by Nicole Scimio | Sep 26, 2024 | Blog, Investment Rental Property, Owner Resources, Property Management Education, Uncategorized
Selling Your Rental Property with Residents in Place
Do I Want to Sell My Rental Property?
If you own an investment property, it’s probably safe to say that at one point or another, you may have considered selling it, depending on how the market is fluctuating.
When considering whether or not to sell your investment property, one of the questions that will inevitably come up is, “Should I sell with or without my residents in place? And what happens to them when I do sell?”
This article will serve as a guide to help answer those questions and help you make an informed decision.
Selling a Single-Family Home with Residents in Place vs. Not in Place
If you own a single-family home and it’s being rented with residents in place, the value of the property is going to be dependent on the rental amount if you’re selling it to another investor.
With that being said, the value of the property for an owner-occupant (someone who will both own and occupy the home) would be more along the lines of what the market will determine.
If the property is located in an attractive market with high home values, you may be better off waiting until the property is vacant and selling it to someone who intends to move into the property and live there, as it may be more valuable to them in that scenario.
If the property is in a less desirable location with low home values, the rental amount might provide a higher value to an investor than it would someone looking to live in the property.
In this case, it may be beneficial for you to keep the resident in place because it would be as if you’re buying an income stream/cash flow.
Selling a MultiFamily Home with Residents in Place vs. Not in Place
For multifamily properties, their value is often evaluated based on the rental income they can produce.
So the higher the rents the property can generate, the higher the value of the property.
So in this scenario, it’s beneficial for the seller to increase rents as much as possible in their market, and have a fully occupied property when selling because that will give them the highest value for the property.
If your rents are significantly below market rate rents, it may be beneficial to terminate leases or transition them to month to month leases because the new owner will see that as an opportunity to increase the rents, or lease the units at the higher market-rate value.
Advantages & Disadvantages of Selling an Investment Property with Residents in Place – Single-Family Properties vs. MultiFamily Properties
Selling Your Rental Property with Residents in Place
|
| Single-Family Properties |
MultiFamily Properties |
| Advantages |
Disadvantages |
Advantages |
Disadvantages |
| – If the property is in a majority rental neighborhood, and the price point of the property allows the investor to purchase the property and cash flow with the current rental income, then the property will be attractive to an investor interested in single family home rentals
– If the lease is within 60 days of expiring and the tenants are moving out, then it could allow for a sale to a new owner occupant reducing your vacancy period
– Continue to collect rent & cash flow until the property is sold |
– Scheduling showings, inspections, appraisals, etc. with the tenant can be difficult and could lead to delays in ability to sell or close on the property
– Potential for poor showing conditions (dirty, unkept, messy, loud, etc.)
– Multiple showings will disrupt tenants’ lives, potentially causing them to want to leave
– Most single family homes sell at their best price to owner occupants, not investors |
– High rental income can make the property worth more
– Attractive to an investor looking for a “turnkey” investment property
– Continue to collect rent & cash flow until the property is sold
– A fully occupied multi-unit proves the marketability/rentability of the property to the new owner |
– Lower than market rents could cause the property to be undervalued
– Scheduling showings, inspections, appraisals, with the tenant can be difficult and could lead to delays in ability to sell or close on the property
– Cannot sell to a buyer who wants to live in one of the units
– If tenants are not paying their rent, it could be difficult to attract a buyer |
What Happens to the Current Lease – Do I Have to Kick My Resident Out?
This may vary from state to state and you’ll want to check the lease terms. However, here in Pennsylvania, the leases will transfer to the new owner in the event of a sale.
This means that you do not need to terminate the lease or evict the resident in order to sell your property.
Just keep in mind the best case scenarios that we outlined above on your particular situation to determine if it’s best for you to keep the resident in place or not.
The Challenges of Selling a Property with a Resident in Place
But as with all things, there will definitely be a few challenges in the process.
Some things that could be difficult if you sell your property with a resident in place are:
- You’re going to have to provide notice to the resident for any showings
- You’ll have to show the property with all of the resident’s personal belongings in place
- You’ll need to provide copies of the lease and payment history to the new owner
- Uncertainty around resident’s future
- If the resident has pets, it could cause accessibility concerns
- The resident might not like having their personal space entered during the sales process
- Showings, inspections, appraisals, etc.
All in All
If you decide that you want to sell your investment property with a resident currently in it, we hope this article gives you some of the advantages and disadvantages of doing so.
But ultimately, you have to make the right decision for you.
If you need any guidance in making this decision, we are here to help!
In order to best serve our clients, Arbors management, Inc. has created a sales division, Arbors Real Estate. If you are interested in selling your rental property with a resident in it, this is something that we specialize in and are well versed in the challenges that come along with doing so. We would be happy to discuss the details of your property with you. Please don’t hesitate to give us a call!
by Nicole Scimio | Jul 24, 2024 | Blog, Investment Rental Property, Owner Resources, Property Management Education, Uncategorized
Investing in Rental Properties
So, you’ve decided that you want to invest in rental properties, but aren’t exactly sure what kind of property is right for you. Don’t worry, we’re here to help!
To make it as simple as possible, you have essentially 3 different asset classes to choose from:
The purpose of this article is to explain each type of the 3 main asset classes when investing in rental properties, cover the pros and cons of each, and hopefully help you decide what’s right for your investment needs.
Single-Family Property
Definition: A single-family home is a free standing residential building designed to be used as a single-dwelling unit.
Pros of Single-Family Properties:
- Tend to attract renters who stay longer, reducing turnover
- You’re often able to make the resident responsible for utility expenses
- The value of the property is not necessarily dependent on the rental income that it generates
- Fairly easy to sell
- Widely available
- Will potential rent at a higher rate than a multi-family counterpart
- Resident usually responsible for all landscaping and snow removal at the property
Cons of Single-Family Properties:
- When you do have turnover, there’s only one unit so you have zero income from that property during turnover
- They’re typically more expensive on a per-unit basis because you’re only purchasing one unit (for the same price as a duplex, for example)
Multi-Family Property
Definition: A multi-family property is a property with 2 or more residential units.
Pros of Multi-Family Properties:
- You can typically realize efficiencies of scale – you have one roof over multiple units
- Each unit often has the same floor plan as well
- Turnover time tends to be lower because they’re usually smaller than single-family
- Typically easy to rent – there will always be someone looking for a one bedroom apartment
- Cost per unit to purchase tends to be lower than single-family
- If one of the units is vacant, you still have the ability to generate rental income from the other occupied unit(s)
Cons of Multi-Family Properties:
- Often more difficult to find
- Typically smaller units, which lead to higher turnover rates (usually only 1-2 bedrooms)
- Attracts singles or someone with a roommate, shorter overall average residency
- Often have shared utility expenses
- For example, one water meter for a two-unit duplex
- Value of the property is oftentimes directly correlated to the income that the property generates
- Value of property directly relates to rental prices you have (value depending on the rent)
- Increased risk of disputes between tenants
- Usually shared common spaces
- Shared lawn or shared sidewalk means owner is responsible for snow removal and lawn care
Condominiums (Condos)
Definition: Condominiums (or condos, for short) are an ownership structure whereby a building is divided into several units that are each separately owned (via Wikipedia.com).
Pros of Condominiums:
- HOA fees – oftentimes, they’re inclusive of exterior maintenance (roof leak, condo association will pay for it) making monthly expenses more predictable
- Don’t have to worry about landscaping
- Neighbors are more likely to have higher level of respect for the property giving a greater sense of community
- Oftentimes in desirable locations
- Could lead to making units more attractive to potential renters
- Some offer amenities like a gym, pool, tennis court, etc.
- Another factor that can make units more attractive to potential renters
Cons of Condominiums:
- HOA fees – could cut into monthly cash flow
- Sometimes the HOA has limitations or restrictions on how many units can be rented within the association or imposes fees for rental registration
- Can be difficult to insure
- Shared common areas or shared walls with other condo owners
- An elected HOA board makes the decisions for the community, politics are often involved
Overall…
When choosing an asset class to invest in, there are pros and cons to each.
As an investor, you have to evaluate each of those and determine what’s best for your particular investment strategy.
However, if you’d like to discuss any of this further, or need help finding out which type of asset class is the best option for you and your investment strategy, please contact us for a free consultation!
by Nicole Scimio | Jun 20, 2024 | Blog, Investment Rental Property, Low Income Tax Credit Housing, Owner Resources, Project Based Section 8 Housing, Property Management Education, Tenant Education
The Differences Between Market-Rate and Affordable Housing
If you’ve been involved in the housing industry for any period of time, you’ve probably heard the terms “market-rate housing” and “affordable housing.” But what exactly is the difference between the two? Don’t worry, we’ll break it down for you.
Market-Rate Housing
Market-Rate Housing is also known as conventional housing. This just means that the property does not have any type of subsidy, and the resident pays the full amount of the rent that is determined by the market.
Attributes of Market-Rate Housing:
- The lease terms are customizable
- No restrictions on additional services and fees you are able to provide to the tenant
- You can non-renew a lease for any reason
- The rent is not guaranteed (residents may or may not pay, might be late on rent)
- Late payments/refusal to pay could lead to eviction
- You can create your own screening criteria
- There’s no limit on the rental amount that you can charge
- Rent is dictated by what someone is willing to pay for the unit
If you want to check out our available market-rate properties, click here.
Affordable Housing
Affordable Housing is also known as subsidized housing, meaning that the property is receiving a subsidy from a governmental agency whereby the resident is only responsible for a portion of the rent. This portion of the rent that they owe is typically based on their income.
Attributes of Affordable Housing:
- Lease terms are subject to the agency issuing the subsidy
- The rental subsidy payments may be subject to property inspections from the agency
- You are limited in reasons for non-renewing a lease
- The rent is guaranteed by the agency issuing the subsidy
- Your screening criteria is also dependent on the agency that’s issuing the subsidy
- The rental amount is dictated by the agency that’s issuing the subsidy
- There are income restrictions for residents to qualify
If you want to learn more about the different types of Section 8, check out this blog post.
If you want to check out our available affordable housing properties, click here.
All in All
Whether the property is market-rate or affordable housing, our primary goal is still the same: to provide safe and habitable housing for all of our residents, as well as professional management services to meet our clients’ goals for any property that we manage.
We have 40+ years of expertise in all aspects of housing in and around the Pittsburgh area, Western Pennsylvania, and West Virginia, so if you have any questions, feel free to contact us!
by Nicole Scimio | Jun 19, 2024 | Owner Resources, Property Management Education, Uncategorized
How to Keep Residents Happy as a Landlord or Property Manager
One of the most important goals in property management is to keep residents happy, A.K.A. maintain resident satisfaction. Why is that?
Well, just to name a few reasons:
Here at Arbors Management, we’ve seen a 10% higher renewal rate than the industry average over the course of our 40+ years in business.
But how exactly do we keep our residents happily renewing their leases year after year? Let’s dive in.
1. Communication
Different Avenues of Communication
We communicate with our residents in a multitude of ways: emails, phone calls, text messages, physical mail, etc.
Everybody is different, so it is important to take note on what is the most effective with each resident individually. Whatever way a resident prefers to communicate, meaning whatever is most convenient for them, we will communicate with them via that medium.
Clear Communication
It’s also important to ensure that we’re communicating clearly and effectively.
We always want to make sure our message is very clear and that we answer any questions that our residents may have. What’s the point of conveying a message if the other person is confused and only left with questions rather than answers?
Timely Communication
Timely communication is key!
We do our best to ensure that we’re responding to residents within an appropriate timeframe and following up on any questions that we may have on our end.
Each of our properties is assigned a dedicated portfolio manager or property manager that is responsible for all resident communication, as well as any communication with the owner of the property.
By acting as that liaison, our management team is in constant communication with residents, and owners when necessary.
2. Convenience
Exceeding Expectations
These days residents have increasingly higher expectations, especially when it comes to the convenience of working with a property management company.
As you can probably imagine, we are always trying to meet and/or exceed those expectations.
One of the ways that we do this is through an online portal, which residents begin to use starting with the leasing process. We’ll cover more on our online portal in just a bit.
Convenient Application Process
Prospective residents are able to fill out and submit their application online.
This process is easy and streamlined, and doesn’t require the applicant to jump through any confusing or exhausting hoops to apply with us.
It may sound obvious, but the easier you make it for potential residents to apply, the more applicants you’ll have.
Digital Lease Signing
Once an application is submitted and approved, the lease signing process is completed through our online portal as well.
Applicants can sign their lease digitally from anywhere in the world as long as they have an internet connection! It can’t get much simpler than that.
Online Resident Portal
Our residents also have the ability to do just about anything rent-related through our online resident portal. Just to name a few portal features, residents can:
- Pay their rent online
- Access lease documents
- Sign future lease renewals
- Submit maintenance requests 24/7
- Access a 24/7 emergency maintenance line with a live answer
Ultimately, we want to make the renting experience convenient and easy. The more barriers you create, the harder it is to convert a prospect/applicant into a renter.
3. Resolving Maintenance Issues Quickly
One of the most stressful things as a renter (or even a homeowner) is when something goes wrong in your residence.
We always want to make sure we’re addressing things as quickly as possible, keeping damage to a minimum, and keeping residents satisfied.
Quick Maintenance Protects Properties
While maintenance requests being taken care of right away satisfies our residents, it also protects our clients’ (A.K.A. our owners’) assets.
For example: if there’s a water leak, we want to fix that as soon as possible so that any damage caused is mitigated and comes to a halt, hopefully preventing any permanent damage.
A Large Network of Maintenance Vendors
Over the past 40 years that we’ve been in business, we have developed a list of reputable vendors that we know we can rely on.
Having a vast network of vendors that can address any issue that might come up is always beneficial; if the first plumber we try to contact is unavailable, we’ll go back to our vendor list and contact another plumber that we also have an established relationship with.
With having connections to multiple vendors in each trade, scheduling maintenance services is generally a breeze.
It also is a win-win situation: we give our vendors a lot of business, so they generally aim to keep us satisfied and often prioritize our work orders.
Access to Emergency Maintenance 24/7
We mentioned earlier that our residents have access to 24/7 emergency maintenance. This ensures that when there is an emergency, they can get ahold of someone right away.
This in turn allows us to address the problem quickly, and have the appropriate vendor handle the situation in a timely manner, preventing any further damage to the property.
So When It Comes to Keeping Residents Happy…
Keeping your residents happy is an important part of being a landlord or property manager.
Resident satisfaction comes with many benefits: increased rental payments, increased lease renewals, and increased property value by maintaining the property, just to name a few.
Here at Arbors Management, we try to focus on 3 main aspects of resident satisfaction: clear and timely communication, a convenient leasing experience, and efficient maintenance resolution.
By focusing on these 3 areas, we’ve developed a strategy that has proven to be extremely successful at maintaining resident satisfaction, and we’d love to help you do the same.
If you want to discuss how we can help you keep your residents happy, please contact us for a free consultation!
by Arbors Management, Inc. | Apr 16, 2024 | Owner Resources
by Arbors Management, Inc. | Apr 16, 2024 | Tenant Resources
by Arbors Management, Inc. | Apr 16, 2024 | Tenant Resources
by Nicole Scimio | Nov 8, 2023 | Uncategorized
Should Residents Be Allowed to Do Their Own Maintenance?
As an investment property owner, you’ve probably had at least a minor maintenance issue or two at your property.
And once your resident notified you of this minor issue, chances are that you were met with the statement:
“I don’t want to wait for a vendor to come out. Can’t I just repair this myself?”
Well, that depends.
Essentially, the blanket answer is no, but there are exceptions to every rule.
Professional Maintenance of Your Property
When it comes to the maintenance of your property, you want to ensure that you’re utilizing skilled professionals that know what they’re doing.
If you allow your resident to perform repairs at the property, a couple of less-than-desirable outcomes could occur:
- They don’t do the repair correctly, causing you additional maintenance and additional expense
- The resident can damage your property if repairs are done improperly
- The resident gets hurt while performing maintenance, which causes a liability to you as an owner
But when using a professional, you have the peace of mind that they can perform skilled work because they’ve been trained in it.
The cost is a little higher up front, but will ultimately save you money in the long run.
Licensed & Insured Vendors
An important item to note is that you want to ensure that the vendors you work with have appropriate insurance and licensing in their field.
If the vendor you hire does something wrong, damages property, gets hurt, etc. their insurance will cover it.
With hiring properly licensed & insured vendors, your liability is greatly reduced in a number of ways.
Examples of Maintenance that Residents Should NOT Do:
- Any major mechanical repairs involving:
- Plumbing
- HVAC
- Appliance
- Electrical
- Roof repairs
- Flooring/carpet installation
- Siding or window repairs
- Gutter clean out
- Lawn maintenance and snow removal when there are multiple units at a property
This isn’t an exhaustive list of everything that residents shouldn’t do maintenance-wise.
However, it does serve as a brief summary of some of the most important items that you don’t want to risk a resident handling themselves.
Examples of Maintenance that Residents Can/Should Do:
- Small routine maintenance that would be expected when living in a home
- Change out a furnace filter
- Water filter
- Changing light bulbs
- Lawn maintenance for a single-family home
- Cutting grass, trimming trees, shrubs, etc.
- Snow removal for a single-family home
At times, an item may need to be purchased to aid in small routine maintenance, like a dehumidifier or space heater.
You can allow the resident to purchase the item, provide you a receipt, and you can reimburse them if there is a need for that specific item (that doesn’t require professional installation).
Any good lease (like ours) covers these topics and puts the responsibility on the resident for these routine service items.
Overall…
It’s in your best interest to hire professionals to handle most major maintenance items/repairs at your property.
Professionals are best when considering liability concerns, properly done maintenance, and long-term care of your property.
After all, your property is a big asset that you want to protect.
But, with that being said, there are always a few minor things that the resident should be responsible for outlined above.
The list does not include anything major, but just what would be regularly expected of someone occupying a home.
If you’d like to discuss any of this, please contact us about your specific situation. We’d be happy to walk through your situation and property needs with you!
by Nicole Scimio | Nov 3, 2023 | Uncategorized
What to Do When an Evicted Resident Leaves Belongings Behind
Evictions: Unfortunate, But Sometimes Unavoidable
As you may know, evictions are an occasional obstacle that we deal with in property management.
Maybe you’ve dealt with an eviction before as an owner, and maybe you haven’t.
If you haven’t had any experience with evictions, check out our blog post on the timeline of an eviction.
In that post, we detail out the course of the whole eviction process.
But, whether you’ve had to evict a resident before or not, you may have asked yourself the question:
“What do I do if the resident I evicted leaves their belongings behind in my property?”
While each eviction case is unique, we’ll try to break this part of the process down into the simplest terms.
What to Do if the Evicted Resident DOES Contact You
Chances are, the evicted resident will want at least some of their belongings back.
If that’s the case, the resident has 10 days to contact you and let you know that they’d like to retrieve their belongings.
If they do contact you, you must arrange for them to have access to gather their personal property within 30 days.
Note: This 30 day period begins the day of the eviction.
Once you’ve confirmed that they’ve retrieved everything they want, you’re legally allowed to do what you see fit with the the items that they leave behind.
What to Do if the Evicted Resident Does NOT Contact You
If the evicted resident fails to contact you within the initial 10 days, they forfeit their right to retrieve their belongings.
After the 10 day period of no contact, you are allowed to do what you see fit with the items they left behind.
However, to be on the safe side, we recommend you hold onto their items for the full 30 day period.
In Simplest Terms:
Eviction occurs → Resident has 10 days to contact you
If you are contacted → Resident has 30 days to get their belongings
If you are not contacted → After 10 days, you can handle their belongings how you see fit
All in All…
While evictions are not a “fun” part of owning a rental property, they do come with the territory.
The good news is that we can help!
We’ve gained expertise in all aspects of property management, including evictions, over the past 40+ years that we’ve been in business.
Contact us today for a free consultation to discuss your unique situation!
Disclaimer: We are not attorneys, and this is not to be considered legal advice. We encourage you to contact your attorney for guidance on your particular situation. This article is meant to provide a general rule or procedure on how this process works.
This is the process as we understand it in Pennsylvania and may not pertain to other states or specific cities within Pennsylvania. We always encourage a consultation with a local attorney who knows and understands Landlord Tenant Law for specific locations.
by Nicole Scimio | Jun 21, 2023 | Blog, Project Based Section 8 Housing, Uncategorized
Stoneboro, PA – Arbors Management continues to expand their reach by adding Lakeview Manor in Stoneboro, PA to their portfolio. Effective June 1st, Arbors will become the new management agent of the 50-unit senior building near their new office in Grove City and other Arbors-managed properties, such as Evergreen Arbors in Franklin and Towne Towers in Oil City.
Lakeview Manor is an affordable independent senior living facility that offers a wonderful community of residents and has been a staple of the community for 36 years since its construction in 1987. Located near Lake Wilhelm, Goddard State Park, the Stoneboro Fairgrounds, Grove City Outlet Mall, and Conneaut Lake, residents have plenty to do just minutes from the property.
Since 1982, Arbors Management, Inc. has built a portfolio of over 4,000 residential units with a large majority in the affordable housing segment across Western PA and West Virginia, and it continues to grow each year. The team at Arbors Management is thrilled to begin building a lasting relationship with the residents of Lakeview Manor.
If you’d like to learn more about how Arbors can help you manage your property, please contact us.
Read the original article online on the Pittsburgh Business Times here.
