How do I financially prepare for my rental property?????

As a residential phoenix property manager, I am always surprised by the number of people considering becoming landlords without the expectation of any costs exception their mortgage.  Unfortunately this mind set can cause tremendous stress to the tenant, landlord and property manager.  No one can predict what the actual repairs will be during the lease and landlords can get themselves into trouble if they base the repairs off of their owner occupied experience.  Let's say for example that you decide to rent out your current owner occupied property that only you (1 single person) has been living in.  During your occupancy you probably rarely utilize for example the guest bathroom and most likely have not had to replace even a cartridge in there which is a standard wear and tear item.  You turn the property into a rental, and end up renting to a family of 4 (and remember due to fair housing you can't decide not to rent to families) and now suddenly the guest bathroom is being used constantly.  It would be a mistake if you hadn't budgeted for possible plumbing issues with that bathroom such as cartridge replacements which are a relatively common normal wear and tear item.  In general a good rule of thumb is to put aside 1.5 times the rent amount towards repairs through out the lease agreement.  Keep in mind however those funds do not include any normal wear and tear items that may be needed once the tenant vacates which can run from $0 to several $1000 depending on the tenant.  Furthermore, make sure you save enough money to cover 1-2 mortgage payments for times of vacancy - you don't want to suddenly be surprised that you don't get your rent check yet the mortgage is still due.  In conclusion owning an investment property is just like any other type of investment: Once tenant occupied, the property represents an unsecured investment which can bring about large gains but also the possibility of losses so it is best to mitigate your times of loss by preparing!

"It was already like that when i moved in"

MOVE IN/MOVE OUT

When you have a new tenant moving in to a rental property either you as an owner or your property manager should conduct a move in inspection with the tenant and a move out inspection when the lease expires. Your report should be consistent with the kind of detail you would need if the tenant decides to challenge the disposition in court.  Such detail includes noting the condition of the paint, doors, baseboards, flooring, inside cabinets, landscaping etc.  Make sure that you use the same report for the move in as the move out so that the same items are noted.  Also, take lots of pictures right before the tenant's take possession and during the move out inspection.  Be sure that the power and water are on for both the move in and move out because you can't go back once the reports are signed and add items without the tenant present.

When conducting the move out, do not commit to the tenant on what the charges will be - instead explain that you need to review all of the documentation and pictures and will call them to review once complete.  Remember you only have 14 business days in Arizona to get the disposition in the mail so be sure to give yourself enough time after the move out to really thoroughly review everything.  Keep in perspective that the security deposit is the tenant's money and therefore can only be applied to actual tenant damages.  

What's the best way to find a good Property Manager??????

Since I own a property management company in Phoenix Arizona, my friends and family who live in different states are always asking me really what is the best way to screen property management companies???  Several of my disappointed friends tell me that they thought they had screened them - that when the management company called them back they sounded responsive on the phone, they had a good rating with the BBB and some very positive online reviews.  That's when I explain that they really should have just sat down in front of their computer and picked up the phone!  The best way to screen is to go to the management companies website, find a few addresses for properties that are currently listed for rent and then call the company for "more information".  Take notes on each company you call on.  Note if you left a message how long did it take someone to call you back?  When you received a call back, did they provide basic info to you about the property such as square footage, bedrooms, bathrooms, price & deposit.  Also, more importantly, did they ask you a series of screening questions such as when are you looking to move?  Do you currently rent?  Have you ever been evicted?  Do you have any criminal records?  During this experience you will be amazed at how many companies "sounded great" yet you can't even get a leasing agent to return your call.   Then you won't believe the number of leasing agents who don't ask any screening questions - as if you want people with criminal records going through your home and in some cases doing so alone without a representative from the management company.  You will be amazed at how much information you learn this way as opposed to reading online review which most likely are fake.

So the applicant discloses they may file for bankruptcy should you care????

As a landlord you should care.  Often times we hear from landlords that the tenants "seemed like good people".  They say the applicants had some credit struggles but showed lots of income and we really wanted to get the property rented so we moved forward......two months into the lease and the tenant stops paying rent AND decides to file bankruptcy.  Now the notion of a "simple" eviction is out the window and the landlord is stuck going to multiple courts in order to gain back possession.  Proper tenant screening is critical to a landlords success.  When reviewing an applicants credit don't just look at their score but instead look at each line of credit; does the applicant have a lot of large accounts with multiple late payments?  Has the applicant ever filed for bankruptcy?  When talking to the applicant on the phone ask about current and past times when they have struggled to make their payments.  It is amazing how many applicants will tell us over the phone of their plans to just "write it all off in a BK".  I know it is tough to be a landlord and have your property vacant but in long run it is much cheaper than ending up in bankruptcy court in order to win an eviction.

Rent Check Statistics for March 2013!

RENT Check™ is ARMLS’s monthly publication showcasing the Valley’s residential single family leasing market. It features the Rent Check Quotient™ (RCQ™) derived by dividing the # of leases by the # of closed sales as reported in STAT. Elevated lease activity is stoked by high foreclosures, which turn home owners into renters, and investor sales into rentals rather than owner occupied houses.

In March 2013 the Median Lease price was $1063 with average days on market of 55.  Should you decide to use professional property management services in Phoenix such as Real Property Management, your average days on market can be as low as 28 days.

It's Monsoon Season in Arizona - Is Your Rental Home Ready?

Roofs are one of the most neglected parts of a home, in regards to repairs.  With monsoon season upon us, is your home prepared for the wind, rain, and trees?  "Large trees may pose risks during monsoon storms."  Maybe a small leak during the winter was apparent, then the rain stopped and you put the problem out of your mind.  This is a good time to make sure that that small leak you had doesn't turn into needing new roofing.  This article contains tips about what to look for, in preparing your rental home for monsoon season in Arizona.

http://www.azcentral.com/style/hfe/diy/articles/2012/05/21/20120521monsoon-proofing-preparation-roof-tips.html?nclick_check=1

Dealing with the Evicition following a Trustee Sale

During the eviction process the new owner is essentially negotiating an agreement with the occupants, often through an attorney but sometimes directly. Today’s post will explore the basis for those negotiations.

The reason you will be negotiating is because each party, the new owner and the occupants (often the old owner, sometimes a tenant), probably has something the other wants:

The new owner has legal ownership of the property, including all attached appliances or improvements. That means:

1. A legal right to evict, including the use of force if the occupants aren’t out in time
2. A legal right to collect rent for the period in which the old occupants remain in the house.

The new owner wants:

1. Possession as quickly as possible.
2. No damage to the property.
3. No possessions from the occupant remaining on the premises.

The occupants have:

1. Possession, which means the ability to remain in the house until the eviction process has run its course
2. An implicit threat of causing trouble, through damage to the home or delaying the eviction via legal action

To read more please visit: www.foreclosureinvestingmadesimple.com/dealing-with-the-eviction-part-2/

Rental Home Market is Hot in the West Valley!

For real-estate agents, home buyers and especially home sellers, the West Valley is burning up, especially for homes less than $150,000. That heat is strongest in the market for homes of $100,000 to $150,000, forcing new buyers to move to higher ranges.Distressed properties, those houses owned by people facing foreclosure or short sales, still make up the bulk of sales. But ARMLS statistics show they have decreased in metro Phoenix to about 43 percent in May. That's a drop compared with their high-water mark in September 2010, when distressed properties made up 74 percent of homes sold.