April 2011: What IS a Rental Emergency? & Market Update

What IS a Rental Emergency?

It is important to understand what a rental emergency is. Depending on whose perspective it is, whether it can be owner, tenant, vendor, or property manager, it can mean different things when it happens.

The definition from Wikipedia is

An emergency is a situation that poses an immediate risk to health, life, property, or environment.] Most emergencies require urgent intervention to prevent a worsening of the situation, although in some situations, mitigation may not be possible and agencies may only be able to offer palliative care for the aftermath.

While some emergencies are self evident (such as a natural disaster that threatens many lives), many smaller incidents require the subjective opinion of an observer (or affected party) in order to decide whether it qualifies as an emergency.

The precise definition of an emergency, the agencies involved and the procedures used, vary by jurisdiction, and this is usually set by the government, whose agencies (emergency services) are responsible for emergency planning and management.

This is a precise definition, but when it comes to handling "emergencies" in rental property, the first step is to determine if there is a true emergency. Some emergencies are obvious when they happen, such as fire, water flowing through the property, loss of heat in cold conditions, major gas leak, etc. For these circumstances, it is important to take immediate action and simply handle the situation as quickly as possible. There are emergencies but there are solutions.

However, there are times when a tenant has a different "perspective" on what is an emergency. When this happens, the Property Manager has to consider the tenant's feelings but at the same time, recognize that it is not an emergency. The following maintenance problem is a good example of this.

Janice is a good tenant. One thing that Janice rarely does is cook. She does use the stove and microwave, but not the oven. However, she invited eighteen people for Thanksgiving and planned the full turkey dinner, including baking pies. The day before Thanksgiving, she started working on the pies. When she turned on the oven, it did not work. As you can imagine, she panicked, calling the Property Management office, screeching that she had an emergency.

When the Property Manager finally worked through the hysteria, she determined it was not an emergency but a necessary repair. However, Janice was not to be soothed. The Property Manager immediately called a technician to see if they could get out immediately. They would try but could not promise. Apparently, this is quite a common situation just before thanksgiving. Eventually, the Property Manager also worked through the situation with Janice and they came up with a plan for the Thanksgiving dinner. It took some time, but Janice finally came to the realization that it was not a true emergency. The best news is that the vendor worked late and did manage to fix the oven.

This may seem a silly example to you but there are many similar situations like this with tenants. They can feel frightened, threatened, angry, frustrated, and more. They can be difficult tenants or just had a bad day. What is important is to determine quickly what the situation is. If it is a true emergency, we want to act on it right away. If it is not, we want to diffuse the situation, but still handle the repair in a timely manner.

As a property owner, you may also feel angry and frustrated when a true emergency occurs. It will mean expense and potential problems with the tenant. We do our best to counsel tenants on what is a true emergency, but it is not always easy. As your property management company, we will do everything we can to minimize the problems and find the solutions, whether it is a true emergency or just a maintenance problem.

Houston Real Estate Market

Many of you have been inquiring about the Houston real estate market. We're doing fine. As we reported last year, we were never hit as hard as other areas of the country. Many of our properties haven't lost any significant value at all and the rents have stayed steady. The area is still growing in employment and transfers.

RENTS: The rental market has been very strong for the past 2 years and that is expected to continue. We have a lower vacancy rate than normal without lowering the rents. Most new leases are higher than the previous tenant's rent, and they have been renting faster than before.

SELLING: The sales market (for those wanting to sell) is still not expected to improve this year. There are still a lot of foreclosures on the market (still a lot of ARM mortgages that adjusted) and as a result we are still not recommending our clients to sell unless they really need to. We cannot stress this enough. THIS IS A TERRIBLE TIME TO SELL A USED HOME THAT USED TO BE A RENTAL. There is still way too much inventory on the market, making days on the market for sales extremely long (higher holding expenses), plus usually forcing STEEP discounts to move the home at all. If you must sell, you will need to accept the fact that you will have to have the home in tip top shape and/or offer huge discounts to compete with the builders and the foreclosure market.

BUYING: The much better news is that if you want to buy, the time is now. There are lots of available homes, builders are making deals to move homes and the 2-5 year old market is very good for buyers (see the above regarding foreclosures or discounts). There is also more mortgage money available than there was last year. So if you want to expand your investment portfolio, the time is now. Just contact Jamie Dominy in our office by any of the means on the left and we'll find you a good buy.

Online Portal and Paperless Statements Update

Most of our clients have set up their online account and are now receiving their statements and other electronic documents through our secure online OWNER PORTAL through our website at terraresidential.com. For those of you already signed up, let us know how it's going. If there is anything we can do to make it better, please let us know. For the rest of you, please sign up. You'll have more timely information, and you can download your statement much sooner than receiving it in the mail. And it's green. Just send us an email and we'll help you get set up.