Month: December 2014

Avoiding a Property Management Horror Story


Matthew Whitaker - Tuesday, December 30, 2014

Halloween has come and gone, but that doesn’t mean we’re free of horror stories – especially the property management variety.

Most property owners without the help of a professional property manager have had to deal with nightmare tenants – the kind who only cause trouble and are a headache, whether it’s due to destruction of property, trouble with the law, or failing to pay rent.

For one homeowner/landlord in Massachusetts, the past year has been one ongoing nightmare due to a particularly stubborn tenant.

Hilbert and Irene Nickerson live in the Jamaica Plain community in Boston. They own a home that they’ve had in the family for decades, and rent out the bottom floor. They’ve had some disruptions here and there, but nothing they’ve gone through compared to what they began to experience in November 2013, when Adam Schatten moved into the rental as a roommate of the current tenant.

In April 2014, Schatten called the cops on his then-roommate, alleging that his roommate “yelled at him really loudly”.

Presumably, the fight was over Schatten’s refusal to pay his share of the rent. The roommate soon moved out, leaving Schatten as the sole tenant. From June to September, according to the Nickersons, Schatten racked up a total of $6,750 in unpaid rent.

The Nickersons moved to evict him from the premises; Schatten countered with a counterclaim and demanded a trial by jury. His argument? Under a Massachusetts law passed in 2013, victims of domestic abuse cannot be evicted in retaliation for calling the police.

This means that Schatten (according to him, at least) can’t legally be evicted because – you guessed it – he was a victim of domestic abuse at the hands of his former roommate. The case is now pending in court, and without being lawyers, we can assume that the courts will eventually side with the Nickersons. But you never know, which just goes to prove just how important it is to avoid all of this and do two things:

Hire a property management firm to handle your rental, thus ensuring they deal with problem tenants, not you; and

Trust your firm to thoroughly and properly screen all potential tenants before allowing them to move in.

Plus, working with an experienced property manager like gkhouses.com gives you access to our extensive knowledge of landlord/tenant laws, which allows us to help protect you from liability.

It’s easier to navigate the world of real estate if you have a trusted professional by your side. Work with a property management pro and you can hopefully avoid a tenant horror story.

Birmingham Is a Top Market for Renters – and Owners | Birmingham Real Estate


Matthew Whitaker - Sunday, December 28, 2014

Does Birmingham have one of the better markets in the country for renters?

According to a report from the Birmingham Business Journal, that very well may be the case.

As discussed in the story, a report from Rent.com was released naming Birmingham as one of the top 10 cities in the nation for renters. The website analyzed Birmingham real estate and looked at key statistics related to the rental market to determine that the Magic City is the ninth-best city for renters in the nation.

Birmingham clocked in at 10.8 percent for its vacancy rate and had a median rent of $896 against a median household income of $31,467. Of course, these stats are for the Birmingham rental market as a whole.

It’s not clear if they include only apartments, or include apartments, single-family homes, and other rental types. We’ve noticed that the single-family home market is quite healthy for owners, but those statistics may very well differ from the stats reported by Rent.com.

Comparing gkhouses.com to the Market: Is the Market Good for Owners?

How does gkhouses.com stack up? For starters, we boast a much lower vacancy rate – around five percent, compared to 10.8 percent – which means your properties, under our care, have a much higher chance of being occupied than the rest of the market as a whole.

And, naturally, with a good property management company by your side, a market can be eminently favorable to owners. This is because you’ll experience a lower vacancy rate and will enjoy a smoother operation than units that don’t have top-notch property management by their side.

On balance, Birmingham real estate as a whole is healthy for property owners. Economic conditions are favorable and improving. Every month, individuals and families relocate to the Birmingham metro area, and these families need single-family homes.

Demand has remained strong and will likely increase as the local area’s economy continues to strengthen. Plus, homes are still affordable, which means buying an investment property and expanding your portfolio is more than possible. Owners don’t have anything to worry about from this report – not if you have a qualified property management professional by your side.

Exploring Birmingham Real Estate Statistics for November 2014


Matthew Whitaker - Thursday, December 25, 2014

Birmingham real estate is on track to finish 2014 strong, judging by the latest report from the Alabama Center for Real Estate (ACRE).

ACRE’s monthly report for November was released on the 21st, and shows more evidence that the market is becoming more and more balanced with each passing month as we inch closer to a bona-fide sellers’ market.

Here is a review of key stats and trends revealed in the report.

Sales Rise; Supply Falls Based on data supplied by the Greater Alabama MLS, there were 827 residential sales in November in the Birmingham metro area. This is up by 2.4 percent from November 2013; year-to-date sales are up by 5.6 percent compared to this point in time last year. Inventory for the metro area in November stood at 6,880 units, which was down by 10.4 percent from November 2013. That is a substantial drop that suggests a weakening of supply amidst higher demand. Supply also fell month-to-month, from October to November, by 0.3 percent. Overall, there are 8.3 months of housing supply, compared to 9.5 months this time last year. This 12.5 percent drop is a positive sign for the market as we approach equilibrium (here represented by eight months of supply for your typical November market). Eighty-three percent of all sales in November were existing single-family home sales; 14 percent were new home sales, and three percent were condo sales.

Prices Dip Slightly According to ACRE, the area’s median sales price stood at $165,000, meaning half of all homes were priced lower than that, and half were priced higher. This is down slightly by 0.6 percent from last year, and was the same as it was a month ago. The thing to note about prices is that they are subject to a significant degree of fluctuation when viewed from a month-to-month (and even year-to-year) perspective. To really understand pricing trends and movements, it’s best to look at a specific area and examine pricing data at the neighborhood level (since that means the most to a buyer or seller).

Synopsis Overall, the Birmingham real estate market continues to improve. We’re not seeing spectacular results, but the improvement, while gradual, has been noticeable. The market is still linked quite considerably to economic factors, like access to credit and household income. For us to see more significant improvement would have to come from significant improvement in economic conditions.

Tenants and Owners, Prepare Your Home for the Winter | Property Management


Matthew Whitaker - Wednesday, December 24, 2014

As property management pros, we’re accustomed to helping our owners and tenants in any way we can. One way to help is to assist our customers with winter-proofing their properties – and making sure their rentals are prepared for cold weather. We haven’t had really cold weather yet, but winter is still very young – and anything can happen in January and February. To prepare your units – whether you own one or rent one – here are tips you can follow and projects you can start today. Tend to Your Furnace A unit’s furnace will go into overtime during cold winter months. You can help prevent nasty surprises by keeping your furnaces updated and free of debris and clogged filters. Change your furnace filters once a month, and check the furnace for signs of clogs, debris, and anything that can interfere with its function. If you have to replace a furnace, it’s best to do it early. Plus, you may be able to qualify for a tax credit worth $150 if you install an oil, natural gas, or propane furnace. Check for Drafts Drafts are like vampires that can suck five to 30 percent of your unit’s energy use during the winter. You want to minimize the impact of drafts as much as possible. Check for drafts along baseboards, windows, doors, and junctions between the walls and ceilings. Consider purchasing new thresholds and rubber weatherstripping for windows. Reverse Your Fans This is one of the easier tips you can follow, but one that has a big impact. If you have ceiling fans that allow you to reverse direction, do it – it can save you as much as 10 percent of your total energy cost by directing warm air down toward the floor instead of allowing it to pool on the ceiling. Insulate Your Windows Did you know that you can insulate your windows to save even more in energy costs? It’s true – and it is very cheap. For a few dollars, you can buy a windows insulating kit that basically helps you apply a thin layer of plastic to your windows. By spending a bit more, you can get a film that accomplishes the same purpose. Both are nearly invisible and will help cut down energy costs. No matter if you’re an owner looking to make your units a bit more comfortable for your tenants, or a renter who wants to cut down on utilities, these tips can get you started.

Three Reasons to Hire an Alabama Property Manager


Matthew Whitaker - Saturday, December 13, 2014

If you own a rental property in the state of Alabama, you have a lot on your shoulders – even if you just own one property. (The burden goes exponentially up for every additional property you own.) This is because in addition to keeping the home occupied and generating income, you have to: – Maintain the home on a 24/7 basis; – Keep the home modern and upgraded; – Market the property in a competitive market; – Keep your tenants happy; – Deal with problems and issues your tenants have; – Screen tenants to find the right ones; – Navigate a labyrinth of regulations and rules. It can become overwhelming without the right guidance and processes in place, to the point where many potential investors don’t find it to be worth the time or effort. It is, though – especially if you have help from a qualified Alabama property manager. Here are three reasons to hire an Alabama property manager. Reason #1: You Don’t Have Time to Run Everything Most investors have other jobs, and even those who are full-time real estate investors find that they have less and less time to spend actually managing a property because they’re busy developing their portfolios, networking with connections, working with contractors, and doing other things that are more valuable to them. With an Alabama property manager helping you, you have free time to invest in your business (or your personal life). Reason #2: Dealing with Tenants Can Be Difficult Dealing with tenants is yet another reason to get a property manager. Even assuming that your tenants are normal, decent, respectful people who don’t cause any problems, they will still have issues to bring up. This is to be expected, but not every owner has the time to constantly deal with tenants and the problems and concerns they have. A property manager is a buffer between you and your tenants, which works out well for both parties; you, because you no longer have that responsibility; and your tenants, because they have someone who can give them their full attention. Reason #3: The Process of Getting Tenants Is (Almost) a Full-time Job Owning a property means you have to eventually find someone to stay in your unit. This can be more difficult than you’d think. Not only do you have to market your property and understand the nuances of a competitive market; you also have to screen and background check your potential tenants, which often includes checking their credit history, references, and other things. Instead of doing all of the above – and then some – work with professional Alabama property managers who can take total care of your property and tenants before you. Contact us to get started.

Reviewing Birmingham’s Vacancy Rate for 2014 | Property Management


Matthew Whitaker - Thursday, December 11, 2014

In property management, one of the most important stats to track is vacancy rate. Vacancy rate, simply put, is the percentage of all units that are unoccupied at any given time. This exact percentage is in flux throughout the year as tenants come and go, but on average, it can give you a good idea of how the market is performing. The higher the vacancy rate, the worse the market; rents will typically be lower due to less demand and more available supply. The lower the rate, the better the market; units are easier to occupy and keep occupied. We like to keep track of vacancy rates for Birmingham to gauge the market so we can offer sound insight to our clients. One good source for this data is the U.S. Census Bureau, which tracks vacancy rates across the country. Vacancy Rates in Birmingham through Q3 2014 The Census Bureau has data for the year ending in the third quarter of 2014, which is the end of September. According to the data, Birmingham’s vacancy rate was 9.8 percent at the end of the first quarter, but swelled to 13.2 percent by the end of the second quarter. Fortunately, the market recovered a bit; by the end of the third quarter, the rate was back down to 11.6 percent, which is still higher than what we’ve seen this year so far but still lower than where we ended 2013 (13.8 percent). The state’s average vacancy rate, by comparison, was 16.1 percent at the end of the first quarter and 11.6 percent at the end of the second quarter. Vacancy Rates from 2009 to 2014 Looking back, we can identify a trend by examining the highest and lowest vacancy rates from 2009 to now:

Highest

Lowest

2009

22.7

6.5

2010

9.6

7.4

2011

17.3

8.2

2012

12.2

9.5

2013

13.8

5.9

2014

13.2

9.8

The highest average was 14.6 percent in 2009; the lowest was 8.5, in 2010. The recession had a dampening effect on vacancy rate, which fell sharply in 2010 only to pick back up the next year. Since then, it has declined consistently until this year (which is still without fourth quarter data). On average, the Birmingham market has beaten the state’s average vacancy rate each year, suggesting that Birmingham is a stronger rental market than other areas throughout the state, and comparable to other metro areas in the South.

Things Tenants Try to Hide from Background Checks | Property Management Advice


Matthew Whitaker - Saturday, December 6, 2014

Screening for the right tenant is an important part of property management. After all, you want responsible tenants who will do two things:

Live peacefully in your unit without damaging anything; and

Pay rent on time.

Finding tenants who will do both of those things consistently can be difficult. All property owners have the temptation of accepting the first person to show interest in the unit, but as anyone who has any experience in property management can tell you, that can end in disaster. It’s even more difficult because tenants can go to great lengths to hide things in their past from background checks and your inquiries. Learning how to get to the truth and thoroughly vet a potential tenant is crucial. Poor Credit Score and Financial History One of the main things a tenant will try to cover up or keep from you is their credit history. Some of this will inevitably come up when you run a credit report, but there’s more to it than just what the credit bureaus tell you. There’s also whether or not they have been foreclosed, or have been evicted, or have had their wages garnished for any reason, or have been sued for non-payment or have failed to pay child support or alimony. Bad Renter History Prospective tenants with something to hide also don’t want you to know the full story about their previous rental experiences. Being evicted falls under this, but this also includes late rent payments, damage to units, bounced checks, or getting in trouble with the law due to noise violations and other ordinances. This is why references are so important – you want to be able to check with a previous landlord and see that this person has everything in order before you rent out your unit to them. Criminal Record Finally, prospective tenants will try to keep their criminal record from you. Fortunately, that’s not that easy to do. You should be able to check their criminal background through a background check and see if there are any red flags. This isn’t to say you should automatically refuse any tenant with a criminal background; some of the best tenants we’ve seen had records. But, it is something to be aware of. To avoid having to deal with any of this, though, you can hire a property management company who can go through the trouble of finding great tenants on your behalf so you don’t have to.