Should you sub-meter your Multifamily Columbus Units for Water/Sewer Use?

RL Property Management Group has managed several hundred duplex and multifamily properties in and around Columbus, OH, and have tried every different way to bill for water/sewage. We have included it in rent as a flat fee, split the city bill evenly between units, and sub-metered usage by a third-party sub-metering company.

Our recommendation is sub-metering, for the following reasons:

  • You will get monthly usage reads instead of quarterly (the city of Columbus and most surrounding suburbs standard billing/read cycle), so any leaks or other abnormal usage can be addressed faster (this one benefit alone could save you thousands on a water bill). Even when vacant you'll be able to see what's going on with water usage. Lifesaver in winter especially.

  • Because it's more fair for the tenants (they are billed for their exact usage), they are more likely to renew their lease and/or just behave better. I'm also not sure how a judge would feel about billing tenants 50/50 if you can't prove how much each side used.

  • It's essentially free for landlords (at least with Guardian) once it's set up, because the cost of the service is included in the tenant's monthly bill. This service fee is nominal (a small percentage of the billing amount).

  • Using the quarterly city water/sewer bill, it's an issue at move-in and move-out to prorate the tenants usage since the tenancy won't line up with the billing periods. With submetering, you can provide readings at move-in and move-out and thus bill the tenants precisely for their usage.

Many duplexes and multifamily properties in Columbus already have either submeters for both sides, or a "master-deduct" system where there is 1 submeter for 1 side and they subtract that usage from the main city meter to determine the other side (not ideal though, see above for the reasons). Rarely (very rarely) you will actually find a duplex that has 2 city meters. If you buy a duplex, take a careful look and you may find an old submeter that is hooked up and either inoperable or simply not in use. Get that up and running; you'll be happy you did.

If you are looking for a property management team that has several decades of experience dealing with nothing but property management including the issues described above, do not hesitate to reach out to RL Property Management Group. Contact Us.

RL Property Management Group, the only property management company in Columbus started and run by engineers. Our clients enjoy a premium property management experience without paying a premium price. RL Property Management is designed to provide our clients reliability and performance.

How to Pick a Property Management Company? - Step 2: Evaluate the marketplace

In the video below, Peter with RL Property Management covers step 2 of 5 that you can take to select a property manager for your property.

There is a serious need for more information on how property management companies work and what you should be looking for and asking about when interviewing them. We outline 5 steps we recommend in this video and go into depth here on Step #2:

Step 1: Determine your needs. (Video #1)

Step 2: Evaluate the marketplace. (Video #2)

Step 3: Research the top 10 and narrow down. (Future Video)

Step 4: Call 5 companies. (Future Video)

Step 5: Meet with 1 or 2. (Future Video)

The goal of this video is to narrow your search to companies that present a clear, active local presence. Peter will examine how to identify what qualities are important and help choose the property management company that is geographically and financially the best fit for you.

  • Create a list of all the professional property management companies you can find that appear to be active. Look for active websites, social media pages, blogs. Discard anyone who is part-time or does not appear to be primarily focused on property management. PM is an intense business that requires focus to execute well and should dominate most of their website. Here are some ideas for finding options:

  • Who is advertising on Google?

  • Search Biggerpockets

  • Check NARPM.org

  • Ask all the Realtors you know for referrals

  • Ask anyone you know who owns rental property

  • Ask your real estate lawyer, CPA, banker

  • Start becoming familiar with the typical jargon and pricing in your area. How much are leasing, letting, and placement fees? Who gets tenant late fees? How much are evictions?

  • Research your state’s requirements for property management. Does it require a license? Does it require special trust accounting? Is there a way to look up companies to find out if they are registered or active?

  • You can get a feel for how large a company is by the number of active rental listing they have on their website. More listings typically means a larger company. Do you want to work with a large company?

  • Narrow your list to the 10 that work best for your unique situation, which warrant further research that we will discuss in the next step.

Stay tuned for future videos covering steps 3 through 5!

For more help on choosing a property manager, see our previous blog post on “What to ask a Prospective Property Management Company”.

If you are looking for a property management team that has several decades of experience dealing with nothing but property management, do not hesitate to reach out to RL Property Management Group. Contact Us.

RL Property Management Group, the only property management company in Columbus started and run by engineers. Our clients enjoy a premium property management experience without paying a premium price. RL Property Management is designed to provide our clients reliability and performance.

Cost of a Property Manager in Central Ohio?

Base Monthly Management Fee

The price range you will find in Columbus when reviewing property managers management fee pricing is anywhere from $45/mo flat-rate to nearly $250/mo. High-rent property (if you hire a percentage-of-rent priced manager) will push you towards that $250/mo or more mark. Some managers charge a percentage of rent and other managers charge a flat, per month management fee.

Total Cost of Management (Fees and Other Charges)

Be sure to calculate the total cost of management which includes setup fees, leasing fees, leasing renewal fees, markups on maintenance, marketing fee, technology fee, etc. We sometimes hear that these fees are "hidden". All the managers we know of in Columbus do disclose them in multiple ways including on the property management agreement so a careful review of the documents received is warranted.

Cost is Not That Important

The cost of management is probably the least important part of your hiring considerations. A single decision by a property management company (on something like leasing or maintenance) can either cost you tens of thousands or save you the same. We wouldn't recommend fixating on trying to save $20 or $30 dollars a month. Instead, focus on the managers experience, their clearly defined process/systems, and their reputation.

Are they a good fit for YOU?

You'll want to make sure they are a good fit for your needs and expectations.

Assistant Type Managers - These property managers are very flexible, will do pretty much whatever you ask, call you all the time with updates, etc. They are more like your assistant. Some owners prefer this approach either because they just became landlords and are not comfortable handing over all decisions or because they prefer to be involved with the management to some degree.

Systems Defined Managers - These property managers take a systematic approach and make owning the property a hands-off experience for the owner. They take the lead and treat the property as if it was their own investment. You will rarely hear from them because they are busy managing your property and making decisions on your behalf. This is great if you don't want to worry about what's going on and want someone else to handle everything. This option is probably best for an owner who is comfortable leaving large and expensive decisions to professionals. A manager may not always do things exactly like the owner would have and you would have to be willing to accept this.

Both approaches are needed in the market and usually you (as the owner) will prefer one approach over another, so try to find out which one the companies you are looking at subscribe to.

For more help on choosing a property manager, see our previous blog post on “How to Pick a Property Manager”.

If you are looking for a property management team that has several decades of experience dealing with issues like these, do not hesitate to reach out to RL Property Management Group. Contact us here.

RL Property Management Group, the only property management company in Columbus started and run by engineers. Our clients enjoy a premium property management experience without paying a premium price. RL Property Management is designed to provide our clients reliability and performance.

Maximize Rental Income By Handling Lease Renewals Correctly

It’s no surprise that residents want low rents and property owners would prefer higher rents. At RL, we strive to find the sweet spot. Listing your property at an appropriate market rent to attract qualified, good tenants is our priority upon leasing. See our video for more information on how we determine the listing price. What happens after a tenant has lived at the property for a year or more and you want to raise the rent?

lease-agreement.jpg

There are a few ways to approach a rent increase that will increase the chance of success:

  1. Give plenty of notice (written) of the rent increase to the residents.

  2. Provide justification for the rent increase.

  3. Share details about the market rate in the area of the type of property they are renting

  4. Provide a great experience for the resident over the past year of living there:

    • Polite and professional communication

    • Clean and safe property

    • Responding promptly to maintenance requests and completing them if they are reasonable

  5. Ask for a modest increase, in the form of a percentage (typically 2 to 5%)

At RL, upon lease signing, we offer an “Automatic Renewal Increase.” The lease states:

This lease shall automatically renew for an additional 12 months, unless LESSOR or LESSEE has provided thirty days written notice indicating otherwise. Please note that this renewal applies jointly to all LESSEE’s herein. At each renewal, the monthly rent shall automatically increase by 2.5%. If LESSEE provides written notice at least 30 days in advance and chooses to not renew for another year and revert to month-to-month status, rent shall increase by 5.0%. This automatic renewal shall occur a maximum of 2 times, or until an automatic renewal would generate a term of over 3 years. At such time, automatic renewals and increases will cease, and the tenancy term shall revert to month-to-month status. At least thirty days prior to planned move-out date, written notice to vacate must be received by LESSOR to end month-to-month tenancy.

So following our guidelines above, we are giving plenty of notice and offering a modest increase. In our experience, presenting a renewal rate in numeric form (eg: “Your base rent for this lease is $900. A 2.5% increase is $22.50 so for the second year there will be a base rent of $922.50”) right up front when they sign the initial lease is fair and transparent. Everyone is on the same page from day 1! We also remind the resident in writing approximately two months prior to the end of the initial lease term that the Automatic Renewal Increase is coming up. At this time, occasionally a resident will ask for justification or information on market rate. We’re happy to provide and the numbers will confirm that a 2.5% increase is reasonable in the Columbus market.

You might be thinking, “But what if I already have a tenant in the property, and their rent is very under market rate? Am I stuck forever!?” This scenario is a little trickier, but our systems help us get the rent back on track. The key on the time frame here is whether or not the tenant is “month-to-month” or on a “current lease”.

Month-to-Month

Great news, we can pursue a rent increase! Our best practices show it is typically in the property owner’s best interest to wait a couple months after you hire us to manage the property to pursue the rent increase. The management transition can make some residents feel uneasy as they are experiencing some changes (where/how they pay the rent, learning how to submit maintenance requests, etc.) RL quickly establishes good faith with the tenants as we have friendly staff, timely responses and repairs, and can automate many of their interactions with us giving them peace of mind. After this management transition, usually about two to three months, we can send the residents written notice of a rent increase. State law requires it be a “30 Day Notice” and we can offer our updated lease terms, as well. Our standard lease is clear and easy to read so tenants can see the value in their experience with RL thus far and the updated, concise contract reinforces this transparency. Our experience shows that a long term month-to-month resident is inclined to sign a one-year lease with a modest increase for the security that it offers.

Current Fixed Lease term (eg: one year)

The short version of this answer is that we are legally required to wait until the end of the current lease. The existing tenant’s lease must be honored, even if it was signed prior to you owning the property. Essentially, the lease “goes with” the property. Similar to the resident’s experience above, RL works diligently to build a relationship with the new tenant upon the management transition. Our extremely high lease renewal rate (71.4% in 2017) is evidence of the systems we have built over time to attract and retain high-quality tenants. We prefer to give more than 30-days notice of the upcoming renewal , giving the tenant plenty of time to prepare for the rent increase. Sometimes there are unauthorized persons (adults living at the unit that are not named on the lease) or pets (pet rent not being enforced, lease says no pets, etc.) also living at the property. We advise pursuing a rent increase or enforcing pet rent upon the renewal; not both. Enforcing too many increases at once such as base rent, pet rent, renter’s insurance, and late fees can result in turnover. Our dedicated team can provide insight on what to enforce first and foremost catered to your specific situation with an under-market rent.

-Molly Harris, Property Manager

How are Security Deposits Handled?

We receive many questions about security deposits. In the video below we answer a few:

  • Who holds the deposit while the resident occupies the unit?

    • RL Property Management holds these funds in our Property Management Trust account as required by Ohio law.

  • How much is the security deposit?

    • RL Property Management typically charges one month’s rent as a security deposit. If a rental application is on the fence of being approved for one reason or another, we may elect to charge two month’s rent as a security deposit.

  • Who keeps the security deposit at the end of occupancy?

    • Based on a detailed comparison of the move-in condition and the move-out condition we withhold funds from the deposit to cover the following:

      • Tenant Damages (Purposeful, Accidental)

      • Abnormal Wear and Tear

    • Tenants cannot be charged for all “repairs”. Normal “wear and tear” and functionality (door stops, rubbing doors, improper outlets, etc.) issues cannot be charged back to the resident.

    • We may also withhold funds from the deposit to cover unpaid rent, unpaid utility bills, unpaid fees, maintenance charges, etc.

  • What if the deposit is insufficient to cover damages?

    • RL Property Management sends a final “invoice” to past residents showing them any outstanding balance.

    • If unpaid, any outstanding balance would have to be collected through the legal system.

If you are looking for a team that has several decades of experience identifying and dealing with issues like these, do not hesitate to reach out to us.

RL Property Management Group, the only property management company in Columbus started and run by engineers. Our clients enjoy a premium property management experience without paying a premium price. RL Property Management is designed for reliability and performance.

What to Ask a Prospective Property Management Company

Property owners and property managers (PM) each have many expectations of the other. For this reason, both parties should ask many questions of the other before working together. A PM is going to take care of many time consuming tasks over the years saving the owner hundreds of hours of effort. We would recommend all owners research prospective PM’s using the following questions:

Updated: March 5, 2019

  1. Is your brokerage licensed with the State of Ohio?

  2. Does your brokerage provide services other than Property Management?

  3. How many units do you manage?

  4. Are your services an all-or-nothing approach or more of an a la carte approach?

  5. In what ways could an owner be involved with the management of the property?

  6. How often will the property be visited by your staff?

  7. What will be checked at property visits?

  8. What geographic area is your brokerage experienced in managing?

  9. Where are prospective tenants looking for rentals and do you advertise there?

  10. When they arise, how are maintenance needs handled?

  11. When they arise, how are capital spending needs (long lived improvements) handled?

  12. What is your process for handling lease violations other than non-payment of rent?

  13. When will I, the owner be contacted?

  14. Are your prospective tenant screening criteria the same across the board?

  15. How many weeks of vacancy should I expect between tenants?

  16. Can you provide me some examples of common repairs and their associated costs?

  17. When was the last time your lease template was updated in a major way?

  18. What kind of process refinement to better manage my property is taking place at your company?

  19. Can I handle maintenance repairs while my units are occupied?

  20. Do you support “Home Warranties” and if not why?

  21. How do you minimize the chance of a bad outcome with a tenant (unpaid rent, lease violations, legal trouble, general strife)?

  22. What “after hours” maintenance work could actually happen and who will the tenant be talking to after-hours?

  23. Do you care how long I own the property?

  24. My property is part of an association, who will deal with association issues?

  25. What steps are taken to “renew” the tenants lease?

  26. How do prospective tenants schedule showings at my units with your company?

  27. Who determines what work needs done to the unit between tenants?

  28. What is your occupancy rate now and on average?

  29. Do I have access 24/7 to all invoices for expenses at my property?

  30. Why might my unit not lease quickly? If leasing is slow, what are we going to do?

  31. What percentage of your tenants receive a 3-day notice?

  32. What is explicitly excluded from your services?

  33. Other than your 2-3 main fees, what other expenses might you charge me?

  34. As an owner, how often will I have to send you money?

  35. How do you ensure carbon monoxide and smoke detectors are in place and working?

  36. What is your pet policy?

  37. How will utility transfers and billing be handled while the unit is vacant?

  38. How do you check for lease violations and which lease violations do you check for?

  39. How do you ensure the furnace filter gets replaced?

If you are looking for residential property management services in Franklin county Ohio, please reach out to us. We’d love to chat and see if our services (which are designed for reliability and performance) are a good fit for your needs.

RL Property Management Group, the only property management company in Columbus started and run by engineers. Our clients enjoy a premium property management experience without paying a premium price. RL Property Management is designed for reliability and performance.

Investment Property Red Flags - What to Look For

In this video the RL team walks a rental property in Columbus, Ohio to identify some issues you might consider with a rental property you currently own or are looking to purchase. Each of these issues, although seemingly minor at quick glance, can result in substantial costs for the investor.

In this video we identify several areas for consideration including:

  • Carpet - Prospective residents are going to notice and be turned off by:

    • Worn carpet

    • Unsightly carpet

    • Stained carpet

    • Odors from the carpet

  • Windows - These can present many issues for the investor:

    • Quality and function of the windows

    • Tenants do look for more modern, more energy efficient windows

    • Do they open/close/lock easily and properly. There are many components that can go bad on a window

    • Are all Screens installed - Housing code typically requires them

  • Doors - A common maintenance request and issue:

    • Do they open/close/latch properly

    • No Rubbing or dragging

  • Neighbor problems:

    • Unsightly adjacent properties both next door and on the street will present issues with leasing

  • Construction short-cuts:

    • A shaved down door that was not painted afterwards. What other shortcuts exist in the property?

  • Ceilings:

    • Evidence of roach waste

    • Previous leaks or other irregularities. Prospective residents will notice and you should address before they do

  • Bathroom:

    • Dated flooring, vanity , toilet, medicine cabinet, light fixtures

    • All fixtures including sinks and toilets working,

    • Plumbing looks OK, shower stall loose head piping, valve piping secure, tub spout secure and divertor working

  • Kitchen:

    • All knobs and pulls tight, cabinet shelves and hinges in order

    • Cleanliness, grease on cabinet doors and drawer fronts

    • Range functionality, all parts present

    • Refrigerator functionality, all parts present

    • Sink, sprayer and dishwasher functionality

    • Plumbing in order

    • Wiring and GFCI outlets proper

    • Appropriate finishes (no carpet on floor)

  • Main living spaces:

    • Appealing layout

    • Fireplace brick troubles (expensive!)

    • Non-durable but inexpensive laminate flooring

  • Basement:

    • Air sealing of windows, installing glass block windows for security

    • Breaker panels, avoid or replace push-o-matic and pacific breaker panels

    • Water intrusion, sometimes challenging and expensive to fix (A common reason to “dump” or sell a rental property)

    • Do not provide washer/dryers to residents

    • Check that hookups for washer/dryers are working and properly set-up

    • Electrical all terminated and installed correctly throughout

    • Hot water tank (HWT) - Just replace if over 12 years old, it’s not worth the risk

    • Furnaces - easy filter changes should be possible for best results

    • Main water meter - good working main water shut-off valve, proper support for piping and meter, water service line age and freezing and clogging and flow capacity

    • Main drain piping stack and sewer lines - Problems with clay pipe, galvanized piping, have main sewer line camera-ed and cleaned.

If you are looking for a team that has several decades of experience identifying and dealing with issues like these, do not hesitate to reach out to us.

RL Property Management Group, the only property management company in Columbus started and run by engineers. Our clients enjoy a premium property management experience without paying a premium price. RL Property Management is designed for reliability and performance.