Category Archives: Property Management

Overland Park Has Lost Their Mind: HELP

The City of Overland Park has lost their minds on their proposed new city licensing of rental properties.  Their new legislation would make property managers responsible, financially, for deferred maintenance of properties under their care.

Now, as an owner you may think this is great.  I can tell you will not have any property manager taking part in that program…at least at their current rates.  Simply put, for all Overland Park rental properties I would have to re-evaluate my management agreements and raise hefty reserves and cost mitigation strategies.  Who ultimately pays? The owner. Then the tenant.

Here is the link to what they are proposing for rental properties;

http://www.opkansas.org/wp-content/uploads/Att-E-Rental-Licensing-Ordinance-Draft-1-20-16-Google-Docs.pdf

Here is the snippet of concern in 5.75.060 A5;

The Owner’s Agent shall be jointly and severablly liable with the Owner for;

Are you kidding me? How can a city of any stature make me responsible for a property I do not own? What is going on here? This is still America, right?

To express your thoughts on this go immediately to;

http://www.opkansas.org/resident-resources/neighborhood-resources/rental-licensing-and-inspection/rental-licensing-feedback/

This must be corrected or property management in Overland Park will get much worse or much more expensive.  Either way it doesn’t serve the public interest.

 

 

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When Owners Don’t Make Money

As an investment property owner sometimes you have to hear things that you are not going to like.  And worse?  Things that will cost you money even though, truly, it shouldn’t be your responsibility.  Let me give you an example.

A rental property owner who had been using the services of a competing property management firm here in Kansas City came to me with their story.  Boiled down, the property manager moved in a tenant after screening that the owner believed to be pretty good. After a month the tenant started screaming about not paying rent and wanting out of the lease because they believed that the popcorn ceiling on their 60+ year old house had asbestos.

Asbestos scares people.  I’m not going to tell you it is safe or not safe.  You can look that up.  From my understanding, however, if it is not disturbed it is of no problem.  But if disturbed it can be potentially deadly over the long term.  Feel free to follow this Google search for more research on the subject.

Anywho, the rental property owner was a bit disturbed that his property manager seemed, at least in his eyes, to be working more for the tenant than for him, the owner.  Why?  Because the manager told him it would be better to just get the tenant out as soon as possible and get someone new in to the property.  Let them go (break the lease) and forgive them the 10 days of rent they still owed.

Well, both of those actions will cost the income property owner money, right?  Yes. But, the owner wasn’t collecting any money because the tenant wasn’t paying and apparently had no intention of paying. The owner and manager could have held to the letter of the lease but if they don’t pay now you have to initiate eviction which will cost for a lawyer, court costs, more missed rents and possibly damages.

On the other hand, if you can get them out by the weekend and re-lease the property at no charge you will lose about 45-60 days of rent and, probably, utilities.  In either case, you need that property back as quickly as possible to minimize damages, right?

After you get the tenant out then you may decide to pursue damages.  But, in my opinion, I support the actions of the first property manager.  Get the crazy tenants out.  I mean, who moves in and decides then that popcorn ceilings (which are on the ceilings of literally hundreds of thousands of homes across America) are all the sudden a danger?

Yes, I know it’s inconvenient and probably costly.  But this is property management.  This is what happens when you own income property.  This is why owning investment houses isn’t for everyone.  This highlights that literally every transaction with a tenant is different than the last.

 

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Property Management Insights

Here are some property management insights from a guy who has about 1,700 lease years of experience.

  • Real estate is a great investment vehicle.
  • Your property manager matters.
  • Some tenants, no matter what, will not be happy.
  • Some owners, no matter what, will not be happy.
  • Property managers are paid to fix/solve problems.
  • If it was easy, everyone could do it.
  • If you have another profession, hire a property manager.
  • Don’t try to lease in winter. It will cost you money. Re-arrange the length of  your lease so it doesn’t happen twice.
  • Don’t allow sexual predators. They lower all your rents in the surrounding area.
  • Screen, screen, screen.
  • Even screened tenants can go bad.
  • Most people are doing the best they can.
  • Tenants want a clean, safe home…just like you.
  • There is a direct correlation between rent prices and tenant issues.

I could go on and on and on.  But those are off the top of my head right now.  Care to add any of your own?

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Pay Your Property Manager

Over and over again here at Ad Astra Realty – KC Property Manager we take over properties for owners who have been using property managers that they believe haven’t been doing the job.  Well you know what?  You need to pay your property manager.

One of the firms we take properties over from is a low cost property management firm here in Kansas City.  I know the owner.  I like the owner.  But he charges too little.  Way too little.  He cannot staff properly and therefore he cannot do the things a property manager need to do in order to;

  • Look after your property
  • Make deferred maintenance recommendations
  • Pay the owners on time, every time
  • Negotiate favorable vendor prices
  • Return most rental inquiries (no one hits 100%)

The job of property management takes a lot of man hours.  Man hours (or woman hours) have to be compensated.  If price is your only consideration when choosing a property management firm you get what you deserve. I’m not saying that the most expensive firm is the best.  But I am saying that there is a floor at which a property manager can actually look after your property properly.

Should you wish to discuss your income property management with us, just give us a call today.  Ask for Jimmy.

Ad Astra Realty
KC Property Manager
913-839-2953

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Maintenance and Property Management

Maintenance is by far, and it’s not even close, where most of our time is spent in property management. Why?

  • Everyone has different expectations
  • Houses are constantly deteriorating
  • Trees
  • Sewer lines
  • Where trees and sewer lines intersect
  • Tenant turn-over
  • Bad weather

But nothing, aside from tenant selection, is as important.  Proper maintenance keeps up the value of the house.  Proper maintenance attracts a better tenant. Proper maintenance keeps repair costs down when it’s time to sell.

If you haven’t figured maintenance, and updating, into your costs of owning residential income property, you need to go back and do so.  Because selling a “melting ice cube” doesn’t leave much at the end.

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The Supreme Court, Disparate Impact and Property Management

Well, in the opinion of this author, we’ve moved yet another step closer to hell.  Today the Supreme Court ruled that Disparate Impact lawsuits for discrimination can move forward and are part of the fair housing acts enacted in the 1960s. This is a HUGE expansion of fair housing and I’m not really sure it can be defined.  And that is what make me nervous.

I am all for the seven protected classes that fair housing protects.  No question. And we are very careful to not violate those classes.  But now the definition of discrimination has grown so broad that I don’t know when we’ll be discriminating and when we wont.

See this link for an example.
http://www.kentucky.com/2015/06/25/3917235_supreme-court-opens-door-to-housing.html?rh=1

Here is the important paragraph:

A “disparate impact” arises when a practice produces different effects across racial groups, even if the practice wasn’t racially motivated. For instance, if a mortgage lender establishes borrowing standards based on income and net worth, and some racial groups are less likely than others to qualify for loans under those standards, this could result in a disparate impact

And I had a Kansas City housing official tell me about a year ago that in his opinion (now green-lighted by the Supreme Court) that because I refuse to lease homes to people with violent criminal pasts and that disproportionally people of color go to jail because of violent criminal behavior that I am discriminating against people of color under the broad definition of “disparate impact.”

Here is the scary, scary thing. It doesn’t have to intentional.  And we all know it doesn’t have to be really even proven in civil court.  So regardless of the fact that I won’t rent to a white guy with a criminal past I may still be discriminating under disparate impact because I won’t rent to a person of color with a criminal past.

Where does this stop?  Read carefully and think about the two examples given. Then take time to shiver.  Government has taken another step into allowing housing to become a populist right.

Again, to answer some of the arguments I can already hear, I am not discriminatory. Not in my nature.  But I’m not stupid, either.  This will be used against property managers, landlords, realtors and lenders to the tune of hundreds of millions (billions) of dollars in lawsuits.  And that will “trickle down” into your expenses, too.

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Fully Understanding Investment Property

There are so many moving parts to fully understanding investment property that it is easy to get confused and overwhelmed.  But relax, just like algebra, it’s not all that difficult once you break it down in to little bite sized pieces.

The next series of blog posts will include the following subjects;

YOUR CRITERIA
YOUR TEAM
YOUR ACQUISITION
YOUR PROPERTY MANAGER
YOUR EXIT STRATEGY

In the following posts we’ll discuss each of these in detail to help you understand how you should really think about investment property whether it’s in Kansas, Texas or California.  We’ll talk about realistic expectations versus guru-seminar fantasy.  At least from what I see here in Kansas City.  As a professional real estate broker and property manager with Ad Astra Realty I can tell you what really happens out on the street.

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