Monthly Archives: May 2013

Being a Property Manager/Owner that Renters Like

website featuresBeing a property manager can seem like a thankless job – you seem to be only approached when  there’s a problem to take care of, and you’re responsible for keeping tabs on what seems like a million little things that help your building run smoothly. To better manage your property and have more satisfied residents, it only makes sense to know what renters expect from property
managers.

When you know where renters are looking for apartments, how they like to contact you, and when your residents expect maintenance in their units, you’re able to maximize the hours in your day with happier tenants to boot. Instead of guessing how you can cater to residents and potential renters, use our survey results to determine how you can live up to renters’ expectations. In an informal survey, the industry leaders looked into the experiences of a collection of renters currently living in
rentals run by property management companies. Their thoughts and behaviors uncovered valuable information about their preferences that you’ll be able to use to become the property manager that every tenant wants.

Can Renters Find You Easily?
If you’re a property manager, you’re already ahead of the game: 51 percent of the renters we surveyed think properties run by property management companies are better maintained than properties managed by an independent landlord. Knowing this, how can you position yourself so that renters find you during their apartment search?

Keep your website updated with listings. Is your property management’s website up-to-date with the latest listings? Of the renters who use property management websites, 24% use them to search listings.

where to advertise

When you’re building your website, it’s important to keep in mind that a portion of renters using property management websites are not tenants. They’re using your site to help them in their housing search. Cater your site to both tenants and prospective renters. Include information about the surrounding community, units and pricing, photos, layout, services, and amenities. The more resources your website offers, the ‘stickier’ it will be with renters. If you focus on being helpful to renters, leads will follow naturally.

Advertise where renters look
There are lots of sites out there to post your listings, but which ones are most effective? Don’t waste your time or money advertising on sites that won’t give you good results. Categorize where your leads come from to find out which marketing channels are most effective. In the chart on the left, you can see the most popular sites the renters we surveyed use in their apartment search. Focus on the most popular sites to give your listings the best exposure, and then see how much time and budget you have left for the others. Knowing the online marketing channels that give you the best results will help you use your time and resources much more effectively.

You’re not the only property manager out there
Browsing listings helps renters familiarize themselves with the rental market and what they can get for their budget. The average renter looks at 1-19 listings in their apartment search. 30 percent of those renters attend five or more showings before signing a lease. With hundreds of listings being posted on rental search websites each day, it’s easy for your to get lost in the crowd. Get your rental ads to stick out by familiarizing yourself with what renters are looking for.

Looking for professional property management help? Give us a shot.

curb appeal

Keep Your Tenants Happy to Increase Cashflow

curb appealAs a local Chico landlord, as opposed to a larger property owner with apartment buildings and an on-site manager, you have unique challenges in maximizing the money you earn on your rental property.

We work with and teach many single family landlords and some common themes come up about how to make the most money with the least hassle. And all real estate has issues and hassles, so reducing them should be your top priority.

Aim for long-term tenants
First, treat your tenants like they are the most important people in your life. In fact, since they are likely paying for your retirement, they really are the most important people in your life. Acting and conducting yourself in a respectful manner will usually make your life a lot easier and your properties more profitable. It doesn’t work every time, but hopefully if you choose this strategy it will be successful.

Treating your tenants well helps you keep them in your property longer. Every time your rental unit turns over, even if you have a new tenant ready to move in the next day, you will probably spend a month’s worth of rent fixing and repairing normal wear-and-tear items, not to mention countless hours completing the whole leasing process, advertising, taking phone calls, interviewing, showing the property, getting credit reports, drafting the leases, discussing the lease, move in day, etc. It’s a lot of work.

So why not just try to keep your tenants as long as possible by treating them really well? And that starts by acting toward them the way you would like to be treated.

Remember the basics
Additionally, in order to keep tenants a long time, maintain your cash flow and avoid angry tenants or having to re-lease the unit:

Keep your properties well maintained and fix any issues in a reasonable period of time.
Don’t try to charge your tenants for items like plumbing or repairs — I’ve never had a tenant intentionally damage one of my properties — just pay for it.

Ask reasonable rents, maybe even a bit under market, so that you have a large pool of applicants and can select the best credit quality group that you think will be good tenants.

If there are problems, like a broken water pipe, deal fairly with your tenants and compensate them a reasonable amount if it ends up being a big hassle for them. That way they are happy, they stay and they keep paying rent. If they pay on time, take care of your property and are good tenants, reward them with minimal rent increases.

Keeping these tips in mind should help you minimize vacancy and costs, plus have reasonable people in your property who will take care of it. And you will learn over time why treating your tenants well, the ones who are paying for your golden years, is just a good idea!

Have questions about Chico Property Management?

Basic Cash Flow Analysis for Chico Rental Properties

property management checklistWhen making an investment in Chico real estate, you should look at it the same way you would look at a financial investment in a bond, stock, annuity, CD or any investment. You should analyze how much cash equity is being invested,  just like you would if you bought a financial asset, and how much cash flow it produces. This is commonly called cash-on-cash return. A bond might pay a 5.0% interest coupon cash-on-cash return or a corporate stock might pay a 2.5% dividend in cash. You also need to compare those returns to what you could earn on an investment in real estate.

Of course, real estate has the added potential returns of long-term appreciation in value, similar to a stock investment. But as we’ve learned the past few years, real estate can also depreciate in value. So going forward, let’s stick with cash-on-cash return estimates and while we hope appreciation in value will come, it’s wise to expect that it will materialize. If it does materialize, it will be the icing on the cake on an already smart cash-on-cash positive return investment.

3 Issues to Calculate Returns on Real Estate:

1. Cash Flows and Investment Returns: How much equity do you invest, what are the cash flows off the property, and what is the projected rate of return? Remember that garbage numbers in will give garbage numbers out, so be conservative in your projections.

2. Compare investment returns: How do your cash-on-cash estimated returns on real estate compare to other types of investments? Bank CDs pay .5% to 1.5% these days, bonds pay 4-6%, and stocks can be all over the map and might average overall returns of negative (10.0%) to positive 8.0%. So how do your #1 cash flows and investment returns projections on your targeted real estate purchase compare to other types of investments? Do the returns seem to be worthwhile for the high risk of real estate?

3. Risk: This is one of the most important items. Will your #1 cash flows and investment returns that you projected come true, or were you overly optimistic on your rehabilitation costs, rents and expenses?

The mathematical portion of doing a projection on a real estate deal is actually pretty straightforward. The tough part is properly estimating the actual cash investment needed to get the property rental ready and the cash flows the property will generate. That is the typical difference between a good investment and a bad one, your ability to properly estimate all the costs, rents and expenses. We can also help with general assumptions for these numbers.

Penciling out a deal is the first and one of the many important tasks a buyer should do in any real estate investment. Need help determine what a good investment is? As a property manager that owns investment property ourselves, we are happy to help prospective and current owners maximize their portfolio.

Looking to find a manager that understands the financial side of cashflow? Our broker’s specialty is finance and portfolio management! Read more about our property management services in Chico.

cash-flow

Thinking about Chico Investment Property?

cash-flowOwning Chico Investment property can be the best decision you’ll make to build that nest egg you’ve dreamed of. It’s not just the potential for property appreciation that makes rentals attractive. There are tax benefits as well as rental income to consider too.

In a down market, leasing instead of selling your property can be a smart decision. Collect the income and wait a few years for values to rise, when you can get more money for your property. In a down market, it’s a great time to buy investment properties at bargain pricing to maximize your appreciation down the road.

There are multiple approaches to purchasing rental property. One way is to “Leverage” your purchase to maximize the appreciation return on investment. To do so, you invest the minimum amount of money to purchase the property (+/-25% down payment), just enough so that your monthly PITI payments (Principal, Interest, Taxes and Insurance) are close to the market rent for the investment property.

Here’s a simple example: Buy a $200,000 single family home and put down $50,000 thereby financing $150,000. At a 5.0% interest rate on a 30-year fixed rate loan the monthly payment for Principal and Interest would be approximately $805. Add in $180 per month for taxes, another $50 per month for insurance, and another $65 for private mortgage insurance and the total PITI is approximately $1100 per month. Let’s say the property goes up in value only 3% per year for 5-years. After 5-years the value is now $234,000, which is a $34,000 profit on an initial $50,000 investment, a return of 68% or 13.6% per annum. And that’s being very conservative at using only a 3% appreciation rate.

The point here is the entire property value (originally $200,000) is appreciating at x % annually, not just the original $50,000 investment. The “leveraging” is using the appreciation of the entire property! If values rise 5% annually, that same house has just generated a 22% return annually. Leveraging works and we do it personally!

The other common approach is to invest for the “Rental Income”. Many clients pay Cash for their investment homes and benefit from the rental income to supplement their usual income, add savings to their retirement or simply obtain a better return on investment than their available options. We have clients that have withdrawn monies from low returning investments, put the cash into a rental and are now getting a 10% to 12% return. One client paid $120,000 Cash and rents the property for $1,000 per month. The $120k was only earning 5% in the CD but now earns 12% annually.

With our years of experience we can help guide you through the process. We can help you select and purchase the property, we can secure the tenants and write the leases and we can even manage the property for you. We can do any combination of these options as best fits your experience and needs.

If you’re thinking of investing or converting your property into a rental property, call us. We’ll help make the choices simpler

How to Drive Traffic to Your Chico Rental Listing

going greenSimply posting your rental listing onto your website is not enough to attract Chico renters. You need to broadcast your listing on a variety of other channels in order to drive more traffic to your web listings. Here’s a list of five things you should be doing to set your rental listing up for internet success.

Make sure your listing is complete
Your listing should include specific details about the numbers of bedrooms, bathrooms, amenities, and any other property features. You also want to optimize your listing for Chico. Keywords about your neighborhood, nearby shopping centers, public transportation, and landmarks will help your listing get prioritized in search engines, especially when renters are searching in your area. Property descriptions are what make your home stand out and motivate renters to respond.

Is your rental photo-centric?
Your text should be accompanied by plenty of high-quality, attractive photos of your property. Images speak much louder than words when it comes to choosing a potential home – in fact, our studies have found that listings with images are opened 19.16 percent more than those that do not.

Share your listing on social media.
When your listing is live on your website, share the link on your Google+, Twitter, Pinterest, or Facebook accounts. Broadcasting your listing on social media helps your audience to know that you’re there and transforms your listing into a more share-able form. Friends and family who ‘like’ or share your post increase your exposure and cast it to a wider network of people.

Post to online listing sites.
Tech-savvy renters are more likely to search online listing sites first when they start their housing search. Many of these sites allow you to post for free, and will drive much more traffic to your listing. The more places your listing can be found on the web, the more likely you’ll catch the attention of renters. A few that come to mind in chico are:

Blog about it.
Write a blog post about your newest listing. Creating new content on your website that’s relevant to your industry is the best way to build your business’s authority and credibility, especially when it comes to ranking higher on search engines. Update your blog regularly with original material that’s applicable to renters, and you’ll improve your business’s chances of being found.

We lease property in 15 days or less on average. If you need help, let’s talk.

For-Rent

Single Family Renters Offer Landlords More Stability

For-RentAre you tired of residents moving in and out of your units each year? We’ve discussed how it’s more cost-effective (and less work) to retain tenants, but what if the type of property you own could encourage residents to lengthen their lease? According to a survey conducted by ORC International, a global market research firm, for Premier Property Management, renters of single family homes are more likely to stay put for five years or longer. For property owners, this means lower turnover rates, more stability, and reduced costs.

If you’re looking to invest in single family rentals, here are some results from the 2013 National Rental Survey that will help you understand this group of renters.

Single family rentals are growing in popularity.
The single family rental sector has received lots of attention from investors who have been purchasing foreclosed and distressed properties in the housing downturn. As a result, it’s a fast-growing housing option: about 52 percent of all rental units in the U.S. are single family homes. Demand for these homes are strong, as shown by reduced listing time (six weeks in Fall 2013 compared to eight or more weeks in 2009) and increasing rent, rising one to two percent in 2011 and 2011 after declining in previous years.

Turnover rate is low.
Single family renters are more likely to stay in their current home than apartment renters. 26 percent of single family residents said they plan to stay in the home for five years or longer, compared to 22 percent of apartment residents. This stability could be the result of great property management: 80 percent of single family residents reported good or excellent service, as opposed to only 63 percent of multifamily residents.

Single family rentals are an alternative to ownership.
For those who are saving to buy a home, are unable to get a mortgage, or don’t fancy the responsibility of home ownership, a single family rental is the next best thing. These renters value the space, privacy, and community of single family homes. Single family renters are twice as likely to have children in their household than multifamily renters. Their median income is higher than that of apartment dwellers ($75,000-100,000 vs. $50,000-75,000, respectively).

Single family residents are more likely to be on the road to home ownership.
Three out of five single family renters said they plan to buy a home within five years. That’s 60 percent, significantly larger than the 44 percent of apartment renters who are on the road to home ownership. If you’re a real estate professional who works in both sales and rentals, this is exactly why it’s important to maintain great relationships with your past clients – today’s renters could definitely become tomorrow’s buyers.

Need help purchasing or managing your residential chico rental property? Give us a call