Raising Rents – Property Management – Quick Tip

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In a past blog post we explored the benefits and disadvantages of keeping a tenant while trying to sell.  As noted in that post, most know that a 60 day notice must be served when  tenant has lived at the property for over a year (12 months), when not on a lease.  If on lease, then the lease trumps all, except cash of course.  This is another discussion, but a tenant can always agree to move if paid to do so – many know the phrase from the bank owned property days, “cash for keys.”  This question was asked recently, “When a tenant is not on a lease, they’ve lived there for over a year, and I want to raise the rent… do I have to give them a 60 day notice?  Or will a 30 day notice do?”

Answer:  If the increase is less then 10% of the rent, then  30 day notice will suffice.  If the increase is more than 10%, then a 60 days notice is needed.

Rents are going up in Sacramento and there is always a decision to be made between keeping up with rents vs. keeping a tenant.  If you do not raise rents a little bit over time, the shock of a one time, big raise will certainly drive a tenant out.  Other would argue that a good tenant is hard to find and is worth keeping, even if it means leaving their rents low.  I find including a note with the rent increase stating how much you love them as tenant… how you want to keep up the maintenance, and how expenses have risen… this seems to take some of the sting away.  I do believe in keeping good tenants, and surely the cost of re-renting, the cost of making the place ready to rent, and potential vacancy may not be worth the extra $30-50/mo.?

What’s your strategy and experience in raising rents?

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Keith Klassen, Real Estate Broker

Klassen & Associates / 916.595.7900

 

Wind-Water Knowledge in Real Estate

I’ve had several clients in the past that caused me to think more seriously about feng shui and pushed me to get a bit more educated on the topic.  This was especially the case when we would find, what I thought was the perfect home, yet the responses were, “Yeah, but it’s located on a ‘T’,” or “I really wish you could see the fireplace when you walk in,” or simply, “There’s not enough natural light.”  I understood people like natural like, but some of the other comments left me scratching my head.  I began to ask more questions and do some simple research.  Each one of these items and more stop the flow of the home for me have gotten in the way of a home sale.  Some things can be corrected with simply measures, while other items are almost impossible to over-come.   Here are some basic examples I’ve come across and a few links at the bottom of the page to guide you deeper.

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The term feng shui literally translates as “wind-water” in English.  While a fad to some or superstition to others, feng shui has been popularized among people with money and hipsters alike, others take it more seriously, as a deeply rooted practice and way of being.

Colors are important, which can also be easily changed.  The placement of color in specific areas of your home can enhance your mood and demeanor.  Others would say that colors attract or magnify the energies of your life.  For example, certain colors in the bedroom can spice up one’s love life (or maybe just picking up dirty clothes would help!  My wife gets turned on when I clean the bathroom – ha ha).  Green is known to be the color of health and family – it makes sense to add plants to the living/family room of your home.

Flow and Organization – If a home is built a certain way not conducive to good flow, this may be hard to overcome, while arranging one’s furniture in a congruent, life-given way can be an easy enhancement.  The same goes for getting rid of clutter and cleaning – this a personal decision that takes just a little effort.  Entries and exits are important in feng shui.  Attracting good energies and blocking negative forces is key.  Open up the entryway for the good to flow in.   Some guru’s attest that a toilet lid must be kept down!  This “waterway” can suck positivity out of a home.  Fireplaces that can be seen from the entry encourage prosperity to leave one’s home, or be sucked out of one’s life (so I’m told).

The direction the house faces or is oriented is key … I’ve heard East is good.  But another friend said that the entrance to the North is better, due the sun exposure.

Numbers seem to be important.  Eights are good.  I know some agents price their listings with $_____, 888 at the end.  I’ve had buyers tell me to write the offer with 8’s (for good luck).  Someone told me that if the last two digits of the address adds up to eight, that’s good too.

Corners – I’ve heard that sharp corners are not good, say when it comes to small eating tables.  Some don’t like corner houses.  Homes located on a “T” are definitely bad feng shui.  Practically speaking, cars can run into a home easier in this case (nothing that some scrubs/trees or a few blockades won’t fix).  We had a neighbor whose parents warned them about bad spirits entering into their home since they lived on a “T.”  The fix was simply to hang a small crystal (like you’d see on an old chandelier) from a string at the entrance, as well as a small mirror and this did the trick.  When I asked why these objects, they said that this confused and repelled the bad spirits.

Death – Dead plants, trash around the house, a cluttered table, and dead people… many buyer’s have a hard time seeing through a mess, and many more clients buying a home want nothing to do with a property where a death has taken place – Some just want to know that it was peaceful, or not violent.  Whereas, I had an investor client who was not happy (or just not alarmed) to find out that a gang shooting had taken place at the house they were purchasing!  Really?  This became a negotiating tool for a deep discount.  A friend of mine had a dying tree in front of this home.  His father sternly told him, “Get rid of it… it’s blocking your wealth!”  He swears that they very next day his stock portfolio began to soar!

Whether your desire is to gain deeper soul-strength or just have a better flow in your home, I hope you found some inspiration, creativity and practical help in this post.  I’d love to hear some of your stories on how feng shui has affected your life.

Here’s some links to explore future.

http://fengshui.about.com/od/glossaryofterms/ss/Feng-Shui-Basics-Create-Good-Feng-Shui-Home.htm

http://inhabitat.com/9-simple-tips-to-feng-shui-your-home/

http://inhabitat.com/feng-shui-101-getting-started-with-the-basics-of-feng-shui/

 

Cheers,

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Keith Klassen, Broker

Klassen & Associates

916.595.7900

Focus: The New Currency

out-of-focus-1197396Most of us are completely distracted on a day-to-day basis, and for good reasons.  There are so many options for eating and entertainment, new restaurants and things to do abound.  In Sacramento, CA we live surrounded by beauty, history, rivers, and a quick ride to the coast or Lake Tahoe.  We have more contact and connection opportunities via social network than every before.  As a father of two boys, now 11 and 13 years old, my wife and I give much thought to this idea of focus – being present and not distracted; Being attentive and giving attention.  I fail miserably at times, nodding to my son’s/wife’s questions while doing some work or reading, only to ask, “What did say?” And maybe acknowledging, “Uh, I’m sorry, I wasn’t listening/paying attention.” Specifically in the realm of technology, distraction lurks.  Many forms of technology can be wonderful tools and has made our lives better on so may fronts.  I cut myself some slack here – 10 thousand songs in my pocket and a world of information at my finger tips.  How can we not be distracted!  Technology clearly has an addictive quality that can work against our productivity, our relationships, our attentiveness.  focussed-1434495

I was stunned by a TED talk (a bit older now) that highlights studies showing how technology (including primarily video games and pornography) have become an addiction.  He makes the point that boys, in particular, are not maturing and intimacy is lacking.  Watch the clip.  It’s less than 5 minutes.  “What’s the solution?”  Zimbardo asks, “… not my job.  I’m here to alarm…”

I too have no solutions, but I have a few thoughts.  I’m a guy.  I have two boys.  My boys play video games, and I partake at times.  I have a computer, laptop, iPad, iPhone…  I’m concerned.

  1. We constantly monitor the tension between the glorious internet age and restricted use – that goes for all of us, not just the kids.  Talk to me in 10 years to see how I actually did, but we are big fans of open dialogue, family meals, lots of questions back and forth, and articulated freedom with discussed consequences.  One difficulty is that I use technology in my work, so to the boys it looks like I’m playing or just glued to technology – sometimes both… sometimes it’s hard to distinguish.
  2. Frequently and intentionally unplug – kinda obvious, but hard to do.  I went camping this past weekend and found myself checking email and Facebook while relaxing in the tent.  If it’s pressing work, I attempt to get back-up help – I’ve used a virtual assistant, or a called on other associates to fill in.  I let current clients know that I’m checking out before I leave (auto response emails are good for this and specific voice messages).  Also when I’ve really checked out, like when I went to India for a few weeks last year, I get someone to be on call for me to handle any emergency business.  In little ways, I leave my phone at home or in the car when we go to dinner (I know… no selfies or pics of the food!).  It’s like the old days (and still) when I knew if I didn’t sit with my back to the TV at the restaurant, I wouldn’t listen to my wife as well.  We try to have meals together as a family with no technology.
  3. Professionally / Business-wise-Boundaries. Being self-employed, I’m the only one breathing down my own neck – no boss to reprimand me, no parent to give me a time out.  It’s easy to see why those who are self-employed are always on the clock.  More work, can equal a bigger payday.  The infamous “carrot” always looms large.  However, mental health and focus may be the bigger, future payoff?  Small disciplines – I’m a big fan of turning my ringer off when I’m with a client.  I have to be “all there.”  I can’t just nod and pretend like I’m listening.  I intentionally make eye contact;  Ask lots of questions; Listen well; Have fun.  Relational, non-sexual intimacy, I find is the bedrock of great business relationship and cultivating a referral business.  I definitely time-block to get a ton done in a few hours, then take a break and don’t feel guilty doing so.  Just as I try to limit business on off hours and on weekends, I limit non-related screen time and technology during business time.
  4. Non-Tech Hobbies – I find that when my boys are playing hard, building something, engaged in a game, creating art, reading, etc…. the urge for screen time goes away.  As parents, we have friends over, play board games together, go for walks, bike ride, eat out, play sports, create and build together… Physical activity is the key for me.  Practicing consistency in friendships and family give me opportunity to test and develop greater focus.
  5. Meditation – While I’m no guru, times of silence, deep breathing, some sort of centering, even minutes before engaging with family or a client goes a long way toward attentiveness.

Ahhhh, it’s a constant battle, but feels so good when we get intimate, centered, and fully engage.

What are your areas of struggle and victory in this area of focus, technology, family?  This is where we help each other.  Please share.

Cheers,

Keith Klassen, Real Estate Broker – 916.595.7900

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Sexy Sidewalks, Curbs and Gutters

Okay, I know the title is a bit misleading, but how else will I get your attention?  Ha ha… just a quick update on my building project.  The sewer lines, manholes, fire hydrant, and water main have gone in and have passed the inspections!  Now to get the sidewalks, curbs and gutters in (Update:  Just got text from my contractor yesterday and said they poured concrete!  “check”).  Next week, repaving the street.  Then maybe we’ll build a few houses if I’m lucky.  Stay tuned.IMG_0097

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Love Letter to Seller – Does it Make a Difference?

Does it make a difference for a buyer to write and include a personal letter with an offer?  I jokingly call them love letters, because they can ooze with emotion and sometimes be kinda cheesy.

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Over the years, working with home buyers, I’ve been an advocate for the buyer writing a personal letter to the owner.  One might wonder if this even makes a difference?  I got my real estate license in 2005 and wrote my first offer on the house I’m living in today.  During those days, buying a home was extremely competitive and the prices were going through the roof.  A buyer had to do whatever they could to get an offer accepted.  So, I too wrote a “letter from the heart” on my first deal as a licensed agent.  It was flowery, heart-warming, and true – we loved the house (and still do!).  The seller subsequently told us that this separated our offer from the others, especially the part where you said, “[your child] immediately ran into the back yard and jumped on the play structure.”  Hmmm, I instantly learned, there’s something to this letter writing thing.

Subsequently, I’ve had many of the same experiences with other clients.  Just recently I listed a home where we received 3 offers.  One of them included a personal letter.  To my surprise the seller said, “I know that this one is lower in price, and you might think we are crazy, but we just love this buyer’s story and want to go with that offer!”

Try this with an investment property and the owner may laugh out loud.  I’ve actually had investor sellers tell me to not show them the personal letters because they didn’t want to be influences by their emotions.  This statement nails it on the head… We are humans with emotions.  Even though every seller wants the most money out of their sale, there is always the human element and emotions involved.

“What should I say in the letter?” is the next questions I get.  While I enjoy writing, not everyone is as confident with their prose.  Here are some suggestions.

  • Make it short and to the point – most people don’t want to read several pages on your life and journey of buying a home. Several paragraphs get the job done.
  • With that said, introduce yourself. Briefly say who you are and maybe something interesting that relates to the home.  Example:  We love the river and are so glad it’s in walking distance! OR,  This home is close enough for me to bike to work – this is so relieving since I’ve been commuting by car for 8 years, an hour each way! OR, I’ve always loved trains and always wanted to live next to the railroad tracks [I kid you not, I actually heard someone say this!]
  • You may even want to start by complimenting the owner in some way, without being heavy handed. Example:  When we walked into the house, we immediately knew this was the one for us!  Purple is our favorite color and we absolutely love the stenciled lettering above the bed, that reads, “YOU ARE AWESOME!”  The deal was done when we saw the bidet in the bathroom – ahhh to be back in Paris again!  Okay, I’m trying to be funny here and this is an example of heavy-handedness, but you get the point.   When done appropriately, a little flattery goes a long way.  How about this:  We love your sense of style and can tell you really cared for this house.
  • Briefly talk about how this house fits you. Do you have a family that you will raise here and enjoy it for years to come?  Is your elderly mom going to live with you and the downstairs bedroom is perfect?  Are you single, and this downtown loft is a “babe magnet?”  [okay don’t say that].
  • End with a “thank you for considering our offer.  And, we look forward to a smooth transaction.

What else would you include or omit?  Do you have success stories of your own, or maybe a reason why not to include a personal letter?  Your stories and feedback are always welcome.

Cheers!

Keith Klassen, Real Estate Broker – 916.595.7900

 

Income Properties in : Is it better to sell vacant or with tenant in property?

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A good portion of my business has trended toward investors and investment properties, I get this question/scenario posed to me often.  If the question is not asked directly, I’m usually bringing up the issues revolving around selling with a tenant in the property.  There are a lot reasons why the answer could go either way on this topic, but let’s explore some of the main concepts that will help you make a good decision based on your situation.  (Qualification:  This discussion mainly has to do with single family income properties, rather than multi-family units).

Many agents just don’t want to deal with the hassle of selling with a tenant. There are scheduling conflicts, posting of notices, and high emotions when treading on someone’s living situation – all potentially emotionally charged and exasperating situations.  While these can be good reasons to sell vacant, they may not be the best.  A good agent knows how to handle and deal with tenants in a caring and professional manner.  It does, however, make the process a bit more grueling and cumbersome.

I find the main issue boils down to is loss of income. Most owners balk at asking tenants to leave, because they don’t want to lose the monthly rents.  In most cases I’ve found that the loss in rent is less than the higher amount a home will fetch when vacant.  Why?

  1. Home buyer’s (people who want and need to live in the home) will pay more than an investor (someone buying a property to rent for income purposes). The reasons for buying are different.  An investor will want a deal to make money.  A home buyer wants a place to live and call home.
  2. Many investors have cash for purchase or a loan that requires 25+% down payment. Home-owner loans (like FHA) require only 3.5% down payment.  VA loans are virtually 100% financed!  Less money out-of-pocket, less skin in the game for an owner occupied loan, which means the purchase price can go higher.  Or another way to say it, money is cheaper for a home-buyer with an owner occupied loan.
  3. A typical home buyer’s loan (Conventional or FHA) requires the buyer to live in the home. If the tenant is on a lease, then tenant’s rights say that the lease must be honored and a home buyer cannot buy the property.

Call or write to discuss your situation in more depth.

Best,

Ketih Klassen, Real Estate Broker – 916.595.7900

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Solar Panels in Sacramento

I just read an interesting article that motivated me to convey some thoughts and experiences on solar panels.

It’s exciting to see the progress solar power and panels have made in the last decade – more affordable and more efficient.  I visited a remote village in Northern, rural India where no power line reached… but to my surprise, they had a communal solar panel in the middle of the village to, yes … charge their cell phones.  Solar farms are popping up in open spaces – I saw a huge one recently on a drive to Las Vegas.  When I visit my home town of San Francisco and look out over a view, it seems more homes had solar panels than ones that do not.  I’ve sold new homes that now have solar panels as part of the purchase package – what home owner doesn’t love almost free energy!  And I’ve now interviewed three companies to hear their pitch for solar panels on my own home.

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While I’m all for solar power, saving the planet, and money if possible, my experience was a little discouraging.  I hope that you might get a few tid-bits from my own journey.

It seems that purchasing panels is still not very popular, as the out-of-pocket expense out weigh the benefits/savings.  Some might argue, like buying a hybrid car, “You don’t buy it for the saving, rather for the planet.” There are also many incentives in California that go along with the purchase of solar panels.  The federal government gives tax credits (write-offs) for owners of solar panels.  And, there are a bunch of local incentives to look into if you are going to purchase panels.  Like a car, there are avenues and incentives to finance the purchase of solar panels too.  This attracted me, because it seemed that one could save money on power, then eventually own the panels.  However, I was also informed that the life of the panel’s efficiency is only about 20-25 years, which just so happens to be the life of the loan.  Take the time, look into the kick backs for your area, do the math and then make a decision.  Purchasing may be the right path for you?

Leasing the panels is another option where you pay a set amount (lower than your average monthly utility bill), but I found that a “power purchase agreement [PPA]” seems to be most popular route offered.  Leasing and the PPA are similar in that there’s little to no money out-of-pocket.  With the PPA, it’s as if you are agreeing to a fixed utility rate (lower than your average monthly utility bill) and allowing the company to use your roof to harvest solar power.  The company I spent the most time with asks for a 20 year agreement.

At the end of the day, while I love our planet and believe solar power and panels are a great move, I decided against it for now.  Here are the issues I came against:

  1. The numbers did not work for me on the purchase route, nor any other route.  Many told me ahead of time, “If you have SMUD (Sacramento Municipal Utility District) then it doesn’t make sense,” due to how inexpensive our power is.  With the PPA I would have save about 2 cents a month.  This does not give me any incentive to save energy either.  The PPA company gets all of the incentives in this scenario.
  2. My roof may need replacing in the next 5 or so years.  I would be charged about $500 extra to have the panels removed while the roof was replaced.  They would not budge on this or work it into the deal.  I did not want to bear this extra cost.
  3. Lastly, I hated the sales tactics.  The big push seems to be part reality and part fear base… “Energy cost will be going through the roof in the near future!!!!!  Sir, do you want to pay triple what you are paying now?”  Are rates going up?  Who’s to say?  Do you trust the guy selling panels?  Maybe, but I definitely do not like the fear-base sales technique.  Also, the sales person was extremely friendly and helpful, even when I said I was not sure… he kept saying, “Just keep moving forward, you can say ‘no’ at any time.”  When I finally said, “Not at this time,” he got really pushy and aggressive, trying to make me feel like the bad guy for backing out.  That actually helped me “break up.”  There are plenty of solar companies out there that offer great service and similar product.  Don’t feel bound to one.

Again, I have friends and associates that it’s worked great for, and I love the idea.  For me, it’s not the right time.  What experience have you had?  What am I missing here?  Surely my experience is not all-inclusive.

 solar in India Picture from my trip to India in 2015, with small solar panel on roof.

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030