If a property owner chooses a property management company they can expect several key benefits. While it may initially seem costly, a well run property management company can actually provide peace-of-mind and increase profits for owners. Here are just a few of the benefits:
• Increased income. A property management company has experience in advertising and marketing and can reach potential tenants through their contact base. A property management company also has the advantage of understanding the local rental prices, and assuring you have the right price on your property.
• Time. If the property management company is handling the marketing, sales, administration and maintenance of a property, that means that the property owner has just one point of contact. That combined with the time that it would take an owner to deal with all the aspects of commercial property ownership if done alone, means that the owner gains free time to focus on other businesses, hobbies, and family.
• Lowered expenses. A property management organization is be able to perform preventative upkeep, which will reducing the immediate costs to the property owner, and they have a better understanding of local laws (helping shield the owner from costly legal cases), as well as having relationships with contractors and maintenance companies that may give a better rate and do a better job on property work!
Overall -- a property management company can essentially pay for itself - both in the tangibles and in-tangibles. If you would like to learn more about how Kuester can provide you with the best property management in the Carolinas, please check out our website at www.kuester.com.
Wednesday, August 25, 2010
Sunday, August 15, 2010
Multi-Family Rental Units
Before you consider purchasing a multi-family rental unit, it is important to consider the cash flow potential of the building. There are many complex models with which to make the calculation, but the best one is a straight forward look at the historical data on the building and comparing similar properties.
A great place to start is to pick up a free copy of a "Renter Guide" or other apartment search magazine. Check out the available rentals for comparable sized units (sq footage), and number of bedrooms within the same vicinity as yours. If there are apartments located within the same neighborhood as your units, find out how much they are renting for. Your prospective renters will be comparing prices, so you should know your competition. Consider options, updates and other features. What makes your unit better? What are some selling points that your units offer?
Once you have researched the comparables, you should request the Schedule E from the current owner. This document is the income or income loss statement for the unit and shows the rental income and expenses and the net income or loss generated for the year. Remember that a net loss is not necessarily a bad thing, as most owners will try to report a loss for tax purposes. You will need to look beyond the bottom line to examine the rents charged. What are the rental prices of the units (are they at or below market value?) What is being charged for utilities? (And what is the actual cost of utilities?) Are there units that spend a long time vacant? How long does a unit sit vacant on average? If a unit sits empty it could mean that it is not a good investment—or it could mean that the landlord did not market the unit properly. Ask the seller—there may be a good reason. You should also check to see what major expenses that the units had – such as electric work or a new roof. This could be the reason for a loss being shown, but are really positives for you. This says that the owner maintained the property, and those are things you won’t need to take care of in the first year of owning a new investment property.
Your next step is to do some simple math. You can expect that for every dollar you make in rent – you really make $0.95. This will roughly take into account the amount of vacancy time you might have. Take that amount and subtract your monthly expenses such as utilities, insurance, lawn care, etc. and your monthly mortgage payment. Then deduct 10% for incidentals for repairs. If the number ends up a positive… then multi unit investment property may be for you!
Finally you should ask the current owner what the length of each current tenants lease is. If the property is currently renting for under market value, you will need to know when you will have the opportunity to raise the rent to the market price.
A great place to start is to pick up a free copy of a "Renter Guide" or other apartment search magazine. Check out the available rentals for comparable sized units (sq footage), and number of bedrooms within the same vicinity as yours. If there are apartments located within the same neighborhood as your units, find out how much they are renting for. Your prospective renters will be comparing prices, so you should know your competition. Consider options, updates and other features. What makes your unit better? What are some selling points that your units offer?
Once you have researched the comparables, you should request the Schedule E from the current owner. This document is the income or income loss statement for the unit and shows the rental income and expenses and the net income or loss generated for the year. Remember that a net loss is not necessarily a bad thing, as most owners will try to report a loss for tax purposes. You will need to look beyond the bottom line to examine the rents charged. What are the rental prices of the units (are they at or below market value?) What is being charged for utilities? (And what is the actual cost of utilities?) Are there units that spend a long time vacant? How long does a unit sit vacant on average? If a unit sits empty it could mean that it is not a good investment—or it could mean that the landlord did not market the unit properly. Ask the seller—there may be a good reason. You should also check to see what major expenses that the units had – such as electric work or a new roof. This could be the reason for a loss being shown, but are really positives for you. This says that the owner maintained the property, and those are things you won’t need to take care of in the first year of owning a new investment property.
Your next step is to do some simple math. You can expect that for every dollar you make in rent – you really make $0.95. This will roughly take into account the amount of vacancy time you might have. Take that amount and subtract your monthly expenses such as utilities, insurance, lawn care, etc. and your monthly mortgage payment. Then deduct 10% for incidentals for repairs. If the number ends up a positive… then multi unit investment property may be for you!
Finally you should ask the current owner what the length of each current tenants lease is. If the property is currently renting for under market value, you will need to know when you will have the opportunity to raise the rent to the market price.
Tuesday, August 10, 2010
10 Questions to Ask Before Hiring a Rental Property Manager
One of the biggest concerns for multi-unit residential landlords is not being able to keep an eye on what is going on at the property. It is difficult to keep track of one property, let alone several! So, if you are not able to monitor your property(ies) you may want to to consider hiring a property management company--to protect yourself, your tenants and your property.
A property manager can oversee all of the day to day issues involved in managing the property, but before you get started, here are a few questions to ask:
1. What is Their Experience? Is your potential property manager experienced in managing multi-unit rental properties? Have they worked in your area, with the types of tenants you hope to attract?
2. Are They Professional? Do the people at the property management company have professional appearances and do they handle themselves in a professional manner? If you hire a company--you want them to represent you!
3. How many other properties do they manage? If your property management company is large - you will want to know who specifically will manage your property, and what other properties they manage --if you have an individual, you will want to know what their work-load is as well.
4. What is their availability? You may need someone who is available 24/7 to handle issues that may arise at the property. Does your potential property manager have full availability, or work with a company that can take calls at 2 in the morning if necessary?
5. What are their memberships and certifications? There are several organizations that provide certification for property managers - membership means they have completed courses, and or meet certain standards.
6. Are they likable? Having a likable property manager goes a long way, especially since this person will be in change of finding tenants and dealing with complaints!
7. Is there a contract?Make sure you get everything in writing! All good property management companies will have a contract already written up. Review this with your attorney. If you are dealing with an individual, make sure to have each aspect of the relationship written down. You can not be too cautious when dealing with properties and your investments.
8. What will be outsourced? Make sure you have a clear understanding of what will be outsourced by the property management company. It would be unreasonable to think that the same company that paves the driveway will be re-stocking the toilet-paper in the common area bathroom, but this is something you need to be aware of.
9. How will they handle rent payments and disputes? Know ahead of time how the property manager will handle collecting rent, late payments and other disputes.
10. What are their references? Always check references before you sign the contract. Make sure they are references from like-properties if possible.
If you are interested in learning more about Carolina Property Management - check out our website at http://www.kuester.com/
A property manager can oversee all of the day to day issues involved in managing the property, but before you get started, here are a few questions to ask:
1. What is Their Experience? Is your potential property manager experienced in managing multi-unit rental properties? Have they worked in your area, with the types of tenants you hope to attract?
2. Are They Professional? Do the people at the property management company have professional appearances and do they handle themselves in a professional manner? If you hire a company--you want them to represent you!
3. How many other properties do they manage? If your property management company is large - you will want to know who specifically will manage your property, and what other properties they manage --if you have an individual, you will want to know what their work-load is as well.
4. What is their availability? You may need someone who is available 24/7 to handle issues that may arise at the property. Does your potential property manager have full availability, or work with a company that can take calls at 2 in the morning if necessary?
5. What are their memberships and certifications? There are several organizations that provide certification for property managers - membership means they have completed courses, and or meet certain standards.
6. Are they likable? Having a likable property manager goes a long way, especially since this person will be in change of finding tenants and dealing with complaints!
7. Is there a contract?Make sure you get everything in writing! All good property management companies will have a contract already written up. Review this with your attorney. If you are dealing with an individual, make sure to have each aspect of the relationship written down. You can not be too cautious when dealing with properties and your investments.
8. What will be outsourced? Make sure you have a clear understanding of what will be outsourced by the property management company. It would be unreasonable to think that the same company that paves the driveway will be re-stocking the toilet-paper in the common area bathroom, but this is something you need to be aware of.
9. How will they handle rent payments and disputes? Know ahead of time how the property manager will handle collecting rent, late payments and other disputes.
10. What are their references? Always check references before you sign the contract. Make sure they are references from like-properties if possible.
If you are interested in learning more about Carolina Property Management - check out our website at http://www.kuester.com/
Sunday, August 1, 2010
Advantages of Hiring a Property Manager
Have you ever wondered what the advantages are of hiring a professional property manager?
When a property manager is hired, the property owner or landlord can rest easy, knowing that they have a property management company working for them. The owner does not have to be concerned about marketing for and screening tenants, and they do not have to worry about daily maintenance issues. This frees up the owner to deal with their own business or hobbies and provides a buffer between them an their tenants.
Another advantage of working with a property management company is that the property manager takes on the responsibility of monitoring & maintaining occupancy levels and choosing the right tenants. Also, the property manager can handle the administrative functions of the property and make sure that the occupancy is high.
A good property manager will be a salesperson--able to persuade potential residents/tenants and buyers and have strong marketing skills to find the right people and/or businesses. A property manager will also make themselves available to handle building inspections, property insurance matters, maintenance requests, and showings.
A primary function of the property manager is to handle the finances and make sure residents pay and submit their rent payments on time. They are also involved with managing the finances and budget of that specific property. All insurance paperwork, taxes, billing, and scheduling of property bills can be the responsibility of a property management company, as can the ordering and maintaining supplies and equipment and collecting payments from the tenants.
Property managers can also supervise maintenance and cleaning crews, coordinate marketing and advertising efforts and know exactly the right time to bring in new tenants. In short, a property manager can take care of everything that you would need as a property owner, and do so effectively and efficiently.
Let us know if you are interested in learning more about property management or how Kuester would be able to help you market and manage your Carolina property.
When a property manager is hired, the property owner or landlord can rest easy, knowing that they have a property management company working for them. The owner does not have to be concerned about marketing for and screening tenants, and they do not have to worry about daily maintenance issues. This frees up the owner to deal with their own business or hobbies and provides a buffer between them an their tenants.
Another advantage of working with a property management company is that the property manager takes on the responsibility of monitoring & maintaining occupancy levels and choosing the right tenants. Also, the property manager can handle the administrative functions of the property and make sure that the occupancy is high.
A good property manager will be a salesperson--able to persuade potential residents/tenants and buyers and have strong marketing skills to find the right people and/or businesses. A property manager will also make themselves available to handle building inspections, property insurance matters, maintenance requests, and showings.
A primary function of the property manager is to handle the finances and make sure residents pay and submit their rent payments on time. They are also involved with managing the finances and budget of that specific property. All insurance paperwork, taxes, billing, and scheduling of property bills can be the responsibility of a property management company, as can the ordering and maintaining supplies and equipment and collecting payments from the tenants.
Property managers can also supervise maintenance and cleaning crews, coordinate marketing and advertising efforts and know exactly the right time to bring in new tenants. In short, a property manager can take care of everything that you would need as a property owner, and do so effectively and efficiently.
Let us know if you are interested in learning more about property management or how Kuester would be able to help you market and manage your Carolina property.
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