Rentec Direct - Property Management Software

I read the following the other day..

In response to complaints from tenants that more and more landlords are requiring rental payments be made only online, California lawmakers are considering a bill that may dictate how landlords collect rent.

“A growing number of landlords are no longer accepting checks or money orders from tenants,” says Sen Ted Lieu.  “Instead, they have begun to change rental agreements to require tenants – including the elderly, disabled and poor – to pay their rent online.”

The issue came to light late in 2011 when hundreds of tenants in apartment complexes in Los Angeles objected when the property-management group notified residents of a 300-unit complex that the only way they could soon pay rent was online.

Current law does not specify how rent is to be paid. The new bill revises the law to prohibit landlords from requiring online only rental payments.

So while I'm in absolute favor of adding payment options to tenants, taking payment options away is a big mistake.  Here's some ideas on how to provide online payments successfully:

• Add it an an option, not a requirement.
• Add both online check as well as online credit card (with a fee).  Some tenants would rather charge rent to a credit card for a fee than risk being delinquent.
• Add an incentive for online or automatic payments, such as a $10/mo discount.
• Provide a method a non computer savvy person can take advantage of it, such as an authorization form which the property manager processes online.

Being a landlord is not just collecting rent and taking care of repairs, it is a customer service position.  Would a company dare think that removing payment options from their customers is going to increase customer satisfaction?  Not likely, and nor should a property manager.

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Nathan is a member of Rentec Direct who provides property management software, tenant ach payment processing, and tenant screening for property managers and landlords nationwide.

The IRS recently did an audit of previous years tax returns and found out that landlords are cheating their taxes, whether they know it or not.  This audit was conducted because in August 2008, the Government Accountability Office stated that “at least 53 percent of individual taxpayers with rental real estate activity for Tax Year 2001 misreported their rental real estate activity, resulting in an estimated $12.4 billion of net misreported income.”

The Treasury Inspector General for Tax Administration issued a report in December 2010 recommending increased scrutiny of tax returns with rental real estate activity, estimating that the change could recover over $27 million in lost revenue over 5 years.

No matter how honest you are on your taxes, owning rental property is an audit trigger since these reports were issued.  Another area of high scrutiny by the IRS this year is landlords who are claiming to be a "real estate professional", which allows one to take the maximum passive activity losses.  This type of classification requires more than 50% of a landlord's working hours and 750 or more hours each year materially participating in real estate as developers, brokers, landlords or the like.  Look for the IRS to begin verifying these hours.

The federal government is starving, and they are looking for new income sources anywhere they can.  Increasing IRS audits has proven to be highly lucrative for the IRS in the past, and this year and future years it's extremely likely they will continue to expand the scope of what they are auditing.  If you do your taxes yourself and it doesn't appear to be crystal clear, I'd recommend consulting an experienced CPA.  If your CPA seems OK with "grey areas", be very cautious.  Don't risk it, audits are expensive even if you've done everything right.

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Nathan is a member of Rentec Direct who provides property management software, tenant ach payment processing, and tenant screening for property managers and landlords nationwide.

California has passed a bill (SB 150) now disallows HOA's from changing the rules mid-game on a landlord by restricting rentals within the HOA.  This bill took effect January 1st.

An association which previously has no restrictions on rentals, that attempts to amend the HOA to then restrict the amount or percentage of rentals is now prohibited from doing so.  Such a change in bylaws will have no impact on existing owners unless the existing owners specifically provide their authorization.  The existing owner by default will get grandfathered into the pre-restriction rules.

It however does not protect the next owner of a home in the same association.  If a home is sold, the new HOA rules related to rentals will apply to the new owner and the previous owner must disclose the fact of the restrictions.

I have mixed feeling about this.  My first impression (as a Landlord) makes me think this is great!  If I bought a property in an association as an investment property, and later the association changed the rules which prevented me from renting my investment property that could be catestrophic to my cash flow.  On the other hand, I prefer smaller government and less government interference in my affairs.  An association is a mini-government in itself, and I generally trend towards wanting decisions to be at the smallest and most local form of government possible.  In this particular topic, I think property rights might trump my preference for local government though.

Thoughts?

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Nathan is a member of Rentec Direct who provides property management software, tenant ach payment processing, and tenant screening for property managers and landlords nationwide.

Was just reading this this morning.  Really makes me wonder if it's a Christmas "gift" to tenants during the Christmas season, or a political maneuver of some sort.  Has anyone experienced them doing this in the past?  Is Fannie going to join in too?

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Freddie Mac announced it has ordered all evictions involving foreclosed occupied single family and 2-4 unit properties that had Freddie Mac mortgages to be suspended from December 19, 2011 to January 2, 2012.

“If the property is occupied, our foreclosure attorneys will suspend the eviction to provide families a greater measure of certainty during the holidays,” said Tracy Mooney, Senior Vice President of Servicing and REO at Freddie Mac.

The suspension will apply only to eviction lockouts related to Freddie Mac-owned REO properties and will not affect other pre- or post-foreclosure processes.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

SOURCE Freddie Mac

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Nathan is a member of Rentec Direct who provides rental software, tenant ach payment processing, and tenant screening for property managers and landlords nationwide.

Starting a new property management venture?  There's numerous methods property managers calculate their fees, some more popular than others.  Working with thousands of property managers, I've accumulated the most popular with their upsides and downsides.  Pick your poison or maybe (if regulation allows) create your own.

#1 Flat Rate Fees - Regardless the rental amount being charged or collected, the management fee to handle the property is the same every month.

• Pro:  Easy for everyone to understand
• Pro:  Any software or manual method of accounting can do this easily
• Pro:  Easy to budget for the manager and owner
• Con: May not account for time the property manager spends on non rent related tasks
• Con: Does not automatically re-calculate when/if rent increases or decreases

#2 Percentage of Rent Charged - Depending on the property manager and area, this ranges from 4-15% and often have a minimum and maximum amount specified.  Meaning, if the monthly rent charged is $1000, the management fee is $50 - $150.  This fee may vary based on the number of properties being managed, the number of units in each property, the location and condition of the property, and most importantly, what services are included in the fee.

• Pro:  Also easy for the property manager and owner to understand
• Pro:  The charge typically occurs on the 1st, which is the same day the rent is charged
• Pro:  Generally nets the property manager the most income
• Con: Not allowed in all states, check local guidelines
• Con: Does not account for time the property manager spends on non rent related tasks
• Con: Can cost the owner funds if part or all of a tenant's amount due becomes uncollectable

#3 Percentage of Payments Received - This method may appear similar to #2 at face value; however, differs in that the charge is calculated at the time when rent is received vs when the rent is charged.  Typically this makes little difference to either the property manager or the home owner unless some tenant rent becomes uncollectable.  At the property manager's option this can also include other income such as late fee income, or tenant responsible repair income.

• Pro:  Covers all potential time expenses for the property manager, including unforseen repairs, or poor tenants
• Pro:  Can include other income such as late fees, or repairs which otherwise are not included in #1 or #2
• Con: The most complicated to understand and budget for for both parties
• Con: The fees are generated throughout the month, so it's not one nice clean fee per month.

Perhaps most important when considering your free is to know the going rate for your locale.  Don't over or underprice yourself out of the market.  Check around and see what the other property managers in your area, and surrounding areas, are charging.

There are numerous other fees involved in property management including setup fees, vacancy fees, leasing fees, advertising fees, eviction fees, etc which are not covered above but all generally are in addition to the standard monthly fee discussed here.

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Nathan is a member of Rentec Direct who provides property management software, cc & ach payment processing, and tenant screening for property managers and landlords nationwide.

I know I'm not the only one out there that has a nagging feeling in their head when the beginning of the month rolls around.  I pro-rate my tenants so they are all due on the first, and typically give a 3 day grace.  There's the select few tenants that pay on the 1st.  That breed of tenants has mostly vanished.  The remainder tend to push that grace limit to it's maximum and come in on the 3rd or 4th of the month.  The whole time I'm worried if they will be in at all.  If the 5th rolls around and nobody is around, just the thought of notices and eviction sets me on fire because I know it's going to be a painful process no matter what and at the very least will strain the landlord-tenant relationship.

The scenarios may be:

1. The tenant just forgot to bring it by, or was out of town.
2. The check got lost in the mail (I've heard this more times than I think is really possible).
   
3. This just happened to me this month, once the mail reached my office it ended up in a different co-workers box, so while the rent arrived on the 4th, I didn't get it until the 7th.
4. Maybe the tenant really is looking to move.

In most cases it's just an accident that the rent didn't make it on time.  Most tenants want to stay and they just aren't prioritizing their bills well.  Even so if you've begun the eviction or notification process for non-payment it's creating a strain on your landlord/tenant relationship and it's costing you time and money.

There's a lot of companies out there that have similar practices to landlords in collecting a recurring fee for services.  The power company, the gas company, cable and satellite companies, and most municipal utilities such as garbage, water, and sewer.  What have all these companies discovered?  Yes, automated bank drafts (ACH) save them money, collection efforts, and often get them their funds faster!  Why haven't landlords jumped on this ship yet?  The answer:  some landlords have, most haven't however, but why is that?  My research tells me that the municipalities and big utility companies all have the means to go through the extensive process of getting it setup and automated with their banks whereas landlords do not.

I'm here to tell you that Landlords now do now have the means!  It's MUCH EASIER than setting up a bank account or merchant account, and the only prerequisites are a) You must own or manage property for rental purposes, and b) You must have a bank account.  If your a landlord reading this I'm absolutely certain you qualify.  The setup process is so simple now that any landlord could be accepting ACH tomorrow.

What does it cost?  I've seen processors charge from $0.50 (plus add'l monthly fee's and percents) up to $5.00 per transaction.  Rentec Direct charges a flat $2.00, and no percentage or monthly charges.

HUGE BENEFITS!  Aside from being able to sleep better knowing that the rent payments are going to happen automatically, one enormous benefit of doing automated ACH is longer term tenants.  Studies have shown that services that are paid automatically are less likely to be cancelled.  This is one of the very reasons the utility companies push ACH.  For a landlord this means less turnover.  How would you feel if your vacancy rate went from 30 days/year down to 10 days/year?  It's possible.  Another big benefit is your payment always gets priority.  Set the deduction day the day following the tenant's paycheck and generally banks process electronic payments (ACH) before paper checks.  You get your money before anyone else.

Sounds great, where do I signup?  I would suggest you do your research and pick a reputable company you can feel comfortable with handling your funds.  Go to Google and just type in tenant ach and see what you get.  There's a number of companies, including ours, that provide tenant ach services.

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The author is a founding member of Rentec Direct.  Rentec Direct provides property management software which includes ach for landlords and tenant screening.  While the above article may speak of products we offer or use screenshots from a product we offer, we encourage landlords to do their research and make up their own minds when selecting a new product.  That said, we of course welcome ActiveRain members with open arms.   

Wouldn't it be nice if your computer would be so kind as to give you this message "Your Computer Is About To Crash.  Backup Now!".  Unfortunatly it won't, and as a result many of us will be left with a busted computer and a loss of data.

It happens every minute of every day.  An unsuspecting PC or Mac user all of a sudden gets an inoperable computer, and all their data goes with it.  Why does this happen so often?  There are various reasons, but it usually boils down to the hard drive.  The hard drive is a bunch of platters stored in a small box inside the case of your computer.  These platters are always spinning at 7200RPM while your computer is active.  This spinning causes a lot of heat, and wear on the bearings of the device.  The useful lifespan of a hard drive is 3-5 years, with newer drives being closer to 3 because manufacturing methods continue to get cheaper.

So is your current computer older than 3 years?  If so, you have an imminent failure approaching. The good news is there is something you can do about it today.  Backup!  If you think your company or your IT administrator is doing it for you, think again!  Most backups are incomplete or done incorrectly.  Don't trust your data to someone else or you may end up re-doing every template, every email, every picture you've ever created yourself prior to today.  Backing up is really easy to do.  Here's a few methods:

1. Flash Drive - These keychain devices are sold everywhere in amounts up to 64GB.  Backing up to one of these drive which cost from $5-$50 could save you hundreds of hours of work in the future.
2. DVD / CD - Most computers nowdays come with DVD/CD writer drives.  These discs hold a finite amount of storage, but for many is enough to get a complete backup.  You can have many levels of backups becuase both CD-R and DVD-R dicss are just pennies apeice.
3. Networked Computer - Do you have a fileserver or other computer networked in your home/office?  You can use your own network to backup your files from your computer to another computer.  Be sure the other computer is trusted before doing this.
4. Tape - I'm somewhat suprised they are still selling these as the technology is so old.  You can buy a tape drive for your computer and backup to tape at any interval you choose.  This is great for permanent archival; however, probably my least favorite of the available options.
5. Online Backup - There are now tons of online backup solutions available.   They give you an application to download which will automatically, using your internet connection, copy the data you specify offsite for storage.  This is an excellent solution if you have a broadband internet connection and less than around 10GB of data to backup.  Dont' use this for music or movies.
6. Use Online Applications - One of the simplest ways to become more portable and become worry-free about backups is to use online applications instead of local ones.  Online apps such as Google Docs and Rentec Direct run via your web browser and are running on a powerful server in a data center somewhere.  They automatically do the backups and are responsible for the data.  The added benefit besides data security is you can access it from anywhere in the world at any time.

Whichever of these methods you choose, or if you create your own, my primary concern is that everyone backup!  Another very important and often overlooked component of backups is verifying if they work.  Sometimes, backups are not restorable and a backup does you no good if it can't be restored.  Follow these steps to make sure your backups are working for you.

1. Restore - Restore your backup periodically to make sure the files restored from it are everything your intending to backup and to ensure that the files are not corrupt.  Open a few documents to make sure they are what they seem.
2. Verify - Verify the backups are running automatically and completely.  A lot of us use Outlook for email and if Outlook is left open your backup program cannot back it up.  Your backup program needs to be smart enough to shut down Outlook prior to starting it's backup otherwise your email is not being backed up.
3. Security - Your backups are sensitive.  Make sure they are not available to any 3rd party that you don't want seeing that data.  Also, in a worst case scenario (fire, meteor, etc), make sure your backups are stored off-site.

I woke up this morning thinking about how important this topic is and decided to write this short article.  If it saves just a single person from losing their data and thereby saving hundreds, maybe thousands of hours of work in the future; then my time was well spent!

--- about the author ---

Rentec Direct provides property management software free to landlords and property managers and it includes automated online backups. Because of the importance of thorough screening for prospective tenants, we have integrated tenant screening directly into the software so in just a few clicks a complete and comprehensive background check including previous evictions can be done on any new tenants.

This comes as routine for many home owners and landlords, but I find when I ask various other landlords I know they often aren't taking all their deductions.  Usually in the form of depreciable improvements, or in wild cases, depreciation on the house itself!

There's a book out there I got off Amazon a while back called 'Every Landlord's Tax Deduction Guide'.  It has a lot of great ideas and is well worth it if your a landlord needing any assistance figuring out what is deductable, what is depreciable, and what might be illegal to decuct on your taxes.  Granted my version is from 2007 and I bet there is a newer one; however, most of the items are still very current.  Here's some examples to my fellow landlords to pay attention to.

Common Depreciations - Depreciable items are items which Uncle Sam doesn't let you take up front.  You get to take a tax break over the improvement's useful life which can be anywhere from 2-30 years.

1. Most investment property owners depreciate the value of the dwelling itself.  This is usually a very large depreciable deduction.  Using the 80/20 rule (80% dwelling, 20% land) is a common way to factor it, or using the local assessed values for percentages are another way.  The typical investor gets to depreciate the dwelling's cost over 27.5 years.

2. New Roof, Add-on, remodel, deck, garage, outbuilding.  All depreciable over 27.5 years.

3. Landscaping, plants, fences, sidewalks, driveways, or swimming pools.  Depreciable over 15 years.

4. Carpeting, vinyl and non-permanent flooring, drapes & blindes.  Depreciable over 7 years.

Common Deductions

1. Repairs - If you are repairing part of the dwelling, land, or an improvement (even if your already depreciation the improvement), repairs to these items are typically always deductable during the year they are done.

2. Operating Expenses - So long as the expense was ordinary and necessary it typically is deductable.  This might include: advertising, auto and travel, cleaning, maintenance, commissions, insurance, professional fees, management fees, and mortgage interest.  Keep receipts!

Trust me, aside the massive self-inflicted national debt, Uncle Sam has plenty of money and he doesn't need any handouts.  When you are managing your own properties, or managing for someone else, please keep all that you should and don't let Uncle Sam take anything more than they are due.  Every state has different rules, and tax law changes all the time.  Do consult with a tax professional to make sure these deductions apply to you.

Keeping track of all this is usually the problem most landlords face.  If you have a property management company handle your affairs, they probably provide you a report at then end of the year with most common deductions itemized.  It's still up to you to keep track of all improvements and depreciable items.  If you manage your own property, use a property management software package which has deducation and depreciation tracking support.

--- about the author ---

Rentec Direct provides property management software free to landlords and property managers and it includes full deducation and depreciation tracking and reporting. Because of the importance of thorough screening for prospective tenants, we have integrated tenant screening directly into the software so in just a few clicks a complete and comprehensive background check including previous evictions can be done on any new tenants.

Many of us have been eagerly anticipating Google Voice to open their doors for months. According to the Official Google Blog, invites are on their way this morning. Invitations are being sent out on a first come first serve platter similar to how gmail was handled years back.  Get in line here.

How is Google going to help us manage our phone contacts, and should we use it?

Voicemail Transcription - I'll start with my favorite anticipated feature.  Google's answer to Apple's visual voicemail.  They up the ante and transcribe your voicemails into text for you and provide them online, and forward them via email or SMS.  No longer is it required we login to our phones and punch in our secret code to listen to the voicemail only to jot the notes down on a notepad.  Google eliminates this step and I am really excited about this.  How well will it work?

Integration with existing phones - It will work with all of your existing phones.  Tell Google Voice about your office number, cell number, and home number.  It can then intelligently route calls or text messages based on your rules any contact to any or all of those numbers, read on..

Call Routing - We all have that client that calls us three times a day with pretty silly requests right?  We sometimes feel a bit guilty letting it ring until it hits voicemail?  No more!  Google voice can be programmed to forward any contact wherever you want.  Automatically route a specific contact to your assistant, direct to voicemail, or to a different phone.  When the kids call it can ring all phones at once, or cycle through all phones, or push them directly to voicemail.  New caller not in your address book, Google says they will take the callers name and announce them to you prior to you picking up the call (it's still ringing on their end), and give you the choice of what to do with them prior to picking up the call.

Record Calls - With a touch of a button you can start recording a call for playback later.  Highly useful when driving (wait, we don't talk on the phone when we're driving do we?) and don't want to also be taking notes.  Click the record button and access the call any time.

Google has short videos and demonstrations of all these features (and oogles more) at the Google Voice website.

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Second thoughts - Is it worth it?

Ads - Google provides so much for "free" including search, email, etc.  Phone service is just another one of their free items.  That's great, but they have to make their billions somehow.  There will be ads!  In typical google tradition, probably few at first, but count on lots of ads in the future.  I'll admit though, google has been pretty good at being fairly unobtrusive with ads, so this may not be a huge issue.

New Phone Number - Google Voice claims they will support LNP (porting your existing numbers) in the future; however, right now they don't.  This means a new phone number is in your future if you want to use Google Voice features.  It doesn't cost anything from Google; however, it means getting your new number to all your clients.

Lock In / Lock Out - Once Google has you, they have you.  Especially if you use one of their numbers.  Nobody has experienced this yet, but often moving away from a phone provider is far more difficult than moving to them.  There are laws which protect phone numbers you LNP into Google when they support that and that should allow you to move them off Google if you choose; however, there's no such stated requirement for numbers Google provides that I am aware of.  Additionally, if you do something that Google doesn't like they can, if they wish, immediately terminate the service causing an instant loss of the phone number.

Trust in Google - With Google now transcribing voicemails into text, and recording calls in their worldly connected data centers it opens up the possibility of that data being hacked or obtained by other sources.  What would happen if your entire contact list, your last years worth of voicemails and SMSs all became public?  While this is unlikely, as Google runs a pretty tight ship; it is a possibility, and you can be certain there are thousands of hackers attempting to gain access daily.  Will they ever succeed?

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What's the harm?

All said, I'm going to try it out as soon as I get my invite.  I'll take their freebie number and try it out with a few friends or family and see how it goes before passing final judgement.  All in all, I'm pretty excited.  Mostly about the transcribed voicemail.  If that works, it will save me and our office a lot of time.

p.s.  If anybody has received their invite yet, I want to hear about it.  Please comment.

--- about the author ---

Rentec Direct provides property management software free to landlords and property managers. Because of the importance of thorough screening for prospective tenants, we have integrated tenant screening directly into the software so in just a few clicks a complete and comprehensive background check including previous evictions can be done on any new tenants.

We've added some great reports, based on user feedback, to Rentec Direct. These new reports are available to Rentec users today, even within Rentec Basic which is abolutely free to landlords, property managers, and brokers!

• Account Summary - See all of your banking accounts in one spot with their total income, expenses, and balance.
• Property Summary - See all of your property accounts in one spot with their total income, expenses, and balance.
• General Ledger - Customizable general ledger report by property or account. Fully sortable by your own custom dates.
• Current Deposits - Quick report to show you deposits held per property.
• Lease Expiration - Quick report to show you which properties have leases and when those leases expire.
• Rent Roll - At a glance report of properties and tenants, their rent due, and current balance.
• Vacant Properties - Quick report to show you all vacant properties.

If you are not familiar with Rentec Direct, we have one of the most easy to use and robust property management software applications in the industry.  The application is web based which means, just like ActiveRain, it works from every type of computer, and works on any connected computer in the world.