The Property Manager’s Misstep

In this story, a prospective tenant called a property manager and reported that she had a service animal to accommodate a disability.  The property manager reported that she was required to pay an additional security deposit for the service animal.  Fair Housing laws define that a security deposit for a service animal is illegal.  People with disabilities have a right to “reasonable accommodation.”  Allowing a service animal without a security deposit has been defined as a reasonable accommodation by the law.  This can be a frustrating and damaging rule for property managers and owners.  The difficulty is two fold.  Many disabilities are not easily observable such as depression or anxiety disorders.  The second difficulty includes prospective tenants taking advantage of the system.  In essence, if a prospective tenant wants to have a 200 pound bull mastiff puppy in a one bedroom apartment and doesn’t want to pay for it, all he/she has to do is “get a note,”  and the owner is required to expose him/herself to the risk of the “service” animal causing major damage.

Significance of the Suit

This is a precedent setting lawsuit in which a jury found that a person with disability has a right to accommodation.  An emotional support service animal has been found to be a reasonable accommodation.  If you are a property owner or property manager and you do charge an additional security deposit for a service animal you are exposing yourself to unnecessary risk and you are breaking the law.

There are Protections for the Investor

The best defense for a Fair Housing violation is education.  Property managers and owners are allotted certain rights.  For example, property managers can request “proof of disability,” but they cannot ask what the disability is.  There are many specific rules that Fair Housing has defined that managers or owners can and cannot do.

Not Knowing is Not a Defense: Manager Owner Training

There is a free fair housing training in Idaho Falls on April 26th, 2012 at the Red Lion Hotel.  Richard Mabbut from Fair Housing has graciously agreed to address the local property managers, real estate agents and owners  from 9am until 12 noon.  If you are interested in attending SIGN UP because there is limited seating.  If you have a specific question you can always call Intermountain Fair Housing in Boise, Idaho and ask (208)-383-0715.

News Article    Free Training

For more information on how Jacob Grant Property Management can reduce your risk for liability for Fair Housing violations call 208-522-3138 or email support@jacobgrant.com

What Does Property Maintenance Cost?

While average maintenance costs in Idaho Falls and Rexburg hover around $.27/ft annually, there are many factors that impact these costs.  This research article, completed back in the 90s, can still be used to generalize regarding factors property managers and rental owners need to be aware of, that impact maintenance expense.

Research Findings

Unsurprisingly, this research on 137 residential rental properties in South Carolina found that the following impact maintenance costs: property age, tenant turnover, higher rents, multi-unit owners, size of the complex (smaller complexes cost more to maintain/sqft).  The turnover cost was especially notable.  If property managers or owners double turnover, they can expect an 18% increase in maintenance expense!!!  Do you have a line item in your budget for tenant retention?  To help see the cost of turnover, this table, from Multi Family Insider, can help you calculate what a turnover costs.

Your Tenant is Your Customer

Maintenance is unavoidable.  Deferring maintenance is typically a short term solution with long term detriment.  However many factors contribute to the cost per square foot.  Individuals managing rental property can especially reduce expenses by reducing turnover.  This justifies reduced rent rates for long term renters, and other incentives and programs designed to retain your tenant.  Your Tenant Is Your Customer!

Description of a Pro Forma Analysis

A pro forma analysis very simply projects all income and expenses on a rental property.  Step one is to assess how much income your rental can produce.  There are many ways to assess market rent, but the simplest is to research what comparable rentals are renting for.

Step 2 is to honestly project day to day expenses.  Day to day expenses on the simplest level include: maintenance, grounds keeping, management, utilities, vacancy, cleaning, and taxes, insurance, and mortgage.

Step 3 is to honestly project capital expenses.  Capital expenses include siding, windows, roofing, flooring, painting, appliances, and other items that only need to be purchased every few years.  A reserve fund needs to be set up for replacement.  For example, a rental owner projects that the roof needs to be replaced in 10 years.  The cost of the replacement is $5000 (assume no change over 10 years) and owner divides the cost over 10 years so the cost is $83/month.  Rental owner decides to set up a reserve account and put $83/month in that account so at the end of 10 years he has enough to pay for the roof.  Depending on the time line of your investment some items may not need to be factored in, but will affect overall value.

Purpose of Pro Forma Analysis

An effective pro forma analysis helps you treat your rental property(ies) as a business.  Other purposes might include:

1. Analyze a rental property before you purchase.
2. Assess and reduce expense items.
3. Maximize rental income.

Data drives growth!

For an example of a simple single family home pro-forma analysis or if you would like a free pro forma analysis on your rental property click here.

On a positive note, unemployment is down to 5.9 in Rexburg (lowest in the area) and 7.5 in Idaho Falls.  The area unemployment rate (7.0) was “lower in eastern Idaho than anywhere else in the State of Idaho.”  The state average is at 8.4, a 1.3% decrease since December, 2010.

Marcus and Millichap continue to produce positive data for national apartment data.  “…guarded optimism for a better year for the economy…should give way to more cheer when it comes to investing.”  M&M report a projected increase of 15-20% in property sales volume in 2012.  Recession fears seem to be forgotten with availability of financing at generation low costs.

The general feel of the Idaho Falls market is slow increase.  Idaho Falls appears to be similar to the nation in that multi-family investment is leading the way out of the mire.  There appears to be growing excitement around multi-family investment with the low cost of debt and the growing investor confidence.  Idaho Falls and Ammon are rattled with billboards of banks with rolls of cash to lend, and investors appear to be accepting the invitation.

Considering investing in multi-family in Idaho Falls?  We provide free pro-forma property analysis.  Call 208-522-3138 or email jake@jacobgrant.com

Information provided by http://www.postregister.com and http://marcusmillichap.com

1. Listing services and information for prospective tenants.
2. Services for current tenants.
3. Property management services description.
4. Login accessibility for current owners

Prospective Tenant Pages

The category rental listings is the entry page for prospective tenants.  The listings are updated every 24 hours.  The feed is viewed directly out of the website rather than sending them somewhere else.  This improves the likelihood that people looking for rentals will find these listings and apply online.  The ease of the process makes applying with jacobgrant.com attractive to prospective tenants.  We suspect this will improve traffic and therefore reduce vacancy.  Another notable item is offering discounts to people with good credit.  We want to attract the highest qualified tenants possible to improve profitability for owners.

Tenant Services

Tenant Services pages outline the services for tenants.  Excellent customer service means more profitability for owners.  Tenants can pay rent online which increases the amount of rent received on time.  You will also find a maintenance trouble shooter.  In the past, jacobgrant has received maintenance requests for items that don’t warrant a call (ex tripped breaker).  These types of items can be very costly.  The maintenance FAQ is designed to reduce these types of requests to save owners money.  Tenants are required to review the FAQ before making a call.  If tenants still need to make a service request they can do it easily online.  Tenants can also find lease information, move out information, and other items applicable to their tenancy.

Property Management Services Pages

More management information is available under the  property management link.  It outlines our services in detail.  There is an FAQ section.  If you have more questions let us know and we can add it to the FAQ section.  You can learn more about all aspects of management services in this section.

Owner Login

Owners can login to see accounting statements.  On the home page at the bottom you will see a green arrow that says Owner’s Portal.

As owners of residential rental properties in the Idaho Falls area we understand the slim margins and the importance of continually improving efficiency and delivery to rental owners and tenants to increase profitability.

Thanks to local 8 news for the picture.
The property management version of this story includes some minor mayhem, damage to yards, cars, and insurance claims.  The question of insurance always piques the interest of many.

In the case of a normal limb breaking and falling onto an automobile, who covers the damage?  The landlord policy does not cover the damage.  The “Act of God” line protects the insurance company in this particular case.  The insurance policy the tenant carries on the car will pay for the claim with a deductible.  In this case the deductible was $500.  There is no apparent way around this.  Renter’s insurance does not help.
The power outages riddled Jill, our office manager, throughout the day on Thursday.  The question for tomorrow is, “who covers a fence damaged by a fallen tree.”  I suspect the insurance company will be on the hook for the fence damage, but not the tree removal.

Though there some challenges to overcome and some new things to learn, the best part of the day came with a cup of chocolate, a sugar cookie and a cozy fire with the family.
Written by http://www.jacobgrant.com

• 40% of leases come from craigslist
• 20-30% come from marketing at other websites
• 5-10% world wide web searches
• 10-15% newspaper
• 5-10% from yard sign

Idaho Falls property management is an unusual market because there are still leases coming from the newspaper. I was at a property management conference (NARPM) and they asked all of the people still using the newspaper to advertise vacancies, raise their hand. Out of about 50 property managers nationwide, MY HAND WAS THE ONLY ONE THAT WAS UP!

You can understand my frustration at the Post Register’s email last week telling me that their rates are going up.
Based on the new information, Jacob Grant Property Management is making a change to marketing policy. Consider our complete marketing policy:

• We offer an after-hours phone service so working people can view vacancies on weekends and after 6pm.
• List on website with pictures and video when possible.
• We list vacancies on craigslist at least once per week (usually twice). Days and times listed are based on traffic data. For example, Monday is the highest traffic day of the week, so listing on Monday is imperative.
• Our website shoots listings to other websites including hotpads.com and oodles.com.
• Yard sign.
• Newspaper ad (billed to owner)

We are considering removing the automatic newspaper, and we will be beginning a webservice called rentalhomespro.com. This will greatly increase exposure for web searches for rental properties. This will also include cutting edge technologies including a text feature, so prospective tenants can send a text and receive more listing information. Based on our research and the continual shift in technology we believe this service will lease out your properties sooner. The fee for this service will be $35/month (only while vacant). The fee for the newspaper will continue to be approximately $50 while vacant.

The best justification for this is a reduction in days vacant. If your rental rate is $800/month the daily rate is $26/day. If we can reduce the days vacant by 4 days your marketing is paid for. If we reduce it by a week or more then the marketing investment will bear returns. I believe this marketing will put money in your pocket.

Thanks
Jake

• counter top refinish   $4
• new carpet               $7
• kitchen vinyl             $3
• bathroom vinyl         $3
• stove                       $5
• fridge                      $5
• patio                       $11
• upper floor              $3
• midfloor                  $2
• new paint                $3
• master bath             $35
• laundry hookups     $35

The next step in this research process is to test it out.  The price changes make sense, but may need some adjustment according to market response.
Other factors property manager will consider:

• What is the overall feel of the property?
• Will ground level condos be more attractive to some because there is no elevator?
• How will rent incentives affect success?
• How will seasonal nature of college town affect success?
• How much will rent hikes affect vacancy?  What is the cost to overall effective rents?

A ramification of this research will be rent optimization on other multi-family properties in Eastern Idaho.  Would it be possible to generalize these numbers?  It could be reasonably expected that these numbers would fluctuate according to other property amenities, overall rent, local consumer price index and concessions being offered.
The Institute of Real Estate Management has given us some exciting rabbits to chase in the property management industry.  We are excited to see where this research leads and if we can generalize according to the data!