In this week’s episode, Podcast Host, Property Manager & Business Owner, Andrew Schultz, chats about whether or not smart homes are worth the investment or not for landlords.
When it comes to work and rental references, what should a landlord ask? Find out the top questions to ask when chatting with references to see if your potential tenant is a go.
Yikes! Your keychain’s a mess and you need help sorting out your rental keys from your personal. Find out the best way to organize your portfolio keys.
Show transcription:
Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode number 419, and I’m your host, Andrew Schultz. On today’s episode, we’re gonna be talking about smart home rental properties, how to organize your keys for your rental, and work in rental reference questions. We’ll get to all that right after this.
Voice Over: (00:24)
Welcome to the Rent Prep for Landlords podcast. Now, your host, Andrew Schultz.
Andrew Schultz: (00:29)
The Rent Prep for Landlords Facebook group. Just hit 14,000 members. Our group members get access to our Sherwin Williams and PPG paint Discount Programs can ask questions in our monthly AMA sessions and much more. So if you have a question or a situation that you’ve never encountered or just need to bounce an idea off, a huge group of housing providers, this is the place. If you haven’t checked it out yet, do it today over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the questions so we know how you found us.
Voice Over: (01:05)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (01:13)
We’re gonna start things off this week with a forum quorum this week comes to us via the Rent Prep for Landlord’s Facebook group. And as a matter of fact, it looks like all of our questions this week are coming from the Facebook group, so definitely check that out if you haven’t already. Jumping into our forum quorum here, let’s go ahead and take a look. I am preparing my condo for long-term rental. I have a number of smart home devices including hue lights, ring doorbell, and cameras, and ring alarm, and I have wired the whole house with network, including switches and such installed and hidden panels. My inclination is to leave most of that infrastructure installed and include gigabit internet as a property perk, allowing the tenants to use most of the devices, the ones that don’t require a login when I’m not 100% sure that this is a great idea.
Andrew Schultz: (01:57)
Do any landlords have experience with renting out their smart homes? If so, can you provide any advice or lessons learned? Thank you in advance, and again, this one comes from the Red Prep for Landlords Facebook crew. This is an interesting question. As smart home tech technology has come a long way in the past couple of years, and more and more people are starting to add smart tech into their homes. In my opinion, I’d remove most of the smart home tech before listing a property for rent. There are a few reasons for this. The first reason, and probably the main reason that I would not wanna rent a home with a bunch of smart tech in it is that the second that anything goes wrong or stops working, you are going to be playing tech support. Maybe that’s something that you’re all right with handling, but I would not want to be in that position, nor would I want to put any of my staff in that position.
Andrew Schultz: (02:43)
And if anything stops working or needs repair, you’re going to be expected to repair it back to the same level or better than it was at the time the tenant moved into the property. Think about a broken icemaker on our refrigerator. This would be the exact same concept. If the icemaker maker worked when the tenant moved in, it needs to be working for the duration of the tenancy. So if it breaks, you have to fix it. This leads me to my next point, which is that simple homes are easier to manage and cost less to maintain smart home technology while it has come down in price, is still rather pricey. We can even use the refrigerator example here as well. If you have a refrigerator with an ice and water dispenser, it’s expected to, you’ll maintain the appliance to that level. The same thing applies to your smart home tech.
Andrew Schultz: (03:29)
So if you have a light fixture that ties into a home automation system and some part of that system stops working, you have to be ready to repair it. The other thing I wanna mention is especially when you talk about smart home appliances, we can go right back to the refrigerator. Oftentimes they cost significantly more upfront and significantly more to repair. For instance, I can remember staying in an Airbnb that had a Samsung refrigerator that had a full-sized tablet in it. That’s not something that I would want to have to pay for. If it breaks and the chances of something like that breaking in a refrigerator where it’s constantly being exposed to different temperatures and possibly moisture inside and things of that nature, I wouldn’t want to deal with it. Smart home technology is meant to enhance the way that we use our homes, but oftentimes poorly configured smart home technology actually introduces problems that we didn’t have before.
Andrew Schultz: (04:21)
A good example of this would be as simple as having a lamp with a color-changing LED bulb plugged into it, which is then plugged into an outlet controlled by a switch. This is very common up here in Buffalo where you’ll have a switch that’s controlling an outlet in a room somewhere. It’s oftentimes because there was not an overhead lamp installed in the room, and that’s kind of the solution to it. So let’s say you have an automation that every morning at 6:00 AM your home automation server sends a signal to the lamp to turn on, set the color to a nice calming blue, and set the brightness to 50%. If the switch on the wall’s turned off, that automation no longer works. So even if you understand the ins and outs of how your system works, your incoming tenants may still struggle to understand it.
Andrew Schultz: (05:06)
Also, keep in mind that not everyone wants a lot of tech in their homes. I think we forget that there’s still a sizable population in our country that missed the tech boom. Not everyone spends their days with their eyes glued to their smartphones. So if you have a tenant that doesn’t want to deal with this new technology, they may wind up passing up your home simply because it’s too much for them to handle. You may also find yourself in a position where you have to spend time training your tenants on how the smart home technology works. Again, this is putting you in the role of being tech support, which may be all right with you. Depending on how you run your business, it may not be a factor of not being tech savvy. There are a lot of people out there who do understand the technology even at a deep level, but still don’t want to embrace home automation technology into their homes because it opens up privacy concerns.
Andrew Schultz: (05:55)
There are a ton of stories out there about various smart home tech companies being hacked, and every time one of them is hacked, it opens up a discussion about privacy. I think we all understand that in 2023, there’s no such thing as not leading a digital footprint behind as we go about our day-to-day lives. But inviting smart home technology into your home needs to be considered before you commit. Double-check the data protection records of the companies you’re buying products and services from, and understand that no matter what data is always at risk. So if you’re installing cameras around your property, understand that you’re not the only one who could see them. I have a couple outdoor cameras, but I won’t install cameras in my house for that very reason. Moving the discussion back to an in-home automation system, it sounds like the system has been really tailored for your home and that you have a ton of control over it.
Andrew Schultz: (06:44)
That also means that you’re gonna have the opportunity to check in, so to speak, by using that same technology. If I was a tenant looking for a home, that would be an absolute deal breaker for me. It’s one thing if it’s a ring doorbell and I can make my own account. It’s another thing entirely. If it’s a full home automation system full of sensors and cameras and other stuff that someone else has control or access to, at the end of the day, smart homes will likely be the wave of the future, but I think we have a duty to protect ourselves and our businesses because the tech companies are here to harvest and sell data. Ultimately, it’s up to you, but I’d remove a bulk of the smart home tech and rent the home as a standard home instead,
Voice Over: (07:24)
Water cooler wisdom expert advice from real estate pros.
Andrew Schultz: (07:33)
For our next two questions, we’re jumping over to water cooler wisdom. Both of these again came from the Rent Prep for Landlords Facebook group, and our first one is very, very straightforward. What questions do you ask? Work and rental references when you get an application. Let’s go ahead and jump right in. Speaking to references can be a key component to your tenant screening process, but you have to understand that the information you receive from references may not be fully accurate and may not be fully objective. Those are two things that can absolutely compromise your tenant screening. So let’s take a look at this a little bit deeper before we jump in too deep. I do wanna mention that tenant screening laws vary from state to state and in some instances even city to city. So before you start screening tenants or asking questions of references, be sure you understand the parameters of what you can and cannot ask.
Andrew Schultz: (08:23)
Now let’s talk about accuracy for a moment. It’s very important that you understand two things that all people lie and that all people have emotions. People will lie to get what they want and people don’t think clearly when dealing with something at an emotional level. Now, understanding those two principles, we can look at all rental references in a little bit different light. First, consider the reference. If you’re calling an employer, call the main number for the company and ask to speak to human resources. If the number provided is a direct number to a supervisor, there’s a possibility that the number could just be to a friend who’s playing the part of supervisor. If you call the main number, you bypass that possibility altogether. And if your applicant works for a smaller company, you may wind up speaking to the owner directly when you call. Either way, you wanna make sure that the person you’re speaking with has the authority to answer your questions and they can do so accurately.
Andrew Schultz: (09:17)
Keep in mind that many employers won’t even answer questions about employees even with a side release, and many employers are now using services like the work number or something similar to outsource some of their HR functions. So you may get very limited information back. We only ask questions that can be answered objectively. I’m not looking for someone’s opinion of our applicant. I’m looking for facts that I can use to make my decisions. So for employers, we ask number one, when did the applicant start working for the company and are they still there? Number two, what was their position within the company? Number three, were they full-time, part-time or seasonal? If they were seasonal, when does their work end? And number four, what was their salary? And that’s about it. We get the name, the number, and the position of the person we spoke to, but everything that we ask there is objective with nothing opinion based being asked.
Andrew Schultz: (10:08)
Now, let’s change over to landlord references. I mentioned that both truthfulness and emotions play a factor earlier. Landlord references is where we tend to see more of this. Some applicants will lie about their landlord’s name and phone number and will use a friend who can support their answers. This one is usually pretty easy to catch by calling and asking if they have any available apartments. If it’s not a housing provider, that’s probably going to throw them off, and you may notice that that happened and you can kind of figure out that that’s not a valid landlord reference. Another easy way to check this is to look at the tax record of the property to see if it matches the landlord’s name. This works especially well in smaller properties where landlords may own it in their own personal name, but it works less well when you have to get into the larger more corporate properties.
Andrew Schultz: (10:56)
At that point, you can just Google their office number and call it directly the same as you would with an employer. Another thing to watch out for is that the landlord will say just about anything to get rid of a bad tenant, you may have had an applicant that owes their landlord six months of back rent, and that landlord will say whatever they need to to get that tenant outta their unit and into someone else’s. This is a lot less common because typically if money’s owed, we’re gonna get a fake landlord reference instead of the actual landlord reference, but we have had this exact scenario play out more than once in the past. So what questions do we ask landlord references? Again, we’re looking for objective information only here. I don’t want someone’s opinion. I wanna work from facts. So our question list includes number one, when did they rent the property and are they still there?
Andrew Schultz: (11:45)
Number two, what was the monthly rent? Number three, how often were they late? Number four, did you ever have to serve any legal notice on the tenant? Number five, did they provide notice that they’re moving? Number six, did they have any animals? How many in what kinds? Number seven, did they pay their own utilities? Number eight, are you the owner or are you the manager? And number nine, are you related to anyone living in the unit? And that’s about it. Again, I like this list because it’s objective and not someone’s subjective opinion about the applicant. It’s also worth noting that in some states you cannot ask about eviction history, so you may need to scratch that question or some of the other questions from your lineup just depending on what the restrictions are in your state. Now I’m gonna let you in on a little secret.
Andrew Schultz: (12:31)
I think that landlord references are a waste of time in 2023. I think the most important criteria in 2023 is have you been making your rent payments on time? Yes, I know that the other questions matter, but ultimately we wanna know if this applicant is going to pay on time because we have bills to pay too. We offer the applicant the ability to prove their on-time, rent payments with bank statements, cancel checks, money order receipts, or a notarized statement from their current landlord. And if they go the notarized statement route, we also include all of the other questions on that sheet so that we can get as much information as possible. We won’t consider a handwritten receipt from a landlord simply because they’re too easy to fake, but really just about any documentation can be fake nowadays. That’s another video in its entirety. We’ll talk about that another day.
Andrew Schultz: (13:17)
Tenant screening is challenging. Trying to determine who you wanna trust with your asset is a critical decision that you have to make as a housing provider. Be thorough and remember that tenant screening is just a snapshot in time. Things can change quickly in someone’s life even after an approval. Our second water cooler wisdom of the day also comes to us via the Rent Prep for Landlord’s Facebook. K. Let’s go ahead and jump into this one. I’m curious how people organize their rental keys. We’re about to acquire our second property so we don’t have very many to keep track of. My boss always kept his rental keys on his main set of keys, which seems like a risk to me also. What do you do with your old keys once you re-key it for a new tenant. I’m starting to build a collection. Key management is one of the great joys of Landlording.
Andrew Schultz: (14:05)
There are a lot of methods out there for key control, but I’ll tell you what works for us. And we’re managing about 150 doors here in the Western New York region right now. Once we have a known good set of keys for a building, we install a wall-mounted key box outside the home somewhere, and we leave the keys in the box. Most of our properties are one to four units, so we bounce around a lot and we’re not in one set location like you would be at a larger apartment complex where you might have a shop or something like that where you can store the stuff. This method has served me really well for quite a while. We’re also able to send maintenance vendors to a property to do work without us necessarily having to be present. In many instances, we’re able to provide a KEYBOX code, and off they go.
Andrew Schultz: (14:48)
All of our vendors are insured and many of them have been working with us for many, many years, which is why we have that level of comfort with them. And in all that time, we’ve only ever had one accusation about a vendor theft, which fell apart pretty quickly once we started investigating. We’ve never had a key box stolen, damaged, or broken into nothing like that. And we operate in class A, B, and C neighborhoods in the city of Buffalo. So we’ve seen quite a bit. We’ve also find this reduces lost keys by a lot. When the keys never leave the property, it’s much harder to misplace them. So if a vendor takes the keys out of the key box, they snap a photo of it empty, and then when they’re done and they put the keys back, they snap a photo of the keys back in the box.
Andrew Schultz: (15:32)
We require before and after photos on all of our maintenance jobs. So this is part of that photo set. We’re looking into converting all of our key boxes over to digital key boxes so we have a better knowledge of who’s opened the boxes and when. But it comes at a considerable expense, and we’ve really only had a handful of times where the last person through the door was a relevant discussion, so we’ve held off on that for now. We’re still using just manual boxes. All that being said, we definitely have a box of keys in our office labeled keys to the unknown. We tag a key or set of keys with the property. It was removed from what date, and if we have any idea what it might be for after a year or after the next turnover when we know we have a full and complete known good set of keys, we toss the unknowns away.
Andrew Schultz: (16:17)
That’s the best I’ve come up with for the random unlabeled keys that seem to pop up all the time. There are a lot of methods for key management out there. They all have pros and cons, and my advice is to just pick the one that works best for you. We picked ours based on how we operate and how we could make things easier for both us from the management perspective as well as our vendors from an operational perspective. And I think that’s really what your focus should be on. How do you make this work for you and the people that you work with? Good luck and good organization. Are you ready for your next rental investment? Find out how to get ahold of off-market properties and add them to your portfolio. Check out our blog post on rentprep.com/blog today for more information. That pretty much wraps up this episode of the Rent Prep for Landlords podcast.
Andrew Schultz: (17:04)
Thank you all so much for listening. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate, and you can help us reach our goal. If you heard anything in this week’s episode or any other episode that will help someone that you know, please do us a favor and share it with them. If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com. From there, you’ll find links to everything going on with me over at Own Buffalo, as well as other projects that we’re working on. Grab a copy of our free deal analysis tool today over at whatsdrewupto.com. There’s no obligation and it comes with a companion video showing you how to use it. If you’re looking for top-tier tenant screening services, head on over to rentprep.com. There are multiple products to choose from, including a tenant-paid option. And if you’re over 50 doors, ask about the enterprise-level programs and pricing. I’ve been an enterprise user at Rent Prep for over a decade now, and it’s absolutely changed the way that we screen our tenants. Check that out today over at rentprep.com. Again, thank you all so much for listening. We’ll be back in two weeks with an all-new episode that you won’t wanna miss. Until then, I’m Andrew Schultz with ownbuffalo.com for rentprep.com, and we’ll talk to you soon.
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