In the movie there is a scene where Leigh Ann Tuohy (Michaels’ adoptive mother) is watching Michael learn to play football. You see even though Michael was over 6 feet and more than 300 pounds, no one had really taught him how to play football and he was against any type of violence since he saw that all his life. 

Michael has afraid to block and really didn’t understand how to play the game and do what the coach wanted him to do. Seeing that the coach wasn’t able to get through to Michael, Leigh Ann goes onto the field takes Michael aside and tells him – “protect him”, dragging the quarterback in front of Michael, “as if he were me. Don’t let anyone get near him or hurt him.” She then pulled another player in front of Michael and said, “this is Collins (Leigh Ann’s daughter) protect him as you would Collins.” 

The point Leigh Ann was making was to do well in the game, you had to protect those in your family, your team.  You protect the quaterback’s blind side which is where the name of the movie came from. 

So what does this have to do with real estate and property management? Glad you asked. As a property manager, we are your Michael Oher. We are there to protect you against things you don’t even know are coming. When I speak with an owner about what a property manager does, I share with the owner that we do all kinds of tasks – over 100 of them to take care of the day to day, but I also talk about protection. 

Protection comes into play in the form of insurance, HOA disclosures, legal documents, how to interact with the tenant, forms, etc. 

Sometimes that means protecting the owner from themselves. You see we know more about the possibilities and pitfalls of owning rental properties than most owners.  When we advise an owner about something, it is usually from the experience of a decade of experience. In addition to having managed hundreds of homes over a long period of time. 

So when you are considering a property management firm, ask them – Do you personally own rental properties & how many? Have you ever used a property management firm for any of your rentals? Are you a member of NARPM to gain insight from other property managers across the country so that you can learn from their experiences? At Solid Source Property Management, we can answer YES to all of these questions.

First, you will be responsible for marketing your properties to locate tenants for your properties. While this might seem like an easy task, the challenge is to find tenants who are qualified to rent from you – that is, who have sufficient credit and incomes as well as have a positive rental history. By adequately screening tenants up front, you will help minimize the time you spend collecting rent and making repairs to units damaged by irresponsible renters.

In addition to finding tenants, you will be responsible for managing your renters. You will need to collect deposits and rental payments, respond to service requests, and deal with tenants who cause disruption in your properties. These disruptions can come in many forms, from domestic arguments, to all night parties, to HOA violations, not caring for the lawn, etc.

You will also need to manage repairs and upgrades to your rental properties. Your property management duties may include interior repairs, building upgrades, and maintenance of lawns and landscaping, among many others.

It is easy for real estate investors to spend the majority of their time on property management tasks, rather than on activities that are direct money makers. You might find that hiring a property management company to handle these tasks will allow you to be more productive, and to make more money with your real estate investing ventures. When you are looking for investment properties, it is a good idea to consult with an experienced REALTOR who owns and manages their own rental properties. Then that can help you navigate the process of either assisting you or can provide assistance in locating and hiring a reputable property management company.

Click here to view the embedded video.

Quite frankly, I think there is going to be a cottage industry that will emerge in about 3-5 years for debt collectors to pursue people for the bad debt on mortgages.  Mortgage companies who “took it in the shorts” with foreclosures and short sales will start hiring debt collectors to make good on the deficits we are seeing. We are already seeing where second mortgage holders are pursuing individuals for their loans after foreclosure as an unsecured debt. 

For now, there is some relief, but I don’t expect that it will continue. See if your situation may qualify. Please read more below on mortgage forgiveness as share with us by Kim Kline & Associates. 

Mortgage Forgiveness 

If you owe a debt to an entity and they cancel or forgive that debt, the canceled amount may be taxable.  But in 2007, the Mortgage Debt Relief Act was passed to help homeowners avoid the double-edged sword of losing their house and having to pay taxes on the forgiven debt amount. The Act is in effect for mortgage debts cancelled from 2007 through 2012. The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.   

Is Cancellation of Debt income always taxable? 

• Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
• Qualified principal residence indebtedness.
• Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
• Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.
• Certain farm debts
• Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. 

Contact Kim Kline & Associates or your accountant for more information regarding the Mortgage Debt Relief Act – http://www.kimklinelaw.com/home.html

In Atlanta recently, there have been a couple of dog attacks which raises the question again – should owners allow pets. My answer has not changed. We have a strict policy about dogs who are known to be vicious. Our insurance won’t cover any incidents with the following breeds:

• Alaskan Malamutes
• Akitas
• Chow Chows
• Doberman Pinschers
• German Shepherds
• Pit Bulls
• Rottweilers
• Staffordshire Bull Terrier
• Siberian Huskies

As of today, we are adding Presa Canarios. I have never been asked about one, but we are adding to the list to be proactive. I just read in the local newspaper on-line – The Atlanta Journal & Constitution in an article written by Alexis Stevens which stated that:

“According to the Clifton study, pit bulls, Rottweilers, Presa Canarios and their mixes are responsible for 74 percent of attacks and 68 percent of the attacks upon children. In more than two-thirds of the cases included in the study, the life-threatening or fatal attack was apparently the first known dangerous behavior by the animal in question.”

I am still amazed at the number of people who try to convince me that we should allow these dangerous dogs in our rental properties. To which I reply, “I love dogs and am a true dog lover. I understand that there are exceptions, but we have to manage for the rule.” With the statistic above, I can now clearly state that there is a first time for everything and I can’t risk my livelihood on the basis that your dog might be the exception.

This happened to be the day of the infamous Atlanta snowstorm, but we still made it to New York. When we arrived at the airport, we waited in a nice long line and then went to check a bag. Another $15.00. We finally got on the plane. They had wireless internet – pretty awesome – $9.95. We did get a free soda each, but were not offered any headphones for the XM radio. By the time we arrived at our destination, I felt like I had been nickled and dimed to death. When I added up all the additional costs for the services that I would have thought to be standard, I actually ended up spending more than I would have if I would have chosen the next level priced option.

So what does this have to do with you or property management? We are getting ready to celebrate 5 years in April. I am blessed to have clients that have been with me since the beginning. When we started we made a decision that we would provide full service property management all inclusive for a fair price. I am so glad that we did that.

I certainly don’t want our clients to feel like the have to pay extra for the basic services and yet a lot of  property management companies are going to a deconstructed pricing structure – charging low monthly fees and then adding additional costs for things that we believe should be included. They charge more for sending a check or for direct deposit. They don’t mail invoices to the tenants nor provide monthly reports via e-mail never-the-less have a 24/7 web portal. They charge for advertising on the best sites like rentals.com and others. So in the end, the owner ends up paying more for the basics just like we did on our trip.

So when you are comparing property management companies, make sure that you get all the facts. Understand the charges and what they include. Ask how many times they visit the property while vacant. Make sure that they are actually managing the property even when it is not occupied.

If you are looking for a new management company, we would love the opportunity to speak with you. Call us at 770-416-1444 x 310. Also, you can watch this short video that we prepared to educate owners about selecting a property management company.

Last week, we received some very disturbing information that translates into even longer time frames for evictions. With all the budget constraints, the county has shared that they are no longer allowing eviction companies to reserve a sheriff for a day per week to handle their clients’ eviction. This was significantly decreasing the already lengthy process as we were able to take advantage of the eviction company planning the most effective route for their clients to get the job done.

With this new development, we will be in line with everyone else meaning that there will be less efficient routes and a first come first serve basis which will result in longer eviction timeframes. We are supporting the eviction company’s stance that this is not a good thing and will only hurt more than help.

In the past year and a half, evictions have increased dramatically. The foreclosure evictions are lumped in with our non-paying tenant evictions. With foreclosures rising to astronomical numbers, this is only crowding an already stretched sheriff service. With Gwinnett County running out of budget, we have been told that there will be no overtime that can be spent. So what does that mean for us as landlords? We are stuck waiting for the process.

At Solid Source Property Management, we are considering a wide variety of options to shorten this process. We are guiding our clients through the eviction process with the best information possible available at the time. While we statistically have very few evictions due to proactive screening, there is little we can do to foresee the loss of a job, a medical issue, or death. We work very hard to maintain a professional working relationship with the tenant throughout the whole process.   

To read some good news – read Mark’s remarks about New Construction sited in Forsyth County.

First, develop a written work plan with your contractor. The work plan should state, in detail, the work that is to be done, the timeframe for completion, and the price that is to be paid for the work. This helps ensure that you and your contractor know exactly what you expect. It’s also a valuable document to have in case the contractor does not complete the work correctly.

Second, pay only for progress. Some contractors will ask for some or all of the fees up front. It’s important get clarity of what you are paying for if you agree to an up-front fee, because it will be difficult to get this money back if the contractor does not complete the work to your satisfaction. Often, you can negotiate a series of smaller payments as portions of the work are completed – this benefits both you and the contractor, because you are more likely to see progress, and the contractor can recoup expenses as the work is being done. We will pay for the materials directly and then do progress payments for the labor.

Finally, make sure that any changes are made in writing. If your contractor needs to extend a deadline, substitute building materials or fixtures, or make any other changes, it’s not enough to rely on a verbal agreement. Your contractor must be willing to commit to all changes in writing.

Other items to consider is making sure that the contractor has the proper credentials as well as insurance – liability and worker compensation. When working with contractors that don’t have the proper credentials and insurance, you put yourself and your home and assets at risk.

On a positive note:  On the real estate sales side, we have more than doubled our sales transactions. We have gotten creative and provided value to our customers.  On the property management side, we have been able to provide additional value added services like inexpensive gutter cleaning as we forge additional relationships with various vendors. We have increased our marketing to include cutting edge internet advertising sites like Zillow and others to attract clients and tenants alike. 

In spite of all the challenges, we have still been able to grow by adding new customers and referrals from our clients. 

We have been recognized for our outstanding achievements by being asked to speak at Agent Appreciation Day at the Fox Theater, Ilyce Glinks’ “Profit from Foreclosures” seminar as well as several smaller venues around the city. 

So, what have we learned from 2009 so that we can make 2010 a better year? 

1. Focus on what you want, not on what you don’t want.
2. Be open to any possibility. You never know when a great idea will present itself.
3. Surround yourself with people you like and trust. They will help you through the tougher times.
4. Be flexible. In today’s market, you have to be able to give a little to get a little.
5. Think beyond today to what tomorrow may bring. Looking forward will help you make better decisions than just looking at today.
6. Work smarter, not harder.
7. Put in more effort than your competitor. It will benefit you threefold.
8. Be all in and live with no regrets.

Mark and I gave the book – The Traveler’s Gift to all our team members and asked that they read it before midnight tonight. We believe the 7 Decisions for Success that is discussed in that book will make 2010 a great year for us. We can’t change the economy, but we can change how it affects us. You may want to read it yourself. 

May 2010 be your best year ever! 

Mark & Anne Lackey

Atlanta Housing Source & Solid Source Property Management, Inc.

This month, we are transitioning to new property management software. This transition has allowed us to examine our base of business and to help us better serve our clients and tenants. What I found as part of our analysis was that 30% of our tenant base has at least one pet. Some actually have multiple pets. 

So what does that mean to you? First, if you are an owner of investment property and don’t want to accept pets, you are significantly reducing the number of tenants that will want to rent your place which will result in longer vacancies. 

So what is a landlord to do? We encourage all of our owners to accept pets with conditions. It has been our experience that if you do not allow pets, the responsible pet owners will go elsewhere and you will still end up with unauthorized pets for those tenants who are dishonest. Unauthorized pets create more damage and are a bigger liability. 

There are certain pets that due to insurance requirements, we cannot accept. Those are the vicious breeds – Alaskan Malamutes, Akitas, Chow Chows, Doberman Pinschers, German Shepherds, Pit Bulls, Rottweilers, Staffordshire Bull Terrier, or Siberian Huskies. The interesting thing is that people who have these breeds are appalled that we don’t accept them. While we are sure that there are many dogs in those breeds that are fine, there are a greater number that have caused problems and our insurance would not cover us should a problem arise. 

Responsible pet owners are happy to pay a pet deposit. We recommend charging a non-refundable portion for the privilege of having a pet and returning the rest provided that the lease was honored and there were no damages. 

We have all our residents sign a pet policy even if they don’t have a pet, so that everyone knows exactly what our pet terms are. It also shares with them the consequences of having an unauthorized pet. We find this comes in handy from time to time. 

We charge based on the weight of the animal the heavier the breed, the more the deposit. Also, we take into consideration the type of dog as some dogs are notorious chewers while others are just helping keep their owner’s lap warm. 

We love our pets and understand that others do too. I hope that this has helped take the fear out of accepting pets in your rental property. 

Merry Christmas from SSPM