Preparing for a Successful Rental Experience
PREPARING FOR A SUCCESSFUL RENTAL EXPERIENCE
Our team of experienced professionals live and work In Portland and have an in-depth understanding of the State and local laws, along with the knowledge and experience of tracking the rental market which allows us to lease properties faster.
Since we focus entirely on managing homes and multi-family residential units and not selling real estate, we are able to provide our full attention to maintaining and preserving your real estate investments. We offer a full-service, affordable property management and leasing system along with a highly trained team to handle all aspects of property management—and all the surprises that can come with it—with the highest level of integrity and detail in order to protect you and your property.
As an owner of rental property, you play a significant role in your success. As active real estate investors as well as owners of a successful property management company, we are uniquely qualified to provide you with the knowledge and support in your role of preparing for a successful rental experience.
The following pages will provide additional details that will prove helpful regardless of your decision to hire a professional to manage your property or you decide to go it alone and self-manage your real estate investment.
The Real Property Management Solutions Team
How Should I Prepare my Rental Investment?
Market Appeal: Our goal is to help you attract the largest rental audience possible. As you begin to prepare your rental property for marketing, wise investors understand that it’s time to stop thinking as a homeowner and begin to think from a renter’s viewpoint:
Neutral Canvas: Set a neutral tone for potential renters so they are able to visualize their own belongings in the home. Replace blue, wine, or yellow colors with taupe, soft tans, or pale greys. These warm and cool shades provide color, but do not overshadow a renter’s personal color preference. Accent colors can provide a wow-factor to the property or they can be a detriment. If you choose to have an accent color, choose a smaller wall and keep the colors in an earth-tone palette range such as taupe, clay, grey, or olive green.
Eliminate Odors: Be objective about the property. Does it have an inviting smell or is there area for improvement? Pets, previous meals, older homes, and musty basements can be a huge deterrent for a potential renter if not addressed. Adding another smell (candles or air fresheners) cover odors – they do not eliminate them. It’s better to take an action that removes the odor which could be as easy as opening windows to let in some sunshine and fresh air. It could mean using a professional cleaning and carpet service, a fresh coat of paint on the walls, or if pet odor is the culprit, it could mean replacing areas of carpet and padding.
Professional Cleaning: A professional cleaning service will clean areas that homeowners can forget or not even realize need attention: Window tracks, panels on doors, interiors of range hoods, and interiors of dishwashers are just some of the things that go unnoticed when professional cleaning is not used. A potential renter notices these things immediately.
Curb Appeal: Take a mental snapshot of your property from across the street. Do you see landscaping that needs work? Do you need to refresh the bark dust or other ground covering? Does the roof, chimney, siding, gutters, entryway, driveway, or walkways need to be cleaned or power-washed? Does the fencing need repairs or a touch-up? Do you see garbage carts that should be placed on the side or back of the home? This is your chance to provide that first impression that will get a potential renter excited about making this their home.
Setting the Standard: Preparing your property for a tenant begins by setting the standard for the way you want that tenant to care for the property while they are living on the premises - and how you want them to leave the property when they vacate. In other words, if you professionally clean the property before the tenant moves in, our policy requires that they, in turn, are responsible to professionally clean the property for the next tenant. When you start with new refrigerator filters, chimney sweeping, professional carpet cleaning, freshly landscaped yard, etc., the tenant, at their expense, will be required to leave the property at the standard set by you upon move-in. This saves a tremendous amount of time and money during the turnover process:
- 1) You do not pay for the cleaning and landscape for each turnover; and
- 2) We begin coordinating with the tenant before move-out so that the property can be ready quicker and another tenant is able to move in sooner, preventing delays and loss of income for you. We cannot enforce this if the standard is not set prior to tenant move-in.
Our policy, which is in the tenant’s Lease Agreement and explained to each tenant prior to their signing, is summarized below:
DETERMINING RENT PRICE
Determining the value of your rental property involves part science, part art, and at times the strategies involved can feel like a chess game. There are several variables that affect pricing and audience expansion, and each should be considered carefully:
MARKET ANALYSIS: Analysis is based on square footage of the property, comparative rent price history for that area, and the value of real estate within that proximity. These combined factors reveal a low, median, and above market rent range that we use in determining rent price.
MARKET APPEAL: Another source that determines rent value is the product you provide to the rental audience. The preparation you put into setting the standard for your property has huge influence in pricing. Special features such as extra storage, large closet space, on-suite bathrooms, newer appliances, off-street parking, a spectacular view, etc. are impactful factors in deciding value as well.
PET POLICY: PET POLICY: In order to understand the scope of your decision regarding audience base, consider this: According to a 2017-2018 Humane Society of the United States (HSUS) survey, 68% of American households included at least one pet - see https://www.animalsheltering.org/page/pets-by-the-numbers. If you choose to have a “No Pet Policy,” you will be limiting your rental audience by 68% which may have an effect on the amount of time it will take to rent your property. There are no wrong answers, only preference and strategy.
PROPERTY LOCATION: There is no getting around it – location is another major factor in price determination. Your rental audience will pay a higher premium for the convenience of being in close proximity to parks, transit, restaurants, theaters, cafes, groceries, schools, etc.
SUPPLY AND DEMAND: Some neighborhoods in Portland are more popular than others – so much so that some people request to be on a waiting list for some Portland multiplexes. Lack of rental homes available will drive a higher rent value.
OBLIGATION & OBJECTIVE: Most properties have a mortgage attached, and some will have HOA fees involved. Taxes, insurance, repair, and maintenance will always be a part of your rental business, so it is imperative to understand the expenses that should be covered in order to profit from your investment. Also, will you prefer to aim for a higher rent price and risk the time it may take to fill the vacancy, or will you prefer to fill the vacancy quicker with a lower rent price and plan for a raise in rent later? Both are great strategies depending on your preference.
SEASONAL CYCLES: Every business is seasonal, and the rental real estate market is no exception. We recommend testing higher rent prices at the peak of the warmer season, not the wetter, colder part of the year. Portland can usually rely on beginning a peak season around mid-March and wrapping it up around mid-October. It’s vitally important to plan your rent price timing.
MARKET RESPONSE: The most important factor in rent pricing is – LISTEN TO YOUR RENTAL AUDIENCE. We can set any rent price, but the market will inevitably tell us what it actually should be. Be prepared to be flexible when necessary, and to discuss strategy depending on the activity level occurring while your property is on the market: number of showings, lack of response, and direct customer feedback will be the gauge that guides the response needed.
RENT HIGH OR RENT FAST?
Which is better, rent for a high monthly amount vs the market or rent the home quickly? It largely depends on your goals, but if making money is your goal, renting your home quickly is by far your best option
Nearly every property in every neighborhood has solid demand at a price. If your vacancies are consistently high, or it is taking longer than a month to rent your property, you may be doing it to yourself and need to think about your price point.
Every month of vacancy costs you 8.3% of your potential yearly revenue, so you would be better off renting every property one month faster for 5% less rent, two months faster for 10% less rent, and so on.
Figure 1. Cost of vacancy based on an average rent of $1,500 per month
Based on an average market rent of $1,500 per month, you are better off financially to rent your home at $1,425 rather than let the home sit for a month longer than is necessary
IT’S NOT ALL ABOUT PRICE
There are many factors that go into determining rent price, most of which are listed below. However, if the home is well marketed, the prospect can easily book a showing and the showing schedule is flexible, but the home is not renting, the reason almost always comes down to three barriers:
|Marketing Result||Reason||Action Required|
|High Lead Volume but low to no Showings||Home is Priced Too High||You can’t rent a home that doesn’t have showings – Consider a Price Reduction|
|Receive leads but no applications or an unusually high number of cancellations||Location||May require a price reduction in order to offset the less than desirable location|
|Priced at or below Market + Good Location + Showings but no Applications||Condition or Function Issue||May require cosmetic or functional issue correction such as curb appeal, painting, cleaning, etc.|
Let’s Talk Maintenance (yes, something will eventually break!)
It’s never fun to hear about a costly repair, but as a rental property owner, you must be prepared for the inevitable maintenance issue, both financially and mentally. To best prepare for, and to properly set expectations, let’s break this topic down into a few big buckets:
Let’s work together to minimize maintenance issues in the first place
Before you move out and certainly before a tenant moves in, complete the Rent Ready Checklist, make necessary repairs and then sign your acknowledgement and provide it to Real Property Management Solutions. By doing so, we can catch many of the maintenance issues and the associated costs before the resident moves in
As part of the move in process, residents are put on “high alert” in regard to their responsibility, so they are looking for issues that were perhaps not noted or missed during the move in process. Secondly, as they settle in, they are experiencing the home for the first time. Even though a resident is renting the home “as is” this unique environment can cause a series of maintenance requests in the initial weeks of a resident’s tenancy. We ask that you stay calm and know that we have your best interests at the center of all we do. Let’s work together to make the residents’ experience the best it can be while cost effectively maintaining the condition of your investment. Our experience shows that eventually, this will settle down.
Owner, Resident and Agent Maintenance “Bill of Rights”.
Unlike many facets of property management, maintenance coordination involves all four parties in the process and each one typically wants something different. Owners want the most cost-effective solution, Residents want the repair fixed quickly, and the Agent wants to coordinate a resolution efficiently while satisfying both Owner and Resident, and the vendor just wants to get in, get It fixed and get paid. Simply said, it’s complicated!! We think of this topic in terms of a
Maintenance Bill of Rights
- As an Owner, you have a right to:
- Transparent invoicing and accurate billing. We will send you the vendors’ invoice and we will correct any invoice mistakes
- Qualified, licensed, bonded and insured vendors working on your rental investment
- Ask questions, get answers and have confidence the issue has been resolved
- Effective communication throughout the process
- To approve all maintenance expense at or above the agreed upon maintenance limit before work begins
- 24/7 emergency hotline to ensure your investment value, to the degree possible, is maintained
Residents have a right to:
- A residence that is maintained in a habitable condition according to State, City and County regulations
- An effective means to report maintenance issues
- Effective communication throughout the process
- An effective repair of items that were working when they moved in
- Repairs that are resolved within 30 days for non-essential and 7 days for essential services
- Respect of personal property, space and personal time
- 24/7 emergency hotline to report emergencies
As Agent, we have a right to:
- Effective communication throughout the process
- Pre-approval to repair issues below the maintenance limit as we see fit as outlined in the agreement
- Quick approval of maintenance above the maintenance limit once owner questions have been answered
- Payment in full within 30 days of satisfactory repair
How does Real Property Management Solutions charge for maintenance and how does this compare with others?
Coordinating a maintenance issue typically takes several hours and the time required to properly effect the repair of your home often has nothing to do with the amount of the repair. Rather, the time required depends on the steps, which are remarkably consistent.
Many property managers will “markup” the maintenance charge to cover this additional cost. So, the higher the repair bill, the higher the mark up, regardless of effort. This could end up costing you more and does not provide the level of transparency between agent and owner that fosters trust. Secondly, when your profit is determined by the amount charged or dependent on maintaining a level of billable hours, the motivation to save your client money, may be limited
It is recommended that rental property owners set aside between 1% to 3% of the value of the property annually for repairs. For a home valued at $350,000, the annual maintenance could average $3,500 to $10,500. When this cost is marked up by 15%, your out of pocket expense is significantly higher when compared to flat charge per work order when experiencing the average of 5 work orders per year.
Figure 2. Cost comparison of flat fee vs mark up for maintenance coordination
HOW DO WE BALANCE THE COST OF MAINTENANCE AND QAULITY REPAIRS?
Ensuring your property is repaired properly by qualified repair experts in a timely and cost-efficient manner is our top priority. ORS Chapter 90 mandates some repairs, such as plumbing and electrical, are repaired by licensed contractors, but we will always look for ways to save you money. Here are some of the ways we manage maintenance coordination.
- We don’t mark up our maintenance. What the vendor invoices is what we charge, plus a maintenance coordination fee
- Quality vendors that provide a competitive price
- In house property management technicians that can handle small maintenance and a more affordable cost
- Ongoing search for high quality, cost efficient vendors
FREQUENTLY ASKED QUESTIONS
What is the best way to communicate with us?
We aspire to create a “culture of communication” and our entire team is standing by to take care of your needs. To avoid confusion as to who you should call, we have a very simple system, regardless of your question or need:
To reach us by phone, please dial 503-224-3002. Our Office Manager will direct you to the person best suited to meet your request. On occasion, or if you call after hours, you may get the automated teller, if this happens, simply follow the voice prompt: Press 1 - and we will return your call as soon as possible.
To reach us by email, simply send us a note at firstname.lastname@example.org. Your email will be routed to the appropriate person who will receive your message and respond accordingly.
Should I change my Homeowners Insurance Policy to a Rental Investment Policy?
We consider it our obligation to assist you in making an informed decision when it comes to insurance coverage. We want to ensure that you and your investment are fully protected. Rental Property Insurance (also known as Landlord Insurance) is more comprehensive than a homeowners’ policy for rented properties. If you are renting a home, you need insurance that protects you in ways that a standard homeowner policy does do not. Homeowners insurance will cover damage to - or loss of - your property, but Landlord Insurance offers greater protection for your property, which results in better financial protection for you.
BENEFITS OF LANDLORD INSURANCE:
Liability Coverage: Homeowner’s insurance will cover damage to your structure, but a Landlord Insurance Policy will include Liability Coverage that will protect a property owner if someone is injured on their property, in some cases it will include legal fees if you are sued – check with your insurance carrier. Experts recommend that landlords have at least $1 million in liability insurance.
Lost Income: Homeowners insurance doesn't cover you for lost income in an event that renders your property uninhabitable. Many people are unaware that Landlord Insurance will cover lost income during repair and renovation if your home is damaged beyond livability. Note, however, that Landlord Insurance only covers income lost because of a covered hazard; it won’t compensate you for vacancies. As always, confirm all information with your insurance carrier.
Ultimately, the amount of coverage needed is up to you as the owner of your real estate investment.
What insurance policies should my property management company have?
Errors and Omissions: Like any service industry that provides a specialized service, your Property Manager should carry professional liability insurance, or Errors and Omissions (E&O) insurance. This insurance is designed to protect the Property Manager from claims against actions specifically related to the industry. Property Manager services on behalf of a property Owner involve gaining access to the interior of the property for inspections, notices to enter, non-compliance warnings, etc. All actions that, while legal, might cause an angry tenant to pursue a claim against the action. Property Management E&O insurance protects the property Owner from a potential financial loss that is directly related to actions of the Property Manager.
General Liability: While E&O insurance covers specialized services offered by the Property Manager, General Liability insurance is intended for the day-to-day business practices. Your Property Manager should have both E&O insurance and General Liability insurance to effectively cover their liability and keep property Owners protected.
What is an “Additional Insured”?
This term is used to describe a person or entity who is added to an insurance policy in order to operate the insured asset instead of, or on behalf of, the owner of the insured asset while maintaining protection from injury or damage caused by the asset or surrounding circumstance. For example:
In terms of vehicle insurance, an additional insured person is able to operate a vehicle instead of, or on behalf of, the owner of the vehicle while maintaining the extended coverage that the additional insured status provides in the case of damage or injury that is caused by another driver or the vehicle itself.
Why does my Property Management Company need to be added to my Landlord Insurance as an Additional Insured?
Just as described in the vehicle example, when an Owner adds their Property Manager as an additional insured, the Property Manager is able to operate the rental property instead of, or on behalf of, the owner while maintaining the extended coverage under the Owner’s insurance policy for damage or injury that is caused by a trespasser or the property itself.
A Property Manager does not have financial interest in an Owner’s rental investment as they are not part or co-Owner. However, they do take on the risk and liability as if they are an Owner. In essence, the Property Manager assumes all the liabilities of an Owner as they are the Owner’s agent while operating the property. Without the extended coverage of additional insured status on an Owner’s Landlord insurance, your Property Manager is vulnerable to claims and lawsuits arising, not from actions or fault of the Property Manager, but from the property itself - such as a tenant or their guest injuring themselves at the property or damage to a tenant or their guest caused by an electrical fire, fallen trees, burst pipes, etc. Because the relationship between Owners and their Property Managers is a team effort, property Owners naming their Property Management company as an additional insured is an industry standard.
“Additional Insured” vs. “Additional Interest?”
Adding a Property Management company as an additional interest is not the same as an additional insured. Additional interest will allow permission for the insurance company to notify the Property Manager of policy renewals, cancellations, or changes in coverage. However, it does not extend Landlord insurance coverage to the Property Management company.
If rent is due on the 1st of the month, why is my owner draw not processed until the 9th?
PAYMENT PROCESSING DATES: Rent is due on the 1st of each month. Tenants are given a grace period up to the 5th of the month before a late payment is charged, so payments can be (and 80-90% of them are) received up to that time. Rent payments made up to the 5th of the month can take up to 2-3 business days for the bank transaction to be completed. Rent payments made by mail are allowed a postmark dated up to the last day of the grace period (the 5th of the month). Mail postmarked the 5th can be received as late as the 7th or 8th of the month. For these reasons, the earliest we are able to process owner draws is the 9th of each month.
How does this work if the tenant is late with rent?
LATE PAYMENTS: If we do not receive a rent payment from the tenant after the grace period (by the 6th of the month), we will notify you of the delinquency and let you know when the payment is received. A late fee of $75 is charged to the tenant on the 6th of the month, and a $4.50 fee is charged for each day payment is not received after the 6th. Owner does not receive an owner draw until a tenant pays their rent and the bank transaction is confirmed. If a tenant supplied by Real Property Management Solutions is charged a late fee, we share that fee equally with our client (this does not apply to owner-supplied tenants).
When does the Eviction process begin?
72 HOUR NOTICE: If payment is not received by the 8th of the month, our policy is to post a 72 hour Notice to pay rent or surrender the property. We will keep you well-informed of the status during this time. If, after the 72 hour Notice deadline the tenant is still delinquent, we will consult with you on a case-by-case basis about the optional action steps to take from that point. Our recommendations may include but are not limited to: 1) Negotiation with the tenant toward a win-win compromise; 2) Offering a “Cash for Keys” solution; or 3) Initiating the Eviction process.
What happens at the end of the Tenancy?
END OF TENANT POLICY: If the Premises was professionally cleaned prior to move-in, Premises will be professionally cleaned after tenant vacates. If the Premises has carpet, the carpet within the Premises must be professionally cleaned upon move-out. Swimming pools, hot tubs, water fountains, decks, patios, driveway, and permanent barbeque fixtures should be cleaned thoroughly and left in the same working order as when Resident moved into Premises. Landscape should be in the same condition as when tenant moved-in, with refreshed bark dust or other ground cover as needed. Refrigerators with ice-maker and water dispenser filters must be replaced, and operable wood burning or pellet fireplace chimneys must be professionally cleaned at Resident’s expense upon move out.
*Refer to the FINAL PROPERTY REVIEW CHECKLIST document that we use to ensure the highest quality standard for tenants to maintain during their occupancy.
Why do I need to provide a reserve deposit? Can’t I just pay for repairs as they occur?
CONTINGENCY RESERVE FUNDS: Real Property Management Solutions should not be required to advance its own money in payment for repairs, recurring maintenance such as landscaping, or monthly utilities. For this reason, we require a reserve from each owner.
RESERVE FUNDS: Reserve funds are not just for repairs. A minimum deposit of $500 (depending on the number of units on a property) is required from owner to hold in a trust account as a reserve to pay for utilities, recurring maintenance, as well as small repairs. The reserve is replenished when the tenant’s rent payment transaction is confirmed, and the owner’s income is processed on the 9th of each month.
How does the Periodic Property Review Program work?
Inspecting what we Expect is the best risk mitigation strategy outside of our applicant screening process. We routinely look in on your investment by checking in with the tenant and scheduling a “Periodic Property Reviews” which assists in maintaining tenant compliance with the exterior of the property. This Program is designed to allow us access to the INTERIOR and EXTERIOR of your property, which can provide us with so much more information about how your investment is being cared for. We look for issues such as:
Pet Policy violations
Unreported damage, leaks, or running toilets
Neglected Maintenance or Cleaning Issues
Possible Hazardous Storage or Hoarding Issues
Upon each review, Real Property Management will provide a written report, along with photographs of the interior and exteriorof the property, and specific recommendations regarding value preservation.
Not only does our Preventative Maintenance Program help to prevent potential damage to the property and non-compliance of a tenant, but it has proven in many cases to help eliminate the issues altogether because the tenant knows we will be performing our Property Reviews on a consistent basis.
If an owner allows pets, are the residents charged a pet rent and if so, who keeps it?
Residents are charged a monthly pet rent for each pet that has been screened and approved. Typically, this rent is $45 per pet. Real Property Managements retains the pet rent charged for a number of reasons. There is the potential risk for more damage caused by pets when you have a pet friendly policy, but there is additional work for your agent too. When we conduct our property reviews for properties that have a pet friend policy, extra time and attention is paid to detect damage as a result of the pet. Secondly, when the property turns over, our team will take extra care to repair minor pet issues as part of the process. By retaining a small amount such as pet rent, we’re able to defray our costs, which aids in our ability to be competitively priced in the market.
Are Separate Pet Deposits a Good Idea?
Even where allowed, separate pet deposits can be a bad idea for landlords because they limit how the security deposit may be used. For example, if a tenant’s dog is well-behaved, but the tenant trashes the apartment, the landlord can’t use the pet portion of the deposit to clean up after the tenant. A landlord who wants to protect rental property from damage done by a dog, cat, or other pet is often better off charging a higher rent (if not prohibited by rent control or regulation).
Another option is to charge a higher security deposit to start with. In Oregon, there is no limit to the security deposit amount that can be collected.
What is taken out of the Security Deposit?
The landlord may claim all or part of the security deposit only if the landlord required the security deposit for any or all of the purposes specified in subsection 7 of ORS Chapter 90.300.
The landlord may claim from the security deposit only the amount reasonably necessary:
A. To remedy the tenant’s defaults in the performance of the rental agreement including, but not limited to, unpaid rent; and
B. To repair damages to the premises caused by the tenant, not including ordinary wear and tear.
What do I need to know about current laws relating to assistance animals?
Section 504 of the FH Act and the U.S. Department of Housing and Urban Development (HUD) extends new regulations to enforce that reasonable accommodation must be considered in situations where persons with disabilities use (or seek to use) assistance animals in rental housing where an owner imposes restrictions or conditions relating to pets and other animals. Under this regulation, assistance animals are not considered pets. An assistance animal “is an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability, or provides emotional support that alleviates one or more identified symptoms or effects of a person's disability” -- US Department of Housing and Urban Development.
We are legally required to provide reasonable accommodation to allow assistance animals to live at the property rent free regardless of pet policy in order to avoid disability discrimination. However, we do take steps to confirm that the assistance animal is legitimate. There are three main types of assistance animals, each with different levels of training/specialty and documentation. It’s important to remember that if an assistance animal has documentation, they are trained well to work and behave differently than untrained pets.
SERVICE ANIMALS: Official service animals are trained to perform tasks for owners with a disability or medical condition. The disability does not have to be visible, and a note is not needed from a doctor. However, service animals should be registered and have documentation for training. Examples of tasks that can be performed by a service animal include:
Alerting to sounds
High blood pressure
Physical / Mental Disabilities / PTSD, Sight, Hearing
Seizures, epilepsy, multiple sclerosis
Service Animals are allowed anywhere the public has access, can travel in the cabin of an airline for free, and are allowed in all housing regardless of pet policy. No pet deposits or pet rent can be charged for these animals. Our Lease Agreement with a tenant states that if a service animal will be occupying the property, training and registration documentation must be submitted prior to the animal’s occupancy.
EMOTIONAL SUPPORT OR COMPANION ANIMALS: Emotional Support Animals help individuals with anxiety or depression by providing comfort and support. Federal law does not require these animals to have specific training but they are required to have good social skills if taken in public places. They are allowed in all rental housing regardless of pet policy, and we are not allowed to charge pet deposits or pet rent. However, a note from a licensed mental health provider or physician is required for housing and airline travel.
Our Lease Agreement with a tenant states that if an emotional support or companion animal will be occupying the property, a licensed mental health provider or physician’s note on professional letterhead must be submitted before the animal lives on the property. We verify with the professional’s office that the note is authentic.
THERAPY ANIMALS: Therapy animals provide affection and comfort to individuals in hospitals, nursing homes, and other facilities. These animals can help in many ways and are commonly used in the following circumstances: Nursing Homes, Counseling Sessions, Hospitals, Schools, and Autistic Support Programs. However, therapy animals do not have the same rights as Service Animals and Emotional Support or Companion Animals, and so they are subject to approval prior to occupancy as if they are a pet.