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Profitability of Owning Rental Property

Making money from a rental property is one of the best ways to become financially independent. An estimated 90% of the most wealthy people in the world make money through investing in and owning Real Estate. Like other forms of investing, owning rental property takes awareness and due diligence.

Getting Started

One method to start investing in rental property is to purchase and live in a property for a time, then rent it out and buy another property and repeat the process. Starting while still young is a great advantage while implementing this method of owning rental properties, but not a requirement.

When to Start

However, being young is not a limiting factor in becoming a property investor. On average most Americans purchasing rental properties or investing in Real Estate are between the ages of 35 and 55.

How

There are multiple methods of making money in Real Estate. There are several categories to consider when making an investment decision. Options other than single-family or residential properties include:

  • Commercial
  • Industrial
  • Mixed-use
  • Retail
  • REIT (Real Estate Investment Trust)
  • Mortgage Lending
  • Sale/Leaseback

Click here for explanations of each and how they create income.

Passive Money Makers

Real Estate has income creating advantages beyond collecting rent that is often overlooked. Passive income that comes from rental properties are methods that create additional wealth other than cash flow from collecting rent. Increasing market value for the property amortization and tax advantages are all additional methods that increase profits.

For a business like a hotel, additional fees to play in-room movies and conference room usage along with parking fees, are all ways to add extra cash flow to a property operating as a business.

Increasing the value of a property is as simple as using other peoples money. As rent is collected, the profit is used to pay down the mortgage or in other words, amortization.

Along with amortization, appreciation is another method of passive value that the Real Estate owners enjoy. The simple fact that there is less land to build on and a steady increase in population growth will ultimately drive price up over the long run.

The advantages of owning Real Estate are numerous, and the ability to make money with a property are many.

We’re here to make the investment and rental process more pleasant and less expensive.

Contact us at Blue Mountain Real Estate & Property Management today. We’d love to tell you more.

Evictions: What Every Colorado Springs Rental Property Owner Should Know

No one likes to evict a tenant from a property because even if you’re successful at removing that renter, you’ve still lost money and time. One of the reasons that individualized and thorough tenant screening is so important is that you don’t want to find yourself in a situation where you have to evict a tenant who isn’t paying rent or following the terms of the lease.

We’re sharing our position on evictions and what we do when we’re faced with a tenant who is not paying rent on time or at all.
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What are Typical Fees for a Colorado Springs Property Management Company?

One of the most frustrating things an owner can encounter when looking for professional property management is a confusing fee structure. At Blue Mountain Real Estate & Property Management, we try to keep things simple and easy to understand. Our goal is to provide the best products and services in Colorado Springs property management, and we do that for a competitive fee.

Most of the property management companies you’ll encounter will charge a percentage-based fee for both management and leasing services. Then, there may be a list of additional fees that you’re charged. We’re breaking those down in today’s blog.
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Tenant Screening Every Colorado Springs Landlord Should Do

Tenant screening is one of the most important functions of a landlord or a property manager in Colorado Springs. The tenant you place will have a serious impact on the type of rental experience you have. When you put a good tenant in your property, you can count on timely rent payments and some assistance in maintaining your investment. You can trust that your tenant will follow the terms of the lease and renew for another year or longer once the tenancy is complete. With a bad tenant, you’ll be chasing down late rent, paying for property damage, and constantly threatening eviction.

Screen your tenants thoroughly and consistently, and if you don’t have the necessary tools, resources, or time to do it correctly, get some help from a professional property manager.
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Why Colorado Springs Investors Have Been Working with Blue Mountain Real Estate & Property Management for Decades

Blue Mountain Real Estate & Property Management is the leader in Colorado Springs property management, and we are committed to delivering high quality services with the customer’s best interests in mind. We value communication, transparency, and a collaborative management method that enables our investors to earn more and spend less on their rental properties.

Today, we’re sharing some of the reasons that our owners and investors love working with us, and why many of them have stayed with us through the years.

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When is an Animal Considered Legally Abandoned on Your Property?

Annie runs a cleaning service that often does the cleaning in residential rental properties after tenants move out. She arrived at a home recently in which the gas was turned off and the thermometer read 47°, but the tenant had not finished moving her belongings.

Unfortunately, among the items the tenant had left was a small, shivering dog. No food or water was available and the elderly animal had been left to fend for herself in the cold. Annie brought this to the attention of the landlord and offered to take the small animal home.

The landlord was as horrified as Annie at the treatment of the dog, but could she legally let Annie take her?

Was the Animal Legally Abandoned?

Though pets are largely treated as property under the law, it is illegal in most states to abandon them. As a landlord, it is important to understand what constitutes “abandonment”.

Obviously, a blog post is no substitute for legal counsel and if this situation has happened to you then you’ll need to talk to an attorney or contact our office to discuss your specific situation.

Abandoned Animals

As a general rule, an animal is considered to be abandoned if the tenant has left it in a public place or if the animal has been left without provision for its needs. If the tenant has moved then the animal is probably considered to be abandoned and you can follow the same laws as for abandoned property.

However, as in the case with which we began this article, if the tenant has not finished moving out then you may not be able to take title to the animal (though you are morally and legally obligated to take care of its immediate needs).

Neglect

Failing to provide for the needs of the animal also falls under the definition of animal cruelty. Colorado law states that any person, “… having the charge or custody of any animal, fails to provide it with proper food, drink, or protection from the weather, consistent with the species, breed, and type of animal involved, or abandons an animal” has committed animal cruelty.

What to Do

If you find an animal who has been neglected, report it to the Humane Society or the local police department. You can find contact information for El Paso County, Colorado Animal Enforcement on the Humane Society website.

If the animal appears to be abandoned on your property, you may need assistance determining if the animal is legally abandoned and considering your options. Blue Mountain Real Estate can help you with problems like this and anything else related to your rental property. Contact us to be sure you’re doing the right thing.

Should you rent to tenants with pets?

Barbra, a tech worker from the Midwest was transferred to Colorado Springs in 2010. She had taken the job with much excitement, but one major concern.

Would she be able to find a landlord who would accept her three elderly cats?

Barbra had owned a home in her former location, but was reluctant to buy a house in the Springs right away.

Pet Ownership in America

According to the American Pet Products Association’s 2017-2018 National Pet Owner Survey, 68% of American households include at least one pet. Dogs are present in the most households, but cats outnumber dogs in total. Cat owners often have more than one cat, which explains the difference.

Pet owners generally see the pet as part of the family and are reluctant to give them up. However, moving and landlords who won’t accept the pets are the top reasons that dogs and cats are surrendered to shelters in the United States.

Should you accept pets?

That leaves you, the landlord, with a decision to make. If so many people have pets then it’s worth giving thought to whether you should accept them into your rental property.

Are there risks? Sure. Pets can cause damage to furnishings and annoy the neighbors. But there are benefits too. Pet-friendly rentals are harder to find and pet owners are likely to stay longer. Pet owners often expect to pay higher rents, as well, increasing the landlord’s income and making it easier to recoup funds needed to repair any damage.

(Note that we are talking about companion animals here, not service or emotional support animals. The Americans with Disabilities Act governs renting to people with these kinds of animals.)

You don’t have to accept just any pet

You can reduce the probability of problems with pets by taking a few specific steps:

  • Ask for documentation. Your pet-owning applicant should be able to provide references and proof of any claims about the pet, such as a dog-training course completion certificate or proof that the animal has been spayed or neutered. Don’t be afraid to ask for these documents.
  • Require a plan for specific problems. Are you afraid kitty will ruin your carpets with litter box problems or Mr. Dog will chew the blinds? Your prospective tenant should have a plan for managing issues before they get out of hand, such as additional training or vet visits at the first sign of problems.
  • Include a Pet Addendum with the lease agreement that clearly documents the rules and specifies exactly which pets are allowed to live on the property.

Good Pet Owners Can Be Great Renters

Are you wondering how things worked out with Barbra and her three cats?

She persuaded the owner of a townhouse to rent to her by providing references and plans as listed above. The pets were well-behaved and, unlike other tenants, Barbra was delighted to discover that field mice sometimes made their way into the townhouses. The mice kept the cats entertained and the cats controlled the mouse population for that half of the building as long as they lived there.

You may not need mouse-control, but owning a pet-friendly rental may have benefits for you. We at Blue Mountain Real Estate are happy to discuss the pros and cons. Contact us today!

What are My Responsibilities as a Commercial Tenant?

Commercial leases often give the tenants more responsibility for maintenance and upkeep than residential renting agreements. Are you wondering why that is?

Commercial Tenants are Different than Residential Tenants

Commercial leases handle maintenance differently for many reasons:

Time

One reason is that a commercial tenant operating a business out of a building might not want to wait on a landlord if the problem is going to affect their clientele. The tenant can get the issue seen to as immediately as they are able.

Fault

Another reason is that the business operating out of the building—such as a restaurant—might affect how often the repairs are made. If the business on a property is a bar, and drunk customers are constantly ruining a wall, then the tenant would see that the wall is patched and repainted because the problem was a direct result of their business’ operation.

Who Controls the Site?

Here’s a common maintenance scenario which landlords often see. You own a building and have commercial tenants running a business out of it. One day in February you get a call from the tenants—the heating is broken. Who is responsible for the repair?

The answer to this situation can be as clear or as muddled as the commercial lease leaves it. Many commercial leases will split responsibility between the tenant and the landlord, stating that the tenant must pay for routine cleanings and checks, but the landlord is responsible for repairing breaks. Some landlords want to be in control of what is being done to the major systems of the property—commonly the HVAC, water and electricity of the building.

The way to prevent ugly disputes in the midst of a needed repair is a clear and detailed commercial lease agreement with a Maintenance and Repair clause. Ensure that your lease states what exactly “maintenance and repair” means, for exactly which systems of the property.

Generally, the landlord will take responsibility for the structure of the building, which includes but is not limited to the roof, exterior walls, and major systems. Tenant should assume duty to keep the interior up and running, as well as grounds appearance. Clear obligations up front will help the commercial agreement be a positive one.

We understand that the relationship between a landlord and a commercial tenant can be a difficult one to maintain, especially in the midst of needed repairs. If you are struggling to navigate the murky waters of repairs with your commercial property, Blue Mountain Realty and Property Management is here to help. Our professionals will keep your building safe and in good condition, and nurture positive relations with the tenants to boot.

Five things to know before leasing to a restaurant

You’re the proud owner of a super commercial space, and you’ve just learned that a restaurant is interested in doing business out of your property. This is great news, and you believe that the type of eatery would be a good fit for the location. Leasing to restaurants can be sticky business, however. Here are five things you should be aware of before agreeing to lease to a food service.

1 You might need to make structural renovations. Most likely any restaurant will require renovations to the space. If the property wasn’t already set up as a restaurant, the space alterations could be extensive.  Be prepared to pay for items which they cannot take with them and aren’t aesthetic, such as outside ventilation, possibly bathroom remodels, stair safety alterations and the like.

2 You might need to offer a year lease first, with long-term options after. Many restaurants fail in the first year. It might be in both yours and the tenants’ best interest to agree to a one year lease at the beginning, with options for longer-term use.

3 You might need to keep a detailed list for exclusivity.  Tenants like to have the exclusivity of being the only type of restaurant in a complex or mall. They will want the exclusivity to be as broad as possible, but make sure you can also lease to another food-serving party if the opportunity arises in a neighboring property. Be sure to keep detailed documentation regarding exclusivity rights and prohibited uses for the space.

4 You might want to watch your clauses. Make sure that you’ve thought through details such as hours that the tenant is allowed to operate their business in the space, trash removal, grease trap installation and maintenance, delivery schedule which won’t block surrounding driveways. All these particulars must be addressed as clearly as possible in the lease to avoid disputes during operation.

5 You might want to specify transfers.  It’s every landlord’s nightmare: they lease to a reputable eatery, which fails, and a nightclub moves into the location. Tenants will want some sort of exit strategy written out in the lease, so be sure to outline exactly what type of transfer is allowed. It is a good idea to ensure that the transfer goes to a business with the same intent of use as the original tenant.

Leasing your commercial space to restaurants can be a delicious situation, but negotiating the agreement and ensuring correct usage can be overwhelming. This is one area where you’ll want a real estate expert on your side, and Blue Mountain Realty and Property Management is happy to help. Call us to discuss property management for your space.

https://www.perkinscoie.com/images/content/1/5/v2/155756/PREL1605-Sherman.pdf

https://www.thebalancesmb.com/rent-a-restaurant-2888547

https://www.qsrmagazine.com/outside-insights/restaurant-owner-s-checklist-commercial-lease-deals

New Colorado Law Makes It Easier to Evict Squatters

Remember the case of Roland Hawkins, the Colorado Springs landlord who came home from vacation to discover squatters living in his rental property? The case made the news because Colorado law required him to go through a full eviction.

Unfortunately, it happens all the time.

For example, Gerry Clark found squatters living in her deceased daughter’s home last year. Clark had to file for a formal eviction and three months passed before the squatters were actually forced to leave. During their unauthorized stay in the house, they caused severe damage to Clark’s belongings and the home itself.

The Good News

The good news is that the new law shortens the process to reclaim a property.

Senate Bill 15 passed this year, which will aid homeowners in evicting squatters. Property owners must still file a complaint with the county court, but SB 15 only gives squatters two days to appear in court to present their case instead of months. If the unlawful occupants fail to appear in court, then the sheriff can be given power to remove them from the property within the next 24 hours.

The Bad News

The bad news is that the law does not make squatting or damage caused by squatters a felony.

SB 15 is a step in the right direction, but this is a case where an ounce of prevention is worth a pound of cure. Here are some tips to help you keep your residential and commercial properties free of unauthorized occupants:

  • Keep all properties occupied to the best of your ability.
  • Make sure your properties are routinely monitored to check for any suspicious activity.
  • Always ensure that windows and doors are shut and locked when you leave a home or building.
  • Installing fences and security cameras can be deterrents for squatters looking for a place to crash.

Of course, the best deterrent is a professional property manager. Blue Mountain Real Estate and Property Management carefully monitors your commercial or residential properties and keeps unauthorized occupants from entering before they cause problems.

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