From Forbes – Stakeholders and Costs to Consider (Whether We Like It or Not)

This article originally appeared in Forbes.

Investing in real estate is not exactly a private activity. Landlords operate in the public domain and are subject to community laws and standards. This blog post discusses a few of the stakeholders a real estate investor and their property manager needs to be prepared to work with. 

Local Code Enforcement

Most municipalities have a code enforcement division. The Code Enforcement Division of the City of Springfield is part of the building and zoning department. Code Enforcement ensures that the grass gets mowed, weeds and brush are removed and the trash gets picked up throughout the city. They do many other things including taking complaints from angry tenants and doing property inspections to follow up on any mandated repairs that may result from a tenant dispute. 

Trash And Lawn Care Responsibility

Our leases for single-family homes stipulate that the tenant is responsible for maintaining the yard and the trash pick-up. In a multi-unit building, the landlord is responsible for these items. Springfield is the only city of its size that I know of in America that does not provide trash service. In our city, each property owner must contract with one of three or four licensed private hauling firms for trash pickup. If a tenant gets behind on their bill the trash does not get picked up. 

Let Me Vent For A Moment

As you can imagine, this privatization of public services, which occurred over 20 years ago has resulted in all sorts of unintended consequences. For instance, all the trash haulers run identical routes all over town duplicating efforts and wasting resources. Second, it is not just tenants that sometimes don’t pay their trash bills. Owner occupants are not all perfect either. The result is abandoned trash in vacant lots and yards all over the town, but especially in the more depressed and lower income areas. Code Enforcement is responsible for making sure all of the abandoned trash is dealt with and that ultimate financial responsibility falls on the property owner.

If I Were King

Obviously, this situation could be vastly improved if all property owners were billed for trash pickup on their water bills. The city could still use private haulers but all would share the cost. In any case, our property managers have a positive and productive relationship with Code Enforcement. They know if there is an issue with one of our properties, we will take care of it. Consequently, if an issue arises, we generally get a courtesy call before a formal citation is issued. Again, the relationship here is paramount.

The Water Department

The local water department can be your best friend or a detriment to your business.  Water bills ‘run with the property.’ This means, like property taxes, they are the responsibility of the property owner.  While the lease may stipulate that the tenant is responsible for the water bill, if they don’t pay it the owner of record is responsible.  

Recovering damages involves billing back the tenant, or in an extreme situation, evicting them and recovering the costs from their security deposit. Practically, you want a relationship with someone at the department that will alert you if there is a problem and in the case of vacant properties, get the water turned on and off as necessary in a timely fashion. 

Gas and Electric Companies

We set up what are called landlord agreements with our local gas and electric companies. These are designed so that if a tenant moves out without telling us, or fails to pay their monthly bills and their service is cut off, the account reverts to us the property manager. This is critical in the winter time when the danger of pipes freezing and breaking when they thaw is a clear and present danger. A broken pipe can with water running can cause catastrophic property losses for an owner. 

The State or Local Health Department

You may also find yourself interacting with your county health department. Our county health department is responsible for ensuring well and septic systems are safe and maintained to code. If you have a home in the country, they can be a wealth of help and information should you have a water or septic system problem. Your local or state health department may also be responsible for investigating any reports of lead paint exposure by your tenants. Again, these entities offer a wealth of information to help you anticipate and prevent problems that can impact your profitability.

The Neighbors 

Being on good terms with the neighborhood is also important. Your neighbors can make or break your investment.  If you take care of your property and any problem tenants you may have promptly, generally you will be rewarded with good ‘press’ and your house will be looked after and protected.  Your pride of ownership will be rewarded.

The ROOST Landlord Advantage™

For more information about The ROOST Landlord Advantage™ property management system, visit us at www.ManageWithROOST.com

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