Good property tenants are worth their weight in gold.
If a qualified tenant slots into the right property, the rest falls into place, area property management firms agree.
Finding and retaining qualified tenants is the leading indicator of not only a successful tenant and landlord relationship, but the No. 1 factor in protecting investor cash flows and minimizing unnecessary business expenses.
“The key to protecting the property investment is getting good tenants,” said Bob Wiley of Berkshire Hathaway HomeServices Fox and Roach, Realtors, Allentown.
Taking time to call references, speak to past employers and landlords, check employment histories and dig deep into financial records and bank statements is well worth the effort – and can prevent hassles later, according to Wiley.
Wiley said the primary difference in finding qualified tenants today, versus even a decade ago, is a result in part to the onslaught of reliable financial information and histories, thanks to online data services.
That’s where nitty gritty due diligence comes into play.
“Now the primary difference is that information is accumulated a lot faster. A late payment is posted instantly,” Wiley said.
Incumbent on those representing the property owner is gathering sufficient information to get a good picture of the tenant’s present and future performance, once inside the rental property.
That means fewer excuses for installing a tenant that can’t make good on monthly payments because payment and employment histories are readily available.
“You have to do your homework,” Wiley said.
Fred Ochey, owner of Apex Management in Bethlehem, said that finding good tenants who consistently meet their rent obligations was the top issue that his firm faces.
Apex specializes in managing small commercial and residential properties in the Lehigh Valley, including Bethlehem’s Southside.
“We get credit reports, criminal reports and references,” Ochey said.
He said when a prospective rental looks promising, but may carry risk, a fall-back position could mean bringing in a co-signer.
Job van Leusden said about 85 percent of his business is residential property management, and that the rental market continues to be strong in the area he serves, which includes Reading and its surrounding municipal neighbors, Wyomissing and parts of Lancaster County.
Van Leusden owns Van Leusden Property Management, based in Sinking Spring, Berks County.
“There is plenty of supply of mid and [lower-priced] housing units available in Reading for rent right now, which gives those folks a chance to save money if they are interested in [ultimately] buying their own home,” van Leusden said. “It is a buyer’s market.”
He said landlords and property owners had an obligation to invest in properties they rent and keep them maintained in good condition, as well as to serve their tenants.
“And the tenants need to take care of the properties they are renting,” van Leusden said.
Managers say there is little if any interest in the area over taking advantage of the “Obama Better Building Initiatives” program, aimed at commercial property owners for upgrading and retrofitting existing properties with more energy efficient replacement parts.
“As with many government programs, they are [cumbersome] to use and they still cost up-front money,” Ochey said.
Ochey said he has taken advantage of local façade improvement programs for properties he owns on Bethlehem’s Southside.
Lisa Lyon, a Realtor with Bob Wiley Team Berkshire, said the property manager’s evolving role began taking shape in 2008.
“People lost their homes and there was a lot more people looking for rentals,” Lyon said.
Property managers may in fact be the only name and face a renter sees because many investment owners live out of state, such as in New York or Florida, Lyon said.
“Some local investors don’t have the time to be hands-on involved, but out-of-state investors rely on a property manager to completely to take charge,” Lyon said.
Riley Ockerman, owner of Real Property Management Lehigh Valley based in Bethlehem, said the region serves as a property management industry microcosm as well as a barometer.
“It’s a much smaller scale, but a lot of what happens here is also happening nationwide,” Ockerman said of recent trends, including a glut of rentals after the economy tanked, and the uptick now in property transfers.
Even with a slowly rebounding economy, inventory continues to meet the rental demands, Ockerman said.
“Trends [in rentals] depend on what the economy does,” he said.
Ockerman said an “accidental landlords” phenomenon increased after the economic bust in 2008, and it continues.
From the more traditional causes such as a business transfer without an immediate home sale to upside-down mortgages, many homeowners end up as landlords when they discover a home won’t sell fast enough, or for the asking price.
“I still get a majority of calls from folks who need to generate income for a property they can’t sell,” Ockerman said.