What owner’s don’t understand is that by overpricing your home, you are creating a bigger issue for your home. Here are 5 things to consider when faced with the fact that your agent wants price your home lower than you would like:

1.   Potential buyers/renters won’t even see your property. Typically buyers & renters are looking for a specific price point. If you are not in their target range, then your home will not be found. If your home is in a higher price point than your competition, they will see the difference and pass over your home.

2.   Multiple price reductions can make you look desperate – inviting even more negotiation.

3.   The longer it is on the market, the “staler” it gets. Most sites share how long it has been since it was originally listed. Sometimes it is best to get a new listing, but this can be costly as most sites require that you start from scratch for all the advertising versus just renewing which costs less.

4.   If selling – your home may not even appraise. If you are lucky enough to find someone to purchase your home, you may be required to reduce it anyway if the home doesn’t appraise.

If renting – you will end up helping to rent your competitors home before yours and you will have to pay the additional mortgage payments while you wait for a renter to bite on your home. Typically 1 month’s holding cost will pay for the small difference in price that we recommend.

5.   It will cost you more money in the long run by overpricing your listing. When you take into account all of the factors above – length of time on the market, the additional negotiation from the buyer/rent for concessions, additional advertising costs that you may have to pay and the fact that you may be forced to reduce the price anyway – all translates to lost time and value.

Even knowing all of this, I am still amazed at the number of owners in this market that want to over price their homes. When I try and share this information with them up front, they state something like – “well let’s try my price and then we can always reduce it.” After weeks of no showings, they are upset and don’t know why their home isn’t selling/renting. Listen to the professionals – it will pay off!

A criminal background check will let you know about any criminal convictions that a potential renter has incurred, including arson, battery, and other serious offenses. In addition, it will tell you about any minor criminal charges. Knowing this information will help you make educated choices regarding the applicants you select for your rental units.

One of the most important aspects of conducting criminal background checks is that it will alert you of sex offenders that may be seeking residence in one of your properties. While sex offenders are required to update their residences with governmental agencies in most states, they do not always do this. If you choose to rent a unit to a registered sex offender, you will be required to notify your state government within 30 days of completing the contract. If the sex offender has not complied with his or her notification requirements, he or she may end up in jail, which means that you will be unable to earn rent from a unit until you find suitable tenants.

Keep in mind that while you can refuse to rent a unit to a prospective tenant on the basis of a criminal conviction, you must be careful not to base the refusal on the applicant’s status as a protected class. This means that if you allow a convict to rent a unit, you cannot deny another similar person the right to rent a unit, regardless of that person’s race, creed, religion, sexual orientation, or gender. For this reason, it is best not to provide housing for anyone with a criminal record, to avoid the possibility of having a future applicant claim that you refused to rent a unit based on a protected characteristic.

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.