Community Investment Corporation: Property Management Training

As with any other business venture, successfully owning and managing residential real estate requires in depth knowledge, planning and organization. The apartment industry is highly regulated by federal, state, county and local government agencies. Understanding of and compliance with the rules, regulations and ordinances set forth by these agencies is essential. In addition, a written-strategic plan detailing all aspects of your business - including but not limited to - pre-purchase, financing, marketing, day-to-day operations, etc. is also important. Lack of organization and/or negligence in the operations of your property(s) can, and often will, result in financial loss and/or legal liability.Whether you are a seasoned building owner/property manager or just starting out, I highly recommend the Community Investment Corporation's (CIC) Property Management Training workshop. CIC is a mortgage banking firm created in 1974. Their mission is “to be the leading force in neighborhood revitalization through innovative financing programs.” CIC is intended to serve as a catalyst for needed rehabilitation lending and to foster the success of cost-effective developers. In addition, CIC is committed to increasing the professional skills and knowledge of hands-on building owners and property managers through various basic level workshops in property management and maintenance. In particular, the Property Management Training workshop is offered at various locations, four consecutive evenings-three hours per evening throughout the Chicagoland area. The overall emphasis of CIC's Property Management Training workshop is to equip building owners and property managers with adequate information to create, implement and maintain a sound operations plan for their residential real estate. Over the four days, the workshop covers in detail the following topics: Marketing/Tenant Selection, Evictions, Fair Housing, Special Financing Programs, Tax Appeals, Maintenance Systems, Housing Choice Vouchers (Section 8 Programs) and City of Chicago “Residential Landlord and Tenant Ordinance.” Below I have highlighted the information discussed in each of these topics. Marketing/Tenant SelectionThe Marketing Plan for your business should cover your tenant selection policy, advertising methods, and property appearance. Within the scope of the tenant selection policy, consistency with all applicants is vital. You should establish your criteria considering income requirements, maximum occupancy, credit worthiness, previous rental history, housekeeping, criminal background checks, drug screening, etc. Once you have defined the criteria for selecting tenants, you will want to consider your advertising methods. Vacancies will cost you money and having an established plan for advertising can help buffer the financial lost. There are various ways of advertising your property - signs, newspapers, resident referrals, Realtors, flyers, church bulletins and area employers to name a few. In addition, the appearance of your property is just as important as the other aspects. There is a direct correlation between the appearance of your property and the types of tenants you will attract. EvictionsAs a building owner/property manager, there may be times where you have to evict tenants. Possible grounds for eviction could include non-payment of rent, lease violations, end of rental period and seizure of illegal drugs. The eviction process is detailed and it must be followed appropriately. The process begins with the preparation and delivery of a Notice to Terminate. There are four standard types of notices utilized in eviction cases:The 5-DAY NOTICE is for past due rent only. These are typically served to the rent-delinquent tenant on the sixth day of the month.The 10-DAY NOTICE is for cause. This notice is used when a lease provision has been violated.The 30-DAY NOTICE is used when no lease exists. Whenever there is a verbal month-to-month agreement, the lease can be terminated by either party with a thirty-day notice.The SPECIAL 5-DAY FOR DRUGS NOTICE is utilized in cases where an arrest and seizure of illegal drugs have occurred in an apartment. Serving the notices is just the beginning of the process. Filing a complaint, the summons issued to appear in court, the trial date, and the judge's ruling follows. The entire process could take weeks or months, depending on the circumstances of the case. Fair HousingThere are several fair housing laws that a building owner/property manager must be familiar with. These laws go well beyond the prohibiting of the obvious racial discrimination that most people associate with fair housing. For instance, within the City of Chicago, there are thirteen protected classes of individuals: race, color, religion, sex, national origin/ancestry, familial/parental status, disability/handicap, age, military discharge, marital status, sexual orientation, source of income, and housing status. Familiarity with your local Fair Housing laws can protect you from potentially costly violations. Special Financing ProgramsMulti-unit buildings with six or more units are considered commercial properties. Financing programs for these properties are different from those of smaller unit dwellings. Most programs require a minimum of a 20% down payment and have other restrictions. However, CIC offers various unique financing programs for residential real estate purchases and refinances:Flexibility to finance more than 80% LTV with extensive rehabUp to 30 year amortization and 1.15 debt cover on select loansAttractive ratesNo prepayment penalty on most loansNo legal or document fees at closingNo payments during constructionLine of CreditsConstruction and permanent loans in one process Tax AppealsThe tax appeals section of the training workshop covers:Triennial AssessmentHow to Appeal Residential Property TaxesUnderstanding Your Tax BillsProperty Tax News Update Maintenance SystemsRoutine maintenance and repair of your property is key to keeping it attractive, preventing many equipment failures, and over the long haul lowering operating costs and frustration for you and your tenants. You should consider developing a Maintenance Policy and Procedures Manual that addresses all aspects of your individual building and its systems. This manual is the guide that can be adapted to meet the needs of your building and requirements for compliance with federal, state and local codes. Proper maintenance requires planning, an organized set of procedures, staff commitment to quality control, and the active support and supervision of the owner/manager. There are three general types of maintenance services:Routine maintenance consists of activities that are planned for and occur on a scheduled basis. Routine maintenance corrects problems resulting from continuing wear on the property and equipment, accidents, and abuse.Preventive maintenance is service that is programmed and is designed to avoid serious problems at a later date. It also serves to secure items that are always in repair.Request and respond maintenance includes services that are requested by a resident or an employee. Requested maintenance cannot be anticipated, but it can be reduced by a preventive maintenance program. Housing Choice Vouchers ProgramThe Housing Choice Vouchers Program, previously known as the Section 8 Program, is a federally funded rent assistance program that provides help to low- and moderate-income families, enabling them to rent privately owned properties by paying a portion of the family's rent each month. Families participating in the Housing Choice Voucher Program can rent a single-family home, an apartment or a condominium. Prior to receiving a subsidy, however, every unit must pass a housing inspection. Once the unit passes inspection and rent reasonableness guidelines, voucher families pay between 30 to 40 percent of their monthly income toward monthly rent and utilities, and the difference is paid directly to the property owner. City of Chicago Residential Landlord and Tenant OrdinanceThe City of Chicago has defined a “Residential Landlord and Tenant Ordinance” that applies to all properties within the City of Chicago boundaries with the exception of:Owner-occupied buildings containing 6 units or lessHotels, motels, inns, tourist houses, rooming houses and boarding houses occupied for less than 31 continuous daysEmployee-occupied unitsA unit being occupied by a purchaser pursuant to a real estate purchase.Therefore, if you own a property within the City limits that does not fall within the exceptions listed above, it is essential that you know, understand and comply with this ordinance. The penalty for non-compliance of the ordinance could include, at the minimum, the tenant's recovery of actual damages sustained and the recovery of two months rent.As you can see, there is a plethora of information that a building owner/ property manager must be aware of in order to ensure compliance with government agencies, protection from potential costly violations, and being a valuable asset to the community. Keep in mind, that I have only briefly touched the surface regarding the vast amount of information you will receive attending CIC's Property Management Training workshop. Once again I encourage you to attend the workshop, I guarantee you will not be disappointed. Additional information about the workshop can be found on CIC's website at www.cicchicago.com. There is a small fee for the workshop.

******************************************************************************************************Anita Clinton (AC) is an investor, a licensed loan originator and real estate consultant. Contact her at 312-246-4894 or anitaclinton@yahoo.com.