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.

More from CNBC:
Shutdown Freezes Housing’s ‘Pipeline’
New York Apartment Prices Hit 4-Year High
Amenities for the Rich

Valuing Property Via The Capitalization Rate Methodology

Posted on 04. Oct, 2013 by Leonard Baron in Business

When one wants to value property, like an apartment building, to get a feel for what it is worth, there are two different commercially recognized valuation approaches that are used. The first one is the comparable market approach analysis (CMA), which is used both for single unit residences and multi-unit properties. The second valuation approach is called the Capitalization Rate Valuation, or “Cap Rate” and it is used primarily for income producing multi-unit and other commercial properties.

The CMA valuation is about as clear-cut and straightforward as can be for estimating a property’s value. The theory is that two properties, in similar shape, in a similar area, in a similar timeframe, with similar rents, in a similar size, unit or square footage, should sell for about the same value on a per unit or per square foot basis. Voila, it’s that simple.

Approach number two is the Cap Rate methodology which is a much better valuation tool for income producing properties like an apartment building. The reason it is a much better tool is because it’s really a “cash on cash” return calculation without respect to whether or not the owner will carry a mortgage on the property. And your hope is that if your Cap Rate Calculation, based on conservative, reasonable and supportable estimates comes back really low, like 2.0%, 3.0%, or 4.0%, you’ll quickly figure out that the property is not a very fair deal and you’ll pass on the purchase.

With the “comps” method you may not notice it’s a bad deal because you are just looking at what another – possibly very unsophisticated investor – was willing to pay on the last deal, and it might be a very low return investment. So keep in mind, a property with 2.0% to 4.0% Cap Rate (or cash on cash investment returns) is not a very good deal – as I detail in this past article Property Investing – Go For The Cash Flow, Not Location, Location, Location. So avoid those low Cap Rate deals, even if they comp well.

Let’s talk about how the Cap Rate works.

The Cap rate, instead of primarily comparing the physical assets of a property, compares the cash flows the property can generate.

The basic calculation is: Net Operating Income (NOI) / Price or Value).

So if the NOI is $50,000 and the asking price is $1,000,000, that’s a 5.0% Capitalization Rate. Note: The NOI is the rental income, less all expenses, except for the mortgage.

If in a general vicinity, 12 properties sold recently at 5.0% Cap Rates, you, or an appraiser, would suspect that the next property for sale would also gravitate around a 5.0% Cap Rate. So if a 20 unit apartment building had NOI of $100,000, it would be valued, based on the Cap Rate approach, at about $100,000 divided by 5.0% (market Cap Rate) for a $2,000,000 valuation, or $100,000 per unit in this case.

Therefore, if all those recent sales did close escrow at about a 5.0% Cap Rate and the next seller was asking for a 4.0% Cap Rate (Note: the lower the Cap Rate the higher the valuation), you’d want to bargain on price to try and buy the property at a higher Cap Rate – and really the highest Cap Rate you could negotiate! That will give you the most cash flow per your investment dollar.

A final note is that Cap Rates go up and down based on investor enthusiasm and demand, and the fancy prize properties usually have the lowest Cap Rates – and hence low cash on cash returns. So watch out for those dogs and you might want to consider non-real-estate investment options if the Cap Rates are too low. Always go for the cash flow! Good luck!

Leonard Baron is America’s Real Estate Professor – his unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate buyers how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com.

 

 

Making a First Impression Counts

What are property managers and landlords looking for when you apply for a home to rent?  The application process can be intimidating.  Here are a few tips;

  1. When you make an appointment to see a home be sure to show up on time and if you need to cancel call in advance.
  2. Shower, brush your hair and dress like you are meeting someone you want to impress.  I can’t tell you how many times I have had potential tenants show up in sweats and pajamas.   It is important to show that you take pride in yourself.  Dressing to impress gives the impression you keep a clean house and are professional.
  3. Find out what the landlord or property managers expectations are.  i.e. will you be signing a year-lease, how much is the deposit, are any utilities paid for by the owner,  do they allow pets, how many people can live in the home.  Asking these questions will make sure that you are on the same page and neither of you are wasting any time.  It also shows that you are serious and prepared.
  4. Be sure to fill out your application completely and provide any additional information requested.  A few items commonly asked for are; application fee in the form of a cashiers check, a copy of your drivers license, current pay studs and pet references.  This shows that you can follow directions and that obtaining a new home is a priority.
  5. If you don’t have a strong rental history consider finding a co-signer in advance.  This way you can mention that to your potential landlord or property manager and provide that information at the time you turn in the application.
  6. Okay, this may sound silly, but clean your car out and wash it.   If your car is full of garbage and there is 10 layers of dust on it you give the impression that this is how you keep a home.
  7. Most landlords check credit, previous rental references, employment and any personal references.
  8. Having good credit says you honor you commitments.  Good credit today is having a credit score of 650-800.  Anything above 800 is amazing credit.  If you have less than stellar credit you still have a good chance at getting a home.  Many landlords and property managers put higher emphasis on previous rental references, employment and any personal references.  You can also provide a letter of explanation.
  9. Leaving any place you have rented in good standing is the easiest thing you can do to make finding a new place much easier.  The biggest red flag for me on an application is finding out that a tenant has paid rent late multiple times, did not properly clean the home when they left, damaged the property or broke a lease.  These things give the landlord or property manager a good feel for what you may be like in their property.
  10. The length of your employment is also a key factor.  Staying at one place of employment for longer than a year not only says that you are likely to pay rent, but that you are responsible and dependable.

Go now and rent and be happy….

 

Welcome

Thank you for coming to my blog.  I have set this blog up to help the landlord and tenant stay informed.  I want my blog to be a place to find relevant information about renting a home, investing in property and being a landlord.  Neither of these are easy things to do.   I hope my nearly two decades of experience is helpful and provides insight.  Please feel free to email me regarding any direct information/questions you may have. Audrey@36northpm.com