As far as maintenance goes, it’s usually the tenant’s responsibility, per the lease agreement, to maintain the yard in a manner consistent with the rest of the neighborhood. This works well if the tenant is conscientious and cares what the yard looks like. As a landlord, I can wholeheartedly say that this is usually not the case. Usually, the tenant will completely ignore the yard maintenance until they receive a notice from the city threatening them with a fine if they don’t cut the grass. The grass and yard is usually then ruined and can not be re-rented due to it’s lacking curb appeal.

One way to avoid this situation is to plant native species of plants at a rental property. For instance, be sure that everything including the ground covering, trees, shrubs and flowers are all native to the region where the rental property is. This way, nothing will grow out-of-control and with proper planning all the foliage will look like it belongs there. You will also avoid dumping chemicals into the ground that contaminate the Floridian aquifer.

Another great thing is that native ground covering is MUCH more tolerant of drought conditions that can sometimes occur in Florida. In most cases it will stay green while all the neighbors have large brown patches in their lawns due to the hot, sunny weather. In extreme cases the ground covering will dry out and turn brown but in a more uniform manner. Then, when it rains eventually, everything magically turns green again.

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Low Maintenance Landscaping for Rental Properties

Whether you run your business from one of your properties or from your kitchen table – these tips, combined with the latest technology, will help you tame the tiger in your back office and make your small business run more like the big guys.

Bookkeeping and Accounting

State and federal laws require every business, and individual sole proprietor, to file a minimum amount of paperwork each year. Large apartment developers and owners have the finances to outsource most of their accounting and bookkeeping functions, but that’s not usually an option for the owner of just a few units; the margin just isn’t there.

Thankfully, bookkeeping and accounting are two of the more basic functions, and whether you realize it or not you probably have more accounting experience than you need to run a successful landlord business.  Accounting is really a matter of simple math; tracking the dollars in and the dollars out. To help you with that math are a host of software providers that offer inexpensive programs to keep your accounting organized and on time.

Computer Software

The landlord with just a property or two can get by pretty well using Quicken, which offers a small business package and one for real estate property management as well.  Unfortunately, Quicken doesn’t offer an online service, which makes its usefulness limited to landlords who only work on the business from home.

Landlords with a few more properties and more expenses to track should upgrade to a more robust program like QuickBooks or Peachtree Accounting.  Peachtree is made by Sage, the company which brings you the customer relationship manager ACT!.  There are various levels which allow you to do everything from making and sending invoices, paying bills, downloading bank statements online, filing quarterly and yearly tax reports, and running payroll.  Sage offers online backup to make sure your data is safe and secure and accessible anywhere you have the internet.

Intuit offers a program called Quickbooks, which is the industry leading accounting program, and for good reason. They have left no stone unturned with this software that handles bookkeeping, accounting, merchant services, invoicing, and payroll all in one simple interface. They offer unsurpassed customer support via phone, email, or chat, and they are so well known in the industry that many local libraries and adult education schools offer free QuickBooks tutorials for new users.

For those who just don’t have the time to do their own accounting, one can search the QuickBooks website for a host of bookkeepers and accountants who, for a small fee, can handle everything from running receipts to balancing the checkbook to payroll and tax returns. They’ll complete the work on their version of QuickBooks and when they’re finished they simply upload a file to your computer and it plugs right into your software.  Perhaps one of the most powerful features in QuickBooks is its ability to distill all your business information into neat and clean financial statements, which can be used to diagnose the health of your business at any given time. Remember, a healthy business is a successful business.

Rent Collection Made Easy

If depositing rental checks is not your thing, look into these online rent collection systems, which collect your rent payments whether you have one unit or one thousand.

Paylease.com – Offers your tenants the ability to pay online using their checking account or credit cards. Can notify you when payments are made and also transfer money online directly to your bank accounts.  Offers a full host of reporting features, including information to be used at year end by your accountant and CPA.

Rentpayment.com – Another online rental payment resource which can collect rent and automatically deposit into your own landlord accounts.

Sublet.com – Offers a portal to your tenants to make rent payments, which can be sent to your own account at any time you desire.  Subtracts a small fee per transaction.

Contact Databases and Property Management

Cloud computing is becoming ever more popular, and making contact management systems available both online, offline, and via your mobile phone.

Contact management systems (CMS) are databases which contain all your business contact information, from addresses and product orders to customer service, support cases and more. They are an invaluable tool in keeping your prospective customer’s information handy.

In this field, Salesforce.com is the industry leader, making their product available to Fortune 500 firms and small businesses alike. For as little as $5 per month a business owner can implement a CMS and have all their customer information at their fingertips in their office, at home, and on the road. CMS systems integrate with many popular email programs like Outlook and Gmail among others. They also allow you to track marketing materials like emails, newsletters, and other direct mail. Some third party plug-ins for CMS systems can track individual clicks and opens for your marketing pieces and auto respond with a pre-recorded message or email. CMS systems also integrate with accounting software so as a new order comes in, the system can be synced with QuickBooks and your financial data will always remain up to date as well.  For the landlord, this can be an extremely valuable tool. Salesforce allows you to track cases, which is a fancy word for customer service request.  Landlords can use this feature to track unit repair requests, which can be submitted online via a simple website. No more phone calls at all hours of the day, and with the case feature, the tenant can stay apprised of the work as it is being done, all through the online case management system.  Salesforce.com also integrates with Paypal, which can be used to accept rent payments for those customers who plan to pay rent with their credit cards.

Another great product is Landlord Enterprise, which offers a computer based, downloadable program to track just about every aspect of your landlording business, from reports, receipts, background checks, and maintenance requests.

Human Resources

The successful landlord needs eyes and ears on his units and on the market to make sure his properties are running efficiently and to make sure he’s not missing any new opportunities to pick up a bargain.  The more people you have at your disposal to help with these functions the more efficiently your property will run and the more opportunities you will be able to analyze.  That’s why it’s important to have a good team behind you.

The Successful Landlord’s Team

There are certain job functions that should be met by people on your team.  At a minimum you should have the following:

●      Sales Agent/Broker/Realtor

●      Accountant/CPA

●      Attorney

●      Banker

●      Loan Broker

These five functions fulfill every basic need from the moment you make an offer on the property to the time you rent a unit or sell the entire building. If you do your own accounting with one of the sources mentioned above you can narrow this list down to four members, and if you possess any other skills you might be able to narrow it down further.

Don’t go too far though. Sometimes even if you have the skills on this list you are better off using another team member.  The old saying “two heads are better than one” is certainly true in real estate.  In tough financing times a broker and banker are worth their weight in gold.  They can find new and interesting ways for you pay for your properties, and the ones who can be creative are especially valuable. Finally, don’t be caught without a real estate attorney.  While foreclosures may present an opportunity for you as a buyer, as a landlord evictions and foreclosures are not a fun business, and they can quickly drain your pockets.  A good real estate attorney can help keep you insulated from any legal problems that might arise during ownership and rental of your units.

Finding team members is easier than you think.  The best place to look is at local real estate investment clubs.  These clubs have weekly or monthly meetings and attendees are usually serious about their business, just like you.  Network and get business cards, you never know when someone might be offering the service you need.

Knowing When to Get Outside Help

At some point, your time becomes so valuable it doesn’t pay to do these functions yourself.  Knowing how much your time is worth can save you from working on things that either aren’t truly important to your business, or are things can be handled by outside help.

There are also a few key functions for which many landlord opt to use outside help, such as financing, marketing and property management.

Property Management

Landlords who have hundreds of units need property managers. Even the software above can get hairy with that many units.  These landlords should turn to outside property management firms that can handle all the reporting you need to run a successful business. It’s not enough to do a web search to find a good property management firm. This is where your networking comes in handy.  Speak to your real estate attorneys and sales agents.  Its likely they will have come in contact with management firms that have good reputations.  If not, remember to ask around during your club meetings.  If all else fails, go to your local real estate board.  Property managers often need specialized licensing to operate. A conversation with a board representative might yield a name or two as a recommendation.

Marketing

Hiring outside marketing consultants to beef up property marketing material has been a trend that will undoubtedly increase in the future.  Marketing and advertising consultants can help take your sales and rental material to an all new level, and to reach potential customers you didn’t even know you had.  More importantly, they can save you the hours it takes to create these documents and post them on the web or put them up in local stores.

I ran into a landlord recently who hired a marketing executive away from google, to help him rent out units to a property that had just been converted from condos to apartments in Seattle, WA. With the marketing exec’s knowledge of the internet, and connections with companies that placed employment transfers, the marketer was able to successfully rent 100 units in under a month.  How’s that for speed?

Financing

Interest rates and loan programs change daily and with all the other things you do staying abreast of current loan programs is too difficult a task for any landlord.  That’s why the broker/banker is an important team member to have, even if you feel like you’ve gotten good deals from your local representative in the past.

Bankers must work within their bank’s parameters, which means if your property doesn’t really fit their program it will result in a turn-down, or the banker might try to get you to make concessions to make the property fit the box.  This might not always be possible to do.  In those cases, it helps to have a broker shopping your loan to several bankers.

Brokers make money only when you close deals so they will go the extra mile to find creative solutions for you. They can also make banks compete for the really good loans, which will result in lower rates and fees for you.

Visit the Direct Lending Solutions website (www.directlendingsolutions.com) for articles on property finance, loan options, and the most recent information on mortgage scams and companies to avoid when financing rental property.

Summary

By embracing technology you will be able to streamline your back office functions, freeing up priceless time that can be spent with more important things like identifying and buying new properties.

About the author, Craig Grella

Craig Grella is an expert writing on real estate and personal finance topics. He has worked for large national banks, and for several Fortune 500 companies.  He invests nationwide, and his articles can be found online at www.directlendingsolutions.com.

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Making Your Small Landlord Business Run Like The Big Guys

First, typically if a potential tenant is using a computer to find a place to rent, they’re trying to be efficient because their time is valuable to them. As in, they’re not sitting around waiting for their next disability/unemployment/welfare check.

Second, typically if they were able to convince a Realtor to use their time in the first place to help them with their search, the Realtor usually has some kind of relationship with the potential tenant. Realtors are usually not going to waste their time with people who will offer no value to them in the future.

That being said, it’s not impossible for a Realtor to bring an undesirable potential tenant to one of your properties. Case in point: A Realtor called me the other day to ask if we accept pets in our units. I let him know that we do and inquired as to how many pets and their type.

Well, it turned out to be 4 dogs of various sizes. This is a situation in which we are not interested. The Realtor then mentioned that the house they are currently renting is being foreclosed upon and they have to be out in 2 weeks.

So let me get this straight. By my account, foreclosures usually take a year from the time you stop paying the mortgage to property seizure. The way laws are written in this country, practically no one gets “thrown out in the street” anymore. This means that there are multiple notices posted at the property and unless these people are completely oblivious, they had plenty of time to find another place to live.

I’m sorry but I’m not sympathetic to people who cannot plan their lives accordingly. Also, after I let the Realtor know that they would have to submit a full credit report with their rental application, I never heard a word more from them.

In my experience, when I sense even a hint of desperation from a potential tenant, it’s usually because they have failed to plan. And as the saying goes, “…does not constitute an emergency on my part.”

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The Smell of Desperation

Apparently this Colony Collapse Disorder was confounding scientists until recently. Now they know that it is caused by a fungus and a virus which kills the bees. Read more here.

The bee keeper ended up having to cut through the floor of the shed to remove about 10-20 pounds or more of honeycomb plus THOUSANDS of bees. I watched, from a distance of course, while he worked on removing the hive and there was  a HUGE cloud of bees engulfing the shed and surrounding area.

In fact, from my observation distance (about 50ft.,) it sounded like a soccer stadium full of vuvuzelas but not as loud.

I’m sure you’ve heard the expression “mad as a hornet” well, these guys were decidedly annoyed. And big too. Bigger than I remember seeing as they entered their home in the floor of the shed.

Anyway, I thought about taking some photos to post here but unfortunately, the bee keeper didn’t have an extra bee suit so you’ll have to take my word for it. Now I can maintain that part of the yard where my previous tenant had a convenient excuse not to.

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No More Bees In My Bonnet…uh, Shed.

Since RentRight is such an old program and is no longer in development by its owner Domin-8, we were looking to find a package that would run on Windows 7 and would also work well with her legacy Novell Netware server.

Now, before you laugh at the fact that they are still running Novell Netware, consider the fact that I’ve seen countless Novell installations where the uptime is on the order of years, not months. This means that the server has been running continuously, without being rebooted, for YEARS. Show me ANY Microsoft server installation that can do that and I’ll shut up right now……..no takers? Ok then….

Novell Netware’s bulletproof nature not withstanding, Microsoft has spent billions of dollars over the years to convince people in the computer market  that Microsoft Windows Server is the best platform to run on and unfortunately for the users, it has succeeded. Unfortunate for the users, but very fortunate for computer support people.

So much so that, the only replacement software I could find, required a Microsoft Server due to the database engine which the software was designed around. Again very unfortunate for the users because normally, the “horsepower” and scalability provided by a server-based database engine is completely unnecessary.

The only other option I found was a large number of web-based property management applications which you would access using your internet connection and a web browser like Internet Explorer or Firefox. It seems the providers of these solutions  would like their customers to pay monthly forever just to use their property management software. Of all the property managers I spoke with, none of them want to pay monthly forever for anything, let alone a software application. But there are other problems with this arrangement.

In Florida, we are subject to a hurricane season on a yearly basis. Some years we are not affected at all but other years we could lose power for weeks at a time. Since internet service is not yet considered a “utility,” it is usually the last service to be restored after a storm. Personally, back in 2005, we lost electricity service for 12 days and it was more than a month before internet access was restored. In fact, services were restored in the following order: cellular phone service, electricity, land-line telephone service and finally, cable TV/internet access.

If my friend would have been using one of these services, her business would have been at a complete standstill. Another problem with these Software-as-a-service solutions is that suppose you decide that your current provider isn’t working out for you. You could stop paying monthly and cancel the service, but what about all your data? Usually property management information systems provide access to a lot of information which is stored in many different database tables. All of the online solution providers use different database structures and there is usually no way to export the data you’ve entered, sometimes years worth, and take it with you. To me, that’s just not a viable solution and I think many property managers would agree.

So, for now, the search goes on. My friend opted to purchase a new computer running Windows XP so that it would easily replace the old one. With the economy the way it is, she just couldn’t afford to replace her entire network, property management software and pay someone to migrate her RentRight data to a new property management system.

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Property Management Software Solutions

1. Certification and Training Requirements

Beginning in April 2010, firms working in homes built before 1978 are required to be certified. Certification requires the submittal of this application including a fee of $300 to the EPA. Along with firm certification, an employee of the firm will be required to be certified as a Certified Renovator. The certified employee will be responsible for ensuring that other employees adhere to guidelines for lead-safe work practices and cleaning. The training consists of an eight-hour class with two hours of pratical training. An EPA approved training facility can be found here.

2. Work Procedures

Once work starts on an affected building (built before 1978), the Certified Renovator must post warning signs outside the work area and supervise setting up containment measures to prevent spreading dust. Refer to the official EPA rules for specific containment procedures for both interior and exterior projects. Certain work practices are forbidden including open flame or torch burning, use of a heat gun that exceeds 1100°F, and high-speed sanding and grinding unless the tool is equipped with a HEPA exhaust filter. Upon job completion, the rules specify cleaning and debris disposal procedures which must be supervised by a certified renovator.

3. Record Keeping and Verification

The rule specified certain verification procedures which must be verified by the certified renovator. A complete project record must be kept on file by the certified renovator for three years. These records must include: verification of occupant receipt of the EPA’s Renovate Right pamphlet, documentation of lead remediation procedures, EPA Certified Renovator certification, and proof of worker training. Remodeling firms also are required to share a copy of their records with the customer within 30 days of completing of the remodeling job.

4. Rule Exemptions

Important to note is that the above requirements are considered optional under the following conditions:

• The renovated building was built after 1978.
• The repairs are minor meaning that interior renovations disturb less than six square feet or exteriors that disturb less than 20 square feet by area.
• If the house or work area on the building test lead free by a Certified Risk Assessor, Lead Inspector or Certified Renovator

In Florida, landlords are required by law to deliver to tenants the EPA’s pamphelet entitled Protect Your Family From Lead In Your Home. In my opinion this new rule will further protect tenants (and owners occupants) from the many dangers of lead-based paint.

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New EPA Rule Could Affect Landlords

Recently I received a call from a tenant who let me know that while her son was mowing the lawn (and it’s about time too) he ran into a “cloud” of bees coming and going from the base of a metal storage shed in the backyard of their rental property.

Due to the well publicized bee shortage, I didn’t want to eradicate them. Also, I enjoy raw honey with my tea every morning so killing the bees would just seem counter-productive.

I called my local apiary (bee farm) owner to ask his advice. He let me know that these sheds usually have joists in the floor which the bees happily use to build a hive. He said that I would have to tilt the shed (or cut through the floor) to get at the hive to remove it. Also, I could attempt this myself or pay him $150 to do the dirty work. Sold! For $150 to the bee man!

Now, as soon as my tenant clears all the junk she’s stored in the shed, this process can begin. This probably means that her lease will end before the bees get evicted.

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Bees!

The difference with this product is that it contains an extra hidden cylinder which can only be operated by a master key. This feature could certainly come in handy if some tenant were to take it upon himself to re-key one of the single-cylinder SmartKey locks and then move out without giving you a copy. Basically you would have to change the whole lock set as far as I know.

With the Key Control Deadbolt, you would be able to re-key it yourself without having the user’s key present. That, folks, is the better way to manage rental property keys.

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Kwikset Key Control Deadbolt Locks

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Kwikset SmartKey Lockset

This is one of the “higher tech” items. I have changed so many entry door locksets between tenants more times than I care to remember. These ingenious devices make that job a complete breeze. These locks can be “re-programmed” to accept a new key in about 30 seconds. So, if a tenant decides that they’re moving out and taking the keys with them. It’s not a problem, except trying to collect the appropriate fees that is.

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A Good Bolt Cutter

This can be an indispensable tool for when tenants decide to chain or lock things that they’re not supposed to. I’ve had tenants chain a tire to a tree branch to make a swing for their kids and then… leave without removing it.

I’ve also had tenants lock a storage shed containing all their junk belongings…and you guessed it..break the lease without taking it with them.

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Master Combination Lockbox

This is great for vacant units needing to be shown. More than once I have found myself half-way on the way to show a property and realize that I’ve forgotten the keys. It’s also good if the unit is listed in the local Multiple Listing Service (MLS) and an agent needs to show it.

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Digital Camera

This tool is great for when you encounter the products of the many wild and wonderful activities your tenants may engage in. It’s also great for showing these activities to the judge when you’re trying to get a money judgment for the damage. Just be sure you have “before” pictures to go with the “after” pictures.

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Duct Tape

Oh, Larry The Cable Guy would be proud. This is actually excellent to have on hand when something is leaking in the middle of the night and the tenant delights in getting you out of bed to come fix it. Tape it up and call the plumber in the morning.

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5 Essential Landlord Tools

Recently I heard the following story about a hapless landlord who found himself in a pickle because for some reason he did not collect a security deposit from a tenant.

As a preface to this story, I should mention that here in Melbourne, FL there seems to be an unwritten rule about the landlord-tenant relationship. It is virtually impossible to collect first month’s rent, last month’s rent AND a security deposit. I have no idea why that is but normally, only two of the above are collected.

So, back to Mr Hapless who owns a single-family home which is occupied by a tenant. He decides that he has had enough of this landlording nonsense and decides to sell his investment. Everything goes normally with the sale up to the point of having the property inspected by the potential buyer.

The buyer’s inspector finds that there are termite wings present in the house which understandably freaks-out the buyer who requests that the seller tent the property in order to treat for a termite infestation. This process normally takes three days, during which the property can not be occupied by humans or animals.

Mr. Hapless calls the tenant to inform her that she must vacate the property for three days due to treatment for a termite infestation. The tenant mentions that she owns an “antique” chair that has termites and wants to know if she should leave the chair in the house so that it can be treated too.

D-U-H !  Now, by a show of hands, who thinks that there should be an intelligence test attached to the rental application? Anyone? Anyone? Bueller?

Most probably, the seller has to incur the cost of the termite treatment due to the inane actions of his tenant. I don’t think that the landlord would be out of line to claim the tenant’s security deposit in order to defray the cost of the treatment. Except, Mr. Hapless did not collect a security deposit, nor did he collect the last month’s rent at the beginning of the lease.

The moral of the story? Always, always, always collect all the deposits you can when renting a property. It creates a security net for the landlord and causes the tenant to have skin in the game which almost always INCREASES the intelligence of their actions.

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Why Landlords Hold Security Deposits