Utilities in a Vacant Rental? Keep ‘em On!

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“Should I cut off the utilities in my vacant rental property?”

My answer? No way.

It’s one of the first questions my homeowner clients ask me—and my emphatic answer often surprises them. After all, none of us is eager to have higher bills—and my maintenance staff and I pride ourselves on looking for ways to conserve energy and lower costs for clients.

Yet, at the same time, I know it’s the best advice. Don’t turn off the utilities in a vacant rental. It’s a shortsighted solution—and one that can be enormously wasteful of time, money, labor, and fuel in the long run. On the other hand, keeping everything running as though the house were occupied isn’t the best answer either.

Keep your future tenants in mind.

The most successful landlords know how to think beyond short-term costs to put themselves in a tenant’s shoes. Remember that when prospective tenants walk through the door, the very first thing they do is to imagine themselves living in the home. It’s only natural to want to turn lights on, run faucets, and generally feel comfortable just being in the house.

Especially if you’re looking for tenants in the coldest part of the year, your best bet is to welcome a prospective renter into a setting that feels cozy—or at the very least, doesn’t require donning a hat and mittens. Spending a little extra money on creating that welcoming setting is ultimately the most cost-effective way for a landlord to prevent extended vacancies. And good communication between leasing agent and property manager will guarantee that the house can be checked and made ready a couple of hours before the showing—and then restored to an energy-saving mode afterward.

Which brings me to my next point.

Yes, you need all utilities on (not just electricity).

Sure, the temptation is great to leave only the electricity on; but 30 years of experience as a property manager has taught me that all utilities should remain in service for every vacant rental home. Keeping water running is just as critical as keeping the lights on. And for those property owners who fear possible water emergencies causing disaster in their vacant home, I remind them of this: Preventing most water emergencies (and burst pipes in winter) is as simple as turning the water off at the main valve. I recommend taping commode covers shut—and, as I mentioned above, turning water on temporarily for tenant showings.

Keep the AC running in summer—and winterize in fall.

Another big temptation for landlords looking to control utility costs is to set the thermostat around 80 degrees during the hottest part of the summer—and then around 60 degrees in the winter. While those settings will lower the utility bills for your rental, they will also guarantee the house is pretty uncomfortable for anyone who walks in during a heat wave or a cold snap. If it’s the summer season, the air conditioning should be set no higher than 75 degrees. If it’s the winter season, the heat should be set no lower than 65 degrees.

Having said this, I’ll add that vacant homes should definitely be winterized prior to the cold season. Draining hose bibs where residual water lies—as well as ensuring water is turned off at the main valve—is really all that’s needed to prevent pipes from bursting in a deep freeze.

Can I deduct Utilities for Rental Properties?

Landlords, rejoice. Vacant single-family rental properties can claim certain utility-related tax deductions, such as electricity or gas needed to maintain the property during vacancy periods. You can still deduct utility costs during vacancy periods as long as the property was actively marketed for rent and you keep accurate records. Remember, as a landlord, you can minimize your taxable income by capitalizing on the various tax deductions that are accessible to you.

Make sure to provide evidence of availability for rent, such as online listings or advertisements, and consult with a real estate tax professional to maximize your benefits.

Remember, not all utility expenses are deductible in every situation, so be sure to understand the restrictions based on factors like personal use or landlord residency.

For even more ways to minimize taxable income from rental properties, consider claiming depreciation on assets or taking advantage of special tax credits offered by local governments or energy companies.

How to Report Utility Expenses on Form 1040

Reporting rental property income and expenses on Form 1040 is a must-do when filing taxes, and keeping track of utility deductions can save you big bucks.

  1. Gather relevant documents: Collect receipts, invoices, and other documentation for utilities paid by you as the landlord.
  2. Determine deductible utility costs: Calculate the total amount spent on utilities for each rental property during the tax year.
  3. Complete Schedule E (Supplemental Income and Loss): Fill out this form with details about your rental properties’ incomes/expenses before transferring totals to Form 1040.
    Schedule E – Supplemental Income and Loss PDF Link

As a landlord, don’t miss out on valuable tax benefits by overlooking rental utility deductions. If you are ready to rent your home, feel free to take advantage of our exclusive FREE Rental Market Analysis. Finally, don’t forget to connect with us on social media! Follow us on Facebook, Twitter, LinkedIn, Instagram, and Pinterest for tips, ideas and updates.

Tenants: 18 Ways to Get Your Security Deposit Back

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Tenants, are you looking for 18 ways to get your security deposit back? When everything is ready and a tenant can get 100 percent of that deposit back, it’s a big win for everyone. We want to see every tenant get their full security deposit back–and it’s important to note that WJD has no financial incentive to withhold any part of tenants’ deposit money.

For us, it’s a matter of making sure the homeowner is protected against surprise out-of-pocket maintenance expenses, repairs, or cleaning costs, and it helps guard against delays in getting the property back on the rental market.

To help make sure things go smoothly, and to help you get your deposit back, here’s our ultimate advice guide for getting every cent of your deposit back.

Please note that these are only suggestions. The process of returning a deposit is individual to each tenant, and following all of the below steps will not necessarily result in a full refund.

Immediately After You Move In

1. Review Your Property Condition Report (PCR), sign it, and return it to the WJD office within 10 days of move-in. The report states that your home is in the same condition we want it to be in at the end of your lease and will be used as a point of reference when you move out. Be sure to make detailed remarks on the form should you note any problems with the home, such as malfunctioning appliances, carpet stains, paint blemishes, etc., so that you are not charged for these issues when your security deposit is refunded.

Pro Tip: Always keep a copy of your Property Condition Report on file.

Throughout Your Tenancy:

Do yourself a favor by making sure your required maintenance is up to date. That way, when you move out, you won’t be facing a massive list of “to-do’s” that have resulted from a year of neglect. See below for suggested maintenance tips. You can also check out our  maintenance guide here, which can be found in your Tenant Handbook as well.

2. Ensure all maintenance is requested online. If something breaks, you must immediately submit a Maintenance Request from our website as we cannot take this information over the phone. Be as detailed as possible about the problem so that we can determine who to send to fix it. Do not try to fix it yourself!

3. Keep up to date on your fireplace cleaning and inspection. This must be done even if you never use the fireplace. Also remember that you are responsible for cleaning the ashes that result from burning wood, as the fire inspection company does not usually do this.

Tips to Get Your Deposit Back

4. Make sure to keep your gutters clean throughout the year. The cost of a gutter cleaning usually ranges between $50 and $200 depending on the size of your home and the amount of guttering it has. Be sure to use one of our recommended gutter cleaners for best results!

Pro Tip: At the beginning of your lease, immediately add a calendar reminder to get your gutters cleaned periodically. Try to schedule a final gutter clean about a two weeks before you move out, just to make sure they’re clear and you’ve left yourself plenty of time.

5. Replace light bulbs. We recommend getting LED lights at the beginning of your lease. LEDs have plummeted in price recently (three of them cost about $10), so you’ll definitely get your money’s worth by reducing electric bills. Also they should still be going strong at lease’s end!

6. Regularly replace furnace filters. If you change filters monthly as recommended you’ll reduce your heating bills, make the home more comfortable during the cold weather, and avoid add-on charges for replacement at move-out.

Pro tip: Write down sizes, or take pictures of your filters so you can easily reference them (sizes are included in the PCR). Also, you might want to consider buying in bulk through Amazon.

7. Keep your HVAC system clean and well-maintained. Check to see that all supply and return air vents are clean and unobstructed and make sure the condensation drain is not clogged or obstructed. If the property has a radiant heat system, make sure there are no leaking valves or radiators.

8. Test your smoke and carbon monoxide detectors. Battery-operated models will begin making an intermittent chirping sound when the battery runs low, and you can easily replace the battery. Hard-wired models will do the same but have no bettery–so when one of these units goes bad you must submit a maintenance request to have it replaced. In either case, test the units periodically to make sure they are in working order.

When You Move Out:

By following the steps below, you’ll make our job easier, which makes everything go much more smoothly.

9. Schedule carpet cleaning. If you have a pet, be sure to order a tick and flea treatment. Our lease requires this at move-out, even if you have no carpets in your home. Be sure to use an approved vendor to clean your carpets. Should you use an outside vendor and their work is determined to be sub-standard, we will have to have your carpets cleaned again by one of our approved vendors, at your expense. Avoid paying for this service twice!

10. Clean! And clean thoroughly. thoroughly.​Remember that when you move out, the property should be left in the same condition as it was when you moved in. This is why it is imperative that you return your PCR right after you move in noting any discrepancies, otherwise you might be charged for pre­existing problems! Common cleaning items that are missed include:

  • Under the refrigerator
  • On top of the refrigerator
  • Inside the oven, oven drawer and underneath the oven
  • Under stove burners
  • Sides of toilets
  • Range hood and exhaust fan filters (Note that you can put them in the dishwasher to make things much easier!)
  • Crumbs in cabinets/drawers
  • Washer and dryer lint.

Pro Tip: Remember to clean the gutters one last time and have the fireplaces cleaned and inspected. Make sure to provide a copy of your receipt for each service.

11. If you hire a cleaning service, make sure you ask for “detail cleaning.” To make sure your money is well spent (and to get all of your security deposit back), be sure to use a recommended WJD vendor. Also, remember to ask for detail cleaning and not surface cleaning.

12. Double-check to make sure you’ve replaced all light-bulbs and furnace filters one last time. Even if you forget to replace just one light bulb that was working when you moved in, we will have to send a contractor to replace it. So, even though the actual light bulb may just cost a couple of dollars, your cost is going to be a minimum $75 trip charge plus the cost of the bulb. The same holds true for furnace filters.

13. Take out the trash. It’s such a simple step, and it would be silly to forget and cause a minimum service fee

14. Perform all necessary lawn care. This is going to differ for each tenant, so check your lease for specifics of what to include (i.e. mowing, pruning, weeding, raking, etc.) Again, if you want to hire someone to take care of this for you, please use one of our recommended vendors for best results.

Tips to Get Your Deposit Back

15. Make the final inspection an easy process by preparing beforehand. Once inspection begins, tenants are not allowed to clean, add finishing touches, etc. Leave all keys, fobs, placards, remotes, and receipts on your kitchen counter; and have the property ready for inspection when the inspectors arrive. It will make everything go much more smoothly.

16. Stagger the work being done, beginning two weeks out from your move-out date. This will keep you from becoming overwhelmed, and will allow you to do one last cleaning spree before inspection. By getting everything done beforehand, we can come and do our job and help you check out quickly and smoothly.

17. Schedule services before the day of check-out. If you’re hiring professional cleaners, don’t have them come the same day as your check-out inspection. Remember that carpets should be dried from carpet cleaning prior to inspection. Essentially, you want to ensure the home is in the exact same condition it was when you moved in. This is most easily accomplished by getting the big stuff out of the way in advance.

Pro Tip: To keep track of everything, we suggest you print off our Move-Out Checklist and post it on your refrigerator or counter. This checklist can also be found in your Tenant Handbook.

18. Ask questions. Ask questions. Ask questions. Communicate ahead of time if there are any issues you have questions about. For example, if you aren’t sure how to clean a fixture or appliance that you’re responsible for or if you are having difficulty accessing light fixtures in high-ceilinged homes, let us know! We can probably recommend just the right tool or cleaning tips.

Concluding:

Moving out is a time-consuming process, but there’s no need for it to be expensive as well. By following the above guidelines, you will dramatically reduce the possibility of having to lose some of your security deposit. And by making it easier for us to do our job, you’ll probably speed up the refund process. Thank you, and we hope you find these tips helpful.

Home Warranty for Rental Property? Save Your Money…

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Wondering if you should purchase a home warranty for rental property? We say save your money… In our years working in property management, this question “should I purchase a home warranty for my rental property” continues to be a highly queried question. We first began writing on this topic about five years ago. I will tell you, as an owner of multiple rental properties, I used to think having a home warranty for rental property was a great idea. Managing over 400 properties for Northern Virginia landlords, though, has taught me a different lesson. Keep that cash in your pocket–here’s why that “good idea” is a waste of time and money. (And potentially even bad for your home.)

I had a rental property warranty on each of the 14 rental units I owned–and I even had one on my personal residence. You pay a reasonable annual fee and a nominal deductible for each repair, and the warranty company pays for everything else!
Who wouldn’t find such an arrangement attractive? It seemed a matter of sheer common sense.

Yes, I thought this was a great idea – until things began breaking. Then, the red flags started waving like mad. And the frustrations, difficulty with contractors, and wasted hours started accumulating.

Red flag #1: Rental Warranties Give You No Choice

One of the advantages of running a property management company is that our years of serving landlords have led us to assemble a great crew of licensed contractors, across all specialty areas. WJD has had a long and comfortable history with vendors who specialize in everything from HVAC to plumbing. However, in going through the home warranty for the rental property, we were not allowed to use any of our WJD contractors. The home warranty company assigned the vendor depending on what the issue was.

Well, you may be thinking, how bad could that be? Either way, you get a well regarded local specialist out to the property to fix the problem, right? Well, not exactly….which leads me to the next red flag.

Red Flag #2: Who Are Those Home Warranty Contractors Anyway?

I have been in the property management business (a/k/a fixing stuff in homes) for a long time, so I know most of the residential contractor specialists in my area. At least, I know the ones I have come to have a high regard for–and the ones my clients have worked with already or my colleagues recommend. And, surprisingly enough, had never heard of any of the vendors they assigned to address any of the problems in our properties.

While it may be that some perfectly good contractors end up on the list of home warranty preferred vendors, my guess is, the warranty companies tend to just go for the low bidders. Which doesn’t necessarily bode well for the average landlord looking for expert help.

Nor does it bode well for getting repairs done in a timely manner.

Red flag #3: Slow, C.O.D. Service Puts Your Property at Risk

This next red flag began waving furiously when I was told the rental warranty contractors have up to 48 hours to respond to a problem. What? What about water emergencies?

Well, as I found out in one extreme instance of water leaking all over a beautiful hardwood floor in a rental property, water emergencies have the same response timeframe as anything else.

But wait, it gets worse.I was told by the home warranty company that their contractors would not begin the repair until after they had been paid the deductible.

Yikes. So now we are dependent upon a tenant paying the deductible at the time of service. What if the tenant doesn’t happen to have that money available? Or doesn’t want to pay out of pocket? (Even when a lease requires them to pay it, that doesn’t mean they always will.) You got it. The water (or other emergency you were trying to get fast service for) just sits…and waits until someone shows up with the payment.

Occasionally our tenants were unable to pay the deductible (as required by their lease) which meant the WJD staff had to scramble to somehow get payment to the vendor.

Fortunately, in the incident of the water on the hardwood floor, the contractor accepted our company credit card and the leak was repaired before irreparable damage had been done. But not all contractors accept credit cards over the phone. And not all will go to the trouble of contacting you if they fail to collect the deductible from the tenant.

Red Flag #4: They Fail to Contact the Tenant!

A fourth red flag came to light the first time I experienced a complete communication breakdown. Even though it should be obvious that a home warranty for rental property means dealing with tenants, neither the warranty company nor the assigned vendor contacted the tenant for access to the property.

Instead, they kept calling the WJD office to schedule the service—even though they had been given the tenant’s name and telephone number. In the midst of all of these communication failures, the repair got delayed even further.

We later determined that because the warranties were all in the name of WJD Management, everyone concerned thought they needed to speak with a property manager in order to get into the property. Our takeaway? Having a home warranty on many rental properties did not give us extra clout or better service. Whether you’re an individual landlord or a large property management company, you have to wait. First you wait 48 hours for the contractor. Then, perhaps, you wait (and stress) over the deductible payment snag. Then, after all of that, you get to wait while they call everyone but the tenant for access.
In the meantime, the needed repair waits, your tenants are inconvenienced, and you (possibly) wind up with more damage.

Red flag #5: Racking Up Those Deductibles

We saw this red flag pop up when one of the home warranty vendors had to make repeated trips to a property to deal with a heating issue, each time collecting the deductible. The tenant was becoming very agitated with this cost and the fact that his heat kept failing in the middle of the night. I was becoming equally agitated with the fact that the home warranty’s policy was clearly to continue to apply cheap band-aid “solutions” rather than to replace the appliance, which was obviously at the end of its useful life.

The furnace was eventually replaced, but not before I had to place a number of irate calls to the vendor and the home warranty company. In all fairness, I can’t lay the blame for that situation entirely on the warranty company. But the problem certainly related to the quality of the contractors they chose to affiliate with.

As time progressed, I came to realize that the home warranty simply used substandard contractors. No matter what specialty area I needed service in, that was the case.

Lesson learned, you get what you pay for.

Red Flag #6 (The Final Straw)

The sixth giant red flag came when a fluorescent light in the ceiling of my personal residence stopped working. The vendor assigned by the home warranty company arrived two days after I placed the service call. After pulling the light apart, he told me that it couldn’t be repaired.

I said, “Okay, then go ahead and replace it.”

His reply? The contract I’d purchased did not cover replacement of electrical fixtures, only their repair.
Apparently, this was some contractual fine print that I had overlooked. The next morning I called the home warranty company and cancelled all 15 of our contracts. These were annual contracts which I had only recently renewed, but I was told they would not rebate any of the cost.

By that time, nothing about the worthlessness of owning a home warranty surprised me. The sea of waving red flags had convinced me. I accepted the loss of my premiums and said good riddance to bad warranties.

Are you a Northern Virginia landlord looking for an effective way to manage risk for your home or investment properties?

A more cost-effective and convenient solution than taking out a home warranty is to work with a property management firm like WJD that specializes in residential management. Landlords who work with WJD Management get the benefit of our long relationships with top local contractors in in Arlington, Alexandria, and Fairfax Counties–and throughout the Northern Virginia region. We keep eyes on your house, doing our best to catch problems before they become emergencies.

And you’ll never have to wait 48 hours for a response, play phone tag with a vendor, or rely on a tenant to pay the bill!

If you are ready to rent your home, jump right in and take advantage of our exclusive FREE Rental Market Analysis. Also, be sure to follow us on Facebook, Twitter, LinkedIn, Instagram and Pinterest for tips, ideas and updates.

5 Ways to Increase your Arlington Property Value this Year

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Are you looking for 5 ways to increase your Arlington property value this year? With the immense changes happening in Arlington VA due to the development of National Landing, Ballston, Clarendon and more, if you own a rental property in Arlington VA, you have plenty of reasons to make 2020 the year you reinvest in your property–and work to increase its value. Because Arlington is such a prime rental market, improving your property will make it more attractive to the high-quality, long-term renters you are looking for. And of course, should you decide to sell at some point, your property will be in a good position to do so. In this article, we’ll review 5 ways to increase your Arlington property value.

1. Start by taking care of the essentials

Before you invest in upgrades to your Arlington property, zero in on utility first. Your primary focuse should be ensuring that the property has no looming maintenance or upkeep needs. These include significant repairs or replacements that eat into your revenue, put your existing lease at risk, and have the potential to lead to costly property damage. Some examples include:

A failing roof: If not promptly repaired or replaced, this can lead to roof leaks, water damage, and mold growth in the property that costs you thousands to repair.

An older water heater: A water heater could fail, leaving your renter without hot water until you have the unit replaced. Worse, a corroding water heater has the potential to leak or burst, leading to water damage in the property.

Aging HVAC systems: A new air conditioner or furnace is a significant investment for any property owner. A furnace that fails in the winter or an air conditioner that stops working in the summer can also lead to renter frustration and lost rental revenue.

We recommend that you work with licensed Class A Contractors in your area to ensure that your property’s roof, plumbing, and HVAC systems are in good shape. Once you’ve shored up the essentials and taken care of necessary preventative maintenance work, you can move onto making value-adding improvements.

2. Remodel the kitchen and bathroom

As it turns out, what’s generally true for the home sale market is not necessarily true for rental properties. However, there is a reality that both homebuyers and renters prefer updated kitchens and bathrooms that pair superior utility with fresh, modern design. If your rental property’s kitchen looks like it belongs in a ‘80s sitcom, it might be time for a refresh and re-imagining of the space. Doing so can greatly improve the property’s value and its appeal to a wider group of renters.

In fact, kitchen and master bathroom remodels can offer a solid return-on-investment especially when the update brings a 1980s kitchen or bathroom up to the taste standards of today’s consumer. To get the most long-term value for your remodeling dollar, choose durable materials—such as granite countertops and tile floors—that will stand up to the wear-and-tear renters put on the property.

3. Make the property more energy-efficient

In addition to a remodeled kitchen and bathroom, buyers and renters are also both interested in saving money. By making your Arlington rental more energy-efficient as a whole, you’ll make it that much more attractive to those looking to keep their utility costs down in the coming year. Many property owners are beginning to advertise energy-conserving features when listing their rental, because they know renters and buyers are attracted to properties with low cooling and heating costs.

Even relatively low-cost efficiency improvements—such as adding weatherstripping and sealing around windows and doors—can make an impact. You should also look into having the property’s HVAC systems maintained every year, sealing leaky air ducts, and adding additional attic insulation to cut down on energy waste.

4. Improve the first impression your property makes

The odds are good that your next Arlington renter will find and view your property online long before they see it in-person. This first impression is everything: while scrolling through multiple properties, yours needs to make an immediate, positive first impression on the prospective renter. If it doesn’t, chances are that it’s going to get passed over again and again.

So, how can you improve the first impression your home makes? You may want to start by reworking your front yard landscaping. Whether they visit in-person or view your property online, this will probably be the first thing a prospective renter sees. Overgrown trees, bushes, or grass sends the wrong impression. Since Arlington is a competitive rental market, we highly recommend professional photos and videos for online listings.

5. Make small, impactful changes

Not every rental improvement project needs to be a major renovation. You can also add value to your property through small upgrades and changes. A few common examples include:

  • Repainting the interior and exterior
  • Switching out older lights for brighter, energy-efficient bulbs
  • Replacing or deep cleaning carpeting
  • Changing out older appliances for new ones
  • Extending the backyard patio with pavers or flagstone

One of the best ways to perform research about your own property is by taking a look through rental listings and seeing what other property owners in your area are doing to make their rentals more appealing.

If you are ready to rent your Arlington home, feel free to take advantage of our exclusive FREE Rental Market Analysis. Finally, don’t forget to connect with us on social media! Follow us on Facebook, Twitter, LinkedIn, Instagram, and Pinterest for tips, ideas and updates.

What Does a Property Manager Do?

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We are often asked, “What does a property manager do?” It’s a great question—and we have a simple answer for it:

“We do everything you’re going to have to do if you don’t hire us!” Here are a few of those challenging tasks…

Find the Right Tenant

Make a mistake on your choice of tenant and you’ll pay for it—in time, money, and possibly legal troubles. Placing a good tenant yourself actually requires a series of steps.

You must first determine the fair market rental value for your home before advertising for a tenant.

    1. Once you have determined the rent you’re going to try to get, it’s time to advertise.  You can use Craigslist (or other similar classified ad sites) where listings have to be renewed every week. Or you may engage a Realtor who will list your property with the Multiple Listing Service, create the lease, maybe conduct a move-in inspection and then walk away from the transaction.If you list the home yourself, you’ll need to be extremely careful that your advertisement does not violate any of the multiple state and federal Fair Housing requirements.
    2. Once you have found an interested party, you must qualify them to be certain they are a good credit risk. Their employment must be verified, as well as their rental history (with references obtained from current and previous landlords). And if your applicant’s credit score and debt to income rations are not within an acceptable range, you’ll have to start the search all over again.

Write a Good Lease

After successfully qualifying the tenant’s application, it’ll be your job to write a lease that’s both legally compliant and completely enforceable.

What does that mean, exactly? First, you’ll have to determine whether your lease will be governed by Virginia Common Law or the Virginia Residential Landlord and Tenant Act. And then you’ll have to make certain that the document contains all of the appropriate requirements for your property and is legally enforceable.

Once that’s taken care of, there’s the matter of the security deposit. It must be placed in a separate escrow account, where it has to remain untouched throughout the tenancy, unless it’s used to offset tenant damage. Comingling of funds is a great way to wind up with a serious legal problem!

Fix Things that Break

If something breaks, leaks, bursts, or simply goes kaput—it’s up to you to determine the cause of the problem. For example, did the eight-year-old washing machine die of natural causes (thus constituting reasonable wear and tear), or did it stop running because the tenant abused it? Either way, you’re going to have to fix it. And if it was the tenant’s fault and they’re going to be charged for the repair, you will bear the responsibility of thoroughly documenting the cost with a legitimate contractor’s invoice.

The same same holds true, by the way, for any damage the tenant may cause throughout the tenancy; do-it-yourself invoices are typically not honored by the courts should the tenants take issue with them.

Collect Rent—and Handle Evictions

In the event the tenant stops paying rent, you must do your best to collect it by sending written correspondence and making phone calls. When all that fails and you determine that you must evict them, the law requires that the tenant be sent a legal notice instructing them to pay or vacate the premises. Following that measure, a lawsuit must be filed in court. At the time of the hearing, you or your representative will have to appear before the judge. If the court rules in your favor, you must coordinate the actual eviction with the sheriff’s office and provide the necessary manpower to remove the tenant’s belongings.

Keep Track of Income and Expenses

Finally, there’s the task of accounting. Tracking the income and expenses for your rental property is not merely a good financial habit—it’s the law. You must keep track of all gross rents collected and report this income to the IRS on a specific schedule (form), attached to your 1040. You must also keep track of all legitimate expenses to offset the income when you file your tax returns. The IRS is noted for thoroughly vetting these itemized deductions (and auditing when they flag inconsistencies). So, it’s critical that all of your expenses be recorded and thoroughly documented.

So, what does a property manager do? All the stuff you’ll have to do yourself in the absence of a management professional–market research, advertising, tenant screening, legal document creation, rent collection, escrow accounting, maintenance and repairs and more–while also keeping you on the right side of the law and out of the courtroom.

David Norod is the principal broker of WJD Management. He enjoys keeping his 400+ property owners up to date on the best ways to keep their homes rented and running smoothly. When he’s not managing properties, he’s playing classic rock in local clubs with his band Off The Record.

Professional Property Management for Foreign Service Homeowners

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Wondering about professional property management for Foreign Service homeowners? What Kind of Property Management Do Foreign Service Families Need?

Professional property management for Foreign Service homeowners requires specialized care. If you’re relocating overseas, you will need a firm that a) specializes in residential management, and b) maintains a vibrant network of local real estate agents eager to show their properties. (More on that below.)

Finding an excellent management company takes time–and you should prepare yourself by interviewing several firms, armed with the following key questions. These are the same questions any homeowner should ask–but they’re particularly important for landlords who are going to be in different countries and time zones. You’ll need to rely on your property manager. You do not, for example, want to find out after your relocation that your PM didn’t do a proper initial tenant screen. The consequences could include going for many months without income from your property–and dealing with an eviction from the other side of the world.

I included WJD’s answers to the questions, so that you can learn more about our services.

How do you screen tenants?

Systematic, thorough tenant screening is critical for guaranteeing your rental income and protecting your home. When a property management firm screens prospective renters, they should do the following in every single screen:

a thorough credit history check

an equally thorough background check using public records–especially any record of criminal convictions or civil judgments.

an up-to-date rental history, including eviction history and landlord references.

verification of employment.

Note: Some management companies allow applicants to pull and supply their own credit history. Make sure any firm you consider does the research independently!

At WJD Management, we run a thorough screen on every applicant. We use industry best practices, as well as premium software applications, to vet prospective renters for our clients. Our process is legally compliant, systematic, comprehensive, and effective. How do we know it’s effective? Though we manage 400+ properties in our rental portfolio, we have not had to evict a tenant yet. Which brings me to the second important question you should ask a property manager.

How many times have you had to evict a tenant from a rental property?

Evictions are expensive, and the process takes a long time. If a PM firm refers to having extensive experience with evictions, that should be your signal that something is very wrong. Either their screening methods are deeply flawed or they are ignoring the problems that their screens reveal. (Sometimes PMs will move too quickly to fill vacancies and disregard evidence that a tenant is not qualified.)

WJD Management is proud to cite its record of 0 evictions in the past 10 years. Many prospective clients are surprised to hear that, assuming that we must routinely deal with at least a certain percentage of evictions, due to the volume of rentals we manage. However, our screening process is tested, and it works well to protect our clients. 

Does the firm have longstanding relationships with a group preferred vendors across all home services specialty areas?

When you choose to work with a management company who has established relationships with an elite group of tried-and-true contractors, you (and your tenants!) will get a higher level of service across the board. Work requests will get faster responses, and repairs will happen much more economically and efficiently. Very often, because of the loyalty they show vendors, management companies can get (and pass along to their clients) volume discounts.

WJD Management has worked with an excellent crew of home services specialists over the years. We have formed lasting and valuable relationships with licensed contractors who offer quality services at competitive rates. We receive volume discounts from many of our vendors, and we pass those savings directly to our clients.

How quickly does the company pay owners?

Know the timing of your cash flow.

How and when will you get your rental proceeds?

Does the professional property management firm mail checks to clients or use direct deposit?

Will you have access to an online portal to check payment status and/or update your banking info?

WJD Management remits payment of rents received on the 3rd of each month (even if the date falls on a weekend or holiday). We deposit funds electronically into the client’s preferred account. Our online portal allows owners online access to up-to-date financial information (including payment status). Owners can also use our online portal to update their banking information.

Do the clients have to set aside a reserve fund?

Some professional property managers require their homeowner clients to put a reserve fund into escrow–and in many cases that mandated reserve is the equivalent of one month’s rent (or more). The purpose of this policy is to make sure any costs incurred by the PM in getting timely repairs or replacement parts are covered. Those who do not require a reserve will pay those expenses through the month-to-month rent proceeds and then remit the rent (minus expenses) to the homeowner.

WJD Management’s policy is not to require a reserve fund of its homeowner clients. We make it a priority to keep your cash flow as positive as possible, and part of how we do that is to not tie up any of our clients’ money in escrow.

Does the PM firm report regularly and thoroughly to homeowners? Does it provide easy online access?

Find out whether the property management company has a system of regular communication/reporting to its owners.

How will you get the information you need about your rental?

How’s everything going at the property?

What maintenance requests, if any, have been submitted during the course of the month?

How are receipts and reports of income and expenses being recorded and filed?

Will you have electronic access (preferably through a secure online portal), so that you don’t have to rely on hard copies and overseas mailings?

How easy will they be to reach if you have questions about any of that reporting?

Do they maintain regular office hours, with a dedicated admin staff?

In general, will they make it easy for you to get your hands on any information that’s important to you?

WJD Management upholds a policy of full, regular reporting to clients–as well as secure owner access through a dedicated online portal. We want to make it as easy as possible for all our clients to access the information they need about their property–and especially for our clients who are stationed overseas, we want to make sure that information is readily available in electronic form.  

Does the professional property management firm provide contractor services at cost?

Markup of contractors can take a big bite out of your bottom line and could even prevent you from having positive cash flow. Find out what the property manager’s policy is when it comes to fees you’ll be charged. If a company applies a markup to its contractors’ charges. That markup might be as much as 10 percent, which adds up quickly when a system like a furnace or heat pump needs repairs.

WJD Management is a fee-based company, and we’re not in the business of marking up vendor charges. We price our services in the most straightforward way possible, charging homeowners 8 percent of the monthly rent price and requiring a one-year contract. We believe it’s a conflict of interests to tie our own revenue to higher contractor expenses. The percentage of monthly rent that we charge covers all our services. We don’t markup invoices. In fact, we pass on the savings we get from our preferred vendors to our owners. Our job is to help you maximize our clients’ investment income, not to nickel and dime them.

Does the Property Manager Provide 24/7 Emergency Service?

If your hot water heater bursts in the middle of the night, will the property management firm get the appropriate contractor out to the property right away? It’s critical that you get immediate responses to emergency requests, regardless of whether it’s a holiday or the dead of night. Instant emergency responses protect your home and keep your tenants comfortable and happy.

WJD Management has procedures in place to handle emergencies at all hours quickly and professionally. Contractors across all service areas are on call at all times to address water-related issues, plumbing emergencies and after-hours problems that may arise.

Is the lease the PM firm uses fully legally compliant?

Ask the professional property management companies you interview whether their leases have been developed (and vetted by a real estate attorney) so as to be fully legally compliant. As the owner of the property, you’ll be the one who’ll have to pay the consequences for non-compliance. Additionally, find out whether the company observes all federal, state, and local fair housing laws.

WJD Management has developed a lease that complies fully with all federal and state laws. Moreover, we maintain an active membership in the National Association of Residential Property Managers (as well as leadership at the local chapter level).  Our lease reflects our up-to-date knowledge of landlord-tenant laws, and it is reviewed at regular intervals by our attorney.  Moreover, we do not discriminate in our tenant application and screening process. We are fully compliant with all fair housing laws.

Does the company sell real estate as well as manage properties?

If the professional property management firm you interview has an affiliated real estate sales arm, you need to ask some tough questions.

Will they require you to use one of their agents if you decide to sell?

What if the tenant decides they’d like to buy the property and you’re eager to pursue that course? Will you be bound to the use the management company and give them the commission?

Is the real expertise of this PM firm in management or sales? The answer to this question will determine not only the quality of the service you get–it’ll determine the choices that may or not be available to you later as a seller.

WJD Management is a licensed real estate brokerage that does NOT have a sales arm. That means that property management is all we do–we do not use rental properties as a means to a commission. And therefore, we have no conflict of interest. As a brokerage specializing in independent residential property management, we develop relationships with local real estate agents. We pay them fees and commissions for bringing us new clients and qualified tenants. We focus on managing our clients’ properties, and we allow the agents we work with to focus on what they do best: sales!

How will the company determine the market price for your rental?

Will their market analysis be based on their own experience or on comps? Do they have access to premium real estate services such as the MRIS? Do they search Craigslist, Zillow, the MLS, internal comps or a combination to arrive at a rental rate?

WJD Management uses a tested process for gathering true comps and performing an accurate rental market analysis for each of the properties we manage. As a licensed brokerage, we maintain a subscription to the MRIS and draw upon that data to compile a rental market analysis that we believe is the best and most strategic in our region. Some PM firms draw only upon comps in their own portfolio, but that’s a lazy approach. We examine all market data. For a look at what goes into our process, see this article. 

How will the company advertise your property?

Have the company walk you through its marketing plan, including where advertisements will be posted. Ask whether they take professional pictures to include in advertisements.

Great property photos are crucial for leasing homes, second in importance only to setting a fair market rental rate. Renters now have access to pictures of hundreds of properties as they search online, compared to the days when brokers would show them only a select number of homes. Pictures are the key to capturing potential tenant’s interest and getting them in the door. We maintain our own listing of properties through the wjdpm.com website. 

If you would like to learn more about WJD Management, please review our comprehensive Management Program guide. If you are ready to rent your home, jump right in and take advantage of our exclusive FREE Rental Market Analysis. Also, be sure to follow us on Facebook, Twitter, LinkedIn, Instagram and Pinterest for tips, ideas and updates.

Finding the Best Investment Property

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Working on finding the best investment property but unsure of what the ideal type of property to invest in is? You are not alone.

This is a question I’m often asked by Northern Virginia investors and homeowners. While I can’t address the intangible reasons people may decide to invest in a rental property, I do know which types of homes offer the best promise of steady income without draining owners’ profits. And, bottom line, I see, year in and year out, which homes are the most desirable to tenants and easiest to maintain.

When it comes to sheer return on investment, there’s no question: The best investment a homeowner can make is in a townhouse. A townhouse represents a superior investment to condos or single family homes for three main reasons: optimal square footage for the money, a configuration that suits the needs of most tenants, and reduced maintenance.

Want to control costs? Start with the structure.

Let’s begin with the ideal investment property structure. With investment properties, simple and low-maintenance always trumps “big and fancy.” Especially when it comes to the exterior of the home. Unlike a single family home, a townhouse does not require much yard maintenance. And, unfortunately, yard maintenance is a responsibility that tenants usually do not carry out well. It’s typical for me, in my site visits, to see the yards of single family homes neglected even though our lease is very specific about tenant responsibilities in this area.

While yard neglect is a problem that we address pretty quickly with tenants, the main thing is, it’s a whole lot better not to have the problem at all. Plus, single family homes come with the added liability of a larger roof and more interior square footage to maintain.

Is smaller always better?

Well, you might think, if a smaller place is best, then why wouldn’t condominiums make for a better investment than townhouses? Great question. The problem lies in the cost. The substantial condo fee payment that owners have to make each month in addition to the mortgage is pure maintenance cost—it does nothing to gain you equity or increase the value of the home. And, what is more, you have very little control over just how high that fee might go over the years you own the place. Do the math, and that fee takes a whopping bite of our your return on investment. And then there’s the issue of the neighboring units; the resident above you overflows a toilet and it rains in your kitchen. You won’t experience that problem in a row house.

And sure, most townhouses do come with HOA fees—which also cut into your return and have an annoying way of going up each year. Townhouse HOA fees, however, are typically only about a quarter to a third of what condo fees cost—and where there are amenities to maintain, can actually do a lot to contribute to the overall desirability of the subdivision.

The Best Investment Townhouse Configuration

While structure makes all the difference for cost of maintenance, room configuration matters when it comes to sheer appeal for the largest possible population of renters. No matter who they are – young professionals, a family, whatever—you’ll find most renters want the following configuration elements:

  • A minimum of three bedrooms.
  • At least two and a half bathrooms (preferably three).
  • Three finished levels.
  • A family room or recreation room.
  • A large utility room or better yet, an attic for storage.

Having a garage is always nice, but it’s not essential providing the association allocates at least two assigned parking spaces for the property.

My Townhouse Tips for Smart Investors

Pick an end unit.

End units will typically rent for more than interior units—due to the increased privacy and larger yard area.

Go with gas.

A gas furnace rather than a heat pump is a real plus. (Try to stay away from an all-electric home.) In fact, the more gas appliances the home has the better. With gas appliances, the tenant’s utility costs will be spread among three utilities–electric, gas and water–rather than just electric and water. And tenants definitely prefer the resulting cost savings. Receiving large electric bills during he peak heating and cooling months is a rude shock for most tenants—and it can be pretty disruptive to their budgets.

The newer, the better.

Try to pick a property that is no more than 30 years old; otherwise you’re probably going to be faced with major system, appliance and fixture upgrades.

Location, location, location!

You’re used to hearing it, but what does that really mean in our area? While there are still bargains to be had in Northern Virginia, you do need to know where to look. Unless you have the funding for a substantial down payment, you probably won’t find any investment properties worth pursuing inside the Beltway (except possibly in certain areas of Alexandria).

My suggestion for finding the best investment property in our area is to look to western Fairfax County and the adjoining parts of Loudoun County. Whether new construction or an older home, rents in this area appear to be fairly consistent and dependable—and demand is about as steady as most areas inside the Beltway. Do not be swayed by a great bargain you may find in Prince William County! You may be able to pick up a property for next to nothing, but it’s been our experience that keeping homes rented in most neighboring Prince William and Manassas locations is very problematic. The location is simply not as commutable for most people as western Fairfax and eastern Loudoun Counties and the rents are as a rule considerably lower.

And of course, anything you can find that’s close to the new Silver Line Metro is going to be a real goldmine.

David Norod is the principal broker of WJD Management. He enjoys keeping his 400+ property owners up to date on the best ways to keep their homes rented and running smoothly. When he’s not managing properties, he’s playing classic rock in local clubs with his band Off The Record.

VIDEO: How Do Property Managers Find Reliable Contractors?

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Ever wondered how property managers find reliable contractors? A big part of what property managers do for homeowners is fixing stuff, so how do property managers find reliable contractors. Well, it’s very important for us to insure that qualified contractors are hired. At any good property management firm, who is responsible for hiring the contractor, […]

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