Category Archives: Adventures in Real Estate

Raising Rents – Property Management – Quick Tip

apt-complex

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

 

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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.

bagua

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

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.

letter

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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New Development in Curtis Park, Sacramento

Yeah, I know what you were hoping for… an article about Curtis Park rail yard development.  Sorry not on this one – no chit chat about gas station wars and dollar stores.  Instead I’m inviting you to follow my own development experience as I build out two houses.  I hope to post some thoughts on the grueling process of splitting the lot / sub-dividing the parcel map.  Could be educational to some – loads of learning from my mistakes and experience.  I’ll be talking about the ins and outs of the scope of work, contracting, and architectural plans.  I’d love some feedback on the design elements when we get to the interior (yeah, everyone loves the interior – this is the sexy part).  Ultimately, these babies will be sold and I will be high-fiving my contractor and business partner.  Welcome to my housing development journey.house rendering

Brief background

If you live in the area, you can check out the progress on 5th Ave., highway 99 frontage road, and Portola Alley.  I bought the house on 5th Ave. in 2008 and got the approval to subdivide the parcel later that year into 3 lots (original house sits on one, leaving 2 to build on).  Oh yes, it came with conditions.  I figured a budget of $25,000 to do curb and gutter work and maybe a few other things.  The City gave me a laundry list of improvements that got bid out between $100,000-125,000 – Yikes!  That killed the deal quickly.  So for the next six years I paid a portion of the property taxes and kept the weeds down.

5th ave overview pic

Fast forward to 2014… I saw a house sell for a decent price on the alley and knew it was time to build.  I got a contractor on board to share the project and do the work at cost (cutting the improvement work cost more than half).

Contact me if you want to discuss the boring, but essential ins and outs of engineering, special use permits, bonding, traffic plans, dealing with the City/fighting with the City (everyone has their war stories), utilities, etc.

We’ve begun improvement work – manholes, water main, sewer main, fire hydrant, and much more!  At the same time I’ve got an architect putting plans together and submitting to the Design Review Board.  In addition, I just got bids from five structural engineers and Title 24 bids.  Yay, getting serious.

lot clearing

Scrubbing the lot earlier 2016

 

“Man holes” – or should I be PC and call them “people holes” – might get a few weird looks?

 

Dropping the “hole” in the ground

Jimmy is the MAN!

Never thought I’d be so exited about a fire hydrant.

Water main beginnings.

Stay tuned for the next phase.

Cheers,

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Keith Klassen, Real Estate Broker / 916.595.7900

Getting Called Out – Learning to Listen – Sacramento CA Real Estate

Has anyone heard the acrostic, W.A.I.T.?  Why Am I Talking?  It’s the question to ask in dealing with clients and especially in negotiations.  Unfortunately I forget this too often.  Ugh.

Last Monday while speaking with an investor on the phone I had a gut wrenching interaction.  While I consider myself a decent listener and business professional, this man did not.   We had a dialogue where we found ourselves butting in on each other’s train of thought.  He wanted to explain to me what I already knew, and I wanted to him to save his breath.  He finally called me out on it by literally saying, “You’re not being very professional by not letting me finish a sentence… and I’m calling you out on it!”  He repeated this idea and phrase several more times to make his point.  Mind you, I’ve never met this man in person and have only had a few short interactions with him on the phone where I felt like I expedited his requests and was able to prove my business savvy many times over.   When he said this to me, my instance reaction was to retaliate and defend myself and tell him why he was misinformed.  Thankfully I at least had the wherewithal to not blurt out everything I was thinking.  We ended the conversation with me simply saying, “I hear you.”

I’m not sure he was satisfied with this response and really, I was haunted by this conversation for the next few days.  In contemplation I simply heard, “Your listening skills have gone downhill due to your impatience.”  In other words, I needed to swallow my pride about thoughts of being right and misunderstood, etc., etc., etc.  I began to realize how universal this lesson is, whether it be with a client, my wife or children, friends, etc.  How can I truly represent a client who I am bulldozing with my driving sense of intolerance for those who feel the need to “talk it out”?

Two days later…. I had a phone dialogue with an owner of a property that I manage.  It started out with him saying, “I’m glad you called because there are a number of items I’m extremely unhappy about.”  This time I was ready.  Inwardly I kept repeating, “Just listen, just listen, just listen…”  After over a half an hour on the phone listening and patiently addressing each item on his list, (which I found out later was not really the issue) he confided in me that he’d been feeling depressed and just need someone to talk with about some of his frustrations and disappointments in life.  He hung up thanking me and apologizing for taking so much of my time.

I’m so glad for second chances and opportunities to shape my character and “professionalism,” no matter how painful they are.

Keith Klassen – Real Estate Broker

916.669.9030

KeithAKlassen@gmail.com

The Things We See When Viewing Property

I know you were hoping for a risqué story… or the one were the daughter called the police on me for “breaking in” and “accosting her” as the mother said… nope just a cool indoor sauna.  I walked into one of the space rooms of this blue-collar home and “Whoa, didn’t expect to find this…

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030