Archive | October, 2014

Rental Property HOA Violations & Subjective Rules

22 Oct

Recently we had our first run in with a rental property’s homeowners association; it started with a couple warning letters letting us know that our duplex had a lawn care violation.

HOA Violation Notice

I wasn’t too concerned because (1) I assumed the lawn was in violation and (2) per our lease the tenant ultimately pays any HOA fines. It wasn’t until the fine was imposed that our letter also included low-resolution photos of the lawns in question, and I started to realize just how subjective lawn rules could be.

Lawn 1

Lawn 2

I’m not saying that’s a perfectly manicured lawn, but for a row of duplexes in rural Texas I was expecting something a LOT worse. It was also quite the coincidence that both tenants simultaneously stopped complying for the first time – more likely the HOA was now enforcing a higher standard of lawn care, but had not communicated those new expectations.

The violation letters themselves didn’t elaborate beyond “Cutting Grass and/or Weed Eating”. Our property manager reached out for clarification, but was told by the HOA manager that she didn’t have to tell them what the violation was – only refer them to the HOA’s covenants, conditions, and restrictions:

“Each owner will keep shrubs, trees, grass, and plantings
of every kind on the owner’s Lot cultivated, pruned, and mowed,
and will keep yards free of trash and other unsightly material.”

Why is nothing easy?  🙂

There were more questions than answers… was there a maximum length of grass allowed? Was edging required? Did they just want the shrubs pruned back? To help sort things out, I scheduled a meeting with the HOA Manager.

The goal wasn’t to get out of the fine – just obtain clear guidelines that I could communicate back to our tenants so they could reliably avoid the HOA’s wrath in the future. If the lawn standards weren’t clear to me then they certainly weren’t clear to the tenants.

Coming soon: the HOA meeting and aftermath

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Landlord Efficiencies: Grab-and-Go Make Ready Kit

13 Oct

These days our property management company handles the day-to-day repairs for our tenants, while we still do most of the make ready work. I enjoy tinkering around the properties and fixing things up, particularly when we can work at our own pace while the units are vacant.

What I don’t like is searching our apartment and cluttered storage closet, trying to find (and remember) everything I might possibly need over the next few days. More than once I’ve purchased something I already own because it’s cheaper than making the trip back to our place.

Storage Closet

The hot mess that is our apartment’s storage closet

To that end I decided to create a “Make Ready Kit” – permanently consolidating the most used tools and supplies in one place. I started with this Rubbermaid Clever Store Organizing Tray and 71-quart storage tote.

Rubbermaid Clever Store

Then I pulled together anything regularly used when preparing a unit for tenants – including yard work, touch-up paint, carpet cleaning, fence maintenance, light bulbs, and security deposit accounting. Even that process took the better part of a week because I kept adding forgotten items.

Make Ready Kit Contents

(Click to view full size image)

There are some bulky elements that won’t fit in the bin (broom, step stool, etc.) but I have another idea to address those (coming soon).

Make Ready Kit Contents:

  • fire ant bait
  • small hose extension
  • fertilizer spikes
  • carpet cleaner (spot treatments)
  • carpet cleaner (machine)
  • drip pans
  • paper towels
  • hand towel
  • drill bits
  • exterior screws
  • spackling
  • putty knife
  • paint brush
  • paint stir sticks
  • light bulbs
  • gloves – his and hers

 

Make Ready Kit Compiled

Everything fits nicely – with room to spare.

The next vacancy isn’t until November, but this has already been an easier solution for grabbing the random tool for an around-the-house project. It would also make a great gift basket for a new landlord or real estate investor.

*If you have a suggestion to improve the kit, please share it in the comments.*

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How We Saved $1,454 on Our Property Taxes, Part 3

8 Oct

Note: these appraisal protest experiences are Texas-specific (and possibly county-specific) so please be careful applying them to your own district.

Once Corey received our appraised value and filed our notice to protest, it was time to compile any value-supporting data. Below are some places to start, and a notation about whether they corroborate an excessive or unequal protest.

Paperwork

(photo by striatic)

Appraisal District’s Supporting Documentation
We previously sent a letter requesting all documentation the appraisal district intends to introduce at the hearing. Our district provides different reports depending on the reason(s) for protest – so again, check both when you file!

Comparable Sales Report (Excessive)

Subject
Comp1
Comp2
Comp3
Address
126 Street 118 Street 200 Street 100 Street
Year Built 2006 2006 2006 2011
TotValue $169,105 $169,105 $169,105 $162,618
Value/Sq Ft $48.87 $48.87 $48.87 $48.87
Sale Date 1/22/13 1/8/13 7/31/13
Sale Price $150,000 $143,000 $182,000
Adjusted Price $153,060 $145,917 $191,252
Indicated Value $153,060

The comparable sales report included 3 other properties sold recently, then made square footage, year built, and sale date adjustments to estimate the market value of our property. Notice that property #2’s indicated value is significantly less than the $161,105 appraisal, and that comp #3 is a considerable outlier in sales price relative to the other properties.

Equity Comparable Report (Unequal)

Subject
Comp1
Comp2
Comp3
Address
126 Street 112 Street 112 Street 112 Street
Sq Ft 2006 2007 2007 2006
Year Built 3,460 3,460 3,460 3,184
Appr Value $169,105 $170,607 $170,607 $169,105

Each equity comparable report gave us the appraised value of 10 similar properties relative to our own property’s appraised value.

3rd Party Sales Comps (Excessive)
Request comparables from a real estate agent or property management company, or search online listings (Redfin.com filters by past sales). Our realtor provided a “Market Analysis Summary” with ~10 similar sales for each property:

Address Unit Mix
SqFt
Sold Price
Sold Date
212 Street Dr 3/2 3,460 $129,000 3/5/12
112 Street Dr 3/2 3,460 $138,000 6/8/12
220 Street Dr 3/2 3,460 $136,000 7/13/12
200 Street Dr 3/2 3,460 $143,000 1/11/13
118 Street Dr 3/2 3,460 $150,000 1/31/13

The ultimate goal of the appraisal process is to determine the value of the property on Jan 1st of the current year. Properties sold within 24 months of that date can be considered (36 months is allowed if there are limited comparables). This means we’re interested in sales from 2012 and 2013, but the most recent comps have more weight when determining the Jan 1st value.

Appraisal District Website (Unequal)
There is a wealth of information on the appraisal district’s website, included the appraised value of every property in your neighborhood. If you find similar properties with significantly lower appraisals (perhaps they are homesteads – which means the rate of increase is capped at 10% per year), they could support an argument that your property has not been equally appraised.

Appraisal District Property Results

While you’re there, verify the information the appraisal district has about your property. Pay extra attention to the square footage and number of bedrooms and bathrooms – it’s possible the appraisal district used inaccurate information to calculate the appraised value.

Recent Settlement Statements (Excessive)
We didn’t know this at the time, but we could have also used our HUD-1 Settlement Statement to support a lower market value since property #2 was purchased in the previous year.

If you have used any other data sources when protesting an appraised value, please share them for others in the comments below.

Next post – Corey’s meeting with the appraisal district

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