first enacted, it prohibited discrimination only on the basis of race, color, religion, sex and national origin. In 1988, disability and familial status were added. 
Protected class is a term used in United States Anti Discrimination Law. The term describes the characteristics or factors that cannot be targeted for discrimination and/or harassment. The following characteristics are considered "Protected Classes" and persons cannot be discriminated against based on these characteristics:  race, age, gender, religion, disability or familial status.  In some jurisdictions gender bias and sexual orientation have been added. 


The first Fair Housing Act was The Fair Housing Act of 1968, also known as Title VIII of the Civil Rights Act of 1968. Congress passed the act in an effort to impose a comprehensive solution to the problem of unlawful discrimination in housing based on race, color, sex, national origin, or religion. The Fair Housing Act has become a central feature of modern Civil Rights enforcement, enabling persons in the protected classes to rent or own residential property in areas that were previously segregated. The Dept of Housing and urban Development (HUD) is charged with enforcement of the act. It issues regulations and institutes investigations into discriminatory housing practices.

In my years as a property manager I have dealt with and heard about a lot of owners where not aware of Fair housing and said some questionable things. Once the law was explained to them they usually complied. There was one owner that asked what color the applicant was. There was another who asked what race the applicants were and even though that information was not given to him, he figured it out from their last name.  He declined the applicants because he felt that particular race would cook smelly things and ruin the kitchen.  I kid you not. Yes there really are people who are still that ignorant. 

Wednesday, September 14, 2011

What rights do renters have in foreclosures?

I have been asked a lot of question lately, about renters who are renting a property in foreclosure.  The first most basic question is, do they still have to pay their rent? The answer to that is yes. They are still required to pay for the property they are living in.  The owner still legally owns the property until the foreclosure is final.  The agreement to pay your rent is between you and the owner. The owner's agreement to pay his mortgage is between him and the bank. They are two separate agreements
Before May 20, 2009, most renters’ leases were null and void upon foreclosure. The rule in most states was that if the mortgage was recorded before the lease was signed, a foreclosure wiped out the lease (this rule is known as "first in time, first in right"). Because most leases are for a year or less, it was all too common for the mortgage to predate the lease and destroy it upon foreclosure.

These rules changed dramatically on May 20, 2009, when President Obama signed the "Protecting Tenants at Foreclosure Act of 2009." This legislation provided that leases would survive a foreclosure, meaning the tenant could stay at least until the end of the lease, and that month-to-month tenants would be entitled to 90 days' notice before having to move out.  The new owner may terminate the tenancy if the owner will occupy the unit as a primary residence, and has provided the tenant a notice to vacate at least 90 days before the effective date of such notice. This is the only exception to the rule that the tenant may not be evicted during the term of the lease.

A lease or tenancy shall be considered bona fide only if:  the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant.  The lease or tenancy must be the product of an arm’s-length transaction; and the lease or tenancy requires the receipt of rent that is not substantially less than the fair market rent or the rent is reduced or
subsidized due to a federal, state, or local subsidy.

 If the lender believes that the tenancy or lease is not bona fide, it can proceed with
the eviction action under applicable state law. If the tenant files a responsive pleading in which it claims that its tenancy or lease is bona fide, then the issue will become a
question  for the court to determine. In the event that the court agrees with the
tenant, the lender’s eviction action will likely be dismissed. However, even if the action
is dismissed, the might find that the tenant owes rent payments to the lender.

If you find yourself in this situation, your best bet is to contact an attorney. 

Friday, September 2, 2011

Have I got a story for you?


After being in property management for many years, I have heard a lot of stories.  It seems sometimes, that almost everyone has one. I have heard some really sad stories, where good people have gotten a raw deal, and I have heard some far fetched, someone trying to pull one over on you stories.   

There have been people who pull up at the office door, with a truck loaded with all their stuff.   They walk in the office and say we need a place to live and we need to move in today.  That is almost always a big red flag.  Then there are others who try to lie about something that is really easy to check out. I once had a young lady come in and turn in an application. She had on scrubs and wrote down that she worked for a Veterinarian’s office.  The number she put down was obviously a cell phone number, so I looked up the number for the Veterinarian’s office and called to verify her employment.  They had never heard of her. I called the number that she gave me out of curiosity, and a young lady answered the phone. She just said hello, so I asked is this such and such Veterinarian’s office, and she said oh yeah sorry, Such and such Veterinarian’s office, how can I help you.   When I spoke to the applicant, she admitted she had borrowed her friend’s scrubs to pretend she worked there, because she was actually a stripper and was paid off the books.   

I once had a couple fill out an application, and put the same number down to contact them as well as their employer.  I called the number and the woman answered, pretending t be a business and then pretending to be a different person, who then got the applicant on the phone. The business they put down, didn’t exist and neither one of them actually had a job. They got really angry and came back to office to argue with me. 

There are many people who have credit issues, due to their divorce, or have been evicted, but it wasn’t their fault.  Even though they had been evicted several times.   Some people have had a whole bunch of collections on their credit report, because their identity was stolen, and no one will believe them.   A lady threatened me once, when I turned her down for a property and explained it was due to her credit and multiple evictions. She got really angry and started yelling and cursing at me, saying I was a lair, that her credit was great and that she had never been evicted.   Her credit  was actually really, really bad, and I told her that the evictions were listed in the public records, that she could look them up herself.  She wouldn’t stop arguing, so I finally hung up on her. She called back and was sent to my voice mail, where she threatened me and called me the devil’s spawn. 

So I guess you could say I have some stories myself. I have been threatened a few times, once I even contacted the police.  That time it is was a man who called, actually looking for someone else. I tried to nicely explain that I couldn’t help him, since it was not my listing, but would be happy to try to contact the agent for him. He had a few nasty things to say about Realtors and the mortgage industry and then hung up on me. The next day, when I got to the office, there was a message on my voice mail, from him saying a lot of awful things about me, and basically blaming me for the financial problems he had gotten into, due to getting a mortgage that he really couldn’t afford. Even though I had never met him, nor do I  have anything to do with mortgages.  He then went on to tell me to watch my back, that he would be looking out for me. That was when I contacted the police. They spoke to him and he seemed to have settled down.  His is actually sad story. Unfortunately it is not an uncommon one.

I once went and showed a property to a guy and when we got inside, he closed and locked the front door. I was really nervous, but I opened it back up and waited outside. When I got back to the office and looked him up, it turned out he was a convicted rapist.  I have also had people fill out applications and agree to background checks, only to find out they had been arrested several times for armed robbery, assault or drug dealing. It is pretty scary to turn people like that down. 

Property management is a very interesting business. You just never know what story the day will bring. 

Monday, August 22, 2011

Should I rent my home?

That's a question a lot of property owners are asking themselves in this market. Many people in Brevard county are facing the possibility of having to move to get a job, and do not want to sell their homes, at a loss, so renting may be a good option for them.  There are others, that are looking at taking a huge loss when selling their home, or worse even, being upside down and not wanting to face a short sale or a foreclosure, many of these are therefore considering renting out their homes.  There are many things to consider when making the decision to rent.  Renting a home is a business and requires experience, in order to make it a legal and profitable one.  Here are some things to consider: 

  1.  First, you must determine whether being a landlord is an obligation you can even handle.  Being a landlord is one more responsibility you'll need to fit into your life, and it's safe to assume that things will not always run smoothly. You'll need to stay on top repairs and maintenance, collect rent, and be available for any issues your tenant may have.  
  2. Is your property ready to rent? In this competitive rental market, perspective tenants are very choosy.  Sometimes, a good cleaning and some paint are not enough to attract a tenant to your property.   
Before listing your property, you should consider several things;
a. Will you allow pets?
b. Do you understand the liability to a landlord when allowing certain        breeds?
c.  Do you know what the market rent is? 
d. Can  you afford to rent your property at that price?
e. Can you afford to pay the mortgage while the property is empty? 
4.  Are you aware of your state and local housing codes? As a landlord you're required to make sure the property meets health and safety standards. If you don't take care of your end of the legal bargain your tenants may have grounds to break the terms of your lease, sue you and even to be legally entitled to compensation for damage or injury due to your neglect.
5. How will check the credit and background of potential tenants? this is one of the most important things a landlord must do, before accepting a tentant. 
6.  Are you familiar with Fair Housing?  Are you aware of the penalties for violating it? 
These are just a few things to consider, before listing your home for rent, once it’s rented, there are many things to consider as well.  I will be talking about those in a future blog post.
If you list you property for rent, with a property manager, you as the landlord will not have to worry about these things. Your property manager will be able to guide you through the process. 
 
 

Thursday, August 11, 2011

What is property management?

When people ask me what I do, and I answer “I’m a property manager,” they often ask me what that is.  Once in a while, someone will kind of understand, but assume that I manage apartment buildings, and are surprised when I explain that I manage and list residential properties.  So I have to explain to them exactly what property management is.  So what is property management?   According to investopedia; “property management is: “the managing of property that is owned by another party or entity. The property manager acts on behalf of the owner to preserve the value of the property while generating income. Managed properties include residential and vacation properties, commercial retail space or industrial warehouse space. Property managers are typically paid a fee and/or a percentage of the rent brought in for the property while under management.”  In my case I work with residential properties.  Typically in residential property management, the leases are long term, at least a year. 

In Brevard County the typical monthly percentage for residential property management, is 10% of the monthly rent.  To earn this fee, the property manager usually performs the following duties:

·         Collecting monthly rent

·         Communicating with vendors, utility companies, home owner associations and/or condominium associations

·         Paying invoices for the properties 

·         Distributing payments to owners

·         Providing owners monthly , and a year end statements

·         Working  with tenants to resolve complaints, or implement requests

·         Performing periodic inspections of the property

·         Renewing and negotiating leases

·         Posting late notice if necessary

·         Initiating eviction procedures


There can be a lot more to it, depending on the owner, the property and the tenant, but that mostly sums it up. Tenant placement involves a whole other list of responsibilities and I will write about that another day. 

Wednesday, August 3, 2011

Welcome to my blog

My name is Cathy Wolters. I am the Broker/Owner for my own property management business; Wolters Rentals-A Property Management Company, LLC. I love working for myself. I love the freedom and the flexibility.  I enjoy my job so much, and the main reason is that it is on my terms. It’s hard to explain that sense of freedom to anyone who has never done it.  I started out in this business working for a huge company, then a small one and now working for myself, which has been the best experience of the three. I am grateful for all I learned at the other companies, but could never go back to that way of doing business. 

I have been blessed to work for and with owners that are easy to work with, and respect and trust in my knowledge and experience in the business. 

I decided to start a blog, to share some of my thoughts and experiences in property management.  I am also hoping to hear from others about their thoughts and experiences.  We can learn so much from listening to each other.