Where is the Value of a Property Manager?

The value of professional residential property management for an investment property isn't seen in a handsome shade of taupe exterior paint or in a reflection on a stainless steel refrigerator. The real value of a property manager can be seen in the bigger picture; a well-marketed home that rents quickly, a unit that remains occupied by a carefully screened tenant, a tenant who lives happily in a well maintained property, and a rent check that is received on-time each month.

Money spent improving a home's appearance offers curb appeal which increases property value almost instantly. Upgrading the appliances in an outdated kitchen makes a home more sought-after, warranting a potential rent increase at the next lease renewal. Hiring a professional residential property management company to manage a residential property works in much the same way, but in a more intangible fashion to protect and preserve the value of the property. A property management company on the owners’ side is assurance that real estate investments-the most valuable investments-will be well-maintained, properly cared for in the case of an unexpected emergency, and will be aggressively marketed when a tenant presents a notice to vacate. 

Marketing

Vacant properties don't generate re-occurring income; therefore it is imperative that days a property sits without a tenant are kept to a minimum. The likely route a landlord takes to execute a newly signed lease begins with a listing on the internet or an ad in the local paper, followed by screening phone calls, showing the property and finally processing the application. Property management companies market rental properties from all angles, newspaper ads, the internet and the multiple listing service (available solely to licensed real estate professionals including property management companies). Effective marketing can generate multiple applicants, cuts down on the number of days a property sits idle and allows the listing to reach the eyes of other local real estate agents who might have tenants waiting for the right rental property to hit the market. Marketing a vacant property to a broad range of renters helps ensure the perfect property-tenant fit. Property management companies are in tune with market trends and specific attributes that potential renters seek, such as allowing pets or permission to sublease during the summer months, all factors that can justify an increase in monthly rent. 

Applicant Screening Process

Good tenants don't just happen by chance, they happen by choice. Anyone can find a tenant by running an ad in the local paper or on-line website, having a quick telephone conversation, taking a deposit and handing over keys. However, finding a quality tenant requires a thorough screening. Although it may seem difficult to differentiate between one qualified renter and another from a pool of seemingly strong applicants, a professional property management company has experience in the applicant screening process and the tools to execute the transaction smoothly; conducting background checks, confirming references and generating and evaluating credit reports. A good fit often leads to a longer term stay. Finding a qualified tenant is just the beginning of a relationship that will last for the duration of the lease. Once the tenant moves in there is an ongoing process of collecting rents, conducting maintenance and emergency management.

Responsive Service

Although it is difficult to be thankful for a middle-of-the-night phone call by a tenant for a leaky roof or broken window, the best source of information regarding the condition of the property during the tenure of the lease is the tenant-who must feel comfortable calling at any hour in the event of an emergency. A residential property management company has an understanding of home maintenance and repair. Managers are prepared to handle emergencies, and are familiar with the rules, regulations, and laws as they pertain to tenant/landlord responsibilities. A reputable property management company will refer to a list of readily available home repair and service providers when the need arises and will have the resources to employ a specialist at a moment's notice; assurance that routine maintenance and emergencies will be handled in a timely manner. Residential property management companies establish relationships with service professionals in the community allowing them to schedule regular maintenance and emergency repairs at discounted prices.

Property management companies are industry professionals that accept the worry and headaches that commonly plague landlords. Working directly in cooperation with tenants, the services of a property manager are a combination of following a schedule of routine property maintenance, responding quickly to emergencies, satisfying tenants with a pattern of responsive service and keeping properties rented. The benefits of professional property management add up. Dollar for dollar, finding a trusted property manager is a most valuable investment aside from the purchase of the property itself.

Is there a Rental Crisis Looming?

Just when you thought you had heard enough about the economic crisis, the credit crisis, the real estate crisis, the foreclosure crisis or the construction crisis, and lately the real estate agent crisis, add one more as fallout from the others. A rental crisis is coming, as sure as the heat comes to the desert every summer.

The number of households looking to rent is going up every month as foreclosures take away their homes. While homes sit empty either not for rent or at rents higher than these households can afford, the demand for cheap apartments is on the rise. 

What makes this a crisis, is that construction of affordable rental property is declining significantly, rents are going up, unemployment is going up, and those who are employed are seeing their real income fall. That adds up to a crisis. 

Have you seen a tent city in your town? You may have one or more, but they simply may not be on the roads you travel. 

As rents go higher and renters get poorer, despite the demand for cheap rentals, landlords are likely to be faced with potential renters that either fail credit checks or whose credit scores are far lower than they would like.

Estimates of when the real estate crisis will end are now being extended farther and farther out. When it was estimated that the real estate market in California would not recover until 2009, people thought such estimates were crazy. Now experts are predicting a turn around won’t occur until 2011 and no one is calling these experts crazy anymore.

This situation may have one silver lining. If demanded for rental properties continue, and land values continue to decline, this may be the next area of growth for California’s construction industry.

In October 2008, the U.S. Commerce Department announced that new home and apartment construction fell in September 2008 by 6.3 percent to the lowest pace since 1991. The report indicates that the housing market correction has actually gained speed in recent months as foreclosures have flooded the market.

Just when you thought you had seen the worst of the real estate crisis, it seems to have become worse again with the stock market crash. Whatever month or year people thought the real estate market would recover, we can probably push that date another six months to a year farther out and the rental crisis looming in California is likely to loom even larger.

Tenant Rights in a Foreclosure

In California, over a third of all homes in foreclosure are rentals, and more than 77,000 rental units foreclosed in 2009 alone, according to a report by Tenants Together, a statewide tenants' rights group. Lenders, loan servicers and private investors sometimes harass tenants whose homes are in foreclosure. Scare tactics include asking tenants to leave without a just cause for eviction, changing the locks and shutting off utilities. Tenants in California are protected during foreclosure by federal, state and local laws.

Stay in Your Home! Tenants have the right to stay in their home during foreclosure until their lease ends. Foreclosure proceedings are not a just cause for evicting a tenant. If a just cause for eviction is filed, tenants have the right to stay in their home for at least 90 days after an eviction notice.

Notification! Tenants have the right to be notified if their home is in foreclosure. The California Foreclosure Bill of 2008 requires lenders to provide the tenants of homes in foreclosure a plain language notice explaining their rights. Previously, tenants would often not realize their home was in foreclosure until the foreclosure sale notice was pinned to their front door.

Utilities! Tenants have the right to basic utilities, such as water and electricity. Utility companies must inform tenants of shutoffs so that they have time to contract utilities in their own name. Tenants can then deduct the cost of utilities from their rental payments.

Rent Ordinances! Cities with rent ordinances, such as San Francisco, Santa Monica and Palm Springs, provide additional rights to tenants. For example, the San Francisco rent ordinance of April 25, 2010, declares that a foreclosure is not a just cause for evicting a tenant.

Beware of Fraudulent "For Rent by Owner" Scams

As the demand for rental homes increase the likely-hood of a “Rental Scam” becomes inevitable. To avoid being scammed, Applicants / Potential Tenants should stick with homes that can be verified through some means such as a Property Management Company. It’s a good policy to approach by-owner rentals and web classifieds carefully! This is especially true now, with the proliferation of foreclosure scams and the ever common ripoffs happening due to the challenging economic conditions.

Craigslist can be a minefield when trying to separate the good from the bad! One common online scam is the advertising of foreclosed and abandoned homes as “For Rent By Owner - Rental Homes.” The goal of this scam is to take your money and, literally, give you nothing. The typical scam process here is that someone (the scam artist) who does not own the home, will attempt to rent the foreclosed or abandoned home online by posting an online ad to a site like Craigslist. The scam artists will find subject homes by using online advertisement sites, where they will place a property to "rent" advertisement as if they owned it. The scammer then steals the advertisement site content to create their bogus vacation rental ad.

Once a scammer has the interest of a potential renter, they will ask for an Application containing information such as credit card or social security etc., as one might expect when renting a home. The scammer will then process and deposit checks and credit card payments from the customer for the rental. The customer will probably not find out about the scam until they attempt to take possession of the non-existent rental. Once they do, they are left without their money or anywhere to stay. Obviously one way to avoid this problem is to ask to see the home in advance of making your commitment. But unless you live reasonably close to your destination, this is probably not practical. Nonetheless, ask if you can see the home first and take note of any resistance. Quite simply, do not rent from anyone who is not willing to comply with that request.

Many homeowners have made their homes available for rent to stave off foreclosure. But ask yourself, is this really who you want to send your money to? Are you really going to give thousands of dollars to someone on the brink of bankruptcy? Be reasonable with your expectations. Nobody can stay solvent when they are giving everything away. As always it's caveat emptor, let the buyer beware. Again, try to avoid using only price as your criteria. Homes priced too low are likely in distress. A little common sense could save you hundreds of dollars and many nights of headache and distress.

Rental Housing Rental Market Trends for 2012

This year will go down in history as the year when the rental housing and multifamily apartment rental markets began to tip in favor of owners and landlords. In many areas in the U.S. like Los Angeles, Dallas, Phoenix, Chicago and Miami, the vacancy rates lowered compared to 2010.

Other areas like the San Francisco-Oakland Bay Areas of California saw vacancy rates flatten out or improve somewhat during 2011, according to the National Association of Realtors (NAR).

The 2012 Forecast for Multifamily Rental Markets

The apartment rental market is expected to see vacancy rates drop from a nationwide average of 5.0 percent in the fourth quarter of 2011 to 4.3 percent in the fourth quarter of 2012, again according to the NAR. Multifamily vacancy rates below 5 percent generally are considered a landlord’s market with demand-supply factors usually leading to higher rents and higher capitalization rates for owners.

Areas in the U.S. with the lowest multifamily vacancy rates currently are Minneapolis, Minnesota, 2.4 percent; New York City, 2.7 percent; and Portland, Oregon, at 2.8 percent. According to the NAR, the average apartment rent was projected to rise 2.5 percent by the end of 2011 and another 3.5 percent in 2012. That’s an amazing 40% increase year-over-year! Multifamily net absorption is likely to be around 238,400 units all tolled for 2011 and 126,600 in 2012. The number apparently drops in 2012 because of a considerable reduction in supply. The true measure of change in total demand is net absorption. Gross absorption is often an inappropriate and potentially misleading indicator in terms of understanding and evaluating changes in total demand for rental units.

How Rental Housing is Being Advertised and Vacancies Filled 2012 will see the expansion of rental housing being advertised online or via sites that correlate to the explosive growth in the usage of Smart Phones and tablets such as the Apple’s iPad. The following video is a reminder of how many property managers around the nation are choosing to advertise vacant rentals using the worldwide web and why (click here). Property managers are also finding that social networking sites, like Facebook and Twitter, can be another great channel to market vacancies. Specialty websites like RentVine.com have been used by an increasing number of owners and property managers to expand their advertising of vacancies online. That trend should continue and grow in 2012.

The number of houses going into foreclosure increased exponentially in 2011. As a result, the number of displaced former homeowners looking for rentals increased to record levels. The good news is that the year 2012 looks very bright and promising for the property management industry and for both single and multifamily rental housing owners.

California “Notice to Quit” Requirements Change

As of January 1st, 2007, new legislation has changed “notice to quit” requirements for California landlords. A notice to quit is a formal notice ending the rental agreement or a request that the tenant relinquish the rental property to the landlord. The new legislation requires landlords to give tenants a 60-day notice to quit, rather than the former 30-day notice requirement. The law only applies when the lease term is month-to-month and the tenant has rented the property for a year or more. If you are a California renter, keep these facts in mind:

1. If any tenant in the household has lived in a property for less than a year, the landlord is only required to give 30 days notice. The new legislation does not affect fixed-term leases.Renters are still only required to give landlords a 30-day notice to terminate tenancy.
2. If the rental property is sold and the buyer plans to live in it, a 30-day notice requirement may still apply.
3. Even if your landlord services you with a notice to quit, you are still required to pay your rent through the last day of the notice.

Watch Out For Craigslist Rental SCAMS!

The number of fake rental scams on Craigslist and other online classifieds continues to grow, with new aliases appearing daily. But while the names may change, the methods are always the same.

These thieves, mainly based in Nigeria, the U.K. and the U.S., are out to steal your money and your identity.

They use yahoo, ymail, rocketmail, fastermail, live, hotmail and gmail, and they also post ads under anonymous craigslist addresses. They frequently change their aliases.

They use photos stolen from other property advertisements or from home furnishing catalogues or hotel websites.

They use fake names, often stolen from Facebook profiles or networking sites. Often they assume the identities of previous victims.

What they all have in common is that sooner or later you get a request to transfer funds via Western Union, Moneygram or some other wire service.

NEVER, UNDER ANY CIRCUMSTANCES, WIRE MONEY AT THE REQUEST OF ANY PROSPECTIVE “LANDLORD” VIA WESTERN UNION, MONEYGRAM OR ANY OTHER WIRE SERVICE. EVEN IF THEY TELL YOU TO WIRE THE FUNDS TO A FRIEND OR RELATIVE’S NAME “TO BE SAFE,” IT’S A TRAP!

NEVER SEND A SCAN OF YOUR PASSPORT OR OTHER ID. THESE THIEVES WILL USE YOUR IDENTITY TO SCAM OTHERS.