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Property Management Blog

How is Financing a Rental Property Purchase Different Than a Primary Residence?

Mike Lautensack - Monday, May 7, 2018

How is Financing a Rental Property Purchase Different Than a Primary Residence?

Financing a rental can be much different from financing a primary residence. Home buyers who understand and anticipate the difference between these two purchases can prepare in advance to buy the home of their choice. 

Difference Between a Rental Property and a Primary Residence

A primary residence is a home that the buyer lives in for the majority of the year. In a newly purchased home, the primary residence must be occupied by the homeowner for at least 60 days after the close of escrow. 

A rental property is a property that is not lived in by the homeowner, but is instead rented to a tenant. Typically, there will be a rental agreement between the property owner and the tenant. This rental agreement can be used to prove that the house is being rented, which may become necessary at tax time. Rental properties are susceptible to tax breaks, so even though securing financing for a rental property can be a challenge, the tax breaks can make the investment worthwhile.  

Financing a Primary Residence

A primary residence can be financed with a relatively small down payment and low interest rate. Typically, the smallest down payment that a mortgage lender will accept is 3.5%, if the borrower is purchasing a home with an FHA loan. Home buyers purchasing their primary residence can also take advantage of lower credit requirements, if purchasing with an FHA loan. In fact, buyers can qualify for an FHA loan with credit scores as low as 500. However, buyers with low credit scores lower than 580 must produce a 10% payment when purchasing through FHA.

Financing a Rental Property

When it's time to secure a mortgage for a rental property, home buyers with high credit scores and a sizable down payment are more likely to qualify, and more likely to enjoy a low interest rate. In fact, rental home buyers should have a credit score of at least 740 or they can expect to pay more in interest. In addition, a rental home buyer should expect to have a down payment of at least 20%, and will do better if they can produce a down payment of 25%. 

It's All About Risk

Clearly, the mortgage qualifications for a primary residence are much more relaxed than for a rental property. Why is this? Because primary residences are relatively low risk. Homeowners need somewhere to live. If times get hard, buyers are less likely to default on a mortgage for a primary residence than they are to default on a rental property.

Contact Your Lender

For more information about mortgage requirements for different types of properties, contact a reputable lender. A good lender can answer your questions and help you decide what type of loan is right for you. 

 

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program please go to our website at http://www.delvalproperty.com/.

Mike Lautensack is the owner of Del Val Realty & Property Management ("Del Val”). Del Val is a FULL SERVICE Philadelphia Property Management company with over 15 years' experience and manage over 3,000 single family homes, HOA units and multifamily properties in and around Philadelphia, PA. We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program. This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation. All this while it GUARANTEES you will never have to deal with maintenance or tenant issues. Please see our website for more information at http://www.delvalproperty.com/

Should Landlords Accept Tenants With Pets?

Mike Lautensack - Sunday, March 25, 2018

Should Landlords Accept Tenants with Pets?

 

One of the interesting discussions I have with property owners is about pets and whether they should accept them.  It is a hot topic, so I thought I would lay out the pros and cons and some of the things you can do to offset the potential risk of accepting pets.  

 

60% of Americans Own Pets!

 

To start you need to understand that about 60% of Americans have pets.  If you decide not to accept pets, you are eliminating almost two-thirds of the population as potential tenants.  Also, if you have a high-end single-family home that number may be as high as 70% to 75% of families are going to have pets.  

 

If you own lower end properties or student housing that percentage might be lower. But either way, if you do not accept pets, a large chunk of the population is not eligible to rent your property.

 

Pet Owners Tend to Stay in Apartments Longer!

 

Pet owners tend to be very good tenants in that they tend to stay longer.  Because it's difficult for a pet owner to move or find another place that accepts pets, they are going to stay at their current property much longer.  Obviously, that helps with turnover and with repair costs so it's better to have longer term tenants.

 

Pet Owners Tend to Make More Money and Make Better Tenants

 

Pet owners tend to make more money than non-pet owner tenants.  Because owners of pets have to pay for food, vet bills, and all the other pet-related items pet owners buy, it indicates a higher disposable income than non-pet owners.  Higher incomes should allow them to afford higher rents and be able to offset any short term financial trouble. 

 

Charge Extra Rent and Security Deposit

 

You should make more money with accepting pets.  We charge an extra $25 per month, per pet.  If the tenants have two pets, then we would charge an extra $50 per month of rental income.  We also charge an extra $300 per pet in refundable security deposit.  It is refundable if the place is perfect when the tenants moves out, but if pet does any damage then we have additional monies to be used to make repairs.  Also, if the carpets were not clean when they left, one of the things we will be using the $300 security money for is to clean and shampoo the carpets.

 

Use Pet Addendums to Lay out the Pet Rules and Regulations!

 

We recommend that you should have the tenants sign a full pet addendum.  The pet addendum lays out all the rules and regulations of owning a pet and the ramifications if they don't take care of that pet.  

 

Do Not Accept Aggressive Dogs

 

We do not accept any aggressive dogs.  If tenants own a Pit bull or other aggressive dogs such as Rottweilers, Chow Chows, Doberman Pinscher and others, we would not recommend accepting them.  Additionally, I would not accept dogs that are over 50 or 60 pounds as they are adding a lot of additional risk for your building and other tenants or neighbors.  One of the reasons for this is most property insurance companies will void your insurance if you accept aggressive or large dogs. 

 

Professionally Shampoo Carpets Once the Tenants Move Out!

 

We require that pet owner tenants must professionally shampoo the carpets when they leave.  They must pay for the cleaning and provide us a receipt proving the cleaning was done. If for some reason they were not to do it, then again as I mentioned earlier, we'd use that extra $300 in security to have the carpets professionally shampooed and cleaned.

 

Hard Wood Floors and Pets?

 

One major concern is hardwood floors.  If you have a property with hardwood floors, accepting pets is a real risk factor.  We do recommend mitigating the risk by requiring that they have rugs over some or all the hardwood floors.  But either way, if you have hardwood floors, it is an extra risk and make sure it is worth having a dog in the property with hardwood floors.

 

Service Animals are NOT Pets!

 

It is very important that everybody understands that a service animal is not a pet.  If you decide to not accept pets, that's fine.  But if the tenant has a service animal you cannot decline a tenant based on a service animal.  So just make sure you're aware that has a service animal is not considered a pet.

 

 

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program please go to our website at http://www.delvalproperty.com/.

 

Mike Lautensack is the owner of Del Val Realty & Property Management ("Del Val”). Del Val is a FULL SERVICE Philadelphia Property Management company with over 15 years' experience and manage over 3,000 single family homes, HOA units and multifamily properties in and around Philadelphia, PA. We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program. This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation. All this while it GUARANTEES you will never have to deal with maintenance or tenant issues. Please see our website for more information at http://www.delvalproperty.com/

 

Why Should Landlords Increase Rent Every Year?

Mike Lautensack - Sunday, February 25, 2018

Why Should Landlords Increase Rent Every Year?

 

Do you own an investment property? And if so have you raised your rent every year?

 

When I get hired by new clients or someone's thinking of hiring us, the topic of rent increases often comes up.  I learn they have not raised their tenant’s rent for a couple of years, 10 years in some cases because they “like the tenants”.  They think the tenants are “good people” so, they have not increased the rent.  I quite often wonder, do the owners understand the impact on the value of their investment property by not raising the rent?  I thought I would write a short article to walk you through the impact of not increasing rent.

 

Here is a simple explanation of what would happen over the next 10 years if you were to raise your rent versus not raising rent. 

 

We know inflation in the United States is averaging about 2.5%.  So at a minimum, over the next 10 years, you would expect rent to go up 25%.  If you do not raise rent at all, you're going to lose 25% of your investment value over the next 10 years just due to inflation.

 

We also know that rent has been rising about 4% per year.  In Philadelphia, we have been going up about 4%, but other markets like Seattle, Dallas, and San Francisco, are probably even higher.  We have been typically advising our clients to raise their rent 4% to 5% per year. 

 

This increase of 4% is largely a result of a large influx of renters over the last 10 years.  A lot of people are no longer owning homes and have become renters.  This trend will most likely continue over the next few years.  Also, within the United States we have not been building enough apartments to keep up with the demand, so the result has been rising rents across the country.

 

So here is a quick example of the impact on the value of your investment property under three (3) different scenarios.  Scenario 1 is no increase in rent, Scenario 2 is a 2.5% increase to keep up with inflation and the final scenario is increasing rents 4%.  Here are the basic assumptions:

 

  • Rent = $1000
  • Building is valued at 100 times Rent - $100,000
  • Impact of Rent Increases for the next 10 years
      • No Rent Increase – Building worth $100,000
      • Rent Increase 2.5% - Building worth $124,886
      • Rent Increase 4.0% - Building worth $142,331

 

You have one investment property and the rent is $1,000 per month.  The value of the investment property is 100 times the rent, or $100,000.  If you do not raise your rent over the next 10 years, the value of your investment property is still $100,000 (100 times a $1000 rent).  If you were to raise your rent just 2.5% to try to keep up with inflation, the value of your building is going to be approximately $125,000. 

 

But if you were to raise your rent to 4% per year, which has been the average rent increase in the Philadelphia area, over the next 10 years your rents are going to go up 42%.  The value of your investment property is going to increase by 42% over 10 years. 

 

So, if you want to keep the value of your investment property as high as possibly simply raise your rents. 

 

So, what is the impact of a 4% rent increase over 10 years?  We now know it's 42% in terms of the value of your investment property.   

 

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program please go to our website at http://www.delvalproperty.com/

Mike Lautensack is the owner of Del Val Realty & Property Management ("Del Val"). Del Val is a FULL SERVICE Philadelphia Property Management company with over 15 years' experience and manages over 3,000 single family homes, HOA units and multifamily properties in and around Philadelphia, PA. We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program. This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation. All this while it GUARANTEES you will never have to deal with maintenance or tenant issues. For more information visit our website at http://www.delvalproperty.com/

 

Why the Del Val Lease is Pro-Owner versus Pro-Tenant

Mike Lautensack - Wednesday, January 17, 2018

Why the Del Val Lease is Pro-Owner versus Pro-Tenant

 

One of the questions I get asked a lot from owners and potential owners is about our lease.  We have a lease we've been using for over 15 years and have been constantly improving and fine tuning it to protect our owners.  We have used our lease for over 4,000 lease signings over this time period.  I get asked about the difference between our lease and why it is so “pro owner” versus pro tenant.   Here are a couple of reasons why our lease is “pro owner” and why it will benefit you to use our lease as opposed to another lease.

 

All Persons Over 18 Must Sign the Lease

 

We require all persons over the age of 18 to sign the lease.  Seems simple right?  But you would be surprised how many property management companies do not require it.  The reason we require all persons over 18 to sign the lease is if we must evict the tenants and all parties over 18 have not signed that lease, we have a problem.  We can evict the parties that have signed the lease, but it is hard to evict people that have not signed the lease if they are 18 or older. 

Tenants will come to us and say my spouse or partner does not work so I don't want them on the lease.  This is not a good policy and do not allow this to happen.  Or they may  come to you and say my partner or spouse has a very poor credit score so I don't want them on the lease.  Again, we want all parties over 18 years old to sign the lease so we know exactly who's living in the property and if we must do an eviction, we can get that done.

 

Automatic Rent Increase after the Initial Term Ends

 

Within our lease is a clause that when the initial term is over in one year or two years, the rent goes up automatically 10% if they want to go month-to-month.  This incentivizes the tenants to either accept the 10% premium if they want the flexibility of month-to-month or negotiate a new one or two-year lease.   This new lease will probably increase the rent by 3 to 5%, which is  a much more reasonable increase than a 10% increase.  And that way we've locked them in for another year, or maybe two years, and this benefits the owner.  But again, the tenant does have the flexibility but the 10% is already pre-authorized.

 

Waive Their “Notice to Quit” Rights

 

In the State of Pennsylvania, and maybe other states, the tenant has what is called a 10-day “Notice to Quit” right.  If we need to do an eviction, we must give the tenant 10 days’ notice to tell them we are about to evict them.   In our lease, we make the tenants waive that right, so they have signed that right away, and we can begin eviction proceedings right away.  We could evict a tenant on the first day of the month.  I am not saying we do that, but we have the right to do that because we require our tenants to waive that 10-day Notice to Quit right.

 

Tenants Must Initial Several Sections of the Lease

 

Tenants must initial certain sections of our lease.  There are areas of the lease that are very important including the Notice -of Quit we spoke about in the last paragraph.  Another important section is Renter's Insurance, so we make the tenants initial these sections.  This way the tenant cannot claim later that they were not aware because we make them initial each of these important sections in the lease. 

 

Tenants Must Sign Several Addendums Designed to Protect the Owner

 

Tenants are required to sign several addendums including Lead Paint, Security Deposit Escrow, Rules and Regulations and several other addendums.  These addendums are designed to protect the owner so it's very clear what's going to happen at the end of the lease or under other various scenarios. So we make sure that these addendums are signed to protect the owner.

 

Our Lease has been Reviewed by 100’s of Judges and Attorneys over the Last 10 Years

 

Del Val has probably signed 4000 to 5000 leases over the last 15 years.  As part of this process our lease has been reviewed by hundreds of attorneys.  We have also been in front of hundreds of Judges during eviction hearings.  As result we have refined and improved our lease based upon this feedback.  Our lease is well tested and any weaknesses have long since been removed.

 

We Include the “Extra” Paperwork that is Required in Philadelphia

 

The City of Philadelphia requires a lot of extra paperwork that is not required outside of Philadelphia.  So, it is important that we get those documents signed at the time that the tenant moves in.  If we do not get these documents signed and go to evict down the road we could potentially have a hard time doing an eviction. That's not the position we want our owners to be in so we want to make sure all the paperwork is done properly.

 

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program, please go to our website at http://www.delvalproperty.com/ .

Mike Lautensack is the owner of Del Val Realty & Property Management ("Del Val"). Del Val is a FULL SERVICE Residential Property Management company with over 15 years' experience and manages over 3,000 single family homes, HOA units and multifamily properties in and around Philadelphia, PA.   We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program.   This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation.   All this while it GUARANTEES you will never have to deal with maintenance or tenant issues. 

 

Should I Consider Renting to Section 8 Tenants?

Mike Lautensack - Tuesday, January 2, 2018

 

 

I am often asked about Section 8 and whether a landlord should consider renting to someone with a Section 8 certificate. They want to know if they should accept these tenants, what kind of rent they might get, and what are some of the pros and cons of this program.  Quite often they initially start out with a negative view of Section 8, so I thought I would give some pros and cons and allow you to make better decision about this program.   

 

What is Section 8

 

 

The PA Section 8 program, also known as the Housing Choice Voucher Program, provides rental assistance to low income families in the private rental sector. Funded by HUD (The United States Department of Housing and Urban Development) the Section 8 housing goals are to provide improved conditions for families while assisting them in obtaining low income housing, maintaining rental payments, and promoting a greater freedom of choice in housing conditions. This Federal program provides incentives to the owners of apartment complexes and private homes to ensure the continued availability of government subsidized homes. Locally, the Pennsylvania public housing authority (PHA) is responsible for qualifying applicants and disbursing the vouchers to eligible families.

 

 

Low income house rentals are listed by the PHA in each of the 67 counties in Pennsylvania, though each complex and home is privately managed.   So, each county, Montgomery County, Chester County, even Philadelphia County manage their own Section 8 programs.  Even within some counties there are individual towns that have Section 8 offices.  For example, Chester, PA has its own Section 8 office.

 

Philadelphia County is a busy office and very difficult to work with. To be frank it is a struggle for Del Val and others to work with them. They are trying to improve their systems but are very bureaucratic.  It is very difficult to reach them on the phone to get simple questions answered.  The counties outside of Philadelphia are much easier to communicate with.

 

But it is a partnership between three people: the owner/landlord, the tenant and the Section 8 office.  Traditionally there is a lease between a tenant and an owner/landlord.  That is the contract that lays out how the lease is going to work.  But with a Section 8 tenant there is a second contract, which is a payment contract that describes the payment amounts and when they will be made.  That contract is signed by the Section 8 office, by the tenant and by the owner/landlord.  So, this is an additional contract and in an exchange for them offering to pay the rent, the owner/landlord must agree to comply with their rules and regulations.  One of those rules is that the owner/landlord will maintain the house in good shape and Section 8  inspections will occur on a regular basis to make sure that you're doing just that. 

 

What are some of the Pros of Section 8

 

One of the pros obviously is its federally funded guaranteed rent from HUD, so there is no credit risk involved.  Traditionally,  Section 8 will pay probably 90-100% of the rent. The tenant may pay a small portion from time to time but 90-100% of the rent typically is going to get paid by the Section 8 office.  You will get a one year contract, sometimes a two year contract.  The county of Philadelphia offers a two year contract. So obviously once you put that tenant in there for the next two years you know your property will be rented and you'll be getting your rent.

 

Now, the question comes up about rent; Is my rent going to be higher or lower than it would be otherwise?  In some cases, it's going to be a little bit higher but I typically tell owners that it will be within 10% + or - than other rents.  Again, it depends on the county, it depends on the city and the area so everything's a little bit different in each case.  Typically, five to 10 years ago the Section 8 rent would be probably 15% below a non-Section 8 person.  But I think that gap has come down recently to no more than 10% that you will receive.  In some cases, you might actually get more for Section 8 than you would get for a non-Section 8.

 

What are some of the Cons of Section 8

 

One of the negatives is they will perform regular inspections.  So initially before the tenant moves in they do an inspection and you must comply with what they're asking you to do. They're not going to ask for you to do anything out of the ordinary.  So you're going to have to make sure that your outlets work, your smoke detectors work, you have fire extinguishers, stairwell banisters are tight and secure and outside that your walkways and things are all safe and secure with no tripping hazards. 

 

Another of the cons is the fact that the tenant may call Section 8 from time to time and say something's not working.  And if Section 8 comes out and determines that is correct, it's not working, then they could stop paying your rent for a period of time.  That is called an “abatement of the rent”, meaning for that period you won't get any rent.

 

Why should you consider Section 8 tenants?

 

In some areas, Section 8 may be your only choice.  There are certain areas where Section 8 is very prevalent and because of that there's not a lot of options and you may have to go with Section 8.  There are certain areas of Philadelphia, Norristown, Pottstown, and Reading that have high concentrations of Section 8.  So, it may be your only option in those areas.

Tenants tend to stay longer. If a tenant has a Section 8 certificate and they like your house, you’re keeping it up and repairs are being made, for the most part they're not going to want to leave.  For one reason, because there's not a lot of other Section 8 housing out there.  Also, it is very difficult to move and there's a lot of paperwork involved and a lot of risk on their part.  If they notify you they're going to move out and they can't find another house within a 60 or 90-day period, they are potentially going to lose their Section 8 certificate.  Second, moving from one county to another county is very difficult.  So, if they want to move from Philadelphia to Montgomery County there's a lot of paperwork involved, and the red tape is not easy.  So, for the most part Section 8 tenants do stay a long time.

 

Section 8 requires you to keep your house in good shape, they inspect it and that's a good thing ultimately for you as the owner of the property.  You want to keep your property in good shape. 

 

There is also lots of demand for Section 8 tenants.   When we put “Section 8 Welcome” in our ads they get a lot of attention and so that's obviously a great reason to use Section 8!

 

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program, please go to our website at http://www.delvalproperty.com/ .

Mike Lautensack is the owner of Del Val Realty & Property Management ("Del Val"). Del Val is a FULL SERVICE Residential Property Management company with over 15 years' experience and manages over 3,000 single family homes, HOA units and multifamily properties in and around Philadelphia, PA.   We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program.   This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation.   All this while it GUARANTEES you will never have to deal with maintenance or tenant issues. 

Time Management

Mike Lautensack - Thursday, November 16, 2017

 

Time Management 

 

"Excellent time management skills" has become a key phrase in the business world.  Many good resumes contain this catch phrase.  Job interviewers will ask how you manage your time.  Knowing what to say and how to implement time management skills is a work in progress, as each job has requires preparation and knowledge, and has different deadlines.

 

Time management is often seen as an oxymoron:  after all, like the best laid plans, the management of your working hours often has to be reassessed numerous times per day as unexpected emergencies or new projects which demand your immediate attention arise.

 

There are countless courses and articles readily available to help you prioritize your workload, and to help you minimize the amount of time projects take by suggesting more efficient processes.  Even with the best planning and most efficient procedures at your fingertips, there are times when the list of things to do seems to just keep growing and may even feel unmanageable.  

 

All dedicated employees will bite the bullet and keep hammering on. They must also learn to delegate some of the work when possible.  Cross-training several people in your department or organization gives more opportunities for employees to build their own skill sets while contributing to the success of the company by being able to aid and assist when necessary.  It also brings employees closer as a unit.  

 

Building a stronger team builds a stronger, more efficient, cost effective and ultimately, more successful company.

 

Some tried and true ways to help with time management are:

  1. Make and review the list of projects which must be done, noting deadlines.  (The list may have to be amended as previously noted.)
  2. Pen in time first thing in the morning to review, sort, and to respond to your e-mails.
  3. Check your e-mails regularly.  Depending on your work load and the type of job you have, regularly can mean every few minutes, to only once every few hours or less.  When multiple assignments must be completed, checking and responding to e-mails frequently can be a time sucker and ultimately, make you less productive.  By checking and responding to your e-mails less frequently, you may be able to respond once instead of several times to inquiries.
  4. When unexpected projects/assignments arise, review your list and make adjustments as necessary.  If you're going to require more time to complete a project, advise your supervisor.  
  5. Allow yourself more time than you think you'll need to complete any task.
  6. Ask for assistance when assistance is needed!  It's better to ask for extra time or for extra help to get a job completed properly than to scramble and rush through a job to get a passing grade.

 

Most importantly, always do your best.  Even with the best of intentions, assistance and hard work, there will be times when your days feel over-whelming.  On those days, the best time management advice (as long as nothing is immediately pressing) is to be good to yourself and to take a little break.  Go for a brisk walk, have a cup of coffee, stretch!  Tomorrow is another day to give your 100%.

 

Harumi Russell, Office Manager

Del Val Realty & Property Management

How to Simplify Accounting Statements for Rental Property Owners

Mike Lautensack - Thursday, June 8, 2017

It is very important that rental property owners understand the activity in their account each month. This is, after all, their money and they should feel confident that their property management company is portraying to them an accurate and easily read accounting of where their money is coming from and what it is being spent on.

One of the most common reasons I have seen rental owners change Property Managers is due to lack of communication in regards to their financials. If their funds are not being reported to them in a logical fashion, on a consistent basis, it creates a lack of trust with their Property Management Company. This can also lead to the rental property owner feeling that they are being taken advantage of, even to the point of them feeling like they are being robbed!

So, how can this be prevented? We prepare not only monthly financial reports, which rarely make sense to anyone who is not an Accountant, we also take a little extra time to give our reporting a personal touch. This includes providing all the transactions that have taken place in their account each month in a simplified, easy to read and understand Owner Statement Summary Sheet.

It is a great way for the financial team to become familiar with each owner’s properties and cash flow so when you do receive an occasional call you will already have the knowledge of their account.

Here is a list of items that can be extremely helpful to a rental property owner, when viewing their summary sheet:

·       A section that includes a total dollar amount of revenue collected that month, broken out between rent, utility reimbursements, late fees, etc.

·       A listing of which units have outstanding balances owed at the end of the month.

·       A section that includes all expenses for the month. This doesn’t have to be detailed, a simple line marked electric bills, or maintenance costs is sufficient. If they do need more detail of the specific charge and what it entailed, they can reference the financial reports, which will provide this information for them. 

·       A total amount of owner disbursements that were paid that month.

The summary sheet should always include the beginning balance in the owner’s account, as well as the ending balance. The rest of the information doesn’t do much good if the owner doesn’t know where they stand when the month is over.

As I mentioned before, not all rental property owners are Accountants and do not want to take time digging through debits and credits. That is that the reason they chose a Property Management Company in the first place! They want to know what rent money came in, which tenants are delinquent and the biggest question: Where is my money being spent?

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program, please go to our website at http://www.delvalproperty.com/ .

Christie DeLaney is the Accounting Manager of Del Val Realty & Property Management ("Del Val"). Del Val is a FULL SERVICE Residential Property Management company with over 15 years' experience and manage over 2,500 single family homes, HOA units and multifamily properties in and around Philadelphia, PA.   We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program.   This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation.   All this while it GUARANTEES you will never have to deal with maintenance or tenant issues.

Six Critical Elements of Great Ad Writing for Rental Properties

Mike Lautensack - Thursday, June 8, 2017

As marketing coordinator for Del Val Realty & Property Management I write ads every day and follow the 6 rules below to make our ads standout.

Headline / Ad Banner

I write my Ad first and see what details jump out at me for the Ad Headline. Is it on tree-lined street?  Is it near a park or something of interest? Then I incorporate the most important items, like number of bedrooms, the address and points of interest into the headline. For example:

“3 Bedroom Condo for Rent – 123 American Drive – Award Winning School District”

Use Key Words in your Headline /Ad Banner and the Ad

      A keyword is generally a word or phrase that is a topic of significance. Prospective tenants use keyword searches as a way to identify and locate a property that will suit them. They can enter this word when searching for a property online.  For example:

“3 bedrooms”, “single family home”, “Valley Forge Park”, “fenced yard”, “pets allowed”

Details, Details, and more Details!

Beyond the basics like number of bedrooms, bathrooms and square footage, include as many other details of the property that will appeal to your renter. 

  • Is there a microwave in the kitchen?
  • Does the home have a washer and dryer?
  • Does it have new windows or carpet?
  • Is there a fenced yard?

Always include information about the home’s neighborhood, access to public transit, shopping, school district, swimming pools or other area features that can effect a renter’s decision to contact you.

We recommend that ads are written in bullet point statements versus a full sentence. This allows the reader to scan ads versus reading long sentences or paragraphs.

Take Great Pictures!

Every prospective renter looks for a property that suits them financially and esthetically. There is greater turn off than too few photos, blurry photos or dark photos. Try to take as many photos you believe will result in a minimum of 10 great photos that capture the essence of the home. And be sure to capture both the exterior of the home and yard.

  • Take pictures on a sunny day, everything looks better in sunlight
  • Make sure blinds and curtains are open to maximize the natural light;
  • Try for an angle to add dimension and visual interest (no corners of bedrooms!)
  • Get rid of piled personal items in a room to let the room be seen, not personal stuff.
  • Follow bathroom photo etiquette, put the lid down!

Make sure your Rental policy is clearly stated

Although the rental price, security deposit, any fees and lease term are important, be very clear about any policies that could threaten the deal with the prospective renters. Make sure they understand pet policies, smoking in the property, parking and anything else that might affect their rental decision. Also, if the property is located within a housing community that has their own set of rules and regulations, be sure it is clear in your Ad that the residence is in a housing community.

Formatting the Ad Itself

There is sometimes a lot of information to include in the Ad. Paragraphs with lots of information and details are too hard to read and a prospective tenant will lose interest. Keep your Ad format the same each time and make it easy to read.  Use bulleted short statements in a list versus long sentences in a paragraph. Make sure they are clear and concise and add value to the Ad.

If you follow these SIX critical elements your Ad will give prospective tenants the desire and confidence to see the property. And in representing your rental property well, your prospective tenants will be assured they have found their new home!

 

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program, please go to our website at http://www.delvalproperty.com/ .

Terri Ulaner is the marketing coordinator for Del Val Realty & Property Management ("Del Val"). Del Val is a FULL SERVICE Residential Property Management company with over 15 years' experience and manages over 2,500 single family homes, HOA units and multifamily properties in and around Philadelphia, PA.   We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program.   This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation.   All this while it GUARANTEES you will never have to deal with maintenance or tenant issues. If you want to learn more about Del Val Property, please visit us at http://www.delvalproperty.com/

 

Tax Time: Tax Reporting Requirements for Property Managers

Mike Lautensack - Thursday, June 8, 2017

The beginning of each calendar year is a very busy time for many businesses, and Property Managers are not left out of that category! Whether you are a large Property Management Company or an individual Property Manager, this is the time when all tax forms should be issued for funds paid out to Rental Property Owners or Vendors during the previous calendar year. The form that is used to complete this task is the 1099-MISC, and this form must be submitted to the recipient and the IRS by a specified date each year. When 1099s are submitted to the IRS, they must be accompanied by a summary form, Form 1096, to meet the tax filing requirements.

Why is the 1099-MISC necessary?

The IRS uses 1099s to monitor any income source that is not filed on a traditional W-2 form, which only shows income received as a salary or wage. This is a way in which the IRS captures any income received by an independent contractor or rental property owner that may otherwise go unreported. A Property Manager or Property Management Company is acting as a reliable source for the IRS to help enforce that all income is being reported.

Who should receive a 1099-MISC?

  • Rental Property Owners - all rental property owners that have received $600 or more in rent disbursements in a given calendar year should be issued a 1099-MISC.
  •  Vendors all independent contractors or vendors who are unincorporated and have received $600 or more in a given calendar year for services provided should be issued a 1099-MISC.

When does a 1099-MISC NOT need to be filed?

Every situation has exceptions, and tax filing and reporting is no different. Here are some of those exceptions:

  • If the total payments to a rental property owner or vendor are less than $600, a 1099-MISC does not need to be filed.
  • If a rental property owner is a corporation, a 1099-MISC does not need to be filed.
  • If a vendor is an incorporated business, a 1099-MISC does not need to be filed.  

What information is required on a 1099-MISC?

  • Tax ID # - this can be an individual’s SSN or an EIN for an unincorporated organization.
  • Address – this is needed for the 1099-MISC to be sent to the recipient.
  • Funds Paid – this includes a total of all income paid to a vendor or individual rental property owner during the previous calendar year. (Remember, only if the total is greater than $600)

What boxes are used on a 1099-MISC to report income?

  • Rental Property Owners – all income collected that was for rent should be reported in box 1 “Rents” on the 1099-MISC. Any additional income paid (late fees, utility bill reimbursements, NTQ fees, etc.) should be reported in box 3 “Other Income” on the 1099-MISC.
  • Vendors – all payments made for vendor services should be reported in box 7 “Non-employee Compensation” on the 1099-MISC. 

It is also good practice to send all rental property owners a copy of their financials for the previous calendar year so they can see where the amounts in each box on the 1099-MISC were derived from.

Not filing 1099s when required can lead to penalties and fines by the IRS, so it is very important to keep accurate records of amounts paid to each vendor and rental property owner and request any necessary forms that you may need to file the tax forms to be compliant in this process.

 

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program, please go to our website at http://www.delvalproperty.com/ .

Christie DeLaney is the Accounting Manager of Del Val Realty & Property Management ("Del Val"). Del Val is a FULL SERVICE Residential Property Management company with over 15 years' experience and manage over 2,500 single family homes, HOA units and multifamily properties in and around Philadelphia, PA.   We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program.   This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation.   All this while it GUARANTEES you will never have to deal with maintenance or tenant issues.

 

 

 

Respectful Communication and Teamwork Leads to Success

Mike Lautensack - Thursday, June 8, 2017

There is an old saying that resonates in all aspects of life.  "Respect is earned."  A very wise former Manager of mine reminded his staff that we must respect our customers at all times.  In business, the customer is not our only client. Our co-workers are our internal clients.  The customer isn't always right, but every person deserves to be treated with respect and in adherence with the golden rule:  "Treat others the way you'd like to be treated."  There will be times when these adages are not being followed by your customer.

 

Communication: 

 

  • It is okay to respectfully disagree with a client, however there's a right way and a wrong way to articulate the organization’s point of view.  The resolution to an issue may or may not address the client’s concern form his or her perspective.  

 

  • Communicating effectively when the client may perceive a request or a complaint is not addressed the way that the customer would like is of extreme importance.  The customer will appreciate the fact that they've been heard and that their concerns have been acknowledged.

 

  • Document, document, document.  Communication is the key to excellent customer service.  Not everyone learns or comprehends the same way.  There are times when a conversation is more effective than an e-mail.  When you're speaking with a customer, they can hear the tone in your voice and pick up on nonverbal cues that an e-mail just can’t convey.  When information is communicated verbally, follow up reiterating what was said and agreed to in an email.  This way, there's a record verifying the conversation, and everyone is on the same page. 

 

Regardless of the position one holds within an organization, recognizing the importance of each person’s function to the success of the company helps to create a more cohesive work environment.  Every employee has an important role, independently and as a team, to adhere to the processes, procedures, and guidelines, to ensure that the company is successful. 

 

  • The Owner or CEO of an organization plans, budgets and works so that the company's vision and success will come to fruition.  

 

  • It has been said that the janitors carry and distribute the most important paper in an organization!

 

  • Every level and department in an organization matters.  If an area is weak, the company may not succeed to the level that it should.  

 

  • Treating everyone with respect creates an environment where ideas, knowledge and experience are freely exchanged and where people support one another.  Such a team environment allows the organization to thrive, expand, retain and attract the best people.

 

The "sundown rule" (answer all e-mails or return all phone calls by the end of the business day) is a good rule to follow.   Occasionally, it will be necessary to take time to gather all of the pertinent information to accurately respond to a client’s concern or request.  Let them know that!  Even if you respond advising them that you will get back to them at a later date, their concern has been acknowledged and they’re aware that you’re working on a resolution or response.  When the customer is happy, the business will thrive.  Word of mouth endorsements and referrals can be as, or even more effective than paid advertisements.

 

Team Work:  Be excited to work for your company!  The more successful each individual is, the more successful your team will be.  

 

  • Working as a team, with mutual respect and effective communication, provides an opportunity for each individual to succeed and as a result, the organization will grow.  

 

  • Give credit where credit is due.  Engaged employees are happy and productive employees!   Happy clients are committed clients.  It's a win-win for all!  

 

 

If you are a real estate investor or property owner and want to learn more about how we can help you buy investment properties and our property management program, please go to our website at http://www.delvalproperty.com/ .

Harumi Russell is the Office Manager at Del Val Realty & Property Management ("Del Val"). Del Val is a FULL SERVICE Residential Property Management company with over 15 years' experience.   Del Val manages over 2,500 single family homes, HOA units and multifamily properties in and around Philadelphia, PA.   We advise property owners how to build wealth and financial security through hassle-free ownership of rental real estate with our NO "Hassle" FULL Service Management Program.   In addition, we advise and manage homeowners and condominium associations on the daily operations of their communities.  This includes but is not limited to sales, collections, maintenance, contract negotiations and management as well as various accounting functions.


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Del Val Realty & Property Management

81 Lancaster Avenue, Suite 218
Great Valley Shopping Center
Malvern, PA 19355
484-328-3282 - Office
610-500-5682 - Fax