Board Member Seeks Digital Revolution
| HEY OGI, I would really like your opinion on something… [Name removed]’s (our current manager) excuse for not doing some work digitally, such as [buyer] applications, is that sensitive financial information such as tax returns, can be easily leaked over email. What is the way around this? Aside from putting everything on a CD four times and then distributing to the Board by hand … can’t there be a more secure way of forwarding such information to the Board, like posting it temporarily on a secure page or secure inbox for their review?Can you please put in your two cents, I’d really really appreciate it. I understand that Recognition Agreements (and I believe, the Commitment Letter) have to be signed and sealed originals but that is easily done after a review of the whole package. Our management company charges us $50 for a credit check and $250 for an application fee (besides the $450 we pay to the Coop) for doing very very little. BEST,  |
 DEAR UNDER THE LUDDITE’S THUMB, Our two cents? You are being taken advantage of. Sensitive financial information can indeed be leaked over email. However, that doesn’t justify making your role as a board member more difficult. Regardless of how the confidential documents are distributed to the board, it is up to each board member to make sure they handle the information responsibly. Your contact is using that explanation to hide backward or out of date technology practices. One way around this could be a password protected website or webpage. Decent managers can can give different levels of access to board members, residents, etc. Nothing is foolproof, but some systems make property owners’ lives easier than others. Paper is the worst for many reasons (cost, speed, trackability, environmental impact etc.). Even so, as you mention, some documents still require original signatures. On those, there’s no way around paper. A $50 credit check and $250 processing fee are industry standard. Neither is a bargain, but neither should change a board member’s vote. They are both usually passed through to renters or new purchasers. Two forces that drive private sector processes should be ease of use and customer service. When you have trouble finding these with your vendors, start looking for alternative solutions. WARM REGARDS, THE OGI TEAM |
Rent De-Regulation Costs Increase- The NY Bill Is a Monster Sans Teeth
It’s no secret that evicting non-primary tenants can be arduous, time consuming, expensive and fruitless. Now the government is trying to dissuade landlords from even trying. A bill is now pending before the NY state legislature, (A00473 see below) which would award court costs and punitive damages to tenants who successfully defend against their eviction (and against the ending of rent regulation for that unit) based on non-primary residence. A form of this bill passed the assembly on 06/24/2008.
Although this bill might appear to have teeth, really it’s all gums. Do the math from a landlord’s perspective with me:
- A lease demands $500 rent each month for an apartment that would rent for $1200 to $3600 on the open market. Three times the rent would be a $1500 penalty
- The tenant uses free legal aid or a mom and pop law firm for a maximum of 10 hours at $250/hour. This totals $2500
- Penalty losses would equal roughly $4000. The value of the building on a conservative 5x rent roll would increase by a minimum $42,000 (5*$700*12 months), alternatively, the increased rent roll of $8,400 easily justifies the risk.
- The landlord’s legal expenses also need to be considered.
For the long-term, well capitalized landlord, the decision to deregulate remains a no brainer.
There are many ways to prove a resident is not a primary tenant. Video surveillance is one. It’s not enough to show that the primary doesn’t come home for months on end. A landlord needs to show that someone else does live in the apartment in question and that the primary tenant live elsewhere. These aren’t easy to do. Secure Watch can help. They are experts at assisting landlords in proving who lives where.
Another method is to rekey the building. That’s simply changing the front locks to use a multi-lock or other hard to duplicate key system. Only primary tenants and immediate family get keys. Primary tenants who show up to housing court without keys to their ‘home’ can look pretty foolish in front of a judge.
There are more ways than these to prove non-residence and more ways than non-residence to get an unwanted tenant out. A good property management firm is an important part of any successful suit and is aware of what happens in its buildings.
Foreign Investors, Local Property Managers
Property management for foreign investors requires better technology and more trust than managing for local owners. When problems arise, as they surely will, remote owners need to know that managers will handle the situation completely with no supervision and little input.
We know from experience that these owners are looking for the income without the headaches. They are paying for it, so why shouldn’t they get it? Local owners frequently retain a semi-active role with the properties- approving tenants, vetting vendors, etc. Not so with remote owners. The distance between their home and investment can increase their feelings of unease. This also necessitates greater levels of trust and reliance. Property managers can either add to unease or dispel it.
The checklist when vetting a property manager for a foreign owner of local property revolves around technology and trust/accessibility.
Trust/Accessibility:
- Assurance that bids for projects, insurance, etc. Will be competitive
- Notification of Community changes (zoning, crime, etc.)
- Reliability that rents will be competitive
- Vacancies will be kept to a minimum
- Properties will be maintained according to owner’s standards.
Technology
- Online visibility of their accounts
- Access to security camera images
- Electronic fund transfer capability
- 24 hour access via an emergency phone line.
This list isn’t exhaustive. It’s a jumping off point. You may notice these requirements differ from the needs of local owners mainly in terms of trust and oversight due to the physical distance and infrequent access logistics.
Many owners look at New York property as a long term value investing play. They need to be kept abreast of changes at the local community board level and zoning board levels. If a property is rezoned, creating more FAR, owners need to know immediately. The same goes for bars, schools, and developments opening nearby.
Regarding technology, all worthwhile property management software these days allows online access for both tenants and owners. Additionally, it’s relatively inexpensive to purchase and install security cameras and hardware to monitor property remotely. The increased sense of awareness these investments offer can be worth far more than their cost to any investor.