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6711 Forest Lawn Dr., Suite 107
Los Angeles, CA 90068

(323) 882-6606


Stay current on the latest articles from Kari Negri and SKY Properties.

Avoid Financial Disaster at Your Building

“Ask Kari” is a monthly, Question & Answer feature from Kari Negri.  Kari has two decades of property management experience, is a featured speaker at many industry trade shows, such as AAGLA’s annual trade show, and is the CEO of SKY Properties, Inc. in Los Angeles.

At the most recent “Shake Rattle and Roll” AAGLA trade show, many attendees of my talk asked for a copy of my notes on avoiding financial disaster. So for this month’s “Ask Kari” article, I promised them I would have my notes printed. Here you go:

  1. Control your vacancies by renting to qualified people & taking care of the residents that pay their rent and take care of their units.

The only thing worse than a vacancy is an eviction and bad/non-paying tenants could lead to financial disaster. You will chase away good people, incur attorney’s costs, plus you will receive no rent and you will incur their utility expense – water at a minimum and probably end up with damages. To avoid this, it is imperative that you rent to qualified residents. In fact, the only way to make money and avoid disaster in this business is to rent to good residents and to do everything in your power to qualify them. For every adult, check their Photo ID, Proof of valid income. If resident is self-employed they need to bring tax returns.

Three bank statements – see if income matches paystub and check to see if rent is paid on time

Social Security card/# or green card, passport, work permit (normally have tax id if they have permit)

Call the previous landlord or two

Meet animal if allowed and require renter’s insurance and signed agreement

Run: Credit report, Criminal record, & a UD report (eviction)

At a minimum Apartment Association AAGLA credit check like the Quad check (includes 2 credit reports, eviction report, and bad checks)

Require a utility bill with current address to verify residence on application

Make sure they do not owe $$ on basic services such as: utility bills (DWP/Gas Co), phone, and cable

 Keep good residents – don’t give them a reason to leave.

 Take care of routine maintenance immediately   #1 reason residents move is a lack of maintenance

If you have an on-site manager make sure they are a good one and are giving great customer service

Accept maintenance requests via email and respond to them with date and time of service.

 How many of you have one crazy tenant in your building? Don’t let crazy or bad tenants drive your good tenants out. Act quickly by documenting everything and having your notices sent by an attorney when you think you have enough to start a UD.

Tenant retention can be as simple as showing tenants you genuinely care. Be responsive. Know how to get messages to your tenants quickly by texting or calling them things like the water is turned off for an emergency or any important information regarding their unit. Statistics say that most residents prefer texts and emails rather than be called.

Keep a schedule of when your leases expire – approach tenant 90 days out and offer them an improvement in their unit such as carpet cleaning, fresh paint, a floor upgrade (if you would do anyways for a vacancy), granite counter tops, a/c in the second bedroom etc. for signing another year lease if they are a good tenant. By doing this, you can do improvements to your building and keep a good residents – this makes good financial sense.

Do not give a rent raise if their rent is already above the market & raise rent if they are below market or they are a difficult or bad tenant or neighbor.

Make sure the outside of your building is maintained and very clean – something they are proud of.

You want to be the best building on the block – make sure your manager and vendors are doing their job.

Good Management Company and Manager – Do not hire a management company with no experience.

Resident referral – careful with several residents from 1 family because if 1 moves you will likely lose all of them and this could definitely lead to a financial disaster.

Ask departing residents if there were any problems. It is always good to know why your resident is moving and they may be more honest on way out.


Do a market survey or you are wasting valuable time! Your pricing must be competitive.

 72% of all residents start their search on-line and Craigslist generates 60% of all calls. Be sure to repost regularly and look at other apartment ads that are close to your building both in proximity and amenities.  Make sure that the title of your ads makes potential residents want to click it as opposed to building next door.

Make sure you are offering a quality product – look at your vacancy and anticipate what tenants want or need (like a/c in the Valley).

Don’t panic and lower rent, stay in market. No crazy specials, and remember if you price too low that someone may not even consider looking at it thinking they want something worth more.

For example, if I were looking for a $1000 apartment – I would not even look at one for $800.

Answer the phone – 40% of all prospect calls go unanswered – can you afford that? Have a good outgoing message no more than 1 minute and return all prospect calls!

Know what tenants want – the basics. If you don’t keep up on trends in design, in the long run it will cost you money. Don’t be too trendy so you can adapt to new things easily.   Some very basic current trends:

Pet Friendly and most tenants have no issue with paying pet rent.


Make sure they know everything upfront – no surprises

Ability to look at apartment and community on their phone

Want to see same day

On-line applications

Ability to do Online Payments and lease renewals

Give Renters and Tenants what they want go GREEN and do yourself a favor by lowering your utility costs.

 In an article I read, it stated that renters want to live in green communities 86% or 9 in 10 Americans. Surprisingly, cost efficient is not the #1 reason they choose a community – environmental stewardship is. 3x as many renters compared to non-renters say it is absolutely necessary and more than ½ of renters are willing to pay at least $100 more in monthly rent in order to make an effort at being green. 

  1. Control Utilities

Check your utility bills to make sure there are no spikes in usage

During your 6-month inspection of smoke alarms required by state law – use this as an opportunity to check all plumbing.

The American Water Works Association says that 20% of all toilets are leaking at any 1 time often undetected.   Replace all pre-1994 without question DWP has a program where you can get them for free.

Think about installing water conserving and energy efficient products, you’ll put more money in your pocket which increases NOI and enhances your properties value. You can also increase your occupancy by attracting eco-conscious residents help the environment a win win.

Utility charges cannot be added to current leases under rent control; however, incoming tenants can be given pro-rata share of bill per the RUBS companies – check with your attorney.  It is a fact that usage is often reduced up to 22% when cost is passed through to user.

Cost efficient bulbs – CFL light bulbs will cost you 75% less to run than standard light bulbs and will last 10x longer, water savers (low flow shower heads are now also available free from the Gas co) – you can get advice and free items from the Gas Co ( and DWP

There are many products on the market that claim to save energy or water – make sure that you try it out before changing everything out in your building. We have found that many of them do not work so be careful in this area.

Recycling is mandatory! 70% of all trash is recyclable. City of LA 213-473-4142 or Fewer trash pickups during the week can save money for everyone with blue bins and free materials for residents about what is acceptable to put in blue bins – educate your tenants and in doing so you can be environmentally friendly but it won’t help you (well except your own conscious) if you don’t inform your tenants of your green habits.

Try Energy Star rated appliances and energy Efficient Washer and Dryers – you can look on the Gas Co or DWP website for what qualifies. Rebates are advertised through DWP but almost impossible to get.

Inspect and clean dryer ducts regularly to avoid the build up of lint that can cause clothes to dry slower, higher energy bills, overworked dryer breaking down, water collecting in duct and dripping inside walls or onto floors. A clogged dryer vent can also create a huge fire hazard.

Master metered building put a/c’s on timers – GET GREEN!!

Draught resistant landscape – check for free programs and/or rebates.

Make sure that you are not overwatering and know that you can often change sprinkler heads and save a lot of money.

Consider incorporation of all the above: ½ of renters feel that energy efficiency and environmentally friendly features are of importance when selecting which apartment to rent. Communities/buildings emphasizing that they are either working to go green or are already implementing green programs can gain the favor or both current and prospective renters.

If you want Higher Occupancy, use common sense BE ORGANIZED


Make sure that you sign any new lease contingent on current tenant moving out on the date given on their 30 day (ask attorney for wording).

Make sure that the current tenant is okay with you showing the unit (or you have video of a similar unit they can look at).

Last make sure that the current tenant is neat and tidy, as most will overlook a lot but not cleanliness.

Collect rent on time, serve 3-day notices immediately and evict within a reasonable amount of time probably between 10 and 15 days. If you are going to listen to a tenant’s story of why they are late and when they can pay then be sure to verify story when possible – not recommended.

Problem or low paying tenants –In non rent control you cans simply raise rent or give them notice but in rent control buildings nonpayment is an opportunity to turn a bad situation around. A troublesome tenant should be served immediately if they do not pay rent.

  1. Control your COSTS to avoid a financial disaster – there is a profit to be made by lowering your expenses.

Do not spend too much on vacancies, be ready for a Code Enforcement inspection, do preventative maintenance, and have a long-term plan for large capitol improvements – this should include a capitol reserve.

Turn vacancy quickly to reduce expense – that means being very organized (average cost $4300 per unit) – line up everything ahead of time. Know what products you intend to use and have them on hand.

You can often make a pretty good list if your tenant requests the two-week walk through that we are required to do.

Hire reliable venders that have legit license, a W-9 on file and work comp. & liability and you know to be reliable. Poor quality work and labor is extremely costly. Had a client re-pipe his building but contractor used substandard copper that is now leaking. Hired a roofer who promised to use a good quality material but was surprised when I showed up to check (his bid was too low).  Spending a lot of money on a large capitol improvement and getting poor quality of work could lead to a financial disaster.

Hire a Great Management Company – A bad management company will never achieve higher occupancy or lower expenses for you and can cost you thousands.

Get bids on everything until you really understand what something should cost.

Educate and train your on-site manger give them the tools to save you $$ and watch on-site repairs to make sure they are fair, etc.

You need great customer service, quick response to maintenance and problems, accurate and regular market surveys.

Make sure that you have done a credit check if employee will collect money and a criminal check on any employee that you directly hire and ask your vendors to do the same. Keep current on basic employment law. Your manager is an employee not an outside contractor – A MANGER CONTRACT IS MANDATORY PER STATE LAW – time sheets are MANDATORY to back up their hours. Consider wage and hour insurance but it is not always easy to get.

Trying to defer maintenance can end up costing you more $$$ and may even cause you vacancy or bad on-line reviews. Check everything at 6-month smoke detector test.

Make sure everything works on the property the way it is supposed to (gates, laundry machines, pool).

Eliminate any reason not to rent at your property or to move out by keeping up with basic maintenance.

Have a solid plan and a financial plan to repair and replace plumbing. Insulate hot pipes.

Always have a paper trail – this is a litigious business and we want to always have documentation. An eviction can now be very expensive if they ask for a jury trial – be ready for this.

Apartment Owners who make security a high priority can keep their tenants longer, protect property values, and reduce maintenance and repair costs. Renters will pay more for a sense of security of course you can never guarantee security or safety in any way.   Have gates that work and develop a good relationship with your SLO (Senior Lead Officer).

  1. Have the right INSURANCE – know what it will cover.
  1. Avoid financial disaster by have a pre-prepared plan to execute in case of a Natural Disaster.

1st be ready to take care of your own family – have a plan for kids and pets for an earthquake that takes place during the day for example. Read this article and then when you go home take a sturdy pair of shoes and a flashlight and put them in a bag secured to the leg of your bed. YOU MUST HAVE ENOUGH WATER ON HAND TO LAST AT LEAST A WEEK FOR EVERY PERSON AND/OR PET IN YOUR HOME.

Know your neighbors, as you will likely need to rely on them during a natural disaster.

Keep important phone #’s in your car and have an out of state contract.

Text will likely work better than calling someone.

Make sure you important paperwork is backed up in a separate location and preferably to a site out of state so that you have access if something major happens here.

If you have a building that is older have it looked at for stability – sometimes some minor additions could mean a huge difference. Those minor adjustments and costs could save your retirement fund.

Give your tenants websites that will guide them to having on hand what they need in case of a disaster. They will need WATER make sure they know that.

Consider having your on-site manager or yourself CERT trained, keeping emergency supplies like blankets, first aide, Tyvek and staple gun or plywood to cover broken windows at your building and also WATER – see Blue Can (

Know how to turn off gas and water – make sure someone at your building knows how to do this also. I have the tool to turn off on a chain next to gas valve.

Consider making arrangements with a glass company and/or a contractor to go to your building after a disaster even if you don’t call them afterwards.   DO NOT EVER HIRE SOMEONE OFF THE STREET OR SIGN SOMETHING FOR REPAIRS WITHOUT THE CONSENT OF YOUR ATTORNEY AND INSURANCE COMPANY.


Keep fire extinguishers up to date – most likely problem after an earthquake could very well be fire.


Please understand that it could be days after a natural disaster before you can get help – try to be ready for that if at all possible.


An earthquake in southern California is inevitable, but it does not have to be a disaster.

As always, please remember, I am not an attorney. Seek clarification through your attorney. All articles are simply an opinion. Stay in touch at

Do you need professional property management from Kari Negri and SKY Properties, Inc.? visit our contact page to get started.