Property Management
- Who Needs It?
By Jan
Leasure, Managing Broker, Monterey
Bay Property Management |
Featured in
DCD
Home magazine.
Property management deals with the
employment of business practices and
"people skills" to obtain the
greatest net income from a piece of
real estate. It also integrates
minimizing the negative influence of
an assortment of laws and
regulations that impact the use of
the property.
It is
the property manager's job to
interact with tenants, vendors,
contractors, neighbors, insurance
adjusters, city, county, state
and/or federal government officials,
and anyone else who might influence
the day-to-day operation of your
property.
A good
property manager can maximize
income, minimize expenses, and help
you maintain the highest property
value possible while avoiding legal
hazards. A good manager can set high
standards for tenants and inspire
them to meet and sometimes even
surpass these ideals.
Property management is both a
science and an art. A good property
management company has the "science"
part in place with good policies and
procedures that allow them to excel
over the long term in the management
business. They also have the "art"
of good people skills, and they
utilize the psychology that is
essential to success in this
industry.
The most challenging aspect of the
real estate business is not
acquiring property, but in knowing
what to do with the property once it
is under your supervision!
Professional property managers know
what to do and how to do it. If your
property is an income-producing
property, you can count on your
property manager to know the rental
market and to place a highly
qualified tenant with minimal
vacancy.
Your
manager will know the rental value
of your property based on the rental
values of similar properties in your
geographical area. She will also
know what vacancy rate you can
expect and how long it will take to
rent your property successfully.
Marketing your property to
prospective residents and providing
those prospects with courteous
service are part of the repertoire
of a good manager. A good manager
will have the "science" in place to
expose your property to a large
number of prospects through a web
site that is high on widely used
search engines and a vacancy hotline
that is available to callers 24
hours per day, seven days a week.
She also has effective systems in
place to insure that your home is
shown to as many prospects as
possible.
The
application to rent is an integral
part of effective tenant screening.
A good property manager has a rental
application that is much more
sophisticated than the one you will
find at the stationery store. She
has the expertise to consistently
screen applications and select a
highly qualified tenant without
violating federal and state fair
housing laws. In fact, she will know
the entire array of city, state, and
federal landlord/tenant laws that
apply to your property.
A
manager's expertise in this area
allows her to draft rental
agreements that meet your needs
while conforming to all applicable
regulations. If addendums to the
rental agreement are necessary, she
has the capability to draft those as
well. The manager knows how much
security deposit she can legally
collect and she knows what
disclosures must legally be made to
the tenant. A good manager makes it
a habit to provide the tenant with a
move-in inspection report to verify
the condition of your property on
the day the tenant takes occupancy.
A good
manager relieves her clients of the
work, time, and stress involved in
the general maintenance of the
property. The property manager has
plumbers, electricians, painters,
handypersons, housekeepers, and
numerous other vendors at her
fingertips to keep the properties
she manages in top condition. She
will be sure that the vendors hired
to work at your property are
licensed, affordable, and reliable.
Furthermore, the professional
property manager not only insures
that these vendors are available on
short notice, she insures that the
vendors are available at night or on
weekends, in case of an emergency.
So when that supply line to the
washing machine breaks in the middle
of the night, there will be someone
there to deal with the flood! Oh,
and one other thing - you won't have
to take that late-night call from
the tenant!
Many
do-it-yourself landlords have had
the unfortunate experiences of late
rent payments, NSF (non-sufficient
funds) checks, damage to their
properties, as well as tenants who
must be evicted.
A good
property manager will have few of
those experiences. Because she is an
expert at tenant selection, she will
rarely have a problem with a tenant.
However, if a problem does arise, a
good manager has the skill to broach
the subject with the tenant,
negotiate with the tenant if
necessary, and take action to
enforce the terms of the rental
agreement.
Property owners don't worry about
their properties when they hire
professional property managers.
Professional property managers are
dedicated to selecting quality
tenants and keeping their clients'
investments in good repair with
minimal cost. They want your real
estate investment to be a success,
not a failure.
And
finally, one last benefit - your
leasing and management fees are
usually a tax deduction. So when the
tax deductions, reduced vacancy
factor, and time savings are
factored into the cost of
professional property management,
most property owners find good
management a real bargain!
How to Select a Property Manager
A good
property manager can put more money
in your pocket than you can. A
strong manager makes up for the
commission paid with good management
practices and attention to detail.
You will reap the benefits of rents
that keep up with market conditions,
limited vacancy, and connections to
good vendors and repairpersons. Many
landlords believe that limiting rent
increases keeps good tenants in
place. A good manager, on the other
hand, will raise rents reasonably,
increasing the owner's bottom line
and keeping the good tenants happy
with realistic rent increases.
Managers are in touch with the
rental market and know at what price
to advertise a rental, thereby
reducing the vacancy factor between
tenants. Because of their
connections to prospective tenants,
a good manager will often facilitate
a new tenant moving in as soon as
the departing tenant moves out,
eliminating vacancy altogether. Your
manager knows which repairpersons to
hire. She/he also knows which ones
not to hire. The manager can save
you time, money, and aggravation by
getting the right person to your
property to solve problems
efficiently and inexpensively.
Give a
large amount of weight to managers
with experience of ten years or
more. A manager who has been in the
business for ten years has fought
the landlord-tenant wars and elected
to continue to make a living in
property management. While none of
us have "seen it all," the
experienced manager has more than
likely seen a lot, and has probably
learned a lot from experience.
Furthermore, property management
should be the full-time job of the
manager. Not long ago, It was rare
to find licensed real estate brokers
whose full time business was
property management. Not so today.
Many people make their full-time
income in the property management
business. A full-time property
manager will be better able to focus
attention on your property when it
needs it, and will be more likely to
keep up with the legal changes
related to landlord-tenant law.
Membership in professional
organizations is an indication of a
manager's commitment to keeping up
with trends in the industry. If your
property is a single-family home,
your manager should belong to the
National Association of Residential
Property Managers (NARPM), whose
members specialize in the management
of single-family properties. If you
are hiring management for multiple
residential units, your manager
should belong to the National
Apartment Association/California
Apartment Association (NAA/CAA) or
the Institute of Real Estate
Management (IREM), which is
applicable to both multi-family
residential and commercial
properties.
Certainly, you will want to
understand the fees charged by the
company. However, the amount of the
fee is not the most important
question to ask, nor should it be
the pivotal answer on which you base
your choice. You will likely find
that fees do not vary greatly in a
given market, but service will vary
drastically, so don't let a few
dollars prevent you from hiring the
best manager for the job. A good
manager will save you more than
his/her commission by placing good
tenants who will take good care of
your property. Good management can
reduce vacancy and minimize
expenses, both of which add profit
to your bottom line.
Some questions you may want to ask
prospective managers:
-
How to you determine the price
at which to advertise a vacancy?
-
What is the current condition
of the rental market, and how
does that influence your
advertising practices?
-
How long would you anticipate
that it will take to fill my
vacancy?
-
How do you screen prospective
tenants?
-
How do you stay up to date on
changes to landlord-tenant law?
-
Why should I hire your company
as opposed to the many other
options available?
How
NOT to hire a property manager:
Don't hire a manager by looking in
the newspaper or the Yellow Pages to
see who has the biggest ad. The size
of the ad simply reflects the
proportion of a manager's income
that has been designated for
advertising.
Ask
yourself, "If the management at the
advertised company is so great, why
do they need to do so much
advertising?" Superior property
managers get most of their business
by word of mouth, thus they do not
need to advertise much, especially
in a small community. As mentioned
above, do not hire a property
manager because his/her fees are the
lowest available. In property
management, as in most other arenas,
you get what you pay for. It costs a
certain amount to do business and
make a reasonable profit in any
given geographical area. If one
company is offering service for a
significantly reduced fee, it is
likely that the company is cutting
corners on service somewhere to
account for the reduction in gross
income.
Successful income property owners
know how to acquire good income
properties and what to do with the
properties acquired. If you are not
in a position to manage your
property yourself or are not sure
how to manage, spend the time and
money to hire a good property
manager. A good manager knows how to
cause the properties to create the
greatest net income to you.
Please feel free to contact Jan Leasure
at
Jan@MontereyRentals.com or
831 402 1765
with any additional questions you may have.