12 Steps to Successfully Manage Your Rental Home
Who Am I?
My name is Tanya Jensen, I am a Property Manager and owner of Envy Property Management in South Ogden, Utah. At EPM we manage single-family homes, commercial, and multi-family up to small apartments in Davis and Weber Counties. I am a fellow DIY Landlord and I grew up in a small town in southeast Idaho, helping my grandparents and parents manage their duplexes since I was very young. I’ve been managing my own investment properties for over 15 years and I’m currently invested in over 130 doors in several states. I am obsessed with processes, procedures, and checklists.
Who Are You?
- You are 1 of thousands of Landlords who own a rental home(s).
- You are an investor.
- You likely have another job or interests you need to budget time for.
- You might be overwhelmed with all the tasks involved with proper rental management, or even unaware of all the tasks that need to be done.
- You most likely have received little if any training on how to efficiently manage a rental property.
Step 1 – PRESENTATION
Presentation of your rental home begins with rehab, tenants want a clean presentable home to live in!
Present a Property That is at Least Slightly Above Average, consider rehabbing the following:
- Bathroom vanity
3 Reasons Why Rehab Matters:
- For every $1 invested in rehab, you’ll get back $1.50-$2.00 in increased rents
- You will add value back into your property
- You will attract a higher quality tenant
*A Great Home Attracts a Great Tenant*
Adding Value Back With Rehab:
We recently remodeled a 2 bed, 1 bath duplex built in 1963:
- Condition: Original cabinets, tile flooring
- Project: Kitchen Remodel, Bathroom Remodel, New Flooring, New Paint, New Plumbing Fixtures, New Exterior Doors, New Light Fixtures, Added a Dishwasher
- Rent Before Remodel: $650 per unit
- Rent After Remodel: $1,060 per unit (63% increase)
- Additional $9,840 in rent per year
Presentation of Your Property During Tenant Move-in:
- Use a Tenant Move-in Checklist
- We use a checklist with over 25 Items Including items such as:
- Rekeying of Locks
- Checking all appliances
- Replacing burned out lightbulbs
- If you are interested in ours, email firstname.lastname@example.org and we will email you a free copy.
- Include a Welcome Bag!
- We use a checklist with over 25 Items Including items such as:
Step 2 – PROMOTE IT WELL
- Use professional photographs
- Consider a 3-D Tour
- Have a strategic ad
- Promote your property on all of the popular websites
- Consider a yard sign
- Consider a referral incentive to the current tenant
Step 3 – PRICE STRATEGICALLY
- Start with a rental analysis, gather information on what similar properties in your area are renting for
- Base your price on “Actual” not “Asking” comps (7-10% less)
- Adjust your price based on your home’s condition and amenities
- Adjust your price based on the season
- Consider using “$90” as the last 2 digits
- Price it 3% below fair market price
- Adjust price $25 every 7 days
REMEMBER – Your rental has NOTHING to do with:
- Your mortgage
- Your expenses
- The appreciation of your home
- What you hear from a neighbor or friend
It has EVERYTHING to do with multiple comps and actual leases.
Step 4 – PET NEGOTIABLE
- Greater Pool of Applicants
- More Profit
- Longer Tenancy
- Set Limits on Size of Pet
- Includes a Pet Agreement
- Happier Tenant
Step 5 – SCREEN, SCREEN, SCREEN!
Make sure you are looking at things like:
- Credit Score
- Criminal Background
- Rental History
- Number of People
- Intended Length of Stay
- Meet Face to Face
- OBEY FAIR HOUSING!
10 Most Common Lawsuits Against Landlords
- Improper Tenant Screening
- Improper Denying of a Tenant
- Improper Handling of Service Animals
- Improper Handling of Smoke/CO2 Detectors
- Improper Handling of Bedbugs
- Improper Handling of Mold Issues
- Improper Service of Rent Increase
- Improper Entry Into Home
- Improper Move-out Procedure
- Improper Security Deposit Returns
Step 6 – PUT EVERYTHING IN WRITING – HAVE A GOOD LEASE
- 12-18 Months
- Landlord vs.Tenant Responsibilities
- Include a Yard Care Addendum
- Renters AND Tenant Liability Insurance Required
- Use correct Addendums (Mold, Bed Bugs, Lead Paint)
- Damage Addendum
- Pet Lease + Pet Identification Form
- Tenant Handbook
- Go Over Lease Face to Face
Step 7 – SECURITY DEPOSITS
- Require to be Paid Within 24 Hours AFTER Approval
- One Month’s Rent
- Credit Issues – 2x Rent
- Pet Deposit
- Do NOT Use the Security Deposit for the Last Months Rent
Step 8 – MAINTENANCE REQUESTS
- Determine Who is Responsible According to the Lease
- Help Over the Phone
- Have a PDF You Can Email to Have Them Solve Common Issues
- Schedule Vendor Promptly
- Vendor Agreement
- Never Defer Maintenance to the Tenant
- Set Aside One Months Rent Each Year for Maintenance, Rehab, Repairs, etc.
Step 9 – REGULAR PROPERTY EVALUATIONS
- Move-in Inspection – Landlord AND Tenant
- Quarterly is Recommended but Minimum Annually
- Have Evaluations Written into Lease
- Detectors – Smoke & CO2
- Unauthorized Pets
- Unauthorized Roommates
- Air Filter
- Deferred Maintenance
- Move-Out Inspection
Step 10 – PROTECT YOURSELF
- Landlord Policy
- Umbrella Policy (minimum $1,000,000)
- Renters Insurance
- Tenant Liability Insurance
- Convert Ownership to an LLC
Advertising Violations of Fair Housing
- Walk to Schools
- Master Bedroom
- Family Community
- Mother-in-Law Suite
- Walk-in Closet
- Near Church
- Private Community
- Bachelor Apartment
FIRST TIME FAIR HOUSING VIOLATION FINE AVERAGES $16,000 with a $10,000 MINIMUM PENALTY IN UTAH IF SUED IN COURT
Step 11 – PROFIT
Consult your tax professional but some possible tax deductions are:
- Management Fees
- Travel Expenses
- HOA Fees
- Property Taxes
- Mortgage Interest
- Landscaping – Yard Care
- Home Office
Why it Might Make Sense to Consider Selling
- Geographically Undesirable
- Owned With Siblings or Partners
- No Depreciation Left
- You Want to Increase the Size of Your Rental Holdings
- The Cap Rate For Your Area is 2-2.5% While Cap Rates Outside of Your Area Can Be 6-7%
- You Sense a Prolonged Flat Period
Remember: Your Property is the Goose, What Really Matters are the Golden Eggs!
“Live where you want to live, but invest where the numbers make sense!”
Landlord Real Estate:
Envy PM has our very own expert in landlord real estate, Nick Jensen:
- Landlord – Invested in over 130 doors
- Wealth Strategist
- Understands Tenants
- Former Contractor – Understands Rehab – Especially the Do’s and Don’ts For Rentals
- Can Help Identify “EXCHANGE” Properties With Higher Cap Rates
- Is a Landlord Himself (only 5% of Realtors own rental property)
Consider a 1031 Exchange:
- You aren’t stuck forever with a rental property under-performing, difficult to manage, or geographically undesirable
- You can increase your portfolio’s value
- You can defer taxes….(about 33%) – FOREVER
Contact us today to see how Nick can help!
Step 12 – CONSIDER PROPERTY MANAGEMENT
A Property Manager…… MAKES You Money!
- A professionally managed home will ALWAYS make you more gross profit in the long run than managing yourself
- Optimum rent
- Fewer Vacancies
- Best Vendors
- Less Risk
- Simplify Your Life
- Let’s Meet!
BONUS! COVID-19 – How to Mitigate Risk
- As we settle into the new normal, it’s important to streamline communication and take advantage of technology
- Virtual showings
- Electronic payment options
- Residents are now spending more time at home and increasing their usage of kitchen, electrical, and plumbing systems
- New York Times has reported that now that people are staying home and using plumbing systems more frequently, septic emergencies, more drainage emergencies, more opportunity for things to start to break down. Before COVID, this was happening more at job sites but now with people staying home, it’s happening more in the home setting.
- Make sure your property is well protected
- Maintenance – How to make sure things aren’t falling through the cracks
- Are your tenants aware of what is considered an “Emergency”
- Now is a good time to think about your maintenance and risk mitigation strategies
- Do your tenants have insurance?
- Is it time for a periodic evaluation of the home?
Thank you for watching today, my name is Tanya with Envy Property Management, make sure you subscribe to receive more valuable information about your investment properties or call us today to see how we can help you increase your return on your investment. Our number is 801-337-4337, or visit our website at www.envypm.com.