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Industry Blog

10-13-17

Scott Lukes - Friday, October 13, 2017

Denver Property Management Company Echo Summit shares RentJungle stat:

https://www.rentjungle.com/average-rent-in-denver-rent-trends/

As of September 2017, average rent for an apartment in Denver, CO is $1589 which is a 1.01% increase from last year when the average rent was $1573 , and a 0.69% increase from last month when the average rent was $1578

Colorado Marijuana laws for Denver Rentals Management -

Scott Lukes - Saturday, June 03, 2017

Property management usually has more to do with ‘grey’ areas than it does with black and white.  There is no more grey right now than with medical marijuana and outright legalization of marijuana through Amendment 64.

The big issue, of course, is that federal and state laws differ from one another.  On the federal level, HUD enforces the federal Fair Housing Act (Amended, Title II of the Americans with Disabilities Act, and § 504 of the Rehabilitation Act of 1973, to be exact). HUD’s viewpoint is that marijuana use, even for medical purposes, should not be allowed.  HUD is against housing providers granting reasonable accommodation requests related to medical marijuana, even in states like Colorado that have a Constitution that allows it.

So where does this leave the landlord?  General consensus is that as long as a landlord has an -enforced- policy in place that they disclose and follow consistently, they probably won’t get into trouble for allowing or not allowing marijuana.  The most conservative approach adopted by professional property managers is prohibition... marijuana use is prohibited even if the resident possesses a medical marijuana card or makes a reasonable accommodation request. The prohibition policy is legally defensible because marijuana use or possession is a felony under the federal Controlled Substances Act.

But how could a landlord get into trouble? A typical scenario would be someone with a pot card wants to rent from them.  The tenant says  “this card says I’m disabled, so under the American with Disabilities Act I’m asking for reasonable accommodation from you.”  This is a fair statement just as if someone in a wheel chair would ask for a wheel chair ramp, or someone with a seeing eye dog asks to bring their dog into a no-pet property. They are asking for the same accommodation.   As long as you have a published policy (that you strictly enforce and never waiver on) that says you do not acknowledge the pot card, and do not allow the use of marijuana you’re going to be safe.  The problem arises when 1) the applicant was never notified of this policy before their credit was run and/or before they moved in, or 2) the landlord allows tenant A to use marijuana (medical or not), and does not allow tenant B to use it. In this case, they have opened themselves up for a possible discrimination lawsuit.

The best way landlords can protect themselves from this potential outcome is to have their policy included in a published “rental applicant selection criteria” document. When someone fills out an application they need to communicate to the applicant what their selection criteria is for marijuana.  Then, when they sign the lease, the landlord should reiterate their policy through a thorough Crime and Drug-Free Addendum which further details their policy on marijuana and helps to further protect against liability.   

We are not suggesting that landlords allow or disallow the use of medical marijuana or other consumables, but they do need to have a policy and follow it consistently … as with anything in property management. 

Another area where landlords have to be very careful; if allowing growing on-premise, and it turns out that the renters are doing something illegally (or violating some form of code), the landlord might be brought into and legal proceedings, and held equally accountable.  If you allow growing, know your stuff and seek legal advice in advance.    

Essential Denver Property Management - Craigslist Scams

Scott Lukes - Wednesday, May 10, 2017
The number of fake rental scams on Craigslist and other online classifieds continues to grow, with new aliases appearing daily. But while the names may change, the methods are always the same. These thieves, mainly based in Nigeria, the U.K. and the U.S., are out to steal renter’s money and identity.

There are several items to look out for:
1) The scammers tend to use yahoo, ymail, rocketmail, fastermail, live, hotmail and gmail, and they also post ads under anonymous craigslist addresses.
2) They use photos stolen from other property advertisements and many times copy the legitimate ad with same description and photos.
3) Look for the misspelling of words and more formal language that isn’t commonly used in such online advertising. The emails will be overly polite and poorly written or express excessive eagerness to rent the property without having proper steps including property inspection, background and credit checks.
4) When there are two identical ads the monthly rental fee will be much different. For instance a legitimate ad for a 4 bedroom house would be, say $1,350 per month. The scam ad will list the same property, same pictures and assume the homeowner’s identity but list it for $850. If it’s too good to be true it probably is. They will have a sob story or say they are not available to show the property but the renter can go and check it out if they wish.
5) What they all have in common is that sooner or later they send request to transfer funds via Western Union, Money gram or some other wire service. Never, under any circumstances wire money at the request of the prospective “landlord” and never provide a bank account number, bank routing number or other financial or personal information.

A renter should ALWAYS do business face-to-face with the landlord or property management company. It’s important to have access inside the property and to sign documents and contracts in person and in an office or professional setting.

For more information on this and other topics, please visit us online: http://echo-summit.com/education
If you prefer to watch a video on this topic, visit us at: http://echo-summit.com/education/videos

Denver Property Management - Normal Wear and Tear

Scott Lukes - Monday, May 01, 2017

Normal wear and tear is a very important topic because it’s where landlords and property managers often run into difficulties when over-charging when conducting a security deposit disposition.

The tenant moves out of the house and the carpet is heavily worn. The landlord wants to withhold some of the security deposit to repair or replace the carpet. The landlord has to ask some questions before they withhold some or all of the security deposit.

  • How old is the carpet?
  • How long have the tenants been living there?
  • Is the damage above and beyond normal wear and tear for a typical renter in their same situation (e.g. family of 4 living there for 3 years)
  • Do we have photo or video documentation of what the carpet looked like BEFORE the tenant moved in?
  • Was there a pre-move-in inspection sheet returned to us?

If the carpet is more than 3 years old, the landlord has to be very careful because, in the state of Colorado, the average useful life of carpet (or paint for that mater) in a non-owner occupied property is typically 3 years. Does that mean if the carpet is 5 years old, and if the landlord has documentation showing the carpet was in great condition before the tenet moved in, then one little section was completely destroyed during their stay – that they can not withhold deposit? No, they can absolutely withhold for that. They just have to be careful when we are dealing with carpets that are entering the end of their useful life.

Mildewed bathroom, very unclean kitchen. Here is another situation where the landlord might want to withhold security deposit to scrub the tile and maybe even re-grout because it’s so badly worn. Can they do this? Again, if this is a situation where a family of four had lived there and the tub area was already starting to get mildewed. When they move out the judge would ask ‘what would that tub look like after normal use by a family of four who had lived in the home for X period of time.’ The landlord will have to ask themselves this question because this will be what’s going to be defensible in court. The most important thing you’ll need to do is have documentation of what the area looked like before the tenant moved in. If you do NOT have before pictures or video, be very careful about withholding security deposit.

Holes in the wall. This is a very common issue – because people like to hang things on walls; from pictures and mirrors, to flat screen TVs. In this case, the landlord checks a tenant out and find quite a different size few holes in the walls. What can they withhold for? Our first recommendation is having lease verbiage that defines what is allowed, and what is not. For instance: “…tenant cannot make alterations to wall surfaces without prior written approval from the landlord, aside from small nail holes used to hang pictures.” If the landlord does not have clear language in the lease agreement a judge could easily rule against them and say the big anchor bolts in the wall are in fact normal wear and tear because most televisions available today are flat screen and require wall mounting. Another good idea is to simply ask the tenant to leave all nails in the walls so it will be easier for the landlord to go back and clean up the areas versus the tenant trying to fix t walls and making it even worse. This could require the landlord to come back and have to retexture and paint the surface and then charge the tenants... which they won’t like.

Scuff marks are another issue that’s common and often misunderstood. Scuff marks can result from a couch, chair or bed head board being close to the wall. The landlord would most likely want to charge the tenant to have the wall re-painted. In general, if the tenants have been living there for a reasonable period of time there, will be normal wear and tear and we would advise against withholding exorbitant security deposit in this case. There will be some cases of excessive dings and dents in which you might have cause to withhold, but you have to be very careful

For more information on this and other topics, please visit us online: http://echo-summit.com/education
If you prefer to watch a video on this topic, visit us at: http://echo-summit.com/education/videos

Truth in Advertizing

Scott Lukes - Tuesday, April 11, 2017
Advertizing a rental property correctly is incredibly important, as there can be significant financial and criminal penalties involved if done improperly and bad events happen.

A property manager is managing a property for an owner. The owner says they do not know if the basement room is conforming or not, so are unsure whether to list it as an extra bedroom. The property manager, in an attempt to get more rent and rent to unit out quicker, opts to list the basement room as an additional bedroom… not really knowing if it is conforming or not. In this case it is indeed non-conforming.

Now, the neighbor across the street gets grumpy because they see four cars at the house. The neighbor contacts the city to complain, and to come out and inspect the situation. After going through the house the inspector says to the tenant “you can’t have someone living in the basement bedroom.” The tenant says, “but our property manager said we could. Look, our application and lease agreement has all four of us listed. Look at the advertisement. It says it’s a four bedroom house.” The inspector says “I don’t care, I’ll be back in 24 hours and you have to be out of that room or fines will start accruing.”
So the tenants call the property manager, obviously, very upset.

If the property manager is managing the property on a fee-based agreement; meaning the home owner is being charged a monthly fee, then the property manager could be liable in the following ways: 1: they would liable to pay to relocate the tenant, because it was their negligence and 2: they might have to compensate the owner for lost rent until the property is re-leased.

Now – it can even get worse.
Let’s say a fire breaks out in that non-conforming basement room. Even if the property manager has a smoke detector and carbon monoxide detector installed, something terrible happened and someone died as a result of fire. Now, this can easily turn into a civil lawsuit. The property managers fancy E&O insurance, company liability insurance, even their umbrella insurance that separates their personal life from your business; all of these will get thoroughly tested.
This is an area where property management varies greatly from regular real estate, especially in the area of E&O insurance. Landlords must be very careful, and very conservative of how they advertise and lease properties. Do not cut corners in this area.

For more information on this and other topics, please visit us online: http://echo-summit.com/education
If you prefer to watch a video on this topic, visit us at: http://echo-summit.com/education/videos

Denver Property Management Utilities

Scott Lukes - Sunday, April 02, 2017
As the rental market continues to thrive and home sales stay sluggish many homeowners are deciding to rent their homes until housing prices increase again. There is a long check list of items to consider when transition a personal residence into a rental. This report will be focusing on how to change the responsibility of the utilities from the homeowner to the new tenant in the context of Excel Energy.

The Landlord Agreement (LLA)
The first step in transitioning the utility bill is to include it in the Landlord Agreement. Utilities companies sometimes call this an LLA. The Landlord Agreement Team is an organization within the utility company that specifically handles this process. The Landlord Agreement provides a certain level of protection for the landlord with the key distinction of determining who the client is. Is it the homeowner or the new tenant? In this case the new tenant becomes the utility company’s client. As a result, any issue surrounding the utility bill, is exclusively between the company and the tenant. The landlord will have no visibility into any matter.

The Turn On, Turn Off Form
One of the provisions in the Landlord Agreement protecting the landlord is called “automatic turn on” and “automatic turn of.” So when a tenant moves in the landlord submits the turn on form and the utility bills goes out of the landlord’s name and into the tenants and vice versa when the tenant moves out. Another component of the turn on and turn off agreements is to be sure to have a 3rd party notification clause so if the tenant is not paying the utility bill, the landlord is notified monthly including the amount owed.

A good lease agreement will have language stating that the tenant is responsible for not only paying the rent but the utilities as well. This further protects the landlord from any financial exposure with regards to the utility expenses.

First Mover Advantage
Both the landlord and tenant have to fill out, sign and date the automatic turn on form. The party that first notifies the utility company as to what date the utilities are to be transferred; that date will be on the record. If the landlord believes, for example March 15th is the date of transfer but the tenant notifies first that the date is April 1 it’s that date that will be recognized. Any discrepancies of dates will have to be resolved between the landlord and tenant. The utility company will only recognize the date submitted first.

The Turn Off
When the tenant decides to move out the turn off form is completed with the turn off date. Both tenant and landlord sign and send to the utility company. If the tenant decides to move out a few days prior to that date they are still responsible for the utility expense up to the date on the form.

Another Way the Landlord is Protected
Sometimes a tenant might get way behind in paying the utility bill or in one particular winter month the bill spikes to several hundred dollars. They don’t have the money and decide to change the name on the bill to another family member, boyfriend / girlfriend….or maybe, back in the name of the landlord! By the basis of the Landlord Agreement and the Turn Off / Turn On Agreement the tenant cannot do this, hence, the importance of having the Landlord Agreement in place to protect the landlord. The Tenant is not allowed to change who is responsible for the bill unless both parties agree.

For more information on this and other topics, please visit us online: http://echo-summit.com/education
If you prefer to watch a video on this topic, visit us at: http://echo-summit.com/education/videos

Denver Property Management - Avoiding Craigslist Scams

Web Admin - Thursday, March 23, 2017
The number of fake rental scams on Craigslist and other online classifieds continues to grow, with new aliases appearing daily. But while the names may change, the methods are always the same. These thieves, mainly based in Nigeria, the U.K. and the U.S., are out to steal renter’s money and identity.

There are several items to look out for:
1) The scammers tend to use yahoo, ymail, rocketmail, fastermail, live, hotmail and gmail, and they also post ads under anonymous craigslist addresses.
2) They use photos stolen from other property advertisements and many times copy the legitimate ad with same description and photos.
3) Look for the misspelling of words and more formal language that isn’t commonly used in such online advertising. The emails will be overly polite and poorly written or express excessive eagerness to rent the property without having proper steps including property inspection, background and credit checks.
4) When there are two identical ads the monthly rental fee will be much different. For instance a legitimate ad for a 4 bedroom house would be, say $1,350 per month. The scam ad will list the same property, same pictures and assume the homeowner’s identity but list it for $850. If it’s too good to be true it probably is. They will have a sob story or say they are not available to show the property but the renter can go and check it out if they wish.
5) What they all have in common is that sooner or later they send request to transfer funds via Western Union, Money gram or some other wire service. Never, under any circumstances wire money at the request of the prospective “landlord” and never provide a bank account number, bank routing number or other financial or personal information.

A renter should ALWAYS do business face-to-face with the landlord or property management company. It’s important to have access inside the property and to sign documents and contracts in person and in an office or professional setting.

For more information on this and other topics, please visit us online: http://echo-summit.com/education
If you prefer to watch a video on this topic, visit us at: http://echo-summit.com/education/videos

5 Tips for Cutting Utilitiy Costs

Scott Lukes - Tuesday, March 14, 2017
Though spring is upon us we still need to be thinking about ways to trip utility costs. Here are a few that will help all year around.

1) Programmable Thermostats

Instead of forcing renters to manually change the thermostat as the weather changes, it may be ideal for Denver property management companies or property owners to install a programmable thermostat. These modernized thermostats can be scheduled to change the temperature of the unit based on personal preference for various times of the day and seasons.

These devices cost as little as $25, are widely available at home improvement stores, and can yield nearly $200 in savings per year in utility expenses.

2) Windows, Door Frames and Cracks

Without adequately sealed windows and door frames, rental units can let out heat when tenants try to warm up their apartments during cold months and cool air when they attempt to chill their home during hot seasons. According to Energy Star, weather-stripping windows and door frames is something landlords and Denver property management companies should take into serious consideration to prevent renters from wasting energy.

Additionally, cracks can sometimes be hidden from the naked eye, so inspecting a property for small seams where cool or warm air – depending on the season – can seep out of a unit. SmartMoney advises caulking these cracks to effectively seal them and prevent wasted electricity.

3) Insulation

If you’re not sure whether your insulation is protecting your home from outdoor temperatures as well as it might be, a good first step might be to have a home energy audit done (or find do-it-yourself instructions on online.)

This audit should reveal whether you have proper insulation in key locations such as your attic, ducts, ceiling, walls, basements, etc.

There are many different types of insulation, and an expert can tell you whether you’re using the right types of insulation in the right places. For example, spray foam or loose fill insulation is best for unfinished attic floors and crawlspace walls, while fiber insulation works best around ducts. There are several choices for insulating walls, from classic, blanket-style insulation to foam board or concrete block insulation.

4) Light Bulbs

Changing out incandescent light bulbs for more modern ones, such as compact fluorescent bulbs, can considerably reduce a property’s utility bill each month. By simply switching one incandescent in exchange for a compact fluorescent, property owners can see energy savings totaling around $35 during the life of the light bulb, according to SmartMoney magazine. Multiply that by however many light bulbs your property has and those savings could be significant in the long term.

Fine Homebuilding also says fluorescent offer the best cost option for landlords, as they are appropriately priced at home improvement stores in comparison to other energy-efficient models.

5) Fans and Air Conditioners

A substantial portion of a property’s utility expenses for an entire year occur during the warm months, when tenants tend to turn on their air conditioners for extensive periods of time to stay cool. While these appliances typically get the job done, the energy they use can be costly for many owners.

Should you have central AC at your residence, Kiplinger advises you cap temperatures to drop no further than 72 degrees Fahrenheit. Doing so, the source states, can save you 3 to 5 percent on monthly electric bills.

Denver property management companies and property owners without central air systems may want to consider installing fans in their units, which can be more cost-efficient than ACs and still keep renters cool when the temperatures reach high levels during summer.

Denver Property Management Essentials: Selection Criteria & Tips for Lease Applications

Scott Lukes - Sunday, March 05, 2017

Denver Property Management - Security Deposit Disposition 12

Scott Lukes - Friday, December 30, 2016
by Scott Lukes

By Colorado Real Estate law, a landlord has 30 days to return the tenants security deposit after t have regained legal possession of the property – unless, they otherwise state in their lease: up to 60 days. No more than that. 

With the Security Deposit Disposition, the landlord took in a certain amount of money from the tenant upon signing a lease agreement to cover any damages during their stay. When the manager is doing the Disposition, it iss simply an accounting of how much money was collected minus how much was used for repairs that are being charged to the tenant (beyond normal wear and tear). The difference is returned to the renter via check, and with an itemization of amounts deducted from their original deposit. It’s a good idea to mail that final check with a delivery confirmation so they tenant can’t come back and say they never received it. This will be covered in more detail in a future topic. 
One area where landlords get into trouble is determining exactly when the 30 day clock starts ticking from when they will need to return security deposit. When does it begin? The answer: when they regain legal possession of the property. It’s not a simple as it may sound. Obviously, the easiest way to regain possession of the property is when the lease is over and the tenant hands the keys back to the landlord. At this point we have the property back in legal possession. 
What about an eviction? If the tenant is in the eviction process (the lease is now expired) when does the 30 days notice begin? The answer: the 30 days begins when the landlord gains possession of the property from the court. What happens when the tenant is still in the property and their possessions are still in the house? The landlord will have to order a sheriff’s eviction. Then, typically, it would be a good idea to get an attorney involved at this point. It’s usually at that moment the sheriff’s eviction takes place when the 30 day notice clock would start ticking. 
What can the landlord withhold for? Please see our other reference material on “Normal Wear and Tear” where we go into details on this topic explaining many items and time periods that are and are not appropriate to withhold security deposit for in the name of normal wear and tear. 

For more information on this and other topics, please visit us online: 
http://echo-summit.com/education 
If you prefer to watch a video on this topic, visit us at: 
http://echo-summit.com/education/videos 


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