You Bought a Tenant-Occupied Property But Know Nothing About Property Management

Uh oh. But not uncommon.

Let me start out by saying that managing your own properties starting out is the way to go.

Why?

Because you must know the laws and what you can and can’t do as a landlord. Perhaps you have no interest in managing the properties yourself and plan to immediately hire a management company. *Warning* – if you don’t understand property management, you won’t know how to hire a property management company or if they’re doing a good job. I’m quite confident when I say that most property management companies are not good.

Now, to the problem at hand – There’s a Tenant in Your Property!

1. When you bought the property, you should have received the tenant deposits and contracts from the previous owner. If you didn’t, you started out wrong. If the owner says they did not have contracts or deposits with the tenant but the tenant says they had a contract with the previous owner, ask the tenant for copies of the contract they have. If they also can’t produce a contract, there is nothing binding you to any previous terms.

2. Hopefully you received the tenant deposits because, when they move out, you want something to cover the repairs you will need to do, plus, you’ll be responsible to refund any deposit they paid that is not used for unpaid rent or damages (even if they paid it to the previous owner who did not pass it on to you).

3. You are legally bound to uphold any prior contract and terms that the tenants have (again, providing you have a copy of these agreements). Consumer protection laws protect the tenant and bind you to their previous agreements until those agreements expire.

4. If there is no contract, send all tenants your own new contracts immediately. They are allowed to sign or move. You will then be managing your property according to your terms.

5. Owning a property and managing tenants are two very different businesses. You must learn property management if you’re going to have tenants. I wrote a book – The Essential Handbook for Landlords – available on Amazon, which is a great starting point.

You own the property – you’re the one in charge. You need good contracts and it’s essential that you know your local laws and how to manage tenants.

6. When you do decide to hire a property management (PM) company, know that they manage based on your paperwork and your rules. I owned a PM company for years and most owners came in with their own previously-signed contracts and rules. Some allowed pets – some didn’t; some allowed smoking – some didn’t, etc., etc. We enforced the owners’ rules. What you do with your property is up to you – the PM company enforces your rules (if the company is any good… ).

Managing properties and/or tenants all goes back to the contracts. And your local laws. Every state is different. Know your laws.

Additionally, owning rental properties is a business. When any tenant is “bad” including behind in payments, start eviction IMMEDIATELY. I listen compassionately to their reasons, but the rules are the rules and don’t bend them for any because, if you give in to one, you must give in to all (consumer protection laws, again).

Have you ever bought a property with a tenant already in place?

Tips for Outgoings Management and Budgets in Commercial Property

When you manage commercial real estate, the outgoings within the property will require focus and financial control. When the property market slows or gets tougher, managing the outgoings is really important; the outgoings form part of the financial strategy for the landlord and will impact the net income for the property. If the outgoings get too high, the property will be hard to lease and hard to sell.

Set Some Rules

You can split the outgoings into a number of categories and this is normally done to identify and track the cash flow by expense streams. Most importantly there are two sides to the outgoings equation. Some of the items will be controllable and others will be uncontrollable. This means that the landlord can exercise control on only some of the outgoings.

The uncontrollable outgoings are those which are imposed on the property and have to be paid without any opportunity for cost savings, adjustments, or budgeting. Those uncontrollable items are normally council rates, land tax, and water rates. To a degree, insurance and energy costs will also fall into that category although some cost controls are possible with these items.

To manage the property outgoings effectively it pays to adopt a process similar to the following:

  • Create a budget for the property prior to the commencement of financial year
  • Track your expenditure to budget monthly. Adjust expenditure when you see a need and reason; early adjustment prevents bigger blowouts.
  • Look at the history of the property expenditure over the last few years to identify any excessive spending or items that are beyond the averages in the local area. The history of the property will allow you to adjust your budgets and cash flow expectations.
  • Make sure that you have removed the capital expense items from the normal repairs and maintenance for the property.
  • Talk to the owners of comparable properties in the same area. The outgoings between your property and their property should be similar. If not, you need to know why and take steps to fix that. Share information of outgoings costs with other similar property owners for this very reason.
  • Monitor the annual valuations for rating purposes. When these valuations are done, you will soon see the statutory charges and council rates rise soon after. It is not unusual for landlords and property managers to dispute the valuation in an effort to keep the statutory charges at a lower rate.

In preparing an expenditure budget for the property, you should time the expenditure so that the larger costs are expected; hence ensuring that the cash flow is suitably adjusted in preparation.

The controllable outgoings are those that the landlord can exercise decision and timing. Normal items of repairs and maintenance together with the contractor maintenance will fall within this category. If the landlord chooses to delay the expenditure with the controllable outgoings, then they can spread the impact of those items on the net monthly income from the property.

In summary, the property manager working on behalf of the landlord should exercise due care and diligence in the budgetary process for property expenditure. A well-managed landlord cash flow in an investment property is a correct balance of income against expenditure given the tenancy mix pressures on the building and the existing vacancy factors.

Tips For Hiring a Probate Attorney For Estate Planning and Estate Management

A probate attorney specializes in establishing estate planning and managing probated estates. Probate is mandated in the United States unless decedents establish trusts. The process is necessary to validate decedents’ last will, settle the estate, and distribute assets to named beneficiaries.

A Transactional probate attorney is used to handle estate administration duties. Transactional lawyers open the probate case and present Wills to the probate court. They provide assistance to the appointed probate personal representative and file legal documents according to protocol.

Probate Litigators are lawyers that specialize in managing estates enveloped in family discord. This type of attorney is required when heirs contest the last will, or are fighting over distribution of inheritance assets. Probate Litigators can mediate and negotiate on behalf of the estate administrator or can be appointed to manage the estate.

When heirs contest the decedent’s last will and testament, they are initially responsible for legal costs. If a judge rules in their favor the estate must reimburse heirs or pay their legal counsel directly. Regardless of whether heirs win or not, contesting a will can tie up estate assets for months or years or bankrupt the estate, leaving nothing for beneficiaries.

When decedents own real estate their estate is responsible for maintaining the property throughout the probate process. Expenses can include home loan installments, property taxes and insurance, homeowner’s association dues, and necessary maintenance. These expenses can quickly cause financial hardship for the estate if proper estate planning measures are not in place.

Transactional lawyers are a good choice for handling intestate estates; meaning the person died without executing a valid will. Intestate probate is notorious for taking several months to settle. Transactional attorneys can help heirs organize documents, present documents to the court, appoint an estate executor, and represent the family in court.

It is best to interview three or more lawyers during the estate planning process. It is never a good idea to retain the services of probate attorney during the grieving process. However, if this cannot be avoided try to obtain referrals instead of scouting out lawyers on your own.

Estate management fees will vary depending on estate value, inheritance assets, whether the estate is testate or intestate, and how well family members get along. Another factor is state probate laws. Legal fees can be charged at an hourly rate, percentage, or gross value of the estate.

It is imperative to understand legal fees prior to signing a contract. Oftentimes, the majority of the work can be performed by the estate administrator. Executors are compensated for their time and must keep record of time spent working on estate related matters.

Administering an estate can be time consuming and emotionally draining. When designating an estate administrator it is important to choose someone who is good with finances, well organized, and able to work under pressure.

Probate attorneys can help individuals establish strategies to avoid probate altogether. Options include revocable and irrevocable trusts, life insurance trusts, and various other techniques which transfer financial assets and personal property to intended beneficiaries.

Helpful Tips For Better Real Estate Management

Managing rental properties can be a tedious process sometimes landing you into legal issues. As a property manager or owner, you should think about preventing problems even before they occur to have an easier time maintaining order. Apart from making your tenants feel worthy, you should also find ways of making the management process easy for you especially when handling large properties or multiple properties. When you are organized in how you handle your property, it becomes easier to keep everything in check and a few tips can help you put in the best measures into the management process.

Tip 1 – Get a professional property manager

If you are a property owner with little knowledge of how to go about management, you should consider getting a professional property manager to ease out the process for you. Professional managers with some knowledge and experience in the real estate industry will know exactly how to go about the process and find organizational solutions to ease everything out. When there is a manager in place, you will feel more at peace and have fewer issues to deal with.

Tip 2 – Embrace technology

There are very effective real estate management solutions available thanks to technological advancements. Real estate management software is among the best solutions you can find to make the process easy and organized. Such a solution can improve communications and payments and data maintenance for the property. With the right system you will have an easy time collecting, returning and holding security deposits, as well as inspecting and documenting rental unit conditions before move-outs. There is just so much you can do with real estate management software to streamline processes so look for the best solution.

Tip 3 – Handle tenants appropriately

First of all you should consider screening tenants before allowing them into your property. It is a simple way of keeping troublesome characters off your property. It is also important that you put tenant landlord agreement in writing to keep things clear and ensure that you treat all tenants equally and without any discrimination. Discriminating prospective tenants based on sex, race, origin, disability or even familial status can land you into trouble. It is also important to respect their personal privacy even if the property is yours by notifying them prior to entering their rental units. Handling tenants appropriately will save you from a lot of trouble especially legally.

Tip 4 – Keep the property in top shape

Regular inspections are very important so you can make any improvements and changes where need be. Recklessness on your part leading to safety and security issues can lead to hefty losses in terms of compensations. You should therefore make a point of making prompt repairs and consider having a security system in place to give your tenants the sense of security they deserve as well as ensure that their safety is not compromised in any way.

Tip 5 – Oversee managers

They should be competent enough to keep your property in check. It is therefore important that as a landlord you choose and supervise property managers. Background checks and clearly spelling out their duties will prevent issues cropping out later.

Commercial Property Management – Tenancy Schedule Tips Tools and Tactics

The tenancy schedule is the tool of choice for a property manager or leasing manager in a commercial or retail property investment. It is the tenancy schedule that will keep the property manager up to task on forthcoming events and dates.

Often you find that the tenancy schedule is not up to date, so if anyone gives you such a document, treat it with the caution it deserves, and check it out completely before you act on the information contained therein.

So let’s say that you have a great tenancy schedule that you know is totally accurate. I get many questions about what I would want to see in a tenancy schedule. Here are my main priorities:

  • Details of the tenant name, lease, and full contact detail for emergencies
  • Tenancy identifier or suite reference that comes from the plan for the property
  • The area of the tenancy in m2 or ft2 (depending on your unit of measurement)
  • The % of the tenant area to the building net lettable area
  • The rent $’s per annum, per month, and per unit of measurement (m2 or ft2)
  • Lease start date
  • Rent start date
  • Lease end date
  • Term of lease
  • Option term of lease
  • Anniversary dates and reminders for rent reviews, options, expires, renewals, renovations, and make good obligations
  • Outgoings charges for each tenant on the basis of area and monthly charge
  • Outgoings budget for the building
  • Total outgoings recoveries for the property on a currency and % basis
  • Types of outgoings to be charged to the tenants
  • Insurance obligations of the tenant
  • Rental guarantee details or bonds held
  • Provision for critical dates relating to any important lease term or condition
  • Maintenance obligation details of the tenants

This list is not finite and you can add your own extra priorities, I would however make sure that it is totally correct and maintain it to the highest level of accuracy. When you do this you can stay on top of important upcoming events that will impact the occupancy or rental of the property.

Whilst you can buy ‘off the shelf’ software programs that display this above information, that can be quite expensive for those commercial and retail property managers that are first entering this type of property. The alternative is to create some simple spread sheet that contains the data; in saying that, it is essential that great care is taken to maintain the spread sheet that you create. Any errors in the tenancy schedule can destroy your landlord, your business, your tenant, your reputation, and the property. Accuracy is paramount.