As many of you know I am the State of California rep for the blog: www.CaliforniaLandlordSolutions.com and I often get calls from people who found out website and want advice on how to handle a situation.

Last week I was called by a lady who was shocked that her former tenant was taking her to Small Claims Court for $5000.00  these tenants had a history of not paying rent and at one time were 4 months behind.  When they did move the owner refund most of their deposit minus the late fees incurred.  Now she is being sued.

Tenants are suing her for not returning the security deposit within the 21 days as is required by law.  The lady stated she was traveling and didn’t get the deposit back within the 21 days but hadn’t the tenants breached the rental contract by not paying rent.

Well two wrongs don’t make a right.  Unfortunately, one has nothing to do with the other.  The tenant’s claim is valid and if the judge sides with the tenants the owner could owe them 2x the security deposit.

So what to do?  I would try to negotiate with tenant to get a settlement.  If you do take your chances and go to court be prepared to hand over money in the worst case scenario and show the judge you were not acting in bad faith.

Lesson Learned?  Security Deposits ALWAYS must be returned within 21 days of receipt of keys.  If work is still going on and you don’t have the actual receipts to send with the return of the deposit then you need to do estimates of the cost and hold back the money and send the remaining portion to the tenant.  Then once the work is done send copies of the receipts and any money owed the tenant.

California is a tenant state and judges favor tenant rights so know the law.  Read the Nolo Press books, have a landlord/tenant attorney on file for questions and get educated.  I don’t know how this case will settle out and if I hear I will pass along the info.

If you have property management needs in Santa Cruz please give me a call or check our my new revised website:  www.PortolaRentals.com

PS.  One of the new laws passed in 2012.  Sm. Claims Court awards are now increased from $7500 to $10,000.

Kathleen

In this difficult economic time (Santa Cruz County Unemployment is around 10%) many are looking to their community for help.  Santa Cruz and Monterey offer a one stop shopping place to help people looking for services who don’t know where to start.  Call 211.  This is an information number that will direct you to the exact resources in the community to help you.

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards, M.S. MPM, RMP

I recently rented a cottage in Santa Cruz and was surprised to see the tenants had a chicken coop with 2 hens and they collected the eggs daily.  When I would show the cottage the hens would scurry around the yard – no bugs at this property was my first thought.

As a property manager it is hard enough to find owners willing to rent to tenants with cats, dogs, birds (in cages) or even fish.  Now, we have chickens.  I was wondering what the city code said about chickens.  It is the rooster that people have problems with but apparently hens are a wonderful pet and very eco-friendly. The roosters are banned in urban areas but hens don’t require a permit of any kind.

The Santa Cruz Sentinel, Home & Garden section, Saturday, June 12, 2010, written by Laura Copeland, lcopeland@santacruzsentinel.com and www.santacruzsentinel.com had a 2 page article on chickens and how they have taken off in Santa Cruz County.  Scotts Valley Feed sold 3,000 chickens in 2009 up from 150-300 just four years earlier. 300 were sold out in 45 minutes.

If you want more info about raising hens there are workshops, of course, this is Santa Cruz County. Contact 831-466-3444, www.diggardensnursery.com To read the entire article you can find it online or click the links above.

I wonder how soon I will see hens listed on my rental apps under pets?

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards

Last weeks post was about Party Houses well since then I attended a community meeting with the Mayor of Santa Cruz, Planning Dept heads at the Santa Cruz Association of Realtors office to discuss a new ordinance.

To back up a bit an emergency ordinance was passed by the City stating that if property owners got numerous complaints about noise, and the police had calls to the property the City could refuse a permit to the owner to expand living space.  This is a direct response to the slumlord landlords in Santa Cruz that pack in the students, collect outrageous rent and do nothing in the way of being a good neighbor.  As a result surrounding neighbors have had it and apparently the City has too.

One gross violation cited by the Mayor was a property near UCSC that had the basement converted with nothing but drywall separating living spaces and extension cords running to each space, no escape route and about 13 people living in the house, who knows how many in the basement paying who know how much.

Back to the community meeting.  A new ordinance to alleviate unsafe housing (health and safety, and zoning violations) is being proposed where property owners of 3 or more units in the City would be required to register for annual inspections which would be done by City inspectors.  If the property passes inspection the first time around there are provisions for not having to have another inspection done by the city for a period of 3 or 5 years.  Self inspection would be the responsibility of the owner.  However, what has property owners upset is the annual fee would still be required which is currently set for $100 per property and $40 per each additional door.

Property Management companies that already conduct annual inspections and the Housing Authority feel they should be exempt because we are already doing inspections.

In addition, vacation rentals are getting hit with a proposed ordinance that would regulate the number of vacation homes allowed in certain areas.

The final ordinance is scheduled for a vote at the July 20th city council meeting.  If you want to give your input contact the City or attend the council meeting.

I understand cities are in financial difficulties but creating a negative business environment in the city isn’t going to help our unemployment rate which in Santa Cruz County is around 13%.  There is fear that if vacationers have to pay more for rentals they won’t come and stay.  If tenants have to pay more for rent they will move.  If investors have these ordinances in place it brings down the value of their properties when it comes time to sell.

I think the focus should be on punishing the violators not the 90% who do follow the rules.  The violators will just find another way around it or will gobble up resources by fighting what the City plans to do.

My solution would be:  If you are a UCSC student you must live on Campus.  The university needs to provide housing for all its students.  Only graduate students could live off campus.

If code compliance violations are as rampant as the city suggests then there should be a fee attached to every property owner in Santa Cruz via property taxes to pay for enforcement.  I own property in Santa Cruz but I would rather pay a small fee in my property taxes than have certain property owners singled out.  That is not fair for a few to shoulder the burden of even fewer violators.

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards

In the June 9, 2010 Santa Cruz Sentinel Newspaper, www.santacruzsentinel.com page B3, there is an article by Shanna McCord about the crack down on party homes in Santa Cruz.  The City Council passed an emergency ordinance not allowing repeat offending property owners from making renovations to their properties that would increase the number of bedrooms or the capacity to house more people.

As a local Property Manager, I agree with the City Council.  I think property owners should be forced to follow the same laws that we do.  I think property owners (and I am one myself) need to be responsible owners not just to their tenants but to their neighbors.

I have lived next to a party house and I can tell you it is hell on the neighborhood.  I complained but what can you do with an owner that lives out of the area or just doesn’t care.  I took the route to be friendly to the tenants and let them know when the noise was too much.  It helped until the next round of students moved in and it started all over again.

As a professional property manager, I do not allow my residents to disturb their neighbors.  If I get a complaint I check it out and then the tenants get a 3 day notice to perform or quit.  If it happens again they are given notice to move.  I make it very clear to tenants prior to moving in what is acceptable and what isn’t acceptable.

If you communicate clearly what is expected of people and what they can expect of you 99% of the time they do the right thing.

In my experience when I get calls from property owners who want me to rent their property on the west side of santa cruz I ask how much rent they get and when they tell me $5,000 for a 3 bedroom I know that I am not the property manager for them.  I don’t want to work with this type of owner.  They want to get as much money as they can, they rent rooms, they don’t maintain the property and the kids have parties and ruin the property further because their rationale is that I am paying all this money for this crappy place…

I work very hard to have an excellent reputation in the community and I realize students need a place to live and this type of owner only makes things harder on everyone, me the professional, the students who are responsible, the neighbors who want to live in a quiet area and get along with their neighbors and the city council.

Enough complaining – here are some steps to take if you do live next to a party home.

1. get to know the students
2. take pictures of problems
3. call the police, again and again if you have to
4. contact the property owner and try to work with them
5. contact the property management company if there is one
6. complain to the city council, the university
7. if all else fails, have an attorney write up something on behalf of the neighborhood and have letter sent to students, university, and owner.

Sometimes making yourself the squeeky wheel does work but I do find if you take the steps to be friendly with the students they will often respond better when you knock on the door asking for the music to be turned down.

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards

I was invited to speak at the Santa Cruz Housing Expo on May 8th, which was sponsored by the Santa Cruz Association of Realtors.  My topic was Investment Properties.  Here is a brief outline of workshop.

Investment Opportunities: 

What is your goal – rental income, appreciation and sell, pass on to heirs?

Location – this will determine rent, appreciation and what kind of tenants you will have

Type of Property – single family, multi-family, owner living on property

Cash Flow – what are your expectations and how much are you willing to put down to achieve cash flow?

Loan – do your home work.  Right now single family is probably easier to buy and get a loan on versus a multi-family.

FMV – Fair Market Value – Rent – often realtors will tell potential buyers that they can X amount of rent and the reality is substantially less which goes straight to your bottomline and cash flow.  Always check with local property management company to find out comparable rates for your type of property.

True Cost of Rentals – Isn’t just the mortgage payment, you need reserves for unexpected maintenance, allow for vacancy factor meaning no rent coming in to cover costs, possible court costs if you ever have a bad tenant, and most importantly your TIME.  I am always amazed at how people give their time away. 

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards

As part of the senior seminar series I was asked to speak to the students about how to get their first apartment, what owners and property managers look for in a tenant.

The class was on April 22nd, from 1-2:15 at the school.  About 40-50 students were in the class and all were attentive except one poor lad who kept drifting off…after all I was the first class after lunch.

For those of you that don’t know I was a former middle school, high school teacher (English, Business) and university lecturer and far in my past a State Dept Cross-Cultural Trainer.  Anyway, it was so much fun to be back in the classroom.

I reviewed with the students the importance of putting together a binder or portfolio to present to potential landlords.  It should include a photo, bio or resume, transcripts (in lieu of credit report since they  may not have one yet), letters of recommendation from teachers, coaches, employers, past landords or RA’s from the dorm, pay stubs, copies of bank statements etc.  Be organized.  If roommates are involved all show up to view the property at the same time.  1 person from the group should be the spokesperson.  Show up, presentable, car clean, no music blaring as you pull up to the house.  Follow the owners instructions, take off shoes when entering house, take notes about the property.

If approved and when you move in, take photos of the property at move in.  Do a detailed move in report of the condition of the property.  Do not have loud parties, get to know your neighbors, keep the property clean and tidy.  Offer the landlord the opportunity to do quarterly inspections of the property.  Report items that need maintenance.

If there is a maintenance issue always put it in writing, if conversations are done with the owner over the phone, follow up with an email so all communication is documented.  Be an adult and handle your communication with the owner yourself.  PLEASE do not have your parents step in and try to be helpful.  As a property manager when I get calls from parents I kindly let them know I cannot speak with them.  Their name isn’t on the lease.  If there is an issue the tenants need to contact me.  My feeling is if you are adult enough to live on your own then you need to solve your issues yourself.

I spoke about the importance of establishing credit and keeping it in good standing and how you get a FICO score.  I also informed them that they need to be careful about what they put on the web and Facebook etc.  Employers and property managers will check those places as part of  processing of an application. I also mentioned to them the importance of checking roommate credit scores so that you can make sure they can in fact pay their share of the rent and bills and don’t leave you holding the bag so-to-speak.

I reviewed with them what is in a standard lease, and the types of notices that they could get and what they mean and how to avoid getting notices.  Lastly the importance of getting renters insurance.  It only costs about $129.00 for the entire year and it will replace stollen items, and cover all kinds of costs associated with a fire or damage to a property.  I gave a few very sad stories about tenants who did not have insurance.

Students had good questions and we quickly were out of time.  I really want to commend the school for offering such classes.  The week before they had a class on finance, check books, investing, credit etc.  The class after me was going to be on communication with landlord, teacher, boss etc.  How to start a difficult conversation.  I wish I had such classes when I was in high-school and college.

Doing this class got me thinking about offering a seminar to students (high-school and those in college) about how to be a Successful Tenant/Renter.  I already teach a class on how to be a Successful Landlord so it makes sense to offer the opposing side of that class.  I know UCSC offers a class to its students and I am always impressed when a group comes in with their binder and all the info is put together.  I have had great success with these students and parents who have been through the class.

I want to thank the school, the students for participating and Linda Murphy, who invited me to do my thing.

If you want more info about Georgiana Bruce Kirby Prep please go to their website: http://kirby.dreamhosters.com/

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards

I have read Raving Fans before – it is a quick read 1-2 hours max.  I received the book as a thank you gift for helping with the CALNARPM conference so I decided to read it again.

The theme of the book is how to provide Exceptional Customer Service.  In our current economy, where businesses are working hard to stay afloat, can’t afford to advertise or market and may have had to cut employee hours what is it that successful businesses are doing to stay afloat and even thrive?  The answer is they are providing Customer Service and providing it in new creative ways.

In recent years customers don’t expect service.  Everything is do it yourself or if you have to get on the phone you wander through a menu tree only to get to an automated self service directory. 

I think it is sad that I tell new customers that I always return calls within 24 hours, that we answer our phones live, that I have a live 24 hour answering service for maintenance emergencies, that my vendors actually show up even when the surf is good!  I have gotten new business just because I answered the phone and returned a call.  This is an indication to me of how low the expectations are for customer service.

The book talks about how it isn’t good enough to have satisfied customers we need Raving Fans to survive and grow our businesses.  The book outlines how to go about creating Raving Fans.  How to distinguish your business, how to create the vision and execute it.  How to train your employees to be on board and understand how they contribute to creating the Raving Fan.

I would recommend for any employer to read the book, do a one day off site brainstorming meeting with employees and set up a road map for how you are going to go about creating your Raving Fans.

I don’t advertise but I do spend a lot of time teaching, and networking, and building relationships so that most of my business comes from referral.  I love to work from referral because I love helping people.  I want to help my colleagues clients, friends, family to have a successful experience with me and if they do, then they refer their network of friends and family. 

Creating Raving Fans is about exceeding expectations consistently.  You can’t do everything and shouldn’t do everything but you can do a few things better than anyone else.  Create your niche, your particular unique service and do it better than anyone all the time.

I highly recommend reading the book and get inspired.

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards

Well I am on Z and covered all topics related to Property Management through the alphabet and then some.  Hope you have found the topics timely and of interest. 

Zero Sum Gain (break even), Zap Your Energy, Zombie, Zen, Zest for Life

Zero-Sum-Gain – break even is at least where you want to be with your investment property and well on your way to positive cash flow.  We all have negatives at time with rental properties but it shouldn’t be a long term condition.  Even with write-offs you don’t want to be losing money indefinitely. 

Zap Your Energy – Yes, property management can do this.  I even have my days.  However, if you have systems in place, follow the procedures you have set and keep on top of accounting and maintenance, work to build a good relationship with your tenant you should rarely be in a state of feeling Zapped or Zombie like.

Zombie – this is how you might feel after doing a large turn over, or remodel.  This isn’t how you should feel managing your rental.  You don’t want to be in a place where you are going through the motions.  If you are then you aren’t minding the store and treating the rental as a business which if you have been reading my entries you now know this is a constant theme with me.  Your rental IS a Business.  If you are feeling like a Zombie – then hire a good property management company to take over for you. 

Zen – This is where you want to be headed with your rentals.  Yes, I live in Santa Cruz, CA and this term is probably better understood than elsewhere.  You want to be managing your properties in a way that it fits into your life, is a balanced part of your life, it shouldn’t become your life because that is when people get fed up and just sell.  People forget their longterm goal for their investment and business and often just call it quits.  Again, by following the tips and advice in this blog you will be able to manage rental properties and hopefully have a balanced relationship with your rentals.  Getting you as close to Zen as possible.

Zest for Life – remember when you inherited the property or bought your first rental?  I do.  I was so excited.  It was my first big investment, my first step into diversifying my investments away from Mutual funds and adding real estate into my portfolio, it was my first step towards my retirement planning.  My first rental was also real, physical, something you could touch and actively participate in.  I was so excited about remodeling, painting, making it mine and honoring my husband’s 96 year old grandma who had lived in the home most of her life and had passed away with no one in the family wanting to purchase the house it became my first real estate purchase.

You want your rentals to be part of an overall plan and something that should still get you excited about your goals and future.  I still have a tangible sense of responsibility for taking care of my properties.  I feel responsible to my tenants to provide a nice place to live.  I feel responsible to myself to manage my investment well.  My goal in buying my real estate was to keep it for the long term and have them as part of my retirement plan.  It was never to buy and flip.

In the past 20 years I have remodeled over 12 homes, and loved it.  I got into property management because of my business background, organizational abilities and exceptional communication skills.  I finally listened to friends and family who kept saying, “why don’t you do property management as a business”?  I took their advice, tested the field, and found I loved it.  I have been blessed to be able to buy a 20 year old business from someone who was retiring and over the past 5 years I have been able to add my own touch to it, go out on my own, build my portfolio and staff and create amazing relationships with my clients, tenants, vendors, employees and the community at large along with finding a career that is challenging every day.  I truly learn something new daily.

I have found my Zest in Life and love to share my experience and best business practices.  I teach at Cabrillo Community College, and at other Real Estate related events.  Hope to see you in the future at some of these workshops.   Look for future postings of classes and workshops.

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards

Last Saturday I co-taught the Successful Landlording Class at Cabrillo College in Aptos, CA.  This class is taught 2 times a year.  It is a class packed with basic info on How to be a Successful Landlord.  This class touches on the things one needs to know to stay within the law, get a great tenant through proper advertising and screening and through good communication skills build a long term relationship with tenant.

Here are some of the comments from the class. 

“Great Class! This class could be 2 classes.” male – age 50

“The more information I get, the more I want.  Thank you!” Male – age 48

“This course covered many apsects of property management that I never considered before. This information is essential to property management of my personal assests.” Male – age 62

“Great class, thanks!” Male – age 54

“Awesome information.  Everyone was professional, knowledgeable and easy to approach with basic questions.” Female – age 41

“Outstanding in breadth and coverage.  Great communication skills.” Male – age 49

“Very valuable, educational.  I would definitely recommend this class and these instructors to a friend.” Female

“The class moved fast with lots of information.” Male – age 43

One attendee mentioned to me he has been a landlord for a long time and has been very lucky and will use the tools learned in the class to be a better landlord.

I would like to thank everyone in the class for taking their time to get educated.  I would also like to invite others to attend the class the next time around.

Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.

Kathleen Richards