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Sweat the small stuff!

by Katie Poole–Hussa, Licensed Property Manager, Acorn Property Management – Portland

You’ve entered into the rental agreement, the residents signed all fifty-seven addendums, and it appears that everyone understands the expectations. Yet, as time goes on, your tenants aren’t quite meeting their obligations. Month after month you turn a blind eye to what’s eating away at you and their behaviors, or lack thereof, have begun to cause you an eye twitch, tightening of the jaw, and possibly a pain in your side. I’m not talking about any of the obvious major breaches, but mainly the “micro” breaches that we question if they’re worth making a stink about or not. I believe that you owe it to yourself and your business to question: “Why am I not addressing what’s bothering me with my tenants?” Is the answer laziness, fear, or simply because you don’t have the information needed to feel confident in order to do so? I am personally guilty of all charges.

For example, when rent shows up a day or two late every month because your tenants interpret the due date as postmarked by the 4th, rather than in your hand by the 4th. Why not send a letter thanking them for their rent, letting them know that because it was received after the grace period there is a fee associated, and that you expect that to be paid with the following months’ rent? In doing so, not only are you asking for what you’re entitled to, but you’re also not waiving your rights to collect unpaid late fees in the future by setting a precedence in attempting to collect the fee. In the past you may have done nothing for fear of causing an undue hardship upon your tenants. My guess is that it will only take one or two late fee letters before your tenants realize that there is great incentive on making sure that the rent is paid as the contract dictates.

Or what about the classic scenario of tenants failing to take care of their yard? Your relatives are in town so you decide to drive them by your rentals to show off how well you’re doing. To your surprise, and embarrassment, your property happens to be the one property in the neighborhood with 2 ½ feet tall grass, dandelions filling the flower beds, blackberries taking over the ivy, and shrubs so unruly that you can barely see the path to the front door. Instead of issuing a breach of contract notice to the tenants demanding that the landscape be maintained as agreed, you either hire a professional landscaper first thing Monday morning to take care of it and you pay the bill, or you do nothing and cross your fingers that the next time you drive by that they would have at least mowed the grass. Do you justify their lack of care because you know they have busy schedules? Or, are you afraid that confronting them about their ways could possibly offend them or cause a rift in the relationship? Instead, send either a Warning Notice or With Cause Notice as soon as you’re aware that there is an issue. Time is of the essence on this one because the neighbors are likely disgruntled. The work that you had done on the yard prior to them moving in is all going to waste and will most likely have to be done again once they vacate which could be costly.

My point is that by addressing the unsettling habits of your tenants promptly, you can minimize, if not eliminate, any potential feelings of disappointment, frustration, and resentment towards your tenants if you were to let things slide. I believe it is natural for us to want to avoid conflict and confrontation in life. However, when it comes to managing your properties, this continual avoidance could come at the expense of your business and property.

Most of us have had some form of training on being a landlord, whether we’ve taken classes on our own time or have been in property management in a professional setting. Unfortunately, there is no training of this sort for tenants. I’ve always had the opinion that if both landlords and tenants know what the rules are, exactly what is expected of them, and what improved performance will look like, then everyone involved will mutually benefit from the business relationship.

Katie Poole–Hussa is a Licensed Property Manager, Continuing Education Provider, Chair of the Education Committee for the RHA Oregon, and General Manager of the Portland Oregon branch of Acorn Property Management, LLC. She can be reached with questions or comments at Katie@AcornPM.net.

How To Sell Your Property While Its Occupied- Part Two

By Jim Straub,  Acorn Property Management

 In a previous blog – ‘How to Sell Your Property While It’s Occupied, Part One’ – I suggested using Oregon Rental Housing Association Form #40 “Entry Agreement for Sale”.  This agreement allows the tenants, for a concession, to waive their right to a 24 hour notice to enter.  It’s a great option if you have fairly reliable tenants, but not an especially close, positive relationship with them.

An approach I like even better is to get the tenants more involved.  If I have a good set of tenants, ones that I can count on to follow-through for me, I offer them a flat fee of $500 – $1,500 to be paid to them at closing.  I ask them to waive their 24 hour notice to enter, but that really becomes a mute issue because I actually want them there when potential buyers look at the house.  Then they have a vested interest in the sales process.  I ask them to keep the house spotless, the light bulbs changed and generally make the house look like a house they would want to buy.  Then, when I show potential buyers the house, I let the tenants tell them everything they love about the house.  “I love living here because…” I even had one tenant who was so excited about the process that she kept a roll of frozen cookie dough in the freezer and, when I’d call to say I was bringing someone over, she’d pop some cookies in the oven.  The house would fill with the scent of warm cookies, making it feel more lived in and cared for than ever.

There are several keys to making this work successfully.  The first, and most important, is talk to your tenants well in advance of putting the property on the market.  With an investment property, you generally know that you’re going to sell ahead of time and have some flexibility about exactly when to put it on the market.  Don’t be too formal or stuffy – don’t write them a letter or give notice.  Call them and ask to arrange a time when you can sit together at the property and have a discussion.  Put their mind at ease about why you’re calling, so they don’t think you want a ‘sit-down’ because they’ve done something wrong.  Just let them know you have some things you want to run by them.

When you sit down together, the most important thing for you, as the landlord, to do at this point is to listen.  Explain that you are considering selling the property and want to hear their thoughts.  Remember the old axiom, “Ask, don’t tell.”  How does this make them feel?  Really listen.   Are they panicked that a new owner might make them move?  Raise their rent?  If they have kids, are they concerned about being given a notice to vacate in the middle of the school year?  These are all valid concerns that you should address to the extent that you can.

If they are concerned about a notice to vacate, and the property is a duplex or multi-plex, you can help ease their fears.  With their excellent rental history, it’s highly unlikely a new owner would ask them to move.  With a single family dwelling, it’s a little trickier, because there is no good way of knowing if a new owner is going to use it as a rental or make it owner occupied.  In this case, make the new owner give your tenants as much time as possible to vacate by writing a clause in the sales contract that any notices to vacate must be at least ____ number of days.  This is an enforceable agreement at the close of escrow.  You could also consider giving them a fixed term lease for several months, which must be honored by the buyer.  If they have kids, is it only a few months until the end of the school year?  If this is a concern, consider waiting to put the property on the market until the school year is over.  Whatever their concern, try to accommodate their timeline if possible.  Remember, these have been good tenants who have followed your rules, paid their rent on time, and helped you build equity in your property – it’s time to return the favor.

Now that you’ve addressed their fears, it’s time to enlist their help.  First, encourage and empower them.  People like to feel valuable.  Compliment how well they’ve cared for the property and made it their home.  This is true no matter how shabby their furniture or decorating style may be.  I’m sure you can find something to compliment.  Next, explain landlord and tenant rights during the sales process, but tell them you’d rather do this without having to go through the 24 hour notice process each time.  Explain your idea to involve them in the sale of the property.  Make them seem a vital part of this process, then throw out the $500 – $1,500 figures to be paid to them at closing.  Explain that this will help cover their new security deposit if they have to move and, if you like the way the property looks during the sit-down, tell them that as long as they continue to pay rent and leave the property in good condition when they leave, you will return their security deposit in full.  The flat fee at closing and a return of their security deposit combined is a windfall for most tenants, and I find they will jump at the chance.

How much to offer them?  It depends on the tenants and the rental.  If it’s a high-end rental and they’ve been paying a significant amount of rent, I might offer them a higher amount than someone in a low-end studio apartment.  However, it’s important to meet your tenants where there are.  If you start at $500 and the tenant says he’ll do it for $1,000, I’d probably jump at it.  Just try to reach an amount with which both you and your tenants can be comfortable.

Remember, if you’ve developed a good relationship with your tenants, they should want to help you. It’s a win-win situation for everyone.  Your property looks better and sells faster.  Your tenants get a little money for their trouble and have a chance to impress their new landlord or financial help towards making a new start.  The buyer gets the house they want and a start on a good relationship with their inherited tenants.  I’ve even found this works well with realtors and have spoken to a number of them who are already using this method successfully.  You can’t go wrong.  Good luck!

Water Rights, Wells and Irrigation – Property Owners’ Rights and Responsibilities

By Guest Editor, Michael Mattick, Soon-to-be-Retired Watermaster for Lane & Linn Counties

The construction, maintenance, and use of wells and ground water is overseen by the Oregon Water Resources Department. They publish a booklet called Well Water Owner’s Handbook,

http://www.oregon.gov/owrd/pubs/docs/Well_Water_Handbook.pdf.

If you have a well on your property, this booklet may address some things you wonder about, and may give you some things to consider. In this article I will try to address some of the common questions I have heard over the last 18 years.

Don’t I own the water under my land?

Under Oregon water law, all of the water in the state belongs to all of the people of the state. With some exceptions, a water use permit, certificate or registration (known as a water right) is required to use water; however, you do NOT need a permit if the use is only for:

  • Domestic or Group Domestic of up to 15,000 gallons per day (individual or community use)
  • The irrigation of up to one-half acre of NON-commercial lawn or garden
  • Commercial use of up to 5,000 gallons per day
  • Livestock watering
  • Commercial irrigation of any amount – even one-eighth of an acre – requires a water right.

For example, anyone using a well or stream to irrigate marijuana they intend to sell needs a water right. But just because they want one doesn’t mean they can get one. The state is conservative about protecting stream flows during the summer and they will evaluate any new well permit for its potential impact the nearest stream. A well owner may irrigate one half acre of lawn and garden, for personal use, without a water right, but any commercial irrigation requires some kind of authorization.

What about rain water or ponds?

Under state law, ORS 537.141(1) (h), the use of rain water collected from an artificial impervious surface

(a roof or paved parking lot) does not require a water right of any kind. But a dam across a valley, including man-made ponds, though it may be collecting rain water, would NOT get this exception if it also stores runoff from the natural landscape. With naturally occurring springs, landowners do not need a permit to use that water, as long as it would not naturally flow off of the property in a well-defined channel.

What good is a water right?

Their primary purpose is to figure out who gets to continue using water during a time of shortage.

The oldest water right is the last one shut off. The newest water right is the first shut off (after illegal uses, i.e., those with-out water rights). The exempt uses listed above actually have water rights, they are just not documented with a permit or certificate. If it is necessary to regulate exempt users, the Watermaster determines their priority date from whatever information is available, starting with a well log.

What is a well log?

Since 1955, the State has been recording information on new well construction (Well Logs). The Water Resource Department maintains this database. Well logs provide good information when the property is up for sale or if the well needs work. Unfortunately, it is often difficult to connect an old well to a well log, because we have a different address system than we did in 1955 (no more Rural or Star Routes), tax lot numbers change as parcels get subdivided, and ownership changes over time. In 1996, we required drillers to put stainless steel ID tags on new wells and old ones they worked on. This will help us locate the construction reports for those. All others are required to get ID tags when the property next changes hands. If your well does not have an ID tag, you can request one at any time. See http://www.oregon.gov/owrd/GW/docs/well_id_app_form.pdf.

We try to match existing wells to a well log. In order to positively identify the well log, we may need to know a history of the property ownership back to the time when the well was drilled. The well logs always have the name of the original land owner, but we do not attempt to update subsequent ownership.

Who regulates water quality in wells?

There is no agency which regulates water quality pumped from private wells. Landowners who rent property for residential use are supposed to have a potable water source. If the water is not safe, they may be liable if its consumption results in injury. Any system serving more than 3 hook ups is considered a Public Water System.

The Oregon Drinking Water Services of the Oregon Health Authority tries to ensure that public water systems meet minimum standards. Public systems need to have an identified system operator who is trained and periodically tests the water for contaminants. More information on the Drinking Water Services can be found at http://www.oregon.gov/oha/PH/HEALTHYENVIRONMENTS/DRINKINGWATER/Pages/consumers.aspx

Do landlords have liability for contaminants in ground water?

Yes. We recommend wells be tested for contaminants annually. Any wells drilled in volcanic geology (anything in the hills East of the Willamette River, or South of Eugene) could have high levels of naturally occurring Arsenic. These levels can change over time which is why we recommend annual testing. Other contaminants to look for are Nitrates and Bacteria. The Drinking Water Services web site above has good links to fact sheets on each of these contaminants.

Can a landowner drill their own well?

We discourage it. Few people have access to the equipment, or experience necessary to properly construct a water well. It is best to hire a licensed bonded well contractor. A landowner can construct their own well if they first get a landowner’s permit and bond. The permit currently costs $25, and a bond good for $5000 will cost approximately $500. The bond ensures we have resources to hire a professional constructor if a landowner gets in over their head.

What if it is just an irrigation well?

We look at all wells as Water Wells which may be used as a potable source, if not now, then in the future. All wells must be built to at least the same minimum standard.

What about very old wells constructed before there were standards?

We do not make landowners bring old wells up to today’s standards unless there is some reason to suspect they may be related to a health threat. Any well without a well log may be required to be abandoned (filled with cement, and the casing pulled or ripped) if it, or a nearby well, tests positive for contaminants. The District 2 Watermaster office is located at the Lane County Courthouse (125 E 8th Ave, Eugene) near the Deeds and Records counter. The phone # is 541-682-3620. The new Watermaster is Lanaya Blackely, and she will be up to speed very soon. Contact information for other Watermaster offices can be found in the back of the Well Owner’s Handbook (see above).

Michael Mattick is the primary water-use and well construction official for Lane and Linn counties. After 18 years of service, he is transitioning to retirement but is helping with the transition to a new Water Master.

This column offers general suggestions only and is no substitute for professional legal counsel. Please consult an attorney for advice related to your specific situation.

Inspections: Take Time Now To Save You $ Later

By Katie Poole-Hussa, Acorn Property Management

Inspection reports are often used to prove the condition of the property when a tenant moves in and when the tenant moves out. Even though completing these inspections when the property is vacant is ideal, conducting an inspection on at least an annual basis while the unit is occupied is just as important when making your case. Don’t think of interim inspections as an invasion of privacy: think of it as protecting your investment by ensuring that the tenant is taking care of your property.

Try to encourage your tenants to attend the interim inspections with you. Best practice is to work with the tenant when scheduling the inspection by offering two separate times for the inspection. This not only shows the tenant that they matter to you and that their time is valuable, but it helps build a rapport with the tenant which will be vital in future dealings with them. However, if you propose two separate times for the inspection to take place and the tenant doesn’t agree to attend, the landlord can and should still complete the inspection without the tenant with proper, legal notice: just be sure to note if the tenant was present for the inspection.

Always keep records. In Oregon, landlords are required to keep all documentation including inspection reports for six years after a tenancy has ended. When in doubt think of it this way: if it wasn’t written, it probably cannot be proven. When the landlord chooses not to carry out an inspection either before or after the tenancy, the landlord will have a difficult time proving why they deducted anything from the security deposit for physical damage to the property that goes beyond normal wear-and-tear. If a landlord makes a deduction from the security deposit without adequate proof, the tenant can take legal action to get their security deposit back. That is stress and money you could have saved simply by keeping better records.

Helpful Tips for Completing the Inspection of an Occupied Unit:

  • Try to arrange your inspection during a weekday.
  • Be thorough: open drawers, cabinets, pantries, and closets; get on the floor and look under sinks; inspect the seals, the wear and tear, cleanliness, and overall condition in the refrigerator and the stove.
  • Inspection reports can also include pictures – consider taking a camera or your phone so that you can take pictures or a video. Offer to share the reports, pictures, and videos with the tenants for best practice.
  • Ask your tenants to point out anything that could be considered damage and make sure it gets written down. If the tenant will not be present for the inspection, ask them to leave a note on the kitchen counter listing anything they’d like you to look at or document.
  • Is the housekeeping good? We all know that poor housekeeping will attract bugs and sometimes vermin so you want the home to be clean and tidy.
  • Are there any signs of unauthorized occupants or unauthorized pets?
  • Check for plumbing maintenance needs as well. See if the lint trap in the dryer is kept clean and be sure to take a look at the washing machine hoses. A frayed hose could indicate a potential leak. Inspect the toilet tanks. Check the flapper valve and make sure it seals properly and does not need to be replaced. If the landlord is paying a water bill, there is not always a lot of motivation for the tenant to report a slight leak in that flapper valve. Even if the tenant is responsible for water, it does not take a lot of money or effort to replace a flapper valve.

Think of interim inspection reports as evidence to support a future case. Of course no landlord ever wishes to be part of a legal battle justifying charges against a tenant for damages but it happens all the time. Good record-keeping, proof, and evidence will be your saving grace if you find yourself in that situation.

Your local landlord organization can sell standard inspection forms for purchase by landlords. These forms provide a complete list of important property items so that issues don’t go undetected during your inspections.

Katie Poole–Hussa is a Licensed Property Manager in the State of Oregon, a Continuing Education Provider, Chair of the Education Committee for the RHA Oregon, and General Manager of the Portland Oregon branch of Acorn Property Management, LLC. She can be reached with questions or comments at 971-352-6760 or email Katie@AcornPM.net.

How to Sell Your Property While It’s Occupied – Part One

By Jim Straub, Acorn Property Management

While many landlords may think of their tenants as more of a nuisance than anything when they attempt to sell rental property, I beg to differ. Pretty vehemently differ, as a matter of fact. When selling an occupied rental unit, I’m here to tell you those tenants may be your best allies.

It’s occasionally true that a rental investment buyer would prefer to purchase a vacant unit. Most, however, welcome the presence of proven tenants, ones who have paid rent on time and care properly for the unit. Have some those tenants yourself? You may have found your best sales technique yet, then. Besides being able to demonstrate to a prospective buyer that the tenants are historically reliable, you can actually enlist these tenants as your salespeople.

Sure, you still want to make sure you’ve got all your ducks in a row – that the property is properly maintained, that there is no delayed maintenance, and it is ready for showing inside and out with good curb appeal. Then, it’s time to enlist your tenants. I have two options to offer you in this regard.

First though, before we discuss that, it’s important to remember that your tenants still have the right to a 24-hour notice when anyone is going to be on the property. This includes contractors and repairmen as usual, but it also includes appraisers, real estate agents and prospective buyers. This can be difficult if you’ve got a great sales lead and your tenant insists on a full 24 hours’ notice. However, if you’ve got a great relationship with your tenants (which hopefully you’ve been building during the tenancy), you can always give constructive notice, such as a quick telephone call. Make sure you take the time to explain that selling the property will not necessary hurt your tenants’ interests and stress that, in fact, it’s in their best interests to make a good impression on the potential new owner. This may encourage them to be more flexible about the notice to enter issue and may encourage them to participate even more in the sales process.

The first approach I can suggest is a hands-off approach with the tenants that can be accomplished by using Oregon Rental Housing Association Form #40 “Entry Agreement for Sale”. This is an agreement that allows the tenants, for a concession, to waive their right to a 24 hour notice to enter. It gives you three concessions to offer tenants: 1) “$______ per month in discounted rent (amount subtracted from monthly rent)”, 2) “If sale occurs, landlord agrees to extend notice to vacate from 30 days to _____ days,” or 3) “other considerations”. These “other considerations” are whatever you and your tenant agree to. I’ve heard of landlords that pay their tenants a certain amount of money each time they show the unit, for instance. In any case, there is an incentive for your tenants to make the property available on short notice, and it removes the burden from you of having to contact them individually each and every time someone needs to be at the rental unit.

An approach I like even better, though, is to get the tenants more involved. If I have a good set of tenants, ones that I can count on to follow-through for me, I offer them a flat fee of $1,000-$1,500 to be paid to them at closing. I ask them to waive their 24 hour notice to enter, but that really becomes a mute issue because I actually want them there when potential buyers look at the house. Then they have a vested interest in the sales process. I ask them to keep the house spotless, the light bulbs changed and generally make the house look like a house they would want to buy. Then, when I show potential buyers the house, I let the tenants tell them everything they love about the house. “I love living here because…” I even had one tenant who was so excited about the process that she kept a roll of frozen cookie dough in the freezer and, when I’d call to say I was bringing someone over, she’d pop some cookies in the oven. The house would fill with the scent of warm cookies, making it feel more lived in and cared for than ever.

It’s a win-win situation for everyone. Your property looks better and sells faster. Your tenants get a little money for their trouble and have a chance to impress their new landlord. The buyer gets the house they want and a start on a good relationship with their inherited tenants. You can’t go wrong.

Spring Maintenance Checklist

In spring, focus on freshening up your rental property and protecting the dwelling against the season’s strong winds and rains.  Use this time of the year to thoroughly clean and care for the home’s interior.

Outdoor Tasks:

Clean gutters and downspouts.
Inspect roof and chimney for cracks and damage.
Wash the exterior of all windows.
Install missing screens on windows and doors. Repair as needed.
Fertilize the lawn.
Check decks for loose boards, railings, or stairs.
Professionally service heating and cooling units.
Check the foundation for cracking as well as for insect damage.
Remove foundation vent covers and spigot covers.

 

Indoor Tasks:

Test all smoke and carbon monoxide detectors
If the basement has a sump pump, test it by dumping a large bucket of water into the basin of the sump pump. This should activate the sump pump. If it does not switch on or if it’s not pumping water, it may need to be serviced by a professional. Also, check for and remove any debris and make sure there are no leaks.
Assess the need for blind repair, cleaning or replacement.
Repair or replace broken or missing kitchen cupboard hardware.
Check the attic for signs of moisture and water stains.
Check walls for condensation and mildew.
Check electrical panel for rust, make sure circuit breakers are operating correctly.
Clean dryer vents.
Clean or replace furnace filters.
Check clothes washer hoses for cracks or swelling.
Check all faucets for leaks or slow drips.  Detach and flush aerators.
Maintain clean drains by pouring one-half-cup baking soda followed by one-half-cup white vinegar into each.  After 10 minutes, flush with boiling water.

 

Katie Poole–Hussa is a Licensed Property Manager, Continuing Education Provider, Chair of the Education Committee for the RHA Oregon, and General Manager of the Portland Oregon branch of Acorn Property Management, LLC. She can be reached with questions or comments at Katie@AcornPM.net.

Inspections: Take the time now to save you $ later

By Katie Poole-Hussa, Acorn Property Management

Inspection reports are often used to prove the condition of the property when a tenant moves in and when the tenant moves out. Even though completing these inspections when the property is vacant is ideal, conducting an inspection on at least an annual basis while the unit is occupied is just as important when making your case. Don’t think of interim inspections as an invasion of privacy: think of it as protecting your investment by ensuring that the tenant is taking care of your property.

Try to encourage your tenants to attend the interim inspections with you. Best practice is to work with the tenant when scheduling the inspection by offering two separate times for the inspection. This not only shows the tenant that they matter to you and that their time is valuable, but it helps build a rapport with the tenant which will be vital in future dealings with them. However, if you propose two separate times for the inspection to take place and the tenant doesn’t agree to attend, the landlord can and should still complete the inspection without the tenant with proper, legal notice: just be sure to note if the tenant was present for the inspection.

Always keep records. In Oregon, landlords are required to keep all documentation including inspection reports for six years after a tenancy has ended. When in doubt think of it this way: if it wasn’t written, it probably cannot be proven. When the landlord chooses not to carry out an inspection either before or after the tenancy, the landlord will have a difficult time proving why they deducted anything from the security deposit for physical damage to the property that goes beyond normal wear-and-tear. If a landlord makes a deduction from the security deposit without adequate proof, the tenant can take legal action to get their security deposit back. That is stress and money you could have saved simply by keeping better records.

Helpful Tips for Completing the Inspection of an Occupied Unit:

  • Try to arrange your inspection during a weekday.
  • Be thorough: open drawers, cabinets, pantries, and closets; get on the floor and look under sinks; inspect the seals, the wear and tear, cleanliness, and overall condition in the refrigerator and the stove.
  • Inspection reports can also include pictures – consider taking a camera or your phone so that you can take pictures or a video. Offer to share the reports, pictures, and videos with the tenants for best practice.
  • Ask your tenants to point out anything that could be considered damage and make sure it gets written down. If the tenant will not be present for the inspection, ask them to leave a note on the kitchen counter listing anything they’d like you to look at or document.
  • Is the housekeeping good? We all know that poor housekeeping will attract bugs and sometimes vermin so you want the home to be clean and tidy.
  • Are there any signs of unauthorized occupants or unauthorized pets?
  • Check for plumbing maintenance needs as well. See if the lint trap in the dryer is kept clean and be sure to take a look at the washing machine hoses. A frayed hose could indicate a potential leak. Inspect the toilet tanks. Check the flapper valve and make sure it seals properly and does not need to be replaced. If the landlord is paying a water bill, there is not always a lot of motivation for the tenant to report a slight leak in that flapper valve. Even if the tenant is responsible for water, it does not take a lot of money or effort to replace a flapper valve.

Think of interim inspection reports as evidence to support a future case. Of course no landlord ever wishes to be part of a legal battle justifying charges against a tenant for damages but it happens all the time. Good record-keeping, proof, and evidence will be your saving grace if you find yourself in that situation.

Your local landlord organization can sell standard inspection forms for purchase by landlords. These forms provide a complete list of important property items so that issues don’t go undetected during your inspections.

Katie Poole–Hussa is a Licensed Property Manager in the State of Oregon, a Continuing Education Provider, Chair of the Education Committee for the RHA Oregon, and General Manager of the Portland Oregon branch of Acorn Property Management, LLC. She can be reached with questions or comments at 971-352-6760 or email Katie@AcornPM.net.

How To Effectively Market Your Rental Property

By Jim Straub, Acorn Property Management

Curb Appeal. I’ve said it before and I’ll say it again. It’s all about curb appeal. If you are using your time effectively, you are having applicants drive by your unit first before meeting them. The outside of the unit and the yard are all they see at first – make sure you’re putting your best foot forward.

The outside of your unit should be clean and presentable. The yard should be well mowed and the flower beds weeded. Inexpensive color spots work wonders to spruce up a dull yard. And I can’t stress this one enough – take the time to clean the windows inside and out. Don’t make the inside of your unit look uninviting by making applicants peer through dirty windows. It undoes everything you’ve done to make the inside clean and inviting! Another tip is to keep an eye on the windows during the whole process of showing your unit. After several sets of people have peered through the windows, they may have left fingerprints on them, so you may have to clean the windows more than once while your unit is vacant and being shown.

While your unit is vacant, leave the blinds open and at least two lights on inside the unit. Then, leave the interior doors open so that the whole unit can be seen by looking through the windows. Your ideal tenant is employed and is most likely working daytime hours, so as it starts to get dark early, you’ll need the lights on so the applicants can see inside. Finally, once you do meet with the applicant to show them the inside, be sure it has been recently cleaned. Scent is an important consideration. It doesn’t matter if the unit is a little dated as long as it smells clean. I sometimes use a carpet freshening agent to give the scent of my unit a little boost. Nothing too fragrant, as you don’t want to set off anyone’s allergies. Just one of the cleaning agents that will give a nice fresh scent.

Advertising. Craigslist.com is king. In the last six months, I’ve only used print advertising once. It’s just too expensive, doesn’t reach as many people, and good quality tenants are focusing their attention on Craigslist now. Craigslist is free and easy to use. You should use the same approach with Craigslist as you have in the past with other outlets. Be concise and to the point. Be careful of Fair Housing laws in your word choice. The beauty of Craigslist over print ads, though, is the addition of photos. You should include one photo of the front, shot at an angle so it includes the front of the house and the yard, one photo of the backyard and a few of the inside. If you’ve not used Craigslist before, I think you’ll be amazed with the amount of response you receive for just a small amount of effort.

Availability. Renting your unit is a horse race. Tenants want the best unit available for the price they can pay, and they will often rent the first unit that seems to fit that description. You’ve got to have a quick response to all inquiries from applicants and get to them first. Even if you have a full time job, renting your unit should be your priority while it’s vacant. Every day your unit sits empty costs you money. So be sure to check your voicemail during breaks and lunch and return calls then. Don’t lose an opportunity to rent your unit by being slow to respond. I can guarantee you that another landlord will get there first if you do. The way to avoid getting burned out during the rental process is to be sure to have the applicants drive by the unit first. Be sure they like the unit and the neighborhood before you spend your valuable time meeting them. That way, you’re sure to meet only those applicants who you know like the unit.

Price. I always price my unit a little higher than I think it might rent for at the start. This is because the market will always tell you what the right price is. If I rented my unit for $1000 two years ago, how do I know that’s the right price now? The market fluctuates, and I want to be sure to capitalize on that. If I don’t have any response to my ad, I know I’m a little high and can reduce the price a little. Better to be a little high at first, though, than too low and cheat myself out of good income.

Also be careful not to price your unit too low. I’ve seen this over and over again. Landlords think they can rent the unit quickly and to quality tenants by marketing it at a super low price. Many times that backfires. It’s all about perceived value. If I’ve been looking at units in the $1000 range and suddenly I see something comparable for $750, my first thought isn’t ‘what a great deal.’ My first thought is ‘what’s wrong with this property.’ Make sure you’re pricing your unit at what the market will bear and you won’t go wrong.

Selecting A Contractor

 

As renovation season approaches, you may be planning projects for your rental properties. How can you know you’re hiring an honest, competent person who is capable of performing an effective repair or upgrade at a reasonable price in a timely manner? Many people hire contractors without fully screening them and pay the price in poor quality work, high prices, and projects that go on far beyond the promised end date.

One of the best ways to locate a good contractor is a referral from someone you know and trust. Ask around, and read the endorsements in the ROA bulletin. Of course, you can always ask prospective contractors for referrals from past clients. Even though they will only give you the good ones, you can gain useful information if you ask the right questions. Did the contractor begin the job when promised, or were there excuses? Was their bid accurate, or did costs get added on and if so, were they reasonable? Did they clean up after themselves daily and when the job was complete? Was the job completed to their satisfaction? Did they finish on time?

When you seek bids from contractors, the more detailed the bid, the better. This is the preliminary outline of your contract for services and will become very important if there ends up being a dispute about the job. Bids should include everything you can think of, including specifics about exactly what materials will be used, down to the thickness and brand of plywood, to the size of nails, screws, etc. Remember the Chinese sheetrock used in many construction projects a while back? Turns out it was toxic. These details are very important, and if they aren’t spelled out can result in problems for you with no recourse against them, so get it all in writing. Also, who will actually be doing the work? Who will be supervising? Who will be obtaining permits and paying the costs of those?

Timelines are one of the biggest sources of conflict between contractors and their customers. To be a successful contractor requires juggling multiple clients and multiple jobs. You are just one client and while they are trying to keep you happy, they are also working to keep their other clients happy. You will likely maintain a good relationship with your contractor if you accept some flexibility in the timeline, but hold them to their commitment. The squeaky wheel does get the grease.

A more positive way to hold contractors accountable (and keep you from having to nag them) is by adding time incentives or penalties. That’s what government agencies do and it can help keep a project on track. For instance, the contractor may get a bonus of X number of dollars for finishing on time, but the bill is reduced by X number of dollars for each day the project runs over the contracted end date. Another useful tool in this regard is to divide their payments into thirds. One third at the beginning of the job so that they can purchase materials and get going; another third at some specified mid-point of completion; and the final third only when every single part of the entire job is complete.

When my daughter accidentally set her bedroom on fire, that’s the deal I struck with the restoration company and it came in very handy when they delayed completion, but still wanted to get paid in full. I received a bill that had late fees on it and I very politely called the contractor to inquire (and then his supervisor, when he failed to return my three phone calls). I reiterated the agreement and made it clear once again, that they would not get any part of the final payment until every last part of the job was done and they had failed to finish the trim work on the siding. Gosh darn, they finished up right away! Always keep that final payment on hold, or you will lose your leverage.

A word of caution: While you as an owner are allowed to be an unlicensed individual while performing most repairs on your properties, this is not the case with hired help, nor is it the case when dealing with hazardous materials such as asbestos or lead-based paint. And ignorance of the law is no excuse! Make sure that if you are dealing with hazardous materials that your contractor has the proper certifications, such as lead-based paint certification if they are disturbing more than two square feet of paint on a property built before 1978, or are hiring a qualified company to dispose of asbestos. Because in the end it’s not only the contractor can be held liable, but you as well. Fines can run into the tens of thousands of dollars. Think hiring a contractor with the proper certifications is expensive? Not hiring one can cost even more. Please refer to the Environmental Protection Agency website for more complete information about hazardous materials in renovations. www.epa.gov

The Construction Contractors Board is the agency that oversees licensed contractors. On their website, you can find information on all licensed contractors in the state of Oregon, including whether or not they are licensed (Go figure, but some folks actually lie about this.); the kind of license they hold; how long they have operated under a specific license; and whether there have ever been complaints lodged against them and/or any punitive damage awards against their company or their bond. Take a few moments and save yourself a lot of time, trouble, and money.
https://ccbed.ccb.state.or.us/ccb_frames/consumer_info/ccb_index.htm

 

This column offers general suggestions only and is no substitute for professional legal advice. Please consult an attorney for advice related to your specific situation.

Damages, Depreciation, and Normal Wear & Tear

Assessing charges to a tenant’s deposit is fraught with peril for many landlords. What are damages? How do you calculate depreciated damages? What is normal wear & tear? These questions are common to our business as landlords and I hope that the following will help guide you in assessing fair and reasonable charges you are owed, without ending up losing a court battle because you assessed improper charges.

Damages in the context of landlord-tenant relationships are related to actual failure of the tenant to take ordinary care; accidental or intentional acts of violence to the premises by tenants or guests; or unpaid tenant charges related to the tenancy, such as rent, fees, and unpaid bills. Damage charges can also encompass items which a landlord chooses not to repair, loss of use of the rental dwelling during repairs (as long as repairs are performed in a “timely fashion”), and depreciated value of the rental dwelling as a result of tenant destruction. So, for example, say your tenant punched a hole in one of the walls. You can patch it so that it is useful for another tenant, but your property has suffered depreciated damage as the wall will never be the same unless you take a large section down to the studs and repair it properly. You may charge the full repair cost for this damage even if you choose not to fully repair it at this time. I had a tenant who moved in to a unit with brand new linoleum, and when she moved out a year later, we discovered a large crescent-shaped burn in the new flooring. The owner chose not to replace the linoleum as it still had a lot of wear left in it, but we did fairly charge her as though we had replaced it. A tenant can also be financially responsible for failing to disclose repair issues that result in ongoing damage to the property from things like leaks; however, landlords can also bear at least partial responsibility if they fail to perform reasonable inspections during which damages could be noted and mitigated. So, if your tenant lived in your property for eight years and you never inspected, but discover a leak on move out that has completely rotted the kitchen floor, how is it reasonable to charge the tenant 100%? What is reasonable in a case like this is a difficult question to answer, but I always say that you should imagine explaining yourself to a judge in court, which usually clarifies the issue to some extent.

Depreciation is an honest attempt to assess charges for damages to a tenant while considering the age and prior condition of the damaged item. So, in one case, I had tenants who left two damaged items in the house they rented: the kitchen counter and the living room carpet. The counter was brand new on move in and absolutely perfect on move out except for a large circular burn adjacent to the cooktop where apparently the tenant set a hot pan. As this was a laminate counter, there was no way to effect a repair and the entire counter needed to be replaced at a cost to the tenant of 100% using comparable materials. The living room carpet had been burned when hot coals had popped out of the fireplace. There was no way to repair it; however, the carpet was six years old and had a lifespan of ten years under normal wear conditions. In this case, we charged the tenants 40% of the replacement cost of comparable carpet. You may not use a tenant’s responsibility for damage to upgrade your home at their expense. So, if we had decided to replace the living room carpet with a high-end wool carpet, for example, we would have gotten a bid for replacement of the normal carpet, charged that amount and the owner would have absorbed the rest. If you’re not sure what a fair charge is for a specific repair, contact an experienced contractor for advice.

Normal wear and tear first of all, depends on the length of the tenancy. In a tenancy of 10 years, there will be much more wear and tear than there would be with a tenancy of only one year. Other factors would include the number of residents or animals living in a unit, the quality of the materials used in the property, the condition prior to move in, and the age of things like carpet and paint. A good interior paint job can be expected to last 5-7 years, with some minor touch ups between tenancies. The lifespan of flooring depends on its quality as well. Your average carpet can be expected to last between 7-10 years (or more for high quality carpet) of normal usage. Hard flooring can have a lifespan of 7-25 years, again depending on quality.

Normal Wear & Tear – Includes, but is not limited to…

  • Minor scuffs on floors or trim
  • Nicks on corners of walls
  • One or two pictures holes on walls
  • Minor scratches around knobs or handles
  • Wear patterns in flooring in high-traffic areas
  • Dingy paint (depending on lifespan of paint & tenancy)
  • Cupboard finish deteriorating
  • Caulking
  • Broken window seals
  • Aged fixtures
  • Replacement seals on appliance doors
  • Mold/mildew/peeling paint related to failure of housing components such as fans, leaky window, leaky roof
  • Damage to floors, counters, etc., from poor caulking

Damages – Includes, but is not limited to…

  • Filth, grime, staining, trash inside or out
  • Gouges/scratches/burns/stains on floors, trim, counters, appliances, cupboards, walls, ceilings, etc.
  • Chunks of drywall broken off
  • Multiple or extra large holes in walls, ceilings, or trim
  • Bent or missing hardware
  • Dented metal doors
  • Ripped, gouged, stained or frayed flooring
  • Unauthorized tenant “improvements”
  • Urine/feces
  • Unkempt yard
  • Broken globes or wrong wattage bulb in fixture that causes it to fail
  • Broken shelves, door guards, drawers on appliances
  • Mold/mildew related to tenant lifestyle (lack of ventilation, heat, circulation)

Figuring out what is fair for each situation is at best an imperfect science. So, be reasonable and act in good faith and you should avoid many troubles. Please call the Helpline if you need assistance with a specific situation.

This column offers general suggestions only and is no substitute for professional legal assistance. Please consult an attorney for advice related to your specific situation.

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