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The Importance of Quick Repairs on Your Atlanta Rental Property

Todd Ortscheid - Thursday, May 10, 2018

Hi, Todd Ortscheid here with GTL Real Estate. I wanted to talk a little bit about the importance of speedy maintenance. This is the second time in the last few weeks we've talked about maintenance and repairs. The reason for that is just because it's such an important issue, it's a question that comes up so often, and it's really important from the perspective of both the tenant and the landlord.

There's a lot of reasons why maintenance and repairs and how they're handled are one of the key issues for everybody involved in being a either a landlord, or tenant, why those issues are important. I wanted to cover another subject on that again, which is the speediness of repairs. Occasionally we get a question from one of our clients asking things like, "can you get three or four bids for every repair?" or "Can you call me for approval before ever repair?"

We get those questions occasionally, but not too often, as most of our clients now are generally pretty hands-off. They like that we're a turnkey solution that can take care of all aspects of managing their property without them having to be directly involved. We do occasionally have an owner who wants to be a little bit more hands-on, so I wanted to address why we have the process we do that's so fast in dealing with repairs, and why that's to your benefit as a landlord.

There's many polls that have been done on tenants to try to determine what causes tenant turnover, meaning why do tenants leave one rental property and go to another. It's obvious why a tenant would leave a rental and go to a house that they've purchased. They'd love to be a homeowner, for most people that's part of the American dream, so they want to own house. That's a pretty obvious reason why someone would leave a rental property. In a lot of cases, tenants are leaving one rental house and going to another, and even going from one similar rental house to another, not even upgrading to a bigger place.

Why does that happen so often? The polling answer on that is pretty clear, it's almost always about maintenance. The number one reason the tenants leave one rental to go to another, is that either repairs aren't getting done, or they aren't getting done very fast. The other thing to keep in mind about that is turnover, losing a tenant and having to find a new one, is the number one driver of expenses for a landlord.

There's two components of that. One is the cost of finding a new tenant, which if you have a property management company, that's the fees that you pay that management company to find that tenant, but even if you're doing it yourself, you have your own advertising costs, and your own time, which obviously has a value that you have to spend showing the property, taking phone calls, and everything that goes along with it.

There's that part, but then there's also the aspect of repairs between tenants. If you have a tenant in your property who's there for 10 years let's say, it's very likely that tenant is not going to ask for paint, or carpet, or anything really while they're in that property. As long as the property was in pretty decent shape when they moved in, they're going to stay in that property for all those years, and not really bother you about those cosmetic issues.

When you have a tenant who moves out, new tenants expect properties to be in pretty decent condition when they move in. They expect the paint to be in good condition, the flooring, whether it's carpet, or vinyl panel, whatever it may be, to also be in good condition. That's where those expenses come in, and then you have to go in and touch up at the very least the paint. Sometimes you have to replace that carpet, you have to maybe do some landscaping work. These expense add up.

You could have avoided all those expenses if you kept the same tenant. That turnover is what drives up costs, and that can be thousands of dollars. From a landlord's perspective, it's very important to keep that turnover low, and as we said from the polling, the way to do that is to make sure the repairs get done, and make sure they get done very quickly. That's why our process is that as soon as we get a request, we get that taken care of.

Our maintenance line is 24/7. That means if someone calls on Christmas day at 11 PM, we've got that call center that's taking that phone call and dispatching a vendor to take care of that if it's an emergency. If it's not an emergency, then they'll get someone out the next day as quickly as possible. That's very important obviously for the tenant for obvious reasons, but for less obvious reasons that's very important for you as the landlord, because that's making sure that tenant stays happy, so that they stay in your property.

That's a very important thing to consider. Keeping your costs down by reducing turnover is going to be the number one driver of your profitability as a landlord. That's why we do that, but also it's not just a profitability perspective, it's also just the law. In the states where we do business, landlords are required to do repairs. It's just the way it is, the law doesn't make it a gray area.

If you look at the Georgia landlord tenant handbook for example, it specifically says that even if you put a provision in your lease that says the tenant is responsible for repairs, it says that provision is void. It doesn't make any difference, as far as the courts and lawmakers are concerned, that you have a contract provision that says the tenant is responsible. It is always the landlord's responsibility to do the repairs no matter what. That's why it doesn't really make a whole lot of sense to put delays in the process to call for approvals, get multiple bids, etc. All of that stuff just creates unnecessary delays that's going to drive up your costs.

The vendors we have, we have long-term relationships with them, they've given us deep discounts. We bid out our work in a more general sense to multiple contractors all the time to make sure our vendors are the lowest priced and the best quality. Introducing a bid process into each repair is just creating an unnecessary delay when we already know who the cheapest vendor's going to be. It's just going to make the tenant angry while they wait for that work to get done.

Our process is designed to make the tenant happy, and to make the landlord have a more profitable property over the long run. We recommend this even for landlords who are doing the work themselves, and not having a property management company. If they're managing their own property, make sure you're quick on repairs. That's going to be the number one thing that keeps you profitable, and make sure that you have the best return on your investment. If you have any questions, send us an email at support@gtlrealestate.com, or give us a call at our office, thanks.

Maintenance and Repairs Commission

Todd Ortscheid - Thursday, April 26, 2018

Todd Ortscheid of #GTLRealEstate talks about why an additional commission is charged on maintenance and repairs over and above the standard monthly management fee.

We manage a broad range of properties, and maintenance and repairs are a huge source of our expenses. We do not really make any profit in overseeing maintenance and repairs, but we do need to cover our costs; so, we thought of going about that in certain ways that are most fair and transparent to everybody. Older and more run-down properties are a much bigger source of the work we do because they require more maintenance and repairs. On the other hand, brand-new houses and properties that are just a few years old do not entail a lot of repair work, so we very rarely need to send vendors to them. We didn’t think that lumping everything into one big management fee that covers everything, including maintenance, would make a lot of sense, because then the owners who don’t really get a lot of maintenance done on their properties are basically subsidizing the owners who get tons of work done on their properties.

We thought it made more sense to break it out. Things that don’t deal with maintenance and repairs like the basic management, rent collection, and evictions are covered by the standard monthly management fee, while maintenance and repairs are charged with a percentage-based commission on top of the invoice amount. That way, the only people who are paying for maintenance and repairs are the ones who require it.

Some management companies do it in other ways. Some charge a flat fee for every maintenance and repair they do. Some management companies do not disclose that they are marking it up, so they will bill you directly from the property management company and won’t ever tell you that they are adding an override percentage on top of that. And a number of companies have an in-house maintenance unit. While some of them will disclose that it is an in-house maintenance company, others will not. They might also give it another name and will not let you know that it is under the same umbrella corporation that owns the management company. So, what they do is they include their commission in the invoice that they charge from the repair company and they get their money that way.

That’s not how we like to go about these things, as it is not a transparent way of doing business. We always tell our clients that there are no hidden fees. Everything we charge you, you know about, and it’s right on the second page of your management agreement for you to look at. We feel that this is the most fair and transparent way of conducting business.

If you have additional questions about this topic, please send us an email to support@gtlrealestate.com. If you require further assistance or want to see our available #HousesforRentinAtlanta or #HousesforRentinDaytonaBeach, give us a call or visit our website. Thank you for watching!

Tenant Threats about Security Deposits

Todd Ortscheid - Wednesday, March 25, 2015

If you've been a landlord for long, you've probably dealt with tenants who left the property owing money, either for repairs or for unpaid rent or late fees. Obviously, the reason that a landlord requires a security deposit is to cover these amounts. But when a landlord withholds the deposit as he's supposed to, tenants frequently start throwing around threats about getting lawyers and filing lawsuits. What should you do when this happens?

First, it's important to make sure that you've followed the law and the lease agreement. If the tenant really does have a legitimate dispute, then you should work to resolve it fairly. This is rarely the case, though. Usually the landlord has complied with the lease and the law, but the tenant is still demanding their deposit back.

So after you've confirmed that you're within your rights, the next step is to send the tenant a response to their dispute in writing. Make sure that the response is written in a professional manner and not as an angry diatribe. If the tenant has angered you with their accusations, then take a break and come back to write the response after you've calmed down. If the matter does end up in court, you want to make sure that you looked like a consummate professional. Judges do factor that in and will make assumptions about you if you behave unprofessionally. In your response, just state the facts about what the lease says regarding return of the security deposit, and clearly state why the security deposit was withheld.

If the tenant still doesn't relent, and starts making threats about hiring a lawyer, then don't worry. We hear this constantly from angry tenants, and 99% of the time, they never hire any lawyer and never file any lawsuit. They're just trying to scare you. Ask yourself this: if the tenant couldn't even afford to pay their rent or pay for the repairs to get the property ready for move-out, how are they going to afford a lawyer or court costs? Just calmly tell the tenant that you will be more than happy to speak with their attorney, because you know that any attorney will see the facts and realize that you have complied with the law and lease. That will almost certainly be the end of it.

In that incredibly rare occasion when a tenant actually does file a lawsuit to try to recover their deposit that they are not entitled to, you can either defend yourself in court or hire an attorney. We would recommend hiring an attorney, but there is no requirement to do so in most jurisdictions.

Obviously, the best way to avoid these problems is to hire a professional property manager, like us. When these problems come up, we take care of them so you don't have to, and we have a team of attorneys to deal with frivolous litigation. Give us a call to talk to us about how we can help you so that you don't have to worry about these tenant problems.

Doing repairs yourself?

Todd Ortscheid - Saturday, April 5, 2014

On occasion we get a new client who is dead set on doing his own property repairs, or having his own vendors take care of them. We certainly have no problem with this, because we generally don't make any money on property repairs, but there are some pitfalls that owners should be aware of if you decide to go this route.

First, when you're dealing with renters, you need to worry about liability. While most tenants are not looking to make a quick buck off of a lawsuit, there are always scammers out there. A scammer can come up with all sorts of claims, from claims that a vendor left a door unlocked and property was stolen, to claims that a repair was done in a shoddy fashion and the tenant suffered injury as a result. When you are doing the repair yourself, you and your insurance will have to deal with this sort of litigation if it comes up. You could also have a fly-by-night vendor that you're using to save a few dollars, and some of them can be scammers just like tenants, claiming that they slipped and hurt themselves while on your property, or claiming that the tenant's dog bit them and wanting the homeowner to pay for it, etc. When dealing with a rental property, liability is always something to be thinking about.

When you have us handling the repairs, you don't need to worry about this. First, we use licensed and insured vendors, and we make them keep a copy of their liability insurance policy on file with us so we can verify their coverage. Second, we have our own general liability insurance. And finally, scammers look for a point of least resistance. A large property management company is not an easy target for a scammer, because they know that our attorneys can easily deal with their litigation. When dealing with an individual owner, though, that seems like a pretty easy target to them.

You also should be concerned about quality of the work performed. Your rental property is either an ongoing investment, in which case you want it in the best possible condition so as to appreciate in value as quickly as possible, or it's a home that you are only renting temporarily while you wait to return, in which case you want it in the best possible condition for you when you move back in. Either way, you don't want shoddy work done on your home or your investment. We spend tens of thousands of dollars a month on repairs because of the large number of portfolios that we manage, so we know the vendors who do good work. We can make sure that your property is in good hands, while you might be taking a shot in the dark.

And finally (and perhaps most importantly for some), price is an important consideration. Because of the bulk amount of work that we provide to various vendors, we are able to get the best possible pricing on labor. One example that we frequently provide is a hot water heater, which is one of the highest priced repairs that owners frequently deal with. If you were to hire a reputable company to replace a hot water heater for you, you would likely be spending between $1,200-1,500. By contrast, we can usually get it done for you for well under $1,000, including our commission. Another example would be an air conditioning system. Along with roof or foundation repairs, this is about as expensive as repairs get outside of natural disasters. We've seen HVAC contractors try to charge owners as much as $5,000 to install a new air conditioning system. This is highway robbery compared to what we can usually get for you. We can get even a brand new heat pump system installed for a little more than half that price. Long story short, it is highly unlikely that you'll be able to find a reputable vendor to do the work for a lower price than we can get you. Sure, you may be able to find some guy on Craigslist who will do it for less, but he won't be insured or licensed, and you probably don't want him touching your investment.

Again, we are always more than happy to let our clients handle repairs in any way that they choose. We don't lock anyone into using our vendors. But we think you'll be far better off allowing us to handle them for you.

GTL Real Estate
120 Village Circle
Senoia, 30276

(678) 648-1244

Office Hours: 8am - 5pm

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