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Excalibur Home Management Blog

#1 Reason Tenants Do Not Renew

Mike Nelson - Thursday, September 27, 2018

The #1 reason tenants don't renew?

Maintenance – it’s that simple.  Understand that the tenant is your customer, not your adversary.  Our average rent is over $1300, but let’s use $1300 for this example.  Our average tenant stay is about 4 years.  So the average “customer” represents $62,400 of business for the typical landlord.  That’s a lot of money.  And to have the tenant move out after only one or two years costs the landlord A LOT of lost income.

Common mistakes landlords make:

·Postponing service or ignoring the tenant’s requests.  This is a big reason why they don’t renew.  Get to “yes” quickly and get the repair done.  If it turns out that the vendor establishes the problem is due to the tenant’s abuse or neglect of the property then you can bill them back for the repair.

·Getting multiple bids for smaller jobs.  This is just a type of postponement and it is not likely to save the landlord money.  In a practical sense there is no such thing as a “free estimate”.  Any reasonable business owner needs to account for all their time, including their time bidding jobs.  So the “free estimate” includes the contractors time to provide the estimate.  For jobs under $500, if you have a vendor you have used before and trust, just send them to fix it.  It will require less time and the tenant will have a better experience.

·Patching when replacing is warranted.  This usually involves the HVAC, either the air conditioner or the furnace.  When the tenant has to call over and over again, because the landlord keeps getting the vendor to “patch” the unit, the tenant has a negative experience and they are more likely to move out at the end of the term.  When HVAC equipment is over 12 years old (rental units go thru HVAC systems faster than owner-occupants), and the issue involves a failing condensing unit, coil, or heat exchanger, consider replacing the bad component rather than just trying to repair it “for now”.

Generally speaking consumers today want to hear “yes” and “now”.  They are used to instant gratification.  To be a successful landlord, look for ways to achieve that more often.  If your tenant is overly picky, you can make that up with the rent increase at renewal time.  Today people are paying more for superior service all the time.

Significant Change to Landlord-Tenant Law in Georgia

Mike Nelson - Monday, August 20, 2018

Significant Change to Landlord Tenant Law in Georgia



During the 2018 General Assembly the State of Georgia passed, and Governor Deal signed into law:


§ 44-7-23. Termination of residential lease after issuance of civil family violence order or criminal family violence order; notice; occupancy…


This law took effect on July 1, 2018 and applies to all residential leases, or renewals, that take effect after that date. The entire language is copied below for your review. The primary clause which impacts landlords and property managers is The tenant shall not be liable for any other fees, rent, or damages due to the early termination of the tenancy as provided for in this Code section”. If one of your tenants provides the notice as required in the law (in short, a copy of the court order and the police report establishing the tenant as a victim of domestic violence), then that tenant has the right to “terminate his or her residential rental or lease agreement”. The law does not say that only the victim is released, it says the lease is terminated. The lease being terminated means all parties are released from it, even if the abuser was also a party to the lease.


Best Practice – if you receive such a notification from one of your tenants, and that tenant establishes the last day of residency not earlier than 30 days from the date of notice, then process their move out as if that is the last day of their lease per your lease document. There will be no penalty for failure to provide more notice, if your lease requires that, and there will be no penalty for terminating early. However the tenant is still liable for any damages to the property as a result of their abuse or neglect of the property (not normal wear & tear). Any additional parties to that lease are also released due to the fact that the “lease is terminated”. Now you need to determine whether you want to create a new lease with any of the adults that wish to remain in the property. If one of the parties that want to remain is the same one that committed the domestic abuse, then perhaps you do not want to keep them as tenants. If other adults that were on the prior lease express their desire to remain in the property, then you should re-qualify them as you would a new applicant to confirm that they have the financial capability of honoring the lease now that one of the other tenants has moved out. How will the departing tenant’s income effect the total income of the remaining tenants? Was the departing tenant the primary tenant, and their good credit is what got the applicants approved initially? Has the credit worthiness or employment status of any remaining tenant changed since they were initially approved? While “turning” a rental house is expensive, it will be a lot less expensive to handle the turn now rather than have to go through an eviction action with the remaining tenants later.


Reminder – We have a lot of service members in Georgia. JAG Officers and service members are familiar with the Service Members Civil Relief Act which covers the entire U.S. However, Georgia law (O.C.G.A. 44-7-22) requires only a 30 day notice to vacate which is more restrictive than federal law and very similar to this new law under O.C.G.A. 44-7-23. 


Conclusion – Knowing the law and abiding by the law is much less painful and costly than having someone in a black robe explain the law to you.


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§ 44-7-23. Termination of residential lease after issuance of civil family violence order or criminal family violence order; notice; occupancy 

(a)  As used in this Code section, the term:

(1)  "Civil family violence order" means:

(A)  Any protective order issued pursuant to Article 1 of Chapter 13 of Title 19, provided that the respondent was present or had notice of the hearing that resulted in the issuance of such order; or

(B)  Any ex parte temporary protective order issued pursuant to Article 1 of Chapter 13 of Title 19, provided that it is accompanied by a police report showing a basis for such order.

(2)  "Criminal family violence order" means:

(A)  Any order of pretrial release issued as a result of an arrest for an act of family violence; or

(B)  Any order for probation issued as a result of a conviction or plea of guilty, nolo contendere, or first offender to an act of family violence.

(3)  "Family violence" shall have the same meaning as set forth in Code Section 19-13-1.

(b)  A tenant may terminate his or her residential rental or lease agreement for real estate effective 30 days after providing the landlord with a written notice of termination when a civil family violence order or criminal family violence order has been issued:

(1)  Protecting such tenant or his or her minor child; or

(2)  Protecting such tenant when he or she is a joint tenant, or his or her minor child, even when such protected tenant had no obligation to pay rent to the landlord.

(c)  The notice to the landlord pursuant to subsection (b) of this Code section shall be accompanied by a copy of the applicable civil family violence order or criminal family violence order and a copy of the police report if such order was an ex parte temporary protective order.

(d)  Upon termination of a residential rental or lease agreement under this Code section, the tenant may occupy the real estate until the termination is effective. Such tenant shall be liable for the rent due under such agreement prorated to the effective date of the termination, payable at such time as would have otherwise been required by the terms of such agreement, and for any delinquent or unpaid rent or other sums owed to the landlord prior to the termination of such agreement. The tenant shall not be liable for any other fees, rent, or damages due to the early termination of the tenancy as provided for in this Code section. Notwithstanding any provision of law to the contrary, if a tenant terminates a residential rental or lease agreement pursuant to this Code section 14 or more days prior to occupancy, no damages or penalties of any kind will be assessable.

(e)  This Code section shall apply to all residential real estate rental or lease agreements entered into on or after July 1, 2018, and to any renewals, modifications, or extensions of such agreements in effect on such date. This Code section shall not be waived or modified by the agreement of the parties under any circumstances.

It's a great time to buy a rental house in Atlanta!

Mike Nelson - Thursday, July 26, 2018

During the 2nd quarter of 2018 class A apartment properties have been selling at Cap Rates of about 4.6% and class B apartment properties have been selling at Cap Rates around 4.95% with a 2nd quarter average of about 4.8%.

Excalibur has been able to find several houses for investor buyers in Atlanta with Cap Rates of 5% to 6%.  But that is only part of the reason to buy rental houses.  

If you buy apartments today, you will sell the property later based on the market Cap Rate and the property's NOI.  When you sell your rental house, the sales price is not likely to be impacted by the Cap Rate.  Your buyer is more likely to be an owner-occupant who is more interested in the quality of the schools, the commute to work, and other area amenities.  Today housing prices are rising faster than inflation.  And the Atlanta market, in particular, is promising better than average growth due to all the businesses relocating here.  Buy early and enjoy that ride.  

This (home price appreciation) is why investors need to compare IRRs, not Cap Rates, when shopping for rental houses.  The IRR estimate will include the estimated appreciation for the property.  Cap Rates are only comparing the cash flows (Net Operating Income divided by investment) of comparable properties. 

Click here to view for more info on how to invest with the Experts in Leasing, Management, & Sales.


“Protecting Tenants at Foreclosure” protections are back!

Mike Nelson - Thursday, June 7, 2018


“Protecting Tenants at Foreclosure” protections are back!  And they're permanent!

The Economic Growth, Regulatory Relief, and Consumer Protection Act recently passed by Congress and signed by the President was focused primarily on reducing some of the regulatory burden, this law re-instituted the Protecting Tenants at Foreclosure Act which had otherwise died on 12/31/14.  Below is the section of the Act.  Note that now there is no expiration date.

19 SEC. 304. RESTORATION OF THE PROTECTING TENANTS AT FORECLOSURE ACT OF 2009. 21 (a) REPEAL OF SUNSET PROVISION.—Section 704 of 22 the Protecting Tenants at Foreclosure Act of 2009 (12 23 U.S.C. 5201 note; 12 U.S.C. 5220 note; 42 U.S.C. 1437f 24 note) is repealed. 71 SIL17981 S.L.C. 1 (b) RESTORATION.—Sections 701 through 703 of the 2 Protecting Tenants at Foreclosure Act of 2009, the provisions of law amended or repealed by such sections, and 4 any regulations promulgated pursuant to such sections, as 5 were in effect on December 30, 2014, are restored and 6 revived. 7 (c) EFFECTIVE DATE.—Subsections (a) and (b) shall 8 take effect on the date that is 30 days after the date of 9 enactment of this Act.

As a quick review – if a tenant occupied property is foreclosed upon, and the “buyer” at the foreclosure sale will not make the property their primary residence, then the “buyer” must honor any existing lease until it terminates – or unless the parties negotiate a mutually agreeable termination.  If the lease is running on a month to month basis, the buyer must provide the existing tenant with at least 90 days notice to terminate the lease.  If the “buyer” at the foreclosure sale plans to make the property their primary residence, then the buyer can terminate the tenant’s lease with a 90 day notice and require the tenant to vacate.

If you buy properties at foreclosure auctions, make sure you account for whether or not the current occupant is the owner (mortgagor) or a tenant.  It could impact your plans.


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5 Sizzling & Surprising Tips to prepare your home for Summer

Mike Nelson - Tuesday, May 8, 2018

The heat is on, Atlanta! 

With summer quickly approaching, we could have easily given you the standard top 5 list of things you need to do to get your home summer ready… have your HVAC serviced, plant shrubbery 2 feet away from the house, check weather-stripping around windows and doors, etc. But that wouldn’t be any fun, and we wouldn’t be telling you anything you didn’t already know.  Instead we’ve put together a list of 5 surprisingly simple and not often thought of tips to make sure your home is ready for some fun in the sun!


Keep Electronics Away from your Thermostat: Heat producing electronics such as TV’s, lamps, game systems and more could cause your thermostat to read at a higher temperature if placed nearby, ultimately causing your air conditioner to run unnecessarily.

Refill your First Aid Kit: With summer fun comes summer injuries. Take the time to refresh and restock your first aid kit so that you are prepared. Dispose of expired medication and stock up on summer essentials including ice packs, medicine for bug bites, bandages, athletic tape, gauze, and more.

Change your ceiling fan direction: Did you know your ceiling fan is designed to rotate differently based upon the season? For the best breeze to keep temperatures low, make sure the blades of your fan are rotating in a counter-clockwise direction.

Give your roof a thorough check: Georgia weather is not forgiving towards your roof. Fall fills the gutters with leaves. Winter blasts it with snow and below freezing temperatures. Spring dresses it in a thick layer of pollen.  And Summer? Summer brings with it the potential for severe storms. So grab those binoculars and check your roof for missing shingles, damaged flashing around the chimney, and clogged gutters.

Mulch is more than a Makeover: Do you think mulching is just about making your plant beds look nicer or that it’s only other purpose is to help prevent weeds? Think again! Georgia’s red clay soil doesn’t absorb water at a fast rate which means a significant amount of the water you put on your plants to keep them alive evaporates before it even gets into the ground. Laying down mulch helps prevent evaporation, meaning you’ll spend less time watering while also saving on water bills.

Bonus tip for our Grill Masters: 

To check the grill's propane level, feel the outside of the tank. The area with fuel will be cooler than the empty portion.


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Property Management: The Art of Being Proactive

Mike Nelson - Thursday, March 1, 2018

“In general, airplane pilots are open, clear-eyed, buoyant extroverts, and helicopter pilots are brooders, introspective anticipators of trouble. They know if something bad has not happened, it is about to.” – Harry Reasoner

Let that sink in for a moment, and ask yourself, “Am I an airplane pilot, or am I a helicopter pilot?” Perhaps you’re Air Traffic Control constantly aware of all of life’s moving pieces or maybe you’re the passenger looking to get from point A to point B as quickly and safely as possible. There’s no right or wrong answer here. Ultimately, every role is essential to the success of any well-oiled machine

So how does Excalibur fit into this scenario? Excalibur President and Managing Broker, Mike Nelson, reminds his Team regularly that each individual at Excalibur is a helicopter pilot. In order to best serve our clients, our Team from leasing agents to property managers, maintenance to support staff, accounting to applications, must consistently be aware that “if something bad has not happened, it is about to.”

 “An airplane by its nature wants to fly, and if not interfered with too strongly by unusual events or by a deliberately incompetent pilot, it will fly. A helicopter does not want to fly. It is maintained in the air by a variety of forces and controls working in opposition to each other and if there is any disturbance in this delicate balance the helicopter stops flying, immediately and disastrously.” – Harry Reasoner

With over 30 years in property management, our Team has seen a lot, but we are very aware that there will never be a point where we’ve seen it all. As helicopter pilots, the Excalibur Team is trained to know that at any time during the management of a property, there can be a series of disturbances that ultimately lead to a helicopter that stops flying…or in other words, a property that stops seeing a profit. Our recommendation to investors who have experience that loss…work with a company who’s experience allows them to be proactive versus reactive.

Excalibur’s 30+ years of experience have created a team intent on reducing landlord liability. We know the law. We know the questions to ask. We know the warning signs. We know the steps to take. We know how to reduce our landlords’ liability today, while the helicopter is flying, rather than after it crashes.

But don’t just take our word for it. Let our expertise and industry designations speak for themselves. Excalibur President Mike Neslon teaches property management courses for the Georgia Association of Realtors and the National Association of Residential Property Managers. He was selected by the Georgia Real Estate Commission to serve on their Education Advisory Committee as the representative of the property management industry. 

Mr. Nelson also has the GRI (Graduate, Realtor Institute) designation from the National Association of Realtors (NAR), the RMP (Residential Management Professional), and the MPM (Master Property Manager) designations from the National Association of Residential Property Managers (NARPM).  

We are also very proud to say that Excalibur Homes is one of the few Certified Residential Management Companies (CRMC®) in the country.

So what does this all mean? Be assured that from your first phone call to your final walk-through, Excalibur's expertise will reduce your liability and help keep your investment flying high.


We have some big announcements and promotions coming your way so make sure to connect with us on Facebook

 



Winning with Winter Rentals

Mike Nelson - Sunday, January 28, 2018


Winning with Winter Rentals – Why Renting in the Winter Makes Sense

So far Atlanta’s winter has not been forgiving. With below freezing temperatures dominating our January forecast, you may think tenants are focusing more on staying warm than they are on leasing new properties.  Excalibur’s numbers tell a very different story.

We’re only half way through January and our tenant placement has increased by over 50% compared to this same time last year. That’s more tenants placed, less properties vacant, and quicker return on our clients’ investments. Why then is the Metro-Atlanta rental market so hot during such a cold season? We’re going to let you in on a few of those industry secrets:


MOTIVATED APPLICANTS

Renters that are looking to move during the winter months are typically doing so because their situation requires it. Whether it’s work related, the result of selling their home and waiting to buy until after the market shifts, or any number of other reasons, those that are applying tend to be motivated by circumstance rather than simply shopping around for something better than what they already have. This often weeds out those applicants not invested in the property or the process which means you don’t risk wasting time with an applicant who’s merely looking for a “good deal.”


LOCK IN A LONGER LEASE

Despite winter being a great time to lease a property from the landlord’s perspective, it’s not necessarily the best time to move from the tenant’s perspective. This gives you the opportunity of locking in a 16-18 month lease, guaranteeing the tenant the opportunity to either move or renew in the Spring, while guaranteeing you, the homeowner, additional months without vacancy.


LESS COMPETITION

When our clients ask us to do a comparative market analysis on their home, our Realtors are trained not to just look at past sales, but to look at current competition to ensure our pricing is strategic when your home hits the market. During the winter months, the pool in which you are competing is much smaller, meaning your home won’t get lost in a flood of summer listings. Because of that, you have the opportunity to yield a higher market price as supply is low while demand remains high.


UPGRADING? BUY NOW!

You’ve probably heard over and over again, “It’s a seller’s market! There’s no inventory! Sell!” and that’s true…up to a certain price point. 2017 statistics provided by the First Multiple Listing Service (FMLS) indicate that the Metro-Atlanta market transitions from a Seller’s market to a Buyer’s market at the $475,000 price point. This means that if you’re looking to upgrade to a price above $475k, you’ll have more options, and you’ll have more control in the negotiation process. When you decide to upgrade, consider holding on to your investment. Rather than selling, earn passive income through the leasing of your property. Watch while property values in Atlanta’s diminishing “affordable” housing market continue to rise rather than regretting that you sold it when you did. 

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Government Shutdown: What it means for Property Investors

Mike Nelson - Thursday, January 18, 2018


With a U.S. Government shutdown looming, many Americans are asking, “How will this affect me?” 

The answers are many, from the closure of National Parks to the potential delayed payment of military personnel.  The effects of a massive shutdown don’t stop there, however. Should the U.S. Government not meet their midnight Friday deadline, the fallout could most certainly have repercussions on the U.S. Housing Market.

The 2 week government shutdown of 2013 resulted in the unpaid leave of many employees associated with IRS services that provide income and Social Security number verification. Because of this, lenders did not have access to information essential to the processing of mortgages.


“One of the biggest impacts to the mortgage market is that the ability to obtain a 4506 and Social Security Number Verification has been halted,” says Jason Auerbach, an LPO manager at New York city-based First Choice Bank/Lending. “The 4506 IRS Transcript is verification from the IRS that the income documentation, specifically tax returns, provided by a client match with what they filed.”


While absolute disruption is not expected, be prepared for delays with FHA and VA Loan Closings. And if you’re buying a home in a flood zone, beware that unless you’ve already obtained flood insurance, you will not be able to close due to the shutdown of FEMA.

While a government shutdown will not stop the housing market, it will certainly affect the speed at which mortgages are obtained and closings occur. Make sure your agent is prepared when placing your offer on the bidding table. Excalibur’s agents are fully aware of the potential consequences of a government shutdown and are prepared to make the strongest offer while keeping your best interests in mind. 


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ZESTIMATES - HOW ACCURATE ARE THEY?

Mike Nelson - Wednesday, January 3, 2018


We’ve all done it, and for some of us it’s become a weekly ritual. We turn on our computer and before checking social media or email, we Google our address to see our most recent Zestimate on Zillow. But how accurate are Zestimates, and how can you best understand where your property rests in the evolving Atlanta market?


According to a report published by Zillow.com itself on November 14, 2017, the Zestimate margin of error for the Metro-Atlanta area is 4.1%.



If we dive deeper on a county by county basis, we begin to see that Metro-Atlanta’s average margin of error is composed of percentages ranging anywhere from 2.9% in Gwinnett County to 11.4% in Decatur.  That means that if you have a $1500 rental property in Decatur and decide to rent it at the Zestimate, you could be leaving over $2,000/year on the table due to under pricing. You could also be advertising it $170/month over market value, and while that seem reasonable, the carrying costs associated with having your property vacant in excess of the average days on market as a result of overpricing, immediately begin costing you money, rather than making money. Even at Atlanta’s average margin of error of 4.1%, you still risk losing money either due to under pricing or excessive days on market.  So why is there such a large discrepancy, and what does Excalibur do to help close the gap?


The answer is very simple, and it starts with a question, 

Has Zillow ever been inside of your house?” 


Zillow pulls its data from tax records, and if you’ve ever taken a close look at your property tax bill, you might find this information isn’t always correct. Have you ever noticed that your property listing on Zillow has the incorrect room count or square footage listed? This is why. Additionally, Zillow does not have the capabilities to factor in condition, finishes, market projections, and market competition.


In the Metro-Atlanta market, getting the most money out of your property is just as important as doing so in the shortest amount of time. This is why Excalibur puts a great deal of effort into analyzing those properties that are currently listed for rent so that a strategy can be put into place ensuring your property is selected first. Not only is this analysis done prior to the property going on the market, it’s done throughout the listing period to ensure your property is strategically placed so that you get the most money in the shortest amount of time.


To guarantee this, our first step is to have a licensed Realtor® conduct a comparative market analysis on your property. Our reports are not automated and will not be immediate. They may take an hour to get to you, but the value you get in waiting that extra hour is well worth the accuracy you will receive by having your analysis done by an actual agent who will call you to talk through the report.


Additionally, Excalibur will arrange to have a Leasing Agent specializing in your area walk your property with you, document condition & finishes, and provide you with an in-depth analysis and strategy that considers much more than just tax records.


There is no cost for any of this and no sign-up required.


We are by no means trying to discredit Zillow. In fact, our agents will look at Zillow as part of their strategy as we know potential tenants will be comparing your listed rental rate with the Zestimate. What we want to do is educate you so that you can make the best decisions possible for your situation and to show you how Excalibur will go the extra mile to ensure your home is rented for top dollar in the shortest amount of time.


If you are interested in having one of our agents conduct a detailed market analysis or if you’d like to meet an agent in person to talk about your specific property needs, please let us know Here!


Did you know we are giving all new property sign-ups during the month of January 3 MONTHS OF FREE PROPERTY MANAGEMENT? No catch. No additional paperwork. Get more information Here!


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A Message from Excalibur President, Michael Nelson

Mike Nelson - Monday, December 11, 2017


To All of our Wonderful Clients,

The end of the year brings no greater joy than the opportunity to express to you season’s greetings and our best wishes. 

May your holidays and New Year be filled with joy.  At this special time of year, we give thanks for clients like you who have made our jobs easier and our lives more fulfilling. 

Thank you for being you. 

From all of us at Excalibur Homes, LLC we would like to express our sincerest appreciation for the trust you have placed in us.  We look forward to moving into the New Year together.

Best wishes for a joyous and safe holiday season,

Michael Nelson
President, Excalibur Homes, LLC








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Excalibur Homes
2855 Marconi Dr, Suite 310
Alpharetta GA 30005
678-825-0500 Fax:(678) 825-1401