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

Pasco County Multi-Family 2-4 Units Market Info

As always I started doing research seeking were the opportunities for investment exists today. I have always been partial to the multi-family market; specifically the 2-4 unit market. The reason I have always been [atrial to this type of investment is because one vacant unit does not equate to zero income until rented again. The other units usually help you cover expenses such as water/sewer, trash and of course mortgage payments.

Here are my findings as of today July 4^th 2011 – Independence Day!

According to the MLXchange Data, there are currently a total of 39 duplexes, triplexes and quads in the market place available in the Pasco County Area; with prices ranging from the low of $29,900 to the high of $299,000 with the bulk of available properties price at between $72,900 and $99,900. There are some fine bargains out there waiting to be grabbed.

The same data show that during the last twelve months a total of 41 duplexes, triplexes and quads have been sold in Pasco County with prices ranging  from          $19,900 up to $158,500. The sales break down as follows; six properties sold for $30,000 or less, five sold from$33,000 to $40,000, six sold between $41,500 to $50,000, seven sold between $51,000 to $60,000, four sold between $62,500 to $66,000, eight sold between $71,000 to $80,000, and five sold between $96,000 and $158,500.

If you are looking for investment possibilities this is a market ripe for the picking!  

Jump Start Your Property Management Career

Whether you are new to the business, considering a career change or a seasoned property manager there are steps you can take that can help you jump start and/or get your property management career on the right track.

Choose the right company – Make sure the office is conveniently located and positioned to service your target market. Ask to speak with other property managers in the office; ask about training and support provided. Is the company culture a good fit for you? Is the atmosphere congenial and allows for you to spend time with seasoned pros.

Meet your prospects needs – while you’re a proving yourself as a property manager people will expect you to respond to their needs. As a seasoned professional, anticipating and meeting your clients’ needs is essential to your success as a property manager.

Stay in touch with your prospects – provide prospects with business card, e-zines, and email announcements. Let people know you are in the business. In addition make sure they know how to access your website and blogs. Social media is a great way to reach prospects; Facebook, Linked In and Twitter are great tools for you to communicate and provide value to your prospects.

Know your market – Managing single family homes is different from managing a mobile home park. While there are some similarities in managing different types of properties there are nuances to each specific market. Research the market place you serve; learn market rents for your area, know what inventory is available and who is your competition.

Dare to be different – just because it’s always been done this way does not make it the right way.  There is always a way to improve how we manage our properties, improve cash flow and add value to the properties we manage.

Keep learning – fifteen to thirty minutes a day of learning will make any person a renowned expert in five years.  Read books in sales and management, attend seminars, join industry association and attend their meetings. Network with other industry professionals, study and learn from them.

Give back to your community – find a way to contribute to your community, give value to others, expecting nothing in return. Donate your time to a cause that you are sympathetic to and you will find it rewarding to help and assist others.

Benefits of Investing in Real Estate

There are many benefits of investing in real estate; Appreciation, Growth, Tax Benefits, Leverage, and Return on Investment.

Appreciation - Even when the economy is declining Commercial and/or Multi-family real estate investments may continue to go up in value. In addition while the owner is paying down the mortgage he/she is also building equity. Over the long run, investing in real estate has proven to be a great creator of wealth.

Growth - Once you have your initial investment you don't need to continue investing your funds like you would in an IRA, Mutual Fund, or 401K. Instead your tenants are paying down your mortgage and covering maintenance expenses while you are building equity. 

Tax Benefits - Some of the tax benefits of owning real estate may include;  
depreciation that may be use to offset your income, write offs such as the interest paid on your mortgage, insurance, car expenses etc. Of course the benefits vary according to each individuals tax situation and property location. You should always seek tax advice from an accountant, CPA or Tax Attorney.

Leverage - This is the best part of investing in real estate as oppose to any other type of investment. An investor may purchase millions of dollars in real estate while investing only a fraction of the actual cost from his/her own money while the banks or private investors provide a mortgage for the balance.

Return on Investment - While you own the property you are receiving income from rents and tax benefits. In addition the property may appreciate in value over time. You are the beneficiary of the increase in value. For example; you buy a $500,000 property with 10% down or $50,000 down (leverage)(plus closing costs) , the property appreciates 3% per year. In just one year your property may have appreciated in value $15,000 that's a return on your original investment ($50,000) of 30%. Now you may say but Oswaldo, real estate values have tanked! That's the beauty of investing in commercial or multi-family real estate investments; the primary driver of appreciation for your property is its Net Operating Income (Income - Expenses = Net Operating Income). Yes, there are other factors that affect the value of your property such as demand, location, and market forces but commercial and multi-family property values are directly influenced by the Net Operating Income for the property.

Bottom line - buying commercial or multi-family real estate investments still represents a great opportunity for you to build wealth by leveraging your money, creating equity through appreciation and paying down the mortgage, collecting rent and taking advantage of the many tax benefits of owning real estate investments.

                                                                                                   Oswaldo Torres, PA

Mobile Home Park and Property Management: What to do when you visit a community...

Mobile Home Park and Property Management: What to do when you visit a community...: "Community visits are as much about ensuring the asset is managed in accordance with the goals of the investor as they are about rewarding th..."

What to do when you visit a community...

Community visits are as much about ensuring the asset is managed in accordance with the goals of the investor as they are about rewarding the community staff for a job well done. Since usually we have not seen the community for a while we tend to notice things the community staff does not. The reverse of that is that things that have been done may also go unnoticed.

In order to have  a successful community visit we must plan our visit and carry out that plan. Below I have put together a list of some of the things you should prepare for and carry out as part of your visit.

Before the visit:
Print out a rent roll
Highlight your vacant units and/or inventory
Print out your delinquency report
                                  Print out your occupancy report
Print out your YTD actual vs budget report
Anything else that deserves being discussed during the community visit

During the community visit:

Greet everyone in the staff as you meet them; establish rapport
Greet residents as you meet them
Walk the community; this gives you a better feel for the community and what needs to be done
Walk all of your vacant units and/or inventory; make sure they are ready to rent or sell and that whats vacant matches your rent roll and occupancy. There should be no major discrepancies from the reports.
Review your delinquency report with the community manager and determine what is being done to collect any past due rent and NSF checks, and confirm that legal action is taken when necessary.

Go over the expenses with the community manager and compare to budget determine what needs to be done to stay on budget or why projects that where budgeted for have not been started.

If the community manager and ts staff are doing a good job make sure you tell them and thank them for it. I always lie to take the manger out to lunch or bring in lunch for the staff as a way to boost moral and create good working relationships.

Adding value to your Mobile Home Park

There are different ways to ad value to your Mobile Home Park:

• Curb appeal - Think in this terms "paint is cheap, mulch is cheap and weeding is (almost) free". Walk around the entrance of your community, your clubhouse and other recreational areas and look at them as if for the first time. Paint curbs, add plants and mulch, and pull out weeds for a neat and clean look.
• Draw Attention - positive attention that is. Ad flags to the front entrance and make sure to replace them before they start to tear. Open house sandwich boards, bandit signs and or directional signs allow prospects to find your sales office.
• Sales office - make sure your sales and management office are clean and inviting. We want the prospect to feel comfortable.
• Customer service - stand up, smile and greet your prospect. Make them feel welcomed. Listen to what they are saying and answer their questions.
• Inventory - whether new or used inventory is available make sure is clean and in good repair. Always show the home entering trough the primary door (no that's not the door by the driveway) this will give the prospect a good first impression of the home.
• Sell, Sell, Sell - Lets face it! Everything else before this is worthless if we can not sell. Be creative; three months of free rent now can earn you thousands per year in site rent. If no financing is available create a rent to own program or do seller financing carry your own paper. Make sure you stay safe act compliant when carrying the note.

The best way to ad value to your community is to increase your occupancy! In order to be successful at filling sites you must create an inviting and welcoming environment for your prospects. Follow this steps and you will surely succeed in increasing your occupancy.