July 18th, 2013 Meeting Minutes

Our meetings was called to order at 7:00pm.
We had 14 members in attendance.

 Cheryl Blair from Patton Insurance

We had asked Cheryl to bring us information about Damage being done to vacant properties. Is it covered by Insurance or not. What she explained to us is that Erie Insurance says that if a property is leased but unoccupied, tenant is gone for a length of time it is covered but if a property is vacant more than 60 days it s not. This is something we as Owners and Managers need to be aware of. You need to check with your Insurance Company to find out if this is the same for your properties.

Cheryl has been in Insurance for 35 years. She is past president of the RPA and has held other offices in the years she has been a member.

Tracey McCaughey spoke to us about a three day seminar she went to in Tenn sponsored by Mr. Landlord. She learned a lot and was willing to share some of the information with us.

We received a letter from IVY TECH about our scholarship program. A $500 scholarship was given to Christopher Rubio in the spring.. Cory Millikan also received a $500 scholarship in the summer.

Next month the speaker will be John Spafford from National Tenant Network. We have discovered that this is a perfect way for us to do Credit checks and Back ground checks on potential tenants. He will be there to explain and answer questions. 

Meeting was adjourned at 8:30.

Landlord Sued Over Paranormal Activity

Posted on 23. Apr, 2012 by Bryan Ives in News

In what must be one of the more bizarre lawsuits filed, a New Jersey couple is suing their landlord for their $2,250 deposit, claiming the home is haunted. Michelle Callan and Josue Chinchilla claim they were victim to a variety paranormal activity in the Toms River Home, including clothes flying out of their closet, flickering lights, menacing voices and moving bed sheets.
Chinchilla told ABC News that he once had an invisible hand on his shoulder, and even was hospitalized for panic attacks due to the paranormal experiences. The couple and her two children left the rental back in March, claiming their lives would be in “mortal danger” should they return.
Their landlord wasn’t born yesterday, and is countersuing the couple, claiming the suit is an attempt to break their yearlong lease and avoid the $1,500 monthly rent. “Frankly, there is something else going on,” Lopez’s lawyer David told the Asbury Park Press. “She is a single mom, she has this fiancé living with her. I think she is in over her head and she can’t afford the rent.”
According to Callan, it wouldn’t make sense to flee one week after moving in with the rent paid for the month if there wasn’t some validity to their story. Even if Lopez knew the place had a history of similar reports, and rented it out to the couple, he still would not be liable. The majority of U.S. states do not have renter/seller disclosure laws that apply to non-material facts.

Bedbug Lawsuit

Maryland woman awarded $800k after suing landlord over bedbug infestation that caused her to lose 'practically everything'

• $650,000 of the $800,000 was awarded as punitive damages
• Housing attorneys expect to see a spike in bedbug lawsuits

By Daily Mail Reporter
A Maryland landlord was ordered to pay a former tenant $800,000 after the tenant filed a lawsuit claiming the landlord failed to address a bedbug infestation that caused her to lose 'practically everything.'
The ruling is one of the largest - if not the largest - amounts awarded in this sort of lawsuit, according to housing law experts.
According to the lawsuit, plaintiff Faika Shaaban, 69, suffered hundreds of bites and lesions as a result of the infestation, which she claims the landlord knew about in the summer of 2011, prior to Shaaban's moving into the apartment. 

Gross: bedbugs are parasites that feed on blood - and they're in every major city in America

Shaaban claims the landlord, Cornelius J. Barrett and West Street Partnership - which owns the property - ignored complaints about the bedbugs from other tenants before she moved in in September of 2011.
Shaaban ultimately was evicted from the apartment, at which point her things were put outside on the curb and were eventually stolen, despite a sign she'd left with her things asking that people not take them.

'She lost practically everything due to this,' her attorney, Daniel Whitney, told the Baltimore Sun.
Of the $800,000 awarded to Shaaban, the majority - $650,000 - was awarded as punitive damages, which are designed to monetarily deter a defendant in a civil case from engaging in similar behavior in the future.

Housing lawyers anticipate a spike in lawsuits against landlords over bedbug infestations

Whitney went on tell the paper that the large amount awarded to Shaaban indicates that juries are sympathetic to tenants in what is becoming a new trend of bedbug lawsuits being filed against landlords; Whitney currently has 75 clients who have filed lawsuits against their landlords over bedbug infestations.
'You are going to see a rapid growth of bedbug claims over the next decade. There are enough lawyers who are getting trained so that people will be able to find lawyers, so that people will find a way to get relief,' Alabama-based attorney Tom Campbell told the paper.
Barrett and West Street Partnership did not respond to the lawsuit, and the property has since gone into foreclosure.
Whitney says the ruling was the jury's 'opportunity to send a message to the community, to landlords, that you must abate it.'

Forclosure as Rental

 I put the other article on first then I found this one. I guess Bank America has been trying to do something like this for a while. This article is dated 12/13/2011.

 Bank of America looking into a Foreclosure Rental Program

Posted on 13. Dec, 2011 by Bryan Ives in News

A new rental program where a home is rented back to the borrower after foreclosure has caught the interest of Bank of America. “We are talking with investors that would come in and buy these houses and would lease them back to who would now be the new tenant” says Ron Surzeneggar, leader of the bank’s legacy asset servicing division.
BofA put together a division back in February specifically designed to manage the servicing for delinquent mortgages, loans no longer being written, and to work through outstanding representation and warranty claims. They have more than 35,000 employees analyzing 1.1 million loans that are 60 days delinquent or worse. The Federal Housing Finance Agency is also working with Fannie Mae and Freddie Mac in developing an REO rental program. The agency received more than 4,000 ideas on how to create and implement a plan.
According to Sturzeneggar, the basic idea within some of the programs they are looking into involves catching someone before the REO process and presenting them with a deed-for-lease. “We’re still going to sell the property. You will no longer be the owner. But you can be a tenant now in that same property and save you from moving on,” says Sturzeneggar. He also stresses the point that the bank, given reasonable bids, would still sell the REO as before but given the tremendous amount inventory in some areas the properties could sit for years.

Maybe the Foreclosures Around Your Properties Could Become Rentals

Bank of America Announces Rental Program

Posted on 29. Mar, 2012 by Bryan Ives in News

Selected homeowners facing foreclosure will now have the option to remain in their homes as renters, announced Bank of America. The “Mortgage to Lease” program will include around 1000 homeowners with BofA mortgages in Arizona, Nevada and New York reports CNNMoney. The bank may broaden its reach to a larger group in foreclosure depending on the performance of this initial pilot program.
According CNNMoney, the selected homeowners will be over 60 days delinquent on their home loans, have an income high enough to pay rent, and will not have any other liens on the property. The title of the properties of those selected will be transferred to the bank and any outstanding mortgage debt will be cleared. The homeowner will then have the opportunity to lease their home up to three years at or below the current rental rate. Bank of America will own the properties in the beginning stages of the pilot program, eventually transferring ownership to investors.
“Our priority in designing a solution that helps our customer,” said Ron Sturzenegger, an executive at Bank of America. “If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market.”
Read More: http://money.cnn.com/2012/03/23/real_estate/bofa-mortgages-foreclosures/

Item from Property Manager's Newsletter

Property Investing – Go For The Cash Flow, Not Location, Location, Location

Posted: 15 Jul 2013 03:41 PM PDT

When discussing real estate investments, we often hear people say the three most important words in real estate are location, location, location.  And while “3L” properties may be some of the finest looking and most prestigious properties to own, the reality is that they are generally very poor investment choices. The reason is that the investment returns on these location properties are typically very low; and one should strive for better investment returns to compensate for the risk. The primary reason for those low returns is that A+ location properties are usually bid up to prices that are very high for the rental income and cash flows they can generate.
So where are the better cash flow properties that investors should pursue? It’s really the moderately priced, non-descript, boring location properties – whether apartments, single units, or commercial properties – that typically generate the higher cash flows and investment returns. And, higher returns, for similar risk, should be an investor’s primary goal. This is because cash flow pays the bills and excess cash flow accumulates in one’s bank account.
Let’s just think through a few numbers herein.
Moderately Priced Property – If I find an average non-descript apartment property in Southern California that sells at a realistic 6% capitalization rate (Cap Rate); that means on a $1,000,000 investment I would earn $60,000 per year (if no mortgage) and a return of 6.0% on my investment. That’s a really fair deal, and with that money I can pay the bills, put some money in reserves, and diversify the extra cash into other investments.
Fancy 3L Property – A prize property, so beach area properties, fancy areas of town, the 3L properties, are going to have very low real Cap Rates. Maybe 2.5% to 3.0%. That means on my same $1,000,000 investment, I only get $25,000 to $30,000 per year in cash flow – just half the cash flow of a moderately priced property! That may be enough to pay the bills and put away some reserves, but it’s significantly less than I’d have from a non-prize property.
Now you may think that prize properties appreciate more in value over time, but there just isn’t any long term proof that it is true. And even if it is true, that doesn’t mean it will be the same way into the future. However, the cash flows are clearly different and over long periods of time the investor collecting all that extra cash flow is virtually guaranteed to earn much more wealth on their real estate investment(s).
If you agree with the above information – and please review property listings and do some research for yourself – you might wonder why an individual would buy a very poor cash flow investment property?
There are many reasons: the buyer might not even know how bad a deal it is because they are simply buying the property in hopes that it will go up in value; without evening considering the cash flows. Also, most real estate investors have no idea how cash flows can differ based on a property’s location so it doesn’t even enter one’s mind to consider this issue. And, they may just be buying a property so they can brag about owning a prize, the “I own the nicest property in the land” and the fancy car, big house, etc. Finally, sometimes people are investing other people’s money and earning a fee on that investment; so they’re more concerned about placing investment dollars than making a smart investment.
There really are many reasons why an investor would make less than optimal decisions when purchasing property. And that is to their own financial detriment, or possibly to their investor’s detriment. But you can do better!
My guess is that if you understand the above and do your research, you’ll conclude to similar findings that those prize properties are just not the best of investments.
So to increase your affluence, find the cash flow properties that pay you more cash flow! They’re usually in the boring location, location, locations and they’ll probably provide the most long term wealth building into your future.
Leonard Baron is America’s Real Estate Professor – his unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate buyers how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com.

Craig's List

I was on the phone today with one of our Members who asked if we used Craig's list. I have in the past but I now have an account and it is easier to make changes or renew items. We are on there now. I will go back in every few days and renew our ad. If you have feelings about this please let me know. If not I am going to keep us on there. Another free way to advertise. I Love Free!  Debby

Another Suggestion from NTN

Screening tips......
After a while in the business, showing properties to many applicants, you tend to hear some of the same questions and statements again and again. The screening process is alive from the moment you first speak with your new applicants. Keep your eyes and ears open for clues on your applicants intentions. 

"You won't need a security deposit with us. We'll take good care of your home."

"I'm an attorney and more than qualified to rent your house. By the way, I found 3 illegal questions on your rental application."

Don't forget John from NTN (Nationals Tenant Network) will be with us on September 19th. You will have an opportunity to join and he will waive the $35 fee to join. Bring your questions.

Have a safe 4th of July.

         God Bless America!

Next Meeting will be July 18th

I received a message from Mark Dunn about a property he has been helping the out of state owners get ready to rent. Mark went over to the house and found that it had been broken into and vandalized. He reported this to the police and to the Owners. They contacted their insurance company and found that the property was not covered. I feel that we need to get more information on this. Mark has an Insurance agent with that company coming to speak to us and I felt that we have an Insurance professional that belongs to our Association and is also passed President. Cheryl Blair will also be our speaker. It might be a good idea if you check with your personal insurance agent and see what they have to say on this subject.

We also have a young woman who is wanting to get into Investment Properties. I have met with her and she also came to the meeting while I was on vacation. She met Jane Harman and was told about a Landlords conference and she went. She is so fired up that she feels she has things that she learned that might help us. She has asked if she can come and speak to us. Tracey will also be there on the 18th to give some information. We have tried to get some younger people interested in Investment Properties and we have had a few so maybe this is another start. I am interested in what she has to teach us.

Debby Gilpin, Pres.