We just observed the 10 year anniversary of 9/11. The take away for me was the reminder of how precious life is and the fact that our lives as we know it can be turned upside down in an instant.  So how does that impact owning rentals?

We need to be prepared.  Once you own real estate you need to have a living trust, a will, written instructions for family, insurance such as Term Insurance, that would cover the mortgage on the rental so the loan would be paid off and the surviving family members can receive the income from the rental.  Have a list of all your contacts associated with the rental – plumber, accountant, gardener, insurance agent etc. Have a file with everything related to the rental so people know where to go to get info. 

Make sure bank accounts have appropriate names on the accounts for the rentals.  I added my husband to my bank accounts even though I own the rentals so that in the event of my passing he can still access the accounts, pay bills etc.

Life can get complicated when things happen unexpectedly try to be as prepared as possible.

I have a client that knew he was ill and terminal and came to me to take over management of his rentals so that when the time came it wouldn’t be a burden to his wife.  Now, we are educating his wife about the properties and working with her.  Her comment to us all the time is, “Thank you for handling all this for me.  It is such a relief.”  I really admire her husband for taking action to protect his wife.  He truly loved her.  I feel blessed to be able to lift the burden and to protect her.

If you have property management needs in Santa Cruz County check us out we might be able to help you.  www.PortolaRentals.com

Kathleen

I just had a fire in one of my rental homes and thankfully the tenant had renters insurance.  Moreover, we had a copy of the owners insurance and were able to get in touch with the insurance company on behalf of the owner.  It is important that you are listed as additionally insured on the clients insurance.  This way you get copies of the insurance for the file.

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

The biggest tip I can give renters is to get Renter’s Insurance.  We include with our lease a recommendation for Renter’s insurance – addendum.  It costs only about $150 for the entire year.  Your iphone to replace is more than $150 so it is worth it.

I have seen too many fires and the tenant falsely assumes the owner’s insurance will cover them.  It doesn’t.

Renter’s insurance covers: rent, security deposit, hotel costs, replacement of personal items from fire, water, smoke damage such as furniture and clothing.  So be protected.  Add it to your Christmas wish list.

If you don’t think this happens – I just had a fire and the first question to the tenant was, “Do you have renter’s insurance?”  Their response, “Yes”  What a huge sigh of relief for me.  I know they are taken care of and I can work with the owners insurance to get the home repaired.

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

On the news this morning was a report of a rash of arsons on vehicles near downtown Santa Cruz.  Whenever I see a fire situation or a flooding situation on the news my first thought is, “I hope they have insurance.”

With every lease we have tenants sign we have a Renter’s Insurance Addendum where we recommend that they get insurance for their personal belongings.  It usually costs around $150 per year.  Yes, it is so cheap. Your laptop, iphone, leather jacket, bike all add up to more than $150 to replace.

I had a very sad situation happen when a tenant moved into a property and 2 days later came into the office asking if we had heard….well we had not, we did placement of this tenant the owner handles the management.  Well, the tenant’s dad got up in the middle of the night to use the bathroom and stepped into 2 inches of water!  The entire house was flooded and it came from the malfunctioning ice maker on the fridge.

The gal asked, “who is going to pay to replace my items”, my response was, “did you have renter’s insurance?”  “No. ” “Well, then I guess you are paying for your lost belongings.”  The owners insurance will pay to repair the house but not replace her belongings.

What she could have gotten compensated for in this situation would have been:  hotel cost, funds for rent, replacement of personal belongings etc.  Instead she had to stay with family.

I have recently discovered another local company called, Home Asset Defenders which is a great service.  The company comes into your home or business and documents with text and photos and values all your belongings and can provide the info to your insurance company in case of loss.

The company is:  Home Asset Defenders (831) 761-9656 www.homeassetdefenders.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

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

As many of you know I have been very involved in professional organizations for Property Management.  By participating and being involved I learn more and grow not only professionally but personally.

April 12-15 in Concord at the Hilton, the California Chapter of NARPM (National Association of Residential Property Managers) had their annual state conference.  There were classes the first 2 days for those who want to enhance business skills in marketing, office procedures, and owner-client relationships.  The conference kicked off on Wednesday.  Throughout the 2 day event there were serveral workshops covering such topics as how to use  Social Media, Fair Housing, Risk Management (insurance), Starting the Difficult Conversation, Business Practices to help increase revenue, offer excellent customer service and so on.  In place of a key note speaker the first day we had a session that reviewed the new FTB (franchise tax board) 7% out of state withholding tax that property managers must comply with as agents for the owner.  We also had a networking session that produced some real laughs.

The networking session question was, “You thought you’d heard everything until….”  2 stories stand out.

1.  Tenant calls property management office complaining that the heater doesn’t work, his wife has to wear a sweater to bed when they make love….property management company sent maintenance out and there was nothing wrong with heater…

2.  Tenant calls property management office with plumbing back-up, plumber is sent out, and in the process of snaking the plumbing the next door neighbor comes running out of the house screaming that she knew the house was haunted…apparently the snake came up through her toilet and was whipping around and caught the shower curtain and was spinning it in the air!

Humor is what gets any of us through the bad days and it is fun to be able to share these crazy stories.

Our key note speaker the second day was a legend in our community.  Mark Kreditor from Texas.  He has a degrees in music and is able to put property mgmt lyrics to well known songs to keep us all in stitches.   He shared with us his thoughts on the Stimulus of the Economy and how it relates to Property management.

As a current board member for the state I had the opportunity to attend the First Timers breakfast where I got to meet new members to NARPM and their first conference.  It is really inspiring to me to meet other property managers and hear their experiences and find out how they decided to become part of our family.

I can only tell you that NARPM is the first and only professional organization I have ever been a member of that truly made me feel welcome from the first day and each time I see old friends.  They gladly share their experiences, tips and tricks and are always available if you have a situation or question you just aren’t sure how to handle.  The thought is there is more than enough business to go around so there isn’t the feeling of being competitors as much as being professionals who want to do what is right and help others in the field.  A perfect example is the last day of the conference there is always a breakfast and at this breakfast we network and share forms.  Attendees bring with them handouts of some of the forms they use in their office that have been especially helpful.  Why recreate the wheel?  I can’t tell you how many ideas for services, better ways of streamlining my office procedures or added text to my management contracts that I have gotten from fellow property managers.

I would like to encourage anyone that is a property manager or thinking of becoming a property manager to attend a local chapter meeting, or state or regional conference.  I think once you meet some of the members you will be convinced of the importance of getting involved.  Many members are former past presidents of local, state and national boards, are authors of property management books, teach and speak to professional organizations, and continue to run businesses in their local communities.

Our vendors are a large part of our success as well and this year for the first time we had them in the conference room with us instead of a separate vendor exhibitor room.  The feedback was overwhelmingly positive.  They were able to mingle with us in an informal setting and got to hear first hand the presentations and topics of interest to us as business owners.

For more info about NARPM or to find a local chapter go to:  www.narpm.org

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

Yearly Planning, Year-End Planning

Yearly Planning – this should be done before the new year begins.  It should also be reviewed quarterly.  Again, this is your business, your investment.  What should be part of your yearly-planning?  Any turnovers coming up, what maintenance needs to be done this year?  Have a budget?  Taxes, Insurance, Mortgage, Utilities – what are your fixed expenses and how much are they going to be? If you have a vacancy do you have the reserves set aside for turnover, and the return of the security deposit?  Review insurance, mortgage to see if you need to make adjustments.  You’d hate to find out after a fire that you didn’t have enough insurance. Review the lease to see if there are any new legal addendums that need to be included with the lease, are there any changes to occupants – birth of a child, new roommate etc.?  Compare your new year budget with actual budget from prior year?  Were you on track, over budget, under budget etc?

Year-End Planning – this is where you gather all your files, prepare for tax time, review the budget and see how you did.  What changes were anticipated and unanticipated?  This will help with the new year planning.  Set up new accounting spreadsheets, and new file system for the coming year.  I have set files, and I pull out all the docs in the files and put them in a large envelop with the property address on it and then I print my spreadsheet for the entire year of my accounting and staple it to the front of the envelope.  Then I give the envelope to my accountant.  I now have empty files and folders ready for the new year.  I go to my computer files and create new ones for the new year.

This planning is vital and so important to do.  If you just hate it then hire a bookkeeper to do this for you.  It is well worth the money to have someone organize this accounting.  Remember this is your business.  Get help where needed.  Just like I don’t expect all owners to be able to do plumbing, electrical or general contracting work you shouldn’t expect that you can do the accounting if it isn’t your thing.  You can write off the expense for taxes and this way you get all your due write offs.

I can’t stress the importance of doing your year-end and new year planning.  If you don’t do this crucial part of property management then you might end up like my next and last topic of property management:  Z for zombie, have your energy zapped and lose your zest for life by being burdened with your rental property.

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

Xerox and  X-check

Xerox – copy documents, keep copies of all communication whether on your computer or printed and put into the file.  The main point here to document, document and document.  Have a filing system for your documents so you can find what you are looking for later.  Copies can always be sent to the tenant, referenced in communication and shows you are organized.  Less chance for you to get sued.  Keep copies also includes photos before and after move in, repairs etc.

X-Check (cross-check) – you want to cross check all references, everything on an application and do your due diligience with referencing the web and books about property management so you are educated and can answer and speak to any concerns or questions your tenants may have.  Cross-checking your facts keeps your risk down from possible law suits.  It is ok to not always have the answer.  Just tell the tenant, let me check into your question and I will get back to you by…and give a specific date.  Otherwise, it will be viewed as a stall technique.  Then get back to tenant with your answer and the location of your information if they want to check it out for themselves.

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

Question & Qualifying Applicant

Question – You as Owner always want to question and get more info not just from tenant when they call with maintenance emergency – ask lots of questions to understand situation but question your insurance agent annually to make sure your investment is property insured.  Be pro-active in staying on top of the laws and maintaining your relationship with your tenant.  Don’t be afraid to ask your tenant how things are going with the unit.  By questioning in a caring way you allow your tenant to feel comfortable coming to you when issues arise.  Questioning allows you to stay informed and educated about being a landlord.  Be open to questions and ask lots of them.

Qualifying an Applicant – you want to know what your criteria for renting will be ahead of time.  How much income compared to rent do they have to make? How long is their employment history, rental history?  You want to ask all the same questions you would find on an application over the phone to pre-qualify them.  Ask their FICO score, how much income do they make, why are they moving, what is their job and how long have they been in it?  Many times you can screen someone out over the phone thus saving you time showing the property.  The way I position my phone screening is that I want to make sure I am not wasting their time since I am sure they are looking at many many potential rentals.  Applicants are always appreciative when you are honest with them but always willing to show the property if they are still interested in seeing it after doing a drive-by.  Keep in mind you CANNOT ask questions about family (you can’t ask if they have children).  I ask how many people are in your party or will be living in the unit?

Ask questions and listen to how they are answered, the tone, the attitude etc.  Are the answers vague?  If so ask for more detail.  Ask them what they are looking for in a unit and be quiet.  Know your criteria and stick to it.  If you apply the same criteria to everyone then you aren’t discrimminating and you will be more confident when questions are asked of you.  I include my 2 page criteria form with my application.  I give everyone the entire packet so everyone knows the criteria so they can determine for themselves if they fit or not.    Ex:  do you accept people who have a bankruptcy that isn’t discharged?  Do you accept someone with debt that is larger than $1,000? If someone is self-employed what financial information do you want to see to help qualify them?

Again, bottom line, have your criteria in place and ask lots of questions over the phone before you even show the property.  Once you get the filled out application you MUST check everything on the application to verify that it is accurate.  Good applicants rise to the top quickly both from paperwork you collect and from referrals of past landlords, and employers.

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

Organization

Even if you have only 1 rental you need to be organized and have a system that keeps all your records in order.  I have a binder and it has the following tabs:

• Summary – 1sheet with tenant contact info, rental amount, security deposit amount, recent maintenance done
• Lease – lease and application, credit report, copy of move in money checks
• Maintenance – list of recent and future maintenance for the property
• Budget – check book, bank statements, property taxes, insurance, mortgage statements
• Communication – phone log of conversations, letters sent and received

If you have more than one property you definitely need a system.  If you aren’t good at accounting then you might want to consider hiring a local bookkeeper to help you with this.  By being organized your CPA will appreciate it when it comes to doing your taxes for your rental.

Being organized helps you to assess when to raise rents, review the last maintenance work that was done when the tenant calls and asks for something…has the plumber been to the property 5 times this year?  If so, why..maybe the roots are getting into the pipes and you need to set aside money for a line replacement which is very expensive and you don’t want to be surprised by this emergency expense.  I just had 5 properties recently that had to have lines replaced at a cost of $10,000-$25,000 per line!

In my business we use 5 section folders with the following tabs: property info (copy of ad, property details such as house, 2/1, 2 car garage etc.), Invoices, Communication, Owner Info (insurance, taxes, management contract), Tenant Info (lease, addendums)  If I have an Owner with many properties I have a separate Owner file that contains info that would apply to all the properties.

Whatever system you decide to use, set one up and use it. Please don’t have a shoe box or drawer that you just toss everything into and then try to sort at tax time.  This isn’t treating your rental as a business.

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