Rent Sense: Value of Rental Ownership

Written by Apartment Management Magazine on . Posted in Blog

By: Neil Fjellestad & Chris De Marco

Rental ownership has a long history of satisfying the primary investment priorities of personal financial independence: safety of capital, inflation hedge and tax-favored income.  Traditionally, if the detailed financial statements of the wealthy are available for review it becomes apparent that long-term income producing real estate assets directly or indirectly contribute substantially to their net worth.

Certainly there are exceptions that get the notoriety. There are the entrepreneurs that hit the jackpot with a new invention, the right innovation at the right time and/or the market control of a needed commodity. Then there are the speculators that successfully capture the benefits of leveraged capital, cheap labor or some windfall in the short-term that cannot be repeated with consistency.

However, forget the outliers and the top one-percent and concentrate on the basics of what has worked for the top twenty-percent. Locally understood and available rental properties purchased carefully one at a time consistently becomes the safest real asset to own.  Note that a small share in a national real estate investment trust may seem like a “safe way to get the benefits of real estate ownership” but in fact, this is just another financial asset with the same characteristics and historically similar results as any other stock market investment.

Rental Property

San Diego Multi-family Fundamentals are Strong!

Written by jordan on . Posted in Blog

By Jack Nooren

Judging by the reports recently published in the local media, San Diego’s real estate market continues to be neck-deep in turmoil.  With home values still adjusting to the new market conditions, and a large numbers of homes still in foreclosure, the county is likely to face a shortage of apartments by August 2012.

Approximately 13,000 apartment buildings dot the skyline of San Diego, but currently just less than 130 apartment buildings are up for sale.  Due to the shortage of saleable properties, cap rates have been compressed, fetching owners a higher value.  It is the other extreme though when it comes to commercial sectors such as retail, office and industrial. Here, cap rates and vacancy rates remain at the highest peak while values continue to decline.

Source: Costar

When Should You Call A Public Insurance Adjuster

Written by jordan on . Posted in Blog

By Ronald R. Reitz, CPA

When and why should a property owner contact a Public Adjuster?

You should consider contacting a Pubic Adjuster as soon as you suffer a loss. The insured has certain policy conditions that must be strictly adhered to. These conditions are detailed in the policy and they will vary by the type of policy i.e. commercial versus residential versus manuscript. You may start off at a disadvantage if   you wait until your insurance company has begun the adjusting process and  you may discover you have not met certain policy conditions or missed deadlines.

I believe it is the insured’s responsibility to determine the value of their claim and it can be a cumbersome process gathering bids from various contractors while you are reading your insurance policy and trying to understand what it means. Insurance policies are very complex documents and are not very easy to understand, many of them have certain limits that increase or decrease depending on the total amount of your losses – and each coverage area can be different. Perhaps you simply do not have sufficient time to document and determine the full value of your claim. Some people try to handle the adjustment process on their own, and quickly learn there are not enough hours in the day to gather all information required to prove your claim.

HOW TO CHOOSE AN ELECTRICIAN

Written by jordan on . Posted in Blog

By Kim Hopkins

When you are looking for an electrician, look for someone whom you can form a long term relationship with. It’s going to save you a lot of time and also save your company money if you can find someone whom you trust and who will become part of your maintenance team.

Find Recommended Electricians

You can get recommendations for electricians from other apartment managers and also from homeowners. You can also search on-line for electrician Los Angeles or electrician Anaheim, and so on. If you add the word reviews to your search, you can look for companies that have the best reviews.

Another approach is to search websites that feature reviews. Reviews appear on many websites including Google Places, Yelp.com, AngiesList.com, and CitySearch.com. You may be familiar with AngiesList.com, a paid service. It’s an excellent source of recommendations for contractors. It asks customers to rate contractors, including electricians, and give specifics about how their job went.

It’s not snake oil, It’s amazing!

Written by jordan on . Posted in Blog

By Foothill Painting

There are a few reasons you might not have heard of roof coating until now, and it isn’t because the snake oil salesman hasn’t been in your office. Roof coating has been around more than two decades, but just now is catching the eye of the public thanks to companies like A Amazing Roof Coating, a subsidiary of Foothill Painting Co. Inc. in Tujunga, Ca. “We’ve been in business 60 years, and this amazing process is a game changer for property owners,” said Donald Freed of Foothill Painting and Coating. “Customers want to be environmentally conscious these days, but that sometimes means cutting into the bottom line. We all want to do our part, and with roof coating you can have the best of both worlds; a more environmentally friendly roofing system at half the cost of a new roof.”

Legal Corner

Written by jordan on . Posted in Blog

by Stephen C. Duringer, Esq.

Question One of my residents wants to replace his roommate with another.  Seems he has already done this, and is just now getting around to asking for my permission.  I don’t really mind, the last roommate was a bit of a flake.  If I want to allow this, what is the best way?

Answer There are several possibilities, but they depend on the type of rental agreement you currently have, and who the parties are.  If your original tenant is the only party to the lease, then you have two possibilities.  The first would be to leave the rental agreement intact, respond in writing to your tenants ‘request for permission’ to sublet by granting permission to sublet to this specific person, and no others.  This keeps the original rental agreement intact, without altering any terms.  It keeps the tenant in a superior position over his subtenant thereby allowing him a remedy to remove him if the subtenancy doesn’t work out, without bothering you.  The second method would be to enter into a new rental agreement, listing both tenants on the agreement as authorized occupants, making them jointly and severally liable to perform.  This is generally a cleaner method for you, keeps it simple, but it elevates the new roommate to the same position as your original tenant, making them equal.  If the original lease included the former roommate, then ideally, you will request and receive a written notice from the former roommate stating that they have moved out of the unit, and that they are relinquishing their right to the security deposit.  Do not just ‘alter’ the original agreement by just adding the new roommates name.  Any alteration to a contract that is not signed and acknowledged by all parties may void that agreement.

Expert Roundtable Series – Best Practices for Lead Management

Written by jordan on . Posted in Blog

By: Houston Neal

In the latest of our Expert Roundtable Series, we report on best practices for managing leads. We interviewed three experts in the multifamily housing market to learn about the technologies and procedures they use for successful lead management. Among our experts are executives from Gables Residential and Archstone – both are ranked in the Top 50 Apartment Managers report from the National Multifamily Housing Council. Let’s meet our experts:

Donald Davidoff is Group Vice President, Strategic Systems for Archstone, a large privately held multi-family housing developer and operator. His teams manage Archstone’s entire marketing platform, which includes ecommerce, field marketing, creative services and corporate communication. He also pioneered Archstone’s industry-leading business process management solution to automate key forms and processes resulting in a “less paper-full” office.

Lynette Hegeman is Vice President of Marketing for Gables Residential. In this role, Hegeman oversees the development and execution of general marketing, internet marketing, public relations and advertising. With 19 years of experience in marketing, sales management and real estate development with companies such as Intrawest, Hilton Hotels Corporation and Preferred Hotels and Resorts Worldwide, she leverages her experience to further establish Gables as a leader in the multi-family industry.

Tracy Guillen is the owner of Esquire Property Management. She has many years of experience providing Ventura County property management services to real estate investors in Ventura County. Tracy is passionate about the real estate business and takes a personal interest in this field as she actively owns, sells, buys, and manages her own property management portfolio in Ventura, Oxnard, & Camarillo. Her affiliations include: California Broker’s License, California State Bar Association and the California Apartment Association.

Lead management is a critical component for any property management company serious about marketing. In a study from the Aberdeen Group, 90% of companies using automated lead management had average yearly revenue growth of 59%. So without a strategic and organized process for vetting prospective tenants, you may be leaving money at the curb.

Should You Buy Terrorism Insurance?

Written by jordan on . Posted in Blog

By: Eric Paulos

Should you buy terrorism insurance or save your money? The answer may depend on how you perceive your building(s) will be affected, at all, in the foreseeable future.

Following the 9-11 attacks on the World Trade Center and Pentagon, damage was estimated at $40 billion dollars. Other than the first attempt to bomb the World Trade Center in 1993, which was limited to the parking garage, and did $300 million damage, 9-11 is the first foreign attack of its kind that has taken place on U.S. soil.  Following the 9-11 attacks, the insurance companies were obliged to pay for the damage to property and had no exclusions for terrorism. Similarly to the way that homeowners company previously had no exclusions for earthquake damage prior to the 1971 Sylmar earthquake, after which homeowners’ policies carried earthquake exclusions thereafter, the commercial insurance industry saw the enormous losses they stood to take and moved to draft terrorism exclusions while they worked with the government to find a solution against this new problem.

10 Inexpensive Ways To Spruce Up Your Rental Or Rehab Property

Written by jordan on . Posted in Blog

By: Bill Bronchick

It’s easy to fix up your properties if you have unlimited cash. However, you need to keep your repairs to a Related Information: “Flipping Properties Course” minimum to stay profitable. You also need to keep your properties in good shape to attract tenants or buyers. There are the basic improvements, such as carpet and paint, but these can still costs thousands of dollars. The following are some inexpensive ways to improve your properties with very little cash.

#1) New Electrical Switch Plates

This is such a minor, yet overlooked improvement. Most rental owners and rehabbers paint a unit and leave the old, ugly switch plates. Even worse, some even paint over them.

New switch plates cost about 50 cents each. You can replace the entire house with new switch plates for about $20. For the foyer, living room and other obvious areas, spring for nice brass plates. They run about $5 each – not much for added class.

Don’t Make Long-Term Decisions Based on Short-Term Problems

Written by jordan on . Posted in Blog

By: Chris Miller

I have seen countless investors, countries, and even major corporations make permanent, long-term decisions based on short term problems.  My investors are well aware that real estate works best when it is held for five to ten years, or perhaps longer.  Such an investment needs to be made based on long-term trends; not “fads.”

Mistake One  – Cutting Necessary Costs to Save Money

An excellent example is a company that, in an effort to cut costs, fires a majority of its’ salespeople.  Less salespeople equals less sales, and severe financial hardship follows.  This may seem like an extreme example, but I’ve seen it happen twice!

In real estate terms, we can make this mistake by; skimping on maintenance – using lower quality replacement appliances that just break sooner, or on management.  (Hiring a cheaper property manager, and seeing vacancies increase by 5%.)  We can avoid these mistakes by looking at the “big picture;”  How can spending a little bit less today affect me in the future?  Keeping costs low is an essential part of successful real estate management; but it needs to be done wisely.

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