A Personalized Approach for Owners

Even the most meticulous property management company / property owner may be sued by a tenant over the return of a security deposit. Fortunately, you can take some basic steps to minimize the possibility that you’ll spend hours in court haggling over back rent, cleaning costs, and damage to your rental property

The most important thing we can do is to follow state law scrupulously when we return security deposits. Make must make sure that we meet the Texas deadline of 30 days for itemizing and returning the tenant’s deposit. The itemization should be in writing and state how the deposit has been applied toward back rent and costs of cleaning and damage repair, together with whatever is left of the deposit.

To reduce the possibility of disputes over security deposits, have a move-out vacate notice signed … the signed move-out notice explains:
• tell the tenant how you expect the unit to be left (be specific about cleaning things like floors, appliances, and window coverings)
• explains your final inspection procedures
• list the kind of deductions you may legally make unpaid rent and necessary cleaning and repairs, outside of “ordinary wear and tear”.
• remind the tenant to return keys and provide a forwarding address, and we explain how we will send any refund that is due.

After the tenant leaves, we inspect the rental unit to assess what cleaning and damage repair is necessary.

Property Owners and tenants tend to disagree on what is “normal” deterioration resulting from basic human occupancy, and what’s unreasonable damage. As a property owner, chances are you took a security deposit before signing on your tenants. This deposit is intended to be used to fix any unreasonable damage your tenants caused. Legally, it may not be used for anything defined as normal wear.
Defining normal wear and tear can be tricky, particularly since its definition results in financial loss either to you or your tenants. In general, normal wear and tear is any deterioration to your property and its fixtures resulting from normal use. Time and usage lead to a physical decline in a property, no matter how careful a tenant is. This normal lessening of the value of your property is part of having tenants, and you may not take from their security deposit to fix it.

Damage
Damage is almost as difficult to define as normal wear and tear. In most cases, damage is harm or loss of value to your property caused by abuse or misuse. Gross neglect may also cause damage. The key is deterioration of the property’s value or usefulness.
Normal wear and tear can also result in this deterioration, so damage and wear and tear are typically assessed on a case-by-case basis.

If you have a tenant in the property currently and they want to renew the lease, this will require some work. This is a very time-consuming task of mailing out four letters asking for the renewal. Emailing all residents, the same letter asking for a renewal as well as the time spent talking and sitting with them to go over the renewal contract and getting the signature. We believe the rate charge is fair and equitable for the cost of mailing out and the time spent to get the renewal started and finished. In most cases the renewal fee charge is significantly less than having a turnover and paying a leasing agent for leasing the property. The fee is for renewing the lease for an existing tenant. The fee covers the time it takes to make any adjustments to the lease—including performing a Comparative Market Analysis to recommend rent changes (if any)—and obtain the tenant’s signature.

For many of you, there are new lease contracts on your properties. Put simply, what this means is that there may be several charges to your expense account, as we prepare for a future make ready on the property for the new residents (i.e., painting, cleaning, maintenance, security deposit reconciliations, etc.).

How do you handle leasing commissions? Equity Real Estate & Company has always encouraged good working relationships with our REALTOR® colleagues, and offer referral fees based on the rent rate and term of Lease. Every effort is made to make the property available for showing by agents. Referral fees are factored on a sliding scale and are paid on the first of the month following Tenant’s move-in.

Owner distributions are made on the last business day of each month. Net proceeds, less reserve, are either deposited into our client’s accounts within 48 business hours or included with the Monthly statements that are mailed no later than the 2nd business day the following month. All paid invoices will be provided with report. Invoices are available upon request via email.

In the unlikely event that the expenses exceed your monthly income, we will contact you for payment of the expenses. Payment must be made within 7 days to avoid penalties and interest. We are prevented by law from expending money from our Trust Account if your portion of the account does not have sufficient funds.

We account for the security deposit from your tenant as indicated on your owner’s statement. When the tenant moves out, we process the security deposit and deduct all costs that are considered “beyond normal wear and tear” of the property from the security deposit. Tenants are informed of these potential costs prior to moving in as well as in their move out packet upon notification of move out. The tenant is issued their security deposit refund and any damages deducted from their deposit are reflected on your end of the month statement.

A move out-inspection is performed in which we document, both in pictures (when necessary) and writing, the condition of the property.
• See the move-out process below.
• As required by law, all smoke and carbon monoxide detectors must be tested, and the batteries replaced regardless of how new they are. We abide by the Texas Property Code for the proper number and location of smoke detectors.
• Furnace filters will be changed, as needed. Not only does this help protect your investment but sets the benchmark for new residents. Per the terms of our lease agreement, residents are required to replace them throughout and at the end of their tenancy.
• The property will be re-keyed to ensure the safety and security of both the property and new resident.

As the invoices come due for these make-ready expenses, your disbursement check may not be in the amount that you’re accustomed to. Also, as many of you know, I usually hold back monies from cash flow in your account in anticipation of these charges. Once all of the make-ready charges are paid, you will see a return of normalcy to your disbursement check, as most invoices for make-readies have been paid out.

For those of you who have had or will have a resident move out, this letter is a friendly reminder of how our move-out / move-in process works. When a resident moves out, we have a six-step process we go through to prepare the unit for a new resident:
We perform a move out inspection of the property. During the inspection, we identify items that should be charged to the former resident.
1. We walk the property and assess condition/damages/need for repair.
2. We schedule and complete general maintenance.
3. Depending on the wear, we have the carpet steam cleaned or replaced.
4. Depending on condition, we have a touch-up or full paint done.
5. We have a professional cleaning company clean the unit.
6. Security deposit must be returned to the resident with-in thirty days.
• Please refer to your monthly financial statements.
• If all bills for the move-out are not covered in the current month’s report, the balance will carry over and be paid in the following month.
• Please remember that the ending balance that is shown on your monthly statement will reflect the security deposit(s) and the reserve amount being held in your property account.

Marketing (It’s an art AND science) We are actively advertising and professionally marketing each of your properties. Our leasing agents are well trained and courteous, and we are working in your best interest every day to acquire and retain the best residents for your property. We are constantly comparing rental rates to find the most Competitive Rent Rates Based on Market Conditions and ultimate Property Condition. We have a very Wide Internet Exposure (see below). Eye catching Yard Signs. All vacant available properties available to local REALTOR’s, as well as other leasing agents s in the area that don’t belong to the local MLS.

Search engines are providing search users with a ranked list of the websites they’ve determined are the most relevant. Search engines aim to be a tool for finding what the user wants from a very large pool of information and data. Our Website pushes out to these search engines.

We have a mailing list of over 60,000 Texas A&M and Blinn students they we email up to three times per week. We are able to reach a large portion of the Bryan College Station renter demographic.

As a property manager … our legal duty to our clients is “fiduciary” which simply means we serve them as though we own the assets ourselves. It also means our clients’ interests are prioritized to ensure a mutually beneficial relationship. If a deal isn’t good for both parties, it’s just not a good deal.

With our property management, expenses are minimized through our long-term relationships with quality service providers. In addition, our weekly pay period provides vendors with greater cash flow and flexibility in performing various tasks. Because of our volume of work, our vendors give us excellent pricing which is directly passed on to our clients. Maintenance tracking software integrated with our residential and commercial property management system allows for higher efficiency in performing repairs and reporting expenses. Incidentally, our clients get copies of every billed invoice providing full disclosure of the expense.

No, we do not mark-up charges for performing repairs; all work is at cost.

Our clients don’t get charged for items such as faxes, long distance, and copies. We’ve even been known to waive fees. For example, once a new tenant occupies a unit, and the lease fee is assessed, if that tenant for whatever reason, has to breach their lease after a short period, we will re-lease the residential or commercial property at no additional charge to our client, excluding direct expenses for make ready and advertising. We want to prevent bad ownership experiences and help, not hinder, our clients in their investments. This is essential to our property management and the bottom line to investors.

Collecting rents, evicting non-paying tenants, and getting vacant units rented are done in a proactive and thorough fashion.

Here at Equity Real Estate & Company, with our combined experienced background in real estate, our “out of the box” solutions are available in addressing unique or difficult problems – an added benefit from Equity Real Estate & Company, your property manager.

The lease addresses which party will pay for the various repairs. If a tenant causes a condition that needs repair, the tenant will bear the cost of repair. Likewise, if the landlord causes the condition, the landlord will bear the cost. The only exceptions are: if the tenant caused the condition. Under the lease, the landlord will pay for all repairs, however the tenant may have to pay all or a portion of the cost if this requirement is specified in the lease.

Tenants have access to our 24-hour maintenance number in case of an emergency after hours. Emergencies are taken care of immediately. Action is taken by Equity Real Estate property Management on your behalf.

The amount of each property’s Emergency Maintenance Reserve (“EMR”) is mutually agreed between the Owner and Keith when the Property Management Agreement is signed.

Do you really want the cheapest company? The old saying “You get what you pay for” is always true. There are other companies that charge less than we do. There is other companies that charge more than we do. We are somewhere in the middle. We feel that we offer a very comprehensive service package, and our rates are very competitive.