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Property Owners FAQ - Q and A
 

 

Q. Why should I use Professional Property Management rather than manage my property myself?
A. Besides the obvious fact, that you do not have to be concerned with the day to day hassle of taking care of the various problems associated with the property, the following should be considered.
      Selection of a prospective tenant is very very important. First the Fair Housing Laws need to be complied with, then the credit check evaluated, the employment verified, present and prior landlords contacted and then the decision made whether to rent to the person or not. We have written criteria based on our experience in property management that helps our decision making.
       The rent amount needs to be close to the maximum market rent for the property. The problem with the maximum market rent is that usually the only people that will pay the maximum rent are not the desirable tenants. They are people that most people will not rent to. To get a good tenant, the rent needs to be a little less. If your rent is too low, you are the one that looses. We use our own experience in renting similar properties and our own rent surveys to determine the asking price. Then every 6 months we evaluate the existing rents to determine whether we should raise or lower the rents based on the market place. If the rental market is strong and rents going up, then we raise rents, but if rents are going lower, we may lower the rent. The reason for possibly lowering the rent is to keep the tenant from moving to a place that is a better deal for them. If rents are going down and a tenant moves, then you get to spend money and time getting the property ready to rent and then rent it at the lower market rent.
      Collecting the rent on a regular basis. Good tenants pay their rent on a timely basis. And even a good tenant can get into financial problems by losing a job, having unexpected expenses etc and not be able to pay the rent. Our company policy is that for a tenant to get two weeks behind on paying, they have to have a good story. At 30 days there is no acceptable story and eviction papers are filed with the court. The rationale is that if they are over 30 days late, the chance that they will get caught up is very slim. And since it is likely that they will have to be evicted, it is better to do it sooner than latter.
      Moving tenants into and out of the property needs to be done properly. We use a thorough check list to verify the condition of the property upon move in with the tenant verifing the condition and then use the same check list when they vacate the property, to determine whether the tenant will be charged for damaging the property or for not leaving the property clean. When a tenant has given the required notice of their intention to vacate the property there are notices required by law that must be given to them. Finally the tenant’s security deposit must be accounted for within 21 days in California and what ever is owed to them, paid.
      Maintenance and repair expenses can vary greatly depending on who is doing the work. We have seen estimates for the same work vary by a factor of 3. It is true that you want quality work done, but you also want the repairs to be consistent with existing property. We find that there are many good handy men that do quality work. The problem with using most handy men is that you need to provide workers compensation insurance to cover their work. If the worker is injured while working on your rental property, you personally can be held liable. We maintain a workers compensation policy that covers the handy men working on the properties we manage. And since we keep several hand men busy, we are able to get very competitive pricing for quality work.
      Bookkeeping is done for you. We provide monthly financial statements including detailed transactions for each property and at year-end, financial statements including the detailed transactions for the complete year.
Q. How can I evaluate the “actual cost” of property management?
A. The ”actual cost” of property manage, whether you do it yourself or have it done, includes not only the management fees charged, but also any monies lost due to management mistakes. These mistakes include the lost income if the property is vacant more than necessary, renting at less than market rent, not being able to collect the rent from the tenant and excess repair and maintenance costs. A good professional management company will usually save the owner more than the fee they charge by minimizing or eliminating these costly errors.
Q. How much does property management services cost?
A. The common property management fee is 10% of the rents collected, but may depend upon what services are provided, and it can always be negotiated. Some companies charge an additional fee to rent or re-rent a property and some have a minimum monthly fee if the property is not rented. Our typical fee is 10% of the rents collected with the owner paying for the advertising and any legal fees that are directly related to their property.
Q. How long will it take to rent my property?
A. Our goal is to rent each property within 30 days or less. When a property is vacant we evaluate what we think the market rent should be and each week the property stays vacant we reevaluate the marketing of the property and the asking price. There are many factors that come into play when renting a property. The main factor is the price with respect to properties being offered, meaning how does your property compare with other properties being offered in the market place. The comparisons should include location, size, amenities, age, upgrades etc If prospective tenants are viewing the property but not filling out applications, then we know the asking rent is too high and we usually reduce the asking rent. And if the applications that we are getting are not desirable prospects, we know the asking price is too high. Also the time requirement can be regional specific, i.e., if an area is not in high demand by prospective tenants, it can take more time.
Q. If I place my property into property management, how much control do I have in making Management decisions?
A. You can have as much or as little control as you like. Most owners don’t want to be notified every time a faucet leaks so our contracts provide that the owner will be contacted for their approval if the repair or maintenance costs more than $500. We will work out an understanding with you about the degree to which you want to be involved in tenant selection, maintenance and repair decisions, setting rental rates, etc. according to your goals.
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