What’s The Secret To A Successful Property Management Selection?

SAN DIEGO—Experience is one of the most important factors when selecting a property manager, particularly experience that is asset-type and market specific, Cushman & Wakefield SVP and IREM president-elect Mike Lanning tells GlobeSt.com. We spoke exclusively with Lanning about some of the less-obvious reasons to choose one particular property-management firm over another, the role of leadership in property management and how property management fits into an owner’s overall strategy.43008669_s-300x199

GlobeSt.com: What are the lesser-known reasons for using a property-management firm?

Lanning: I think experience is one of the most important factors when selecting a property-management firm, and it also depends on the property type an owner owns—multifamily, office, industrial or retail. It’s also important to match up the objectives of an ownership group with a property-management firm, and it’s difficult to hire a firm that focuses on multifamily when you own retail properties or even a company that focuses on office management if you have an industrial portfolio. It’s important to match experience with the property type.

Also, when the property is entrusted to someone else to manage, the owners/investors need absolute assurance that their investment is protected. Coming from the IREM perspective, it’s important to have an educated asset or property manager to provide local expertise and real market insight. This can make a significant impact on a property’s bottom line. As a professional property-management firm, we work on behalf of the client, so Cushman & Wakefield is a third-party property-management firm, and we are creating a level of confidence earned through experience. We feel we’re transparent with our clients, adhere to code of professional ethics and have integrity beyond reproach. Management companies across the country bear the AMO accreditation through IREM so that the owner knows the company will stay on top of their properties, provide local expertise and bring true market insight to the assets they manage.

GlobeSt.com: How does leadership come into play in property management?

Lanning: Property managers lead the team that includes brokerage, marketing and overseeing a group of vendors that service the property, so it’s important to develop leadership skills because you have to be a leader of a team. We think that’s important. We think that basic real estate skills will always form the prerequisite for successful real estate management. You must be prepared to analyze marketing statements and leasing plans, manage engineering functions and all the rest of the responsibilities that go under that job, but leadership and relationship management skills become more important as your career progresses. The higher up you are in an organization, the more you have to manage people and relationships rather than the properties themselves. Instead, you’re managing the people who manage the properties, so leadership competencies really distinguish top real estate professionals from real estate technicians handling day-to-day responsibilities.

GlobeSt.com: How does property management fit into an owner’s overall strategy for an asset or portfolio?

Lanning: Every owner going into owning an asset has financial goals or objectives when acquiring a property. The property manager helps them create and implement strategies to achieve those goals. Oftentimes, we see property managers who are responsible for their clients’ needs and meeting ownership objectives, or those who work with an asset manager representing an ownership group, and they must generate the greatest potential income and operate efficiently in terms of operation expenses. Operational strategies will change upon the goals of the investor. Maintenance decisions will change based on goals, so property managers play a critical role in achieving the desired outcome of the owners’ goals.

GlobeSt.com: What else should our readers know about best practices and leadership?

Lanning: The concept behind best practices is that certain proven solutions and guidelines for operating properties enhance effectiveness in operating them and ultimately give those properties a competitive advantage. But just because something is a best practice doesn’t mean it’s executed well. You must get buy-in from owners and property staff to execute those best practices, and you must lead your staff in effective implementation of that practice. The best practice that is poorly executed won’t deliver intended results. Unless it is a very small property, the property manager must rely on his or her staff for operational excellence, so without strong leadership skills, most likely the property won’t meet owners’ objectives. Best practices continue to evolve, and what was established practice seven years ago may not be today. We make sure we’re staying up on today’s best practices and what’s going to happen with an asset three to five years from now. We’re continually evaluating our best practices to see if they are current; they must be enhanced periodically. And as an AMO Firm, we have to meet certain top-line industry standards regarding operations and servicing our clients.

Source: globest.com

Serving tenant in rooming house

ask-the-attorneyThe Landlord Protection Agency®presents John Reno, Esq.,a highly experienced Landlord – Tenant attorney based on Long Island, NY.

Q:  Dear Mr. Reno:

I am in process of evicting tenant for non payment of rent in a four roommate house.

The ten days allotted in the notice to vacate expire in a couple days and I want to serve the tenant with eviction court papers on the tenth day. The only problem is that tenant has been out of town for days and will not inform me of when they are returning. How do I serve papers if they are out of town so I can get this show on the road?

Second question: the tenant made complaint to licensing and inspections who visited the house on account of supposed mold in tenants room. The inspector was unable to enter tenants room however as they had lost key to their door.

As the inspectors visit was the first I had heard about mold I promptly hired mold inspector but like I said earlier the tenant is out of town and we cannot enter their room even though they have granted us permission.

Icing on the cake, The door lock was added by tenant in violation of lease (no alterations/repairs without prior approval). So my question is…can I remove door to gain access and inspect given that they have given permission, lock is in violation of lease and my properties basement is potentially being ruined?

Jesse M.

A: For about $75, hire a professional process server to serve your eviction papers. They don’t have to be served “personally”. They have other methods. But you need to hire a process server THAT KNOWS HOW TO SERVE EVICTION PAPERS. Special rules may apply. (Please keep out until they’re gone.)

Legal Disclaimer
The Landlord Protection Agency’s “Ask the Attorney” column is for informational purposes only. The questions answered by Mr. Reno on this site do not constitute an attorney – client relationship and are not to be considered legal advice. Not all questions will be answered and some may appear in the LPA Q&A Forum.
The Landlord Protection Agency recommends that you seek legal advice before using any of the material offered on this web site, and makes no guarantee on the effectiveness, compliance with local laws or success of any of the material offered on this web site. The Landlord Protection Agency is not engaged in rendering legal advice.

Looking for a Property Manager on the Cutting Edge? We’d be Happy to Carve Out Some Time to Talk!

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#CuttingEdge Leasing and Property Management services in #Cary #Apex #Raleigh #WakeCounty#Triangle

Should You Sell Your House or Rent It Out?

1Remember that old girlfriend of yours — the one with the annoying laugh? You put up with her because she was nice, but one day you met that new girl, and she was everything you ever wanted. Best of all, the new girl started showing definite signs of interest and wanted to date — but you had a problem: You still had the old girlfriend.

While this drama doesn’t take place in the life of every high school student, something similar does happen to most adults — but rather than girlfriends… it’s houses. 

You buy a house and it’s fine, but then you need to move on to another property. Maybe it’s by choice or maybe your work is forcing you to relocate. Either way, you have the same problem as that high school lover: What do you do with the old girlfriend house?

While trying to date two girls at once might prove difficult, owning two homes can actually work and be profitable if you decide to rent out the previous home. By keeping the house, you can begin building serious wealth through cash flow and equity.

But how do you know if that’s the right move?

Should you just sell the house and move on? Or should you rent it out? As with most real estate questions, these are not universal “right or wrong” questions, but once you understand the options, you can make the best choice for your situation.

Below I’ll discuss five factors to consider when deciding whether to sell or rent out your house.

1. Will This Property Cash Flow?

The first thing to look at when deciding whether to rent out your house or sell it is to look at the math. I know, math was likely not your favorite subject in school, but luckily it doesn’t require anything more than a fifth-grade mind to understand real estate investment math.

First, ask yourself: Will this property produce positive cash flow?

In other words, when this property is rented out, and I deduct all of the expenses associated with the property (mortgage, taxes, insurance, utilities, management, vacancy, repairs, HOAs, etc.), will the property produce a monthly profit or a loss? If you are looking at a loss, consider selling.

For more on analyzing properties, read my Ultimate Guide to Analyzing Rental Properties.

2. What About My Return on Investment?

Next, consider how much you would profit if you sold the property today, assuming you’d lose around 10 percent to agent fees, closing costs, and other sales expenses. If you would make little or nothing, it may be advantageous to hold onto the property, waiting for the market to improve over time. This is especially true if the property will provide positive cash flow in the meantime.

If you would make a profit by selling, consider your return on investment. For example, if you could make $100,000 in profit by selling your house and would only achieve $1,000 per year in cash flow, that’s a 1% return on investment. I would much rather take that $100,000 profit and invest it in something else that could give me a higher return.

3. Consider the Taxes

The United States Government does a lot of things I don’t agree with, but one thing they do that I absolutely love is the potential exclusion from paying capital gains tax on the sale of your primary residence.

Normally, if you sell real estate and make a profit, you’ll have to pay capital gains tax on the sale, which can be up to 20% depending on your tax bracket. However, the IRS allows homeowners (sorry, investors!) to exclude the sale of up to $250,000 (or $500,000 if married filing jointly) of a primary residence if you lived in the home for at least two of the last five years.

Let’s look at another example where this might come in handy. Bob and Marge bought their home in 1990 for $150,000. Today, they can sell the property for $500,000, clearing $300,000 after the sales expenses. If they keep the home as a rental for, let’s say, five years and then sell, they’ll potentially owe $60,000 in taxes. But if they sell now, they can potentially keep that $300,000 in profit without paying any capital gains tax.

Of course, by keeping the property, there is always the likelihood that the property will appreciate in value higher than what the tax would have been, but there are no guarantees when it comes to real estate values.

(And I’m not a CPA, so to learn more about this possible capital gains tax exclusion, consult a tax advisor or read the IRS’s rules on the topic.)

4. Does the Future Look Bright?

Another important factor to consider when deciding whether to rent or sell your house would be to put on your crystal ball and gaze into the future. What do the next five, ten, twenty years look like for your home’s location? Are things improving? Will your neighborhood decline in value? If the future looks dark, consider selling now to avoid problems later on.

Of course, we don’t have crystal balls, but trying to gauge where the market’s going is not impossible. Take a look at the growth of your city — is it moving away from you or towards you? Are businesses moving into your area? Are homes being fixed up or left to rot? You can’t know with 100 percent certainty, but by analyzing the current trends in your market, you can make a more informed decision on whether to hold on or sell now.

5. Can You Handle Tenants?

Finally, ask yourself: Are you willing to be a landlord? Because honestly, many people are simply not cut out for the life. While some tenants are a dream to manage, others require significant time and patience to deal with. Last week I had to deal with the eviction of a “garbage hoarder.” It wasn’t pretty.

Luckily, landlording is a skill that can be learned and improved upon. All new landlords make mistakes, but if you are the kind of person who is willing to learn, you’ll do fine.

Also, just because you own rental properties does not mean you have to be the person dealing with the tenants. Professional property management companies exist in nearly every city, and if you can find a great manager, they can cut the stress of rental property ownership down to a minimum (for a fee, of course!).

So, Should You Rent or Sell Your House?

Unlike high school girlfriends, real estate allows you to keep the old and the new. But deciding whether to rent out your house or sell it is a choice only you can make after weighing all the options.

If you are trying to make that decision right now, take a look at the five factors outlined above and make the choice that works best for you, your family, and your financial future.

Source: forbes.com

Asking for Rent Not Harassing?

ask-the-attorneyThe Landlord Protection Agency®presents John Reno, Esq.,a highly experienced Landlord – Tenant attorney based on Long Island, NY.

Q:  Dear Mr. Reno:

Hi. I live in Colorado. We had to move quickly for a job in a different town. We posted the house for rent and were contacted by a family. My husband and I realized traveling 4 hours for maintenance would be too difficult. We advised interested party we decided not to rent. They said what if we do all maintenance? Ok. Done. Instead of a deposit they agreed to do a few things we couldn’t do before we moved. Anyway. Nothing repaired. Rent 4 to 15 days late. Water bill still in my name, almost disconnected. We drove by property to see deck destroyed and unsafe as well as a brand new swing set we couldn’t take. Trash everywhere, lawn dead…etc. posted a notice that we would be down in 1 weeks to.fix things. I have not been able to contact them since. Told me last time i talked to them that i was harassing them because i would ask when rent would be paid after they were late. Any advice? I just want them gone.

Charlene

A:  Oh boy, Big problema. You didn’t mention about the lease. I hope you didn’t give them a year or more. This is why, I don’t like the one year lease to start with new tenants. I prefer six months. Now if these people don’t pay, you’ll do a non-payment eviction. But if they pay, even late, your going to be stuck with them until the lease expires and then evict as holdovers. Just to top it off, you let them in without security. Another “no-no”. Another lesson learned.

Legal Disclaimer
The Landlord Protection Agency’s “Ask the Attorney” column is for informational purposes only. The questions answered by Mr. Reno on this site do not constitute an attorney – client relationship and are not to be considered legal advice. Not all questions will be answered and some may appear in the LPA Q&A Forum.
The Landlord Protection Agency recommends that you seek legal advice before using any of the material offered on this web site, and makes no guarantee on the effectiveness, compliance with local laws or success of any of the material offered on this web site. The Landlord Protection Agency is not engaged in rendering legal advice.