This week’s episode, Podcast Host, Property Manager & Business Owner, Andrew Schultz, goes over when you should start advertising your rental property.
What happens when a tenant refuses to get rid of a rental appliance? We’ll review how to handle appliances correctly if they are under rent control.
Last, but not least, we’ve got the latest on the rental market including housing trends for last month. Tune in, you might be surprised.
Andrew Schultz: (00:00)
Hey everybody. Welcome back to another episode of the Rent Prep for Landlord’s podcast. This is episode number 397, and I’m your host, Andrew Schultz. On today’s episode, we’re gonna be talking about when to start advertising your rental, how to handle unauthorized appliances in a rent-controlled apartment, and understanding the truth about today’s real estate market. We’ll get to all that right after this.
Voice Over: (00:26)
Welcome to the Rent Prep for Landlords podcast. Now your host, Andrew Schultz.
Andrew Schultz: (00:31)
Before we jump into today’s episode, have you joined the free Rent Prep for Landlord’s Facebook group? Our group members get access to our Sherwin-Williams and PPG paint Discount programs. Can ask questions in our monthly AMA sessions and if you have a question or a situation that you’ve never encountered before or just need to bounce an idea off a group of over 13,000 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: (01:02)
Water cooler wisdom expert advice from real estate pros.
Andrew Schultz: (01:10)
We’re gonna start things off this week with our water cooler wisdom segment. This one comes to us via the Rent Prep for Landlord’s Facebook group. Let’s go ahead and jump right in here. How soon do you start advertising your home for rent? My tenants will be out at the end of February, so I was thinking I would start advertising at the beginning of February. Does that seem reasonable or should I start now? So showing an occupied unit can be a challenge because you’re always trying to balance a few different factors. First, you wanna get into the unit so that you can find a new tenant and reduce your vacancy time as much as possible. Second, you want to interrupt the existing tenant as little as possible because obviously they have a life to lead as well, and pretty much any showing is gonna be seen as an inconvenience to them.
Andrew Schultz: (01:51)
And third, it doesn’t always make sense to show an occupied unit. So what exactly do I mean by that? Should you be showing occupied units at all? I think there are a few questions that you have to ask before you determine whether or not you wanna show an occupied apartment. And first of all, I would start with is the apartment clean? Obviously, this is a little bit subjective. Everybody has a little bit different definition of what clean is, but I think in this instance we can all agree that if you’re going to show an apartment, it needs to be relatively clean with minimal debris or clutter hanging out. Clean also means not having an offensive odor. So if you have an apartment that’s dirty or smells bad, no one is gonna want that apartment and it doesn’t necessarily make sense for you to waste time showing it once you’ve determined that the apartment is actually clean enough to show it.
Andrew Schultz: (02:36)
The next question would be how cooperative are the outgoing tenants? If you’re in a situation where the outgoing tenants are being evicted, those tenants are not going to be cooperative with you showing the unit. Even if you post a notice and force yourself into the unit using a key, if they’re home during the showings, they’re absolutely going to do whatever they can to make your showing go poorly, and at the end of the day, you’re probably not going to wind up getting applications from those showings. On the flip side, if you have a tenant that’s practically moved out already and is just finishing out their lease obligation, that’s a pretty good opportunity to get in and show the unit before it’s technically vacant. If you’re planning on doing substantial upgrades to the unit after the current tenant vacates, again, I would not recommend going forward with showing the unit.
Andrew Schultz: (03:20)
You only get one chance at a first impression, and if you’re going through making major upgrades or changing paint colors or putting in new appliances, all of that is going to have an impact on how people see your unit. So the best bet in that instance would be to wait until the unit is actually rent-ready and then list it for rent again. So assuming you want to go forward with showing and occupied a unit, how do you actually go about doing that? Our lease requires the current tenants to provide us with a 60-day notice to vacate, though that seldom actually seems to happen. It seems like we get closer to a 30-day notice. More often than not, our lease does give us the ability to enter and show the apartment with a 24-hour notice to the tenants, and we also limit the number of showings per week to limit the interruption to the current tenant schedule.
Andrew Schultz: (04:03)
We also try to accommodate the tenant’s schedule when possible, but that doesn’t always happen, which is why we have keys for all of our units. If your lease doesn’t have anything in it With regards to showing the apartment at that point, I would refer back to whatever the law is in your state to determine what the rules are for entering an apartment. Most states are probably gonna be 24 hours, some might be 48 hours or a longer period. So it’s just a good idea to check and see what the requirements are in your area. As far as the listing itself goes, we’ll actually reuse our old photos, walkthrough videos, and 360 virtual tours whenever we possibly can. I don’t like to take photos of occupied units and post ’em online because you’re essentially exposing the current tenant’s personal life and all of their belongings to the internet at large, which is kind of a security risk.
Andrew Schultz: (04:49)
So if you are in a situation where the unit is occupied, try to reuse old photos whenever possible. If you don’t have any old photos, perhaps just use an exterior photo of the front of the building. The nice thing is with marketing photos, walkthrough videos, 360 tours, stuff like that. Unless you’re doing substantial work in the apartment between tenants, again, like changing wall colors or buying new appliances, most of that stuff, those marketing images, that marketing material is going to be evergreen and can be reused time and time again. It’s worth spending the time the first time a unit becomes vacant to get good marketing photos and get your marketing stuff squared away so that you can reuse all that stuff in the future. There are a couple different ways that you could go about showing the actual unit. You could schedule individual showings or you could schedule an open house and have a bunch of people come through at once.
Andrew Schultz: (05:37)
Individual showings tend to work best in situations where there’s less demand for a unit or if it’s on a higher end or a luxury listing. Individual showings tend to work better in those circumstances. In a situation where a unit is occupied, you may find that an open house style showing works better because it limits the number of interruptions to the current tenant. That said, if you’re gonna have a bunch of people walking around inside of an occupied department, you need to make sure that they’re not walking out with more than they walked in with. So if you have a place where you’re not gonna be able to see everyone during the showings, you may wanna consider having an extra person with you to help watch over the unit. Another good option is to have people wait outside and take one group through at a time.
Andrew Schultz: (06:17)
This is actually the tactic that we use during covid to maintain state compliance and prevent us from having too many people inside of a unit at any given time. Having everyone arrive at roughly the same time makes it very easier for you to show one group after another in a short timeframe and hopefully secure some applications on your vacant apartment. Good luck and good renting. All right, let’s jump into our second water cooler wisdom segment. This one also comes to us via the Rent Prep for Landlord’s Facebook group. Let’s take a look. We have some units in LA County. If a tenant refuses to get rid of a washing machine in their unit, are these grounds for an eviction? The unit is under rent control. Thank you in advance. I will preface this by saying that I’m not intimately familiar with the laws of California or Los Angeles, but I know that they are some of the strictest and most tenant-friendly in the country.
Andrew Schultz: (07:08)
That said, I think that you would be crazy to attempt this eviction without having an attorney unless you’re very, very well-versed in landlord-tenant laws in that area or any area for that matter. If you’re in a situation where you’re looking to evict someone, in my opinion, the cost of an attorney is so much less than the cost of screwing up an eviction and having to reset the timer or lose additional time that it simply doesn’t make sense to not hire a professional in that instance. Um, that’s just my 2 cents, but I would not in this day and age move forward with an eviction unless I was very, very familiar with the laws in my area. It’s just too much, too much of a headache, to be honest with you. There were two main concerns that I came up with when I was thinking about this question and why you would want to prevent a tenant from having a washer in their unit.
Andrew Schultz: (07:55)
The first thing that I came up with was the increased water and sewer usage. Water is incredibly expensive in California. You really have to think about all of the water that you’re using when you live in California simply because it is so expensive and because the supply is so limited. To give you an idea, California restricts the watering of grass with portable water in some areas to prevent the limited potable water resources from being misused. I believe that Nevada has or is considering similar legislation and if you look at the water levels in Lake Mead for instance, they’re drastically low. So an increase in water and sewer usage could definitely have a direct impact on the operating expenses of the property. The other more direct concern, at least in my eyes, is the risk of a flood. I understand that a properly hooked-up washer is likely not going to flood an apartment.
Andrew Schultz: (08:43)
Something would have to go pretty wrong for that to occur, but it can happen and we’ve had it happen to us, so it’s definitely something that’s worth pointing out. In our situation, we had a tenant that was using a portable washer, so not something that was piped directly into the property. Uh, if you’re not familiar with what a portable washer is, it’s essentially a washer on wheels that connects to your kitchen or bathroom sink. The supply line connects onto the bottom of the faucet, and there’ll also be a discharge line that discharges the wastewater into the sink where it then goes down the drain as usual. Unfortunately, in our situation, the tenant failed to realize that they had the drain plug in the sink, which caused the sink to overflow onto the floor, and that caused damage in both that apartment as well as to the kitchen of the apartment underneath.
Andrew Schultz: (09:28)
Another concern to watch out for would be if the sink isn’t empty when the washer starts training, it’s very possible for the water to keep hitting whatever dishes are in the sink and splatter out, which can also cause damages. Think about what happens when you have a spoon in the sink and the water hits it just right. You know it’s very possible to cause damage. Doing something like that, portable washers can be a real pain, especially when they’re not used properly and honestly, after dealing with the situation we dealt with. I don’t blame any landlord for putting language in their lease that prohibits portable washers from being used. We’re not really talking about dryers in this instance, but I would also recommend banning portable electric dryers in your units as well. Oftentimes, they aren’t vented properly, which could mean that the tenants pumping moist, humid air into their apartment, creating a potential mold issue, and if there’s lint buildup, it does create the risk of a fire hazard as well.
Andrew Schultz: (10:17)
So going forward, we’re gonna assume that your lease does prohibit a tenant from having a washer and dryer in the unit. Now, I could be wrong, but I don’t think that the rent control issue would have any impact on this situation because it’s not a situation where unpaid rent is at play. You’re talking about a non-rent lease violation. This is a situation where you would definitely want to talk to an attorney and see if there’s some reason that rent control would be at play, but from where I’m sitting, I don’t think that that would be a cause for concern here. So what do you do in this situation to try to get the tenant to remove the washer from the apartment here in New York? It starts with a notice to cure. I know we’ve mentioned this a bunch of times on the podcast in the past, but every state’s gonna be a little bit different for what rules they have on how notices work, how they need to be served, things of that nature.
Andrew Schultz: (11:03)
A lot of times there will be a specific timeframe that you have to adhere to when it comes to giving the tenant time to cure the issue. So spend some time doing a little bit of research on how notices to cure work in your state. In our Notice to Cure, we actually include information on what the tenant is doing that’s putting them in violation of the lease, and we also typically cite the lease clause that they are in violation of in that notice to secure letter. If you have photos of the violation such as the washer hooked up in the unit, I would include that along with the letter as well. That really helps to illustrate to the tenant that yes, you do know that they’re in violation of their lease, and yes, you do expect the situation to be resolved. Telling the tenant that they’re in violation is only half the battle.
Andrew Schultz: (11:45)
We also include information in our letter on what they need to do to cure the issue to our level of satisfaction. So in this instance, removing the washer is the cure. For something like this where a reinspection is going to be required, we will typically put the reinspect date and time right in the notice to cure so that the tenant number one knows that we’re coming back to reinspect and number two has already been notified of that inspection. Again, you’ll need to check with your state laws to see if you have to send a separate notice. Every state’s a little bit different when it comes to how notices need to be served on the day of reinspection. If the washer’s still hooked up in the unit at that point, I would forward the case over to the attorney to begin an eviction based on that lease violation.
Andrew Schultz: (12:24)
Try to grab a photo of the washer still hooked up while you’re in the apartment for the inspection and make sure that you forward that photo over to your attorney so that they have it for court. Essentially what you’re doing is documenting for the court that you found the violation, issued the notice to cure with proof of the violation, that the tenant failed to cure the violation, and now you’re requesting the tenant be removed as a result of the violation. In the future, if the unit has washer and dryer hookups, you may want to consider removing them pre tendency or offering the tenants the use of the washer and dryer hookups for some sort of additional rent per month. Again, with rental control, I’m not sure how that would work out or how much leeway you have with stuff like that, but hopefully you’re now in a better position to know how to handle this situation. Good luck and good renting. We’re gonna wrap things up this week with our in the new segment. This week we are pulling an article from the Hill titled Survey Finds Americans Wildly Misinformed on the Housing Market. This was posted on January 25th, 2023, and written by Daniel Devise. Let’s go ahead and jump right in.
Andrew Schultz: (13:28)
A new study finds that Americans are wo misinformed about the nation’s Urial housing market, even as millions of them prepared to buy homes. 28 million Americans plan to purchase a home in 2023. According to a survey released Tuesday by Nerd Wallet, the Personal finance company, on average, they hope to spend $269,200, but that figure falls more than a hundred thousand dollars short of the median home price, which was $388,100 in December 2023. According to the real estate brokerage, Redfin home prices crossed the $269,000 threshold sometime in 2013. Federal Reserve Statistics Show if prospective home buyers sound oddly optimistic about prices that may be because they’re pessimistic about the state of the housing market. Two-thirds of American surveyed say that they expect an imminent crash. Real estate economists do not. Lawrence Yun, chief Economist for the National Association of Realtors forecasted an average sale price of $385,800 this year about the same as last year.
Andrew Schultz: (14:29)
Redfin predicts a 4% drop bad news for sellers, but hardly a crash. Home prices have already been falling, especially on the West coast, and prices will fall in some cities. In 2023 said Holden Lewis, a home and mortgage expert for Nerd Wallet, but a drop in the home prices does not necessarily equal a crash. Another head-scratcher as 61% of Americans told Pollsters current mortgage rates are unprecedented, meaning that they had never been seen before. We actually defined it, said Elizabeth Renter, data analyst for Nerd Wallet, the average rate for a 30-year fixed mortgage kit, 6.15% last week according to the Fed, that’s higher than most mortgage rates of the past few years, which have ranged below 3% at times, but it is not unprecedented. Over the last 50 years, nerd wallet reports 30 year mortgage rates have averaged 7.75%. Mortgage rates in the six to 7% range were common.
Andrew Schultz: (15:22)
As recently as 2008 home buyers have basked in climate of historically low rates for more than a decade now, the fed cut rates dramatically in the great recession of 2008 to stimulate the economy campaign that continued on and off through the Covid-19 pandemic. Runaway inflation prompted a dramatic series of hikes in 2022, which pushed mortgage rates back to normal levels, at least in a historic sense. The new survey of 2051 American adults conducted by the Harris Poll ARD wallet is the latest iteration of the annual poll. Pollsters have found overconfident home shoppers for the past several consecutive years. We know from the past five years, roughly 10% of Americans say they’re going to purchase a home in the next 12 months, which is wildly optimistic. Renter said part of it could be that they’re unaware of what’s going on in the housing market. Nearly 30 million Americans plan to buy a home in 2023, and all likelihood, just a small percentage of them will succeed. Only 6 million existing homes sold in 2021. The survey found more realism when asking respondents how their home-buying plans had planned out. In 2022, 70% of Americans who had planned to buy a home in 2022 did not succeed. Some of them made offers that were not accepted. Others shelved their plans because they could not find affordable homes.
Andrew Schultz: (16:45)
There are essentially two points that I want to touch on here. Prices will remain high until sellers realize that it’s no longer 2020 or 2021, but I don’t see them returning to 2019 prices. Even with the higher interest rates, home sales have slowed down, but we do see that with seasonality and that’s gonna start to pick up again once the winner starts to wane. Overall, however, we are still seeing a solid market here in Buffalo. We may not be seeing 10 or 20 offers all over asking price two days after a property hits the market, but seeing that sort of activity is not really necessarily the sign of a healthy market. That’s the sign of a market that needs more housing added to it, new builds in both the single and multi-family markets need to be built. This numbers are still way too low when you look at the number of people looking for housing versus the amount of housing that’s available, and it doesn’t matter if it’s in the luxury category, builder grade, affordable, whatever the category is, there simply isn’t enough of it being built right now with construction costs, both labor and materials being more expensive, that’s gonna further sustain the price of the housing market.
Andrew Schultz: (17:49)
You’re not gonna sell a home that costs you $300,000 to build for $150,000. I mean, you can, but you’re not gonna be in business very long if you do that. The mention of interest rates being in unprecedented levels also made me chuckle a little bit. We see a lot of hard money and private money deals with interest rates way higher than our current six to 7% rates, but even excluding non-institutional money, taking all of the hard money, all of the private money out of the picture, interest rates have steadily dropped since the late 1970s and early 1980s when it wasn’t uncommon for a home loan to be 12%, 14%, 16% or higher. I think one of the highest interest rates recorded on a regular institutional loan was in the 16% range back in the eighties. Rates have pretty much steadily declined since 2000, right up until 2019 when the pandemic hit, so we’re nowhere near unprecedented interest rates.
Andrew Schultz: (18:42)
I think a lot of people looking to buy right now need to have a conversation with their parents about what the rate was on their early homes. Obviously, the property values were drastically different then and the money doesn’t stretch it nearly as far today, but interest rates are not the only factor at play. Here is what I’m driving at. The best advice I have to offer to anyone looking to buy a home right now is to get a home inspection. Don’t overpay for the home. Marry your home and date your interest rate. Lower rates will be coming back, so take advantage of that refi opportunity when it presents itself. What are the questions that you cannot ask a potential tenant? In our latest post, we’ll go over the questions that should not be on your rental applications. Check the post out today over at rentprep.com/blog.
Andrew Schultz: (19:28)
That pretty much wraps things up for this week’s episode of the Rent Prep for Landlord’s podcast. Thank you all so much for listening. We truly do appreciate it, and 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 with that goal. If you heard anything in this week’s episode or any of our other episodes 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 Owen 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.
Andrew Schultz: (20:05)
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 at enterprise user of Rent Prep for years now, and it’s definitely changed the way that we screen our tenants, and you can 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 want to miss. Until then, I’m Andrew Schultz with own buffalo.com for red prep.com, and we’ll talk to you soon.
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