utah rental housing journal september 2014
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DESCRIPTIONUtah Rental Housing Journal September 2014
By Cynthia Hale, Esq.
I recently bought a little apart-ment complex up on Capital Hill. While shopping for the right units to buy, I had the opportunity to walk through a good number of units in the Salt Lake valley. So as an investor, I got a recent first-hand look at some fatal landlord mistakes that may be costing you money.
Likewise, in my law practice I of-ten see landlord mistakes, many of which can be fatal to your invest-ment health, and all of which are eas-ily avoidable. This article is offered as a little refresher (you already know everything Im going to tell you) to help you avoid these mistakes and bank a profit.
Fatal Mistake #1: Failure to Maintain and Upgrade Your Property
Maxim: The value of your property is determined by the income stream that it produces.
Some investors make the mistake of not putting any money back into their properties. The business philosophy of some of the landlords whose properties I recently inspected, must be to charge low rents so the landlord can justify do-ing the irreducible minimum. This is bad investment logic and often lands you with creepy tenants, government agen-cies looking over your shoulder, and at-torney bills.
If you can spend, for example, $3,000.00 on upgrading a unit and then raise the rent by $100.00 per month, you will have enlarged the income stream of the property by $1,200.00 per year. Us-ing a 10-Cap, you will have increased the value of your property by around $12,000.00. I know a couple of local in-
vestors who have recently raised rents by as much as $135.00 per unit, by doing exactly this. If your property is in a good rental area so that youre not over-im-proving, then why would you run down the value of your asset by letting it go to the dogs?
Much can be done with plain old soap and water and elbow grease. As the units turn over, wash and caulk the win-dows, re-stain the doors, acid-wash and caulk the tub and sinks, sweep the side-walks, pull the weeds, etc. These things cost pennies but the improvements can be dramatic, plus the sweat-equity youll build and the improved clientele will be well worth the effort.
Fatal Mistake #2: Failure to Treat Your Investment Prop-erty as a Business
Maxim: Youre either making a prof-it, or youre running a charity.
If you have a tenant who is consider-
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September 2014 - Vol. 6 Issue 9Rental Housing Journal Utah
WWW.RENTALHOUSINGJOURNAL.COM PROFESSIONAL PUBLISHING, INC
Official PublicatiOn Of the utah aPartment assOciatiOn utah's leading advOcate fOr the rental hOusing industry 888-244-0401 www.uaahq.Org
UPCOMING EVENTS:General Membership Meetings All meetings 7 pm for addresses go to www.uaageneralmembershipmeetings.comOgden- Oct. 28thOrem- Oct. 29thSalt Lake - Oct. 30
EventsUAA Annual Meeting Nov. 18th
By Scott Watkins, Cambria Property Management
A story is told about a rancher who hired a ranch hand who claimed to be able to sleep when the wind blows. One night a big storm came in. The rancher, in a panic, went out to tour his spread. He found all the gates closed and shut, the barn shut-tered, the animals put away and safe, and all prepared for the storm. When he went to look for the ranch hand that had done it all, he found him asleep. He now understood what it meant to be able to sleep when the wind blows. It means you have prepared and have no worries.
Properly winterizing your proper-ties allows you to sleep when the wind blows. Taking appropriate care in the following six areas will help you reduce cost, lower risk, and better maintain your properties.
PlumbingCheck all hose bibs. Unhook and
remove hoses. Wrap any exposed areas with insulation. Look for any exposed pipes outdoors or any indoors that are close to exterior surfaces and wrap with insulation.
Landscaping and RoofsTurn off sprinklers and if possible
blow out the lines with compressed air to decrease freezing and cracking. Be sure to remove all fallen leaves (lots of slip and falls happen on sidewalks with wet leaves) to reduce hazards and not kill the lawn in the spring. Inspect trees and branches around roofs to make sure they arent dragging against the building and could do damage. Make sure braches that could hang low when covered with snow are removed as well. Clean out gut-ters and ground spouts so they wont get clogged and overflow.
HVAC (Heating, Venting and Air Conditioning)
Drain any swamp coolers and dis-connect any water pipes (so they dont freeze in winter). Scrub the water pan to get rid of grime and moisture. Prepare the furnace by changing filters, cleaning combustion chambers, and making sure any flammable materials are not stored nearby.
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Why Landlords Fail: 10 Fatal Mistakes
and How to Avoid Them
2. Ask The Director: Dear Director: Tenant wont let me in!
5. Troubleshooting Appliances
6. Directors Message: Annual Renewal Packets Out in October
7. Presidents Message: Money Talks: How Pac Donations Help Represent Our Industry
9. House Vote Sinks EPA Water Rule
Utah Economy and Rental Market Conditions Strong
By Dr. James WoodsBureau of Economic ResearchUniversity of Utah U
tahs Economy is strong and get-ting stronger. This is fueling the residential rental market and
leading to good times for landlords and
property managers for the foreseeable future. Overbuilding is unlikely to be a problem overall, though it may have an impact in some submarkets like sugar-house and downtown Salt Lake City.
Drivers of Utahs High Growth Rate
There are 6 things that drive Utahs High Growth rate, which is one of the top in the country: 1 )Our labor market is inexpensive, low cost, with a large sup-ply of high quality workers who stay in Utah because of our quality of life; 2) Our transportation infrastructure is high
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2 Rental Housing Journal Utah September 2014
RENTAL HOUSING JOURNAL UTAH
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UAA Landlord Guide Provides essential information for understanding basic landlord/tenant law and best practices all in one place. Free with association membership. UPDATED 2014
General Membership Meetings www.uaaGeneralMembershipMeetings.com October General Membership Meeting Topics: Emergency Preparedness Inspections UAA Forms & Contracts
Ogden @ Northern Wasatch Board of Realtors October 28, 7:00 PM Orem @ Century 21/Harmon Building October 29, 7:00 PM Salt Lake City @ UAA Office October 30, 7:00 PM Events UAA Annual Meeting Nov. 19
Good Landlord Class This class qualifies you for a discount on your business license State wide.* Salt Lake @ UAA Office October 20, 8:30 AM November 1, 8:30 AM Ogden @ City Hall October 9, 8:30 AM October 13, 8:30 AM
Washington Terrace @ City Hall November 3, 8:30 AM South Ogden @ City Hall October 22, 6:00 PM
Providing Advocacy and Education
to Utah Landlords and the Multi-Housing Industry
NOT A MEMBER? JOIN TODAY!!! Online: www.uaahq.org Toll Free: 888-244-0401
*The discount applies to municipal business licenses that require landlord education for a lower annual fee.
For more classes go to: www.GoodLandlordTraining.com
Did you know that as a member of the Utah Apartment Association, you are also a member of the National Apartment Association?
UAAPAC Protect your business and make your voice heard. The UAAPAC is scaling back overzealous regulations, limiting fees and taxes, and protecting your property rights. Be proactive, donate today!!!
I donate to UAAPAC because the only way to protect our industry from over reaching govern-ment regulation is to be proactive in building relationships with all levels of government. Kirk Cullimore Landlord Attorney
I donate to the PAC because its critical we have a strong voice on capitol hill and our PAC helps us build relationships with and help keep in office those supportive of our industry. Gloria Froerer Century 21 Property Management
Utah Apartment Association Political Action Committee
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Ask The Director: Dear Director: Tenant wont let me in!
Dear Paul,I have a tenant who has lived in a prop-
erty for 3 months now. They recently had a leaky faucet and asked me to send over a plumber. When I went over there with my plumber, they insisted that he could go in, but I couldnt. This made me suspicious, so I gave them a 24 Hour inspection notice a few days later, and when I came by they locked the doors and refused to let me come in. What should I do? Should I just let myself in when they arent home?
Dear Linda,Im sorry that you had a breakdown
of communication with your tenants. It sure sounds like something strange is
going on! As you know, doing regula