Spencer Sutton - Tuesday, January 5, 2016
At gkhouses we have the pleasure of working with two types of owners:
- Homeowners who want to rent their personal house
- Investors who either have or are building a portfolio of rental houses
Birmingham is a unique market in that there are a lot of opportunities for investors interested in low, middle and high income houses. This coupled with a solid local economy are reasons investors from around the globe have targeted Birmingham as a solid investment opportunity.
As you might imagine, no matter if you’re a homeowner looking to rent your house or an investor familiar with purchasing and renting property, there are common questions we hear owners asking when looking for a professional property manager….you might call them FAQ’s.
At gkhouses we have someone who is responsible for all of our new owner calls or web inquiries…his name is Nick Goudreau. I asked Nick to talk about the five most common questions owners ask when we speak with them on the phone. So, here we go!
1. How much do you think I can charge for rent?
With mortgages, insurance premiums, and taxes in mind, the biggest worry for a homeowner who has never rented a house before is how much they will get for rent. Some owners believe all they need to do is add up expenses plus tack a little extra for profit and…presto…there’s your asking rent.
As Lee Corso says on Football Saturdays – Not So Fast, My Friend!
It’s extremely important find your true market rate in order to minimize any losses while marketing your home for a tenant.
So how do we find that market rent?
As previously stated in a more detailed blog post on market rent, there are three great ways to help find a market rent value for your home.
- First, we’d suggest taking a look at either Zillow.com or Trulia.com. Both sites can provide an excellent starting point and will also be referenced by tenants when looking for a home to rent. However, from our experience, some of the rental rates these sites give you can be a little bit inflated.
- Secondly, search local property manager sites for comparable homes in the area.
- Lastly, check your neighborhood for other homes for rent and inquire about their rental rate.
Each of these options should provide your with a good idea of a fair market value and a price point that will help you find a good tenant quickly.
What we’ve come to find out is that if you market your home and you’re not receiving a fair amount of calls or applications, there is either a price or a product issue.
Your house could be overpriced and no calls or applications is the market’s way of telling you you’re not in the ballpark with your price.
Or if you’re getting some interested parties come look at your house but not a lot of applications, it’s possibly a problem with your house (the product).
2. What happens if the tenant tears up my house?
Even when a homeowner is moving out and deciding to rent their home, they may have raised kids in their home or had other great memories from their time living there. The last thing they want is for a tenant to cause damage to their home. So, what happens if they do?
Of course, the first line of defense is the security deposit. When a tenant signs a lease with gkhouses, we collect a security deposit up front equal to one month’s rent and hold it in an escrow account until the tenant’s lease is up or terminated.
Upon tenant move-out, a property manager will visit the home and perform a move-out inspection. During this inspection, he is looking for any damages caused throughout the tenants stay and deeming what are tenant related damages (which would be paid to repair out of the security deposit we still hold) and what is considered general wear and tear (which the owner can decide if work needs to be done before another tenant moves in).
Once he’s finished this report, it’s then handed off to our maintenance team to give an estimate on the repairs. Any tenant related damage is then deducted from the security deposit and passed onto the owner to pay for the repairs. Sometimes, the damages to the home are more costly than the initial security deposit.
In this case, gkhouses will charge the tenant for any additional damage upon move out and if left unpaid will ultimately be passed off to a collections agency.
Here’s a copy of a recent move-out inspection so you can see what one of our owner’s receives when a tenant moves out.
3. Can I have a say in who rents my home?
The short answer is no.
It’s left up to the owner to decide whether or not to allow pets in the home, but Fair Housing Laws do not allow owners or property managers to take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap:
- Refuse to rent or sell housing
- Refuse to negotiate for housing
- Make housing unavailable
- Deny a dwelling
- Set different terms, conditions or privileges for sale or rental of a dwelling
- Provide different housing services or facilities
- Falsely deny that housing is available for inspection, sale, or rental
- For profit, persuade owners to sell or rent (blockbusting) or
- Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.
One of the most common request from a homeowner is that we only rent their home to a family.
Of course this is something we cannot do, not only can we not discriminate against people based their familial status, but we cannot ask whether they are married or have children!
Fair housing laws are a serious issue and we have a zero tolerance policy here at gkhouses. If you should accidentally break one of these laws, you could land yourself in a messy lawsuit.
For your safety, either strictly adhere to these regulations or let a professional property manager handle finding a tenant and the tenant screening process for your home.
4. How do you make sure you collect rent?
Collecting rent can sometimes be one of the tough parts of managing properties. With that being said, gkhouses has around a 98% collections rate on tenants we place in homes (as of 12/31/15). Our successful collections rate is very dependent on our thorough tenant screening process and our disciplined collections process.
When we first started in business with our own rental properties, collecting rent was not a fun task…especially if the tenant was behind. And that’s typically the only time when a tenant heard from us…when they owed us money.
And the only time we usually heard from a tenant was when they had a maintenance problem.
This created a tension where neither one of us really wanted to talk to the other….and in this business, that’s not good!
In order to defuse this tension we started sending tenants monthly invoices like we all get for bills that are coming due. This helped tremendously.
We also began maintaining an open dialogue with each tenant about the rent they owed when it became past due. This includes emails and phone calls.
We understand that life happens sometimes and a tenant may either be late or miss a month of rent, but we expect them to communicate these issues with us and begin discussing a payment plan with us.
If tenants ever stop communicating with us or cooperating, our collections process heats up. Here’s our collections process in a simple infographic so you can understand how it works.
As you can see, we give tenants multiple opportunities to work out a payment plan with us before moving them to the next “bucket” and ultimately posting eviction.
5. How does maintenance work?
Maintenance is always one of a homeowner’s biggest worries.
While living in the home, it’s easy for the homeowner to notice what needs to be fixed and either fix it yourself or hire someone to do it…or like a lot of homeowners do, just put it off!
It’s different when dealing with a tenant. When they notice something that needs to be repaired, they won’t hesitate to call that request into the office. And that’s ok…we want tenants to have a safe, secure, and well cared for home.
We rely on these tenants along with our quarterly inspections to let us know when the house needs repairs.
The process works like this:
- Tenant notices something is wrong in the house (let’s say there’s a leak under one of the sinks)
- The tenant will either call us or fill out an online form to inform us of the problem.
- One of our technicians will go out and assess the situation.
- If it’s a repair that can be made for less than $300, they will take care of it on the spot
- If it’s a repair that will exceed $300, they will let our Operations department know and deliver an estimate to the homeowner
- The homeowner can either choose to have gkhouses make the necessary repairs or they can find a contractor on their own.
Either way, the important thing to remember is that the tenant has identified this as an issue and the sooner it’s taken care of, the better this ongoing relationship will be!
Our maintenance team is made up of skilled professionals like plumbers, electricians, HVAC technicians, and general handymen. A majority of our owners enjoy the peace of mind knowing our licensed and insured technicians are working on their home…and not what we call ‘Chuck in a truck”.
Here at gkhouses, we require that our owners carry a maintenance reserve fund of $100 per property or $500 per entity/owner, whichever is greater. This fund is used for any small maintenance repairs that come up during the year while the tenant is in the home.
Ultimately, our goal is to provide quality and attentive service to our owners and tenants in a quick and responsive manner. If our tenants and owners are happy, we’re happy.
If you’re a homeowner and have questions outside of these five, feel free to reach out to Nick at [email protected] and he’ll be happy to answer them for you! As a matter of fact, he’s the one that wrote most of this post today!
And don’t forget that you can always check list of FAQ’s.