I don’t know what it is about trying to get appointments to see two, three and four-flats in Chicago, but it seems to be near impossible.
And when showing apartment buildings, there are even more people to coordinate with. Of course you remember that to coordinate showings that the listing Realtor shows up for, we need to accommodate the schedule of the Seller, the Listing Agent, the Buyer, and the Buyer’s Agent. Now – add the Tenants. And the Tenants are usually the LEAST cooperative of the bunch.
They don’t have an interest in the sale. They usually worry that the new seller is going to raise the rent, kick them out, or perhaps both. Invariably they’re still in bed. I’m amazed at the number of college grads with decent jobs still in bed at Noon on Saturday.
But we still can’t figure out what the problem is with Agents and their Apartment Building Listings. Trying to schedule six showings on Saturday, we’ve been told "no", we’ve been told "not at 1:30, but how about 3:30?", we’ve been told "not Saturday. How About Sunday?", or still the ever popular ~ Nothing. No call back. Silence.
For the guy who told us 3:30 rather than 1:30 because that’s when he’s showing the building, I hope he’s there showing to no one in particular.
Ironically, the same Agent’s tagline in his E-mail signature is "Striving to be the best Realtor in Chicago!"
Good luck, buddy!
Part 4 – Move-in Day.
Once the unit is prepped and ready for move-in, several things should occur before you hand over the keys.
If any forms are left to be signed, get them signed before you hand over the keys.
If any balance remains to be paid – get it now, before you waste time on any inspection. Once you hand over the keys, you sole recourse is eviction if any balance remains unpaid. Eviction is expensive.
Walk through the unit with the renter with camera and move-in inspection sheet in hand and note the condition of the unit. Have the renter fill out the inspection sheet in their own had writing and accept the condition of the unit. Put in writing anything you agree to fix and if you don’t want to fix something, put that in writing also. They don’t get the keys until you are both on the same sheet of music.
Take pictures of every room, every wall, every floor, every cabinet, every window, every door, everything. Media storage is cheap, take pictures of everything. You do this on the day of move-in because your camera will encode the picture with a date stamp. This could protect you down the road.
This sounds simple, but…verify the keys work – have the renter test them in front of you.
Once all paperwork is signed, all monies paid, the inspection is complete and acknowledged by signature of everyone, you can now hand over the keys. Now you should get out of there before you get roped into helping move boxes.
Sometimes the lease will say that it starts on the first but your tenants will want to move in a few days early if the unit is vacant to take advantage of a weekend. No problem, but they do have to pay prorated rent for the days they have possession. No pay, no move in early.
The renters now have assumed possession of the unit. Their rights, and your responsibilities, have just changed dramatically. That is why we made sure we took care of everything and got paid before handing over the keys.
Guide to articles
Taking an application and lease
Personally, when I take a lease application, I require all the paperwork, and all the money, paid up front.
There are several musts when someone rents your apartment:
1. They fill out a credit application – completely (no blanks).
2. They pay a credit check fee. Check with your credit reporting bureau to see what this fee is. Have the tenant pay the credit check fee in a separate check either to you or to your credit bureau depending on your arrangement. No, you will not take a credit report from someplace else. These are too easily faked.
3. They fill out the lease.
4. They pay the first month’s rent. This must be a separate check.
5. They pay the security deposit. This must be a separate check. In Chicago, the law requires it be a separate check.
6. You must give a receipt for every check you receive. Some receipt books have check boxes so one page serves as a receipt for all three. Some receipt books do not and you’ll have to write three separate receipts. In Chicago, the law requires that the security deposit receipt contains: 1) description of the dwelling unit (property address), 2) the amount received, 3) the date received, 4) the name of the person who received the deposit and, 5) the signature of the person who received the deposit. Big troubles to those who don’t follow this simple rule.
Some possible exceptions:
You might let the tenant pay their rent on the day they move in. Personally, I would not. I want their checks to have plenty of time to clear. If a tenant is scheduled to move into my apartment sooner than one week from application, then I require certified funds.
This should go without saying: do NOT fall for a Cragslist style scam whereby you receive a certified check in the mail, and the tenant tells you he made a mistake and that you should cash his check and return the overage by mail. You can kiss your bank account goodbye if this happens.
Other things to consider:
If your rental is a condo, does the building have move-in/move-out fees or deposits? Find out and make sure that the renter knows it is their cost to absorb. Get this info and inform them upfront at the application stage or it could cause some bad animosity later.
Get the appropriate lease for your unit type. You will want to look for one of these:
@ Standard Chicago Apartment Lease
@ Chicago Apartment Lease – Furnished
@ Condominium Lease – or a standard lease that contains language appropriate to condominiums
You can get the Standard Chicago Apartment Lease at Tanenbaum Hardware on Belmont. The others, we may have.
The Standard Chicago Apartment Lease is the easiest to use (but not appropriate for condominiums) because it covers all the legal stuff required in Chicago.
If you don’t use the Standard Chicago Apartment Lease, you must add a rider that contains the following information:
@ The Chicago Landlord Tenant Ordinance applies to the lease. Tenant acknowledges receiving a copy of the summary of the ordinance.
@ Tenant acknowledges receiving a copy of the rules and regulations of your building, or of the condominium building the unit is located within.
@ The interest rate paid on the security deposit.
@ Rent is due on the First of the month. It shall be considered late if not received on the first. Even though late fees cannot be collected until after the 5th.
@ The late fee: The monthly rent shall be automatically increased $10, plus 5% of the amount by which the monthly rent exceeds $500, as additional rent, if received by Lessor after the 5th of the month for which it is due.
@ Tenant acknowledges receiving a Lead Disclosure statement and the pamphlet “Protect your Family from Lead in your Home.”
@ Tenant acknowledges receiving a Heating Cost Disclosure – or a statement that the heat is included in the rent and therefore a Heating Cost Disclosure is not provided.
Guide to articles
Part 2: Marketing
These steps might be a bit simplistic for a larger property owner, but using these tools and implementing this plan has served property owners with as many as 20 units in their portfolio.
If you own several multi-unit buildings with several dozen or more apartments, you’ll probably want to simply hire an apartment finding service to handle your marketing.
Get a Gmail email account
For marketing, you probably don’t want to expose your personal, or your business email address to the public. Also, after you have a tenant, you might simply decide to only give them your Gmail address, but have a system in place that either (a) forwards it to your regular email or (b) you diligently check it.
Get a Postlets account
Go to http://www.postlets.com/. Here you can generate an attractive web page for your rental with a thorough description and photographs. You’ll be given the HTML code you can drop into other websites you choose to advertise on.
Get a Craigslist account
You can easily market your apartments yourself using Craigslist and not have to spend a penny on advertising. Seriously – nothing else.
Go to http://www.chicago.craigslist.org/ and set up an account. Having an account makes it easier to review ads you have already posted, delete them, and update them.
When you’re fielding phone calls, the volume of requests can be overwhelming at times. It’s perfectly acceptable to encourage prospective renters to come to view the property when you intend to hang out for a couple of hours. For example, Friday evening for 1 hour, Saturday morning from 10 to Noon, or a similar schedule for the afternoon or on Sunday. Don’t worry if a prospect complains that they can’t make your showings. You’re simply interested in moving as many people through the apartment as possible in the most convenient period of time.
If you are not going to take pets, feel free to be firm when turning down prospects on the phone. Say “Sorry, no thanks.” Or even better “Sorry. This building doesn’t allow pets.” And if they persist, you can be slightly less friendly while pointing out that your ad clearly indicated No Pets and that you resent having your time wasted.
Guide to articles
A client purchased her first investment condominium this week. Besides helping her identify and purchase her first property, I will be getting her started as a new landlord. Since I have to create a new set of materials on her behalf, I thought I could use them as great series of blog posts.
Phase 1: Identifying your potential investment property.
Get together with your real estate pro. May I suggest ->me<-? You should have a lengthy discussion about kinds of properties, goals and objectives, and finally your finances.
Kinds of properties: Would you like to own a two, three or four flat? Will you live in it? Would you prefer a condominium? Do you want one that you can fix up and sell for a profit? Or one that’s already in good condition? Or do you want to find a larger building with six, a dozen, or even more units?
Goals and objectives: Will you buy and hold? Or buy, fix and flip? Are you betting on appreciation? Or do you need the property to cash flow? Do you need to shelter other income?
Finances: How much money are you putting down? Have you spoken to a bank yet? Do you know what interest rates are on investments? Are you aware of making exchanges? How’s your insurance? What’s your tolerance for risk?
After answering all these questions, you should then begin looking. This step can take a day or many months depending on your unique needs. I have a great checklist of steps to take in order to get comfortable selecting a property and making an offer. It’s several pages – too much to share here. Give a call if you’d like to receive this; it’s part of my investment handbook.
After you identify your desired property, you’ll write a contract on it. You’ll negotiate out your terms and your price, and if you’re successful, you’ll be under contract. But the process isn’t over yet.
Take the time to do your discovery, or due diligence. For a condominium, you’ll be given all the condominium documents. For a multi-unit building, you’ll be given copies of all the leases, reports about expenses and copies of some of the bills.
Another part of your due diligence is to have an inspection.
If this all goes well, you’ll be well on your way to closing on your investment property. Your attorney will handle most of the details and you’ll be given instructions on when and where to go for closing, and how much more money to bring.
Before Phase 1 ends, however, it’s wise to begin implementing Phase 2: Marketing your condominium or apartments for rent. Stay tuned for tomorrow’s installment.
Guide to articles
The Chicago Residential Landlord and Tenant Ordinance (RLTO) requires the City Comptroller to set the rate of interest to be paid on security deposits held by landlords. The rate is calculated annually based on a formula tied to actual market rates.
The new rate of 1.26% applies to all residential rental agreements in which the lease term begins from January 1, 2008 through December 31, 2008. The rate of interest on security deposits is determined by the rate in effect on the date the lease term begins. Owner occupied buildings of six units or less are not required to pay interest on security deposits.
The interest rate to be paid on security deposits for apartments outside Chicago has been set by the State of Illinois at 0.35%.