Eviction Protection Plan

Eviction Protection Plan:

Recently First Rate Property Management took over management from another property manager.  The owner of the property participated in what the other management company called an Eviction Protection Program.  The other management company deducted $5 per month from the property owner.  How the program worked was that if the property manager ever had to evict a tenant, they would cover the legal costs ($495) as well as the cost to serve the tenants ($120).  This new owner liked the plan because he said that it gave him piece of mind.  First Rate Property Management has never offered this service because our eviction rate is so low.  I suppose we could offer the service and only charge $1 per property.  But then again, I’m not too sure that would be worth all the extra effort the accounting department would have to go through.  Anyway, if for whatever reason this program is of any interest, please let Lizz Loop know and we can do some further investigation.  Obviously the more that enroll, the cheaper the fee would be.


Christmas Evictions:
An Old Wives’ Tale is that you cannot evict when it is cold out or around Christmas.  This isn’t true.  In the Boise area, the judges simply want to know if the rent was paid or not.  Below is a link to a recent news story that ran on a local news station.   A local property manager went to the media because they couldn’t get the tenants evicted while the tenants were destroying the house.  Have you all watched the movie Pacific Heights with Melanie Griffith, Matthew Modine, and Michael Keaton?  If not, I think you should.  Both this recent news story and that movie create a very strong argument why investors hire professional property managers.  So many think that renting out a property is as easy as finding a suitable tenant and collecting the rent each month.  Unfortunately, it takes horror stories like these to make so many realize that there is so much more.  First, you have to screen the applicants.  In recent posts I have described all that goes into our screening.  Second, you have to have a strong lease that precisely describes what is expected from the tenant.  Third, the property manager needs to know what to do when a crafty tenant dodges the system.   The news story describes a tenant who is able to dodge the legal service of the court appearance for the eviction.  Since our application is much like an application to obtain a mortgage loan, we’re going to have the address of where they work, where their nearest relative is, etc.  We’ll find them.  In the meantime, I would publicly publish the notice of service so that the court date cannot be delayed further.  Lastly, I would get very creative.  For example, in the past, I have bought flowers, knocked on the door and stated that I had flowers to deliver.  Everyone loves flowers.  When they open the door, I serve them with the notice.  I’ve got a whole host of these types of tricks, which fortunately, I haven’t had to use for many years.  I would also make the tenant’s life miserable and make them want to move.  Calling the news crew wasn’t that bad of an idea as it probably caused some of the tenant’s friends and neighbors to put some pressure on them.  But because of the health risks, I’d also be calling the police and child protective services.  Obviously, I would offer to meet them there so that I could serve the tenants while making their life miserable as authorities take their children away.


http://www.ktvb.com/news/local/Meridian-property-owners-cant-evict-non-paying-tenants-111963824.html

Boise Rental Market:

First Rate Property Management has officially reached its lowest vacancy rate all year at just below 2%.  I predict that it will continue to fall for the remainder of the year.  In general, low vacancies typically indicate a shortage of inventory and high demand.  Well, I do agree that it appears that inventory is low.  I think that we’re filling our vacancies because of the low rents and incentives being offered.  If we continue to see this trend, then I believe it is safe to assume that as we exit the winter months, we should be able to remove any move-in incentives and see rents increase.  What a great thing to see once again!  I can only hope that we see the market that I saw in the mid 90’s where we pre-leased almost all of our rentals and pretty much got the rent we were asking.  2011 is looking like a good year.

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Boise Investment Market:

I see that interest rates have climbed a bit, but you still can get a non-owner occupied loan for around 5%.  Prices are still very good too.   So add a strong rental market in the equation and I can’t imagine there being anything better.  Of course I have been saying that all year long.  It’s just a good time to buy, but you’ve got to be fast as the good deals are getting tied up fast.

Happy Holidays!

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From all of us at First Rate Property Management, we wish you all a Happy Holiday season and what looks like a very Happy New Year!



The Progression of Tenant Screening

The Progression of Tenant Screening
When I first started property management, all I did was run a credit report and check references. Then after a few criminal-related issues, we started searching the local court records to screen out criminals. Well, after a known arsonist burned down one of our favorite client’s home, we came to realize that wasn’t enough. So over the years, we have incorporated a whole gamut of screening criteria all geared to prevent loss of income to the owner. When we have problems filling a vacancy, I look at all of the denied applications for that property and wonder if our screening process has gone too far. There is certainly a cost to being over selective. How much lost rent outweighs the risk of getting a bad tenant?

I don’t analyze the credit reports any more, but I wanted to list some of the things we look at when our leasing agents do. Alone, some of the discrepancies that we find don’t mean a thing. But multiple discrepancies raise a flag and sometimes additional documentation is needed or the applicant is denied.

Misspelled applicant names, multiple social security numbers under that name, multiple addresses in the same period of time, poor credit to include bankruptcies, charge offs, collections, and late pays, public records, inquiry history, criminal background to include sex offenders, employment and pay verification, eviction records, and previous Landlord verification. That’s a long list from just a credit report.

RentGrow is a national screening company and besides offering great services, they routinely send out great newsletters. In their recent newsletter they addressed how tenant screening has changed over the past 10 years. For example, RentGrow stated that in 2000, less than 15% of their clients performed criminal backgrounds. Today, they report that over 95% of their clients request criminal backgrounds. Obviously, property managers who had experienced similar issues like I had, looked at how to reduce their own risk, as well as the property owner’s risk. RentGrow also acknowledged advancement in technology making it easier to find and access this data.
Identity theft was another new trend. When I was in the military, they put our social security number on everything, like my duffle bag and every certificate and plaque that I ever received. Your social security number was your identity. Times have obviously changed. Bad people who no longer could rent from professional property managers began to use others identity to secure rental properties. So almost every professional screening company has analytics in their programs to flag or bring attention to possible applicants who have done just that. Identity theft is just another reason all landlords should use a professional company to do a full tenant screening. Additionally, they have measures to protect the Landlord from hackers getting confidential information and stealing the identity of our tenants.


Boise Area Rental Market
As the graph below indicates, our vacancy rate continues to improve. However, each week that we get closer to Christmas our inquiry rate decreases. So I am actually surprised about the number of vacancies we are filling right now. We are being very proactive on the incentives and marketing campaigns, so that is probably a big factor. Normally, a low vacancy like this indicates a time to increase rents and decrease incentives. To be honest, I think the only reason our vacancy is this low is because we have been proactive and the small pool of tenants who are looking to move are calling us before others.

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Boise Investment Market
Since my daughter’s illness, I’ve really had to rely on the other agents in the Swope Investment Properties offices to help me. But I am still keeping up to date on the market. From a year ago, active four plex and duplex listings are greatly reduced. We’ve got about a 6 month supply, which normally would indicate a better than normal market. The number of pending deals is slowing down, but that is fairly typical this time of the year. 90% of the deals in November were either bank owned properties or short sales. So those deals continue to keep sales prices down. As I have indicated in months prior, newer turnkey properties seem to be in higher demand and we’re seeing those values go up.