Winter and End-of-Year Business Prep for Your Rental Property Business

Where we do this in the Spring season, one of the best times of the year to perform these tasks is during Fall, in preparation for the winter months.

This week on the podcast, we are discussing what landlords should focus on to winterize their rental property.

We also dive deep into year-end business preparations in the office, which is something that really should not be overlooked.  Budgets, analysis, planning, and tax prep are just a few of the items we will be discussing.

LINKS

👉Outdoor Water Spigot Covers for Freeze Protection.  2 Qty, $6.89

👉 Fall Maintenance Checklist

👉 Episode 67: Renters Insurance

👉 Property Management Software We Recommend: 

TurboTenant, Innago, EZ Landlord Forms, DoorLoop, Hemlane, RentRedi, Avail

👉 Episode 39: Pt 1, 50+ Must Ask Questions When Hiring a PM

👉 Episode 40: Pt 2, 50+ Must Ask Questions...PM

👉 Property Manager  Questionnaire

👉 Episode 35: How Small Gestures Make a Big Difference

👉 The Fair Housing Institute: Courses/Certifications. Use code: YLR2024 for 15% OFF any course!

👉 Course Waitlist: From Marketing to Move In, Place Your Ideal Tenant
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Transcript

Stacie: 0:00

Last year we did an episode called Fall's Checklist, Rental Property Maintenance for a Hassle Free Winter. And where today's will touch on what was covered in that episode, we will also be talking about year end business preparations as well. You know, the things that you need to take care of in your office to ready yourself for the coming year. The scope of preparation for the property itself depends on the location, the age, and how on top of preventative maintenance you have been as an owner. And no judgment at all, we've been there. We've been in a place where we did just what we had to do to keep the place running. But we're also here to say that if you can avoid that, or work towards not operating that way, you will have a much better experience as a landlord. Because the peace of mind of knowing that we have done what we can to mitigate risk goes a really long way.

0:59

Welcome to your landlord resource podcast many moons ago. When I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lack confidence in the hands on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping. After many failed attempts, fast forward to today. Kevin and I have doubled our doors and created an organized, professionally operated rental property business. Want to go from overwhelmed to confident? If you're an ambitious landlord or maybe one in the making, join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire. All while building a streamlined and profitable rental property business. This is your landlord resource podcast.

Stacie: 1:47

Hello there, landlords, and thank you for listening to the Your Landlord Resource Podcast. I'm your host, Stacie Casella.

Kevin: 1:56

And I'm your co host, Kevin Kilroy. And we hope this finds everyone in a good place right now. It's the beginning of November, and hopefully hurricane season is dying down a bit. And we know a lot of people got hit really hard in late September with Helene. And again, in early October with Milton. So if you have a personal home or a rental and have sustained any damage or loss, please know that you are all in our prayers. We did make some donations to different foundations as well as to personal friends who lost everything, and are now having to start all over. It's been heartbreaking to watch everyone go through the experience. But actually for the people we know on a personal level, they have been surprisingly optimistic. And where it did take some time to wrap their head around the enormity of it all, they received a lot of support and I think that love really carried them through.

Stacie: 2:56

Yeah, one older couple that we know in western North Carolina lived near a, a sweet little stream. and when they built their home there, they built it 15 feet above the 500 year flood line thinking even in the worst of storms that the house would be okay. And the lady was home alone with her two dogs when the water started to rise. And in a matter of an hour, she watched the water rise, watched her truck float away, watched the water come in through the wall of her stairs that came through an exterior outlet that had been hit by debris and broke a hole in the wall. We saw videos of the water flowing halfway up against their bedroom window and little by little their house was being torn off and floating away. You know, they're fine now and they're living in Alabama with pretty much just the clothes on their backs and the dogs, but I'm saddened to say they did not have flood insurance and their insurance company has denied their claim for the house and for the cars. And no judgment on why they stayed. They did and will live with that nightmare for the rest of their lives. We here on the West Coast live every day wondering when the next big earthquake will hit, and even wildfires. And personally for us, we have earthquake insurance. In California, if your property is located anywhere where a flood has happened or could happen, they require you to pay for flood insurance, even if the home is a mile away from the levee or the water source.

Kevin: 4:29

Yeah,, in Sacramento, we are required to hold it as the property owners as are our tenants with their renters insurance. And I believe last year when we had some heavy rains, the sewer backed up about, oh, I think three blocks from our building. And where our property was fine, many buildings and cars were not. And that had nothing to do with the levees or rivers or any consistent water source. Listen, we are not going to get into the why all this is happening, but it is. And our job as mentors for landlords is to make sure you are doing all you can to be prepared for the unexpected. Whether that is a flood or a fire or an earthquake. I mean stuff happens

Stacie: 5:16

Yeah, and the sad part is that anyone who did not have essentially flood insurance on their home and lost it, like it floated away and every single thing they own within the confines of that house is gone, they still have to pay their mortgage on their home, even though it's no longer there. If this happens to you, the banks will come after you, and you will likely have to file for bankruptcy, or allow your property to be foreclosed on. And if so, you can kiss trying to get another mortgage for a new home goodbye.

Kevin: 5:49

Yeah, and as we have recommended before, you need to be checking in with your insurance broker at least twice a year for an evaluation. They are absolutely an integral part of your rental property team. There are new policies and coverages that are available for property owners for occurrences such as natural disasters. For instance, there are some insurance companies that offer what is called DIC insurance or difference in conditions coverage, as additional coverage to your homeowner's policy. If there is an instance where there is a flood, wildfire, tornado, hurricane, or earthquake, DIC insurance kicks in and will pay off your mortgage so you can move on. And when your income is dependent on one source, it is imperative that you do what you can to protect that source, or in our case, our rental properties.

Stacie: 6:45

It does feel like we're doing so much more now to mitigate risk, don't you think?

Kevin: 6:50

Well, yeah, I think so. And of course, the more property you own, the more there is to do, right?

Stacie: 6:56

Right.

Kevin: 6:58

We are getting ready to head up to the mountains here soon to winterize all of the cabins up there and prepare for really heavy snow loads, as the homes are all located between elevations of 6, 000 and some over 8, 000 feet. Last year, one cabin was buried in over 25 feet of snow. Now at home, we have preparations for rain. In Idaho, freezing weather and ice are issues we need to make sure we are prepared for. So, as you can see, our properties are diverse and that's actually really good. We won't lose everything all at once in one disaster, but there's a lot to do and manage this time of year.

Stacie: 7:39

Which is what we are here to talk about today. You know, last year we did an episode called Fall's Checklist, Rental Property Maintenance for a Hassle Free Winter. And where today's will touch on what was covered in that episode, we will also be talking about year end business preparations as well. You know, the things that you need to take care of in your office to ready yourself for the coming year. So let's get to it. You know, the scope of preparation for the property itself depends on the location, the age, and how on top of preventative maintenance you have been as an owner. And no judgment at all, we've been there, you know, we've been in a place where we did just what we had to do to keep the place running. But we're also here to say that if you can avoid that, or work towards not operating that way, you will have a much better experience as a landlord. Because the peace of mind of knowing that we have done what we can to mitigate risk goes a really long way.

Kevin: 8:41

And guess what, you guys? Shit still happens. We did everything right a couple winters ago, and that didn't matter when a neighbor down the street didn't take care of their trees, and a rather large limb, uh, I'd say it was about 4 inches thick and at least 8 feet long. It broke off in a heavy storm and pierced the roof of our apartments in Sacramento. And we had no idea. I mean, this was on top of the third story, and the only way to see it was from the neighbor's windows, who were also three stories up. They texted us a photo to let us know. And if you're wondering why the tenant didn't report it, he said he didn't hear it. So, the previous owners, lucky for us, pitched the roof and built a new roof over the old one. So when the branch punched a huge hole in the roof, water fell to the old roof and never caused any issues.

Stacie: 9:36

Yeah, I mean that was lucky. So with all that said, let's start with the roofing gutters. If you can, check out the roof and see if you can find any missing shingles or lifted areas or damage. A lot of leaks can happen around those vent pipes and chimneys, so be mindful of checking those areas. And if you're not comfortable getting up on the roof, pay a roofer to come out and do a quick inspection. I mean, even sometimes I think they'll do it for free. Nine 10, they're not going to find anything. You also want to clean the gutters and the downspouts. Now we don't get ice here and we still have things that get stuck in the downspouts. But if you get freezing cold weather, making sure your gutters and downspouts are clear is crucial to avoid ice dams. And once or twice we had ice dam issues in the cabins and the leaks screwed up the drywall. It's not a big deal, but it's just a mess to have to cope with.

Kevin: 10:36

And at your uncle's place there was a leak in one of those vents. I mean, we're still dealing with that damage.

Stacie: 10:42

Yeah you guys do not underestimate the damage even the smallest amount of water can make. And actually, well one of those vents in our house is leaking and the water coming through that primary bathroom ceiling has caused the ceiling to have all kinds of issues now.

Kevin: 10:57

Well, it's all job security for our contractor Jim, right?

Stacie: 11:01

Yeah for sure. All right, let's move on to windows and doors. Make sure that they close properly, that the weather stripping is in place, and the caulking around the windows is good, you know, there's no cracks. We have had windows in a couple of the units that have leaked, not a huge deal again, but a pain nonetheless. If you have properties in areas where you will get below freezing temps for days in a row, you need to check the pipes and make sure that they're properly insulated. Do not assume that everything is okay. Rodents can get into crawl spaces and attics and chew that insulation off. We do our inspections in November and then usually again in May. And we will pay our contractor to be present, to look for things because to be honest, we know some stuff, but we don't know enough, that's why he's there. And the couple of hundred that we pay him, as well as our HVAC guy to come and check the heaters in the fall and the AC units in the spring, It really is nothing compared to all the issues we'd have to deal with.

Kevin: 12:05

Yeah. I'll pay for that piece of buying knowing that we have taken preventative measures to decrease the chances of a heater going out in the dead of winter or an AC unit going out in the middle of a heat wave in the summer.

Stacie: 12:19

Yeah. And the funny thing is that when he checks the heater, he rarely finds anything, but every single year he finds something wrong with one of those AC units. Alright, let's finish up the exterior really quick. Check out your walkways for cracks that might be a tripping hazard or an issue with ice related incidents. If you're responsible for maintaining walkways, stock up on ice melt or salt or give it to the tenant to use if they're responsible for that maintenance. Like we wish our neighbor would have done, trim overhanging branches that can fall under the weight of snow or ice or break off in heavy winds. And blow out your irrigation lines and cover your exterior hose bibs to keep them from freezing. We have these great covers that are really inexpensive that we use on the cabins. I think they're like seven bucks for a two pack and they're really super easy to use. We'll link those in the show notes if you want to check them out.

Kevin: 13:18

Okay, now let's move inside. And we know we have mentioned these before, so we'll go through them pretty quickly. Along with checking on your furnace or boiler, change the air filters. If the AC is run over the summer months, the filter is likely pretty dirty and putting in a new one will help extend the life of your HVAC systems. You're going to want to check the heaters and the thermostats. We tend to change the batteries in our thermostats once a year just so we don't get that call that the heater doesn't work, only to find out that the batteries in the thermostat went out. Of course, check the smoke and carbon monoxide detectors and change the batteries in those if you feel it's necessary.

Stacie: 14:01

And here's a little tip for you. We take a Sharpie pen and we put the month and year on the batteries every time we change them. So the next time that you go in, you'll know if it's time to change them or not.

Kevin: 14:14

And if you're really organized and have a maintenance book, the dates those batteries were last changed should be in your unit file. Come on, we're all human and sometimes we fall behind keeping up with those log books. So that tip Stacie just mentioned really helps as a fail safe.

Stacie: 14:31

Yeah, because if there is a fire, the insurance company is going to ask when those batteries were changed last. And if it's on the battery inside the unit, you have your answer.

Kevin: 14:40

Exactly. And if you have a single family home or a rental with a wood burning fireplace, consider having a professional come out every few years and inspect and clean it. They will check that the flue opens and closes properly, that there are no cracks in the interior where embers can get in and cause a fire, and that the chimney cap on the roof is in place because those can fly off in bad storms. And just like on the outside, check around the windows, doors, and basements for any signs of water intrusion or mold. know, before you go out for this fall inspection, like a couple weeks before, take a minute to contact your tenant and let them know you will be doing your full inspection soon and ask them, are there any issues with the unit that need to be addressed? This will allow you time to contact the appropriate repair person to meet you out there on the day of the inspections. It is most efficient for you to go one day and have your contractor, your HVAC person, and maybe your electrician or appliance repair person all come on the same day to get stuff done. It's easy for you and it's also easiest on your tenant to only be inconvenienced one day than maybe several days.

Stacie: 15:59

And actually, we just finished a fall maintenance checklist that you can download for free. You can grab that at yourlandlordresource. com fall maintenance list. We'll also link it in the show notes for you. All right. I want to touch briefly on tenant communication. Make sure that it's clear who is responsible for what maintenance tasks. You never want to assume because it's a single family home or town home that the tenant has to care for those walkways. Use addendums in your lease to specify each and every task that they're required to handle. You should follow that up by putting the information in their unit binder as well. This unit binder is essentially your unit encyclopedia. And for the younger generation that's listening, encyclopedias are what us old people used before Google was around to look up information. And besides other crucial information like use and care notes, codes for locks, electronic payment information, and general rules, the unit binder should have a winter prep checklist for the tenants if they are responsible for certain maintenance items. You know, like clarify responsibilities for snow removal, whether it's the landlord's or the tenant's duty and who provides the supplies for those tasks. Make sure it has information on what to do in an emergency, like a power outage and who to contact for maintenance or winter related issues. If your tenant is responsible for replacing air filters, in that unit binder have the size and the location of the air filter. If your rental property gets freezing temps, make sure your tenant understands about leaving the thermostat on if they leave on vacation so that those pipes don't freeze. This would also be good information to send in a reminder email each season. You know, just like we send emails to our tenants about how to cope during a heat wave or reminders on safety for the 4th of July and for Halloween. Send your tenant all the information you could think of that they might need during the winter months. And we literally just cut and paste the same template each time we have to send out the same email. We make a few adjustments and update it and then send it out to all of our tenants. If it's something you need confirmation of receipt on, ask them to respond to that email with, got it.

Kevin: 18:26

Yeah. That, I mean, that works wonders. And they can't come back and say they didn't know. The responsibility has been handed over to them and they, hopefully, will be more cognizant of handling things properly. All right, you guys, one thing we have not addressed before but want to discuss is some tips about snow removal. Now, the checklist we sent out touches on it, but if your rental is in a place where you get a lot of snow, you might need, to add on some of these items. As we have already mentioned, determine who is responsible for what. If you handle snow removal, check your equipment and ensure your snow blower, shovels, and other equipment are in good working order. Stock up on fuel and any spare parts that commonly go out. Make sure you or your tenants have de icing products. And please be mindful of using products that are environmentally and pet friendly when possible. When the weather gets bad, bags of ice melt might be hard to come by, so always have extra just in case. If you are like us and hire a snow removal company to keep the driveways and walkways clear, make sure your contract is all signed and up to date, and payment has been made. Also make sure that it is clear where they are to clear, how often, and how soon after a storm.

Stacie: 19:51

Yeah, we have to pay for that invoice over summer, and by the time October comes around, most of the snow removal companies in the mountains have a full client base and are not taking any new accounts.

Kevin: 20:03

Yeah, only needed to let that happen once to learn that lesson. Also, make sure your tenants are aware of the schedule. I mean the last thing you want is to have a big machine plow into the driveway and take out their car or toys that were left out and get covered with all the snow. Getting snow off of roofs is another issue that can be dangerous if left alone. I mean, large chunks of snow sliding off a roof can take out a car or worse kill someone. So make sure there is a plan in place for removal of that. And the last thing to understand is, who is responsible for installing snow stakes or driveway markers to help guide the snow plows and shovels, preventing damage to landscaping, curves or property edges.

Stacie: 20:52

Or decks and stairways.

Kevin: 20:54

Yeah. Last year there was so much snow at that one cabin that the snow poles were buried. And the backhoe came in with those big blades a spinning and took out one of the posts of the railing.

Stacie: 21:07

Of course, we had no idea until spring when the snow had melted. But the bottom line is that if your rental property gets snow of any capacity, there needs to be a plan in place on how it's handled. Especially driveways, walkways, and entrances for emergency services and deliveries to reach your property safely and easily. Now, if your rental is located where there's a lot of rain, like the Pacific Northwest, here are some tips for rain preparation. Again, make sure gutters and downspouts are clear so that water can flow easily from the roof. You want to ensure downspouts direct water at least four to six feet away from the foundation to prevent pooling and potential flooding. So use those downspout extenders or diverters that are made of plastic and they fit right on the end of the downspout. Let's see, we already talked about checking the roof and vents. Okay, here we go. Make sure you have the proper grading around your property, so that the ground around the foundation slopes away from the building, so water won't get down under the foundation. Which leads me to the foundation. You'll need to check that for cracks as well.

Kevin: 22:24

And that's a fairly easy fix. You can pick up sealant or caulking and put it in those cracks and prevent water from seeping into the basement or crawl spaces.

Stacie: 22:34

Yeah, we had to do that at the Chico house, remember?

Kevin: 22:36

Yeah, I do.

Stacie: 22:38

And in Sacramento and in our house here, we have to have a sump pump to remove water from low lying areas underneath the property. So, you want to make sure those are working if you have them. Ours here, the float does not work so we just open the hatch to the crawl space and tap it with a broom handle.

Kevin: 22:57

Which is exactly what you don't want to have your tenants do. So make sure it's working if you provided one. Which reminds me, we need to check that one at your uncle's rental.

Stacie: 23:08

Yeah, I have to ask him if he did that. He's usually pretty good about checking that out.

Kevin: 23:11

Yeah, he is. But those sump pumps tend to go out easily, so replace them if it's needed. Okay, let me get through the rest of these items here to prep for rain. Storm drains need to be cleared, so make sure there are no weeds growing over them and they can drain easily and not back up. Let's see what else. Oh, if you provide outdoor furniture or grills or any equipment that rain can damage, maybe cover those up and tuck them away in a protective area. Make sure tree roots are not affecting drainage systems too. And if the property is in a flood prone area, have sandbags ready to place around vulnerable entry points like doors and garages to prevent flood water from entering.

Stacie: 23:55

Yep, every single year we have a family member who has to run and get sandbags for her garage. And tenants have to do the same with my uncle's rental that has the garage flood whenever we get heavy rain. You know, some old homes were not built with a consideration to extreme weather, and his small cottage was built in the early 1900s, and it has a detached garage that sits lower than the house. Like, the driveway dips down into the garage behind the rental home. So, of course, when it rains heavily, that garage is gonna flood. Are there things that he can do to prevent this from happening? Absolutely. He could buy a rubber bump, or build one out of cement, and that would help direct the water to the side of the garage where the lawn is. But, you guys, some landlords are set in their ways about certain things. How does it get handled? We have it disclosed in the lease that the garage floods with heavy rains and not to leave anything on the ground that could be damaged by water.

Kevin: 24:59

And yeah, that's a good point too. If you guys have anything that can be a hazard or cause damage to a tenant's personal items, make sure you disclose that in your lease. And of course, enforce renter's insurance policies to protect their personal property. We did an episode called Renter's Insurance, Why Landlord Should Require It, explaining why we make it mandatory for all of our tenants to hold. You can find that at your landlord resource. com episode 67, or you can go to our website and search 67 and it should come up. We will also link that in the show notes too.

Stacie: 25:39

And speaking of renters insurance, let's use this time to switch over from physical property maintenance to some end of year tasks that are important on the business side of things, you know, in the office. And one of those things is to ensure each tenant's renters insurance is good to go. We recommend checking the policy to make sure that it has the correct property address and if applicable, the unit number, which is something that we've had issues with in the past. You also want to check the policy to see if you have been added as an interested party. Now, if you received a copy of the policy declarations in the mail, then it's likely that you are. If you have not, and you received your copy of the policy directly from the tenant, this is something to check for. The podcast goes over all the reasoning behind this, but the one main reason is that you will receive notifications if the policy is changed or canceled for some reason. And this just happened to us last month. We received something in the mail from a tenant's insurance company. And, you know, a lot of times I know what that envelope is and I'll just toss it in a pile of mail to open later, but for some reason I opened it and I found that the tenant had canceled the policy and not notified me of it. So of course I scan that paper and I email it off to him explaining our policy and noting the page on the lease where it stated that renters insurance is mandatory. And if not, it's a lease violation, yadda, yadda, yadda. And the tenant got right back to me and said, oh yeah, I got a new policy that was bundled with my car insurance so I could save money. But they failed to add us on as additional insured or as an interested party. So we didn't get this new replacement insurance policy information. So at the year end, if you have not already, go through your mail and your files and make sure that your tenant's rental insurance policies are up to date, have the correct address, and have you listed as an interested party. This is also a really good time to check on your own property insurance as well as any other policies you have like umbrella insurance. Think about scheduling a meeting with your broker to discuss any changes to properties or concerns that you might have. And this would be a good time to ask them about that DIC insurance add on to your policy.

Kevin: 28:09

Now, I don't know about any of you, but we have lost insurance on multiple policies. We lost it on our sixplex in Sacramento because it"s over a hundred years old, which is actually kind of ridiculous because it was gutted and fully renovated in 2003. I mean, that building is more updated than our personal home. We lost it on one of our cabins, likely because of the wildfire dangers. And we also lost it on a classic vehicle we have. Well, it's not as fancy as it sounds, but we do have a 1958 Willy that was Stacie's brother's, and we have done quite a bit of work to get it running again. And as soon as we changed the insurance from non op to drivable, they dropped our policy. Boy, is that fun to take out. I mean, especially in the mountains.

Stacie: 29:01

Yeah, my brother actually left that Willy, which if you're not familiar with them, it's an old army jeep that can pretty much four wheel over any terrain. He left that to my middle son who, I'm hesitant to say is just like him. Um, not in any of the bad ways, but they both love the outdoors like camping and hiking and fishing. And the two of them spent time hunting together as well. So because of that, he got my brother's most prized possession, the classic Willy. And of course, classic cars are money pits. And because Kid 2 doesn't have the money to sink into it, Kevin and I dropped a bunch into it to get it working and running well or at least we thought. And we let him take it back to his home in Idaho last Labor Day weekend. So he's happy as a clam and actually, so am I, to have that spot in the driveway back.

Kevin: 29:51

Yeah, that's really a plus. And it's funny, you don't think anyone notices stuff, but we've had, what, the mailman and several neighbors ask, hey, what happened to the Willy? Yeah, I know. Okay, so let's get back in your office and continue to talk about end of year tasks. One thing that we let lapse last year and will not allow to happen again is reviewing and organizing our financial records. For us, we had a lot of tax stuff we waited on gathering. I mean, it was a real pain. So much so that Stacie created a tax prep checklist for us to follow now. And this will ensure we do not forget to add anything. This is the time to review and organize all of your financial records. Okay. You want to ensure all rental income is accurately recorded. So, go through rent payments, security deposits, and any late fees or penalties collected throughout the year. Organize expense receipts and invoices. So, gather all receipts for repairs, maintenance, property management fees, and other operating costs. Organized records makes tax filing so much easier. Reconcile your bank accounts. Cross check your bank statements with your financial records to ensure everything aligns and there are no discrepancies. You're going to want to categorize expenses. Ensure expenses are properly categorized to make it easier when preparing tax documents. And this includes operating expenses, capital improvements, and utilities.

Stacie: 31:33

And you guys full transparency here. We have a business credit card, but we have several businesses now, so tracking the expenses for each one has become quite a chore because some are on the business card and some are paid from the business debit card. And some got mistakenly charged on our personal credit cards and those are the ones we forgot about. And we balance our bank accounts both the personal and each of the business ones. But for the expenses that were run through our personal accounts, we have to actually go back and find those. And we're not talking huge amounts, but here's one scenario. We have rentals in Idaho, which, you know, so we can expense the travel that we incur when we go back to do inspections or have meetings with the HOA or whatever. And personally, we have a United Airlines credit card and we use those points earned to buy airfare. So when we fly, we charge all of our flights on that card because we get like five times a points or something. We also pay that credit card with our personal bank account. So when there are expenses on that credit card that belong to a business, it's not so easy to track. When you purchase airfare, you don't get a physical receipt to file away like when we go to a restaurant. So when we expense a meal on that trip. So our advice to you is to start now on gathering all the information that you're going to need for your taxes.

Kevin: 33:04

Yep. One thing that gets us each year is the home office. So if you have a home office, you'll need copies of your mortgage statements, all utility bills, property tax bills, and your internet invoices. Measure the room where your office is and figure what percentage of space that is relative to your entire home. That percentage is the amount you can deduct from all those personal home expenses. If you have done any repairs or improvements to your rental property. Those are key to know about as well. So meet with your tax prep person or CPA before year end to discuss changes in tax laws that might affect you. If there are legal changes or large improvements that need to be made before year end to take advantage of for tax purposes, you'll need this time to get it done.

Stacie: 33:58

So one thing we recently learned was that for roofing companies, their prices usually go up at the beginning of the year. So here in the Bay Area, we were told to sign a contract for our new roof, even if it won't happen until the following year, because then we can lock in that lower rate.

Kevin: 34:17

Yeah, I believe that was because material costs go up and they adjust their pricing around that. I mean, this one guy told us it has been averaging, I think it was around 15 percent each year the last several years. And again, this is here in the San Francisco Bay Area, so not sure if that's true all over or not.

Stacie: 34:35

Yeah. Well, nonetheless, other businesses are evaluating how they can earn more money, just like you should be doing. One more thing on taxes where we have dropped the ball before, and that is preparing the information you need to process 1099s. Anyone you've paid for a service who earns over$600 should be getting one of those. So this is where having all of your accounts balanced and your expenses coded to the proper bookkeeping account really makes a difference. And if you have an accountant or a bookkeeper who does this for you, make sure that they are going to be ready to create those once the new year rolls around. I also want to address your maintenance records. Before the winter months set in, review your maintenance records to make sure they're all completed. We get some that we can put on the back burner and the tenant is fine with it, but we have to set reminders for ourselves to circle back and complete them. Otherwise, we will definitely forget about them. And like the roof that we were just talking about, plan for large scale maintenance projects. Think about any major repairs or improvements that need to be scheduled for the upcoming year and start planning timelines and budgets. For instance, upgrading single pane windows to double pane ones for efficiency. Speaking of budgets, plan out next year's budget. You should know how much you have in your reserves and if you can perform any larger maintenance items. Compare your budget for this year to what you actually spent and see where changes can be made. Do you want to incorporate a more involved landlord software that might cost more than the free option that you're using now? Are you getting to a point where you have reached the max in your reserves and can take more home for yourself? Or did you have some big hits that that reserve account this year needs to be replenished? These are all things you need to evaluate and plan around.

Kevin: 36:38

Yep. And you want to check things like, has your property appreciated? Is it time to scale your portfolio? And if so, is the 1031 exchange a good option or have you made so many improvements your capital gains would be minimal and you can just sell it outright and take your time finding that next rental property? Again, these are all things to discuss with your CPA and legal team. I think that's it for the financial side of things. So let's move on to business development and see what tasks you can tackle on that end of the business. Alright, let's start with your leases. Often landlord tenant laws change and state specific leases are updated to reflect those new laws. So, make sure your lease and its addendums are updated for when your renewals roll around. Take time to evaluate your rules and criteria and see if any of your lease terms need to be updated. So, for us, last year, we decided we wanted to look into using a RUBS program at the sixplex in Sacramento. The acronym R U B S stands for Ratio Utility Billing Systems, which is where a company will come in and handle dividing up a utility bill that is usually covered by the owner. Like for us, we pay for water, trash, and sewer charges on behalf of our tenants. We do not charge them for that and we absorb the cost ourselves. There are companies out there now that come and analyze the water bill along with the size of each unit and how many tenants are living there, and then be able to determine how much each unit should pay for their share. Now, in order to begin this program, we had to have each tenant sign an addendum and agreement to those new charges, so it took some planning and we ultimately decided that we would wait for each to renew and have them sign the agreement with the renewal.

Stacie: 38:42

Yeah. You know, we tend to move slowly on changes like this. We could have had them all sign at once and started the program right away, but we had several new tenants and we thought it really didn't make a good impression to throw another expense at them just a couple months after they signed their lease. So we tabled that change and need to revisit at this year end. And to add to what Kevin was discussing about changing rules and criteria, consider maintenance and who handles what. Are there any changes there that you might want to have the tenant take over and take something off your plate. Now, a lot of people will say you should be checking out your rental rates, right? This is your income, and if other businesses are looking how they could make more, you should too. Well, not necessarily. Now think about the fact that rental rates vary and usually in the late fall or winter months rental rates will decrease because there's less renters moving and in the applicant pool. So landlords will lower their rents even if its$25 to attract applicants. And my point is, we prefer to evaluate income as we get renewals and turnovers. And often we are pleasantly surprised and can add a sizable increase. So for income evaluation, just keep it where it is, or maybe look at like a three or five percent increase for budgeting purposes. Don't use what the market is in the last quarter of the year unless you have a renewal or turnover that you have to deal with. And I touched on tenant communication briefly earlier, but if you have any changes to your policies or procedures that the tenants need to know about, keep the tenants informed in a well written email. And you know, some large property management companies will send out a survey for their tenants to complete, and that will help them gauge tenant satisfaction and get insights on areas for improvement. And we don't do this as of yet, but it's definitely something that we're considering.

Kevin: 40:46

Yeah, I mean, even though we think we have the tenant satisfaction part dialed in, I believe there's always room for improvement. All right, I'm going to talk now about property management software. Now, we have not done an episode comparing these as of yet, but we have touched on a few of our favorites. If you are a landlord who is already using property management software, ensure your software for managing finances, maintenance requests, and tenant communication is up to date and functions well for you and your rental property business. If not, explore upgrading it. I mean, you might want to consider upgrading to a more efficient property management tool that can streamline tasks like rent collection, lease management, and maintenance tracking. We have mentioned them before, but I mean, we love TurboTenant. We also think Enago is another good option. Both are free and most all expenses are passed on to the tenant. EZ Landlord Forms, which has traditionally always been state specific forms like leases, addendums, applications, et cetera, now offers rent collection for their paid accounts. If you feel you have grown out of these software, DoorLoop, HemLane, RentReady, and Avail are all landlord management software companies to consider. We will link each of them in our show notes for you.

Stacie: 42:14

All right. And one more thing to consider is backing up your information. So make sure that all essential documents, which would be your lease agreements, your tax records and tenant information are all securely backed up to both a cloud storage solution and a physical backup like an external hard drive. And if you're a member at Costco or Sam's Club or something like that, they usually have those really at a good price. You can pick those up. Okay. Getting ready to wrap up things here soon, you guys, we just have a few more end of year tasks to discuss. And this next one can get a little deep and that is. If you have a business plan, go over it and evaluate how well you stuck to it this year. Did you meet your goals? And consider what goals you want to achieve for the upcoming year. And those can be as simple as upgrading a unit, or cutting expenses, or working on renewal rates. Or they can be big, like buying your next rental property. Again, not always something that is in black and white, and that can be measured, but maybe in the upcoming year you have big changes personally and you need to back off from the business a little bit. Maybe you have reached a place where hiring a property manager makes more sense. And if so, check out episodes 39 and 40 where we do a deep dive into the 50 plus must ask questions when hiring a property manager. And we even have a questionnaire set up for you that you can purchase and you can use that when you're evaluating and vetting your property managers. So we'll link all of that in the show notes for you.

Kevin: 43:55

Yeah. I mean, we worked hard on those episodes in that questionnaire. And there's a ton of valuable content there. Alright, now I think we touched on legal before, but doing a legal compliance check is a good idea. The end of the year is the perfect time to meet with all your professional team members. So, your realtor for property values, your CPA for tax prep and financial planning, and of course, your real estate lawyer who can review your leases and make sure they are compliant with state, local, and federal regulations. Review your tenant screening procedures to make sure you won't get in trouble there. And same goes with your eviction procedures, which we hope you never have to use. The last thing we want to recommend is to take time to reflect on your professional development. What can you do to improve yourself as a self managing landlord? Like, are there any courses to take or certifications you can get? One that comes to mind is to take a course on fair housing and get your certificate in that. We will link the Fair Housing Institute in the show notes where you can take one big one or many specific courses related to fair housing. Like for ESAs or criminal background checks. If you use the code YLR 2024, you'll get 15% off any course purchase. And we get nothing in return for this. We are just sharing that discount code for you to use. Alright, the last thing I will say about professional development is to encourage you to join your local rental housing association. I mean those memberships in local or even national associations can provide so many valuable resources, including legal advice, networking opportunities, and industry updates.

Stacie: 45:49

Yeah, we are members in several of those. And as a matter of fact, we just attended one conference down in LA, Long Beach, California for the AAOA, and we'll be traveling back to Idaho to do our November inspections, and we're finally going to be able to attend one of the meetings for the Boise real estate investors network back there. It's a good opportunity, not only to learn about the local area with regards to rental properties, but investment outlooks, and we get to network with other landlords as well.

Kevin: 46:22

Yeah, I mean, I really enjoyed the one down in Long Beach. I mean, that was better than I expected and that has me looking forward to Boise, especially too now.

Stacie: 46:31

Yeah, it was fun. It was nice to get away for a couple days, too. And, shameless plug here, we do have a course on the process of tenant screening coming out in 2025. And we would love if you would consider taking it and expanding your knowledge of self managing rental properties with our course. There is a link to sign up and be on the wait list in our show notes. And one last thing we forgot to mention was, if you're someone who wants to send a holiday gift to your tenants, start working on that. We did an episode last year about the benefits of giving gifts and ideas on what you can do, and we'll link that in the show notes to give it a listen. But time tends to get away from us as we get closer to the holidays, and with tenants traveling, consider sending or dropping off that gift a little early. You can even use Thanksgiving as your gift giving, uh, with a message about being thankful for them as tenants. All right, you guys, so that is our episode. We hope we got your mind thinking about what you can do this last quarter of the year to organize and prepare yourselves and your rental property business for the upcoming year. And if you guys like what you hear on this podcast, would you do us a favor and subscribe or follow on your favorite podcast platform? This way, all of our episodes will be waiting for you each week, so you can enjoy everything we have to say about landlording and owning rental properties. And we would be really appreciative if you could even leave us a kind of review. Those reviews really help other landlords like you know that we're the real deal and hopefully they'll listen too. So links to those review sites are in the show notes. Now, if you have a question or you want to suggest a subject for our podcast, you can text us at 650 489 4447. That's 650 489 4447. Or you can email us at Stacie@your landlord resource. com. That's Stacie with an I E or Kevin yourlandlordresource. com. We want you to feel free to download any of those free forms that we offer, or if you want to sign up for our free weekly newsletter, you can access all those in the show notes as well. And if you'd like to follow along, you can find us on Instagram and Facebook, and we also have a private Facebook group as well. You will find all the links you need in our show notes. Thanks again for taking time out of your day to listen to our podcast and until next time you've got this landlords!