Top 7 Tips for Creating “Curb Appeal”

April 30th, 2009

First impressions matter more than they should when it comes to rental property but regardless of how fantastic the neighborhood, the people, or the property. Dead grass and junk cars make for DOA – Dead On Arrival.

 

Here are seven quick tips to make sure your property has that glorious “Curb Appeal”:

 

  1. Use mulch! A $4 bag covers a tree planter and then some. For $25 you can cover weeds, ugly lawn, and pretty much anything worth burying. New mulch looks great. Faded mulch looks terrible. We recommend buying the “premium” mulch because the dyes seems to last much longer in the sun and rain, keeping it looking fresh and clean longer. Just before prospects come to view the property, if you can, hose down the lawn and mulch…it makes the mulch look clean and sharp.
  2. Cut the grass, pull weeds and trim the bushes around property. Nothing says “dump” like an overgrown lawn.
  3. Replace any blown exterior bulbs. Dim or absent lighting makes a nice rental property look sketchy.
  4. Remove old mail. Minor thing, but a stack of unopened mail looks like the place has been vacant. Why is it vacant so long?
  5. Place a fresh new welcome mat at the door.
  6. Add some inexpensive Walmart window treatments on the front windows. For $17 a window, it makes a very nice, warm feeling.
  7. Put potted plants or hanging plants near the entryway. This helps to create a great “vibe” before the prospects get inside. Amazing what a few $7, 8” potted annuals, can do.

Viva Las Vegas…Real Estate, That Is…

April 5th, 2009

As I checked in to the Palms in Las Vegas for a 3-day conference last night, something totally unexpected happened. By chance or odd fortune, it happened to be Hugh Hefner’s birthday. At the Palms. That night. The streaming in-flow of celebrities, silicone, and hangers-on made for a “people watcher’s” dream.

Watching bombshell after bombshell saunter up to the VIP line, exchange flirtatious glances with the 300 lb mammoth door men and gate keepers, I couldn’t help but think to myself, “This world couldn’t be further from mine.” The style was fantastic. The money was evident and on their sleeves. They glanced at one another, sizing up the “who’s who” and “who’s not.” The clear pecking order of social status being meted out silently among the socialite elites… It just isn’t for me.

I doubt that I own a t-shirt that costs more than $12, or jeans that cost more than $30. And I’m okay with that. Don’t get me wrong, I can’t help but gaze like a hillbilly does at a “flying machine” when these walk by, and I certainly cannot relate or fit in to a crowd like that. For all the glamour and good looks, it’s also a tireless rat race of one-upping the other and keeping pace with the absolute latest in styles (I saw about 15 guys trying desperately to look like they were on a Justin Timberlake video. By the way, that fedora hat thing has to go.)

Real estate isn’t Hollywood. It’s not VIP lines with special tickets and special handshakes. It’s not $200 t-shirts and $2,000 shoes. It’s accessible. It’s something of tremendous value that anyone can own. There’s 20 ways to get someone else to give me $500,000 to invest in real estate and I get to keep the lion’s share of the profits. I don’t have to be pompous. I don’t have to be fake. I don’t have to worry that I’m not “on the list” to get in.

Unlike most other ways of obtaining and spending wealth, real estate is available to me just as I am: a guy who wears a 6 year old polo shirt and $30 jeans to the craps table at the Palms. I lost, by the way, but I had a great time.

So, happy birthday, Hugh Hefner. You’ve got an incredibly interesting lifestyle that makes for great TV and great stories, but I’m glad as hell it ain’t me.

How Can You Verify the Past “Landlord” is, in fact, a Landlord?

March 23rd, 2009

Sometimes, applicants stack the deck by listing friends or relatives as former “landlords”. By asking a few simple questions, you should be able to determine whether their past landlords are legitimate. The best solution is to pepper them with a few key questions:

 

  • What is the address of the former rental?
  • How many years did the tenant rent?
  • What was the monthly rent?

Failure to answer to answer any of these questions adequately is a signal that the “fomer landlord” may be a friend or family member.

Spring 2009 Maintenance Checklist

March 20th, 2009

Maintenance

 Get ready for this spring by tuning up your rental properties! Preventative maintenance helps limit surprises and keeps overall operating expenses (and tenant complaints) lower.

  • Air Conditioning. Schedule professional service. Check that the unit is still level and clean and has proper clearance. Remove any trees, debris, or trash that obstructs the unit. Adjust the main duct dampers if needed.
  • Humidifier. If you have a humidifier operating during the winter months, turn the unit off and close the water supply.
  • Duct dampers. Adjust dampers for a switch from heating to cooling as necessary.
  • Ceiling fans. Check ceiling fans and reverse fan direction for summer operation.
  • Roof. Visually inspect the roof for any damage. Trim trees as necessary. Inspect roof vents for damage or bird/wasp nests.
  • Gutters and downspouts. Clean gutters and make sure downspouts are attached and extended.
  • Chimney. Visually inspect for any damage to the cap, flash, or masonry. Check for bird/wasp nests.
  • Exterior of the house. Check condition of paint, caulk and putty. Open outside hose connection shutoffs so you can water the garden, wash the car, etc.
  • Termites and pests. Schedule professional inspections and service as needed.
  • Sprinklers / Irrigation. Service and start system for lawn and garden.
  • Decks. Clean and seal as needed. Normally decks need to be resealed every 3-5 years in order to preserve the wood, look, and protective finish.
  • Attic. Check for signs of leaks, mildew, or condensation.
  • Basement. Check for signs of leaks, cracks, movement, rot, or mildew. Consider a dehumidifier. Clean the dehumidifier and start operation as needed.
  • Sump pump. Test sump pump to make sure it removes water from the hole and discharges water away from the base of the house.
  • Water heater. Draw sediment from tank as needed.
  • Refrigerator. Clean coil, clean drain pan, and check drain.
  • Range hood. Clean filter and wash fan blades.
  • Bathroom exhaust fans. Clean grill and fan.
  • Bathroom tile. Check grout, caulk, and tile for damage. Caulk or repair as necessary.
  • Septic system. Schedule professional pumping and inspection at least every 2 years.

Create a Tenant File

March 19th, 2009

In order to protect you against allegations of violation of Federal Fair Housing legislation, for example, you should consider keeping records of past applicants, even if they didn’t result in becoming tenants—even if you deny them in the application process.

Call to confirm! – A Tenant Screening Tip that Saves 1 Hour

March 16th, 2009

When arranging a showing for a rental property, I strongly suggest that you ask the prospective tenant to call to confirm the appointment that day. Having been a victim of no less than one thousand “no shows” it’s a lesson that I’ve learned the hard way.

 

Be clear to the prospect when setting the appointment: “I’ll need you to call me the day of the appointment to confirm that you’ll be there. Please understand that if you do not call to confirm the appointment on the day of the appointment, that I will not be there. I have several other appointments and showings that day. I’m really looking forward to meeting you in a few days.” Be professional but direct.  

 

If they don’t call to confirm, don’t go to the property. If they do call, I like to thank them and ask if they drink coffee. If “yes’, then I grab a couple of Starbucks’ on the way there and give one to the prospect as appreciation. A little thoughtfulness goes a long way and tend to result in more rental applications. Coffee is great. It’s thoughtful but also not too personal so you don’t have to worry about getting too friendly. An ounce of “no show” prevention on your part will save an hour you may otherwise waste on a no-show.

PART 3 – Is There Hope?

March 12th, 2009

This is Part 3 of 3 on how real estate agents must fundamentally change their industry. In Part 1 we looked at how bad the situation really is. In Part 2 we analyzed how agents are failing to respond profitably. In Part 3 we look at how agents can create a profitable business by delivering what customers need in today’s world.

 

PART 3 – Is There Hope?

 

Thankfully, there is still a place in this world for a real estate professional. But, not for the same kind of agent that existed 30 years ago.

 

What’s left for the real estate agent to do?

 

The traditional value proposition for agents was:

§  We understand the buying/selling process

§  We understand the general legal and paperwork requirements

§  We know the neighborhood

§  We know how to negotiate

§  We know the best price

 

Websites like www.forsalebyowner.com walk sellers through the process and incorporate the state-specific legal and paperwork required for $199-$899…a far cry from the $10,357 an average home seller pays in commissions today. Basic level neighborhood information is available on both government and community based sites, as well as www.apartmentreviews.net and similar review platforms. The “best price” is being estimated by Zillow, Trulia, Hotpads and numerous others. But, nobody likes to negotiate in America so we’ve still got that one…or do we?

 

A comparison of figures released from FSBO.com and Realtor.org show that FSBO-sold properties are selling on average for about 2 percent less[1] so it appears agents are justified to ask for up to a 2 percent fee to handle just the negotiations. What about the rest?

 

Luckily, there are places we can still add value. Here are four questions clients ask and how we can respond profitably:


Read the rest of this entry »

PART 2 – Why are Agents Responding So Blindly?

March 10th, 2009

This is Part 2 of 3 on how real estate agents must fundamentally change their industry. In Part 1 we saw how bad the situation really is. In Part 2 we analyze how agents are failing to respond profitably. Later, in Part 3, we look at how agents can create a profitable business by delivering what customers need in today’s world.

 

PART 2 – Why are Agents Responding So Blindly?

 

You know how technology has changed the landscape:

§  buyers and sellers create their own mediocre-quality CMA online;

§  they view thousands of available properties and sort by every imaginable amenity;

§  they use Google Earth to do a virtual “drive by”; and,

§  they quickly uncover what previous owners paid and mortgaged through public records.

§  they have neighborhood and crime data at their fingertips and reviews of city communities via social web-networks.

 

In the face of technology’s offensive into the real estate agent’s traditional space, we’ve responded with a remarkable lack of insight and creativity. Instead of asking how the customer’s needs have changed, real estate agents focus desperately on getting more leads as if pouring more water into a bucket with a large hole at the bottom will solve the problem. Agents spend increasingly-scarce dollars to:

 

1.      Pour more marketing leads into the “top of the bucket”. They’re adding ever-more leads into a business proposition that has ever-diminishing value to the customer. Agents compensate by doing more transactions each year just to stay on par. The ultimate conclusion of this strategy is to work harder for less money. This is not smart business.

 

2.      Get noticed on social media and become a “recognized expert.” Without changing your underlying value proposition to buyers and sellers, these are hours wasted. Enjoy watching your list of (non-paying) blog subscribers climb higher. Having a “voice” in a blog is not the same as getting paid to provide a valuable real estate product to homebuyers and investors. As a business owner, you must keep your eye on CASH FLOW and things that make your profit-per-hour go UP, not DOWN.

 

3.      Leap on technology that is new or cool. Agents post widgets on their websites with dizzying quickness. Having a cartoon character calculate mortgage payments is sure cute, but it’s not worth the $10,357 an average home seller pays in commissions. Website traffic is not the same thing as cash in your hand, which you get by providing real value, not cute gimmicks.

 

Sadly, agents will not find redemption in lead generation. As my grandma used to say, “You can’t make a silk purse out of a sow’s ear.”  It’s time to re-evaluate what agents can do for money.

 

Tomorrow we’ll look at how agents can regain their profitable business by doing things that buyers and sellers will not or can not do for themselves…

REVOLUTION: Improving Real Estate Agent Profit by 2,000 Percent

March 9th, 2009

This is Part 1 of 3 in a series on how real estate agents must fundamentally change their industry to find profitability. In Part 1 we look at how bad the situation really is for agents. In Part 2 we analyze how agents are failing to respond profitably. And, in Part 3 we look at how agents can create a profitable business by delivering what customers need in today’s world.

 

PART 1 – Real Estate Agent Revenues Plummet 17% While Expenses Double

 

According to an article in Inman News on Aug 27th[1], real estate agents argue that an increase in the technology available to buyers and sellers is eating away at the traditional 6 percent commission. Are they right, and should they complain? 

 

How Bad Is It?

 

Recent SEC 10-K filings by Realogy confirm what agents across the country know already—that average real estate commissions are down from 6 percent circa 2004 to 4.96 percent in 2007. That tremendous downslide equals $2,169 less commission on each sale, or $729 less going into the pockets of each agent on each sale, not counting inflation.[2]  So, the average real estate agent’s salary dropped from $27,323 to $22,587 due to an inability to command the same commission split this year as they did in years past. That’s a 17.3 percent pay cut!

 

Viewed another way, the nominal revenue-per-hour for a real estate agent dropped from $13.66/hr to $11.29/hr.[3] Adjusted for inflation, its real value has dropped $9.99/hr![4] You can make more money working as a salesperson at Walmart, a security guard at the mall, or a waitress in a bar. Married agents with two children are actually below the poverty line.[5]

 

While agent revenues plummeted, fuel costs rose from $1.69 per gallon to $3.93 per gallon and agents are spending nearly twice as much on advertising to funnel leads into their sales bucket. Well, there’s a hole in this bucket, dear Liza, and it’s called the “Agents aren’t that valuable anymore” hole.

 

Contrary to NAR fluff, the agency industry as we’ve known it is dying. An agent’s recourse? Redefine the industry, change the product they deliver, or get out.

 

Tomorrow we’ll look at how agents have responded to the looming crisis by blindly flailing around the Internet…


[2] The average home sold for $208,600 in 2007, according to the NAR. If average commissions have been reduced from 6 percent to 4.96 percent, that equals a $2,169.44 drop in the average overall commission paid. Split commission between buyer/seller and then between agent/broker at national average of 67.17 percent commission split.

[3] Average salaries of $27,323 (2004)  and $22,587 (2007) divided by 2,000 hours (50 work weeks * 40 hours per week).

[4] Estimated inflation at 4 percent per year 2004-2007.

[5] http://aspe.hhs.gov/POVERTY/08poverty.shtml accessed September 4, 2008.

Costs are Determined by Volume

March 7th, 2009

Ontopofheap

If you process $2 million in rents per month, your fees will be half that of someone processing $100,000 per month. To the extent property managers and owners can band together when negotiating a fee structure with a bank or payment processor, they’ll save enormous amounts of money.

1.    Electronic check – the true cost of processing can be lower than $0.25 per check. Most pay $0.75 - $1. Typically there are two transactions: one to receive the rents, and a second to disburse the rents to the landlord’s account, for a total average cost of $1.50 per unit.

2.    Credit card – pricing structures are all over the map. There are normally three parts: monthly minimums (statement fees, maintenance fees, etc), per-transaction fees (may be $0.60 à $2), and a transaction percentage fee (2%-3.5%). Each vendor prices their mix based on your volume, the dollar-per-transaction average, and how knowledgeable they think you are. People with fewer properties will do better negotiating higher per-transaction fees in favor of lower transaction percentage fees. Do the math for your situation and decide which plan is better.

3.    For both, lowest cost is not always the best option. Low cost bidders often provide minimal documentation, proprietary code integration or no support. A poor quality solution will negate all the great potential benefits of accepting electronic payments. You’ll end up babysitting a payment system and trapped with that vendor. Find a high quality vendor with a reasonable price. The reduction in day-to-day hassle on your end will pay for itself 20 times over.

RentingYourHome provides a web-based alternative to property management for landlords with 1-10 properties to advertise listings, run credit checks, collect rents, and manage maintenance. We serve clients across 42 states and many cities. Your rental advertisements run automatically on the top 23 rental listing websites; one-click credit checks take less than 10 seconds; landlords collect rents by e-check and credit card with no transaction fees; and, we have a network of over 1 million qualified contractors complete with user reviews. For more information, see www.RentingYourHome.com.