Property Management Blog
As usual, older AC units were killed off in droves and those that survived struggled to keep houses cool. Industry standards state that on average, an AC unit is going to last 12 to 15 years. Can it last longer? Of course. However, the probability of it dying just keeps going up. If your property has one of those older units, we would strongly suggest discussing a proactive change out with your property manager. We find that AC companies have more time during the cooler months and give better pricing to keep their techs busy.
When an AC dies in the middle of the summer, tenants (and rightly so) want them repaired ASAP! You would too! However, it's not uncommon to have a 5 or 7-day delay (worst case) for the work to start. Here's what that can look like.
When it's been 100 plus for a month, everyone is a little on edge and at this point tenants start to come unglued.
Remember the goal, we want your tenant to renew their lease over and over and keep that cash coming in. If we have to get another estimate, that can easily add another 3 to 4 days on top of the 4 already spent at this point. You get the idea. We understand it's a lot of money and we are sensitive to that. One of the most cost-effective companies for these change-outs is usually two weeks out (from when we send them the WO) for a change out. However, you are now 4 to 5 days in and this adds 10 more days. This is untenable in the summer and because of that, we can't use them in the summer. Fall would be a better time as the temps are more acceptable.to the tenant.
Also, as these units age, they begin to become more and more inefficient and tenant utility bills skyrocket. We have seen owners continue to repair older inefficient units (that keep breaking down) instead of replacing them. This only leads to the tenants getting angry over their high electric costs, the continued break downs and they eventually move out. Did the owner save money on repairs? Yes, in the short run. However, now they have a turnover, all the costs associated with that and the AC still needs to be changed out.
If you're not getting spring and fall checkups on this valuable piece of expensive equipment (which our owners are and a reduced cost) it'll die sooner rather than later, most likely in the middle of summer and when you're on vacation. Of course, you'll then wind up spending way to much. What a hassle! Call us about property management services and let us "take the hassle out of property management."
Hiring Quality Contractors Equals Quality Results on Several Levels
Rental property maintenance doesn’t have to be expensive or full of hassles. If you have a preventative maintenance plan in place, it’s easy to stay on top of the things that may need attention on a routine basis. Make sure your tenants know how to report maintenance needs, and be responsive to those notifications. Choosing vendors is a huge part of maintaining your home. When you look for the cheapest possible work, you can actually end up spending more in the long term.
Protecting the Condition of Your Property
To protect the condition and the value of your investment, you need to maintain it with quality work. Sloppy work or unfinished work will only result in additional repairs and more expenses. This is why it’s so important to develop relationships with good vendors who you can trust. Look for professionals who will stand behind their work. A cheap vendor will cut corners and avoid taking the extra steps necessary to prevent further problems. This can cause damage to your property, put your tenants at risk, and increase your overall maintenance expenses.
Work with Licensed and Insured Vendors
Insist on working with licensed, fully insured, vendors and contractors. These professionals will often cost more than uninsured vendors, but you’re getting better work and you’re not risking lawsuits and claims. If you hire an uninsured vendor to clean tree branches off your roof and he falls off a ladder and gets hurt, you could be responsible for his medical bills and any other damages for which you are sued. The risk is not worth the few dollars you might save working with an unlicensed laborer. Ask to see proof of liability insurance, licensure (if appropriate), and worker’s compensation insurance before you hire anyone to work at your property.
Make Preventative Maintenance a Priority
There isn’t a repair that’s going to get better with age. When something is broken or old, don’t wait to repair or replace it. Take care of the work right away. Otherwise, that simple problem will become more complicated and more expensive. A preventative maintenance plan ensures everything continues to function and shows your tenants that you care about their safety and comfort, and about the condition of your home. Some simple things you can do include having your HVAC system inspected annually. Bring in someone to clean out your gutters and check your roof. Preventative checks can save you a lot of money and time.
Developing relationships with quality and service-centered vendors will save you money at the end of the day. While you may spend a little more for their services, you’re saving yourself money in additional expenses and you’re avoiding low-quality vendors who will do bad work and then nickel-and-dime you. You’re also showing your tenants that you care about quality. Positive and responsive maintenance leads to tenant retention and reduces your vacancy and turnover costs.
It’s not easy to learn all of the requirements investors must meet in order to run a rental business. Whether you have a single rental property or several, you ARE running a business.
There are many, many guidelines you must follow. No one sits you down to explain them or emails you a packet outlining them in a step-by-step format. There’s not one place to find out everything you need to know - you must discover the information and requirements. This process takes time because the details are not always easy to find. Even so, you must comply.
A real estate investor or professional property management company should have detailed knowledge of your rental property. At Rollingwood Management, we have a thorough owner and property account setup process that includes several steps for developing a complete owner and property picture. We develop an in-depth understanding of your specific expectations and your property expectations so we can make sure the property is adequately maintained and complies with housing and habitability requirements. What does an investor need to keep up with?
There are federal and state and local laws concerning habitability issues that you are responsible for. Many of these are outlined in the International Property Maintenance Code. Additional laws, such as lead-based paint, asbestos, smoke detectors, carbon monoxide detectors, the Texas Lock Law, bed bugs, mold, and rodent or insect infestations will impact your property.
Another example is that you are required to report all rental income to the Internal Revenue Service. As your property management company, we prepare and provide all the required 1099s for you. We also prepare cash flow statements and any additional needed documentation for you to submit with your income taxes. You get copies of all your invoices each month; we want to be completely transparent. These records are digitally prepared for you to streamline your tax process. These are just a few of the areas that you’re going to have to stay on top of.
At Rollingwood Management, we take pride in our full property documentation and reporting. Your property manager will probably know your rental property better than you! Our detailed record keeping and tracking will meet required deadlines and remain in compliance. Our annual property surveys are sent to you before we renew the lease agreement. This helps you stay on top of the property’s condition and help to eliminate maintenance/expense surprises.
Let us put our years of residential property management experience to work for you and your investment. Schedule a free rental market analysis with us or email us and we’ll answer any questions you have. We can also discuss how our services will help you achieve your investment goals. Rollingwood Management is a fulltime residential property management company. We only manage residential properties, like yours.
The Texas Association of Realtors® has approved our property manager Diana Cuero to receive the Texas Residential Property Manager or TRPM® designation. This Texas-specific statewide designation is held by less than 1% of the 120,000 Realtors statewide. This shows Diana’s commitment and dedication to the specialty of residential property management. The required coursework and 200 unit years (number of units managed per year) of property management experience have aided her in gaining further knowledge and training on current business issues impacting property management, how to mediate tenant relations, proper maintenance and the ins and outs of the Texas Association of Realtors® Property Management Agreement. Diana also acquired the Texas Residential Leasing Specialist (TRLS) certification which is a required prerequisite to the TRPM designation.
One of Rollingwood Management’s key objectives is to examine and evaluate an owner’s property operating costs for areas where savings can be accomplished. Our experience has been that one area where most rental property owners typically overpay is their annual property taxes.
To combat this, we partner with a well-established company to evaluate the assessed value placed on our owner’s property by the county appraisal district. This company of experienced property tax professionals is dedicated to effectively evaluating and managing the property tax liability for our owners. This service verifies that you are paying only your fair share of property taxes.
This year we were able to save our owners over $94,497.00 in property taxes. One owner realized a remarkable annual property tax savings of $11,200.00! In the past 16 years, our owners that are signed up for this valuable program have saved over $618,000.00 in property taxes they would have paid out had they not taken advantage of this service. Since we contract a large number of accounts, the evaluating company gives us special pricing on this service. Is your property management company thinking like this for you?
In addition to saving money on property taxes or verifying that an owner’s property is not overvalued, the hidden significance of this service is that a decreased tax this year means that the property's tax valuation base is lower next year than it would have been otherwise. This creates a compounding benefit in the tax payments each year. In other words, if the property value is increased next year, the appraisal district will start at a lower value than if it had not been decreased this year. A breakdown of additional information on the valuation process is sent to each owner.
If you are not receiving this and other invaluable cost-saving services and would like to be included next year, please call or email us to find out more about our property management services.
The National Association of Residential Property Managers (NARPM) has approved our Office Manager, Deborah Thornton, to receive their designation, the Certified Support Specialist Texas or CSS®. This certification shows her commitment and dedication to the specialty of office operations for residential property management companies. The required coursework and service to the local NARPM chapter aided her in gaining further knowledge and training on property management office operations. Classes range from office operations, Fair Housing issues, and ethics in property management. This commitment to education means higher quality services to our clients, their investments, and their residents. Congratulations Deborah, we’re proud of you!
As a real estate investor in Austin, are you prepared to meet any large operating costs to properly maintain your investment for the long-term? Today’s blog post will examine the area of capital reserves for investment properties and how to proactively fund them.
First, some basics: Capital reserves are used for capital expenditures. Capital expenditures or capital expenses are defined as funds spent to upgrade or materially improve a property. Typically, these are one-time major purchases. Capital expenditures are much different from routine operating expenses or routine maintenance and repairs. For tax purposes, a capital expenditure must be depreciated over the useful life of the asset (talk to your CPA for specifics). A routine operating expense will be entirely deducted in the tax year it is incurred.
Replacing an entire heating and air conditioning system or replacing a roof are examples of a capital expenditure. A plumbing service call, a minor AC call or touch up painting after a tenant moves out is examples of operating expenses. A single family real estate investor doesn’t need a complicated budget to figure out how much money to set aside for capital expenditures.
The best way to determine how much to hold in reserve for your property is to take a look at the remaining useful life of the “big ticket” items at your property. Here is a partial list (from the National Association of Home Builders) and an estimate of useful life:
Asphalt shingle “3-tab” roof: 15-20 years
Asphalt shingle “Architectural” roof: 20-25 years
Windows: 30 years
AC condensing unit: 15-20 years
Heating furnace: 20 years
Wood siding: 20 years
Countertops: 20 years
Decks: 10 – 15 years (depending on upkeep)
Vinyl siding: 25 years
Carpet: 5 – 8 years (depending on grade)
Exterior paint: 5-10 years
If you have a property that has a lot of big-ticket items that are nearing the end of their useful lives, you need to set aside more than if you have a new construction property.
While there is a debate about “how much” one should have in reserves, I find that on average, an investor should expect to budget 8-10% of gross annual rent toward capital expenditures. So, if you have a property that rents for $1000 a month, you should budget $960-$1200 a year for capital expenditures.
However, capital expenditures don’t typically happen every year, and when they do happen it’s typically a lot more than $1000. For example, the cost to replace an HVAC system (compressor and furnace) might range from $4,000 – $8,000 in a typical single-family property. A new roof can cost $8,000 - $15,000 or more
By evaluating the age of the capital assets of your investment property, you should be able to arrive at a number you feel comfortable with to put aside for capital expenditures. The important idea here is to have an idea of what systems might need replacing soon and to be prepared to pay for the replacements when needed.
You don’t want to have $0 in capital reserves when the 20-year old HVAC system dies in the middle of the hot Texas summer, nor would you want to only have $1,500 on hand when your 25-year old roof finally gives is beyond cost-effective repairs.
We are perplexed when owners seem caught off guard by these types of expenditures. Think of the age of your investment, if it's in the age range of the end-of-life of some of these items you should be planning for this expense. We tell owners “it's not a matter of if but when” these items are going to fail beyond repair. Additionally, if you replace these items proactively instead of reactively, you will save money. For example, water heaters don't break down Monday morning at 8:00 am, they break down on Friday of the 4th of July weekend and the tenant has a house full of company. Or they start leaking over the long weekend that the tenants are out of town and the tenants discover their house has water on the floors on a Sunday evening. Remember, happy tenants, are more likely to renew their lease.
Keep your asset in tip-top condition for the long-term by maintaining proper capital reserves to make needed and necessary repairs and upgrades. Your tenant will thank you, your property manager will thank you and you’ll be thankful you did when it comes time to sell!
Property management Austin Texas
The Texas Association of Realtors® has approved our Property Manager, Diana Cuero, to receive their newest designation, the Texas Residential Leasing Specialist or TRLS®. This Texas-specific state-wide certification shows her commitment and dedication to the specialty of leasing and residential property management. The required coursework aided her in gaining further knowledge and training on current business issues impacting leasing, how to properly handle a lease transaction, and the in's and out's of the Texas Association of Realtors® residential Lease Agreement. She is part of a group of the first agents in the state to receive this industry-specific designation. Owners and tenants want the services of a real estate professional who understands their needs and can guide them through the process. This commitment to education means higher quality services to our clients, their investments, and their residents.
Investor insurance is inherently more complex and much less standardized than your average homeowner’s insurance products that you are most familiar with. That’s why it is crucial that property owners understand what they need to purchase to mitigate coverage holes, otherwise, they risk losing hundreds or thousands of dollars. Below is a suggested list describing essential coverage options that should be included in every investment policy. Many of these coverage enhancements are not available with a typical home and auto insurance company. That’s why it is imperative that owners discuss this with a licensed Texas insurance professional that understands the unique needs of a Texas real estate investor. If they say “you don’t really need that” then call us and we can get you connected with an agent that knows the industry and your need for risk protection.
- 100% Replacement Cost
Minimum coverage of $80-$95 per square foot in Texas is suggested in order to ensure your same property is rebuilt completely in the event of total loss. Do you have replacement cost or actual cash value? There is a huge difference if you have a claim.
- Landlord Liability Protection
Did you know that many basic policies only cover up to $100,000 of liability per property? This may barely be enough to pay legal fees, much less to indemnify for actual damages. Coverage of at least $300,000-$500,000 is required. You’ll be surprised how little additional liability coverage actually costs
- Accidental and Sudden Discharge of Water or Steam
Coverage for hot water heater bursts, pipe breaks, and other common plumbing issues are regularly left off basic policies and are some of the most frequent claims payouts.
- Dwelling vs. Homeowner’s Policy
If you have a homeowner’s policy on your investment property, you will need to switch to a dwelling policy immediately. Your current policy has a provision in it that excludes coverage if you do not occupy the home.
- Lower Deductibles
Unlike most companies who require a deductible of 1% of the value of the dwelling, investment type policies will have a flat $1000 (on in that range) for all perils.
- Vacancy Clause
Most dwelling policies exclude coverage for any property left vacant for 30 - 60 days. If your home is vacant, you need to be temporarily switched to a vacant home policy in order to be eligible for a claims payout. Investor policies can have up to 180 days of coverage.
- Optional coverage, Loss of Rents
If your property is significantly damaged due to a covered claim, your tenant will move out and more than likely not pay rent. With this endorsement, the insurance policy pays your rent for a certain period of time while the home is being repaired/rebuilt. How long will the rebuild be if it’s a fire? Investor policies will sometime be up to 24 months.
- Ordinance Law
Ordinance law is coverage for loss caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings. Older structures that are damaged may need upgraded electrical; heating, ventilating, and air-conditioning (HVAC); and plumbing units based on city codes.
The landlord’s insurance agent should periodically provide a policy check-up review. You could provide a value-added service to encourage this. Here are some essential coverages to meet the minimum threshold for an adequate landlord insurance policy:
• Personal injury that covers wrongful eviction and invasion of privacy ($1M limit suggested)
• Get enough coverage to rebuild your whole property, not just a part of it! Check out the “Coverage A” limit and be sure it’s a reasonable estimate for total reconstructing cost.
• Extended Replacement Cost – covers reconstruction cost overruns – get a minimum of 125%
• Building Ordinance and Law – adequate limit to covers the additional cost of rebuilding old properties to be compliant with modern building code • No exclusion for marijuana grow houses
• No Exclusion of the landlord’s vicarious liability from tenant’s pets (known or unknown to the landlord)
A good robust policy should also have these coverages, though they may still be more difficult to find in the insurance marketplace:
• Sewer back up
• Extended Fair Rental Value
• Property Manager listed as “additional insured”
• Service Line and Equipment Breakdown
If you have not already done so, this is the time to do an audit of your rental home to make sure your space has been “winterized”. A surprising amount of wasted energy and costs can be reduced by simply following some basic tips.
These tips will show you how to be more energy efficient and save energy, money, and will go a long way to improving the environment and making it more comfortable.
1. Open your blinds during the day, close them at night
If your windows are facing the sun, let the sunshine in and turn on nature’s heater! Likewise, close blinds at night to add an extra layer to keep the cold out.
2. Keep doors closed.
If you have a large closet or any other rooms that aren’t heated (and don’t need to be), keep the doors closed to minimize the space requiring heating.
3. Make sure your heat sources aren’t blocked.
This may seem obvious, but make sure your furniture is not blocking any vents or radiators! This can have a big impact on how efficiently your home or apartment is heated.
4. Use the ceiling fan (if you have them).
If you think ceiling fans are just for cooling, think again. If you run fans in reverse, they’ll push warm air downward, to where you can enjoy it.
5. Turn thermostats up when you’re at work
This may seem obvious but we can’t tell you how many times our maintenance tech has told us of homes that are “toasty warm” when he goes to perform a maintenance request and everyone is at work.
Second homeowners can now enjoy total peace of mind, knowing that their property is safe and secure while benefitting from our affordable and reliable services.
Have you wondered what the best way is to care for your other home while you’re living elsewhere? Despite power outages, extreme weather, and the normal effects of time, we can eliminate your fears about the ongoing upkeep and management of your valuable assets....... while you're away.
Whether you call it your vacation home, second home, or "let's hang out in Austin" home, the last thing you want is worries about “what’s happening on my property?” "Is there a leaking water line?" "Is the yard being properly maintained?" "Are newspapers and flyers piled up on the porch?" "Is the heating and air conditioning operating properly?" and on.
Noticing a home disaster is easy . . . preventing one is extremely difficult, even for the experts. With Rollingwood Management on your team, an experienced property manager is looking after the home in a methodical and professional way to help ensure that disasters are avoided and your investment is well protected.
Periodic surveys that are emailed to you help mitigate the set of risks that are unique to this part of the country . . . like high winds, curious raccoons, high summer temperatures and humidity, torrential rain and potential vandalism. With Rollingwood Management’s complete "Second Home Management program”, owning and enjoying a second home has never been easier . . . so our clients tell us.
For a breakdown of the different areas of your home that we will be surveying, visit our second home management services page.
If you are an investment property owner and want to help lower your risk at your property, purchase the right kind of rental property insurance policy. Start by calling and discussing your property insurance coverage with your agent. This would be especially true if you don't have a policy that was written specifically for rental property. This should be done at least annually.
Occasionally, we find insurance agents that don't have experience with rental property coverage writing a policy with inadequate coverage for our owners. This puts the owner and their property at risk should something go wrong. The correct policy and coverage is the most important thing you can buy for your property. Here are a few examples of items you should ask your agent about. Does your policy have:
• Coverage for vandalism?
• Coverage for water damage?
• Coverage for Ordinance Law (see last month's article)?
• Coverage if the property is vacant for more than 30 days? Most policies DO NOT provide coverage if a home is vacant for more than 30 days!
• Coverage for Loss of Rent. If there was a fire, repairs could take many months. Would your policy pay the rent while being rebuilt?
• Coverage amounts that would rebuild the property if there was a fire? The cost of construction has gone up, are you covered?
• Enough General liability coverage if there was an accident at the property?
Nobody likes to pay insurance premiums, but proper insurance is a critical part of properly managing your property. After 30 years in the property management business, we've seen owners who were glad they had proper types of coverage and coverage amounts, as well as owners who wished they'd purchased the proper coverage. A wise use of your investing time includes a review of your coverage with an experienced agent who knows investment property.
The Texas Association of Realtors® has approved our Leasing Coordinator, Chris Francis, to receive their newest designation, the Texas Residential Leasing Specialist or TRLS®. This Texas-specific state-wide certification shows his commitment and dedication to the specialty of leasing and residential property management. The required coursework aided him in gaining further knowledge and training on current business issues impacting leasing, how to properly handle a lease transaction, and the in's and out's of the Texas Association of Realtors® residential Lease Agreement. He is part of a group of the first agents in the state to receive this industry-specific designation. Owners and tenants want the services of a real estate professional who understands their needs and can guide them through the process. This commitment to education means higher quality services to our clients, their investments, and their residents.
Rental Property Video Tours. Several months ago we discussed the recent addition of a Leasing Coordinator to our team. One of the Leasing Coordinator’s responsibilities is producing a digital video tour of a property once it is vacant. Video tours have quickly become the preferred viewing method of choice for potential renters. The best part of this new service is that we are providing this service to our clients at “no cost”.
Why video tours? While still, photos provide an idea of the home, they cannot capture the property’s appeal. The best part of a video is that it gives a potential renter a more accurate view of the inside of the property, especially when it comes to the layout of the home. It allows people to see the depth of rooms, the width of hallways and other spaces, and also gives us a chance to narrate and highlight some of the properties great characteristics. Pictures definitely can’t do all that!
More efficient showings. With Austin’s continued growth and traffic, traveling across town has become more and more time intensive. As discussed above, by providing potential tenants an avenue to get a real feel for the home and its layout, it saves them (and us) an unnecessary trip to a property. It is not uncommon for tenants to want to see a listing, only to not like the floor plan once they get there.
Appeal to more people in the market. With a number of people moving to the Austin area, the video tour allows them to lease a property “sight unseen” and be more comfortable with their choice. It is much more desirable for new arrivals to have “buy-in” on a property they have leased than to have them move in and be unhappy for 12 months because the property isn't what they thought it was going to be. Some property management companies won't lease a property sight unseen. We see an opportunity!
Our new video tour service is giving our properties more exposure to the leasing market than ever before. More exposure means shorter vacancy time and that helps our client's bottom line!
Designation from the Texas Association of Realtors. The Texas Association of Realtors® has approved our property manager Peggy Smith to receive their newest designation, the Texas Residential Property Manager or TRPM®. This Texas-specific state-wide certification shows her commitment and dedication to the specialty of residential property management. The required coursework aided them in gaining further knowledge and training on current business issues impacting property management, how to mediate tenant and owner relations, and the in's and out's of the Texas Association of Realtors® Property Management Agreement. She is part of a group of the first 100 agents in the state to receive this industry-specific designation.
Designation from the Texas Association of Realtors. The Texas Association of Realtors® has approved our property manager Peggy Smith and Michael Francis to receive their newest designation, the Texas Residential Leasing Specialist or TRLS®. This Texas-specific state-wide certification shows their commitment and dedication to the specialty of residential property management. The required coursework aided them in gaining further knowledge and training on current business issues impacting property management, how to mediate tenant and owner relations, and the in's and out's of the Texas Association of Realtors® Property Management Agreement. They are part of a group of the first 100 agents in the state to receive this industry-specific designation.
Rollingwood Management Inc, was awarded the prestigious CRMC (Certified Residential Management Company®) designation from the National Association Residential Property Managers (NARPM®) at its national convention. This prestigious designation is held by only forty-six property management companies nationwide and is reflective of the professional commitment made to the residential property management industry by Rollingwood Management. This professional designation is awarded to property management companies that have completed the highest levels of achievement including specific courses as well as service to the NARPM® organization.
- Texas Summer = AC Deaths
- Quality Vendors = Quality Repairs
- A Texas Summer and the Death of Air Conditioning Units....is Yours is Next?
- So, You Want To Be A Landlord?
- Property Manager receives Specialty Designation
- Property Tax Evaluation Nets our Owners over $94,000 in Savings!
- Michael Francis