Property Management Blog

Top Property Investing FAQ: When a Tenant Doesn’t Pay Rent in Colorado Springs

System - Friday, July 12, 2019


We often have owners or potential clients that want to know what happens if their tenant does not pay rent. Today, we’re briefly talking through the process here at Cornerstone so you can understand what we do to collect past due rent from a tenant.

Rent Collection Policy and Past Due Rent

It’s important to include a rent collection policy in the lease agreement. In our lease, rent is due on the first of the month and we allow the tenants a grace period through the fifth of the month. If a tenant has not paid rent by the fifth, then on the sixth day they begin to accrue late fees. Hopefully within that timeframe we are in contact with the tenant. We are happy to reach out to them and hopefully they have reached out to us.

Many times, they may notify us that their rent is going to be late but promise to pay by a certain date. That communication lets us know that:

  • The tenant intends to pay the rent
  • It provides us the opportunity to remind them of the lease requirements

The tenant will continue to get late fees and with our lease and our policy there are some more steps we are going to have to take until they are paid in full.

Notice to Pay or Quit

The next step is to provide the tenants with a Three Day Notice to Pay or Quit. It gives the tenant three days to pay up or leave the property. We will post that notice no later than the eighth of the month, provided the tenant is not paid in full.

Scheduling a Court Hearing

Once those three days lapse and the tenant has not paid the rent, we will then be forced to send that paperwork to our lawyer to begin the eviction proceedings. The lawyer will schedule a court date with the magistrate. If the tenant has not paid in full when the court date arrives, the magistrate is going to give possession of the property to us, the management company, on behalf of the landlord.

Possession of Property

Once we have possession of the property, we will schedule a time with the sheriff to do an eviction. We meet the sheriff at the property and remove the tenant’s belongings. Then, we take back possession of the property. We can then get the property in rent ready condition so we can rent it out to the next potential tenant.

Final Rental Accounting

The last step of the process is the final accounting. By Colorado law, we have to provide each tenant with a final accounting of funds. In this case, it would include back rent, late rent, late fees, and legal fees that the owner incurred with the eviction process.

We aim to answer some of the most frequently asked questions, and hopefully this information helps you to understand the eviction process a little better. If your tenant is not paying rent or you have any questions about Colorado Springs property management, please contact us at Cornerstone Real Estate Team.


How to Maximize the Rate of Return on Your Colorado Springs Multifamily Rental Property

System - Friday, July 5, 2019


As an investor, it’s important to maximize the net operating income for your investment property, and we’re talking about that today. There are two main ways to do this; by increasing your income and reducing your expenses.

Reduce Your Vacancy Rate

In order to increase your income, the first thing you must do is reduce your vacancy rate. There are two types of vacancies. You might have a vacant unit which is an actual vacancy or you might have an economical vacancy where you have someone living in the unit but they are not paying rent. If you have a vacant unit, you should do a market survey and find some comparables to help determine why that unit is vacant and why you cannot get a tenant in there. Ask yourself if your rent is above market or if the condition of the property is poor and maybe you need to do some repairs.

Know Your Market

Every time you have a lease coming up whether it is a new lease or a renewing lease, you should do a comparison of the market to find out what the rent rate is for similar units. Here in Colorado Springs, we have seen the rental market increase year over year for the past three years. In some areas of town, the rental market has increased by 10 percent. So, you may be leaving money on the table if you are not doing a good analysis of what similar properties are renting for.

Rent Collection Must Be Consistent

Your lease should plainly detail when rent is due and any late fees that will be applied when the rent is late. It should also list steps that are taken if rent is not paid. We recommend if you have a disciplined rent policy, then you stick to it. We like to say, ‘someone is always training someone’, which means if you are following your policy, then you are training your tenants to pay their rent on time. If you are not following that policy, then it is actually your tenants who are training you to not accept rent on time.

Handle Repairs at Lowest Level

The next part of maximizing your net operating income is to reduce your expenses. The first way to do this is by handling repairs at their lowest level. If a tenant calls in with a request order or there is a problem with the property, always see if you can troubleshoot the problem first. Maybe you can go by and take a look at the issue so you have a better idea of what might be required. Find out if a maintenance guy can handle the repair or if you will need to hire someone outside, which will come at a higher hourly rate.

Qualify Prospective Tenants

We recommend you screen and qualify your prospective tenants thoroughly. A good background screening with a credit check and a minimum income of three times the monthly rate is always encouraged. Make sure you know who you are putting into the property.

Retain Your Good Tenants

Obviously if you have a tenant who pays their rent on time and keeps the property nice and clean, you want to keep that renter as long as you can. If they move out, every transition has a cost. Wear and tear such as new paint and carpets will add expenses. You also have to expect vacancy when a tenant moves out which will be a loss of income. You always want to find those good tenants by screening them well and then try to keep them.

Bill Utilities Back

Many times when we take over the management of a property, we find that the owners have been paying all the utilities and the tenants are not. We found that when you are billing the utilities back it saves the owners money because the owners are not actually using the utilities. It also makes the tenants more accountable. You see the utility bills decrease in cost because the tenants are now aware of their actions and realize they are responsible for the amount of utility cost they use.

Increasing Net Operating Income: An Example

As an example of this concept, we took over an 18-unit apartment complex. When we took it over, it had a 55 percent vacancy which included 11 percent for actual vacant units and a 44 percent for economic vacancy where there were tenants that were there and not paying rent. This led to almost $16,000 in delinquent rent when we took over the property. And the rent income for that unit was just over $10,000.

One of the first things we did to turn this property around was follow some procedures to help the cause. We went and physically introduced ourselves to each tenant and let them see us actually making improvements to the complex. This let them see that we were actually taking care of the property which in turn, would hopefully make them take care of their property.

The next thing we did was actually enforce the lease that was in place. We enforced the quiet hours on the property and the cleanliness and parking on the property. We strictly enforced the rent payment process and made tenants aware again of the procedures. Tenants then either followed suit and began to take care of things as they saw us doing, or they left because they didn’t like the new procedures happening.

With all the delinquent rent that was sitting out there, we then offered each tenant a payment plan to assist in catching up on the rent that was owed. Many of the tenants did in fact get caught up on the rent and were able to stay on the property. Unfortunately for those who didn’t, we did have to turn to evictions and collections.

One year later that property is at 0 percent vacancy and we were able to collect 80 percent of the delinquent rent that was past due. The monthly rent income from the property itself has now gone up over 18 percent to almost $13,000.

Increase your net operating income because it increases your return on investment and of course it also increases your cash flow.

If you have any questions about increasing your net operating income or anything pertaining to Colorado Springs property management, please contact us at Cornerstone Real Estate Team.

2019 Rental Housing Market Update for Colorado Springs Property Investors

System - Friday, June 28, 2019


Property owners in Colorado Springs enjoy receiving frequent updates about the rental market and how it’s performing, and today we are sharing some information with you about the market in 2019, and what we expect to see.

Colorado Springs Real Estate Growth

If there is one word that would describe Colorado Springs over the last 18 months it would be growth. We have seen growth in the rental market, the population, and the sales market. For example, our population in 2017 for El Paso County was estimated at just over 460,000 people. Today, that same estimate is just under 700,000 people.

Such population growth drives growth in other areas as well, such as residential building. Last year in 2018, the city issued just over 3,800 permits to build single-family homes. This is a 10% increase over what we saw in 2017. This was also the highest level of permits issued in 13 years.

Building and Development in Colorado Springs

If you are familiar with Colorado Springs on the north end, north of Dublin, we are seeing additional building all along Powers and up through Marksheffel. As you travel south, there is more building to the east and to the south in the vicinity of the airport. A housing development that had been incomplete for years is now built out. Further south of that, two more housing developments have been completed that were once not finished. So, we are seeing quite a bit of growth on the residential, single-family home side.

Apartment Growth and Development

On the apartment side, we are seeing additional apartments going up north and in downtown Colorado Springs. So, between the Airforce Academy and Colorado Springs, over the last year and leading up to the end of 2019, we will see an additional 2,000 multi-family units. North of the Airforce Academy, there are even more apartment buildings being built, and those are being occupied by commuters who live in the north end of Colorado Springs and commute to Denver.

In the downtown area, over the last year we have seen an additional 200 units across three different apartment buildings. There are also two more under construction, and we also have a hotel being converted into condos, and that is going to add another 75-100 units in the downtown area.

Commercial Real Estate Growth

Additionally, we have seen building on the commercial side with hotels. There are several under construction and across town we are seeing both occupation of commercial space that has been vacant for awhile and also the building of new office space.

Cornerstone Real Estate Team

Within Cornerstone, we have also grown.

We are now managing approximately 420 units across Colorado Springs. One-third of those are single-family homes and two-thirds are multi-family units. With that growth of units under management, we have also increased our personnel. So, on the Colorado Springs property management side, our team is 10 people strong and we have two additional property managers, two additional assistant property managers, and several administrative personnel to assist us with the management of those properties.

In January of last year, we also added a sales team. The team has been doing a fantastic job with our clients, and we have had several investors add additional properties. We are now able to assist with both sides of the process – sales and management. In 2018, they sold over 50 properties which ranks them in the top 10% of agents in Colorado Springs.

We intend to provide these updates on a regular basis. Please reach out to any of our team members if you have any questions about the sales or rental markets in Colorado Springs. Feel free to follow us on social media or contact us at Cornerstone Real Estate Team.



3 Maintenance Tips Every Colorado Springs Landlord Should Adopt

System - Monday, June 27, 2016

All landlords handle maintenance their own way, but these are 3 maintenance tips that every property owner should adopt. We are talking about routine maintenance items that are required to keep your home in excellent condition as well as safety tips that will keep your tenants and your property protected.

Preventative Maintenance Needs

The first tip is to take care of all your preventative maintenance needs on a regular basis.

  • Service your furnace once a year to be sure that everything is working properly. Have a tech come out and go over the furnace from top to bottom. This will extend the life of your furnace and ensure that everything works properly. If you have an air conditioning unit, do the same thing for the cooling system.
  • Clean out exhaust ducts. This is something that is often overlooked. There’s often a buildup of lint, and sometimes you’ll find a bird’s nest or a squirrel nest. Check and clean these ducts to prevent fire or hazardous situations. Also, it extends the life of your dryer.
  • Clean your wood burning chimney and fireplace once a year. Build up can cause an unsafe situation, so have a licensed and insured technician check and clean your chimneys.
  • Replace the batteries in your smoke detectors and carbon monoxide twice a year. We do this at daylight savings time and it can be a tenant task if you have it in your lease.
  • Change the furnace filters quarterly.

These routine maintenance items reduce your liability and keeps tenants safe. They also contribute to reduced maintenance expenses over the long term.

Protect Against Storm Damage

In Colorado Springs, we often have high winds, especially in the spring and during summer storms. There’s also the threat of hail storms. It’s not a bad idea to have your roof and gutters checked out every year. You don’t want any leaks in the attic and you want to make sure water is being pushed away from the house and foundation.

Clean Out the Gutters

If your property is in an older neighborhood with tall and mature trees, clean the gutters once a year to get rid of leaves, pine needles, branches, or build up. Keeping them clean will ensure they are working effectively.

These are the 3 most important maintenance tips we have for you today. If you need any help, please contact us at Cornerstone Real Estate Team.

 

Tenant Screening in 5 Easy Steps – Colorado Springs Landlord Education

System - Monday, June 20, 2016

Tenant screening can be done in 5 easy steps, especially if you’re working with a property manager who has access to technology and resources. We’re sharing our process today, so you can see how a professional screens potential tenants. Always

Prequalify A Tenant

The first step is the prequalification period. We prequalify all interested tenants on the phone or by email. We provide them with our minimum leasing criteria and ask them to confirm that they meet those criteria before we set up a showing. You don’t want to waste your time or the tenant’s time if they don’t meet your minimum standards.

Schedule a Showing

If they meet the criteria, we go ahead and schedule a showing. At the property, we have another opportunity to talk face to face with our prospect and discuss the conditions of our lease. We can share the expectations we have for any tenants who lease a property we manage.

Provide Online Applications

Online applications are an efficient way to gather all the necessary data we need for a thorough screening. Everything is on our website, and we usually get the results that same day.

5 Part Background Check

From that application, we conduct a 5 part screening and background check. We look at the FICO score, and check for a criminal background or a listing on the Registered Sex Offender List. Then, we confirm income and employment. We also confirm previous tenancies with former landlords and check for prior evictions.

45-Day Survey

The last part of this process is to do a survey 45 days after a tenant moves in. We go to the property and meet with the tenant. We take a look at the home, confirm the condition report, and make sure everything looks good. We’ll check to make sure the appliances are working and there aren’t any problems with the plumbing or the electrical system. This is another chance to go over our expectations for how the property is maintained.

This is tenant screening in 5 easy steps. If you have any questions, please contact us at Cornerstone Real Estate Team.

Why You Should Choose a Colorado Springs Property Manager vs. DIY

System - Monday, June 13, 2016

There are huge benefits to working with a professional property management company like Cornerstone rather than managing your investment property on your own. Today, we’re sharing some of the best reasons to work with experts.

Major Time Savings

One of the most common reasons to hire professionals is that your property manager will save you time. The hours in your day are limited, and time is a precious commodity. We will do the advertising and marketing to bring in a great tenant. We will conduct showings for people interested in renting the home, and do screening to ensure we’re placing a quality tenant. Once the tenant moves in, your property manager will be the first point of contact, and handle everything from rent collection and distribution to maintenance and accounting. That’s time you can spend with your family or on your hobbies.

Rigorous Tenant Screening

A professional manager has the resources to conduct a thorough tenant screening. You’ll get a criminal and background check, and your manager will confirm employment and income. It’s important to make sure the tenant hasn’t had any evictions and that the credit checks meet your minimum requirements.

Legal and Regulatory Knowledge

Your property manager will be trained on all regulations at the federal and state level as well as any variances at the local level. There are a lot of fair housing issues to worry about, and a property manager is going to know the local laws on the maximum number of people who can live in the property, and the maximum number of pets they can have.

24-Hour Emergency Contact

Another benefit to using a property manager is that you’ll have someone available to respond to emergencies 24 hours a day, 7 days a week. Calls will be fielded on weekends, holidays, and in the middle of the night. If the problem is determined to be a real emergency, a technician can be dispatched to solve the problem or fix whatever is broken.

Increasing Rental Income

Even while paying the property management fee, you’ll see increased income. Property managers are experts in their field. They spend time tracking the market rents for your type of property in your area. That will provide a good price for your property so you can maximize your income. This keeps you from lagging behind the market and prevents your property from being listed too high and sitting vacant.

Experienced Management Accounting

Professional property managers will send you your income each month with a detailed monthly report showing income and expenses. You’ll get a snapshot of everything that went on with your home. At the end of the year, you can expect an annual report summarizing everything, along with your tax documents.

These are just a few reasons that demonstrate how using a professional property manager is better than doing it yourself. If you’d like to hear more about our services, please contact us at Cornerstone Real Estate Team.

Why Choose Cornerstone Real Estate Team for My Colorado Springs Home

System - Tuesday, June 7, 2016

Cornerstone provides expert property management services for Colorado Springs and surrounding areas including Fountain, Widefield, Manitou Springs, Monument, and Denver. Today, we want to tell you why you should choose us to take care of your investment, whether you have a single family home or a multifamily complex.

Property Management Knowledge and Experience

I started in the property management business in 2008, when I began managing my own rental property. I was soon contacted by a number of friends and family members who were looking for new management because they were unhappy with their current company, or they were bringing a new single family home onto the rental market and needed a manager. The more property management I did and the more I learned, the more I enjoyed it.

Military Background and Service-Oriented

We are a veteran owned and operated business. All of the former military members on our staff have more than 100 years of combined military service. With that, we bring the skills, values, and work ethic we developed and learned in the military. You get an experienced team of people who are focused completely on property management.

Successfully Managing Diverse Properties

We currently manager just over 300 units, including two apartment complexes with 50 units each, 100 investment properties like duplexes and triplexes, and more than 100 single family homes. Our average rental rate is $1,535 per month for a single family home. We do manage a range of properties, so we are experienced taking care of efficiency units that go for $400 a month up to single family luxury homes that rent for over $3,000 per month.

Keeping Your Costs Low

Typically, we are able to lease a single family home before the current tenants leave and end their lease. That results in a faster turnaround time for you, and less rental income that’s lost. Our tenant renewal rate is 55 percent, which means the majority of our renters stay and renew their leases. Keeping a good tenant in place reduces your turnover costs.

All of our property managers are licensed real estate brokers in Colorado. We have a full support staff, and an outstanding network of vendors and contractors.

If you have any questions about the services we can provide, please contact us at Cornerstone Real Estate Team.

Landscape Maintenance and Rental Properties

System - Wednesday, January 13, 2016
While residents want to rent a nice looking home, they often have no interest, time, or knowledge on how to maintain the property. They may agree to landscape maintenance in the rental contract but it can be difficult for a property manager or owner to enforce. The owner can charge the tenant for maintenance or include landscape maintenance but it is not always practical to increase the rent with the full cost, particularly if the landscaping on the property is extensive.

Cornerstone Real Estate Team
685 Citadel Drive East, #325
Colorado Springs, CO 80909

Office Hours:
Monday - Thursday: 9am - 5pm
Friday: By Appointment Only
Saturday & Sunday: CLOSED

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