Rising Rents in San Francisco

City Hall must address rising rents

EDITORIAL Another flurry of public concern over rising rents in San Francisco — driven by one-bedroom apartments listed for almost $4,000, a well-attended forum on gentrification in the Mission, fresh residential and commercial evictions, and a poll showing 63 percent think the city is building too much luxury housing — has been ignited. And once again, it’s falling on deaf ears at City Hall.

Working class residents, small businesses, and nonprofits are being driven out of San Francisco, unable to keep up in a city that increasingly caters to chain stores, wealthy residents, and tourists (both vacationers and conventioneers).

When Mayor Ed Lee and kindred politicians, who have fueled the rising rents with tax breaks and pro-landlord policies, are asked about the problem, they mouth stale rhetoric about job creation, change the subject (gee, we now have bike share!), or cite far-off and insufficient solutions like the Affordable Housing Trust Fund.

San Francisco’s landlords are doing great — despite the sob stories published recently by tone-deaf local media outlets such as San Francisco Magazine — and they’ve actually been emboldened to start attacking rent control as somehow hurting renters, threatening the last lifeline of diversity in the city.

The whole debate has gotten so surreal that it would be funny if it weren’t so serious. The future of San Francisco is at stake, yet nobody at City Hall with any clout seems to be taking it seriously. So here are a few places where our policymakers could start:

– End corporate welfare. Twitter is valued at $1 billion as it prepares its initial public stock offering, so it doesn’t need a $22 million multi-year tax break from city taxpayers. In 2012, city tax breaks nearly quadrupled, reaching $14.2 million (and that’s not even counting the $2 million annually that Airbnb is simply refusing to pay). Enough! We need that money more than Wall Street does.

– Hold developers accountable. Lennar Urban has been sitting on public land in southeast San Francisco for a decade while housing officials just let it slide. Lennar should front-load affordable housing or lose its land. Threaten a citywide moratorium on all market-rate housing permits until more low-income units come online and watch what happens. And protect existing rent control apartments from illegal subletting.

– Stand with people, not capital. Put the clout of San Francisco behind Richmond’s threat to buy underwater mortgages, using eminent domain if necessary, as Sup. David Campos proposed. Mayor Lee’s Housing Authority “reforms” should cater to residents rather than developers. Push for state-level reforms like pro-tenant changes to the Ellis Act, a Prop. 13 split role, and the right to control commercial rents and vacancies.

It’s time to change the conversation.

Article by: Guardian Editorial

Cap Rate Formula | What Is Cap Rate?

 

  • How do you know what a commercial income property is worth?
  • How do you know that you can get your desired return on your investment?
  • Is there a way to calculate the maximum you can pay for an investment and still achieve your investment goals?

This article will answer these questions and more about valuing income property.

Many real estate investors determine the value of an income property by using the capitalization rate, aka cap rate. It is probably the one most misused concept in real estate investing.

While brokers, sellers, and lenders are fond of quoting deals based on the cap rate, the way it is typically used, it can shortcut the true use of a valuable tool. A broker prices a property by taking the Net Operating Income (NOI), dividing it by the sales price, and voila!–there’s the cap rate.

Example:
Say the property has an NOI of $125,000, and the price is $1,125,000.

$125,000/ $1,125,000 = 11.1% cap rate

But what does that number tell you? Does it tell you what your return will be if you use financing? No. Does it take into account the different finance terms available to different investors? No. Then just what does it show?

What the cap rate above represents is merely the projected return for one year as if the property were bought with all cash. Not many of us buy property for all cash, so we have to break the deal down, usually by trial and error, to find the cash on cash return on our actual investment using leverage (debt).

Then we calculate the debt service, subtract it from the NOI, and calculate our return. If the debt terms, loan-to-value, or our return requirement change, then the whole calculation must be performed again. That’s not exactly an efficient use of time or knowledge.

Brokers are fond of quoting a “market cap rate.” This is an effort to legitimize an assumption, but it is flawed in its source. As a comparison tool it is almost impossible by any means to find out what other properties have sold for on the basis of the capitalization rate.

In order to correctly calculate a cap rate, and get an apples to apples comparison, you must know the correct income and expenses for the property, and that the calculations of each were done in the same way explained below.

This information is not part of any public record. The only way to access the information would be to contact a principal in the deal, and that just isn’t done because the information is confidential.

A broker may have the details of several deals in the marketplace, and if there is enough information about enough deals, the information may rise to the level of a market cap rate. But few brokers are involved in enough deals in one market to have that much information.

So the conventional wisdom becomes a range of cap rates for property types, which may or may not apply to the property you are looking at, and certainly does not take into account your own return requirements. So what do you do when you’ve found a property that looks promising, and the broker tells you the cap rate is 11.1% and you better act fast? How do you know if it is worth pursuing?

For years, I immediately jumped in the car to take a look, and then started crunching numbers making assumption after assumption to arrive at some estimated value. The truth is I was guessing. I wasn’t looking at the right numbers. There is a better way. It is not a magic bullet, but it is a powerful tool to use in gauging value.

What’s it worth to you?

The real question is not how much I (or another investor, or even an appraiser) value a property at. Nor is it the value from a cap rate estimated in the market. It’s the value at which YOU can attain YOUR investment the value from a cap rate estimated in the market. It’s the value at which YOU can attain YOUR investment goals, that is reflective of YOUR borrowing power, and gives you an intelligent starting point for the analysis.

I promise you if you learn how to do this, it will give you a leg up on 90% of the brokers and investors out there. Critical to this calculation is that the NOI is figured consistently with industry norms. The generally accepted definition of NOI is:

Gross Income – Operating Expenses = NOI

Please note that the operating expenses do not include debt service or the interest component of debt service. Obviously, the income and expenses must be verified, or all calculations that flow from them will be flawed. Verifying the income is usually easier than the expenses. Rent roll analysis and a contract contingency for tenant estoppel letters at closing can settle the income stream conclusively.

On the expense side, normal due diligence includes verifying with third party suppliers as many of the expenses as possible. But take care evaluating the operating expenses to uncover any anomalies that exist under the present ownership.

Owners often take a management fee that may or may not be market based; maintenance expenses may or may not include labor charges; items such as “office expense,” “professional fees,” or “auto expense” (I love that one myself!) may or may not be property specific.

In short, before accepting the NOI presented, understand what is behind the numbers. This is known as “normalizing” the numbers. You can also tweak the numbers to reflect the way you will own and manage the property.

No two investors will own and operate a property the same way. It is entirely possible for two investors to look at the same property and come up with two different NOIs, and two widely divergent values, and both are right.

That’s why appraisers use comparable sales, replacement value, and the income approach as part of a three-pronged method in estimating value. They make the appraisal representative of the market conditions and the typical requirements of investors and lenders active in the market.

The third method, the income approach, is usually given the most weight. That method is also known as the “band of investment” method of estimating the present value of future cash flows. It addresses the return required on both equity and debt, and leads to what can be called a derived capitalization rate.

Deriving your cap rate

The best way to get an initial value (after I am reasonably certain that the NOI is accurate) is the derivative capitalization rate. It requires two more pieces of information: You have to know the terms of financing available to you and the return you want on your investment.

We then use these terms for both debt and equity to indicate the value at one precise point in time–the instance of when the operating numbers are calculated–to derive the cap rate that reflects those terms. (The value in future years is another discussion.) Deriving a cap rate works like a weighted average, using the known required terms of debt and equity capital.

The bank’s return: the loan constant

Let’s start with the finance piece. We need to know the terms of the financing available. From that we can develop the loan constant, also called a mortgage constant. The loan’s constant, when multiplied by the loan amount, gives the payment needed to fully repay the debt over the specified amortization period.

IT IS NOT AN INTEREST RATE, but a derivative of a specific interest rate AND amortization period. When developing a derivative cap rate, one must use the constant since it encompasses amortization and rate, rather than just the rate.

Using just the interest rate would indicate an interest only payment and distort the overall capitalization process. The formula for developing a constant is:

Annual Debt Service/Loan Principal Amount = Loan Constant

You can use ANY principal amount for the calculation, then calculate the debt service and complete the formula. The constant will be the same for any loan amount. For example, say your bank says they will generally make an acquisition loan at a two points over prime, with twenty-year amortization, with a maximum loan amount of 75% of the lower of cost or value.

Say prime is at its current 4.5%. That means the loan will have a 6.5% interest rate. Using a payment calculator or loan chart, find the payment for those terms. On a loan for $10,000, the annual debt service required is $894.72. Divide that by $10,000 to find the constant.

894.72/10,000 = .08947

Using the terms given then, the loan constant for that loan would be .08947 (I usually round to four or five digits. Depending on the exactness desired, you can use as many as you like.)

The answer will be the same if you use $100,000 or any other number as the principal amount. (One hint: do not use a principal number with less than five digits, because the rounding will affect the outcome.)

You might note here that the mortgage constant is basically the lender’s cap rate on his piece of the investment. Both the mortgage constant and “cash-on-cash” rates for equity are “cap” rates in their basic forms. A cap rate is any rate that capitalizes a single year’s income into value (as opposed to a yield rate).

Your return: cash-on-cash return

The next step is to provide for the return on the equity. Start with the return you want on your money: Say the cash-on-cash return you are seeking is 20%. The cash-on-cash rate is also known variously as the equity dividend rate, equity cap rate, and cash-throw-off rate.

It represents the cap rate to the equity position, and to keep things simple we will call it the equity constant. If an investor puts in $30,000 and requires a 20% pre-tax return, then his annual cash in the pocket after paying the mortgage (but before income taxes) would have to be $6,000. In this case, the equity constant is .20.

Put it all together: Weighted average

Each of these capitalization rates is then weighted based on the loan-to-value ratio of each of the debt and equity positions to build the “overall cap rate.” The formula looks like this:

(LTV debt ratio x mortgage constant) + (LTV equity ratio x equity constant) = derived cap rate

To finish the example, using the mortgage terms given above, and the desired 20% cash on cash return, the following would be the overall cap rate with a 75% loan-to-value on the debt component:

(.75 x 0.08947) + (.25 x 0.20) = .1171
or
.0671 + .05 = .1171

To convert to a percentage, move the decimal two places, and therefore, under the stated conditions, the required cap rate for the property (income stream) is 11.71%. Using the normalized NOI figure, then the indicated value is calculated with this formula:

NOI/Cap Rate = Maximum Purchase Price

For the original deal above, the value would be calculated to attain the desired return:

$125,000/11.71% = $1, 067,464

The asking price of $1,125,000 is very close to my target of $1,067,464. This is a deal that would definitely be worth hurrying to take a look at. Had the deal been priced at a 10% cap rate, or $1,250,000, then I might still take a run at it since my price is within ten to fifteen percent of the list price.

In a normal market, California aside, most sellers do not expect the property to sell for the asking price.

Not a magic bullet

Now please note that I said at the beginning that this is a starting point. It is not the end all and be all of valuation, nor should it be. That doesn’t exist.

Many factors can influence the value of an income property both up and down. Some of the most important include deferred maintenance; security of the income stream (strength of the tenants and length of the leases); comparable sales in the area; general economic and market conditions; and local market conditions.

All these factors speak to the relative risk and effort involved in the continuance of the income stream, and must be investigated during the due diligence. As the instability or cost of any of those factors increases, I would increase the required return on my cash invested to offset the increased risk taken and the increased effort required to mitigate that risk.

Increase the required return and the cap rate changes, and so does the price. At this point you are writing your own paycheck. This is a powerful tool if understood and applied correctly. Play around with some alternative scenarios of returns, loan terms, rates, etc. and you will see the effect of changing different parts of deal structure.

You should now see why it is so critical to verify EXISTING income and expense BEFORE establishing value. This little exercise also shows why I harp all the time on no two investors coming up with the same value for the same property. DO NOT use this as a “magic bullet” and stop your analysis after the calculation.

I cannot stress enough the importance of performing thorough due diligence in commercial income properties. That alone is what determines the difference between being a true “investor,” and the next “don’t-wanter” seller.

Article by: Ray Alcorn

 

A Crash Course in Tax and Investment Property

One way or another, Uncle Sam is going to get his cut. Count on it. And so will your state and local governments. That said, there are certain things you can do as a real estate investor to help manage your tax bill, and maximize your after-tax return on your investment.

In order to do so, however, you need to understand the primary ways in which investment real estate portfolios get taxed. You must also have a general grasp of some abstract concepts like calculating your tax basis, as well as the depreciation of capital investments. Hey, if this stuff were easy, we’d all be CPAs, right?

Warning: This article will only arm you with enough information to be dangerous. You can click on any of the links for more detailed information directly from the Internal Revenue Service. This article is not going to make you an expert. But you can become conversant with the basic terminology, so you can be better prepared for a meeting with your tax advisor.

Taxation of Rental Income

The IRS taxes the real estate portfolios of living investors in two primary ways – income tax and capital gains tax. (A third way, estate tax, applies only to dead investors, and will be left for another article).

Rental income is taxable – as ordinary income tax. That means you have to declare it as income on your tax return, and pay income tax on it by April 15th of the year after the year you receive it. (Corporations may have to declare this income quarterly).

Rental income receives better tax treatment than income earned from wages – you don’t need to pay FICA taxes on rental income, while you do have to pay FICA on wages you get from a W-2 (and double FICA on self-employment income!). It’s almost as if the system is rigged against the working man!

Your income is everything you get from rents and royalties on the property, minus any deductible expenses. You can’t deduct everything, though – you can only deduct mortgage interest and repairs you make that restore the property to its original minimally functional condition. You can’t deduct capital investments like new buildings, additions, or renovations. More on these later.

Capital Gains Tax

The second tax bill you need to worry about is capital gains tax. The IRS taxes you on any net profits you get out of a property when you sell it. If you’re “flipping” properties and you own the property less than a year, you pay short-term capital gains, which is the same rate as your marginal income tax rate. If you’re in the 28 percent tax bracket, you’ll pay a 28 percent tax on short-term capital gains. And you’ll like it, by God!

Ok, maybe not. But you’ll pay it. Unless you can hang on to the property for at least 12 months. In that case, you will qualify for more favorable long-term capital gains. Depending on your marginal income tax bracket, these taxes could range from zero to 15 percent. In every bracket, however, Uncle Sam takes a smaller cut out of long-term gains than out of ordinary income or short-term gains. And once again, we see the system favors the landlord investor over the worker.

Calculating Capital Gains

You pay capital gains tax on the difference between your selling price in the property and your tax basis. Your basis in a property is the total amount of dollars you have invested in the property for which you have not taken a deduction, from your purchase price to the amount invested in renovations and improvements (including labor costs on these projects!). If you have deductions associated with the property, you subtract them from your tax basis. If your basis is higher than your sale, you have a capital loss. You can subtract losses from a given year from gains to reduce your tax bill. If you have more losses than gains, you can “carry forward” these losses into future years, to cancel out capital gains in future years and then to cancel out up to $3,000 in income. (Note, if you take a capital loss on a property, you cannot buy the same or substantially identical property back for at least 30 days, under so-called “wash sale” rules.

How To Defer Capital Gains Taxes – Indefinitely! An Intro to Like-Kind Exchanges

The IRS provides an important exception to capital gains taxation, made-to-order for real estate investors: If you own an investment property, you can sell your property at a profit and roll your money over into another property within 60 days without having to pay capital gains taxes at all – a transaction known as a Section 1031 exchange, named for the section of the U.S. Revenue Code that allows it. It has to be a property of “like kind.” You cannot swap your rental property for a personal residence, or vice versa. For this reason, these exchanges are sometimes called like-kind exchanges.

The 1031 exchange makes it possible for real estate investors to defer paying capital gains tax almost indefinitely – which is another advantage over investing in mutual funds, stocks, bonds and other securities or collectibles. Outside of a retirement account, you have to pay tax on gains in these items by the April 15th in the year after you sold them.

Depreciation and Amortization

This is a broad concept, so we can only cover the very basics here. When you buy investment property – be it a building, a computer or a horse – the IRS knows that the item won’t stay young and new forever. Over time, the property will decrease in value. Depreciation is the process of claiming a deduction to compensate you for the property’s decrease in value during the year. Note: You can’t depreciate your personal residence. You can only depreciate investment property. For more information on the process of depletion, see IRS Publication 946 – How To Depreciate Property.

Land, of course, doesn’t depreciate. But minerals underneath the land do. If you are extracting oil or other minerals, or timber, for that matter, from the land, you will account for the gradual loss in value through a process called depletion.

Likewise, when you make a purchase of investment real estate or capital equipment with a useful life of longer than a year (hopefully that applies to all your real estate!), the IRS knows you will be using that property to generate income for a long time to come. Except in certain circumstances, then, the IRS does not allow you to deduct the full cost of your investment in the first year. Instead, you must amortize your investment over a number of years. For cars, you have to spread your deduction out over five years. For real estate, you must spread the deduction out over 25 years. For more information on how to account for amortization and depreciation on your tax return, you can download the IRS instructions.

Passive Activity Rules

Again, these rules are complex. But in a nutshell, if you are a passive investor – meaning you are not working day to day in the business of managing your real estate investments – you are subject to passive activity rules. Basically, you can only deduct passive losses to the extent you can cancel out gains from passive activities. These rules restrict your ability to use passive activity losses to offset capital gains elsewhere in your portfolio. Congress implemented these rules in 1986 to eliminate tax loopholes and abusive tax shelters. So thank your parents and grandparents for ruining it for you. And their accountants.

Most individual investor landlords can deduct up to $25,000 per year in losses on rental properties, if need be. Hopefully you won’t have to make use of this provision much.

Property Taxes

Just as Uncle Sam takes his cut, so do his local nieces and nephews. Expect to pay property taxes to local and county governments each year.  Your local government will assess the market value of your property at its “highest and best use,” and charge you a percentage of that value every year. You can deduct property taxes against your rental income, though, provided the property tax is uniformly assessed throughout the jurisdiction and is not a special assessment.

Other Tax Deductions

Be on the lookout for opportunities to take deductions for these common real estate investment expenses:

  • Mortgage interest
  • Tax advice and preparation fees
  • Legal fees for business purposes (but not for personal reasons)
  • Mileage
  • Business use of your home (the home office deduction)
  • Advertising fees
  • Employees (but if they are working on capital improvements or renovations, you have to amortize their labor costs as part of your capital investment, rather than as a current year expense.)

Article by: by Jason Van Steenwyk on March 3, 2012

DETERMINING RENTAL RATE

There are many factors to consider when determining a rental rate.  You want to make sure you don’t charge too much or you’re likely to be sitting with vacant units.  And on the flip side if you charge too little, you’re leaving profits on the table.

MARKET RATE

To determine your rental rate you want to first look at Market Rent.  Market Rent is, simply, the going rate for rental properties in a specific area.

Some of the factors that can affect Market Rent are supply and demand.  Typically, if supply is low, the demand is high and conversely, if demand is low, the supply will be high.  In general, when demand is high we see the rental rate increase.  When the demand is low it may be worth considering lowering your rental rate in an effort to increase your return on investment (ROI).

The easiest way to determine Market Rent is to look at comparable properties.  The rate is not determined until a renter is willing to pay the rent asked.  A local property manger is a good source to help you determine the actual Market Rent for your area.

COMPARABLE HOMES

Looking at comparable homes currently for rent is also a great way to determine a rental rate. Be sure to look, if possible, how long the property has been on the market.  For example, if you are looking at a home in the low-end of the market that has been posted for rent for a while and demand is high, it is a reasonable conclusion that the rent may be too high.  If you are looking at the higher-end, you want to take note that these homes typically stay on the market for a little longer than the lower-end.  We will discuss this further below, but in both cases it is important to compare homes of similar size, amenities and area.

KNOWING YOUR RENTER POOL

When looking at comparables you want to consider your renter pool.  Typically you have a larger pool of renters in the lower and middle-end.  In the higher-end you have more people with income levels that allow them to buy a home so the pool is smaller.  This is called a stratified marketplace.  It is similar to what we see in the Real Estate market.   Keeping in mind people rent for many different reasons we see rentals in the high, middle and low end of the market.

 

If you have any questions or would like help pricing your rental please don’t hesitate to contact me.

 

Audrey Wardwell

Audrey@36northpm.com

831-320-7116

FAQ’s Regarding Property Management

WHY SHOULD I USE A PROFESSIONAL TO MANAGE MY HOME?

While the reasons our clients choose professional management vary, here are some of the key reasons many people elect professional management over self-management:

  • We handle maintenance and emergency repairs, allowing you to sleep at night.
  • We enforce collection of rents and serve the proper notices upon failure to pay.
  • We understand and apply the correct federal, state, and local laws, keeping you and your investment out of trouble.
  • We know the local market, have an extensive network of contacts, and have advertising resources available to us at discounted rates. This allows us to effectively market your vacant home to prospective residents to get it filled.
  • After you add up the increased rent we can often command, the discounts you’ll receive on advertising, and the company rate we get on repairs, you’ll often make more money than if you managed the property yourself!

HOW WILL YOU FIND TENANTS FOR MY HOUSE? HOW LONG WILL IT TAKE?

  • Your property will be entered into our website (www.36northpm.com), our business facebook page (https://www.facebook.com/36NorthPropertyManagement), craigslist.org, NARPMCalifornia.org, HotPads.com, USAHomeRentals.com, SnapRent.com, HomeRentals.net as well as several other national third party rental websites.
  • We are in frequent contact with many real estate agents in the area as well as the relocation offices of major companies.
  • It normally takes two to four weeks to rent a home. It sometimes takes longer in the winter. A property is activated on our website as soon as we receive notice from the existing tenant and permission from the owner to re-rent.

WHEN DO I GET MY MONEY EACH MONTH?

We deposit the rent in our account as we collect it and it takes a day or two to clear. Once the funds are cleared, we electronically deposit the funds into your bank account. Again, it usually takes a day or two to clear your bank. Generally, we disburse daily at the first part of the month so you should receive your funds about 4 days after the tenant pays us.

WHAT DOCUMENTATION WILL I NEED TO PROVIDE MY MANAGER?

If your property has an HOA or condo association, you will need to provide us with copies of the Rules and Regulations and the name and telephone number of the Management Company. We will need your Insurance Company’s contact info along with policy information. If your property is currently rented we will need a copy of all current rental agreements. You will also need to provide us with your bank account and your Routing numbers for direct deposit of funds.

HOW DO YOU MAKE SURE THAT THE TENANT IS TAKING GOOD CARE OF MY HOME WHILE RENTING?

Above all, careful tenant selection from the outset protects your property from being rented to irresponsible people. During the lease term, we may have occasion to enter the property for repair or maintenance reasons and will use that opportunity to have a look. If we are fortunate enough not to have any repairs or maintenance at your property over an extended period of time, your property manager will schedule a preventative maintenance walk-through twice a year so that there are no unreported problems at the property.

WHAT HAPPENS IF THE TENANT DOES NOT PAY THEIR RENT?

The rent is due on the first of each month and considered late after the 5th. On the 5th of each month, we send late notices to all tenants with unpaid rent. Within a few days we are calling all past due tenants. We will file for a writ of possession in the Landlord Tenant court about the 20th of the month if payment is not received by then. Whether or not the property manager eventually proceeds with a formal eviction depends on the specific circumstances. It is always financially better for all involved if a solution can be worked out. If the tenant has experienced a one-time event, which is causing them a financial hardship, and we have had no previous problems with them, it is better for you and the tenant if we give them a chance to catch up – if there is reason to believe they can do so. If the tenant has demonstrated an ongoing pattern of late payments, broken promises about payments and/or evasiveness, we know from experience that eviction is the best course of action.

Each case is unique and the property manager will make a decision based what is best for you and your home in the long run. That said, we always proceed with the legal notices required for eviction regardless of any other factors. We will simply postpone the actual filing of the eviction if the tenant is showing favorable effort toward resolution. Full evictions, when necessary, can often take up to 2-3 months.

HOW DO YOU HANDLE MAINTENANCE REQUESTS?

Tenants call us directly. We discuss the issue with the tenant and ask them questions which will help us determine the exact nature of the problem before sending a service technician. We also make sure it is not something the tenant can fix themselves (ex: reset button on the disposal, tripped breaker) before your money is spent on a service call. After determining that it is a legitimate problem, we normally will contact the owner, especially if the repair will be more than $350, to get approval. We will then send the appropriate service vendor to make the repair.

We tell our tenants that we are able to handle most repair requests within 1 to 3 working days, and in fact are usually able to do so sooner. Comfort items such as heating or no hot water receive highest priority and are usually attended to the same or next business day.

DO YOU HOLD SOME OF MY MONEY FOR REPAIRS? HOW MUCH?

We will hold back $200 per unit in your account so that we always have funds to pay our vendors quickly.

HOW DO I KNOW YOUR PROPERTY MANAGER WON’T SPEND MY MONEY ON LARGE REPAIRS WITHOUT MY APPROVAL?

This is a legitimate fear. We promise in writing not to do that. For ordinary maintenance and repairs of less than $350, the property manager can take care of it without notifying you. If we think a repair might exceed $350, we will call you and let you know what is happening, what we think should be done, and what the estimated cost might be.

WHAT IF I WANT YOU TO USE MY PLUMBER, A/C COMPANY, ETC.?

We already have a stable of very qualified and reasonably priced vendors that we have used for many years. If you would like to nominate a service company to be added to our vendor list, they can contact us and we will interview them and let them know what documentation and references we need, what our invoicing and payment policy is, etc. We cannot guarantee however that your favorite company will be sent on all service calls to your home. Our concern is always to resolve repair problems in the most efficient way possible with the best available vendor at the time. Property managers can’t keep track of a pre-established roster of vendors assigned to certain properties – it would be a cumbersome and inefficient property management system and would not achieve the best service to the tenant and your investment property.

Our professional reputation as property managers, both with tenants and owners, is largely, if not almost entirely, determined by the effectiveness with which we handle maintenance. We follow a practice that is most likely to insure the best possible response and resolution to maintenance and repair problems for your property.

WHO DO I CONTACT IF I HAVE A QUESTION ON MY MONTHLY STATEMENT?

Please contact Audrey via email at Audrey@36northpm.com or via phone 831-320-7116.

WHO HANDLES THE MIDDLE OF THE NIGHT CALLS?

We do! We are on call 24 hours a day. Why worry you? That’s why you hired us! Most emergencies are prioritized and often can wait to the next day.

WHAT TYPE OF INSURANCE DO I NEED FOR MY PROPERTY?

You will need to have Landlord policy naming 36 North Property Management.

 

What Americans Want in Apartment Landscaping

Posted on 31. Jul, 2013 by  in Greener Properties

As you determine ways to make your apartment complex more appealing to tenants, you should pay attention to the latest trends when it comes to outdoor spaces. More specifically, take note of what the American Society of Landscape Architects found when they conducted their Residential Landscape Architecture Trends survey for 2013. Then consider using these findings to your advantage as you work to improve your property.

Opportunities to Cook and Entertain Outdoors Top the List
A whopping 96% of Americans surveyed said they wanted grills outside. This was closely followed by complete outdoor living spaces, including outdoor kitchens and areas to entertain guests. If your apartment complex does not yet have a built-in barbecue area, or grills at the very least, you might be missing out on tenants who value livable outdoor spaces.

Seating is equally important according to the survey results, so make sure you have tables, chairs, or even basic picnic tables set up around the apartment complex. Installing some fire pits or outdoor fireplaces may also be the key to satisfying your tenants, according to 97% of the survey respondents.

Sustainability Matters When It Comes to Apartment Landscaping
More people care about sustainable outdoor spaces than you might have thought, and that includes landscaping. In fact, about 94% of people surveyed said they liked low-maintenance landscapes. Of course, in an apartment complex, the amount of maintenance might not directly affect the tenants, but it may affect your landscaping bill. Choosing plants that are native to the area can reduce the amount of work required to keep them healthy, and this move would please 87% of the survey respondents, too.

Nearly as many people also like the idea of having gardens that grow fruits and vegetables. In fact, more apartment landscaping plans these days are featuring gardens as a major part of their sustainable outdoor spaces. You can offer one or even a few courtyard gardens, or even window boxes for tenants to grow their own food. Either way, this apartment landscaping can improve the quality of life in your complex. It often even increases the length of each tenant’s stay, since many people grow quite attached to their gardens after putting in hours of work to grow food.

Lighting and Installed Seating Are Also on the Minds of Many Tenants
About 95% of those surveyed claimed lighting was important to them in an outdoor space. After all, this makes it possible for tenants to cook dinner outside as the sun goes down or even simply feel safer taking walks at night. Considering how much people now value sustainable outdoor spaces, you should be sure to use energy-efficient or even solar lighting with timers and sensors to help keep light pollution to a minimum.

Another common desire for outdoor space is the presence of installed seating. This ranges from simple ledges and boulders to installed benches. You can install what you think would look best in your apartment complex, again paying attention to sustainability by using eco-friendly materials that can stand up to your city’s climate for years.

Outdoor Recreation Amenities Are Appreciated in Modern Apartments
You might be surprised to find that outdoor recreation amenities, such as pools and tennis courts, garnered only 76% of the vote in this survey. In fact, more people – about 82% – thought having weatherized chairs outside was more important. That means the ability to cook outside and sit comfortably, perhaps in front of a fire pit, is more important to many Americans than access to a pool.

Of course, many apartment complexes are still expected to have such fun amenities, especially in warmer areas. However, apparently you should focus on getting grills and seating set up first if your apartment landscaping is missing these features. After all, sustainable outdoor spaces are of great importance to many tenants.

Rising Demand For Aparments

by Diana Olick

Despite recovery in the single-family housing market, demand for apartments continues to surge. Just 4 percent of U.S. apartments nationwide were vacant in the second quarter of this year, according to a new report from Reis. That pushed rents up 3 percent from a year ago.

“The simple fact that vacancy continues to compress despite such low vacancy rates speaks volumes about the ongoing demand for apartments,” said Ryan Severino, senior economist at Reis. “The national vacancy rate now stands 380 basis points below the cyclical peak of 8 percent observed right after the recession concluded in late 2009.” As a result, construction is surging ahead, with 34,834 units completed during the quarter, the highest level in four years and up from 21,237 a year ago. This large surge in new apartment product will meet head on with strong demand, and is therefore unlikely to cause any easing in rents.

Rents are still rising, but not as fast as might be expected given the supply constraints. The culprit: weak income growth. “Landlords would like to raise rents faster, but most tenants simply can’t afford to pay more right now,” said Severino.

While single-family home prices are recovering, and sales are picking up, younger Americans are still cash-strapped and some lack the credit scores to qualify for a home loan. That has left more of them renting. Household formation is increasing, but not nearly as quickly as some had predicted.

On a local level, New Haven, Conn., and Syracuse, N.Y., had the lowest vacancy rates at 2 and 2.1 percent, respectively. Both markets are home to major universities. The lowest vacancy rates are concentrated in East and West coast markets, according to Reis, where home prices are the highest and new construction is constrained.

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