Online Rental Scams: How Can Landlords Avoid Them?

How to Protect the Best Interests of Your Property

People who are looking to let their properties for rent are becoming increasingly aware of the scams taking place. As a result, a cautious approach is adopted when picking renters. Unfortunately, property owners cannot tell whether or not their rental properties are used in scams. However, the following few tips can help you make your property highly credible to a large pool of prospective tenants.

 

Scanning Craigslist

An increasing number of people are turning to Craigslist when they look for rentals. Scam artists also use the website to find rental space. Scanning the rentals in your area on Craigslist every now and then can help in ensuring that your properties are not appropriated by scam landlords.

 

Online Advertising

When putting up a property for rent, property management must be done effectively on the internet. Not only will you have to write an effective description of the rental property, but linking it to a created site will make potential renters view your property in high regard. Since scam artists usually deal in bulk, they won’t have time to create professional webpages, thus putting you ahead on potential suitors’ list.

 

Signage

The property for rent must have a sign that lists the phone number of the landlord. It would help in attracting more suitors if you link your property with a professional property management firm as renters tend to find it easier to conduct business with a company than individual landlords. Advertising the number will help you find tenants quickly.

Five Keys for Tenant Screening

Inform the Applicants about Tenant Screening

Before starting off with tenant screening, it is important to inform applicants that screening is compulsory. Just learning that there is a screening process is sure to eliminate potentially bad tenants, thus saving you valuable time.

Screen Consistently

A comprehensive and systematic tenant screening process for all your potential tenants will protect you in case an applicant makes claims that you have made violations against the Fair Housing Act.

Deciding Minimum Qualification

As the owner of a property in NYC, you are expected to pick a tenant who will give you no trouble with regards to payment of rent or other issues. Decide whether you want tenants who have criminal records, or if such applicants must refrain from applying regardless of how long back they were arrested for whatever reason. Think in detail what kind of tenant you would like before starting with the screenings.

Credit Checks

Once your applicants have met your prior requirements, run a credit check to ensure that they will be able to meet rent and bill payments on time. Get the report directly from the applicant’s credit reported to make sure that there are no shenanigans.

 

Check References

Calling the present or past landlords of an individual will help you determine whether or not an applicant is worthy of your space. Personal and employment references will help you know more about the person, thus enabling you to make an informed decision regarding the outlet of your rental space.

Requirements to Eliminate #6 Oil and Reduce Air Pollution

In 2011, New York City, as part of Mayor Bloomberg’s campaign to make the city healthier, adopted new heating oil requirements to reduce the dangerous air particles that contribute to respiratory and other illnesses, says Ira Meister, president and founder, Matthew Adam Properties.  While not as well publicized as the mayor’s campaign to eliminate super-sized sodas, the impact of the oil regulations is being felt significantly more by New York City co-ops and condos.

The law calls for the elimination of #6 oil – the dirtiest and most pollution causing oil – by 2015.  By then, buildings must convert to lighter #4 or #2 oil or natural gas.  Newly installed boilers would have to use the lighter #2 oil or natural gas or their equivalent and by 2030, #4 oil will be phased out.

“In recent years, even before the new city regulations, buildings were converting to natural gas, which is cleaner, requires less maintenance and in recent years has been significantly less costly then oil,” Meister says. Some buildings, depending on their configuration, have switched to dual-fuel options where either oil or gas can be used, depending on the price.

 

Many buildings have yet to switch to #4 or #2 oil and gas

“We have noticed, as we talk to boards of buildings we do not manage, that many properties have not started the process of complying with the new regulations,” Meister says.  Since July 1, 2012, buildings have had to convert to a cleaner fuel before their three-year certificate of operations expires.  All properties must be in compliance by January 1, 2015.

“Some buildings have been lax in rushing to the deadline,” Meister says.

The least expensive short-term solution is to convert to #4 oil, which will probably require a tank cleaning and some minor boiler changes.  Converting to natural gas can be much more costly and depends on whether the boiler is compatible with gas and the need, very often, to line the chimney as the thinner carbon monoxide produced by natural gas can seep through cracks in the lining. Another concern is whether the building is in a zone where Con Ed supplies natural gas.

 

The City has streamlined the permit process, allowing permits to be obtained in days instead of weeks

To encourage early compliance, the city streamlined the approval process by reducing the number of documents requires to be filed. Licensed boiler installers can submit one unified form to city agencies and certify that the fuel grade conversions were documented and the necessary work was properly performed without the need of more complex design submissions. This will reduce the estimated upgrading cost per boiler to $7,000 from $10,000. “Additionally,” Meister says, “the city streamlined the permitting process, allowing permits to be obtained in days instead of weeks.”

Buildings Sloppy in Following Elevator Inspection Regulations

Ira Meister, founder and CEO of Matthew Adam Properties, says that when his company is retained to take over management of buildings after a board changed management companies, it has found a disturbing number of properties that are not current with elevator inspections either by not having the inspections conducted, or not filing the proper reports.  “This raises two issues,” Meister says.  “Most importantly, is the need to keep elevators in good working order to prevent accidents.  Secondly, the buildings are subject to fines for not complying.”

 

Elevator accidents have changed the elevator inspection codes

In recent years, several well-publicized elevator accidents have led the city to rework the elevator inspection codes.  This also followed a report in 2009 from the Department of Buildings which showed lax compliance. Of 50 elevator inspections and tests that were randomly monitored, the department found that 28 of the inspections were performed late, seven were performed by inspectors who lacked the necessary certifications and 19 were not properly documented.  This led to new inspection and testing requirements that went into effect in December 2010.

Under the current code, a basic test must be conducted annually by an approved elevator inspector and witnessed by another company or inspector who is not connected with the company performing the inspection.

“Then, the owner, board or most likely the property manager must file a report with the Department of Buildings with the results. This must be submitted within 45 days of the inspection,” Meister says.  “However, very often the responsible party fails to file the report.”

 

You have 45 business days to repair defects after filing inspection report

If defects are found requiring repair, the work must be done within 45 business days of filing the initial inspection report.  A final report, saying the repairs have been done, must be filed within 15 business days of completion of the work.

Failure to perform the inspection, or to correct defects once found, can result in fines of $150/month per elevator.  After one year, the fines increase to $3,000.  A “full-load” test is required every five years.  Fines for this are $250/month for failure to perform the test and $150/month for not correcting violations.  After one year the fines increase to $5,000.

“In addition to changes in the inspection requirements,” Meister says, “the new code and recent amendments have added requirements for various safety features in the elevators, which require additional expenses for the owner. “

Having an Annual Meeting

We’re in the midst of the annual meeting cycle for co-ops and condominiums as most associations hold their meeting in May or June.  This is a good time to look at some aspects of the gathering while it is fresh in the minds of the boards and residents who have just met and for those preparing for theirs.

The co-op or condo annual meeting is much like that of public companies when shareholders, both big and small, gather to hear about the company’s performance and its future prospects from the chairman and president and vote on board members and other issues.  These meetings, on which many companies spend considerable time and expense, are usually held in the spring of the year for companies whose fiscal year ends on December 31.

While far from as elaborate or attention-grabbing as the meetings of the public companies, the annual meetings of co-op and condos are for many of the shareholders and unit-owners at least of equal importance.  For many, the investment in their home is their largest asset. While each meeting has its own rhythm and tone, the basic structure and requirements are similar, and, in fact, mirror to a great extent the corporate sessions.

Annual meetings help inform shareholders and unit owner

There are three main purposes for the annual meeting: to update shareholders and unit-owners on the operations and finances of the property; elect the board as well as vote on other issues, such as amendments to the building’s by-laws; and provide an opportunity for residents to ask questions.

The annual meeting, as with all regulations and rules in a co-op or condominium, is governed by the building’s by-laws. While these are unique to each building, they all call for an annual meeting according to Business Corporate Law of New York State, which govern co-ops and condominiums.

Most meetings follow a standard agenda.  A management report is given, usually by the president or managing agent, describing operations in the past year and specific changes and improvements that were made as well as current issues and future plans.   The treasurer, and or accountant, describes the financial condition of the building and the accountant presents the audit report certifying that the financial records are in order.  The treasurer, president or managing agent also may discuss capital improvement requirements and whether these can be funded from the reserve fund or will require a special assessment or other financial arrangement.

Some co-ops and condominiums require a vote on capital improvements, and some, mainly smaller ones, require a vote on the annual budget.

Why are the meetings usually scheduled in May and June, when most fiscal years end on December 31? One reason is that it takes the accountants time to review and certify the financial statements.  As we all know, accountants are usually immersed in taxes through April, and May and June are the earliest they can complete the financial statements.

The financial reports should be provided to the shareholders or unit-owners sufficiently in advance of the meeting for them to review the document.  They should also receive the text of items to be voted on, if any, and any potential rules changes.

The managing agent usually organizes and sets the agenda for the annual meeting in conjunction with the board president and in some cases directions from the by-laws. 

Attendance varies from building to building and we at Matthew Adam Properties make certain we collect proxies from those who will not attend, or are uncertain, so a quorum is guaranteed.  By the way, a quorum is needed only for votes, so meetings can start on time and votes taken when more residents arrive and a quorum is achieved.

We’re in the midst of the annual meeting cycle for co-ops and condominiums as most associations hold their meeting in May or June.  This is a good time to look at some aspects of the gathering while it is fresh in the minds of the boards and residents who have just met and for those preparing for theirs.

The co-op or condo annual meeting is much like that of public companies when shareholders, both big and small, gather to hear about the company’s performance and its future prospects from the chairman and president and vote on board members and other issues.  These meetings, on which many companies spend considerable time and expense, are usually held in the spring of the year for companies whose fiscal year ends on December 31.

While far from as elaborate or attention-grabbing as the meetings of the public companies, the annual meetings of co-op and condos are for many of the shareholders and unit-owners at least of equal importance.  For many, the investment in their home is their largest asset. While each meeting has its own rhythm and tone, the basic structure and requirements are similar, and, in fact, mirror to a great extent the corporate sessions.

Annual meetings help inform shareholders and unit owners

There are three main purposes for the annual meeting: to update shareholders and unit-owners on the operations and finances of the property; elect the board as well as vote on other issues, such as amendments to the building’s by-laws; and provide an opportunity for residents to ask questions.

The annual meeting, as with all regulations and rules in a co-op or condominium, is governed by the building’s by-laws. While these are unique to each building, they all call for an annual meeting according to Business Corporate Law of New York State, which govern co-ops and condominiums.

Most meetings follow a standard agenda.  A management report is given, usually by the president or managing agent, describing operations in the past year and specific changes and improvements that were made as well as current issues and future plans.   The treasurer, and or accountant, describes the financial condition of the building and the accountant presents the audit report certifying that the financial records are in order.  The treasurer, president or managing agent also may discuss capital improvement requirements and whether these can be funded from the reserve fund or will require a special assessment or other financial arrangement.

Some co-ops and condominiums require a vote on capital improvements, and some, mainly smaller ones, require a vote on the annual budget.

Why are the meetings usually scheduled in May and June, when most fiscal years end on December 31? One reason is that it takes the accountants time to review and certify the financial statements.  As we all know, accountants are usually immersed in taxes through April, and May and June are the earliest they can complete the financial statements.

The financial reports should be provided to the shareholders or unit-owners sufficiently in advance of the meeting for them to review the document.  They should also receive the text of items to be voted on, if any, and any potential rules changes.

The managing agent usually organizes and sets the agenda for the annual meeting in conjunction with the board president and in some cases directions from the by-laws. 

Attendance varies from building to building and we at Matthew Adam Properties make certain we collect proxies from those who will not attend, or are uncertain, so a quorum is guaranteed.  By the way, a quorum is needed only for votes, so meetings can start on time and votes taken when more residents arrive and a quorum is achieved.

While most buildings have one meeting a year, there are some that have periodic informational meetings to keep the shareholders or unit-owners current on building operations and issues.  Some buildings also have a pre-annual meeting session where the residents can get to know potential candidates for the board of directors and receive an update on building activities.  Additionally, when a major issue arises during the year, such as a capital improvement project, a special meeting may be called.

While most buildings have one meeting a year, there are some that have periodic informational meetings to keep the shareholders or unit-owners current on building operations and issues.  Some buildings also have a pre-annual meeting session where the residents can get to know potential candidates for the board of directors and receive an update on building activities.  Additionally, when a major issue arises during the year, such as a capital improvement project, a special meeting may be called.

Keys to a Smooth Management Transition

Probably the most difficult, important and often delayed decision the board of a co-op or condominium makes is deciding to change management companies.  Numerous factors, both realistic and psychological, play into this, but one of the most prevalent is the fear of change and the requirements of getting a new management company up to speed.

Unfortunately, the final decision is often made after communication has virtually broken down with the manager and the company, the building’s services and physical plant have deteriorated and the financial records are in poor shape.

Our Strategic Management Program Uses Sound Business Principles

What many boards fail to understand is that some management companies are organized and prepared to move in, take control and bring order to a deteriorated situation.  At Matthew Adam Properties, we follow the policies outlined in our Strategic Management program.  Strategic Management is our adaptation of sound business principles.  We set objectives and a timetable so our performance and the property’s improvements can be measured.  It is a planned approach to property management rather than the usual band-aide cure.

We follow this approach in the transition process.  As we transition the property into our portfolio, we are cognizant that every detail – every record, every management professional’s decision – must be incorporated into management files for the property.  Our Strategic Management program facilitates the transition process and helps us move quickly when we officially start.   We keep the board informed of our progress and alert it to any problems encountered.

When we are retained, we immediately conduct a full evaluation of the property’s operations and finances.  We then create a customized Strategic Management Plan that includes financial issues, service contracts, maintenance, repairs and long-term capital improvements.  This is reviewed periodically with the board.

Organization and Communication are Key Points in Management Transition

While we are working on the Strategic Management Plan, our transition team is working to get the property up to speed.  In taking control of the process we emphasize two points: communications and organization.  It is important that we develop a solid working relationship with the board.  Often, we find board members wary of property managers after a disastrous experience with the previous company or companies.  We work hard to demonstrate our capabilities and professionalism in getting the tasks accomplished.  In organizing the transition, we follow our Management Transition Checklist and the procedures outlined in our Strategic Management program.  These guide us in collecting the information we need.  In some instances, we have found that bookkeeping is totally disorganized and a great deal of information is missing, or hasn’t been recorded.

The Real Estate Board of New York (REBNY) has instituted a professional pledge signed by most management firms saying they will provide the required records and information.  In reality, often the fired management company is lax or resistant to turning over the records. In these instances much of the needed information can come from the auditor, if he/she is still on board.  Sometimes, the auditor has also been fired making it more difficult to obtain records.

We need copies of maintenance contracts, the general ledger and bills that have been paid or are outstanding.  We also have to understand a building’s cash flow requirements and need to know the schedule and amount of mortgage and real estate payments (for co-ops), the payroll and which residents are delinquent in their monthly payments.

Communication and people skills are a significant part of a property manager’s job description and these talents come into play when dealing with the staff.  Very often, when the previous property manager has been lax in his responsibilities, the work quality of the staff has deteriorated.  The new manager must walk a fine line between acting like a bull in a China shop and wanting to change everything immediately and one who shows his/her authority, but will listen to the employees and work with them to make improvements.

To improve the quality performance of the staff, a manager can modify work schedules and job descriptions, however, the union must be kept informed of changes and the changes must comply with labor agreements.

The building’s superintendent should play an important role in this, unless he is a large part of the problem.

Overall, a professionally organized and implemented transition can be smooth while affording the board an opportunity to evaluate operations and services and discuss additional improvements with the new manager.

Complying Early with Local Law 87 Has Benefits

Buildings that comply with Local Law 87 prior to their assigned date can benefit from various incentives before funding runs out or regulations change.

The legislation requires large buildings to conduct an energy audit and a retro-commissioning study every 10 years.  The energy audit identifies areas where energy and cost savings could be implemented, though not mandated. The retro-commissioning requires “base building systems” to be at performance capabilities. If not, corrective measures are required.

Incentives for Completing both Retro-Commissioning and Audit

The heating requirements of the retro-commissioning require analysis be conducted during the heating season, which ends in March, negating the possibility of compliance this year. The law provides an incentive for buildings that complete both the retro-commissioning and the audit by the end of 2013.  If accomplished, the date for the next round of compliance is 10 years past the assigned date.

Reports are required based on the last digit of the tax block number.  For example, buildings with the last digit of 3 are required to file in 2013, with 6, in 2016.  The later a building is required to file, the more advantageous it is to comply in 2013.  Those buildings whose tax block number is 2, would be required to file in 2022.  But, if they comply in 2013, the next mandated compliance period would not be until 2032.

Buildings covered by the law are larger than 50,000 gross square feet or two or more buildings on the same tax lot that comprise more than 100,000 gross square feet as we’ll as two or more condominiums governed by the same board that together exceed 100,000 gross square feet.

But, there are significant benefits for buildings complying before the required timeframe, says Brian King, president and CEO, Ecological LLC, an environmental sustainability company.

Incentives are offered by NYSERDA (New York State Energy Research and Development Authority) and others to improve the energy use in buildings.  Changes to the incentives or a lack of funds may make them unavailable in future years.

Energy Auditing Can Save You Money Long Term

While changes are not mandated in the energy auditing component of Local law 87, buildings can save money long term by implementing some or all of the recommendations.  One incentive available involves financing upgrades to heating and cooling systems through the payment of utility bills.  For example, if NYSERDA lends a building $1 million for upgrading, which saves approximately $200,000 annually in energy costs, the building can pay this off in five years through an agreement with Con Ed on its utility bill.  The building will be charged the same amount as if it hadn’t upgraded (which would be an additional $200,000 annually over the actual expense) and in five years that would total the $1 million loan from NYSERDA.  After five years, the building is saving at least $200,000 in energy costs annually.  An option being considered is Pace Bonds, which would be similar to the NYSERDA loans and could be paid back through incentives in real estate taxes.

Several cities, including Philadelphia, Seattle, San Francisco and Washington, DC, have passed legislation similar to Local law 87, and about a dozen states are looking into various aspects of it.

Matthew Adam Properties is working with Ecological LLC to conduct the audits and retro-commissioning in buildings we manage and developing plans for compliance.  A key part of the audit is a cost benefit analysis.

Matthew Adam Properties is on the leading-edge of management firms in promoting energy conservation and “Green” technology.  We are one of the few, if only, management company in New York with a division headed by a LEED certified professional dedicated to sustainability and promoting “Green” initiatives. The goal is not only to reduce costs and gas emissions, but to create a safer and healthier environment for residents of properties we manage.

Local Law 87 is part of a package of four laws called the “Greener, Greater Buildings Plan,” enacted in 2009 to improve the energy and water efficiency of the city’s largest buildings.

Another of the laws, Local Law 84, requires annual benchmarking of energy and water systems with the city publishing the results. Local Law 85 requires that plans for renovations or upgrades demonstrate how the project complies with the Energy Code.  Local Law 88 requires upgrading to lighting systems and installations of electrical submetering in apartments. Buildings covered by this law have until January 1, 2025, to comply.

The goal of the package is to reduce greenhouse gas emissions by 30 percent by 2030.

Reducing Renovation Costs

             While multi-family buildings are looking to keep costs down as much as possible in this economic environment, there are certain items that need to be addressed.  One of these is the physical upkeep of the property, says Ira Meister, president and CEO of Matthew Adam Properties.  An important area is the public spaces, which immediately give a visitor insight into the attention to detail in the management of the property and how the residents view their homes.

Appearance of public areas can affect property value

“In fact,” Meister says, “the appearance of the public areas has an impact on the value of the building and the price of units.  Spaces that show their age might give the prospective buyer an indication that the mechanical systems may lack proper maintenance, which could lead to higher maintenance/common charges or a special assessment.

“The hallways at 1175 York Avenue needed to be refurbished and we wanted to add ‘Green’ elements to reduce costs and make the environment healthier for residents and staff,” Meister says.

He notes that in today’s economy with construction and renovation projects less plentiful contractors are more competitive and buildings can obtain lower bids than prior to the recession of 2008.

“While this helps to reduce costs, there are other ways to do so, and we diligently pursue these,” Meister says.  “One way is through the purchase of materials.”

For 1175 York Avenue, the asset manager at Matthew Adam researched the cost of materials such as carpeting, wall coverings and lighting fixtures and then aggressively bargained with the vendors to get a better price.

“We reduced the designer’s budgeted cost of materials by $150,000,” Meister says.  “The diligence of Martin Traub, the asset manager, paid off for the co-op.”

“Green” initiatives have long-term savings

In addition to installing new carpeting and wall covering, Matthew Adam had energy-saving, compact florescent lighting installed.  While the initial cost is higher for the lighting, long-term there is savings in the cost of the bulbs and energy.  Other “Green” initiatives are found in the adhesives and surface coatings.

“At Matthew Adam Properties we are in the forefront of bringing “Green” materials to the properties we manage,” Meister said.  “In every project we are involved with we see how we can bring our “Green” initiative to bear.”

Cleaning up After Winter’s Blast

“Though this winter has been relatively mild, it can still leave a bleak mark on buildings and their landscaping.  While New Yorkers are thawing out in March and April, our asset manager are inspecting for damage and  repairing winter’s ravishes.”, says Ira Meister, president and CEO, Matthew Adam Properties, Inc.

Areas include landscaping, terraces, the roof, windows and air conditioning, whether window units or a central system.

Starting at the entrance, we look at plants and trees and also check for salt damage to tree planters, plants and flower beds.  The city uses rock salt to melt ice, which kills off almost anything in a planter. We also check for any cracks at the entrance.

Meister says another area to check is setbacks and roof terraces for water/ice damage and to be certain the drainage pipes are not clogged.  It’s a good idea to snake out the pipes every year.

This is also the time for a general clean-up of the building and the common areas after several months of people trudging through the lobby and halls with snow and slush on their shoes and boots.

The roofs are visually checked by our asset managers and the superintendent/resident manager for any ice-caused damage and leaks.  “In fact, they make period inspections during the winter, particularly to make certain the drains are not clogged,” Meister says.

Residents should check windows and window air conditioning units for leaks to ensure maximum efficiency and arrange for vacuuming of condensers, changing filters and flushing the coils.  If the unit was removed during the winter it needs to be replaced in compliance with city regulations. .

“We instruct all our asset managers to visually inspect buildings with window units to be certain they are in compliance,” Meister says.

In buildings with central air conditioning, the HVAC unit and the cooling towers are checked with the towers tested for efficiency at least every five years. Loss of efficiency translates into significantly higher expenses.  While this benchmark is usually done in the fall, it can be done this spring if the cooling tower check has not been conducted for five years.

“While our asset managers and superintendents/resident managers continuously inspect a building during the year looking for potential problems and areas needing repair, we urge resident to be alert and let us know if they see something that needs attention,” Meister says.  “For smooth building operations and to reduce costs, it is much better to find a problem before too much damage has been caused or when damage can be averted.”

The New Generation in Co-Generation

“There were many lessons learned from Hurricane Sandy.  For example”, says Ira Meister, President and CEO Matthew Adam Properties, “we learned that hi-rise buildings are not immune to power outages caused by flooding that can affect a single property or a wide area.  When this occurs, a separate back-up generator is needed to maintain power, but that is expensive.  Now, however, there is a way to have a continuous operating back-up in a system aligned with a co-generation.”

The back-up generator called “Black Start” is produced by Tecogen, a leader in the field of co-generation.  Matthew Adam Properties is working with Tecogen to evaluate the installation of co-generation in several buildings it manages.

Peter Goldsmith, Field Sales Specialist, Tecogen says. “Since Sandy, we’ve been getting at least a call a day inquiring about ‘Black Start.’”

Originally, co-generation involved using the steam produced by boilers to power generators in buildings. This, however, required electric power to keep the water heaters and boilers operating.  Meister says the Tecogen system his company is exploring (called CHP, “combine heat and power”) generates electricity using a natural gas-fueled engine, which immediately reduces electrical consumption. Natural gas is cleaner and more efficient than oil and less costly than oil or steam.

Meister says that while working with Tecogen the company explained how CHP could be used to provide energy in the event of a blackout or situations such as occurred with Hurricane Sandy when flooding caused Con Ed to lose power in much of Manhattan below 40th Street.  Rather than having a separate generator which would be costly and dependent on having sufficient fuel to operate, the emergency generator component of the co-generation system runs continuously and can be utilized for an emergency, though not at full power.

There are financing incentives through NYSERDA (New York State Energy Research and Development Agency) that can reduce the initial costs.

During Sandy, a large residential co-op in southern Manhattan benefitted from having the Tecogen co-generation system with the back-up generator. When Con Ed cut power, Tecogen’s proprietary inverter and microgrid technology continued to provide power for the building.  The system powered the entire building and ran 24/7 under computerized control from an off-site monitoring station until power was restored by Con Ed.