Property Management Blog
In the Pasadena, Glendale and Burbank areas where I manage property I recently talked to two property owners who were thinking about putting their homes on the rental market.
Both owners were new to landlording and both wanted to talk about worst case scenarios. I get it. If you google landlords, tenants, property management, etc. you will find endless horror stories and these owners wanted reassurance.
Leasing out your property is a risk. So is getting out of bed in the morning. You might fall, you might hit your head on the bedpost, you might trip over the cat. You wisely mitigate your risks by not arising until both feet are firmly placed on the ground, removing slippery throw rugs and shooing the cat or banning him from the bedroom. You mitigate your risks and don’t stay in bed, fearful of possible catastrophes.
Although leasing out your property is a risk so is not leasing out your property. Your bottom line is at risk when you have a vacancy and no rental income coming in. A vacant property is at more risk from vandalism than an occupied property.
The first thing these owners asked me about was eviction. I went over my screening process with them and told them the best prevention against an eviction is thorough screening. However, I can’t guarantee 100% a tenant I place will never end up in eviction because we all know life happens no matter how well we plan. A tenant may contract a serious illness, not be able to work and not have the income to support the rent. Or a happily married couple may eventually divorce, and the remaining spouse not be able to afford the rent. Thorough screening makes the percentage of tenants who are evicted very small, but I can’t promise it will never happen.
Two other expensive problems that might occur are bedbugs and mold. In a single family home you can have a pest control company certify the property as bedbug free before tenants move in.Then, If bedbugs occur after move in it’s the tenants’ obligation to remediate.
Best way to avoid mold is to be proactive about water intrusion. Make sure your roof is watertight and handle any plumbing leaks quickly. I also cover mold prevention when going over a lease with tenants.
Yes, renting your property has risks but an experienced knowledgeable property manager can help mitigate your risks and provide peace of mind.
Over the years that I have been managing rental properties in the Glendale, Pasadena and Eagle Rock areas I have seen two extremes regarding tenants requesting repairs.
One is the tenant who requests everything possible. A tenant once asked me to send a handyman over because one of the bolts that fixes her toilet to the floor was missing the half dome plastic cap.
However, the other extreme is the tenant who never requests anything to be fixed. Owners think that is an ideal tenant but there are some reasons that tenant raises red flags.
Possibly those tenants are very handy and are doing minor fixes themselves. I once had a tenant in an old condo that often had plumbing backups who told me she had her own plumbing snake and she knew how to use it. Another reason tenants may hesitate to request repairs is because they think their rent is going to go up.
The red flag appears when tenants don’t request repairs because they don’t want the landlord or any of the landlord’s vendors to enter their unit.
Here are a couple of reasons:
- They are doing something illegal.
- They have moved in 10 additional people who are not on the lease.
- They are hoarders.
- They are sub-leasing the unit on Air BnB.
All of the above is why landlords should do periodic walk throughs of their units. Note: not to be called inspections as those can only be done by a licensed inspector.
Tenants must be given proper notice of a landlord’s visit so verify the time frame in your state: normally 24 hrs. is sufficient. In cases where a tenant is resisting the landlord’s visit be cognizant of the reasons your state will permit a landlord to enter such as emergency repairs, checking smoke and carbon monoxide alarms, etc.
I rarely get pushback from tenants on a visit as I ask them if there are any repairs needed and my visits are usually welcomed.
Don’t congratulate yourself on your cash flow when you have a tenant who never has a repair request. You don’t want extreme requests but you also want your property maintained. Schedule a visit and confirm that there are no lease violations.
In the Southern California areas of Pasadena, Eagle Rock and Glendale where I provide Property Management most owners that I talk to say absolutely no pets in their rental properties. One exception is rental property in West Hollywood as there are more pets than kids in that city and if you don’t accept pets your vacancies will be slow to fill.
Yes, pets can sometimes damage property but there are also many responsible pet owners who have difficulty in finding a well-maintained property that will accept a pet.
I have a solution that will be attractive to both owners and tenants. If an owner decides to accept a pet I advise limiting the number and size of the pet, increasing the security deposit (not a separate pet deposit), asking for proof of spaying or neutering and up to date vaccinations, meeting the pet in person to see if there are temperament issues, contacting previous landlords to inquire about behavior or damage issues and adding a lease addendum referencing pet and pet owner rules.
So far so good, all normal and expected. Here’s the extra twist: inform pet owners that the property will have a twice-yearly pet inspection by the property management company, at the tenants’ expense, to confirm that there is no violation of the lease agreement. Tenants will gladly pay the inspection cost for the opportunity to rent a quality property and owners are happy that their investment will be monitored at no additional cost to them.
You might be concerned about repair costs in a rental property and it seems as though a home warranty would be a good way to prevent high repair bills.
When I am involved in a sales transaction I always recommend a home warranty as it gives both buyers and sellers peace of mind. If the water heater goes out in the first month there’s a number they can call.
However, I never recommend home warranties on rental properties and I know several property management companies that refuse to take on properties with home warranties.
- Home warranty companies do not use A list vendors. Also each time you call you will be given a different vendor. The most common vendor in rental properties is a plumber. Property management companies give their plumbers volume so they get good service, a good rate and the plumbers know the properties. They don’t waste time finding cleanouts or other details.
- In addition to your premium you will also pay a service fee each time the home warranty company rings the doorbell.
- You will not get quick service. 48 hr. turnaround or longer is not uncommon and just placing the call for service will be a lengthy time on hold.
- They are in business to make a profit. If an a/c system needs replacing they will do band aid after band aid before finally agreeing that the patient is on life support.
Rather than use a home warranty for a rental property I advise my clients to self-insure. Based on normal expected lifetimes of property components you can estimate that your water heater will need replacing in the next 2 years, dishwasher might last another 3, roof should be replaced in 6, etc.
Far better to set aside x amount each month for expected replacement of the above items rather than waste money on a home warranty that will frustrate all parties involved.
Are you thinking of hiring a property manager in the Pasadena, Eagle Rock, Glendale area?
Are you already managing your own rental property yourself?
You might already have long term tenants who pay on time and you ask yourself why should I pay someone to take in the rents and send me the money? It’s not worth the fee they charge.
Let me share with you a story of an owner who made a costly do it yourself mistake several years ago and is now stuck. All because he didn’t want to pay a property management fee.
I sat down with this owner recently and asked him to tell me about his property. He shared that he has a long-term tenant who has left an unregistered vehicle in his unit’s parking spot and is using the vehicle as storage.
The owner asked me, “What can I do?”
I asked him, “What does your lease say about use of parking spaces?”
He used a generic form from a stationery store and did not include any language about parking spaces to be used only for licensed vehicles in good working condition. “Can I have the car towed” he asked. “Won’t DMV tow it for me since the registration is expired?”
No I said it’s on private property. Plus another detail—the property is under rent control. If it were not under rent control the tenant could be served with a change in terms but the only terms that can be changed on a rent controlled property without a tenant’s consent is the amount of the rent.
Property Management is not a part time hobby. If this owner had used a competent property manager the lease would be more complete and would have additional language about use of parking areas.
Don’t be penny wise and pound foolish. An experienced property manager is on top of laws and regulations and is well worth the management fee.
As a Property Manager in Pasadena and surrounding communities I am the agent for rental property owners. I have a fiduciary responsibility to place their interests above my own.
So what role do tenants play in my business since I am not representing them and am not their agent?
Some owners see tenants as adversaries and every interaction is about who won and who lost.
That thinking is flawed. Ask yourself do you want someone who views you as the enemy having legal possession of one of your most valuable assets?
A tenant who pays on time, maintains your property and keeps you apprised of any repair issues is invaluable.
Some owners are the other extreme and don’t treat their rental properties as a business. I had a client make an offer on a building with a rent controlled tenant in place for 10 years who had never had an increase so that thinking is also flawed.
As a Property Manager I bring balance to my owners and show them that well qualified responsible tenants protect their investments but also help them take the emotion out of interaction with tenants so that they can make sound business decisions.
If you recently got a big increase in your property’s water bill, time to be a detective as multiple factors are in play.
- Are there unauthorized occupants?
- Anybody operating a business on the premises such as: car wash, hair salon, etc.?
- Are there broken sprinkler pipes or heads? Ask your gardening service to check.
Your leases should have language about tenants notifying you of any plumbing leaks, broken sprinkler valves, etc. but not all leaks are obvious.
Next step is to ask your plumber to do a leak test. An initial water meter reading will be taken and then another one 20 minutes later after requesting tenants not to use any water. If the readings are not the same something is leaking.
The most common source of leaks in residential plumbing is inside the toilet tank. There may be leaks around the flapper plug or at the top of the tank around the overflow tube. Your plumber can determine what might need adjustment or replacement. This is an inexpensive repair but if the toilet tank is leaking your water bill can increase exponentially.
Best practices: change out flappers with every turn and when plumbers do any repair on occupied units advise them to check all fixtures for leaks and make sure all angle stops are functional.
- Self Showing Lockboxes Yes or No?
- What’s the Worst That Could Happen?
- When No Repairs Requested is No Good
- Can Fifi or Fido Move in Too?
- Are Home Warranties a Good Idea in Rental Properties?
- When D.I.Y. Costs More
- How much do you charge for property management?
- Can an owner choose the tenant?
- Who’s My Partner?
- Who’s Using All the Water?