Episode 2: Debunking BAD answers to GOOD questions series

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Heidi (Question) How often do you check on your rentals?

(Heidi) : First answer, A: provided I have a responsible tenant who seems to take pride in her home, I want to encourage that feeling rather than remind her that it’s really my property.

Christopher: Okay, well, hey, look, there’s someone there that just is exercising some boundaries and they want to make sure that, hey, if you’re comfortable, I’m comfortable. I  want you to be comfortable so you continue paying me money. Not a bad answer, go on…

(Heidi) B, when I had a duplex, I mostly just went over there when there was an issue, usually when I had to clean, paint, and show it to new tenants.-

Christopher: Okay, all right. –

H: And then finally, C, I had rented to someone I thought were friends. I said I was going to do a property inspection. And they called the police on me. Now that they’ve moved out, I realized why they didn’t want me to do an inspection.

Christopher: Okay, so, they’re not your friends, first of all, you need to pick some better friends, I’m just joking. But when people live in properties, if they don’t understand the law, if they haven’t read the lease document, they really don’t understand what the owner’s rights are, and the owner can do an inspection for a purpose, and it can be as an annual inspection at renewal, or if they need to check smoke detectors, or carbon monoxide detectors to make sure that that property has good health, it’s safe for the tenants. If there is something going on at the property, and they need to check on the work that was done to repair it, like they say they had, there was running water or a sewage backup, and the landlord needs to go back to make sure that that was cleaned up, they just want to double check on the work to make sure it was done right, they have rights to go back in there.

There’s others, and I know in the California Association of Realtors document, the lease, there is language in there that stipulates that an owner can check the property out to number one, show it to prospective tenants or buyers. And number two, to make sure that the health and safety of that property is maintained. If you have a good lease, in most areas, and most places around the country, your leases should have some language around that. And if they don’t, you should make sure you find a document that does state that. So let’s just talk about those questions. I mean, the answers to that question. So we actually had a client that we were working with, there’s two stories. One of them is a little bit scarier of than the other, but the first one just happened recently, this tenant’s moving out, I asked the owner, I said, hey, look, when’s the last time you did annual inspection? The tenant’s been there for four years. She said, we’ve never done one. So we don’t know what we’re going to get into when we see their property, when they move out, we assume she’s been taking good care of it. I could tell you that she was well-qualified when she went in, she had good references.

I probably am not too worried about it, but if you’re going to do a renewal on our property, if you’re gonna let someone stay on, you should check the property. First of all, you want to make sure that there’s no breaches of contract. So that should be done on an annual basis. And number two, you want to look to see if there’s any deferred maintenance that’s going on that could really hurt the property, like a leak under a sink that goes undetected or if something’s going on in the irrigation or there’s something falling apart that can actually cost you more money if you just leave it alone for too long. Now, if you haven’t been to a property in three years to check on any deferred maintenance, then you’re likely going to run into some things that you didn’t anticipate. And they’re probably going to be more expensive to fix now than they were. So my advice and my strong recommendation, as someone who’s been in property management, and has been doing this since 2005, is that when you sign a lease with somebody and you’re going to do a renewal, you should minimum check the property every 12 months, at renewal, at minimum. And you should also check the property, if there’s work being done that’s significant, like if there’s some deferred maintenance or running water, a major project that needs to be done, at that time you should go into their property. Smoke detectors, carbon monoxide detectors need to be checked and investigated annually, they need to be tested annually.

You can put a 10 year lithium battery in a smoke detector or a carbon monoxide detector, and guess what? In two years it’s going to die, So you should make sure those are checked and replaced annually, because if there’s a fire at the property and somebody dies, or somebody gets injured because the alarm didn’t go off, who’s liable? The landlord. And this is a five to $10 fix you can make. It’s going to cost you a little bit of time, a little bit of money, but it’s going to protect you by the tune of hundreds and hundreds of thousands of dollars. So, definitely want to check that. So here’s another story. We were not managing this property, this happened very recently in our portfolio, we were just leasing this property. And it just so happened that the tenant had moved out and the landlord hadn’t checked on this property. I don’t know, I don’t know how long the tenant was in there before they moved out, but they had been there for at least a year, maybe longer. And when one of our property managers, who was leasing the property noticed, he had been showing it, and this is just in the course of showing the property, but he had just happened to be standing underneath a heat register. And there was the heat register above him on the ceiling. And he just happened to look up and he noticed, and he probably looked at it because there was air blowing down on him. And what he noticed is that there is a heating duct and the heating duct was actually, was torn or broken or something like that, it was just flowing down through the register, but also above in the ceiling.

So this ceiling actually had those removable tiles that you see sometimes in offices, the room had been an addition, so I think they made a financially, what’s the word, a frugal decision on the materials that they used on this ceiling. And they just put up the ceiling tiles. And so my property manager was able to look at what was going on up there. He got his chair, looked up in there. And what he found was that there was not actual a duct running to that register, but the tenant had basically taken a strew driver and pried open the heating duct at a joint area, at a connection area, to funnel air down into this room, because it was otherwise heated by a space heater. The tenant was a little bit, he exercised a little bit of ingenuity, they thought they were being smart, and they thought they could cover it up and made an improvement. But what this tenant didn’t realize was that this property was built before 1981. And during the years, 1981 and earlier, builders used a material called asbestos to seal ducting tape around, as an installation for the duct. And as we all know, asbestos can be harmful and can be very harmful if it’s disturbed and you create dust with it.

So what this tenant actually did is he created a hazardous environment in this room, because he decided to pry open this duct, destroy the asbestos, or potentially hazardous, and when we found this, we told the owners that, look, this is a bad thing, you need to make sure you fix it. And owner did the right thing, they jumped on it right away. They had a professional company come in there, do some negative air, repair the duct work, remove the asbestos, did the whole thing. And it’s fixed. Now, fast forward if this was not caught, guess what could have happened? That landlord could have moved in a tenant and that tenant could have had children or somebody living in that property. They could have stayed in that room for a long period of time. And during the course of the winter time, hot air would have been blowing into this room. And it could be blowing hazardous materials into this room, and the tenant’s kids, or them could have gotten sick, and that could have caused long term health issues. And while the landlord did not know about it, ignorance is no defense in a court of law. And while the landlord probably would not have wanted to hurt somebody’s health or potentially cause long-term health scares or health concerns throughout the rest of their life, they unbeknownstly did that, and they could have actually fixed it, had they noticed it. So lucky for the landlord we had a professional property manager who had experience, was able to look at this issue and they were able to fix it.

And this is just another reason why you want to do an annual inspection and inspect the house more than every once in a while. Because during these times you can identify these types of issues. Some of them might be just, hey, we need to tighten a screw, we need to make sure the irrigation’s not running all over the place. We might want to schedule some painting down the road to protect the exterior of the property. Or you can identify a major health risk. And when you do that, the annual inspection is worth all your time and all the money it would cost to fix it, because you’re protecting yourself, you’re protecting the tenant, you’re protecting the health and safety of the house. So just think about that, at least once a year, if not, once a year plus the times when you need to check on smoke detectors.