Open Letter from Ad Astra Realty, Inc

This is an open letter from Ad Astra Realty, Inc to our employees, contractors, owners, tenants and applicants.

These are interesting times. Not in my lifetime have we had a health crisis such as the one we now face. Before us is a novel coranavirus named COVID-19 and the information and misinformation surrounding top topic can become overwhelming. I will do my best to parse the information and, therefore, our response as best possible to each of you.

EMPLOYEES

Effective immediately I have asked our employees to work from home by telephone, computer and video conferencing as much as possible. When necessary, and they are in the office, I’ve asked them to keep their distance from one-another and to disinfect the building a minimum of once per day.

CONTRACTORS

Our independent contractors who primarily work on maintenance issues are, well, independent. Each contractor has a choice to make as to their exposure in regards to their health, their well-being and that of their loved ones.

MAINTENANCE

For the near foreseeable future, maintenance will be systematically prioritized as to whether this is an emergency, urgent, important or preferable. We will be in close communication with our tenants, contractors and owners to determine necessity, timing and risk.

This is NOT to say maintenance will not be taken care of. This IS to say that should contractors become harder to book and should tenants decided not to allow “strangers” into their homes for the near term, maintenance will have to prioritized properly.

OWNERS

We will continue to monitor and manage your investment properties diligently. When necessary or highly desirable, we will be in contact with your tenants and yourselves. Our fiduciary responsibilities to you have not changed.

TENANTS

We are asking each of you to stay in communication should you have maintenance issues and to exercise patience as we work with you to schedule.

We prefer when tenants make their rent payments online. Talk about your social distancing. We are also asking that for those of you who prefer to pay by check in person are asked to deliver your payment to our drop box closely located to the right-hand door of our office. Please do not enter the facility unless absolutely necessary. We love seeing you and will again… just right now we are looking to comply with the best advice our medical professionals are giving to us.

APPLICANTS

This may/may not slow down the process of renting our properties available. We hope not and will do everything in our power to alleviate any time constraints. We thank you for your patience in advance.

SUMMARY

We do not know how “big” this will get or how long this will last. If we look overseas to Iran, Italy, Spain, France and Germany, well, the forecast looks a little bleak. When we look to the past we know that most pandemics last somewhere in the three month range.

Yet, we also know that we don’t know exactly how THIS virus reacts in comparison to its cousin viruses of similar values.

We do know this; For the coming weeks we will be in new territory, inconvenienced and there will be economic impact. Of what magnitudes we can only wait and see.

Should you have any questions or comments, please do not hesitate to reach out to either myself or Jimmy. We are here to help.

An Open Letter to Tenants of Rental Property

Dear Tenants,

I would love to discuss a couple of items before you rent from us at Ad Astra Realty, Inc here in the Kansas City area…and beyond.

• We really do not want to keep your deposit.
• We are not perfect but we are human beings.
• Do not file an application, pay the fee and ask for your money back when you don’t rent with us.

THE DEPOSIT
We seem to have three kinds of tenants… and heck, I fell under one of these when I was a tenant many years ago.  In fact, I remember once that the landlord called and said they’d be keeping all of our deposit for damages.  And you know what, he was right.  We were not great tenants. I was young, single and didn’t fully respect the man’s property.  Here’s the thing; I didn’t blame him.  I took responsibility. Here are the three tenants we tend to work with…

1. Get all their deposit back.
2. Get most of their deposit back.
3. Get none of their deposit back.

A great many of our tenants get all of their deposits back.  The house is reasonably in the same condition as when they leased the property the previous year, or two or three…save normal wear and tear.  Normal wear and tear includes, but is not limited to, the carpet being worn down by walking patterns or the walls getting a little dirtier or the blinds starting to sag.  Normal wear and tear does not include chunks of wall being torn out on move in or move out, or your pet urinating on the carpet in twenty different places, breaking stove tops, etc.

When we are required to keep some or all of a tenant’s deposit the owner is the one who almost always loses out.  Most deposits do not actually cover the damages done because what most people do not take in to account is that while the work has to be done to repair the damages the owner cannot rent the property.  Therefore, there is a time loss.  And, as we all know, time is money.

As for disputing your deposit, should we keep any, we are happy to discuss.  We do a very extensive move in- move out report that you have access to on your move in, and your move out.  We take pictures of everything.  This is to your advantage, and ours.

WE ARE HUMAN
For me to sit here and tell you that we are perfect, well, that just wouldn’t be true.  We can miss things.  So if you have a challenge with us, let us know.  The best way is in writing, therefore we both have a record.  If you feel strongly about something, set up a time to discuss the matter.  Heck, you may be right!!!

Calling and immediately cussing at us because we kept your deposit because of damages, well, it is a non-starter. So is threatening to sue right off the bat.  Once you threaten to sue, our conversation is over.  We will simply advise you to contact your attorney and they will contact us.  Once that happens, we will forward it to our attorney.  There can be no more discussion between us.  Your attorney will advise the same.

APPLICATION FEES
When you submit an application you trigger a series of events that cost both time and money.  If you take the fees we pay for the credit and background checks and combine them with the time our employees take to sift, review and verify, we actually don’t even cover our costs.  So when we continually hear that our Application Fees are a scam, I know immediately this is someone who has never owned a business.  And that is fine.  Yet, on our listings, on our online application forms and before you hit APPROVE, you will see something very similar to this…

We never encourage anyone to apply for a home before seeing the inside of any property, as the $35 application fee is non-refundable. Without first touring the home, you truly will not know if it going to work for you. Applying for a property and paying a $35 non-refundable application fee before viewing it, is completely at your discretion.

Look, we know it is a super heated rental market and FOMO makes people make decisions they would not otherwise make.  Yet, if you choose several times to read this and move forward then how can it possibly be a scam on our part to get your $35.00?  Apply if would like to rent from us. However, we cannot incur the costs you initiate and then give you your money back if you don’t like the result.

Now, as with everything, there certainly may be a circumstance now and again where we will refund an application fee. Maybe it was a mistake on our part on the listing or maybe we told you a property was available then the owner reversed the decision.  We are happy to listen and examine.

Fundamentally, owning and renting housing is a business.  We are not the owners off the properties we manage.  Most of our owners are people hoping to retire one day and use owning income property as one of he vehicles to make sure they can retire.  The owners make money when they provide clean safe housing and the tenants pay their rent on time and don’t damage the house beyond normal living wear and tear.

And tenants, you want your deposits back, right?  Help us help you.  By signing the lease you are agreeing to the rules that the will govern our relationship.  Take care of the property.  Ask us to do the same when you have a maintenance concern.  Do that and we will got to bat for you, as we have in the past, if the owner doesn’t want to fix something or feels we should be keeping the deposit when they don’t rightfully have a leg to stand on.  The landlord-tenant relationship doesn’t have to be one of tension and controversy.  For most of our owners and tenants, especially when each party is looking to keep their end of the bargain, things go pretty darned smoothly.

Regards,

 

Chris Lengquist
Owner/Broker
Ad Astra Realty, Inc

Two Promises from Ad Astra Realty, Inc

Working in the field of Kansas City real estate investing and property management is not rocket science and yet it is not easy, either. Everyday both myself and my team look at the Kansas City market, make evaluations and recommendations as to which properties look promising and which we’d walk on by.

When it comes to property management, this is a little more complex.  So many things can go right, and wrong, with a property.  Tenants, pets, local laws and policies, weather, bad luck, good luck, etc. work as variables to make each property and each year unique.  To that end we here at Ad Astra Realty, Inc offer these two promises that we will not waiver on;

1. We will watch your money.
2. We will tell you the truth, even if it hurts.

WE WILL WATCH YOUR MONEY
Do you know what the #1 reason rental property owners have for moving from Company “X to Ad Astra? It’s because property owners have grown tired with their property management company not paying them on time or not giving a full accounting of their expenditures.

So when I say “We will watch your money.” I’m saying that, while not perfect, we will always be able to tell you what you spent your money on and we work very, very hard to get our owners paid on or about the 10th of each month when funds are available.  I say “about” because if the 10th falls on a Saturday or Sunday we may not fund until Monday.

We know how important it is for you to know about and to receive your money. To that end, we take our jobs quite seriously.

WE WILL TELL YOU THE TRUTH
Let’s face it, sometimes the truth hurts.  Maybe we made a mistake.  Maybe you are trying to delay and expense because money is tight and yet the tenant needs air conditioning because nighttime temps are still up around 85 degrees.

I call this “Having fierce conversations.”  And property management is full of fierce conversations because of all its inherent moving parts that were mentioned earlier.

When we have a relationship based on trust and honesty, nearly everything else can be worked out.

Thank you for taking the time to learn a little more about Ad Astra Realty, Inc.

Keep up to date with Ad Astra Realty Inc
Sales and Property Management

2018 Kansas City Real Estate Investing Outlook

Hello All. Welcome to the New year.  Here is my 2018 Kansas City Real Estate Investing Outlook for both Sales and Property Management.

REAL ESTATE SALES: BUYING, SELLING, INVESTING

A Quick Look Back at 2017

Wow! What a year 2017 has been in the residential real estate world.  Here in the Kansas City area we’ve seen appreciation as high as 11% in Johnson County, KS and generally above 7% throughout the metropolitan area. It was not unusual for houses to be on the market less than 10 days if they were in good condition and priced right.

Looking Ahead in 2018 

Chris’ opinion about 2018?  It will closely follow 2017’s arch but it will be slightly more muted.  Listen, 11% appreciation is simply not sustainable in Kansas City over the long term. Housing affordability is becoming a worry even here in the middle of the country, interest rates are looking like they will tick up (though Chris has been thinking this for YEARS!) and until wages begin to catch up we will continue to decrease the amount of qualified first-time home buyers.

In conclusion, Chris thinks 2018 will be another great year for sellers, slightly better for buyers and another very good year to be a real estate agent.

PROPERTY MANAGEMENT

A Quick Look Back at 2017
The rental market continues to be very, very strong in Kansas.  However, on the Missouri side we began to see a slide in occupancy rates.

Kansas’ vacancy rates in Johnson County continue to hover at about 5%.  Missouri is creeping north of 8%. We have also noticed greater effort expended in finding the same standard of applicants as in the recent past.  This makes sense since so many of the buyers driving the sales side of the market are leaving the life of tenancy.

We have noticed that many of our tenants that experienced hardships in the Great Recession have rehabilitated their credit and are now buying.

Looking Ahead in 2018 
Tenants continue to rehab their credit and/or begin to look towards owning their own homes, especially in the Millennial Generation.  The nomadic life the Millennials have clung to is beginning to give way to the responsibilities of adult-hood and looking towards securing wealth and personal home ownership.

Chris won’t be surprised at all if vacancies continue their correction toward the historical number of 10%.  This will be a shock to the system of many investors who have entered the market since 2008.

 

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;

Click to access 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.

 

 

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.

 

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?