Property Taxes

Watch out for your property taxes.  If you own houses in a state that has high property taxes make sure you are extra careful watching the value of your home.  Property taxes will rise, but it is important to challenge those taxes if they rise faster than homes on your street.  Get the comparable values, as most Landlords own houses for the long term.  You can challenge your taxes with the taxing authority, especially if you have bought your properties in the last few years.  The best case examples is bringing in your closing statements to those authorities.  They will match them to your recent closing prices, and if comparable sales have been lower than what you purchased you homes at they will also match them to those closing prices of those homes.  When you own for the long term it is important to be efficient with all of your costs, whether those costs are: taxes, maintenance charges, interest charges, insurance costs, etc. be the best you can be.  Rental rates are your revenue and the rest are costs.  Mange your costs.  Posted by your Landlord service expert.

Maintenance Charges Revisited

A couple of weeks ago we looked at the importance of detailing maintenance charges out by your different properties.  I would be remiss if I didn't take that concept one step further.  Demand your vendors (if you use a third party) to detail out their charges on an invoice and then apply those details to different categories inside your QuickBooks or accounting program.  It is imperative to understand if you have an appliance that is costing you way more than it would be to replace it.  Use categories like: HVAC, flooring, roofing, landscaping, sprinklers, kitchen appliances, paint, etc. to determine your charges by property and by category.  As a landlord you are an investor and investors demand efficiencies out of companies they put capital into, treat your properties the same way.  Posted by LandLordStation

Escrow Accounts and Refinance

Often times your mortgage holder/bank will force you as a landlord to have an escrow account for taxes and insurance.  It is in their best interest to do this, and they will often offer you a slightly lower rate if you use an escrow account.  One thing to pay very close attention to is the size of these escrow accounts, especially after a refinance.  Often times the banks will hold too much aside for taxes and insurance, compared to what they actually need.  If you have recently challenged your tax invoice or lowered your insurance amount the bank will often not automatically adjust your escrows.  It is up to you to call the bank and adjusts these amounts or ask for a check for the overage.  Also, if you refinance a property close to the end of the year (or close to when your property tax bill is due) mistakes can be made with the payments of these taxes.  Make sure to follow up with your taxing authority and check through all closing statements to make sure invoices were not paid twice.  It is your money in those accounts, make sure they are holding the correct amounts.  Posted by LandLordStation.com

Ownership in the Neighborhood

As a responsible landlord it is imperative to try and understand the ownership in the neighborhoods you are looking at or buying in.  For instance if one owner or a company owns several lots in the neighborhood you are working, it is always a good idea to see if they will share with you their pricing thoughts or future development plans.  Sometimes it can be a tough task to get to someone you may not know, but you will often be surprised, if you go about it the right way, how much information most people are willing to give up.  If you are just buying one property, it can be very helpful to know the people that either own or rent in your adjacent properties.  Being a landlord can be about managing problems, and it never hurts to have some allies on the street.  Of course not everyone is nice, forthcoming with their plans, or frankly enjoyable to be around, but if you don't try you certainly will not get any information.  Posted by your Landlord Services ally.

Fast Growth Rental Market

The fastest growing rental market in the US, according to Fannie May's website, is single family houses.  They claim that the percentage of rentals in that space has grow from 30.8 percent to 33.5 percent.  While apartments and attached living spaces have long been thought of as a landlord's best friend, especially because of density, single family homes have certainly become in vogue for renters.  The question for real-estate investors and developers, is to figure out whether this will create a new demand for apartment and multi-family living spaces, or perhaps this is more of a function of the pricing curve on the housing market in general.  Only time will tell. 

This blog posted by LandLordStation.com your best source for TransUnion Smart Move Tenant Screening and Landlord.

Maintenance Costs

If you own multiple properties understand and schedule the maintenance costs out by property.  You would be surprised by the amount of property owners that own 5 to 20 properties and employ a third party to help keep their properties maintained but don't account for the different expenses per property.  Often times they use an accounting software program, i.e. Quick Books, and just have one line for maintenance expenses for their entire portfolio, but those programs have the capability to assign costs by property.  If you can avoid it do not co-mingle expenses between the properties.  Know which, if any, properties cost you more or less to maintain every year.  Most expenses in property management are fixed(at least for a year): insurance, mortgage, taxes, accounting, etc.  However, other than scheduled proactive maintenance problems do and will arise.  When they do they often cost you as a Landlord money.  Make sure to separate those expenses out by property.  The math of the expenses and your per-conceived notions about the separate properties may actually be off.  It is much harder to discover individual problems without the check and balances of detailed individual expense to lead you on the right track to lowering your overall costs.

This post brought to you by LandLord Station

Raising Rents

What Landlord is not interested in raising rents?  The idea of a higher percentage of return from your investment is one of the reasons your acquired the property in the first place.  Yet, many landlords fail to properly raise rents, or worse yet use the "feel method" when deciding whether to and push through an increase.  Evaluating the proper market rental rate for your property is a science that includes many factors, and the facts are that some people are better than others at understanding that on the fly.  However, I am here to tell you that "feel" method is not a smart method for landlords (especially individual landlords) to employ regardless of whether you think you fall into the category of someone who is good at evaluating the market quickly.  Use a strategic method for raising rates.  My favorite is simply to employ a spreadsheet and a set of dates that you feel are realistic to increase.  You only have a couple of chances (if that) in the year to actually put through an increase, don't waste those opportunities.  Think about whether you want to raise your rents well in advance of the new lease signing.  Figure out the best time to pass along the rate increase to you new or current tenant.  Always use a transparent method of communicating this increase, and leave yourself some time to negotiate.  The most important factor is keeping your place rented, however don't be afraid to raise your rents, especially when they are under market with a long term tenant they don't want to move!  Keep your places in good shape, use a strategic method, and enjoy the extra cash flow!