The need for affordable housing in Fresno is demonstrated clearly by the fact that the Fresno Housing Authority received 28,838 online applications for its Housing Choice Voucher, or Section 8, housing program.  Here is an article written by BoNhia Lee on July 23, 2013.

In the first day of registration alone, the authority received 26,852 applications, officials said. In comparison, the authority received a little more than 20,000 during a 45-day sign-up period in 2008 – the last time the waiting list opened for registration.

Original Posted July 23: The Fresno Housing Authority received more than 6,000 applications for its Housing Choice Voucher, or Section 8, housing program in the first two hours of registration Tuesday morning.

That’s impressive considering that the authority’s website became overloaded with users which kicked many offline or gave them a notice that said the website is not working.

I received 46 phone calls, voicemail messages, blog comments and emails from folks who couldn’t get through this morning. A Philadelphia woman, who is moving to Fresno, even called because she wanted to talk to someone about her eligibility.

Here’s what happened: The website was working, but only allowed a certain number of users on at one time. All others were unable to log on.

Housing authority officials said not to worry. There is no rush to apply because the waiting list is now open at all times. It will not close. There is also no first-come first-serve process as the list was handled in the past.

The authority will use a lottery system to pick names when housing vouchers for the program become available.

Here is a direct link to the Housing Voucher program application: https://fresno.apply4housing.com/

How will your investment property and your tenants be affected by the proposed water rate increases.  Please click on the following LINK to see a FAQ bulletin recently put out by the CA Apartment Association following their discussions with City officials.

Highlights:

• Water table has dropped 100' in last 80 years
• New regulatory changes from Federal & State governments
• Aging Infrastructure
• Only proposing to increase water bill to maintain the current level of service.

The following is a general estimate for the typical utility bills in the City of Fresno.  Four services go into a homeowner’s monthly utility bill: Water ($24.49 for one-inch meter and 1,800 cubic feet of water); sewer ($25.75); trash ($25.37); and community sanitation (neighborhood cleanup, street-sweeping, etc., $6.23). This produces a typical monthly bill of $81.84.  As an investment property owner (landlord) these are traditionally costs that are paid for by the tenant.  Please contact Neighborhood Property Management if you should have additional questions about these utility rates or other fees that would impact you or your prospective renters.  Neighborhood Property Management is primarily a residential property management company serving the Fresno and Clovis areas in Central California and can be reached at info@neighborhoodpm.com or 559-417-8565.

Here's a great detailed article provided by Kimball, Tirey, and St. John LLP discussing lease language and the ability for landlords (and tenants) to recover attorney's fees related to contract disputes.

The general rule in California is that each party bears its own attorney’s fees. There are exceptions to this general rule. One exception exists when a contract contains an attorney’s fee clause. If a contract provides that the prevailing party will recover its attorney’s fees and costs, generally that provision is enforceable, assuming that the matter is litigated to judgment.

Landlords who want to recover attorney’s fees from defaulting tenants should ensure that their rental agreement or lease contains an attorney’s fee clause. Below is an example of a simple attorney’s fee clause.

In any legal action brought by either party to enforce the terms of this agreement or relating to the Premises, whether based in contract or in tort, the prevailing party will be entitled to reasonable attorney’s fees, costs, and expenses incurred in connection with that action.

Terminology should be made consistent with the rental agreement or lease.

California Civil Code §1717(a) makes attorney fee provisions reciprocal. Attorney’s fees will be provided to the prevailing party regardless of language limiting the right to one party. This means that if the lease contains an attorney’s fee clause, a prevailing tenant will be awarded attorney’s fees even if the lease only discusses an award of attorney’s fees to the landlord.

While in theory the rights of the tenant and landlord to recover attorney’s fees are reciprocal and balanced, in reality landlords typically have more assets than tenants; an award against a landlord is usually far more collectable than an award against a tenant. An attorney’s fee award against a landlord is probably fully recoverable, while a large attorney’s fee award against a tenant will probably not be fully collectable. Keeping this in mind, some landlords choose not to have an attorney provision in their leases. Others impose attorney fee caps designed to prevent a tenant’s attorney from recovering large amounts under Civil Code §1717 if a tenant prevails in a lawsuit. Determining whether an attorney’s fees cap should be imposed is a risk management/business decision that will require an analysis of the types of litigation in which a landlord is involved, the likely amount of attorney’s fees awarded in each kind of case, and the finances of the parties involved. For example, if a landlord’s tenants are primarily low income, and would be unable to pay large attorney fee awards, and 95% of the landlord’s litigation matters are unlawful detainer actions, and the attorney’s fees awarded in those range from 0 to $2500, but only a very small fraction are more than $700, the landlord may want to cap the fees at $700 (or even increase the cap to $1000 to cover increasing attorney fee awards.)

While an attorney’s fee cap should be considered in all cases, it is particularly important in areas where there are defense attorneys available to tenants at no charge to the tenant (such as the Eviction Defense Center in Oakland, BASTA, Inc. in Los Angeles, and Legal Aid attorneys in San Diego funded by the Sargent Shriver Civil Counsel Act, AB 590).

A landlord that would like to impose a maximum amount of recoverable attorney’s fees can change the attorney’s fee provision to read:

In any legal action brought by either party to enforce the terms of this agreement or relating to the Premises, whether based in contract or in tort, the prevailing party will be entitled to reasonable attorney’s fees (not to exceed $_____), costs, and expenses incurred in connection with that action.

An attorney’s fee cap will not limit an attorney’s fee award in all cases.  It will only limit an attorney’s fee award based on the contract awarded under Civil Code §1717. There are several other state and federal laws that allow a tenant to recover attorney’s fees against landlords. The attorney’s fee cap would not limit an award of attorney’s fees granted under the other statutes.

Please contact Neighborhood Property Management, a Fresno and Clovis based residential property management company that can discuss this and other strategies  with you to mitigate your liability and increase profitability.  Contact us today at: 559-270-6776 or info@neighborhoodpm.com.

The Fresno Housing Authority announced it is facing a significant budget shortfall during the 2013 fiscal year as a result of across-the-board sequester cuts to most federal programs.

The agency will see a reduction of more than $8 million in funding received by the Department of Housing and Urban Development. More than $4 million of the reduction is funding that directly supports the Section 8 housing program, which provides housing assistance to extremely-low-income families with children, seniors and veterans.

The agency said in a release that it expects 600 families to lose services in the coming year due to these specific cuts. The housing authority does have reserves available, so it does not expect to terminate current families from the voucher program like many housing authorities are doing across the country. Funding reductions will instead be managed through attrition.

The agency said it has been operating underfunded for years, and with sequestration in place since March 1, it is looking to tighten its belt even more. Services that may be affected include property inspection delays and repairs to public housing units.

“The Fresno Housing Authority Boards of Commissioners have been proactive in taking various measures to reduce program costs in order to maximize assistance to the most vulnerable members of our community,” said Preston Prince, executive director and CEO of the Fresno Housing Authority. “Some of these measures include not filling vacant positions, providing retirement incentives and reducing overall agency costs and expenses across the board.”

Three bills that could hurt the rental housing industry will likely advance out of their respective judiciary committees in the Assembly and Senate next week. Because of the political leanings of the judiciary committees in each house of the state Legislature, they tend to approve bills not necessarily friendly to business, including those that CAA believes have major flaws. 

Three bills that go before the judiciary committees Tuesday, May 7  --and have detrimental provisions for the rental housing industry -- include:

• SB 603 (Leno-D), which would require that landlords pay interest on security deposits while dramatically increasing penalties, even for honest mistakes.

• SB 750 (Wolk-D), which would  mandate the installation of submeters on all new multifamily units and -- as currently written -- ban ratio utility billing systems, or RUBS. 

• AB 969 (Ammiano-D), which would encourage jury trials for eviction cases when a tenant claims he or she withheld rent because a landlord failed to make repairs to an apartment. The bill implies landlords are at fault, and by encouraging trial by jury, would greatly delay evictions. 

Neighborhood Property Management is watching these bills closely.  Contact us or check back to see how these might affect your investment properties in Fresno and Clovis.

Thought I would share this link to an article (click HERE) posted on "BiggerPockets.com" (great resource for property owners/investors btw) that discusses the importance of having a good property manager and why very few companies preserve a good reputation with their clients and tenants.  Here's a couple highlights from the article:


Potential Consequences of a Bad Property Manager
The property manager is in control of your property on a day-to-day basis. He places the tenants and keeps an eye on them while they live there, he makes sure repairs are taken care of and the house stays in working order, and most importantly he stays in communication with you about the property. If your manager doesn’t know what he is doing, or isn’t overly concerned with how he is doing it, here are some negatives that can result.

• Higher Vacancy Rates: The property manager is the ones who select tenants. While no tenant is a sure thing, there are easy precautions to take in screening a potential tenant, such as their income-to-rent ratio, employment history, and their reason for renting. Credit scores these days have become horrible indicators of tenant quality, rental history can be easily forged when the tenant gives you their friend’s number who pretends to be their landlord, and criminal background checks often don’t show everything. All three of those are still worth checking, but they aren’t the big indicators anymore.
• Higher Repairs Cost: If your manager only calls a contractor for any maintenance request, you are going to continuously pay an arm and a leg for repairs. If he hires a handy guy who is cheap but doesn’t do the job right, guess who has to keep paying for the redo? If the management company wants to squeeze extra money out of you they can charge a ridiculous hourly rate for their handymen or create repairs that weren’t really necessary in the first place, as with my property above.
• Constant Stress: “Managing the manager” is horrible. I’ve done it, I don’t like it, and I can’t help but wonder what I’m paying a monthly fee for if I’m having to always be on top of my manager. There are plenty of managers that leave me stress-free and I definitely prefer that route. You may wonder how you will know if you need to be managing your manager or not. Trust me, you’ll know.
• Confusing Invoices and Pay: I think the property management software out now is worthless. It’s confusing, I can barely read the things, and if there is any anomaly such as the manager charged me maintenance incorrectly, the statement rarely reflects the change because it was created by the same computer that received the maintenance request, versus being created by the person I talked to about the request. If that makes any sense. I prefer mom-and-pop style invoices in Word or Excel, personally.

The first two bullets are the most important because they directly, and quickly, affect your ROI. The last two don’t affect the money but they can affect your sanity which to me is in a close second place to the money.

What Makes a Good Property Manager (and Don’t be Fooled into Thinking These Managers Don’t Exist!)

Feel free to add to this list as you go about your experience with property managers, but these are the key things that will make or break my relationship with a manager.

• Feeling of Trust: I want to feel confident that my manager will contact me if there are any issues.  I also want to feel confident that if I fall off the face of the earth for any period of time and my manager can’t get a hold of me that he will handle my property not only smartly but he won’t rack up ridiculous expenses while doing it either. This feeling of trust isn’t hard and isn’t something that needs analysis. You either have it or you don’t. Go with your gut.
• Good and Quick Communication: Nothing gets under my skin more than if I can’t get in touch with my property manager or if I can’t get a question answered promptly. I’ve had managers I had to call daily for a week or more before I could get an answer to a simple question. My good managers however email me back the same day or by the next morning with a simple answer. What a concept!
• Proper Maintenance Doesn’t Break the Bank: This is a big one for me. Calling a contractor out for every maintenance request is unacceptable. Surprisingly, this is what most property managers do. I can call a contractor from 3,000 miles away. Why pay someone to do that for me? I want to know that if my tenant calls and says the toilet is messing up that the manager will go adjust the floaty ball himself and not charge me for such a minor issue. What about compensating his time to do that, you ask. That’s what I pay a monthly fee for!
• Knows the Importance of Tenant Quality: Any period of vacancy is stressful for an owner but being patient in finding the right tenant is key. My good managers may not place a tenant as quickly, but when they do finally place a tenant, the tenant is well-qualified and shows all the signs of holding up their end of the lease. In the long-run, having less turnover with good tenants will cost much less than saving vacancy time in the short-term and placing just anyone.

Questions I Ask When Interviewing Potential ManagersAs you get more experienced with property managers, you will learn what things are most important to you in a manager and consequently you will have a better feel for what questions to ask. Don’t be afraid to learn from your mistakes (or your manager’s mistakes) in order to know better what you are looking for. Here are the big questions I always ask when talking to a potential manager.

• How much do you charge for the following: monthly fee, tenant placement fee, re-leasing fee, maintenance labor?
• How do you handle maintenance calls: send a handyman, call a contractor, do it yourself?
• What are typical maintenance charges in terms of labor?
• What kind of statements will I receive each month?
• How accessible are you on email and/or phone? (not kidding, sad I even have to ask)
• Are there any times you won’t ask for my approval for maintenance repairs?
• How many properties do you currently manage? Do you have references?
• What are qualifications do you look for in tenants?

At the end of the day, it comes down to you realizing that you are in control of the situation. If a manager does anything that seems out of the ordinary, or too expensive, or whatever else that can happen, understand that you have every right to fire that manager and hire a new one. Not all managers are bad. Yes, property managers tend to be at the lower end of the totem pole when it comes to trustworthy real estate connections, but good ones do exist. If you are willing to find them, they will change your investing life forever. Don’t forget, they work for you. You run the show. Bow up and do your thing and don’t be scared to fire someone.
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Admittedly, it is difficult to distinguish quality from average property management companies.  At Neighborhood Property Management (managing condos, houses, and apartments in Fresno and Clovis) we encourage you to do your research and sit down see whether they truly care about the things that you value and that will help you succeed with your investment goals.  Call us today for a no obligation assessment of your property's rental value and discuss methods of decreasing your stress while maximizing your asset.  559-270-6776 or info@neighborhoodpm.com.

The California Legislature has been busy and it continues to be more critical than ever to stay up with one of the most regulated industries in our country--Rental Housing.  NPM would like to bring a few of the most prominent laws to our readers attention:

1) AB 1679 allows landlords to deposit (with the tenant's agreement, any remaining portion of a tenant's security deposit directly to a bank account designated by the tenant.  The law also allows landlords to provide a copy of the itemized security deposit statement along with the supporting documents and receipts to an email account if provided and authorized by the tenant.
2) AB 2521 increases the value of abandoned property from $300 to $700 as it relates to the trigger to require a public sale before disposing of personal property.  Once the statutory period has passed, if less than $700 the landlord may dispose of it in any manner or even retain for his/her own use.  (Today, tenants have a 2 day grace period to retrieve the property without storage charges if teh property is stored on the premises).
3) SB 1229 now prohibits landlords who allow pets to then have a policy requiring the animals are declawed or devocalized as a condition of occupancy.
4) SB 1055 Rental payments were addressed by adding a law that prohibits a landlord from requiring tenants to exclusively use electronic funds transfer (EFT) or cash as the only options for payment for rent or security deposit.  Other options for payments must be offered.  NPM and many of our existing residents truly enjoy the convenience of electronic payments but there are still a minority of residents who do not have the ability and therefore need to be accommodated. 
5) SB 1394 addressed Smoke Detectors by requiring that on or before January 1, 2016, an owner must ensure that smoke alarms are located in each residential rental bedroom.  (Battery operated is OK)
6) SB 183 requires that all single family detached homes (owner or tenant occupied) must be equipped with an alarm on or before July 1, 2011.  All other resiential units must be equipped with an alarm on or before January 1, 2013.

All of us should not only be aware of these laws, but also make sure it is incorporated into all of our lease materials going forward.  Should you have any questions in this regard, please contact Neighborhood Property Management for further insight and implementation.