National Flood Insurance Program (NFIP)

I received the email below from Sammie Copeland at the West Pasco Board of Realtors. I thought it important enough to re-post it here on this blog.

The Problem:

Congress provided a 5-year reauthorization of the National Flood Insurance Program (NFIP), but severe implementation problems threaten to undermine real estate transactions where flood insurance is required to obtain a mortgage.

*             New NFIP rate structures have caused serious confusion and hardship for property owners.

*             The Federal Emergency Management Agency (FEMA) continues to delay and miss deadlines.

*             The legally required transition to true risk rates has plagued consumers with increases in rates beyond what anyone imagined possible.

The Solution:

A four-year time-out. Congress has legislation in both the House and Senate to delay changes to the NFIP. Tell your Member of Congress and your Senators to bring these bills to a floor vote IMMEDIATELY:

*             H.R. 3370 Homeowner Flood Insurance Affordability Act of 2013

*             S. 1610 Homeowner Flood Insurance Affordability Act of 2013

*             The bills would prudently defer rate increases until FEMA completes the affordability study mandated by law

*             The bills would create a system for targeted rate relief.

*             The bills would create an office of the Advocate for flood insurance rate and mapping concerns.

Please take action TODAY!!!  Click Here to take Action <http://www2.realtoractioncenter.com/site/R?i=ScPt72pch9Zifu-2KJOWwA> .

Rent Collection

Rent collection is probably one of the most important tasks we do as property managers. If the rent is not collected on time, the owner can't pay the mortgage, repairs are deferred and no one is happy.

I have often said that we must train our residents to pay the rent on time. This is often accomplished using different approaches but before we discuss those, lets go over what happens when we allow residents to pay late.

When a resident is always late on their rent or does not pay and we do not attempt to collect, the resident perceive it as "normal" to be able to pay late and many times may lead to them being delinquent for months at a time using your money for other things except paying you rent.

What makes it worse is that Residents talk to each other and others soon find out that we are soft on our approach to rent collections and start paying rent late or do not pay at all. Before you know it, the property has a large delinquency and the owners cash flow suffers as a result.

So how do we train our residents to pay on time?

1. Take the time to properly screen your prospective residents; credit check, rental references and work history/income. Use a tenant screening service and check for prior evictions. Call current landlords and ask for rental history; do they always pay on time. If the landlord is hesitant to provide info ask if they would rent to them again? If the answer is no don't take a chance. Set a criteria and do not waiver from it no matter how sad they story gets!

A trick I learned, is to first call the number I am given for the current landlord and block the caller ID before I call. When the person answers I ask do you accept pets? If this is a legitimate business they will answer yes or no. If the prospective tenant just happened to give a telephone number to one of their friends (which with cell phones is likely to happen with bad tenants) they will probably tell you that you have the wrong number or answer with the professional AHHHG?

2. Take the time to go over the lease and/or rental agreement with the new tenant. Explaining thoroughly when the rent is due, when is late and what is the grace period and applicable late charges. For example if your rental agreements says the rent is due on the 1st of every month and it has five day grace period make sure the tenants understands what that means to them.

I always explain it this way; "The rent is do on or before the 1st of every month and it is considered late on the 2nd of the month. However there is a five day grace period before late fees/charges start to accrue. What that means is that we most receive the rent by the 1st of every month if not a lot fee of $____ will be charge on any rents received after the sixth of the month.

3. Proper service of notices; the first time someone is late on the evening of the sixth no later than the seventh of the month I knock on the door and I ask to speak with the tenant. I smile and say hello and then let them know that we have not received the rent. I asked them if maybe they just forgot and they can give me a check at that time. If they say they mailed it or that they will pay by _____; I immediately hand them an official non payment of rent notice and remind them that a late fee of $_____. needs to be included with the payment and I thank them for their time. I they are not home I post and mail the notice as required by law.

Some will argue that a formal non payment of rent notice or eviction notice is to harsh. But keep in mind that if the resident understands from the very beginning that they need to make their rent payment on time it will safe you a lot of headaches later. Besides, do you want to have resident that you have to chase after to collect the rent or that pays on time.

When you do receive the payment for rent the first thing that comes out of the payment that is received is the late fees. We then apply the rest to the rent payment. If they are short I once again serve them a notice for the difference and start the process all over again.

Harsh yes; effective yes!

I'll give you an example. I once took over a property in which they old owner did not collect the rent on time and did not charge late fees. The first time rent was due, two of the three tenants did not pay on time. We went through the above process a for the first few months in a row and we stood firm by the late fees and the timely payment. One tenant moved out three years later but always paid on time. The other one still lives in the property and continues to pay the rent on time month after month ten years later.

Now if we did not train them to pay on time they would have continued their late payments and we would have struggled to maintain the property and pay the mortgage.

Reality is we are in the business of managing property and collecting rents not in the business of evicting people. However, if a resident is not paying rent on time or not paying at all; that is worst than having a vacant site or unit. At least with the vacant unit you have an opportunity to rent to a good tenant who will always pay on time.

Rent colections

Rent Collections

There is a balance between preventing evictions and working with tenants. It starts before the tenant moves in, it starts with the screening process!

1.       We need to set up a criterion for our prospects to meet and we must stick by that criterion no matter how difficult it is to have a vacant unit collecting no revenue.  The criteria may vary from property to property and from owner to owner. I often recommend the following criterion for the approval of prospects

a.       Two years of verifiable rental history with no more than two late payments during that two year period and no NSF checks. That means that I need to be able to call your past landlord(s) and verify that you lived there and whether you paid the rent on time or not.

b.      Two years of verifiable employment and income. If self-employed last two years of taxes must be provided.

c.       Depending on the type of property your income must be at least twice the rental amount; for a class “A” property it’s at least three times the rental amount.

d.      Occupancy is not to exceed the HUD guidelines of two plus one; on a two bedroom unit no more than five people may occupy the home. This may vary but the key here is consistency.

2.       The process then continues with the signing of the lease and setting up expectations. This means explaining thoroughly when the rent is due, when is late and the grace period before late fees apply and the late fees.

a.       The rent is due on the first of the month every month

b.      The rent is late on the second

c.       There is a grace period of five days before late fee(s) begin to accrue

d.      Rents received after the five day grace period are subject to a late fee of $____

e.      There are no exception to the late fees and all rents must be mailed with enough time to arrive on or before the 1^st of the month and no later than the 6^th of every month or a late fee applies

f.        Any monies received after the 6^th of the month is first applied towards late fees and other charges and then to rent

3.       Proper and timely service of non-payment of rent notices.

a.       Always serve the statutory required notices by the end of the grace period. If the grace period ends on the 6^th by the 7^th we knock on doors and provide personal service or post and mail the notices as required by law.

b.      If the tenant has “reasons” as to why they are late, we listen to them and serve the notice anyway. Evictions are a lengthy and complicated process and there is no sense in delaying it over not serving the notices on a timely fashion.

c.       After notice is served partial payments should not be accepted. If you do you are required to re-serve the notice. Besides you do not want to create the precedence of accepting partial payments

d.      Make sure your leases include a requirement for past due rents to be paid with a cashier’s check or money order not personal check.

I have been told that this approach to rent collection is harsh; HARSH YES, EFFECTIVE YES!

Here is a few examples that prove both points:

I took over a property in which rents were below market and two of the three tenants where use to paying late. Immediately during the first month the rent was due I started serving the notices and demanding that the rent and late fees were paid. One tenant moved out three years later and paid the rent on time every month while living there and the other is still there ten years later and always pays the rent on time.

I also took a slightly softer approach with a different tenant at a different property. She had never been late in three years. When I did not received the rent after the grace period I called her to and let her know that I had not received the rent and she assured me she had mailed it. She even got offended because I called and if the mail did not deliver it on time that was my problem. I check the mail the next day and still no rent; so I called again and was as nice as I could be. At this time she told me that she had given it to her boss to mail and that I could call her boss directly to verify this. Of course after explaining to her that her boss did not rent form me and that she needed to follow up with her boss directly; she became more offended and hung up after waiting another three days I served the proper notice and receive the rent within three days post marked after the end of the grace period. Lesson learned, serve proper notice if you want to be paid your rent on time.

As property managers; We are not in the business of evicting people from their homes; we are in the business of filling vacancies and collecting rent! We owe it to ourselves and our property owners to collect the rent on time. A vacant unit is better than an occupied unit in which the tenant does not pay the rent.

Yes, we need to train our tenants to pay on time! But that does not mean that we should tolerate non-payment of rent or habitually slow/late rent payers.

“Pay us, so we can pay them, so they can pay you.” – Unknown

7 Secrets to Winning Over More Buyers

7 Secrets to Winning Over More Buyers

Way Cool Ways To Organize Your Beauty Stuff We love these creative ideas for organizing our beauty product mess. Read Visit houselogic.com for more articles like this. Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®

7228 New York Ave, Hudson, FL | Powered by Postlets

7228 New York Ave, Hudson, FL Powered by Postlets

Rent Collections

Rent Collections

We are not in the business of evicting people from their homes; we are in the business of filling sites and collecting rent!

It’s true! Yet more often than not we have to file an eviction. Are evictions preventable?  Should we work with tenants until we have exhausted every possibility of collecting rent?

There is a balance between preventing evictions and working with tenants and it starts before the tenant moves in, it starts with the screening process!

1.       We need to set up a criterion for our prospects to meet and we must stick by that criterion no matter how difficult it is to have a vacant unit collecting no revenue.  The criteria may vary from property to property and from owner to owner. I often recommend the following criterion for the approval of prospects

a.       Two years of verifiable rental history with no more than two late payments during that two year period and no NSF checks. That means that I need to be able to call your past landlord(s) and verify that you lived there and whether you paid the rent on time or not.

b.      Two years of verifiable employment and income. If self-employed last two years of taxes must be provided.

c.       Depending on the type of property your income must be at least twice the rental amount; for a class “A” property it’s at least three times the rental amount.

d.      Occupancy is not to exceed the HUD guidelines of two plus one; on a two bedroom unit no more than five people may occupy the home. This may vary but the key here is consistency.

2.       The process then continues with the signing of the lease and setting up expectations. This means explaining thoroughly when the rent is due, when is late and the grace period before late fees apply and the late fees.

a.       The rent is due on the first of the month every month

b.      The rent is late on the second

c.       There is a grace period of five days before late fee(s) begin to accrue

d.      Rents received after the five day grace period are subject to a late fee of $____

e.      There are no exception to the late fees and all rents must be mailed with enough time to arrive on or before the 1^st of the month and no later than the 6^th of every month or a late fee applies

f.        Any monies received after the 6^th of the month is first applied towards late fees and other charges and then to rent

3.       Proper and timely service of non-payment of rent notices.

a.       Always serve the statutory required notices by the end of the grace period. If the grace period ends on the 6^th by the 7^th we knock on doors and provide personal service or post and mail the notices as required by law.

b.      If the tenant has “reasons” as to why they are late, we listen to them and serve the notice anyway. Evictions are a lengthy and complicated process and there is no sense in delaying it over not serving the notices on a timely fashion.

c.       After notice is served partial payments should not be accepted. If you do you are required to re-serve the notice. Besides you do not want to create the precedence of accepting partial payments

d.      Make sure your leases include a requirement for past due rents to be paid with a cashier’s check or money order not personal check.

I have been told that this approach to rent collection is harsh; HARSH YES, EFFECTIVE YES!

Here is a few examples that prove both points:

I took over a property in which rent s were below market and two of the three tenants where use to paying late. Immediately during the first month the rent was due I started serving the notices and demanding that the rent and late fees were paid. One tenant moved out three years later and paid the rent on time every month while living there and the other is still there ten years later and always pays the rent on time.

I also took a slightly softer approach with a different tenant at a different property. She had never been late in three years. When I did not received the rent after the grace period I called her to and let her know that I had not received the rent and she assured me she had mailed it. She even got offended because I called and if the mail did not deliver it on time that was my problem. I check the mail the next day and still no rent; so I called again and was as nice as I could be. At this time she told me that she had given it to her boss to mail and that I could call her boss directly to verify this. Of course after explaining to her that her boss did not rent form me and that she needed to follow up with her boss directly; she became more offended and hung up after waiting another three days I served the proper notice and receive the rent within three days post marked after the end of the grace period. Lesson learned, serve proper notice if you want to be paid your rent on time.

As property managers; We are not in the business of evicting people from their homes; we are in the business of filling sites and collecting rent! We owe it to ourselves and our property owners to collect the rent on time. A vacant unit is better than an occupied unit in which the tenant does not pay the rent.

Yes we need to train our tenants to pay on time! But that does not mean that we should tolerate non-payment of rent or habitually late rent payers.

“Pay us, so we can pay them, so they can pay you.” – Unknown

Getting stubbed: Collecting rent when tenant claims bankruptcy.: An article from: Real Estate Weekly

Property Management Kit For Dummies (Book & CD)

Quicken Rental Property Manager 2011