In the world of property management, it’s inevitable you’re going to have conflict. Many investors get into real estate and believe they are in the property business, but you’re not in the property business – you are in the people business – and having good people skills will be essential to your success.
Someone once said, “The road to Hell is paved with good intentions.” In some cases that is absolutely true. Such is the case with the Affordable Housing Act that will be voted on this November.
California is undoubtedly in a housing crisis. There are more people who are moving here than housing that’s available. This shortage of housing is causing rents to soar, especially in high demand areas like Silicon Valley and coastal communities.
Working in the industry of property management, I get the opportunity to speak to a lot of owners. Hignell Property Management manages a wide variety of real estate, but often I find myself talking to single-family home owners who are renting out their homes for the first time. They call a little nervous, a little afraid, and have no clue what the process is to rent out their home. Here’s a little about what to expect when renting out your home for the first time.
Since the great recession, the American rental market has seen incredible demand, with 37% of Americans choosing to rent a home as opposed to own. This is the highest percentage since 1965. Currently the fastest growing segment of rental housing is the single-family home. Here are some reasons why this type of rental investment property has never been hotter.
There are two types of renters in this world: those looking for fully furnished rental units, and those that are not. The former are typically people like foreign exchange students, traveling nurses, traveling construction workers on a short term job, etc. For these people it makes no sense for them to lug a couch, desk, table, and chairs all the way across the country, just to pack up and leave three to six months later. The type of people looking for a fully furnished unit are probably only going to stay for a matter of months and then jump on a plane heading to their next destination. They want to arrive with their suitcase and nothing else. They don’t want to have to bother with putting PG&E in their name, waiting for the cable guy to show up, and they definitely don’t want to deal with unloading a moving van with a massive amount of furniture.
“If you fail to plan, you plan to fail.” We have all heard this catch phrase, but few of us are really taking planning seriously. Whether it applies to our nutrition, retirement, or our investment property, planning takes time and brain power. At our company we manage many large multifamily complexes and homeowner associations. Around November of every year you can hear the groans from the managers as they dive into the numbers and reports to get the necessary info to put together the next year’s budgets for the properties. Is the roof going to last another year? How much do we spend on landscaping? Can we negotiate a better rate with this vendor? All these questions come up as I peer into the offices of the managers sharpening their pencils and getting their numbers right.
Nobody wants to be the mean guy. As humans, most of us have an innate desire to please people and get on people’s good side. We want to be accepted and liked by those we interact with. It’s just human nature. So, what happens when you’re a residential property manager and a prospective resident asks you to make an exception when they don’t qualify financially for your unit? What happens when your resident shares a sad story of why they are late on their rent? Do you make an exception? Should you be the proverbial “nice guy or gal?” My simple answer, for the most part is…no. Do not make exceptions. Here’s why.
There are risks and rewards to every decision in life. Real estate investing is no different. The key to making a good investment decision is weighing out the risks versus the rewards.
In the world of real estate investment there are many opportunities with older homes. Many of these older homes are one of a kind with all kinds of unique craftsman finishes. After all, they don’t make ‘em like the used to! So, what are some of the risks involved in picking up an older rental property?
Every 20 seconds in the United States there is a break-in. Unfortunately, we live in a world where bad things happen. Crime is a reality and something that prospective residents will consider when choosing a place to live. I wanted to take some brief moments to share some tips on how to create a safe environment that can help deter crime from your Redding or Chico rental property.
There are many different property management companies out there. There is half a dozen just in my small town of Chico, CA. Not every property management company will offer the same services so you’re going to want to check and see what exactly will be the scope of services that will be included in your management contract.
I’ve recently been a go-to source of information for friends looking into investment property. There are so many options. How do you know which one is right for you? What are the strengths and weaknesses of each type of property? What are the long term issues that are going to spring up now that you have this property long term?
These are all great questions, so let’s go through the strengths and weaknesses of each type of property.
As a professional property manager, I speak to investment real estate owners every day. Most are calling because they are tired of managing their own property. Sometimes I get calls for advice about how to handle a situation. The benefit of being in my position is that I get a broad perspective of what it takes to self-manage your own property. I also see the other side of having a property management company manage your property. Today, I am compiling a list of the pros and cons of managing your own property.
I work in the world of property management and my job is to interact with real estate investors all day. It’s a great job. I have many rental property owners who call me not only to ask for quotes on services, but also to ask advice on the local market and decisions they need to make. I get to hear all kinds of stories. Some are great the others and terrible. Here’s a compilation of the most common horror stories I hear in my position.
You have probably heard that there are three rules to real estate: Location, Location, Location. The same is true with where you buy your Chico or Redding rental property real estate. When deciding how much to charge for rent or where you can buy a great rental property you need to first look at location.
Turning over a rental property is probably one of the trickiest parts of rental property management. You need to coordinate move-out dates, maintenance, marketing, cleaning, inspections, possibly remodeling and a whole host of other variables. No doubt this takes skill and finesse to nail down a fool proof strategy to turning over rentals. In this blog I’m going to talk to you about developing an excellent strategy that works for your Redding or Chico rental property.
Stuff happens, and unfortunately if you have a Chico or Redding rental property, this “stuff” will happen to your property. Your lawn will die, your parking area will need to be resealed, gutters will need to be replaced, exterior paint will need to be freshened up, and there’s a winter storm coming where you’ll inevitably receive calls saying that the roof is leaking. This stuff is going to happen. It’s not a matter of if, but when. So, what can you do about it? In a world of deferred maintenance how do you keep your investment looking good and staying profitable?
In the late 1980s there was an amazing TV show called MacGyver. MacGyver was a secret agent that would solve all kinds of problems using random things he had around him. He would start car engines using a bubble gum wrapper and some duct tape. It was fantastic to see his creative solutions to save the day.
Sometimes Redding & Chico rental property owners can be a bit like MacGyver. Instead of calling a plumber to fix a leaky pipe, they will instead use some duct tape and bubble gum to save the day. The problem is that when maintenance work needs to be done, you need to do it right and do it quickly. Many properties have what we call deferred maintenance which are maintenance issues that are left undone.
Much of successful property management is getting qualified residents to rent out your property. But even when you get the sense that you are getting the best residents to move in, you still need to cover your bases when it comes to move-in and move-out paper work.
In my small town of Chico, as well as all over California, the rental property market has been on fire. Currently we have never seen such high rents with such low vacancies. As a matter of fact, I’d be willing to say in our 60-year history, it’s never been quite as good as it is now. Rents are up and vacancies are very low. At the moment, the vacancy rate over our 1,500 local units sits at .56%, and this is after we raised all our rents and built 56 brand new apartments. Pretty amazing!
Most readers of our blog are holding anywhere from one to 20 rental units. However, there’s a growing movement of apartment developers who are building brand new luxury apartments with well over 20 units. For those of you out there who are planning on building brand new apartments there will come a time when you will need to lease them up. If you self-manage your properties, you should know there’s an art and science to doing a lease up well.
If you’re going to win in the world of real estate investing you are going to need to be well informed. You will need to be able to quickly and effectively assess what a property is worth. In order to do this, there are some well-known equations that you’ll want to calculate as you assess the property. Here are some of the commonly used real estate equations.
The past few blogs we have been talking about how to keep your Redding & Chico rental properties filled by working on your selling skills. In this competitive market, you need to make sure that you’re using every competitive advantage to fill your vacancies. Developing your selling skills is a great way to get a leg up on the competition without spending any additional income.
We started this blog series with some basic selling skills. Here’s a recap:
If you’re just popping into this blog you may have noticed that this is a series of blogs about how to sell your rental units to prospective residents. If you missed the first two, you can check them out by clicking below:
The #1 Question to Ask Yourself to Fill Your Chico or Redding Rental Property
Tips to Understand Your Customer and Fill Your Rental Property
Time is your most valuable resource. The age-old adage that you can always make more money, but you can never make more time, is true. As a rental property manager, you need to invest a significant amount of time into your investment property if it’s going to be a viable source of income for you – or hire someone to do it for you.
Being in the rental property management industry we get to work with a lot of different investors. It becomes quickly apparent that not all investment property owners are created equal. Some property owners are great to work with and constantly make wise decisions leading to a growing portfolio and happy residents, while others struggle and stress constantly about their investments.
When investing, diversification is usually a good thing. Typically, this blog is about residential property management, but I wanted to take a second to deviate from the normal course of content and dabble a bit in commercial property. If you’re considering diversifying your investment into an office, storage, or retail space, one of the first things you’ll need to understand are the different types of leases.
Do you remember when you purchased your first investment property? Maybe you took a huge risk on a fixer upper. Maybe you rented out the home you lived in for a decade when you upgraded homes as your family grew. No matter how you first got into investing one thing is true among all investors – you have invested a lot of money and you will turn the keys over to someone else. Every investor wants to make sure that the person they hand those keys to is a great resident.
When you first invest in real estate you run a lot of numbers. You want to calculate your Cap Rate, Cash Flow, ROI, projected income, gross rent multiplier, etc. Everything looks good so you pull the trigger. Great, now you just need to keep your property rented and let the numbers run their course right? Well, there is one variable that can’t be calculated, and that is people. You are renting to people. And where you find people, inevitably, you will find problems. It’s just the way it is.
Over the past number of years, the property management industry has seen a huge rise in activity concerning student housing. It’s been pretty amazing. In our college town of Chico, California there’s no doubt that the highest rents are achieved around our University; and we’re not just talking about a 10 or 20 percent increase to be close to campus. We’re talking a 100 to 200 percent increase in rents for prime locations close to college. It’s been a very fruitful investment for owners as rents have been driven up dramatically faster in neighborhoods within walking distance of the University than other locations in our community.
As a real estate investor, you know that time is of the essence. Typically, most investors I know are highly leveraged. They have a mortgage to pay every single month, and the bank doesn’t accept any excuses as to why you’re late or a month behind. Renting out your Chico or Redding rental property fast is important, and it’s something not every investor thinks about with a new investment.
In the previous blog post I talked about the importance of not just showing your properties, but selling your rental property to potential residents. I can’t underestimate how important this is. Any company that goes out of business, or loses money does so because they didn’t sell enough of their products or services in the quantities necessary. Selling is an important skill no matter what business you’re in and it’s something that we can all improve on.
In this complex world of millions of options and tough decisions it’s nice to come across a no-brainer every now and then. It’s like when you go to your favorite lunch place and they tell you the sandwich you want to order is on special and you can get it for a cheaper price and it comes with a side and a drink included. I love those moments. Sometimes I’ll say out loud “why wouldn’t I do this?” It’s an easy decision.
If you are actively looking for great residents to fill your investment property then not only are you a property manager, but you are also a salesperson.
Now, being in sales, it would greatly benefit you to know how to develop the skill of selling. So, I’m going reveal the most important question you need to ask to sell something. It’s basic, but very powerful for you to grow your business and get your properties filled quickly.
“I want to invest in rental property management so I can meet some nice people and make friends,” said nobody ever. Managing Redding and Chico rental property is a business and must be treated as such. Although nobody has said the statement above, there are plenty of rental property owners who have had similar thoughts in the back of their minds. It’s tough because there are those owners who may have had a bad experience with a property manager and now want to right the wrongs. They want to be the nice manager.
The life of flooring in a Chico or Redding rental property can last anywhere from a few years with low grade carpet to decades with high end tile or hardwood floors. Typically, if you’re a long-term rental property owner, odds are you’ll have to replace flooring in your rental. As someone in the rental property management industry, many owners ask me which flooring solutions are the best for rentals. The answer is – it depends.
If you’ve managed property in California for any length of time you understand there are many laws that must be followed or you could end up in some very hot water. These laws are constantly changing every year and you need to be aware of what laws have been passed and what you as a property manager must do to comply with them. There are a number of new laws, but let’s look at two major ones that will affect all rental property managers in the state.
Bed bug infestations have been rising at alarming rates across the nation. In hotels, houses, and apartments there are hardly any places where people sleep that are immune to the effects of these parasitic insects. Unfortunately, if you're a rental property manager of any kind there’s a high chance that you’ll have to deal with the reality of these unwelcome pests. So, it’s time to prepare yourself for that moment when you come face to face with these nasty insects.
Pot, weed, Mary-Jane, wacky-tobacky, no matter what you call it, recreational Marijuana is now legal in California. For some people, these aforementioned names are cringe worthy and bring up thoughts of commercials on MTV with a man dropping an egg on a frying pan and saying, “This is your brain on drugs.” For others, these names bring up memories of a care-free time in college when they lived dazed and confused. No matter what your stance or view point on Marijuana, if you own investment rental property in California, you’re going to have to get familiar and become educated with this new law. It’s high time we cut through the haze and get some clarity about what this means for you. (I promise, I’ll try to keep the puns to a minimum).
If you’re in the market for hiring a property management company, you should know that one of the key factors for the kind of service you’ll get is how much the company is capable of taking on – or can handle. Learn why a property management company’s capacity should matter to you here. Now that you’re aware that capacity matters, there are some indicators to help you determine if a management company is beyond its capacity.
Capacity. It’s a word we don’t throw around too often. It’s something I believe most Americans don’t consider enough, and it’s a concept that, if not adhered to, will have a systemic negative effect on any company, organization, or individual.
When people comparing and contrasting management companies ask me “what sets Hignell Property Management apart from other companies?” My response is one word – Capacity.
Capacity is the ability or power to do, experience, or understand something. It’s also defined as the maximum amount that something can contain. We all know that there’s only so much we can do. Our proverbial plates can only hold so much. When we commit ourselves beyond our capacity, bad things happen. Responsibilities get missed, balls get dropped, and people get let down.
Every investment property owner has a pet policy. Some owners choose to have a strict no-pet policy, others choose to have a pet-friendly policy, while others are somewhere in the middle with a weight limitation or some other limiting factor.
Forrest Gump famously said something to the effect of “stuff happens.” If you have been in residential property management for any length of time, you know this is true. From bursting water lines to falling trees, handling emergency situations just comes with the territory. So, what do you do when this “stuff” happens? How should you handle it? Unfortunately, there’s no instruction manual for handling every possible emergency scenario, but here are a few guide posts to help you navigate these difficult situations.
So you have a rental, but aren’t sure what exactly the fair market price is to rent it out? This is a very common issue for people in the rental property management business. Market prices are constantly changing. In order to fill your units, you need to be on top of how quickly rents are rising or dropping and set rental rates that are reflective of the current market. Currently, in our community, the rate to charge for Chico rentals is rising and it’s hard for most owners to keep up with how fast they’re increasing.
If you haven’t noticed, the American dream has changed. Once upon a time Americans dreamed of getting a good job, buying a house, raising their families, and then retiring to a life of playing golf and bird watching.
As a full-time sales representative for a property management company, I talk with property owners all day long. Our company, Hignell Property Management, manages over 1,500 residential units, so we’ve seen it all. Whether they’re first time rental property owners looking for some advice or seasoned veterans with multiple commercial and residential units, all come across my desk. In my experience there are people who benefit tremendously from a professional property management service, and those that simply don’t. So, which one are you?
Whether you’re looking for your first piece of investment property or you’ve managed your residential property for a long time, every investor needs to consider the benefits of having a professional residential property management company manage their investment real estate.