Category Archives: Property Management

Effective Tenants Screening

Keith has a knack for effective screening of potential tenants. He has given recommendations for reasonably priced contractors when we need them. He is good at keeping our tenant and us calm and working together when issues arise. Thank you Keith!  

–Amy & Robert (Property Management Clients)

_______________________________

Effective Tenant Screening

When engaged in a job role that required repetitive actions, it’s easy to think that some things are obvious, and forget that others have no understanding or bearing, in this case, when it comes to screening tenants.  I’ve had clients initially tell me that this is what they are most afraid of.  When I ask why… here are a list of reasons given to me:

pexels-photo-221164.jpeg

  1. Don’t we have to accept anyone who applies, due to non-discrimination laws?
  2. How do we know if they qualify? What if they can’t pay their rent?
  3. What if they are partiers? And the neighbors complain and then everyone will be mad at us!
  4. What if no one applies?
  5. How does the process work?

Many times people inherit a property, or make their old residence a rental and then fall into property management or become landlords (this is what happened to me).  When this is the case, it becomes extra scary for the new landlord.  This makes more sense, versus a savvy landlord who already owns or intends to buy a property with renting it out solely in mind.  Either way, to a property manager and someone seasoned in rental properties, these are easy questions to address.  Hopefully I can take some of the fear out of the process for people reading this.

#1 – You DO NOT have to accept any applicant that applies.  However, you CANNOT base your reasoning on any discriminatory factors, such as, race, religious, familial status, sexuality, age, etc.  A good property manager follows set practices and procedures that eliminate much of this concern and fear.  One practice that is helpful is to have a minimum requirements to rent sheet available to all applicants.  This then helps potential applicant figure out whether they meet the criteria or not, and takes it out of the category of subjective choosing.

#2 – All property management should use a filter, as stated above… a systematic approach to qualify an applicant.  Primary requirements: Income; credit score; rental history (evictions and what past landlords report).  There are other factors I’d be happy to share with you as a client, and which I develop for each client individually based on their preferences and the situation.

pexels-photo-893894.jpeg

But what if they cannot pay rent?  The employment/income check gives way to the prospect’s capacity to pay rent, however, without the ability to forecast the future and fully predict human behavior, there is always this risk of not getting rent from tenants.  However, the best predictor of the future is past behavior, yet there are still unseen variables and life events that are never foreseen.

#3 – This answer is similar to the last, regarding predicting the future.  I like to try to have a conversation with the last landlord or property manager, oppose to just emailing a questionnaire.  By taking a relational approach to all of property management (tenants, landlords, vendors, etc.), you can build a bridge with a fellow property manager and, you’d be surprised how much information I can glean from a conversation by just appealing to one’s humanity.  Yet, sometimes it’s very difficult to know if a potential tenant like to play music late night, or work odd hours, or rev their motorcycle at midnight.  I say this because I had a great tenant once, whose adult son moved back in with him mid-lease.  The original, single guy was quiet, helpful, and always paid on time.  Once his son moved in, the entire neighborhood was up in arms about the smoking, rude behavior, revving of motorcycles late night, etc.  You never know what will transpire.  This is the risk an owner/landlord takes when owning income property.  This is another reason why many owners opt to have a property manager, even if they live two doors down.   Good tenant screening and selection will always make the management aspect easier.  If things go sideways, a good property manager can objectively take the next procedural steps, communicating with the owner along the way, a many times sooth a tumultuous situation better than an owner.

#4 – If no one applies, then most of the time (if the property has been marketed correctly) the rent is too high.  Most of the time it’s better to ratchet the rent down a little rather than hold out for a unicorn tenant.  The loss of the lower rent is usually less than the monthly vacancy expenses.   If these does not make sense to you , I can elaborate on this more if you want to message me directly.

#5 – How does the process of finding and renting a property out work?  I’m happy to sit down with you or have a conference call to lead you through each step.  Feel free to email or text.

Keep your tenants happy!

Keith Klassen, Real Estate Broker – 916.595.7900

Specializing in Residential Sales & Property Management

cropped-keithklassen_logo_final_green

Advertisements

Midtown Sacramento CA – 4 plex for Sale

I’m excited to present this classic four unit income property.  As you may know, rents have gone a little crazy in Midtown, unfortunate for renters, but income property owners are loving it.  With the advent of Golden 1 arena, gobs of new restaurants opening every month, and the coming of the railyard build-out, this building is still a winner now and in the future!Flyer

Please contact me if you have interest.

Keith Klassen, Real Estate Broker – 916.595.7900

Specializing in residential real estate sales and property management

cropped-keithklassen_logo_final_green

LESSONS LEARNED IN REAL ESTATE & PROPERTY MANAGEMENT – How to manage & sell a dump.

5 Star Review

Keith Klassen is smart and professional.  No matter what the circumstances, he manages his attitude and stays solution oriented.  Because of this, we came up with great solutions together. 

Mari Paul (Buyer, Seller, Property Management Client)

_____________________________

rundown-shack-3

HOW TO HANDLE SOME OF THE ROAD BUMPS THAT GO ALONG WITH MANAGING AND SELLING A RUN-DOWN PROPERTY (Part 1)

Many income/investment properties are purchased with the idea in mind that they will be fixed up and improved over time.  This is a great idea… let the property pay for itself.  However, this doesn’t always happen, especially when the property is just breaking even or not cash flowing as expected.  Perhaps this also points to a reality check when figuring out expenses, deferred maintenance, and a realistic slush funds for unexpected costs at the time of purchase – by the way, this is something I enjoy helping newer investors figure out. When that big ticket item comes up, like when a new roof is needed, or rotting widows need replacement, it could be time to encourage an owner to sell, or for you to walk away from the property management position.  I have found that owners who are not able to maintain their properties to a minimum standard can put the property manager’s neck on the line (i.e., lawsuit waiting to happen), or just create an unmanageable situation.

broken window

Here’s a story of how the house of cards can fall over.  The tenant calls to say that several of the old windows won’t stay up any longer – of course the owner was going to install new windows as a first priority.  The tenant says that it’d be nice to fix them, but they understand and it’s not a big deal because they can just put a stick or a book in the window to hold it up.  The owner says, “Oh good, because I don’t have the money to fix it anyway.”  Several months later the tenant calls to say that the window slammed shut and the glass cracked.  The owners says, “Can they survive with a cracked glass for a while?  … Until we get new windows, or just until I get some money together to fix it?  Maybe they can put some tape on the glass?”  The tenant is not super happy, but puts some tape on the window.  Six months later the tenant says, “I’m starting to notice some mildew, or maybe mold in the bathroom where the window was cracked.”  As it turns out, the roof was on its last leg, the windows were rotting, and many other items had been on a list to renovate over time…

The owner ended up having to give the tenants notice to move and give them free rent due to the mold (and pray there were no health issues as a result).  When the owner finally decided to sell after doing some hodge-podge fix-its, they still took a big loss on the sales price due to all the put-off maintenance issue that later became health issues.

While I had to threaten to cancel our management agreement due to the owner’s inability to take action to make the needed repairs, I ended up being able to navigate us through the fog of it all without things escalating and ending in litigation.  Eventually I listed, sold the property, and eventually wash my hands of the situation.  Remember, distressed properties a lot of times equal distressed owners.  If I had to do it again, I would have taken action faster, and not hung around as long, cancelling the management agreement or encouraging the tenant move-out and sell sooner.  What happens when everything starts sliding down hill, the property manager gets taken down by all parties (who used to love you and high five you for being so great).  This also obviously will kill the listing/sale opportunity. Fortunately on this one, I still walked away with a high five.

high 5

Have you had any mold or deferred maintenance scares, whether as an landlord, seller, or agent/PM?

Cheers to learning new lessons,

Keith Klassen, Real Estate Broker – 916.595.7900

Specializing in residential sales and property management

cropped-keithklassen_logo_final_green

 

Adding Value to a Home & to Your Life

pexels-photo-448366.jpeg

Many have asked me about what adds value to a home when it comes to backyards.  Most people know that a $60K pool will usually not add $60K in value to a home.  In some cases, it can even be a liability, or it highly depends on where the home is located and what is expected in that area of town.   What about fancy landscaping? When it comes to property management, many savvy investors love a yard that has little to no maintenance, saving on landscaping expenses.  Flippers many times just leave a yard like a blank canvas, putting money into the front yard and curb appeal.  When it comes to one’s personal residence, much of the value can be seen in the intrinsic joy a yard brings and the usability for the owner.  I had one client that wanted to make sure the backyard faced a certain direction., was not sloping and had certain feng shui characteristics.  Another wanted to make sure the sun came across the yard in a perfect path for their love of gardening, so she could grow the best produce.  One client had to have a space for pexels-photo-715134.jpega Japanese Maple.  Others are in love with having a fire pit, or an outdoor eating area.  Recently I sold a home where an appraiser called and was curious as to why it sold for $11,000 over asking, relative to other similar homes?  I believe it was due to the high-end landscaping, custom lighting, a water feature, perfected irrigation and watering system, etc.  This stuff is also very expensive and sometimes costly to maintain, but definitely added value to this homes selling price.  What I’m getting at, many times an addition of this or that it’s not a value add to others (or a buyer), but it adds tremendously to your life and perhaps family.  And, if done with some forethought, you may be able to accomplish both.

My backyard has gone through some serious renovation over the last few years, and I can now write this post without feeling shame for having a half finished, project-of-a-backyard.  The first dilemma for many, to hire a professional, or do it yourself.  I tend to be a glutton for punishment, so I took on the “art project,” as I like to call it.  The term gives me room for error – ha ha ha.  Whether it’s a financial thing, or you want to tap into your creative juices, there are so many things to consider before undertaking a project like this.  I found that it can be like pulling a thread… one thing leads to the next… things you have not even considered, whether it be drainage, lighting, plumbing (gas for a grill and water coming in and going out); electrical outlets, furniture, BBQ, shade, space and functionality – the list can be endless.  Again, remember the term, “art project” if you’re a DYI’er.

 

First of all our yard is postage stamp sized –  No football game or kicking the soccer ball around there.  We tried to tend the landscaping that there when we purchased the home, but it either died or became over grown with weeds and ivy coming over the fence.  We’ve tried to plant a garden, but it just does not get enough sun.

dirt1

The water feature broke and we just stopped going out there except to dump food scraps into the compost.  With a dog chasing squirrels, rats living in the ivy, and kids in Jr. High, we decided that we needed a 5th Space, or outdoor room – a place to host; an extension of our kitchen; an outdoor living area; a place where our kids and their friends would want to hang out.  This, for us, has added tremendous value to our family’s life and to the value of our home.  During our Christmas party we found a group of people sitting by the fire until late night … mission accomplished!

IMG_3319

I only posted a handful of pictures – let me know if you are interested in seeing more, or any of the particulars of the concrete counters, or brew pub inspired metal fence, or what I choose cinder block over metal, etc.?  I’m happy to share more pics or thoughts on construction, err, artwork.

In addition, check out this cool article from our friends over at Houzz.com – 30 Creative Backyard retreats. I do dream of a little office, or chill spot, or retreat in the backyard – maybe I will convert our garage/carriage house.  These pictures get my juices flowing.  How bout you?  Which one is your favorite?

[See my backyard pics below]

Keith Klassen, Real Estate Broker – 916.595.7900

KeithKlassen_logo_FINAL_green

Backyard pictures…

FullSizeRender(2)

Excavating and Forming base for cabinet

I managed to get a little help from my oldest

Got some free brick on Next Door

Used a pasta faucet, attached to a funky post I found in the alley.  Built the forms for the counter tops, even thought it looks like I poured in place.

Grabbed the wood siding from someone down the street that was throwing it away

IMG_3067

Drought tolerant lawn, errrrrr, fake grass!

IMG_3190

Fence inspired by Moonraker brewery

IMG_3319

View from our bedroom balcony… 9/10ths complete!

Dart boards are fun!

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?

Signature2

Keith Klassen, Real Estate Broker

Klassen & Associates / 916.595.7900

 

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

foreclosure-48120__180

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

Signature2

Moisture in Windows – Real Estate Sacramento

I have viewed and sold so many homes with dual pane windows that have failed.  The clear, or should I say unclear, indication is fogged up glass.  When you try to clean them, you quickly realize that there is moisture trapped in between the two panes, hence the window has failed.  Most inspectors will tell you that this does not diminish the effectiveness of the window, rather it just looks ugly.  And typically the remedy is replacing the glass or the window, which can be costly.

I ran across an article/ad regarding a newer technology, whereby they can de-moisturize and repair the window by just drilling to small holes in the corners.  Sound great if it actually is legitimate.

Has anyone out there utilized this technology?  And more importantly, does it work?  If so, this would be a great innovation to all those failed windows out there.

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

KeithAKlassen@gmail.com