My RE investment summary - 2017 by JY

By JY  Mon Jan  1 14:26:52 2018

Again here comes 2018, like in the past I try to write a short summary to
remind myself what happen in the previous year.....

2017 started somewhat disappointing but didn't do too bad at the end, yet 
still, its the first time in 5 years our net cash flow dipped below 500k, I 
continue to pay down additional principles to the banks, bringing debt to 
asset ratio close to 33%, goal is under 30% before next recession.

And thanks to a stronger than expected appreciations with the local real 
estate market, our personal real estate portfolio exceed 11 million the 
first time.

--------
Realized Net Cash Flow ( Combine all sources, including regular principal 
payments ) - $494,000.

Unrealized Appreciations ( including a one-time appraisal adjustment) - $873
,000

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This is my personal portfolio, the group portfolio is about 25+ million strong.

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Personally I hold 173 units.

Mice problem? Should I Hire a Mice Exterminator or Get Rid of Mice Myself?

Should I Hire a Mice Exterminator or Get Rid of Mice Myself?

Posted on January 11th, 2018 by Nomer Caceres. Posted in extermination, News - 0 Comments

This stone foundations is vulnerable to mice infestation. All stones must be perfectly repointed outside and in.

Before trying to get rid of mice on your own, consider what a mice exterminator can do.

A mouse in the house can create a mix of fear, disgust, and filth, and left unchecked, will quickly turn into dozens or hundreds of mice. It is possible to get rid of mice yourself as a DIY owner/manager, but there are definite advantages to hiring a mice exterminator as well. This article reviews the basics.

Know Thy Enemy

According to Wikipedia, mice are — along with humans — one of the most successful groups of mammals on the planet. They are remarkably adaptable to varying food sources and environments. They reproduce quickly and in large numbers.

In the wild, mice eat fruits and grains from plants. In manmade settings, they will eat anything, including pet food, chocolate, peanut butter, and meat scraps.

On a per-weight basis, mice eat ten times more food than people. NPR reported that the average American eats close to 2,000 pounds a year, and the CDC reported an average body weight (men and women) of 182 pounds, which equates to eating 1.5% of our body weight each day. A mouse eats 15% of its bodyweight each day.

Mice are fertile when they’re about 50 days old. Gestation of a new litter takes 20 days, and under optimal conditions, produces 10 to 12 pups. Weaning takes three weeks, and then two to five days later the female can conceive again.

Well cared-for pet mice can live for approximately two years (the record is four years, see the rodent link below). This means a single breeding pair could theoretically produce approximately 150 offspring. This figure is highly dependent on temperature and food availability.

Mice teeth (like the teeth of other rodents) have evolved to grow continuously so they can continually be filed down and sharpened. This is partly why mice can destroy moldings, casings, walls, and electrical wiring.

Get Rid of Mice Yourself

Mice are inside to look for nesting material in the early fall and food sources throughout the winter. As an owner, there are many things you can do to get rid of mice yourself.

First, eliminate access to loose fluff, fiberglass insulation, blow-in insulation, old carpet, and other nesting materials.

Second, close off interior chaseways like holes for electrical wires and pipes. If  you have forced hot water heating, pay special attention to the holes around those pipes. They should be blocked with a copper wool mesh and black PUR foam. If you seal up all the chaseways in all your units, it will take an hour or two per unit. You will want knee pads, a flashlight, a butter knife or dowel, more copper wool than you think you need, tin snips, a trash bag, and PUR foam gun with a can or two of foam.

To close a chaseway, use the tin snips to cut off an appropriately sized piece of copper wool. Do this over your open trash bag to catch metal shards. Shape the copper into a donut, place it around the pipe and against the hole, and use the butter knife to jab the copper wool firmly into place. Squirt black foam around it. Don’t use “great stuff,” which is easier to chew through, and don’t do this when the heat is actively working , which can cause the foam to run. Repeat for every hole, no matter how small.

Third, close off exterior access. Pay attention to the lower corners of exterior doors, stone foundations riddled with holes, and the sills between the foundation and the frame. These must all be sealed perfectly to prevent rodent access.

Fourth, seal the interior foundation. Mice can burrow, so sealing the foundation above ground-level is not adequate. Seal the wall from inside the basement down to the basement floor. If you have a dirt floor, it is hopeless; put in a slab.

Fifth, once the place is sealed up, place traps and check them regularly. A mouse that is alive in a trap should be killed immediately for humane reasons. Place your thumb and index finger behind its skull. With your other hand, grab its tail and draw sharply back, holding the head in place. You will feel the spine snap and the mouse will be put to rest.

These forced hot water pipes are inadequately sealed against mice. They need copper wool, more of it than the steel wool pictured, and an application of PUR foam.

Hire a Mice Exterminator

Exterminators are licensed and trained to use lethal rodenticides in a safe way. For instance, under 333 CMR 13.08(1), rodenticides must be placed in tamper-resistant bait stations and secured so as not to be lifted. The bait station must also be labeled to identify the person or company who placed it there, the date it was placed, the EPA registration of the product inside, and the active ingredients of the product.

Applicators are also required to keep logs of where they applied baits, and share those logs with any person upon reasonable request.

As an owner/manager in a litigious age, hiring a licensed exterminator solves several problems beyond mice.

First, there is no question in a court’s eyes that you have taken appropriate action to address a vermin infestation. If it takes a long time to get rid of all the vermin, you won’t have liability the way you might if you were doing it yourself.

Second, you cannot be liable for improper or unlicensed application of a pesticide or rodenticide.

Finally, there’s a good chance that the mice exterminator knows more about mice than what can be learned in a newsletter article.

Whether you decide to hire a mice exterminator or get rid of mice on your own, don’t wait. Mice are one problem that multiply.

A “How To” for Better Tenant Screening

From:

http://masslandlords.net/a-how-to-for-better-tenant-screening/

A “How To” for Better Tenant Screening

Posted on April 30th, 2015 by Doug Quattrochi. Posted in advice, tenant screening - 0 Comments

We recently tracked the process of renting out two vacancies in a Worcester three-decker. The results show that this one landlord, at least, could do their tenant screening better. Below we share the statistics on their rental process in the hope that the case study will shed some light on your own business.

Case Study Overview

The Worcester three-decker is owner-occupied. One apartment was almost completely modern and the other was somewhat antiquated. Both had been priced barely below market and within the payment standards for Section 8.

Case study apartment #1.

The landlord has a history of compliance with all fair housing laws. For this owner-occupied property, the landlord was concerned that tenants would follow house rules, especially quiet hours and a no-smoking policy for the entire property (even outside). The landlord had an additional preference not to accept dogs on account of possible noise and yard filth. These concerns stacked on top of the basic concern that tenants would be able to pay. First and security were required to move-in. Tenants were evaluated using our applicant qualifier. 

Case study apartment #2.

The first vacancy began on March 1 and was filled on March 26th for an April 1 start. The second vacancy began on April 1 and was filled on April 29 for a June 1 start. Three months of vacancy between two units was longer than the landlord wanted.

The only advertisement for the vacancies was done with craigslist posts, following our advice. The ad clearly directed tenants to call a cell phone, and the landlord took the calls more or less as they arrived. If the call was not picked up the call went to voicemail. Prospective tenants could also email.

The landlord’s process required an initial phone screen. Whether tenants emailed or called, the landlord used our phone screening prompt sheet to find out basic information.

A prospective tenant who passed the phone screen was scheduled for a one-on-one tour of the apartment. All prospective tenants who attended a tour were given our rental application.

Tenants who completed a rental application were scored on our applicant qualifier. Low-scoring tenants were notified of the deficiency and had at least one opportunity to correct it by providing additional information.

Tenant Run-Down

The figure below shows this landlord’s data.

Flowchart of the tenant screening process for a Worcester, MA case study.

128 households called or emailed the landlord inquiring about the apartment. Here is where the drop-off begins:

• Households that left a voicemail or email but could not afterwards be reached: 27
• Households that were declined by the landlord during the phone screen: 38
  • Vaping: 1
  • Smoking: 17
  • Income grossly less than 3x prospective rent: 11
  • Not a first time renter, but unable to provide either good credit or any kind of landlord reference: 2
  • Stated desire to operate a high traffic business out of the unit: 1
  • No expectation of getting required move-in money: 3
  • Dogs without doctor’s notes: 3
• Households that were scheduled for a tour: 63
  • Drove by beforehand and canceled the tour: 1
  • Incorrectly thought heat was included, reread the ad, and canceled the tour: 1
  • Did not cancel but did not show up: 9
  • Definitely attended the tour (landlord made a note or remembers): 33
  • Probably didn’t show (landlord failed to note but has no recollection of meeting that tenant): 19
    • Households that applied: 12
      • Received a passing score: 4
        • Preferred a different apartment:  1
        • Given the chance to provide move-in monies: 2
        • Lower scoring and not given the chance: 1
      • Households that failed to complete all required documentation before another: 6
      • Households that gave up part-way through: 2

Observations

Renting an apartment is a significant time sink. (This is why realtors often claim one month’s rent as their fee.)

As this landlord found out, it’s very important to answer the phone when it rings and to reply to emails promptly. Approximately 20% of first contacts went flat, meaning that the tenant was initially interested in the apartment, reached out, and then found a more promising apartment before the landlord returned their call. The number one biggest cause of early rejection would seem to be the tenants rejecting the landlord for being unavailable or not returning calls quickly enough.

Another significant time sink was the number of tenants who were not prepared to rent this apartment. The two biggest causes of rejection at the phone screen stage were ignoring the “no smoking” part of the ad (13% of callers) or being unprepared to take on the financial responsibility (11% of callers). The landlord rejected nearly a quarter of all applicants over the phone.

Thoughts on Smoking

The landlord’s ad said, “This is a no-smoking property.” All smokers who called about the apartment admitted that they smoked but offered not to smoke inside the apartment. The landlord wanted no smoking anywhere at all (not on the porch, in the lawn, or anywhere near any windows). The landlord also believed that in the winter, when temperatures dropped, smokers were likely to break their promise not to smoke inside. This didn’t make the landlord any new friends, but all smokers were told they were better off renting elsewhere.

Thoughts on Section 8

This landlord observed that tenants receiving public assistance made this fact known during the phone screen. Tenants routinely asked “Do you accept Section 8?” Presumably there are some other landlords who say no, otherwise why would a tenant ask? The law prohibits the landlord from refusing to take Section 8. A landlord cannot discriminate on the basis of receiving public assistance.

Did this landlord turn away any Section 8 tenants? Absolutely. Almost all of the tenants unable to meet the financial requirements had Section 8. Section 8 does not pay for security deposits, and it does not require a landlord to relax their application standards. So tenants without a security deposit or without adequate income could not qualify for the apartment.

(Note: This landlord used the correct way to calculate a Section 8 tenant’s income ratio. Divide the applicant’s income by their share of the rent. Section 8 screening is actually very complicated and will be discussed in another article.)

Recommendations

1. Try open houses as a way to meet more tenants in less time.

This landlord gave somewhere between 21 and 40 tours (they don’t have accurate notes on no-shows). This one-on-one probably was more costly than it needed to be. If they had instead scheduled open houses (aka, group tours), they would have reduced the impact of no-shows and the total time spent showing the apartment.

2. Respond to calls and emails on the same day, before a tenant forgets your apartment ever existed.

As noted above, almost a quarter of this landlord’s leads went cold in the very first contact.

3. Continue using phone screens as a way to gain information early and save time.

The chart above shows that roughly a quarter of callers could be screened away for obvious non-starters. This saved time for all concerned.

4. Do not bother showing an apartment unless it is rent-ready.

Although we didn’t discuss it above, this landlord had not finished painting when the second apartment was first being shown. This likely left all the earliest, most proactive tenants with a feeling that the apartment was not ready or not good enough. This renovation work combined with the landlord’s difficult behavioral criteria likely contributed to the extra month’s vacancy experienced (the June 1st start date).

5. Continue to engage in dialog over application completeness and objective point scoring.

One thing the landlord did very well was to engage in dialog about the application process. Although only 4 applications received passing scores, none of them passed on first glance. All 12 applications required additional supporting materials, like pay stubs, bank statements, or doctor’s notes. All applicants were given the chance to provide this information. This dialog sharply reduced the chance that the landlord would be found non-compliant with fair housing laws. Most importantly, it turned some dud applications into passing scores.

Conversion Analysis

The ideal situation would have been this: one tenant called, passed the phone screen, loved the apartment, applied, got approved, and gave the landlord their move-in money. One call, 100% conversion. Easy!

In reality, the actual conversion rates at each step were far less.

Examining Step One: Phone Screening

Conversion rates for phone screening.

As stated above, the 21% of “no contact” were missed calls that the landlord should have been on top of. Of the remaining, roughly five tours were scheduled for every three households rejected. Another way of saying the same thing: five tours were scheduled for every eight calls. This means that if the landlord had not missed those 26 calls, they would have had another (5 divided by 8) times (26) = 16 tours. This would have increased their schedule rate from 49% to 61%.

If the landlord had not missed as many calls…

Landlords with offices sometimes do not do any phone screens whatsoever. They require the prospective tenant to show up and complete a questionnaire. This is fine as long as the questionnaire encourages honest answers. This landlord did not have an office.

Phone screens and questionnaires can be really distracting. The landlord found phone screens difficult, especially when the craigslist ad was refreshed and a wave of new calls began. But they were far less wasteful than giving a tour and processing a full rental application for all 128 callers. Every time this landlord excluded a prospective tenant up-front, it saved both them and the prospective tenant valuable time.

Examining Step Two: Tours

The landlord scheduled 63 tours. Consider these tenants the new “100%”. The landlord didn’t keep records for 30% of them. They might have taken a tour, they might not.

Drop-offs at the “tour” part of the process.

It looks like there were roughly three times as many tours as there were no-shows and cancellations. Said another way, three out of every four tours actually took place. We’ve redrawn this step in the process to attempt to correct for the lack of data. We think probably 75% of the “no recollection” candidates actually did take tours, or 14 households, and the remaining 5 probably failed to show.

The percent of tours actually given is probably more like this.

This landlord owner-occupied the building, so a no-show was not a big deal for them. But for any other landlord or for a realtor, no-shows would have been a huge waste of time. All the time spent driving there and back would be utterly wasted. Some of the 63 tours might have been combined into “open house” events as a time saving measure. It probably would not have increased the number of tenants who applied for the apartment. (If we get data on it, we will post it.)

Examining Step Three: Applications

If it’s true that 75% of scheduled tours did take place, then there would have been 47 tours. But since this doesn’t change the number of applications received (12), we now find another problem. Almost three-quarters of all tours did not result in an application.

The percent of tours that apply may be too low.

This ratio may compare with what you find in your own business. Every apartment is unique and not all apartments are appealing to all households. But the advice for this landlord is clear: make sure the apartments appear to be good value.

The image of apartment #2’s kitchen (at the top of this article) shows old cabinets and a small sink. We also know that apartment #2 was still being painted. It’s possible that the landlord could have increased this application ratio if this unit had been rent-ready during tours.

What If

If our recommendations had been made at the outset, the landlord would have had more invitees to open houses (61% instead of 53%). And with a rent-ready apartment, they would have had more applications (we’ve estimated 15 instead of 12). They would have had this for the same amount of work. All they did was change the process a little.

This would have given the landlord at least another three applications, and very likely one of them would have been qualified. Maybe that one would have taken the apartment for May 1 instead of June 1. We can’t say for sure. But more applications for no additional cost sounds worthwhile to us.

The revised process with increased numbers:

So those are our recommendations for better tenant screening. Overall, this landlord used a rigorous process and made good use of our forms.

Was this insightful? Let us know in the comments below!