Monday, November 25, 2013

Rules Of Thumb for Property Rehabilitation and Maintenance

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It's a simple fact that there are many people out there that want to get one over on you. It is unfortunate but I see the entire culture of the United States changing into everyone trying to get one over on the other guy.

Real Estate as an Industry has it's fair share of dirt balls around every corner. There are safeguards you can put in place to protect yourself. We often do this with LLC's, insurance, leases, etc.

One area of your business that can drain a huge pile of cash out of your company is your rehab and maintenance services. That's why it's so important for you to know how much money it should cost to do any repair to your property that you may need to do.

How do you know when your contractor or maintenance people are charging you too much to rehab a house or paint a room? Or when they come up with some figures that look legit but the reality is that they cushioned the materials so much they will be walking away with fat pockets when they are done with you.

Our experts Andy Stowasser and Dennis Miller will be at REI this Tuesday to give us a seminar on the general rules of thumb in our area regarding the pricing of jobs. They will take two different angles. The cost of fixing up a property to flip condition and the cost of fixing up a property to rental condition. That includes each and every aspect. From a new roof to flooring.

These guys did this meeting before and it was so popular that we asked them to do it again. They will also be providing us with a simple cheat sheet that you can use on each job to ensure that you are being treated fairly by your contractor.

Ladies, and gentlemen, this is not a meeting to miss. I can't think of one single meeting that we have had that has been more beneficial in helping our members save money. As you know, contractors prices are often all over the board. Don't let them stick it to you again. This meeting alone could save you thousands in 2014. Go ahead and reschedule your plans if you have to.

Come on down and have a good time with some of the nicest people in Roanoke. By Far, The Largest Neighborhood Organization in the city. Real Estate Investors of Virginia.

Monday, November 18, 2013

Binding Arbitration Clause In Your Lease

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I'm happy to say we have a great meeting lined up this week. Roanoke's real estate law expert, Ross Hart, will be at our meeting next week to talk about binding arbitration clauses in your lease.

REI of Virginia's interest came about a few years ago when member CB Knox mentioned his use of an arbitration agreement in his lease. Later Dan and I went to a meeting legal aid was holding on nursing home law and they mentioned how difficult it was for them to sue any of the nursing homes these days because it has become standard practice for them to include binding arbitration in all of their contracts with the elderly.

This further confirmed the benefit of these clauses. The benefit being protection against being sued and potentially losing a suit that could end up costing you treble damages. A law that permits the court to triple the amount of damages awarded in cases where the defendant willfully acted in a prohibited way. Kind of like tenants refusing to pay rent when they know they owe it. But it doesn't seem to go both ways. This law is most often used in landlord tenant law against the landlord. Not against the tenant.

So lets say that the court determines that what you did requires all of the rent paid to date to be returned to the tenant. Maybe they are saying you rented a place without a valid certificate of occupancy. And they are confusing the difference between a certificate of occupancy and a rental certificate. And the total to the date of court is $5,000. If treble damages are awarded, the court is allowing judgement against you for $15,000!

I can't think of a better person to come and talk about this to our group than Ross. His family has been heavily involved with legal aid in Roanoke since its inception.

This isn't a ploy to get around legal aid. It's nothing more than an attempt to protect your interest. REI of Virginia does nothing more than preach being a good honest and ethical business person and following the direction of the Virginia Residential Landlord Tenant Act, weather you feel it is right or not. It's best to attempt to change a law you don't agree with than to break it as breaking it can come with some pretty serious consequences at times.

Regarding the binding arbitration agreement, it's important that it exists in all cases with exception of nonpayment of rent as it wouldn't be advisable to hold up the termination of a lease knowing that in most cases you will never be paid. That's why most landlords don't do mediation when asked to in court. Under nonpayment of rent conditions it is necessary to go ahead and terminate the lease agreement and get the judges final stamp of approval if the residents don't move out of the place given the 5 day pay or quit notice as they are required to do.

Ross is going to cover benefits and disadvantages of a binding arbitration clause. Maybe he'll throw in some information that tells us what the difference is between arbitration and mediation in non compliance of the resolution. What happens if you have to go to arbitration when the tenant is causing neighborhood drama? Or when they brought unauthorized pets in the unit and refuse to pay a non refundable pet fee and pet rent? What are the steps required by the landlord? What happens if there is an agreement made in arbitration and the tenant doesn't comply? What are the next steps for the landlord?

How about if the tenant has a grievance with the landlord… What is the process they have to take to bring the landlord to arbitration to develop a solution to what they see as a breech of our agreement? What happens if they hold their rent via tenants assertion with the court when it clearly states in the lease that arbitration is required?

Who pays for the arbitration in both cases and what amount of time is involved in waiting for an arbitrator? I'll bet it could be much faster than court. What if the resident doesn't show up to arbitration?

Good stuff this week people. Come on out to our weekly shindig. The mic will be open and if you have any other real estate law questions, bring them along with you. Ross knows his stuff…

Thursday, November 14, 2013

Final Vote On New Storm Water Utility Bill This Monday

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3 city councilmen are up for re election soon. I'm curious how the general public will feel about them after they make their vote to give every homeowner and business owner in the city a new utility bill due to their lack of planning over the years and frivolous spending on pet projects, giving away $10 dollar buildings and taxpayer money to friends for their private businesses.

I'm guessing that they will have strong support and may even run unopposed. That's one of the problems with the city not having much owner occupied property and business owners primarily doing business in the city but living outside of it.

I saw an interesting lease clause in Jeffery Taylor's Lease Clause contest that would likely make their constituents squirm.

“ If any Federal, State, City, or any other governmental entity imposes any fee, assessment, or similar charge against the premises during the term of this contract, said fee, assessment, or similar charge shall be considered additional rent to be paid by the LESSEE.”

As Newton said, To every action there is always an equal and opposite reaction. However people don't always see that opposite reaction. Rents will rise due to the higher cost of doing business whether a statement such as that is in the lease or not.

Costs of doing business always pass through a company and land square in the hands of the end user. Too bad that most people are too economically ignorant to understand that. If they did they would be telling the city to make budget cuts rather than passing this cost along to property owners. I sat on the city council budget committee and can tell you from personal experience that there are many millions of dollars that can be cut from frivolous waste that would not cost even one city employee job.

The city council is supposed to be giving their final vote on your new utility bill this Monday. City council chambers at 7pm as usual.

Please see the message below from Dan:

Was downtown getting a permit today and talked to the city engineer that is the main guy with info on the water runoff project.
He said the council will pass it at the council meeting this coming Monday.I will be out of town but I strongly believe that REI should have another good showing and voice our concerns.Roger ,myself and a couple of other members spoke at the first meeting and we need to hit them again with all the waste and lack of funding set aside for this when they knew about it for 10 years.
Please forward to the group as this will happen before our meeting on tuesday.

Dan

Monday, November 11, 2013

How To Care For Your Rental Unit Addendum & Results Of A Lease Clause Contest

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One of our favorite speakers, Ray Alcorn, is not able to make it to our meeting this week and has rescheduled. However, you don't want to miss this meeting because it will end up directly resulting in more money in your pocket.

This week we will have a group discussion on a few topics pertaining to leases, maintenance calls and your money.

Tenants can waste a significant amount of your time and hard earned money due to a lack of knowledge of minor general maintenance procedures that are required of any occupant of a house. There is a solution that will keep your money in your pocket if handled correctly and I am in the process of developing a lease addendum to do it.

Common Problems:

*  I'm sure you have heard tenants call you over the years about things such as an electrical outlet that is not working and it turns out that the breaker was off.  That simple mistake of theirs just cost you time and money.

*  Or a light that doesn't work and it was the light bulb, not the light.

* How about this, I have had this one happen to me multiple times. A tenant calls about their power not working and you send maintenance out there and it's because they got it cut off. LOL. Jokes on you though because they again just wasted your valuable time and money.

*  Have you ever had a tenant call you and tell you that their toilet is stopped up and your maintenance goes out there and finds that they are using one of those little thin plungers from the dollar store and a couple pumps of yours that pushes allot of water and air in the pipe instantly fixes the problem.

*  How about getting a call for a shower that is stopped up and it turns out to be nothing more than their hair as you pour down some Drano and it is instantly cleared.

* Have you ever had a tenant call you saying they saw a roach or some other kind of bug?

In order to do this properly, it's important at the start of a lease for your residents to sign something that indicates that all of the pipes drain freely, there are no bugs in the place, it is free of mold and everything is in proper working condition. This would be part of a Rental Checklist that they will complete.

What is also given along with the lease is a "How To Maintain Your Rental Unit Addendum".  It will explain what they need to do BEFORE calling maintenance. 

Smart landlords don't plunge toilets, don't change light bulbs, don't flip breakers, don't pour Drano and don't apply pest control gel bait when their tenants are perfectly capable of doing so. I'm not running a hotel. These people live in the house over a long period of time and there is some very minor maintenance that is required by them. I'll handle the big stuff.

So at this meeting we're going to have a conversation about common maintenance calls that we as a group get so they can be partially eliminated. I will use what we come up with to develop the maintenance addendum.

We will also talk about a list of tips that our member Doug Turner developed to give to tenants, most of which are along the lines of house rules and procedures.

And in addition we will have a discussion on an Effective Lease Clause Contest that Jeffery Taylor of Mr. Landlord had. Some interesting results.

Going to be an action packed meeting at REI Tuesday night at Shakers. Bring your friends, family and girlfriend / boyfriend. Don't miss it.

Last Week Property Management Software And Bobbed Deuces

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Last week we had a presentation by me on property management software, Landlord Max. I personally feel that there is no part of my job that is more boring than the accounting part. So if you were bored with my presentation, don't worry, so was I.

I'm more of the sales kind of person and prefer finding and negotiating deals.

SOOO, instead of putting up a picture of Landlord Max I decided to put up a picture of something much more entertaining. A picture of my last deal. That's a 1969 M35A2C, otherwise known as a "Bobbed Deuce And A Half" with a Hercules Whistler turbo multi fuel engine.

So I've been looking for one of those for a few months now. The bobbed part is because the last set of wheels and frame has been cut off and a shorter M105 Military Trailer bed has been put on as the pickup truck bed. The multi fuel engine runs on anything like diesel, gas, kerosene, used motor oil, cooking fryer grease, etc. A Good Prepper Truck.

If you look online you will see these "bobbed deuces" starting at around $15,000 on up. Some tough negotiation with the bars I bought it from in Charlotte NC accompanied with some of my hard closing techniques and I turned that 15K deal into a $3,800 truck. I got every last dollar I could off that truck and then put it up for bid on UShip to have it delivered to me on a heavy equipment trailer.

That is one BIG truck. Need a ladder to get up in it. The door handle is face high. The tires alone are 4 feet high. Believer it or not, it's allot bigger than it looks in the picture.

So you ask WHY, Why a Deuce Dallas? Do you have a little man complex or something? The answer is YES I DO. I'm a Big man with a Little man complex.



And This Is What They Do:



Monday, November 4, 2013

This Week We Will Learn About Landlord Max Property Management Software

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Last time we had a meeting about property management software it was about Quicken Rental Property Manager which was done by Phil Givens. Dan uses that software as well and added some points.

This time we are going to talk about Landlord Max. Before I purchased Landlord Max I did extensive research on the various software available. I decided I wanted software that was NOT web based as many of them are. The web based property management software comes with a monthly bill. I have enough of those.

I also wanted something that was very easy to use because I don't have the time to spend days or months trying to learn some software.

So my options were limited to Rent Tracker, Quicken Rental Property Manager, Real Tools, Tenant File (the one Jeffrey Taylor - Mr. Landlord -  uses), and Landlord Max.

I read and watched videos on websites such as TheREIBrain.com and settled on Landlord Max because the price was right and it seemed to do almost everything I wanted it to do other than automatically generating pay or quit notices which would be nice. BTW, that review website has discounts on most if not all of the software that they review. The runner up would have been Tenant File for me but the higher price knocked it out back in the day when I was researching this software.

So this week I'm going to do a review of what I have learned about Landlord Max over the years. I never read the user manual so I'm sure I'm not using it to it's fullest potential. I just started inputting data and generating reports that can help you figure out quite a bit about your company and give you something quick and easy to give your accountant. To see some of the videos on Landlord Max Click Here.

If you come to the meeting I'll show you how to use it.
 

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