McGrath Quarterly - Summer Edition

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for at least seven days. When

they inally did visit the prop-

erty, the contractor found

that a dirty air ilter caused

the air conditioning to mal-

function. The warranty com-

pany would not pay to have it

ixed because this issue was

not under warranty. The unit

was still not working, 10 days

after the initial request.

McGrath then sent out one of

our preferred contractors

who had the problem ixedand the tenant was charged.

The relationships that McGrath

has made with our contractors

over the years allows us to

make our requests a service

priority. McGrath, now manag-

ing over 650 homes, offers a

huge supply of potential busi-

ness for our (continued on page

6)

Home warranties are a big sell-

ing point when buying or selling

a home and why not? The way

home warranties are presented

to homeowners gives the percep-

tion that you will pay a nominal

fee each year and never have to

pay full price again for home

repairs. This is partially true and

if you live in the home yourself

there is value to a home warran-

ty. Depending on your plans

deductible you can receive con-

siderable savings for unexpected

repairs. However the risks start

outweighing the rewards in a

rental situation.

Like you expect your tenant to

live up to his responsibilities in

your home, you plan to live up to

yours as a landlord. It may seem

like common sense, but the more

understanding and cooperative

you are with your tenant in most

cases it will increase their good

will towards you and encourage

them to treat the home as if it

was theirs, which is one of your

goals. So what does it mean to be

a good landlord? This means

providing the home in an ac-

ceptable condition for move in,

granting reasonable requests

and addressing repairs in a time-

ly fashion. (McGrath Real Estate

Services, Inc. does not recom-

mend conceding to every tenant

request just to gain some good

will but there is a beneit to being

reasonable.) The last point is the

reasoning behind our recommen-

dation to not have a home war-

ranty. Home warranties prolong

repairs and oftentimes require

multiple trips before the job is

satisfactorily done. Below are two

recent and

prevalent

examples of

McGrath

Real Estates

clients home

warranties

gone awry:

McGrath

received

an emer-

gency

repair

request for an air conditioning

unit that was not functioning.

While this is not considered an

emergency, we do try and pri-

oritize A/C requests to allevi-

ate discomfort of the tenant.

The property was identiied as

having a home warranty. Dave

Buckingham, head of the Re-

pairs Department, contacted

the home warranty company

and informed them of the is-

sue, at which point we were

informed that this particular

contractor was a week out on

maintenance calls and would

not be able to go to the home

Home Warranties with Rentals: Not All Theyre Cracked Up to Be

McGrath Real Estate Services, Inc.

Summer 2011

McGrath Quarterly

Special points of inter-

est:

New Virginia real estate laws that

could aect you as a landlord.

Find out what you need to

know. Meet the McGrath Accounting

Team and how they handle your

money Toxic Mold or No Big Deal ?

Learn about mold and what can

be done to prevent it and cure it! Do you know the life span of your

carpet? Its not as long as you

think...

Inside this issue:

Spotlight on ACCOUNT-

ING 2

FSYF Essay Contest and

Awards Ceremony 3

Life Expectancy of House-

hold Components 4

New VA Real Estate Laws

Take Eect 4

Mold: What Is It and How

Do You Keep It Away? 5

Friend Us!6

Contact Information6

Volume 1 Issue 4

8/6/2019 McGrath Quarterly - Summer Edition

2/6

The single most important part of the management of your home is the organization of your

money. The Accounting Department, while often in the background, is constantly working on

your behalf to ensure you are receiving your rent and you will be prepared to ile your tax return

at the end of the year. There are many intricate parts of your owner statement and expenditures

that you will incur throughout the month and it is important to understand your owner state-

ment.

Meghan McGrath, Accounts Supervisor, collects rental payments from the irst to the ifth of eve-

ry month. We encourage all of our tenants to pay with automatic payments through their tenant

portal but checks and cash are also accepted. On the 10th of every month Meghan pays you the

disbursements that are due to you. If we have still not received rent by the 10th you will be in-

formed that your rental payment will be late this month because of it. Also please note that de-

pending on which bank you use, it could be a couple days before the payment clears and you can

access your funds.

The monthly owner statement is created

on the 11th of the month. It will cover the

period from the 12th the month before

until the 11th of the current month. This

was a recent change we made at McGrath

Real Estate Services, Inc. based on your

feedback. It allows you to see whether

your owner payment was received and

that it was dispersed to your account. On

this statement you will see a detailed de-

scription of rent received, management fee

charged, as well as any repair invoices that

you were charged. Please Favorite the

URL for your owner portal to ensure you

have easy access each month.

The management fee is a percentage of rent collected that is charged every month that your

home is actively rented. Typically 9% of one month rent, you will see the management fee on

your owner statement each month that rent is received. Please refer to Clause 5 Paragraph I of

your management agreement for your speciic terms.

For repairs that were deemed to be over $500, you should receive an estimate from Richard

Price in the Repairs Department. Upon receiving your approval, Richard will meet with Ann

Orem, our Accounts Associate, to discuss payment of that estimate. Richard will contact you ask-

ing to send money so that we can pay the invoice within 30 days of receiving. When the work is

completed and the invoice comes in, Ann processes it. The invoice will be attached to the accom-

panying work order. Once the invoice gets paid, a copy of the invoice will be in your owners

packet on the owners portal. Ann pays the vendors eve-

ry Friday. She will also pay the vendor on the 9th of the

month, right before you receive your owner payment on

the 10th. The reason for paying vendors every Friday is

to maintain our policy with them and further ensure

they keep our clients a high priority.

Certain charges only occur when your lease is renewed

or we re-market the home. These will be classiied as

Re-Leasing Commission or Commission on your

owner statement.

Spotlight On Accounting

Page 2

McGrath Quarterly

Has your address changed?

Is there a new HOA managing your

community?

ANYchanges to pertinent information

regarding managing your home should be

sent to [email protected] so

we can provide the best possible service to

you!

NEW INFO?

8/6/2019 McGrath Quarterly - Summer Edition

3/6

The Re-Leasing Fee (for renewals found on page 4

clause G of your management agreement pays for the

monitoring and renegotiation of your existing lease.

Under this fee we are negotiating not only to renew the

contract, but we are pulling comparables for your

home, making sure to see if you are at market valueand working on your behalf to ensure the paperwork is

signed and the tenants are secured for another year or

longer.

If your home went on the active rental market, an ap-

plication accepted and a lease signed, you are charged

the Commission. The commission is equal to 90% of

one months rent or a full months rent if the lease is

longer than two years. This fee is applied not only for

the marketing, processing and lease creation but also a

part of that commission is given to the procuring agent

who brought in the tenant.

Miscellaneous charges that you may see during your

time with us could include utilities charges and service

charges if you have a lawn service or any other type of

recurring service you have contracted. At the end of

the year your IRS Form - 1099 is prepared as well as a

cash low statement. The statement breaks down eve-

rything we have paid for on your behalf (repairs, etc.)

as well as all income you have received. It is important

that if you should have receipts from repairs that were

not through McGrath Real Estate Services, Inc. or your

total HOA/COA dues (which McGrath in most cases

does not pay for) to make sure that you add these to-

tals to your end of year tax iling because they will notbe included in the 1099 and cash low statement we

send to you. If you ever have any questions regarding

your owner statement, rental payments or your end of

the year 1099 please contact our Accounting Depart-

ment [email protected].

Broker Jim McGrath and Senior Mar-keting Manager Tommy Chambersdedicated their time as judges on thepanel of the FSYF Essay Contest.McGrath is all about preparingForeign Service Fami-

liesandrepresenting their real estateneeds when they are heading over-seas, but it is also an honor to giveback to the youth that are the nextgeneration of our countries thinkersand leaders and youth that are al-ready contributing to the mission ofthe Department of State, Chamberssaid. The ive winners received cashprizes provided by McGrath RealEstate.

The awards ceremony for the win-ners of the Foreign Service YouthFoundations annual Essay Contest

McGrath Real Estate Services, Inc.invests in the annual Foreign ServiceYouth Foundations Essay Contest

The annual FSYF Essay Contest chal-lenges U.S. Foreign Service youth to

answer a topic question in 1,000words or fewer. The contest allowsFSO Youth to express the opinionthrough their unique experiences.

The 2011 topic question was, "As aYouth Ambassador choose one issue/problem you would focus on forimproving the lives of youth in thecurrent country you live in. Whatwould your focus issue be and howwould you convince othersthat thisis an important issue to tackle andprioritize, given there aresomanyproblems/issues that needattention?"

was Friday July 15th and was ahuge success. The winners fromthe high school category wereChungdhak Lhamo Sherpa whospent most of her life growingup in a village in Tibet and Cas-

tilleja Kuzis who aims to travelthe world and pursue a degreein arts or business. The winnersin the middle school divisionwere Andriy Etcheverry who iscurrently posted to St. Peters-burg, Russia. Anna Bailey wonsecond and is currently postedto Riga, Latvia. Olivia Mozdzierzalso won second and currentlyposted to La Paz, Bolivia. Toread the winners essays pleasevisithttp://fsyf.org/contestawards/Winners/Winning%20essays%202011.pdf

Continued from page 2...

2011 Foreign Service Youth Foundation Essay Contest Highlights

Page

Volume 1 Issue 4

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McGrath Real Estate Services, Inc.

understands that as a landlord

you are trying to maximize your

proits and reduce your expendi-

tures. Then you get an email from

McGrath saying your new tenant

wants the entire property re-

painted. They need all new car-

pets! Replace the dishwasher,

install a new air conditioner!

You probably say to yourself, well

it was working ine while I lived

there and you are probably right.

However, one of the realities of

being a landlord is that every-

thing in your home has a life span

and it could be up. McGrath Real

Estate wants you to be prepared

and expect that eventually parts

of your home will reach their life

expectancy and will need to be

replaced in order to secure a

quality tenant. Average life expec-

tancy for common household

components are:

Carpets: 6 years

Paint: 3 years or less **Moremove ins and move outs tend to

reduce life expectancy of paint,

another beneit of longer term

leases

Washer & Dryer: 8-11 years

Fridge & Dishwasher: 10-12years

Stove/Oven: 5-8 years

AC Unit: 12-15 years

Hot Water Heater: 10-12

Of course the life expectancy

will vary depending on qualityof material or equipment (low,

mid, high grade), quality of instal-lation, level of maintenance, andthe intensity of use. It is verybeneicial if you know when acertain component of your homewas last replaced, let McGrathknow so we have a record of age.

If you have any questions aboutthe replacement of an aspect ofyour home, please feel free tocontact our Repairs [email protected]

Life Span of Household Components: When Should You Expect to Replace

Virginia Passes New Legislation Aecting Landlordslord takes the appropriate steps

to remediate the mold in a time-

ly manner, rent cannot be with-

held later and the tenancy can-

not be broken unilaterally.

2. Delinquent Utility Fees:

Requires a water or sewer au-

thority to provide 30 days written

notice to the owner before record-ing a lien for a tenants unpaid

charges. The authority may not

deny service to a new tenant for a

prior tenants unpaid charges

unless a lien has been recorded

against the property owner.At

McGrath Real Estate Services,

Inc. we already have a provision

in our lease as an attempt to

prevent this from ever happen-

ing. We require evidence that the

inal water and sewer bills were

paid before returning the tenants

security deposit. If there is an

outstanding balance it is paid

through the security deposit,

thus reducing your risk of a lien

against the property. When there

is a gap between tenancies, we

put the utilities back in your

name Care of McGrath so any

such notice would be sent to our

ofice and handled immediately.

3. Adverse Conditions: Directs a

tenant on procedure, including

escrow of rent, when the tenant

asserts that adverse conditions

exist within the rental unit.Vir-

ginia is moving towards a more

pro-tenant law and this is a per-

fect example of such legislation.

If the tenant proves that required

repairs are not being completedor the home has adverse condi-

tions (including a ire hazard or a

serious threat to the life, health

or safety of occupants) they are

allowed to put rent in an escrow

account held by the speciic

county Circuit Court until the

condition is ixed. This means

you will not receive your rental

income, cannot charge late fees,

send a sheriff notice or evict,

because the tenant has been

paying rent to the court.

If you have any questions about

these or any new measure please

feel free to contact John Bennett,

our Senior Property Manager and

member of the National Associa-

tion of Residential Property Man-

agers at

[email protected]

Effective July 1st, 2011 there were

several new measures passed,

many of which will affect you as a

landlord. A complete list

of this new legislature can

be found at NVAR.com but

weve compiled a sum-

mary of the most perti-

nent laws to landlords

and how they couldchange your landlord

experience.

1. Mold Remediation:

Clariies tenant is still

responsible for payment of

rent for the remainder of

the rental term following a

temporary relocation for

mold remediation. The

tenant is not entitled to

terminate the tenancy

when mold is remediated

according to professional

standards.As a landlord,

if evidence of mold is found at

the property, you are required

by law to have the mold remedi-

ated. In the past, tenants would

sometime use this as a way to

get out of a lease because the

house was inhabitable. Under

the new measure, if the land-

Page 4

McGrath Quarterly

New laws could aect your experience as a land-

lord, are you aware or on the outside looking in?

8/6/2019 McGrath Quarterly - Summer Edition

5/6

In the mid 1990s there was an out-

break of pulmonary hemmorages in

infants in Cleveland.

"Stachybotrys", atype or group of

molds, was found in some of the

victims' homes or buildings. The

Cuyahoga County Board of Healthand local Case Western University

blamed the mold for the outbreak

and the media soon followed suit.

The "black mold" scare had be-

gun. The Center for Disease Control

later determined that the mold was

not the culprit but the widespread

media coverage had left a lasting

impression on Americans. In the

ensuing years insurance companies

in California and Texas began drop-

ping clients whose homes had sever-

al water damage claims with the

assumption that they were at a

higher risk for mold. Today there is

a national, legal blacklist called The

Clue Database which allows insur-

ance companies to track water dam-

age claims. If a homeowner iles one

looded basement claim, not know-

ing the previous owner of that home

had iled two before, his or

herinsurance could be dropped. All

insurance irms have access to the

database. In the past several years

insurance companies have been

leaning toward not insuring

againstany mold or water damage.

There is no one type of mold, in fact,

there is a countless number of spe-

cies in the world. The most common

molds in Virginia that cause concern

are Stachybotryus and Pennecilli-

um/Aspergillus. A case can be made

that molds are actually not a toxin

but an allergen, however the medias

use of the term Toxic Mold has

caught on with the public who use it

at the drop of a hat. A new term has

been coined, "toxigenic" which

means mold that excretes a toxin.

New laws in Virginiaregulate exami-

nation for visible evidence of mold

and professional testing and remedi-

ation. There are many scary stories

out there on the internet and TV but

little science is actually presented

in these claims. In the old days

one might have tried tokill all

mold with bleach and seal it with

Kilz. Today thestakes are high-

er. We have had three tenants

break the lease and move outbecause of mold. Remediation was

done in these three houses, at a

cost of over $5000 each and the

mold was eradicated. We have

spoken with anattorney, consult-

ed remediation irms, and re-

searched the issue and recom-

mend that if you are looking for

more information, visit the EPA

website. The EPA,CDC, and AMA

have no standards of acceptable

levels of mold thought thats likely

because the issue is new. Testers

usually report mold levels as

"elevated" if theinside air is consid-

erably higher inmold parts per

million than the outside.

If visible moldis found in a rental

home, you as the landlord have a

responsibility to solve the problem

"exercising ordinary care" in accord-

ance with "professional stand-

ards."Please read Virginia Passes

New Legislation Affecting Landlords

on page four, for more information

regarding legal requirements of

mold remediation in rentals. In

theory, a homeowner could solve the

problem with the bleach and Kilz

method, but mold remedi-ation irms use more

sophisticated equip-

ment. For $500 a remedi-

ator can use an "air trap"

to sample air inside and

out, and send the traps to

a lab. The lab returns a

detailed analysis of the air,

particulate matter, primar-

ily biological. They also

may use an infrared camera to ind

mold hiddenbehind walls and ceil-

ings. Another advantage to using a

pro is the ozone generator. This

piece of equipment creates negativeair, or unbreathable air, in the

house, killing airborne

spores. When their work is done,

they test the air and provide a clear-

ance notice. Most companies will

warranty the work and return if the

problem returns.

In most cases paneling or drywall is

removed in areas where there is

visible mold or where infrared de-

tection inds hot spots inside the

wall consistent with biological activi-

ty. Insulation is also removed when

affected. Usually studs, plates,

beams and joists are not removed

but are treated.After drying and

removal of contaminated materials,

a HEPA Vacuum (High Eficiency

Particulate Air) is used for clean-

up. Some irms will even wipe down

every surface in the entire dwelling,

including all personal possessions,

though this is not required.

If a tenant reports evidence of visible

mold, McGrath will investigate and

contact you with our report and

recommendations. The EPA and

McGrath recommends professional

testing and remediation if the mold

covers more than 10 square feet.

If bathrooms are ventilated by vent

fans or windows (either of which is

required by code), surfaces are

cleaned with normal cleaning prod-

ucts, there are no water leaks in-

sideor outside penetration of rain or

groundwater, and there is normal

circulation and humidity in the

home, mold will rarely appear. If a

small amount appears it can easily

be killed with bleach based prod-

ucts. The risk in any case of mold

usually occurs when it is hidden

inside of walls or ceilings. Anyone

who wishes to remediate without

professionals should read the EPA

booklets "A Brief Guide to Mold,

Moisture, and Your Home" and

"Mold Remediation in Schools and

Commercial Buildings" both availa-

ble on the EPA website

www.EPA.gov. Also feel free to con-

tact John Bennett, McGraths Senior

Property Manager, with any ques-

tions relating to mold and your

home.

[email protected]

Mold In Your Home: What Is It and How Can You Prevent It?

In the old days one

might have tried

tokill all mold withbleach and seal it

with Kilz. Todaythestakes are

higher.

Page 5

Volume 1 Issue 4

8/6/2019 McGrath Quarterly - Summer Edition

6/6

McGrath Real Estate Services, Inc.761C Monroe Street

Suite 100

Herndon, VA 20170

Oce: 703-709-2264

Fax: 703-709-5230

Email

[email protected]

one of our contractors he

determined that in fact the

dryer had a defect and

would need to be replaced.

Again, the owner paid a

service charge for an incor-

rect diagnosis, the tenant

was charged for cleaning

the vent which turned outto not be the issue and the

repair would take another

week to be completed.

When a contractor receives a

work order from a warranty

they only receive a repair

deductible typically between

$60-100. The reality is this

makes contractors working

with warranty companies look

for the quick ix instead of

identifying the actual issue

and correcting it. All of ourcontractors sign our vendor

policy which states that not

only do we require them to

provide us detailed before and

after pictures to prove the

repair was done, but if it is

determined later that they did

not perform the job correctly

and to our satisfaction, we can

leverage our relationship with

the vendor to go back out and

bring to our standard.

McGrath holds all of our con-

tractors to a high standard and

are constantly implementing

new policies in our Repairs

Department to ensure that

preferred contractors and

while our vendor policy is in

place to protect your interests,

it does provide several bene-

its to our contractors includ-

ing quick payment upon re-

ceipt of their invoice.

Our contractors are also keen-

ly aware of determining

whether the repair is a defect

or tenant caused and will

inform us of their professional

opinion of who should be

responsible. As you can see

from the above example, not

only was the issue not ixed in

a timely manner, upsetting the

tenant who had no A/C in the

summer for two weeks but as

the owner, you still had to pay

a deductible for the initial

warranty that did not coverthe issue.

We received a repair re-

quest for a broken dryer.

The home was identiied to

have a home warranty so

the warranty company was

called. The contractor went

out and determined that the

dryer vent was dirty and

just needed to be cleaned.

This was done and assumed

that the issue had been

resolved. A couple dayslater the tenant reported

that the dryer was still not

working. When we sent out

repairs are handled profes-

sionally, quickly and at a good

value price point. To learn

more about our Repairs De-

partment please reference the

2011 Winter McGrath Quarter-

ly Newsletter(found in the

Landlord Library section of

our website McGrathRealEs-tate.com) for the Spotlight on

the Repairs Team.

We could go on with several

more examples but in the end

home warranties in a rental

home tend to cost the home-

owner more than if they had

relied on the property man-

agers contractors. McGrath

understands the appeal of the

home warranty and appreci-

ates your desire to keep the

home in working order whileyou are away, but we believe

that a home warranty is not

the best way to accomplish

this. Our job is to protect your

interests and through years of

experience we know we can

offer our clients the lowest

prices at the highest quality. If

you ever have any questions

about a home warranty or the

management of your home,

please contact our Dave Buck-

ingham of our Repairs Depart-

ment [email protected]

..continued from page 1

As you well know, McGrath Real Estate Services Inc. has specialized in property manage-

ment for over 35 years. Through the relationships weve forged managing our clients

homes, McGrath Real Estate has had the distinctive opportunity to come to know your ex-

pectations and goals, and we have unique knowledge and background with your home! As

a valued customer of our property management services, we wish to continue to provide

you the best service in all your real estate needs.

Please let us know if youd like a no-obligation sales market analysis and

consultation sent to you!

[email protected]

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Sales Team?

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