Dealing With Trouble Tenants: Part 1

Everyone at one time or another has had to deal with someone unpleasant. Teachers, coworkers, managers, and yes in-laws, can make one want to pull their hair out. However, it’s a different story when that someone is a tenant of your investment property.

Bad tenants can create more than hair loss. Loss of time and money can turn a good investment into one that has a break-even point somewhere in the distant future. Dealing with troublesome tenants is one of the biggest obstacles to owning Real Estate. But with a solid plan, losses can be stopped before going bald.

Screening Tenants

The process of screening tenants can be time-consuming, which can translate into lost revenue. It’s critical to have a method to filter out potential tenants that are a bad fit quickly. This will reduce stress and protect evenings spent at the property playing tour guide.

At first contact with a potential tenant, ask a few simple questions like:

  1. Why are you moving?
  2. Why did you choose this area?
  3. When do you plan to make the move?
  4. How long do you plan to rent the property?

It’s essential to make them feel comfortable and to get them talking about themselves and their family if they have one. The point of the questions is to gain insight and find a solution that fits for both the investor and the tenant. It’s best to address a bad fit straight away and offer alternate solutions. Schedule the tour at a time that allows the prospective tenant time to review the contents of the application.

Get To The Point

Once the understanding of the situation has a solid foundation, move to the qualifications. For Example:

  1. State monthly rent, cost of security deposit, and any fees like background and credit checks.
  2. Pet policy and any associated fees.
  3. Requirements of any maintenance like upkeep of the landscape.
  4. What is NOT included- like electricity and gas, waste, and snow removal.
  5. Clean criminal history.
  6. Clean eviction history.
  7. The minimum credit score.

Before the Tour

An application can be sent to the prospective tenant for their review before looking at the property. The application will reinforce the conversation about all qualifications. They may have it completed before the tour or have it in hand during the tour.

After The Tour

The process continues with ensuring that the application is thoroughly and carefully cross-checked with criminal credit and eviction histories. There are many different resources to assist with this process. Having a local property management company with experience in the area will help. At Blue Mountain, we do the screening ourselves. We conduct in-depth credit and background checks on each applicant, and we visit social media pages and look at online reputations.

The Contract

Rental contracts can be tricky and if not crafted correctly, and it will only add additional stress if you’re faced with a bad tenant. We will address issues concerning the contract in the next blog.

 

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.

Avoid Anxiety at Tax Time

Tax time creates anxiety every year for a majority of Americans. A recent study by TaxAudit found that half of Americans feel anxious when they receive something from the IRS, and 77% find the new tax laws confusing. For the Real Estate investor, just thinking about taxes can cause anxiety.

Fear not- we are here to give some practical advice arming the reader with the courage to deal with the dreaded tax monster.

Professional help:

CPA

Like most any endeavor, it’s always good to seek competent counsel before venturing out into the unknown, even if it is somewhat familiar. Because you own property doesn’t mean you need to know everything about the Tax Code concerning rental properties. A good CPA with experience in Real Estate may cost a bit but will reduce stress in retaining the deductions available. Before seeking out an accountant, be sure that you do your homework and ask someone in the business for recommendations then follow up with your own check. The Better Business Bureau is a good starting point. Go to www.bbb.org to find accountants in your area. The BBB website is straightforward to navigate and intuitive. Type in what and where by zip code and voila- vetted results will appear.

IRS

One of the most overlooked aspects of the IRS is that one of their primary functions is to help the public in understanding the system. The IRS webpage has a plethora of information on every aspect of taxes for the Real Estate investor. The site is written in easy to understand language and has direct links to publications, schedules, recent developments, and is continuously updated. Click here to learn the facts about renting out residential property. It’s worth a look, and it is surprising what is considered a deduction. From ordinary and necessary expenses to improvements and depreciation it’s all listed with guidance on each.

Advantages

Taxes differ for any given location; however, there are common types of rental property tax deduction and benefits, including:

  • Depreciation
  • Mortgage Interest Payments
  • Licensing Fees
  • Occupancy Tax Deductions
  • Insurance
  • Utilities
  • Maintenance and Repair
  • Advertising and Marketing
  • Homeowner Association Fees
  • Auto and Travel
  • Supplies
  • Property Management
  • Legal and Professionals Fees

There are numerous resources a mere keystroke away, offering advice on taxes for the property investor. Confirm that articles are recent within a couple of months because tax code can change more often than tires on a race car. Remember that keeping a solid account of each expense is paramount to ensuring proper deductions are capitalized on at tax time.

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.

Raising Capital to Invest in Real Estate

Investing in Real Estate is a rewarding and profitable endeavor with many different motivating factors. Many times the catalyst is a product of a significant life change. The care of an elderly family member or job promotion- therefore requiring a relocation for example. Raising capital to invest in real estate may be a good financial move in this type of situation.

Beyond a significant life change, Real Estate is often used to balance other investments, for example, stocks and bonds. The recent volatility of the stock and bond market has led to many investors moving a portion of their assets or adding Real Estate to their strategy.

Whatever the factors are of becoming invested in hard assets like rental properties, Real Estate is one of the best ways to create wealth. Raising capital to address these opportunities has many pathways other than going to the bank.

OPM

Other Peoples Money (OPM) has been the starting point of most every venture into raising capital for all types of business, including Real Estate. OPM are private lenders who are not affiliated with any bank. Many times they are referred to as ‘Money Partners.’

Money Partners

Private lenders can be friends and family and are many times the first and easiest connections to raise capital. Beyond family and friends, there are those with capital looking for an excellent opportunity. Private lenders are similar to traditional lending. They too are looking for a good return for their investment. There are similarities and differences and pros and cons for each.

Pros and Cons

Private lenders operate much faster, usually with less paperwork than a traditional lender. However, time may be an essential aspect of closing a deal, while waiting for approval from a bank may hinder the process. On the flip side, obtaining a loan from a traditional lender like a bank will give the owner autonomy to operate. Regardless of the chosen method, a good understanding of the return on the investment (ROI) is a necessary step to raising capital.

ROI

Having realistic expectations and a detailed plan of how the secured funds will be paid back is the first step to raising capital. Remember, the fear of loss is a more significant motivator than the potential for gain. Create your pitch based on this fact, and the capital will be more natural too secure. For more information on how to obtain capital using a private lender or a money partner Click Here.

Raising capital to begin building your real estate portfolio has many avenues, and each has its pro and con. Building awareness of these avenues, having a realistic understanding of the ROI and overcoming the fear of loss are ingredients to a successful campaign to raising capital.

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.

Profitability of Investing in 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 with Real Estate Investment

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!