SlateHouse Launching a Video Blog for Investors!

Real estate investors are dying for more knowledge on how to invest, but don't usually have the time to find experts to talk to 1:1.  So...... SlateHouse is here to help!  We are officially launching our SlateHouse video blog this month to interview to the best of the best about how they succeed in real estate investing.  Hope you enjoy it and let us know in the comments if there is anyone we should interview!

Group Buying Maintenance Discounts -- Save 10-20% a year on maintenance!

Group discount buying is employed by many different businesses to create a win-win scenario for the customer and service provider.  Go to a Phillies baseball game with a group of 50 people -- fans get a 15% discount and your own usher to make your game experience as special as possible.  The Phillies are thrilled because they now have 50 more fans in the stadium for the game.    

 

At SlateHouse Group, we have started implementing the same group buying business principles for our owners to save them money on maintenance.  We are able to save owners 10-20% a year on maintenance through making use of our scaled maintenance operations, which is a huge savings each year.  Here are some examples of tactics we are employing at SlateHouse Group:

 

  • Buying parts in bulk: There is a huge opportunity to save money by buying parts in bulk.  The obvious example is the discount that Home Depot gives us for buying parts at scale from them.  But the more interesting discount is that we save precious maintenance time by storing the parts in storage units in each city we operate.  By keeping the parts locally in a unit, it saves countless hours of time from our maintenance team --- that in turn saves owners money.

 

  • Full-time laborer: When turning over a unit, a significant amount of the work that needs to get done requires low skill, but is highly time consuming.  For example, evictions often lead to a large amount of things that need to be cleaned out of the house which takes a lot of time for the maintenance team.  A full time laborer saves a ton of time on these low skills tasks -- rather than using the same maintenance person to do everything.  The other advantage of full time laborers is that you don’t need to wait 3 weeks to get on their schedule…. Which could cost you hundreds of dollars in missed rent from a house that isn’t rent ready.     

 

  • Full-time Specialized maintenance:  Let’s say you have a simple plumbing issue to be fixed, a leaky sink just for an example, that takes an hour to fix.  If you call a local plumber, the first issue is it might take the plumber a week to get over to fix the issue -- while the leaking potentially damages other parts of the house.  Once the plumber does get over to fix the issue -- they may charge a $100 house visit fee, followed by $45 - $65 per hour of labor at a minimum of 2 hours.  So your simple leaky faucet ends up costing $300, plus the lost rent.  At SlateHouse Group --- that same issue should cost $50!  These savings add up across roofers, electricians, plumbers, etc.   

 

  • Network of Preferred Contractors: When we sub out specialized jobs for a new furnace or a new roof we get special rates from local contractors.  We get preferred rates because of the volume of work we give the contractors.  We also get top notch performance/results because they want to keep our business.  We don’t mark up any of these jobs.  You’ll see a copy of the invoice they send us.  We bill you the exact price on the invoice.  

Even if you aren't using SlateHouse Group there are ways an investor can use this concept on a smaller scale to help minimize expenses. Start by trying to buy in bulk and use a smaller sized contractor who appreciates your repeated business.

Taxes

 

 

    It’s about that time.  Each year, right around now, most real estate investors realize that they need to organize their taxes for the upcoming year.  Whether you do them yourself or get an accountant to help, investing in real estate makes it a more cumbersome process.  Gone are the days of a quick 10 min TurboTax session to get the taxes done.  

    That being said….. there are some MAJOR tax advantages to real estate investing that many investors are well aware of.  With the help of our accountants at Hostetter and Hostetter, we came up with the top suggestions for tax time for real estate investors (NOTE: SlateHouse Group is not a CPA, these are just suggestions we have learned over the years…. we highly recommend consulting with an accountant for your own personal taxes).

1- Stay Organized via the Cloud.  Technology like Google Drive or Dropbox.  At SlateHouse Group Investments, we have moved all of our documents and information onto Google Drive.  This means no hard copies that are bound to get lost in the madness.  It also makes it incredibly easy to share with your business partner or accountant as you can create each sharing rights in the folder.

2- Learn to utilize the 1031 Exchange.  This one of the lesser known tax laws that allows an investor to defer capital gains tax on a purchase by moving the profits of one purchase to another new purchase.  In the world of flipping….. this can be a HUGE deal and save you thousands of dollars in taxes.  

3-Make sure to write-off the depreciating value of the property.  If you have rental properties, this is really one of the biggest wins on the tax side.  Take the value of the house, divide by 27.5, and this amount can be written off your taxes each year for depreciation of the asset.

4-Don’t forget to also write off interest(and property taxes, deed prep cost, etc.).  With interest rates so low, we have utilized banks to refinance or take out loans on many of our properties.  The interest paid each year on the loan is deducted from the taxes paid…. another really nice advantage of owning rental units.  

5-Get a good CPA to help!  Prior to hiring an accountant, we were always nervous that it’d cost a ton of $$.  We were pleasantly surprised that if you are organized (see point #1), an accountant is well worth the price paid.  Not only does it save you hours, but it can also decrease the chance of getting audited which will take up even more of your time.

6-Refinances are tax free.  Let that sink in for a second.  Tax free.  It almost sounds made-up….. but it’s true.  Let’s play out a real-life example.  You buy a run-down property for $10K in cash.  You put $40K into the property, and now have $50K invested.  You get it appraised for $100K, and refinance it to pull out $80K (at a typical 80% loan to appraisal value).  You have just “made” $30K, but don’t have to pay any tax on that amount.  NICE!!!!   Editor’s note -- we do this about twice a year at SHG Investments.

7- Driving mileage for investment purposes is also tax deductible.  If you don't have a property manager, this will be a pretty significant amount of miles! Checking out the house after a storm, driving to court, or just stopping by the house to pick up the rent check.....these all count towards mileage at $0.57 cents per mile.

8- Understand the difference between a repair and an improvement.  In general, an improvement must be capitalized and written off over a period of years while the cost for a repair call be fully deducted in the year the expense occurred.  There are defined lists by the IRS of what items are considered repairs vs improvements. 

There are tons of other tax saving strategies.  This list is certainly not comprehensive but a good starting point.  April 18th is approaching soon.  Happy filing!

    

 

Property Management Keys to Keeping a House Safe in a Blizzard

Jonas, the blizzard of 2016, has officially hit.  Kids love the sledding.  Trees look like a winter wonderland.  Most businesses will be closed all weekend.  But as a real estate investor -- you probably can’t stop thinking if there’s anything you should do to prevent damage to your investment property.  Here are the top 10 things investors can do to survive a blizzard turning into expensive repairs…..

 

  1. Make sure all roofs are repaired, ideally prior to the major snowfall.  I know…. this might make your blood pressure increase if you had a roof leak that wasn’t fixed.  Keeping roofs fixed prior to a big snowfall is the single most important thing you can do to protect your investment.  There are 2 issues here: (a) Any small leak will turn into a major issue because all that snow will eventually turn to water and leak into your home.  (b)  The added weight of the snow can cause any compromised roof to collapse.  At Slatehouse Group Property Management -- we take roof repair very seriously to make sure a leaky roof doesn’t turn into a $20K water damage or structural issue inside your house.  If you did have a roof that wasn’t previously fixed, keep an eye on it and try to capture any dripping water in a bucket.

  2. If you have a furnace, make sure the air intake is free of snow.  If snow piles up or starts to create a big drift and blocks the pipe, the furnace will shut off.  Cold tenants are not happy tenants.  

  3. Disconnect any hoses from outside of the house faucets to prevent them from freezing.  Hopefully you did this back in October.

  4. Every municipality has different rules for when sidewalks need to be cleared once it stops snowing.  Know the local rules and make sure the sidewalk is clear in time to avoid any fines.  If your tenants are responsible for removing snow, remind the tenants to avoid them forgetting.

  5. Eventually the snow will turn into water and need to drain off the roof.  Make sure all gutters are cleared of fall leaves so the water can properly drain off the roof.

  6. If you utilize a snow removal contractor --- make sure they know that you will need their service once the snow has stopped.  Over communicate what they specifically need to clear.  

  7. Make sure any fire hydrants are clear of snow drifts in case of a major emergency.

  8. Keep an eye on suspect tree branches that seem to be drooping and either prune them or cut them down prior to major storms.  The added weight of the snow can lead to them breaking and causing major house issues.   Tree branches are especially an issue if the blizzard has a lot of freezing rain due to the extra weight.

  9. Pray for the temperature to increase.  Seriously --- the best thing to happen isn’t necessarily that the snow stop, but that the temperature increases so the snow doesn’t pile up on the top of roofs before the next storm.

  10. Hire a property management company to stay on top of all of these items.  Life is short!  Next time there is a blizzard, spend it sledding with your family or roasting marshmallows in the fire rather than worrying about your investment properties!


Hope this list is helpful…… Let us know if we can help you get through the rest of the winter by managing your property 24/7/365.  Oh….. and bundle up…… it’s windy out there!

How does a Property Management Company make the community better?

How Can a Property Management Company Make a Community Better?

If you check out reviews of most property management companies, it’s not exactly a bunch of Log Cabin 5 star reviews.  You can’t ever make everyone happy all the time, but we were surprised how many people hate PM companies.  As a PM company, we want to see the community thrive and want to make the community better in anyway possible.  Here are a few things we are working on to improve the community….

Donate Left-over Tenant Belongings to Local Non-Profits.  Bikes.  Tables.  Clothes.  Shoes.  Even beds!  You’d be shocked how much stuff is left in a lot of houses when tenants move out.  We are constantly partnering with local non-profits (and looking to add more!) to make sure that as much of this stuff as possible gets into the hands of less fortunate people in the community.

Take Tenant Screening Seriously.  In many ways, a PM company is a lot like the local border patrol.  We believe it’s incredibly important to a community that a property manager does the best job possible to get a renter that will pay bills on time and be a positive addition to the community and local economy.

Make sure tenants keep the property in decent shape.   You know that yard that hasn’t been mowed in 4 years?  Or the sidewalk that is never shoveled in the winter?  Nobody likes a neighbor like that…. And ultimately it’s up to a PM company to ensure that things stay under control.

Repair house issues.   A neighbor that has a leaky roof can quickly cause issues to the entire row of houses as water gets behind walls and under roofs.  House values are directly impacted by the condition of neighboring houses, and PM companies have a major role in maintain the properties under their watch.

Take tenants complaints seriously.  About once a week we get a complaint from a tenant about another tenant in the building.   By now, we’ve heard it all.  Late night dancers at midnight to a parrot that won’t shut up during the day.  Our asks of tenants are simple --- be reasonable community members to your neighbors and we do our best to encourage tenants to respect the other tenants in the house.

 

How does technology impact Property Management?

Everywhere you look in the economy, technology is changing the way we do business.  AirBnb turning your house into a vacation rental when you are away.  Uber making the taxi industry cheaper and faster.  Sites like Zillow have opened up the information flow to make it easier than ever find a new house.  But how does technology impact property management – an industry that has been very slow to adopt new technology.  

 

 

Here are the top 6 impacts technology SlateHouse Group has found that can have for an owner of a property.

 

 

1)      Automated Payments: It might sound basic, but getting tenants to automate their rent payments is the #1 way to ensure they pay rent on time.  For a property management company, this also applies to getting owners their money each month.  Automating payments takes away time from collecting payments or cashing checks that can be spent on making sure properties are well maintained.

 

 

2)      100% Transparent Owners Portal: It’s no secret that the construction industry is paved with some less than honest individuals.  Workers billing for 2X the time spent on a project or management companies adding fake management fees for no reason.  An owners portal gives the owner complete transparency into everything going on.  All costs are detailed to avoid any hidden fees from occurring.  Bottom line -- you see what you get!

 

 

3)      Improved Marketing of Apartments: The internet has exploded the information age to give everyone access to information at lightning speed.  A good technology platform can get a rental listing up on 100 different websites immediately.  This is important b/c each site caters to different use cases, demographics, or ways of showing off the data.  In a click of a button --- your listing is now on hundreds of sites covering millions of potential tenants to get a tenant faster.

 

 

4)      Better Communication: A key part to keeping tenants happy and maintenance costs low is proper, timely communication.  Interfacing across owners, tenants, a property manager, the city inspector, power companies, plumbers, contractors, bankers, a roofer, a banker, Section 8 housing, and more can turn into a nightmare without property communication systems.  But properly tracking all open items across email, texting, automated alerts, and a phone call when needed --- a property manager can ensure all parties hear back within 24 hours of a request.  If you are having trouble getting people to get back to you on time, the issue might be that you aren’t embracing technology well enough.

 

 

5)       Rent Estimate: As an owner, it’s incredibly important that you charge the proper rent.  Charge too much….. you will have vacant apartments costing you money.  Charge too little and you could be losing thousands of potential rent a year without even realizing it!   With better information flow has given the opportunity to use technology to estimate your rent.  SlateHouse Group actually has built out it’s own proprietary formula (AccurateRent) that you can see on our site: http://www.slatehousegroup.com/rentestimator/.  We looked at 15 different variables across thousands of properties to form the most accurate rent estimate tool around.  AND – it’s totally free for all owners --- even if they don’t work with us!       

 

6)      Cheaper rates for owners!:  This probably should go first, since it’s the number one thing we hear from owners.  Even just a few years ago, the lowest property management rates in Central PA would be 7-10% of the monthly rent.  Now -- we are able to charge 6% of the rent a month and guarentee high quality service due to property managers being more effective with their time.  1-4% in savings might now sound like a lot --- but if you own 3 units in Central PA – the savings could be well over $2K a year if you include additional rent from more occupied rooms.  $2K is a pretty nice savings for an owner --- all thanks to better technology!

 

 

Shoot us a note if we missed anything, you have a question, or want to talk to us about our PM services.

How to Make Sure Tenants Pay Rent

The #1 thing we hear from owners that were currently managing an investment house themselves is the tenants aren’t paying rent.  It’s sad because if tenants don’t pay rent --- real estate investment can turn into a very costly endeavor.  Since it comes up so frequently, we thought it might make sense to highlight a few things we have found over the years to ensure tenants pay rent on time.   Here are a few must-have’s if you are going to make sure you get rent…..

 

  1. Credit Check AND Criminal Check for all tenants.  This is an absolute must-have.  A quick story for you to illustrate.  My Dad rented his house out when he was out of the country for a year (he didn’t use SlateHouse to manage it!).  He didn’t do a credit check --- the tenant looked like a perfect candidate because he was a teacher with a solid job and income.  Fast forward 6 months later and the tenant didn’t pay 3 of the 6 months rent and eventually had to be evicted by the cops.  Why?  Well ---- it turns out he was a drug dealer with a major addiction problem --- who happened to also be a teacher during the day.  A credit check would have most likely uncovered his poor credit and shown he was a risk as a tenant.  

  2. Maintain Strict Rules.  We have very specific rules that we follow at SlateHouse Group and highly advise all owners to do the same.  If rent is late -- a late payment is charged.  If rent isn’t paid in full by the 15th, we start the eviction process on the 16th.  It’s never fun to make rule and enforce them --- but that’s the only way you will maintain tenants that actually pay rent on time.

  3. Make it easy to pay rent.  Tenants all want to pay rent different.  Some want to pay online, some want to pay by money order in person or the mail.  We are open to accepting rent many different ways --- which makes it easy for a tenant to get it to us.  The more tenants that pay rent online the better --- as we have found these have a higher likelihood of actually happening in a timely manner.

  4. Maintain the unit.  As an owner, you need to do your part.  Fix things in the house in a timely manner -- and tenants will be more likely to pay their rent in full.  Often we buy houses that are in bad shape and the tenant hasn’t paid rent for a year or more!  No surprise --- we wouldn’t pay rent either if the roof was leaking!!!

  5. Evictions aren’t fun, but are important.  Nobody likes to evict a tenant, us included.  It’s sad for the people and is a very timely endeavor.  But if a tenant doesn’t follow the rules -- you have to follow the eviction process or you may never get rent again.  At SlateHouse -- we are very strict about following the eviction process exactly as we lay out in the lease that the tenant signs and abide by all the laws of Pennsylvania and surrounding counties.   

  6. Treat Tenants with respect and honesty.  Tenants are people too.  Nobody likes it when someone is a jerk to you, and what goes around often comes around.  It sounds like a Kindergarden rule…. but it’s important.  One of SlateHouse’s core tenants is be honest --- it makes life a lot easier!     

What Should I Rent My House For?

One of the biggest challenges of renting an apartment is knowing what to rent it for.  Rent too high -- apartment sites vacant costing money.  Rent too low -- could be missing out on rent upside for years to come and not even know it!  As a potential owner -- it’s incredibly important to know not only what the estimate is, but also what drives the estimate so you can alter future investments.  

At SlateHouse Group, we have looked at tens of thousands of data points and correlated them into an advanced algorithm to nail down the variables that matter most.  Here are the items that you need to consider….

  • # of Bedrooms -- Totally obvious, but typically under appreciated by owners.  An extra room can easily get you $100 in additional rent a month.

  • # of Bathrooms -- Not as important as bedrooms, but still adds another extra revenue per bathroom.  

  • Area of PA -- This is typically over compensated for by most owners.  While the area matters --- it matters less than you think.  Across Central PA for example -- Reading and York will have lower rents than Lancaster, but not by more than $100 for a similar apartment.

  • Square Footage -- Similar to the Area of PA, this matters but less than you would think.

  • Detached House vs Townhouse -- Renters do prefer a Detached house…. typically adding $100 to rent.   

  • Quality of House / Year Built -- Not surprising, renters prefer newer houses in good shape.  Throw on another $100 - $400 based on the quality and age of the house.

  • Quality of Neighborhood -- This is one item owners often overlook…. it makes a difference.  House on a golf course -- much nicer than a street with houses falling down!

  • Garage -- Each garage counts towards more revenue as you’d expect.

  • Central Air -- PA can get awfully humid in the summer…. AC helps!  Small jump from AC in the house.

  • Furniture in House -- This is often a hot topic from owners.  Generally we advise that it doesn’t make sense to keep your furniture in the rental.  It will increase the rent $50 - $100 if it’s a really nice place…. but that often isn’t worth the cost of the all the appliances.  Vacation Rentals are the exception here!

This can be a lot to work though to calculate each house rent ---- so at SlateHouse we devised our own AccurateRent estimate tool on our website.  It takes all of these variables into account and dynamically spits out the most accurate rent estimate (more accurate than Zillow!).  We actually had a client who was going to use ZIllow’s estimate -- and we were able to get her over $4K in additional annual rent by using our estimate tool.   http://www.slatehousegroup.com/rentestimator

One quick note -- we do always do a free in-person estimate for all our owners since sometimes there are things that our rent estimate tool can’t take into account.  


We always appreciate feedback --- let us know what you think of our tool or if you have a unit that you want us to manage for you!  

10 Reasons to Invest in Real Estate in Central PA

1- Nearly Risk Free- When you invest in real estate you are buying a physical property.  Unlike the stock market you have something tangible. 10 years from now you know your property will be worth something to someone.  The same cannot be said for a stock.  Historically, real estate doubles in value every 10-20 years.

2- Tax Breaks- There are several tax laws that allow real estate investors to defer gains and write off expenses.  Depreciation alone is huge win for investors.  http://www.memphisturnkey.com/depreciation-one-of-the-greatest-benefits-of-rental-property/

3- Hands Off- Use a property management company and you don’t have to get your hands dirty.  Let them deal with all of the issues.  You can sit back and collect a check each month.  

4- Diversify -  You hear this all the time right?  It’s true.  Don’t invest all of your money into the same type of investment.  It protects you from fluctuations in a specific market.  Personally, we even diversify within real estate.  We try to by different types of properties, in different cities.  This way if something unfortunate happens in Lancaster City we don’t have all of our eggs in one basket.

5- In Demand - Central PA has a shortage of affordable rental units.  Due to the shortage, landlords can continue to raise rents and raise the bar when screening tenants. Current occupancy rates exceed 97% in Lancaster County. http://lancasteronline.com/news/local/lancaster-county-lags-state-in-affordable-housing-new-study-shows/article_685177b0-b0aa-11e4-8ece-238e6c75a076.html

6- Growth - Central PA’s population continues to grow steadily. Lancaster and Berks County are projected to grow faster than almost all other PA counties over the next 20 years.  Lancaster’s projected growth is 2nd in the state. http://lancasteronline.com/news/local/lancaster-county-population-births-location-to-fuel-nd-fastest-growth/article_98602952-d327-11e4-a8c9-a34af1031151.html?mode=image

7- In Control- You are in complete control.  You decide what property to buy and how to manage it.  When I originally decided to invest in real estate this idea of control is what won me over.  For better or worse I like to be in control.  My understanding of the stock market is somewhat limited so I felt like I was at the mercy of my financial advisor when investing in stocks.  That made me uncomfortable.  

8 - Improving the area-  Some people feel a civic duty to improve the local area.  If you feel this way look no further than your nearest city.  One of the most satisfying feelings is moving a new tenant into a recently rehabbed house.  One house at a time we can help improve the quality of life for a city residents.

9 - Great Lending Rates-  Banks are lending money at historically low prices.  A well qualified investor can borrow money for around the same price of inflation. 3%-5%. This is like like borrowing money for free. Rates will continue to rise over the next decade so take advantage of these rates now. http://www.mortgagenewsdaily.com/mortgage_rates/charts.asp

10 - Lastly, Stable Long Term Returns - Over time both stocks and real estate investments will provide high percentage returns if done prudently.  One undeniable difference is the stable nature of investment properties.  The instability of the market was clearly captured during the last two full decades.   The 1990’s stock markets produced a favorable return of 18% while the 2000’s produced a return of only 1%.  If you were heavily invested in stocks and about to retire in 90’s things probably worked out well for you.  However, if you were heavily invested in stocks and about to retire in 2000’s you probably ended up working longer than you hoped. http://www.stockpickssystem.com/historical-rate-of-return/

Real Estate Investment properties are much more stable.  When the housing market collapsed in 2007 rent prices actually increased.  If you are relying on rent income for your retirement income you can rest assured that rent prices will not fluctuate like most other investments.

 

How does technology impact Property Management?

 

Everywhere you look in the economy, technology is changing the way we do business.  AirBnb turning your house into a vacation rental when you are away.  Uber making the taxi industry cheaper and faster.  Sites like Zillow have opened up the information flow to make it easier than ever find a new house.  But how does technology impact property management – an industry that has been very slow to adopt new technology.  

Here are the top 6 impacts technology SlateHouse Group has found that can have for an owner of a property.

1)   Automated Payments: It might sound basic, but getting tenants to automate their rent payments is the #1 way to ensure they pay rent on time.  For a property management company, this also applies to getting owners their money each month.  Automating payments takes away time from collecting payments or cashing checks that can be spent on making sure properties are well maintained.

2)   100% Transparent Owners Portal: It’s no secret that the construction industry is paved with some less than honest individuals.  Workers billing for 2X the time spent on a project or management companies adding fake management fees for no reason.  An owners portal gives the owner complete transparency into everything going on.  All costs are detailed to avoid any hidden fees from occurring.  Bottom line ­­ you see what you get!

3)   Improved Marketing of Apartments: The internet has exploded the information age to give everyone access to information at lightning speed.  A good technology platform can get a rental listing up on 100 different websites immediately.  This is important b/c each site caters to different use cases, demographics, or ways of showing off the data.  In a click of a button ­­­ your listing is now on hundreds of sites covering millions of potential tenants to get a tenant faster.

4)   Better Communication: A key part to keeping tenants happy and maintenance costs low is proper, timely communication.  Interfacing across owners, tenants, a property manager, the city inspector, power companies, plumbers, contractors, bankers, a roofer, a banker, Section 8 housing, and more can turn into a nightmare without property communication systems.  But properly tracking all open items across email, texting, automated alerts, and a phone call when needed ­­­ a property manager can ensure all parties hear back within 24 hours of a request.  If you are having trouble getting people to get back to you on time, the issue might be that you aren’t embracing technology well enough.

5)   Rent Estimate: As an owner, it’s incredibly important that you charge the proper rent.  Charge too much..... you will have vacant apartments costing you money.  Charge too little and you could be losing thousands of potential rent a year without even realizing it!   With better information flow has given the opportunity to use technology to estimate your rent.  SlateHouse Group actually has built out it’s own proprietary formula (AccurateRent) that you can see on our site: http://www.slatehousegroup.com/rentestimator/.  We looked at 15 different variables across thousands of properties to form the most accurate rent estimate tool around.  AND – it’s totally free for all owners ­­­ even if they don’t work with us!       

  6)   Cheaper rates for owners!:  This probably should go first, since it’s the number one thing we hear from owners.  Even just a few years ago, the lowest property management rates in Central PA would be 7­10% of the monthly rent.  Now ­­ we are able to charge 6% of the rent a month and guarentee high quality service due to property managers being more effective with their time.  1­4% in savings might now sound like a lot ­­­ but if you own 3 units in Central PA – the savings could be well over $2K a year if you include additional rent from more occupied rooms.  $2K is a pretty nice savings for an owner ­­­ all thanks to better technology! 

Shoot us a note if we missed anything, you have a question, or want to talk to us about our PM services.

Evictions - A well written lease will expedite the process

Evictions are a landlords worst nightmare.  The ultimate goal is to avoid them by diligently screening your tenants.  The sad truth is no matter how thoroughly you screen tenants every once and a while a tenant will break the lease.  It is important that you do everything in your power to make the eviction process go as fast as possible.  This starts with a solid lease.  Every lease should contain the following phrase 

"If Tenant breaches Lease for any reason, Landlord can begin eviction proceeding without written notice.

 TENANT WAIVES OR GIVES UP TENANT’S RIGHT TO A NOTICE TO MOVE OUT."

Without this language in a lease a landlord in PA must give the tenant 10 day written notice of an the impending eviction.  Essentially, the landlord needs to tape a notice to the door of the tenant saying that they have 10 days to resolve the issue or the landlord will start the eviction process.  10 days may sound insignificant but it isn't.  If the tenant's rent is $900, 10 days represents 1/3 of a month or $300.  Additionally, It is time consuming to type up a written notice and drive to the tenant's apartment to post it.  Having a well written lease is critical to being a landlord.  This is just one of many reasons why.  If you have any questions about the lease you currently use don't hesitate to ask me at nate@slatehousegroup.com.   

Why You Should Raise the Rent Each and Every Year

You finally found a great tenant.  They pay rent on time every month and they don't complain about trivial things.  This makes your life as a landlord easy!  They are approaching the end of their year long lease and things are going smooth.  You always assumed you would raise the rent at the end of the year but now you are scared to rock the boat.  You think keeping the rent the same is better than taking the chance of the tenant moving out.  Let me explain why this totally normal thought is a completely wrong approach to renting.

Assumptions-Rent is $700 

1- LOST MONEY-Fast forward 5 years-  If you don't raise the rent $20(3%) each year like you should have you are now renting $100 under market value.  Over the course of a year this is $1200.  That is a significant amount.  Over those 5 years you lost $240,$480,$720,$960, and $1200 respectively for total loss of $3600.  I'm sure you could take your whole family on vacation for a week with the extra money

2-  STICKER SHOCK-  If you wait 2 or 3 years to raise the rent you will need to raise the rent $40-$60 to get back to market rent amount.  In my experience tenants expect and can budget for a small raise each year.  However when you raise rent by $60 a month it creates a cash flow problem for the tenant and increases the chances of then moving out.

3- Tax,Utilities, Repairs- Historically inflation was increased by 3%.  Taxes, Utilities, and Repair costs will continue to rise in cost.  If rent is stagnant these expenses will cut into your cash flow effectively making your rentable property less profitable then it was last year.  

Raise your rent between 2%-4% each year or you are doing yourself a disservice.  I'm sure some people have situations where this strategy did not work as they hoped.  However, I can promise over time, you will be glad you increased rent annually.