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From Somalia with Love
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Posted - 10/19/2010
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Well, here's a new one for me. Here's how my Monday morning started yesterday; Picture this: I received a call from our long distance provider notifying me that our system had been hacked and multiple toll calls had been made to Somalia through our remote access feature (which has now been disabled!!) totaling almost $1,000!!
After several calls to our vendor with our phones, and checking call logs, we determined that the calls were coming from a number in Georgia from a Food Service company. I contacted them directly and it seems that we are one of several companies that have been hacked via their system. Apparently, someone had gotten into their system and were using it to go into other phone systems around the country and hack their systems and making those toll calls to Africa.
It was a nice wake up call to me that our systems need firewalls and security in place to prevent these types of things. We have changed every password and access code in the building, disabled our international calling, and changed our procedures. Interesting how this world puts you in a defensive posture most of the time!
I hope this will help you to think about your own systems, passwords, firewalls, etc. and that you will analyze your system status.
Have a great week -- I'll be commenting on the foreclosure freeze in my next entry this week.
Tony
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Stolen Cars!
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Posted - 09/24/2010
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Another day, another new experience in the world of rental management. Today, I went out to check on a house in Mint Hill near the country club that we had been renting to a mother and daughter and found that they had moved from the property. As I went through the house, I didn't note any real damage, apart from the floors being dirty and the toilets not being flushed. However, when I opened up the garage, there were 2 cars sitting on blocks with no wheels or tires!
On my way back to the office, I stopped into the police department and gave them the tag numbers and they called them in. And of course, they were stolen! The police met me at the house and called a wrecker and they pulled them from the garage and hauled them off to the impound lot, where their rightful owners could come and pick them up (if they brought some tires and wheels with them!).
This house is in a nice neighborhood and rents for well over $1,000 per month, which confirms what my Mama always used to tell me --
You Can't Buy Class!
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Property Break In
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Posted - 09/14/2010
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I got a call last week from the Police Department at about 4 PM to let me know that one of our houses had been broken into. This is a house that sits in one of the city's gentrification neighborhoods that we have been having rehabbed for the past few months. This house has fresh paint, new ceramic tile, new tub, shower, toilet, sink, kitchen cabinets, appliances, lighting, etc. All together, we have spent almost $20,000 to get this house ready for the market!
When I arrived at the house, there were 3 police officers at the property and water was running ouf of the walls at the driveway. Not a good way to end my day! After going through the house, it was obvious that these were some of the stupid crooks that you read about in the magazines, but the unfortunate thing was that they had cost me a lot of money and headache.
To start with, these mental giants threw a huge rock the size of a bowling ball through the glass doors on the back of the house, which not only broke the glass but also damaged sheetrock in the house as it traveled through the door and across the hall. Next, they targeted the thing that everyone wants these days -- no, not the brand new microwave, smooth top range or dishwasher. They went straight for the copper pipes on the water heater. When I looked in the utility room, my 55 gallon water heater lay on it's side in about 3 inches of water as water continued to gush from the floor where the pipe previously connected to it. All together, these masterminds made off with about 8 feet of copper pipe, worth about $12 at your local scrap yard.
Finally, they eyed my brand new ceiling fan that was hot wired in the living room and got a saw horse from the storage building so they could disconnect the wiring. However, apparently they didn't realize the wires were buzzing with 120 volts, because that's where they stopped! Man, I would love a hidden camera of that daring robbery!
When everything was added up, the damage was a little over $1,200. However, it would not be worth it to file an insurance claim because the property carries a $1,000 deductible and then they would probably cancel the coverage.
So, here I sit with $1,200 in damage coming out of my pocket and these idiots got about $12 for their hard fought efforts. Wouldn't it be more productive to get an actual JOB?? As the economy continues to stall, we will probably see more of these types of crimes, so if you own property, make sure it doesn't sit vacant for any length of time. Get it ready to rent or sell and get it on the market ASAP.
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Home Sales Down Across The Country
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Posted - 08/29/2010
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Once again, we are faced with some rather negative news coming out of the trenches of real estate sales. It was announced this week that existing home sales dropped 27% in July from June of this year. It was noted that the recent (April 30) expiration of the first time buyer tax credit had an effect on the market and the number of sales, even though we are seeing historically low interest rates in the 4% range for fixed 30 year mortgages. It was also announced that foreclosures were on the rise again, and that the commercial sector was beginning to take a hit as well.
New construction sales were also down in July by 12.4% over June of this year. However, looking at year over year figures, July dropped almost 33% from July, 2009 sales figures which were already anemic, at best. The new construction rate is the lowest that it has been in over 40 years!
In "gossip news", I heard this week from a friend with Bank of America that they are expecting to foreclose on as many as 30,000 houses per month through the end of this year! Not sure if that's true, but if it is, that's a lot of property that will be coming on the market in the next 6 months!
Here in Charlotte, we are reflecting the national trend and seeing reductions in the same percentage ranges. With all of the talk of the double dip recession and continuation of sliding home prices, I'm not sure when we will finally see the bottom and start heading back up. Buckle up, I think we are in for a continuing bumpy ride for at least the next 18 months.
As always, feel free to email me your comments and questions at tony@tmbjr.com.
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Charging a Tenant When They Move Out
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Posted - 08/29/2010
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One area that we constantly get questions about in our rental department is, "what can we charge a tenant for when they move out". This question comes from tenants and landlords, but mostly from landlords after we have performed the move out inspection. The rules are pretty simple when it comes to what the tenant is financially responsible for:
1. Any unpaid rent, late fees, legal fees or other charges on their tenant ledger
2. Any damage to the property that is over and above normal wear and tear.
The question usually arises when the tenant moves out and the cost to get the property is, for example, $2,000. However, when we evaluated the property upon move out, we only charged the tenant, let's say, $300 for damages. The owner usually wants to know why we didn't charge the entire $2,000 in this instance.
As noted in number 2 above, we can only charge the tenant for anything above and beyond normal wear and tear. In this example, the $2,000 may have included painting inside, carpet cleaning or some replacement, lock changes, performing normal maintenance items, replacing light bulbs, cleaning the house before the next tenant moves in, etc. In other words, much of what needs to be done to turn a property to a new tenant is the owner's responsibility, unless the tenant has caused excessive damage to the property. Therefore, I can only charge the tenant for something in excess of what the owner would have to do anyway. Some examples may be:
** large red stains in the carpet (we can charge to remove the stains, but not the cost of the normal carpet cleaning);
** holes in the wall that need to be patched or excessively dirty walls, walls that have been painted a color that is not neutral, etc. We can't charge them for painting the house, but we can charge the extra amount that a painter would charge to repair the holes, or to Kilz the walls prior to painting;
** excessively dirty house. We would have to have the house cleaned prior to the new tenant moving in, but if the cleaning service charges us extra because the oven was never cleaned during the previous tenancy, or the tenants left food in the refrigerator that spoiled, or we have to exterminate for roaches that showed up during the previous tenan'ts stay, then we can charge for those items.
The bottom line is this: as a landlord, we all need to remember that this is a business, and in any business there are expenses. Getting a property ready for a new tenant is a normal business expense, and it should be something that you and I as property owners are prepared for. Responsibility in items that are damaged will fall to the tenants, and we will do our best to collect the damages from them upon their tenancy termination. However, it is up to you to be able to prepare the property for the next tenants so we can get the property rented quickly and continue the cash flow on your property.
As always, I welcome your comments and questions. Email me at tony@tmbjr.com and I'll be glad to answer!
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Threatening Lawsuits
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Posted - 08/06/2010
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Until recently, I have never heard as many people threaten lawsuits over the most minor and baseless things. It must be a sign of the economic times, I guess. Just yesterday, my first call of the day was from an irate previous tenant who claims I was stealing his family's money. He had moved from a house that we manage where he had rented for almost 5 years, and neglected to pay his last month's rent. Since he did not pay, we filed eviction against him on the 15th of the month, as is our policy. So when he moved out, he owed the last month rent, the eviction fee of $230, plus a late fee for the month that he didn't pay. In addition, there was a little over $700 in damages to the property that we charged him for. His deposit was applied to the total balance and a balance still remained on the account. Since he was not receving his security deposit, he claimed that I was stealing from him and that he was going to sue me. I'll let you know what happens -- 99% of the time, these threats are never followed through, so I don't anticipate hearing any more from him.
It seems that this is the latest en-vogue statement, the threat du jour as it were. Last month, I had to appear in court as a defendant in a lawsuit from a previous tenant who was angry that we had evicted her. The case was thrown out of court, but it was ridiculous that I had to take the time to prepare a defense, travel downtown, and spend my time in court over a baseless claim such as that. It makes me realize that our justice system is badly broken and in need of reform. Anyone can sue anyone for anything, and you have to defend yourself even it is all a bunch of bull. Had I not appeared in court, she would have prevailed in her lawsuit and I would have lost. Unbelievable!
As we navigate these incredibly tough economic waters, I suspect that things will get worse in this regard before they get better. That's why it is so important that everything is documented and notes are kept regarding the tenant and the situation. A professional property manager will do this, as is our policy. If you're managing your own property, I would urge you to consider hiring a professional property management firm, for your own liability if nothing else. Give us a call at 704-573-4106 and we'll be glad to talk to you about our program and how we can help.
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Keys, Keys, Keys
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Posted - 07/20/2010
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Keys to a house are a very important issue. Everytime a tenant moves out and the property is offered to another tenant, the locks are changed so we are certain that no one except the new tenant and our company has a key to the property. For safety and liability reasons, this is the best policy. We never know who a previous tenant gave a house key to, and what their background is. My greatest fear is that we would not change the locks on a property and, after the new single mother tenant moves in, someone with a key from the previous tenant decides to visit the house in the middle of the night and assaults the new tenant, or worse. Althought it is an expense, it is worth every dollar to prevent something like this from happening.
I was reminded of the value of knowing that you have the only key to your house this week by a strange set of circumstances. One of our female tenants, who recently moved in to a property with her boyfriend/baby's daddy had recently kicked him out of the house and taken his house key (we had no knowledge of the breakup). On Friday just after we closed, we had a knock on the door and a young man was there saying he had locked his house key inside his house. We verified his identity, verified he was on the lease and checked for any notes about him and found none, so we cut a new key for him.
Then, on Monday AM, the young lady that he lived with showed up at our office upset that we had given him a key and asking us to change the locks on the property. Unfortunately, the cost of the lock change will be the tenant's responsibility. Had she notified us that there was a separation and a restraining order, we would not have cut a new key for the male on the lease. Fortunately, there was no personal injury, only some items that were removed without permission.
So, keys and rekeying the locks are important to do after each tenant. To lower our joint liability and to keep our tenants safe, it's the only choice.
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City Code Inspections
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Posted - 07/14/2010
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I think if there is one topic that makes my blood boil worse than any other right now, it's City Code Inspections. Somehow, tenants all across the city have gotten instructions to call the City whenever anything doesn't go their way. I have been managing property since 1992, and it wasn't until 5 years ago that I got my first City Code Violation letter. Since then, it's been a steady stream and it's only getting worse.
First of, let me tell you that we don't manage any slum properties, so the City Violations Letters are more a nuisance than anything of substance. And when I say that the tenants have "gotten instructions to call the City", I mean exactly that. Apparently, when the tenant calls Action 9 or the BBB, they tell them to call the City and complain. And then the tenants talk to each other about what they did to get their Landlord back for __________________ (charging them a late fee, not getting out to fix that dripping faucet over the weekend, etc.). It's maddening and aggravating!
Now, don't get me wrong -- if there are serious issues with a property that we have neglected after being made aware of them, I think that the tenant has every right to seek relief from the City or whoever. But more times than not, the reason for the call to the City is to seek revenge for what they perceive is a wrong committed against them. Some of the terrible things that have precipitated these calls include:
> Charging the tenant for spraying for the roaches that showed up 2 years after they moved in
> Charging the tenant a late fee for bringing her rent in 17 days late
> Requiring the tenant to have her live-in boyfriend (not on the lease or disclosed to us) pay an application fee and have a background check performed to make sure he is not a criminal
> Not repairing a closet shelf that had fallen for the 3rd time due to the tenants placing too much weight on the shelf
> Claiming that we have not made necessary repairs. Of course, this generally occurs in conjunction with the tenant not paying rent, which then creates an eviction filing. The tenant usually tries to call the City in to keep from paying the rent (this is the most common reason for the tenant calling the City)
When the City inspector comes out, he has full reign of the house. He checks everywhere -- under the house, in the cabinets, closets, in the attic -- and makes a FULL list of everything that needs to be repaired. And you have no choice -- you MUST comply or you will face fines and penalties. This is why, when we have a tenant who is requesting some repairs, we encourage the owners to go ahead and make the repairs if they are not unreasonable. Because, if they decide not to make the repairs and the tenant calls the city, they will be facing even more repairs and they will be required, not an optional repair.
Recently, while speaking to an inspector about a code violation, I unloaded on him and railed against the vigilante tenants and how they file unfounded complaints. He, in turn, agreed with me and gave me some advice and recommendations that I feel are some good suggestions. I will share them with you in a future installment of this BLOG. Until then, email me and let me know what you think of this encroachment of your property rights (my opinion!).
tony@realtyworldcambridge.com
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Repairs Are The Biggest Problem
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Posted - 07/06/2010
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Repairs -- What a can of worms! We deal with problems every single day from tenants, owners, repairmen, vendors, and inspectors. Nobody seems to be happy with the outcome, no matter what it is.
It is vital that repairs are done in a timely and professional manner so as to prevent any problems with the City Code Inspectors or further escalation of tenant complaints. We have some owners who don't like to make a decision on the repairs, thinking that the tenants will just forget about them or overlook them. We also have some owners who like to do their own repairs or have their own repairmen and they get to the repair issues when it fits in their schedule. Sometimes that is okay, but when you are experiencing consistent 90+ degree days and the AC goes out, we can't wait on a repair. Or when the heat goes out and the outside temp is 30 degrees, it requires immediate action.
This is one of the biggest complaint areas that we get because the owners don't want to spend a dollar more than they have to, but the tenants are paying for a place to live and should be able to reasonably expect a timely response to repair issues. So what's the solution? Owners, please, be prompt in your responses and approval of repairs; and communicate with our office to let us know what's going on. Communication will cure 99% of the issues that we have with repair problems.
In my next entry, I'll discuss the City Code Enforcement and why it's such an issue in today's market.
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Cocaine House
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Posted - 07/04/2010
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Seems like something new everyday. Recently, we inspected a house that was vacated from 2 guys that had lived there for a year. It was in a nice, middle class neighborhood with the rent approaching $1,000 per month. When we performed the move out inspection, there were plastic garbage cans full of chemicals, white powder all over the floor of the garage, and about 200 plastic packets of something from Peru that were empty. When I looked up the english translation of what was on the packets, it turned out to be powdered Coca leaves (used to make Cocaine).
We called the fire department and they checked the chemicals and couldn't determine what it was, so they called the HAZMAT crew. They narrowed it down to kerosene in the barrels, and speculated it was a cocaine lab. So, the police were called, and they brought in the Vice Squad and they in turn brought in the SBI. The final determination was that the house was being used as a cocaine manufacturing lab. The upstairs had barely been lived in, and the SBI said that it is becoming common that drug dealers are renting houses for the purpose of manufacturing and/or distribution, and never actually living in the houses.
Bottom line is that the tenants were no trouble during their lease and didn't cause any "red flags" to pop up, so we had no idea that this was happening. When the final tally was complete, the owner had to pay to have the chemicals properly disposed of per the EPA's watchful eye -- to the tune of $1,000!
When something happens in our business, we always look at the situation and analyze as to how we could have prevented it from happening, or how we could have stopped it in progress. In this situation, the only thing that we have come up with that may have stopped it in it's tracks would have been an inspection at mid-lease. Our company policy is to inspect the property at the beginning and end of the lease, and at renewal if the tenant has decided to renew. However, we are considering offering the option of a mid-year inspection at the expense of the property owner. What do you think? Email and let me know your opinion. The inspection rate would be $50 and would be a walk-through type inspection (i.e. to check on the overall condition, living situation, occupants, pets, etc. This would not be an inspection to test the appliances, lighting, electrical, etc., but mainly to see how the property is being kept). I look forward to your responses.
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