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How Often Should I Inspect My Property?

How Often Should I Inspect My Property?

ONCE PER YEAR???

I was floored a few months back when I sat at the table with a large property manager, and they said their goal was to only be in a property once per year. I understand the reasoning from this company’s standpoint, but this philosophy cuts against the grain of our inspection strategy.

Profit maximizing property managers are not the only ones with this strategy. I also recently sat down with a new investor, and he had similar thoughts about how often his property should be inspected.

What about Leaves and Furnace Filters?

Some obvious exceptions to a once a year strategy include both exterior and interior components. For example, the fall season after the leaves have fallen is a good time to inspect the gutter systems. In addition, furnace filters should be checked frequently. This is true even when it is the tenant’s responsibility to change the filter; however, not everyone is as conscientious as we would like.



Profit maximizing property managers are not the only ones with this strategy. I also recently sat down with a new investor, and he had similar thoughts about how often his property should be inspected.

What about Leaves and Furnace Filters?

Some obvious exceptions to a once a year strategy include both exterior and interior components. For example, the fall season after the leaves have fallen is a good time to inspect the gutter systems. In addition, furnace filters should be checked frequently. This is true even when it is the tenant’s responsibility to change the filter; however, not everyone is as conscientious as we would like.

Water Leaks are the Enemy

Less obvious reasons for additional inspections include checking smoke detector operation, mechanical operation, forming of any small leaks, and other preventative maintenance measures. As often holds true an ounce of prevention is worth a pound of cure.

Proactive Communication

And, to be frank, certain tenant’s do not take care of a property as well as an owner would prefer. A quarterly inspection allows an owner to correct certain negative behaviors earlier rather than relying singularly on the security deposit to recover damages. For instance, carpets are a big potential expense when tenants do not take proper care to clean them. When our quarterly inspection results in observations that the carpets are excessively dirty, we will require the tenants to have them cleaned professionally. And, we require they foot the bill for that expense. We also explain the consequences that will result in significant expenses including potential small claims actions if behaviors to not change. Fortunately, most of our tenants really to want to be good responsible tenants. Consequently, effective communication usually preempts the need to take a tone that approaches being threatening in nature. Even when the communication does not lead to the desired result, our aim is to communicate simply in a cause and effect nature that logically explains the consequences for certain behaviors.

My personal, and our company philosophy, is that we need to have our eyes on every property, approved by those owners, once per quarter.

Nice Guys Finish Last

mr-nice-guy-pic

MY TENANTS LOVE ME BECAUSE MY RENT HAS BEEN THE SAME FOR 20 YEARS

Money On The Table

Some landlords may have the luxury of keeping rent the same for the entire time they are a real estate investors, but most investors need to keep up with the ever increasing cost of living. In addition, if you are like most investors, you became a landlord to boost your income, and not simply to shield income or profits from other endeavors. So, if you have not recently evaluated your rents, in comparison to the market rate, it may be time to see how much money you are leaving on the table.

You Can Keep Your Current Tenants (If Desired)

Do not hear us wrong; we can already hear people chanting we are part of the problem for the increasing rise in rental rates. A balance must be struck between getting “top dollar” and keeping tenants for the long-term. If you charge the highest possible rate, your tenants are going to hit the road as soon as they can find something cheaper. On the other hand, most landlords have plenty of room to increase rent somewhere between the rates from the 1970s, and the very top of the market. In fact, it is not uncommon that a landlord can see as much as $100 increase per month with an effective strategy. You did not misread that stat; rental rates can increase by an average of more than $100 per month. In many cases, this increase can occur while keeping existing tenants. This is possible by educating them about the realities of the current market and offering them options that do not break their bank. If for some reason, an increase does not work, we help them transition with as little pain as possible.

$36,000 Yearly Rent Increase!

One success story involves an owner who was collecting around $7,000 in gross rent for his 14 units. He looked at his ability to raise rent with skepticism when he was told his rents could be increased to $10,000 per month for the same inventory. And, this increase could happen in the first year. His skepticism transformed to elation when he hit his goal in less than six months. And to the critics chagrin, those tenants did not leave as soon as they could. They all stayed longer than the initial lease obligation, and many stayed for multiple years. If you already broke out the calculator, you will know that the gross rent increase was $36,000 per year.

Thousands Behind on Rent

THOUSANDS BEHIND ON RENT

One of the common comments we get from prospective property management clients is that they enjoy the relationships they have established with their tenants, and they don’t want to lose that connection. On one hand, we applaud such a noble endeavor to treat their tenants well with an eye on relationship building. The majority of the time, however, shortly after hearing such a statement we learn that one or more of the tenants in the investor’s portfolio are significantly behind on their rent. We find that some of these owners have tenants who are behind by thousands of dollars. Most of these landlords don’t have the luxury of using their rental portfolio as a charity.

Tenants Happily Pay More For Positive Relationship

Please do not get us wrong, we do not believe that tenants are blood sucking opportunists who look for ways to mess over their landlords. Some tenants do know how to play the system, but the majority of tenants want to have positive relationship with their landlords. We have found the best way to establish and encourage such a positive relationship is to set professional boundaries that incentivize them to prioritize rent payments. This does not mean we have to be cruel or unsympathetic, but it does mean that we don’t budge within preset parameters. We stress communication, and we keep our landlords up to date on collection developments. Our goal is not to take you out of the driver’s seat.

Legal System Favors The Landlord… This Is Not A Misprint

A common complaint expressed by real estate investors is that the landlord tenant legal system is slanted toward the tenant, and they are commonly taken advantage of in such a system. These same investors are skeptical when we tell them that we use this structured legal system to their benefit, and that the vast majority of tenants we work with end up paying their past due rent, court costs, and legal fees accrued as necessary through the process.

Keep The Relationship & Blame The PM

Once a tenant who is behind learns that there is a new sheriff in town, they are not likely to want to experience this legal process again. Consequently, a healthy boundary has been set whereby they know concretely the cause and effect results of rent prioritization decisions, and we all can go on living happily ever after. And, the best part of this process is that you can keep being the nice landlord and building those relationships. We don’t mind you having contact with your tenants, if you desire such contact, and you can blame us for the fact that boundaries have been established. Some of our owners go so far as to explain that it is now out of their hands. Here 2 Serve is now in control of rent collection. In the end, we all feel good because encouraging people to fulfill their obligations is good for them, good for you, and good for society as a whole.