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What Is Your Investment Property Due Diligence

Long Term or Flipping

Determine whether you desire a long-term property investment or a “flipping” property. Long-term investments produce positive cash flow, increasing your net worth. If you plan to flip, your focus will be on property appreciation and a quick return.

Flipping Caveats

Your profit margin depends on your acquisition cost, and it’s important you buy the property at a low price so you can sell at a profit. However, finding that property at a low price is getting more difficult as inventory drops and currently, it’s a buyers’ market.
If a property is super cheap, the amount you may need to spend on repairs will drive up the cost.
Even if you buy at a great price and get the property ready for the market, there’s no guarantee it’s going to sell.

Good Property Features

Research areas that have features to enhance the value of your investment.

Quality neighborhoods close to a metro area and properties near business districts are all desirable locations.
Close to public transportation. Public transportation no more than 15 minutes away from the property is ideal.
Lifestyle amenities within 10 minutes of the property. These include malls, schools, libraries, theaters, parks, restaurants, cafes, and gyms.
Areas that have a good renter to homeowner ratio.
Need to check with local police for crime statistics in the subject neighborhood.
Jobs market.
Property taxes.

Get a Feel for the Neighborhood

Park your car, and walk around to chat with anyone willing to share insight on the neighborhood. Check with the city or county planning department to get an idea of what the area’s future holds. New business developments such as new retail outlets mean area growth is good news. If new subdivisions and apartment complexes are planned, they could drive down your rents and increase your time in finding a suitable tenant and lower the value of your investment.
Consult with a Professional

Never take a Realtor’s claim on his or her rental rate projection; it could simply be a sales ploy. If you work with a Realtor who is representing you on the purchase of an investment property, get a second opinion from a professional property manager such as TierOne Real Estate Property Management.

Bonus Advice

Avoid areas that have 2 or more apartment communities; scarcity is a desirable attribute, since rents nosedive with plenty of available rental units.
Try to buy the property at least 10 percent below market price. This gives you room should you decide to sell the property.
The specific property you buy dictates the time required to manage it.
Several investment property types require substantial property management. These would include college rentals, vacation rentals, and properties in crime-ridden or low-income areas.
If you buy a high-maintenance property, you should hire a property management company but expect to pay a premium. You can expect to pay 10-15 percent of the rental gross and lease fees as well. You will also incur higher administrative and legal fees as well.
Be open to discuss your plans with real estate professionals. These folks have great insight into the market, and they are more than happy to spare a few moments to offer advice.

The Bottom Line

Most important point I can make is to discuss rental rates and occupancy factors with a professional, one who does property management for a living. Remember, rarely does the sales agent helping you find and close investment rental property have the knowledge that a property manager has within that given market area. Make sure you go over all available data on the property you plan to buy, and do a thorough investigation to make sure your decision is sound. Since knowledge is power, though, due diligence always pays off in the end. And, last but not least, always discuss with a professional property manager.

If you have a question about this topic or need assistance with anything else, contact a TierOne Real Estate Property Manager at 801-486-6200 or use the form to the right – we are here to help you with your rental/investment property whether you are a current client or one in the making.

What is Useful Life and Why is it Important?

All things on earth have a life expectancy – people, buildings, clothing, food, etc. All the parts of an investment property have a life expectancy as well. A building can last for years, even centuries, while you may have to replace that dishwasher next year or in ten years.
Why is it useful to consider life expectancy?

It is always better to know as much about your property as possible. Property owners can do more planning and budgeting if they are aware of the life of different items in their investment property, such as heating units, air-conditioners, various appliances, garage door openers, or water heaters. Knowledge can also help you plan for the unexpected – for example, it may be worthwhile to pay for a 3-5 year warranty than paying for a high maintenance bill when that one-year warranty expires one day after purchase on the new dishwasher.
How can you figure out the life expectancy of an item?

The following is a chart compiled from various Internet sources that generally agree on the life expectancy of various appliances and features in a property. The information below is to provide you with a general idea and the numbers can vary. There is no way to give you an “exact” chart because many factors can affect the life expectancy of your appliances and systems, such as care, maintenance, type, and the number of features.

Item Average life (years)
Dishwasher 5-10
Range, electric 13-16
Range, gas 13-19
Range hoods 9-14
Microwave 5-8
Refrigerator, standard 14-17
Freezer 12-16
Garbage disposal 10-13
Trash compactor 7-12
Clothes dryer – electric 11-14
Clothes dryer – gas 11-14
Clothes washer electric 11-14
Clothes dryer – electric 11-14
Heating, central 15-20
Air-conditioner, central 15-20
Garage door opener 20-25
Water heater 10-25

Sit down and create a similar chart for the systems and appliances in your investment property. Other steps can help you with this task.

When you buy a property, you may not know the exact age of the appliance but you can easily find out the building age and a physical inspection of the appliance can give you some indication of its age.
Talking with the selling agent or even a former owner can help.
Take into consideration the condition, care, and history, previous care of the property.
You can also research the manufacturer of existing appliances or pending purchases online.
This exercise will at least make you think about the expectations in your current property or you may be considering another investment.
Add one more column to your chart and list a “replacement price.”

By creating this chart, you are ready when it is necessary to repair or replace a system or appliance in your property. As your property management company, we have years of experience handling appliances and systems. Contact us if you have any questions on your property; we are happy to help you.

If you have a question about this topic or need assistance with anything else, contact a TierOne Real Estate Property Manager at 801-486-6200 or use the form to the right – we are here to help you with your rental/investment property whether you are a current client or one in the making.

How Is Your Rental Property Insured?

Many times when an investor is considering the purchase of a rental property, they look to the typical financial metrics such as cap rate, occupancy rate, square footage, occupancy, etc. All of these are great measurement tools in the evaluation of a purchase. But while the property is being evaluated, don’t forget to ask about the insurance questions as well.

The ability to obtain cost-effective insurance along with the appropriate coverage for the owner as well as the lender can have an equal effect on your bottom line. Listed below are some of the areas of concern as well as the questions to ask:

1. Has the property had any claims, both for property or liability issues? Claims happen, that’s what the insurance is for. Find out when the claim happened and what was paid.

Were all the repairs made from the damage? A good insurance agent can help you obtain this information from the prior carrier.
Were there any liability claims, what happened, what has been done to prevent further claims?

2. Have there been any updates to the property? What is the age of the roof; have there been any electrical or HVAC updates? While it is rare for a property owner to completely gut and rehab, there may have been some moderate updates.

When was the roof replaced?
Has the current owner changed out any electrical boxes? HVAC systems?
If you have not owned the property long, did the previous owner do any updates?

3. Occupancy or future plans

If the investment property has serious occupancy or existing deferred maintenance conditions; let your new insurance agent know what you will be doing to improve these conditions.
Provide a list of repairs that are planned and the timetable. Provide your marketing program to increase the occupancy.

The above questions always seem to be the hardest to obtain, probably because the answers have to come from the seller who a buyer may not have direct access to. This is a great time for the listing realtor to be of considerable help. There are many other basic questions in insuring a property, most of which can be answered by the real estate agent assisting you in this transaction. I would also suggest getting advice from a professional property manager such as TierOne Real Estate.

If you have a question about this topic or need assistance with anything else, contact a TierOne Real Estate Property Manager at 801-486-6200 or use the form to the right – we are here to help you with your rental/investment property whether you are a current client or one in the making.

The Challenges of Security Deposit Returns

One of the most difficult tasks for a property manager and/or owner, can be refunding the tenant’s security deposit to everyone’s satisfaction. Any property manager (or owner) is elated when they can issue a full refund because the tenant has left the property in excellent condition, complied with their rental agreement, and paid their rent in full. Unfortunately, there are times when deductions must be made for loss of rent and damages, leading to the dissatisfaction of the departing tenant. However, steps can be taken to optimize a successful reconciliation between all parties.

Step 1 – “Start before the tenant moves in”. This may sound like an odd approach to take but common sense steps in the beginning will increase the odds for success when the tenant moves out.

First, we prepare the unit in a clean reasonable condition for when the tenant moves in. For, example, it is really difficult to charge for painting when the walls were scarred and marked when the tenant moved in. If the property is in good condition, then it is reasonable to expect the same condition when the tenant moves out.
We document the property condition before the tenant moves in. With this completed at the beginning of the tenancy, there are grounds for deductions if there are tenant damages at the end. It may not always be possible to avoid litigation so it is very important to have complete records to defend keeping any or all of the security deposit monies.
We conduct a thorough tenant screening. Starting with the right tenant in the beginning eliminates most problems regarding a security deposit refund at the end of the tenancy. A good tenant will care for the property while renting, complete all required payments, and leave the residence in good condition. Good tenants want to maintain a good rental history and credit; in addition, they want their security deposit back.
We complete a detailed rental agreement that complies with state laws and executed to ensure that the tenant fully understands and signs what is expected of them during tenancy and when they move out Proper documentation details what rent is due until the end of the tenancy, when rent is to be paid, and what condition is expected of the property when they move out. The rental agreement also clearly states the amount of the security deposit paid by the tenant.

Step 2 – “Continue important functions during the tenancy.” This can avoid legal issues where the tenant feels they have the right to use the security deposit for rent or repairs while they are still renting.

Complete necessary repairs in a timely manner.
Maintain accurate maintenance records.
Keep accurate financial records on rent, late fees, and any other funds collected from the tenant.

Step 3 – “Complete the move out and refund of the deposit in a timely manner.” It is important to remember that settling the security deposit in a timely manner will be to the benefit of all parties.

The property condition is properly documented and completed with the tenant whenever possible.
A refund and/or statement of condition detailing the deductions is issued in accordance with state laws.
If circumstances dictate that the security deposit has been forfeited, we itemize repairs and details of all unpaid monies and issue a statement to the tenant at the last known address. This needs to be completed even if the tenant owes the property owner money.
Failure to issue a security deposit statement and/or fund within the timeline of state law can lead to larger financial loss.

Step 4 – “Use common sense if there is any dispute regarding the security deposit.”

If the tenant challenges the deductions, it is important to evaluate if it is worth the dispute. Sometimes, even a small compromise will settle the matter. Remember that a legal action can be more costly than simply refunding the amount challenged.
Most tenants do not dispute the loss of their security deposit when they owe more than they paid.
When necessary, we consult an experienced attorney, and discuss your options with you based on their advice.

Handling a security deposit is not always easy. By taking the right steps from the beginning of the tenancy until the end, we find the process easier.

If you have a question about this topic or need assistance with anything else, contact a TierOne Real Estate Property Manager at 801-486-6200 or use the form to the right – we are here to help you with your rental/investment property whether you are a current client or one in the making.

Swamp Cooler Information

In evaporative cooler should have at least two speeds and a vent-only option. During vent-only operation, the water pump does not operate and the outdoor air is not humidified. This lets you use the evaporative cooler as a whole-house fan during mild weather.

Control the cooler’s air movement through the house by adjusting window openings. Open the windows or vents on the leeward side of the house to provide 1 to 2 square feet of opening for each 1,000 cfm of cooling capacity. Experiment to find the right windows to open and the correct amount to open them. If the windows are open too far, hot air will enter. If the windows are not open far enough, humidity will build up in the home.

You can regulate both temperature and humidity by opening windows in the areas you want to cool, and closing windows in unoccupied areas. Where open windows create a security issue, install up-ducts in the ceiling. Up-ducts open to exhaust warm air into the attic as cooler air comes in from the evaporative cooler. Evaporative coolers installed with up-ducts will need additional attic ventilation.

Optional filters remove most of the dust from incoming air — an attractive option for homeowners concerned about allergies. Filters can also reduce the tendency of some coolers to pull water droplets from the pads into the blades of the fan. Most evaporative coolers do not have air filters as original equipment, but they can be fitted to the cooler during or after installation.

Evaporative Cooler Maintenance

Save yourself a lot of work and money by draining and cleaning your evaporative cooler regularly. Build-up of sediment and minerals should be regularly removed. Coolers need a major cleaning every season, and may need routine maintenance several times during the cooling season.

The more a cooler runs, the more maintenance it will need. In hot climates where the cooler operates much of the time, look at the pads, filters, reservoir, and pump at least once a month. Replace the pads at least twice during the cooling season, or as often as once a month during continuous operation.

Some paper and synthetic cooler pads can be cleaned with soap and water or a weak acid according to manufacturer’s instructions. Filters should be cleaned when the pads are changed or cleaned. Be sure to disconnect the electricity to the unit before servicing it.

Contingencies. Are You Prepared?

At TierOne Real Estate, we continually work on educating tenants for any event that could happen during their tenancy. This includes making rental payments, reporting maintenance, handling emergencies, checking smoke alarms, practicing good neighbor policies, buying renter’s insurance, and more. Of course, we hope that they always follow our advice, but we know that it is human nature to avoid or ignore the possibility of emergencies or disaster situations.

It is just as important for property owners to prepare for all possible contingencies. No one likes to think about the possibility of vacancies/evictions, tenant damage, and emergencies because it can be disruptive both financially and emotionally. However, being prepared can make a bad situation tolerable for both owners and tenants. There are several areas to consider.

Property Insurance Evaluation

This is probably the most obvious and important item to have in place for unwanted events. It pays to review possible scenarios and coverage with your insurance agent at least once a year. Insurance policies are subject to change, particularly when catastrophes occur. With all the catastrophes that have occurred in the last few years and the resulting high losses, insurance companies are continually making major policy changes. Often notifications are obscure with “small print.” Too often property owners find out that their insurance does not apply to a particular situation until “after” it happens. Find out specifically what catastrophes, emergencies, tenant damage, and rent losses are covered or not covered.

Property Records, Accounts & History

Another area that everyone fears is an audit by a government agency, particularly the Internal Revenue Service (IRS). The best way to prepare for an audit is to create and maintain your investment records consistently and accurately. Keep all tax returns, property management reports, maintenance records, financial receipts, and property documents organized in one place where you can easily retrieve and review them if you have an audit. Maintain them yearly and when you need this information, you will have it for any circumstance, such as an audit or sale of the property. It is much easier to maintain files than try to recreate them later. In addition, they will probably be more accurate.

Formulate a Maintenance Plan of Action

Just like your home, periodic work is necessary to maintain investment property. Do you have a maintenance plan of action for future years? It is not practical to bury your head in the sand and “hope for the best” when it comes to roofs, paint, carpeting, appliances, fencing, plumbing, electrical, air-conditioning, heating, miscellaneous repairs, and more. Figure out the life of all major items and make a plan to have work done periodically to avoid unnecessary major rehabilitation. Take a “preventative maintenance” approach to reduce expenses and stress.

Do You Have A Financial Plan?

Do you have a financial plan for your maintenance plan? Have you considered how you would cover expenses in the event of an eviction and loss of rent? What funds and coverage will you need if there is a fire? If a disaster happens, such as high winds, tornado, hurricane, fire, and flooding, how will you sustain the property? Insurance may not cover everything. Talk with your bank or available financial institutions about what financing you could obtain if necessary. Even better, establish an emergency fund in an interest bearing account. If something happens, you have an immediate resource to use.

You do not want to fall victim to the old adage, “fail to plan and plan to fail.” Planning now can help prepare for the unexpected.

If you have a question about this topic or need assistance with anything else, contact a TierOne Real Estate Property Manager at 801-486-6200 or use the form to the right – we are here to help you with your rental/investment property whether you are a current client or one in the making.

Backyard Fire Pits

Now that the nice warm weather has arrived more people will be moving outside for their entertainment. This could mean the use of fire pits. How does that affect your investment property?

A backyard fire pit can be fun, but it can also be a hazard. If you allow your tenants to have a fire pit at your rental property, make sure they follow a few safety tips to decrease risk.

  1. Set up fire pit on a solid surface, in an open area, away from the building and trees.
  2. Have a fire extinguisher or hose near by.
  3. Require the use of a fire screen
  4. Extinguish fire completely, with water, after every use.

If you aren’t comfortable even with these rules. then don’t allow your tenants to have fire pits. There is always some danger that comes with open flame.

Need advice on how to get rid of a tenants fire pit? Call us today! 801-486-6200

Summer Safety Tips

Keep your family safe this summer by following these tips from the American Academy of Pediatrics (AAP).  For sun and water safety tips, see this tip sheet. Please feel free to use them in any print or broadcast story, with appropriate attribution of source.

FIREWORKS SAFETY

  • Fireworks can result in severe burns, blindness, scars, and even death.
  • Fireworks that are often thought to be safe, such as sparklers, can reach temperatures above 1000 degrees Fahrenheit, and can burn users and bystanders.
  • Families should attend community fireworks displays run by professionals rather than using fireworks at home.
  • The AAP recommends prohibiting public sale of all fireworks, including those by mail or the Internet.

BUG SAFETY

  • Don’t use scented soaps, perfumes or hair sprays on your child.
  • Avoid areas where insects nest or congregate, such as stagnant pools of water, uncovered foods and gardens where flowers are in bloom.
  • If possible, eliminate stagnant water, such as in bird baths or fish ponds, in your yard. Check that your window screens are tightly fitted and repair any holes to keep bugs out of the house.
  • Avoid dressing your child in clothing with bright colors or flowery prints.
  • To remove a visible stinger from skin, gently back it out by scraping it with a credit card or your fingernail.
  • Combination sunscreen/insect repellent products should be avoided because sunscreen needs to be reapplied every two hours, but the insect repellent should not be reapplied.
  • Use insect repellents containing DEET when needed to prevent insect-related diseases. Ticks can transmit Lyme Disease, and mosquitoes can transmit West Nile, Zika virus, Chikungunya virus and other viruses.
  • The current AAP and CDC recommendation for children older than 2 months of age is to use 10% to 30% DEET. DEET should not be used on children younger than 2 months of age.
  • The effectiveness is similar for 10% to 30% DEET but the duration of effect varies. Ten percent DEET provides protection for about 2 hours, and 30% protects for about 5 hours. Choose the lowest concentration that will provide the required length of coverage.
  • The concentration of DEET varies significantly from product to product, so read the label of any product you purchase. Children should wash off repellents when they return indoors.
  • As an alternative to DEET, picaridin has become available in the U.S. in concentrations of 5% to10%.
  • When outside in the evenings or other times when there are a lot of mosquitoes present, cover up with long sleeved shirts, pants and socks to prevent bites.

PLAYGROUND SAFETY

  • The playground should have safety-tested mats or loose-fill materials (shredded rubber, sand, wood chips, or bark) maintained to a depth of at least 9 inches (6 inches for shredded rubber). The protective surface should be installed at least 6 feet (more for swings and slides) in all directions from the equipment.
  • Equipment should be carefully maintained. Open “S” hooks or protruding bolt ends can be hazardous.
  • Swing seats should be made of soft materials such as rubber, plastic or canvas.
  • Make sure children cannot reach any moving parts that might pinch or trap any body part.
  • Never attach—or allow children to attach—ropes, jump ropes, leashes, or similar items to play equipment; children can strangle on these.  If you see something tied to the playground, remove it or call the playground operator to remove it.
  • Make sure your children remove helmets and anything looped around their necks.
  • Metal, rubber and plastic products can get very hot in the summer, especially under direct sun. 
  • Make sure slides are cool to prevent children’s legs from getting burned.
  • Do not allow children to play barefoot on the playground.
  • Parents should supervise children on play equipment to make sure they are safe.
  • Parents should never purchase a home trampoline or allow children to use a home trampoline because of the risk of serious injury even when supervised.
  • Surrounding trampoline netting offers a false sense of security and does not prevent many trampoline-related injuries. Most injuries happen on the trampoline, not from falling off.
  • If children are jumping on a trampoline, they should be supervised by a responsible adult, and only one child should be on the trampoline at a time; 75% of trampoline injuries occur when more than one person is jumping at a time.
  • Homeowners should verify that their insurance policies cover trampoline-related claims. Coverage is highly variable and a rider may need to be obtained.

BICYCLE SAFETY

  • A helmet protects your child from serious injury, and should always be worn. And remember, wearing a helmet at all times helps children develop the helmet habit.
  • Your child needs to wear a helmet on every bike ride, no matter how short or how close to home. Many injuries happen in driveways, on sidewalks, and on bike paths, not just on streets. Children learn best by observing you. Set the example: Whenever you ride, put on your helmet.
  • When purchasing a helmet, look for a label or sticker that says the helmet meets the CPSC safety standard.
  • A helmet should be worn so that it is level on the head and covers the forehead, not tipped forward or backwards. The strap should be securely fastened with about 2 fingers able to fit between chin and strap. The helmet should be snug on the head, but not overly tight. Skin should move with the helmet when moved side to side. If needed, the helmet’s sizing pads can help improve the fit.
  • Do not push your child to ride a 2-wheeled bike without training wheels until he or she is ready. Consider the child’s coordination and desire to learn to ride. Stick with coaster (foot) brakes until your child is older and more experienced for hand brakes. Consider a balance bike with no pedals for young children to learn riding skills.
  • Take your child with you when you shop for the bike, so that he or she can try it out. The value of a properly fitted bike far outweighs the value of surprising your child with a new one. Buy a bike that is the right size, not one your child has to “grow into.” Oversized bikes are especially dangerous.

SKATEBOARD, SCOOTER, IN-LINE SKATING AND HEELYS SAFETY

  • All skateboarders and scooter-riders should wear protective gear; helmets are particularly important for preventing and minimizing head injuries. Riders should wear helmets that meet ASTM or other approved safety standards, and that are specifically designed to reduce the effects of skating hazards.
  • Communities should continue to develop skateboard parks, which are more likely to be monitored for safety than ramps and jumps constructed by children at home.
  • While in-line skating or using Heelys, only skate on designated paths or rinks and not in the street.
  • Most injuries occur due to falls. Inexperienced riders should only ride as fast as they can comfortably slow down, and they should practice falling on grass or other soft surfaces. Before riding, skateboarders should survey the riding terrain for obstacles such as potholes, rocks, or any debris. Protective wrist, elbow and kneepads should be worn.
  • Children should never ride skateboards or scooters in or near moving traffic.
  • Riders should never skate alone. Children under the age of eight should be closely supervised at all times.

ALL-TERRAIN VEHICLES

  • Children who are too young to have a driver’s license should not be allowed to operate or ride off-road vehicles. Children are involved in about 30 percent of all ATV-related deaths and emergency room-treated injuries.
  • Because their nervous systems and judgment have not fully developed, off-road vehicles are particularly dangerous for children younger than 16 years.
  • Don’t ride double. Passengers are frequently injured when riding ATVs. Most ATVs are designed to carry only one person: the driver. Passengers can make ATVs unstable and difficult to control.
  • All ATV riders should take a hands-on safety training course.
  • All riders should wear helmets, eye protection, sturdy shoes (no flip-flops), and protective, reflective clothing. Appropriate helmets are those designed for motorcycle (not bicycle) use, and should include safety visors/face shields for eye protection. Wearing a helmet may prevent or reduce the severity of these injuries.
  • ATVs lack the common safety equipment found on all cars and trucks that are designed for street use. ATV tires are not designed to grip on pavement, so operators should not ride on paved roads. Parents should never permit nighttime riding or street use of off-road vehicles.
  • Flags, reflectors and lights should be used to make vehicles more visible.
  • Drivers of recreational vehicles should not drive while under the influence of alcohol, drugs or even some prescription medicines. Parents should set an example for their children in this regard.
  • Young drivers should be discouraged from on-road riding of any 2-wheeled motorized cycle, even when they are able to be licensed to do so, because they are inherently more dangerous than passenger cars.

LAWN MOWER SAFETY

  • Only use a mower with a control that stops the mower blade from moving if the handle is let go.
  • Children younger than 16 years should not be allowed to use ride-on mowers. Children younger than 12 years should not use walk-behind mowers.
  • Make sure that sturdy shoes are worn while mowing.
  • Prevent injuries from flying objects, such as stones or toys, by picking up objects from the lawn before mowing begins. Have anyone who uses a mower wear hearing and eye protection.
  • Do not pull the mower backward or mow in reverse unless absolutely necessary, and carefully look for children behind you when you mow in reverse.
  • Always turn off the mower and wait for the blades to stop completely before removing the grass catcher, unclogging the discharge chute, or crossing gravel paths, roads, or other areas.
  • Do not allow children to ride as passengers on ride-on mowers.
  • Keep children out of the yard while mowing.
  • Drive up and down slopes, not across to prevent mower rollover.
  • Keep guards, shields, switches, and safety devices in proper working order at all times.
  • If children must be in the vicinity of running lawnmowers, they should wear polycarbonate protective eye wear at all times.

– See more at: https://www.aap.org/en-us/about-the-aap/aap-press-room/news-features-and-safety-tips/pages/Summer-Safety-Tips.aspx?nfstatus=401&nfstatus=401&nftoken=00000000-0000-0000-0000-000000000000&nfstatusdescription=ERROR%3a+No+local+token#sthash.TmyMVmNN.dpuf

Water Heaters: Repair or Replace

A water heater is an important element in an investment property. Lack of a working heater is a serious liability for an investor. Therefore, it is important to either quickly repair or replace a water heater when there is a problem. Most judges do not accept excuses for unnecessary delays and there have been many court cases where property owners have had to pay fines or large settlements due to a lack of action to provide hot water to their residents. The basis for these legal decisions is the Uniform Residential Landlord Tenant Act (the URLTA); warranty of habitability is required of investors.

There are times when you can repair a water heater. Sometimes, it can be as simple as replacing a coupling and the water heater works for many more years. In some cases, minor repairs prolong the life of the unit. However, it pays to consider the age and the cost before making a large or even small repair. If the water heater is beyond warranty and very old, it is probably not a sensible move to repair it. Unfortunately, there is no way to predict the failure of a water heater whether it is old or new.

If the decision is to replace the water heater, there are various factors to consider. The first questions to ask are:

What fuel source supplies the water heater?
What type of water heater is currently in the property?
What size of water heater is adequate?
How quickly can a vendor replace the water heater?

The logical step is to investigate the heater that is currently in the investment property. There is a large variety of water heaters.

Conventional storage water heaters offer a ready reservoir (storage tank) of hot water.
Tankless or demand-type water heaters heat water directly without the use of a storage tank.
Heat pump water heaters move heat from one place to another instead of generating heat directly for providing hot water.
Solar water heaters use the sun’s heat to provide hot water.
Tankless coil and indirect water heaters use a home’s space heating system to heat water.

When selecting the best type and model of water heater other considerations should be:

Fuel type and availability: most fuel sources are either gas or electric but there are others, such as propane, solar, fuel oil, etc., depending on the area of the country. Some sources may not be available, such as fuel oil or solar. Changing the fuel source can also incur more cost but depending on the property, it may be worth it.
Size: to provide residents with enough hot water and to maximize efficiency, you need a properly sized water heater.
Energy efficiency: to maximize energy and cost savings it is important to investigate the energy savings. Although the resident is most likely paying the heating bill, investors should always work to make the property as attractive as possible to tenants and cost savings during vacancies.
Costs: before purchasing a water heater, it is a good idea to estimate annual operating costs and compare those costs with other less or more energy-efficient models. The energy source used for water heating will not only affect the water heater’s annual operating costs but also its size and energy efficiency – again, an important issue for residents.

Using a reliable, experienced, and trustworthy vendor is major factor in this issue because they can give you the pros, cons, and costs on repair or replacement. The vendor must also be able to act quickly to either repair or replace the water heater.

As your property management company, we consider this an extremely important issue and of course, we are very familiar with this type of repair call. We act immediately on calls from residents regarding a non-working water heater and utilize competent technicians. We will notify you as soon as practical if something happens. It is always our goal to work to maintain the habitability of the property and reduce the liability for your investment at all times.

If you have a question about this topic or need assistance with anything else, contact a TierOne Real Estate Property Manager at 801-486-6200 or use the form to the right – we are here to help you with your rental/investment property whether you are a current client or one in the making.

How Do You React When Your Tenant Calls?

You have employed the TierOne Real Estate Company, a professional Property Management company, because you feel our expertise will give you peace of mind regarding your rental property. In particular, this alleviates having to handle difficult tenant situations. Then the phone rings and your tenants are on the line. This can develop from several scenarios:

You and your tenants know each other from previous contacts, so the tenant calls you directly. They figure they do not have to bother to interact with TierOne Real Estate despite the fact you have hired us.
You visited the property and the tenant now decides to call you because they feel this is now a better way to get what they want.
The tenant is unhappy with a “no,” a notice to pay or quit, or other information they have received from TierOne Real Estate and they decide to circumvent the Property Manager by calling you.
The tenants want to cut a “new deal” on rent, repairs, or other issues and decide they have a better chance of getting what they want from the property owner.

What to do when the tenant calls

We ask that you politely give them the number for TierOne Real Estate and ask them to call their Property Manager to discuss any issues that they have. Inform them that you hired TierOne Real Estate to take care of the property and work directly with the tenant. Emphasize that we have authorization to act on your behalf and consult with you.
Call us as soon as possible to let us know that the tenant is trying to circumvent TierOne Real Estate and deal directly with you. We will then contact them to help them with their problems or requests.
If they demand immediate action from you, reiterate with them that you will discuss their call with TierOne Real Estate but they are to call their Property Manager as soon as possible.
Be calm if the tenant threatens you with legal action. Do not panic with a threat. Many people feel that getting what they want involves using forceful action. Let them know that you will be discussing the situation with us and if necessary, your attorney.
No matter what the tenants have said, please reserve judgment and give us the benefit of doubt if the tenant claims unfair treatment and practices. We will give you the facts and it may differ greatly from the tenant.

What NOT to do when the tenant calls

Do NOT negotiate with the tenant on the rental amount, payment of rent, authorization of repairs, or promise any repairs or improvements. This really puts TierOne Real Estate and your Property Manager in a weak position and without the facts; it may put you and your investment at risk.
If you know that there are eviction proceedings on the property, do NOT talk to the tenant and definitely do NOT make any promises. Certain actions can void an eviction and you could have to start the process again, causing more loss of rent and more legal fees. Tell them to call their attorney or our office.
Do NOT set up an appointment to meet with them. Tell them you will contact us and arrange an appointment at the property with the Property Manager, with you and the Property Manager, or between any attorneys involved.

Meeting with the tenants

Do not visit the property unannounced. This can cause many problems, some of which could be legal ones. This also implies to the tenant that they do not need to go through TierOne Real Estate.
If you do want to visit the property, contact us. We will meet you there and discuss all issues with the tenant.

Obviously, a tenant calling you directly can create a three-way situation that can undermine our authority, possibly cause you anxiety, and in some circumstances, create legal issues and liability. We have taken on management of your property so you can avoid sticky situations and reduce your liability. We will always work diligently to settle all tenant issues and protect your investment; your assistance is important if a tenant calls you.

If you have a question about this topic or need assistance with anything else, contact a TierOne Real Estate Property Manager at 801-486-6200 or use the form to the right – we are here to help you with your rental/investment property whether you are a current client or one in the making.

Licensed with the Utah Division of Real Estate