Posts Tagged Real Estate

RENTAL PROPERTY MANAGEMENT – RETURNING SECURITY DEPOSITS

Many people don’t know that if you fail to return your Tenant’s security deposit within the time frame allotted by your particular state . . . there can be some very serious consequences.  As an example, let’s assume that your state mandates that you are to return your Tenant’s security deposit to them within 21 days (3 weeks).  In many states, if you fail to return the deposit within that time frame then first, you will lose the right to charge the Tenant for anything!  It doesn’t matter if your Tenant owes you for three months of rent, late charges and they tore up your property . . . by returning the money late . . . you waive your right to charge the Tenant for anything at all.  But wait . . . there’s more!  Also, in many states if you miss the deadline, your Tenant is entitled to TWO TIMES the amount of security deposit.  Translation: if the Tenant paid a $2,000 security deposit and you miss the return date, you could have to pay them $4,000 AND not be able to charge them for any back rent or late fees owed or for repairing any damage they may have done to your property!   So be sure to check the specific laws in your state.  A good place to start is to google “tenant landlord laws (insert your state’s name)”

This tip is part of the scores of information contained in our Property Management Training Program; Manage to Make Money . . . . the Real Estate Series.  This new series has been developed around our book: Manage to make Money . . . Your Guide to Profitably Managing Rental Properties 2nd Edition.

To view a short video about returning security deposits click on this link.

To visit our website and see our large selection of books, e-books, downloadable forms and documents, videos and tips go to: www.ManageToMakeMoney.com

Thank you for Reading!

Pat and Kris

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RENTAL PROPERTY MANAGEMENT – EARLY TENANT MOVE IN

Few of us would ever allow our Tenants to move in before their lease begins but . . . many of us do unwittingly!

Would you ever knowingly allow your Tenant to move into your property early?  Perhaps unwittingly.

Think about this scenario for a minute:  You have rented your property and the lease begins on the 1st of the month which is a Sunday.  For our convenience, many times, we may be inclined to give the Tenants the keys on a Friday or Saturday, so that we don’t have to do it early Sunday morning.  What happens so many times is that the Tenant is excited about their new place and now that they have the keys they go by just for a look . . . just to “breathe it in”.  When they get there, they remember those two boxes in the back of the car . . . “Gee, if I get those out, then I can start with an empty car on moving day.” Once those boxes go from their car to the house or condo, technically, they have “moved in”!

Now, let me ask you, what is the effective for their renter’s insurance?  Chances are, it doesn’t take effect until the 1st.  why would it start sooner?  Without that date (the now NEW move in date) being covered in their lease or their renter’s insurance being in effect . . . you, the Landlord, are liable for any damage, or injuries they may occur during that time between when they moved the boxes in until the lease start date on the lease!

To solve this issue, we always wrote the lease to begin on the day we gave them the keys and, required the Tenant to have their renter’s insurance effective on that date also.  You don’t necessarily need to charge them for the extra days rent . . . just cover yourself legally and from a liability perspective.

In summary, think through the date relating to move in dates and “possible” move in dates.  You might just save yourself some heartache.

To view a video on this same subject click on this link:  Early Move In

If you have any questions about this subject, fell free to contact us via our free service; ManagementLink.  Simply click on the link and type in your question or issue.  We will get back to you within 24 hours with an answer.

Thank you for reading!

Pat & Kris Larkin

We have founded and developed “Manage To Make Money” which is a resource for anyone, novice or professional who manages rental properties.  We provide Books, Documents and Forms, Live Seminars, E-Books, Free Webinars, Tips and Private Consulting.  Check it out!

Manage To Make Money – Cottonwood Falls, Kansas 949-689-4344, Info@ManageToMakeMoney.com

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RENTAL PROPERTY MANAGEMENT – SYSTEMS FOR THE PROS

SYSTEMS FOR THE PROFESSIONAL PROPERTY MANAGER

 Any business, in order to operate and deliver its products or services, must have systems and processes.  In this chapter, I will be sharing with you many of the systems and processes we implemented to manage the 320+ properties we were responsible for.  The process is like any other . . . it is never finished.  There is always something that, while it works better since you changed it, is still not working as smoothly as you would like.  What I am sharing with you is basically a snapshot of where we are in this ongoing process.

Filing

 Every organization has to do filing.  It is simply a way to put important documents and information away in such a manner as to be able to find it again with you need it . . . and that is the acid test!  You may have an awesome filing system that you have implemented but if you can’t find what you need when you need it, you have to ask yourself: is this really working for me?

The starting place for us in dealing with our properties was to assign a property number to each property.  This number is used in paying invoices; in setting up our property management software and . . . you guessed it . . . in setting up our filing system.    We start out arranging all of the properties in alphabetical order, by their street name and then begin assigning property numbers to them.  Under this convention all of your properties on numbered streets would come before your named streets in the order of your streets: 6th street, 10th street and 27th street, then Apple Street, Boston Street then Orange Street.  If you have more than one property on the same street; the ones with the lowest house number would come before those with the higher ones.  As you are designing your property numbering system, one thing to think about is to allow enough unassigned property numbers between the assigned ones to allow for some growth.  We only re-assigned property numbers once in the five years that we owned the company.  This was mainly due to the fact that we more than doubled our number of properties during that time.  As you can imagine, because we had outgrown our numbering system, we had a lot of property numbers with decimal numbers so that we could fit them between two consecutive whole numbers:  #110, #110.2, #110.5 & #111.

Here is an example of a numbering convention which works:

Property #               Property Address

1

623 E. 6th Street

2

Unassigned

3

Unassigned

4

842 So. 18th Ave

5

622 West 120th E. Ave

6

Unassigned

7

Unassigned

8

123 Apple Street

9

129 Apple Street

10

Unassigned

11

Unassigned

12

855 So. Boston Street

13

Unassigned

14

Unassigned

15

27 Highland Ave.

OK, now that we have figured out how to number our properties we are ready to set our filing system.  We recommend that you use a three folder system for each property.  One is a colored folder; red, blue, green or even electric colors are available at your local office supply store.  The other folder is a plain-Jane manila folder.  The two folders rest in the third folder, which is a hanging folder.  All three folders have the property number and address on it.

The Colored Folder – The colored folder is for all of the legal documents relating to the property, or you could also think of it as housing all of the long-term documents.  On the left side as you open the folder, we keep all of the documents relating to managing the property; Management Agreement; property set-up sheets; Owner information, and copies of any letters to or from the Owner of the property, etc.  On the right side of the folder, keep all of the information relating to the current Lease.  On this side you will keep the Lease itself, the rental application, any Change of Terms, any Three Day Notices or written correspondence with the Tenant or notes of communication with the Tenant.

The Manila Folder – This folder is for all of the day-to-day stuff that goes on with the property.  On the left side, you will keep all of the HOA documentation; newsletters, notices, etc.  On the right side is where you will keep all of the paid invoices for anything on the property: mortgage statements; HOA statements; and paid contractor statements, as well as the work orders for that work.

Another thing that we put in the manila folder is the Lease.  I know, I just said that you will keep that in the colored folder . . . whassup with that.  If you re-lease the property during the year, we put the new Lease in the colored file and move the outdated Lease into the manila folder.  This way, you will still have access to this information without having to go to your archives.

As I have mentioned before, I tend to be an efficiency-driven sort of person.  When I first saw this filing setup, I pushed hard for going to the multi-tabbed, all in one folders.  The reason that doesn’t work as well for this system is that at the end of the year you will want to purge your files and essentially the entire manila folder will go into to your non-active file storage.  This becomes a very efficient process when all you have to do is remove the manila file, mark it with a colored tab with the year it was for and make a new manila folder to replace it.  Also, if you don’t purge your files each year, they would become so fat and cumbersome that you literally would have to rent a larger space to house all of your files!

Archiving – If you are going to keep physical copies of your old files, you will need to maintain a storage facility where you keep all of your file archives.  Typically this is for files on properties that you no longer manage, or for files on properties that you do manage, but the files are so old that the likelihood of needing to access them is minimal.  A good rule of thumb is that you maintain records for 10 years and then have them shredded.

Depending on how long we have been managing a particular property, we would generally keep all of the past year’s files for that property in storage in our office.  Now, if you have been managing a property for 15 years, that doesn’t make sense; information that is 3 – 5 years old is only going to need to be accessed once at the most, during a given year, so it really doesn’t make sense to use your valuable file/office space for that and it goes to storage.  At any rate, this three folder system is working well for us.

Physical Hard Copy Filing vs. Electronic

With all of your current year files and three–five year archives, your filing will require a lot of space.  That is valuable and expensive office space.  If you can eliminate several file cabinets then you could add more work stations and not have to rent larger space in order to hire new people as you grow!

I recommend that you start out scanning all of your documents that you would normally file . . . as they occur!  This will start to build your filing system and when it is time to purge your physical files and move them to another cabinet you can skip that step and move them to archive.  You will have the electronic files on your computers (don’t forget to have an off-site backup!)

 

We hope this posting has been helpful for you.

Thank you for reading!

Pat and Kris

 

For a virtual goldmine of  resources for time and money saving systems and secrets of the pros, visit our website at www.ManageToMakeMoney.com

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MANAGING PROPERTY FOR OTHERS – DELIVERING STATEMENTS AND PAYMENTS TO OWNERS

Delivery of Statements – Mail Hard Copy vs. e-mail

 When our company started all of these processes and procedures . . . it seems bizzare to say it but . . . there was no internet or e-mail.  All of the monthly statements along with all of the backup copies of invoices were packaged, posted and mailed out to each of our Owners.  With the advent of e-mail and good quality scanners, we were able to move toward e-mailing our monthly statements to our Owners.  The only thing that held us back was our Owners; many of whom were a bit technologically challenged and “didn’t do e-mail”.

As we moved forward though, we pushed to make the change.  I am a big believer in processes and the more processes you have for the same outcome, the less efficient you are.  I know that the time is quickly approaching when this will no longer be an issue and electronic delivery will be the standard for all property owners.

If you are just starting a property management firm, this is an awesome opportunity for you.  You can start from the beginning sending your statements out electronically . . . and not be faced with converting to the new technology that will undoubtedly be here all too soon!

 

Payments to Owners

 Assuming that our Owners’ property had a positive cash flow, we paid a disbursement out to each of our Owners at the time we issued the statements.  Our software had a default setting that basically told it to send the Owner any remaining cash in the account after all expenses have been paid.  This is not always a good thing; if you have a system like this, you want to be diligent to keep an eye on future anticipated expenses.  Let me tell you it is not fun to have sent an Owner a bundle of money one month, then the next month you are trying to pay his real estate taxes and you don’t have enough money in the account.  You then have the opportunity to ask the Owner to send the money back to you.  This is not good for your credibility!  We could also go into our system and set a cash minimum that we wanted to maintain in all of our accounts and it would automatically send the Owner anything in excess of that amount.  It is all a matter of how you want to set it up.

Like mailing out hard copies of statements and technology marching on, making payments to our Owners has also undergone some changes.  In the early days, we sent out live checks each month to our Owners.  Now, with the advent of ACH or; Automated Clearing House, we can electronically transfer funds from our trust account to our Owners’ bank accounts, minimizing live checks, mail problems, etc.  Again, we still had those Owners (probably the same ones that “don’t do e-mail”) “who don’t do electronic deposits”.  We continued to work with them knowing that “someday . . . this too shall pass!”

 

Our hope and prayer is that this information has been helpful and sparked some thought processes for you.  To discover more resources for managing rental properties for yourself or others, visit our website and check out our Books, Documents, Forms, Checklists, Videos  . . .  available in hard or immediately downloadable versions.

Thank you for reading!

Pat and Kris Larkin

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MANAGING RENTAL PROPERTIES – Owners and What Type of Properties to Manage

While you will have your ways of doing business and many regulations that you cannot stray from, to be successful managing properties for others, you will need to know how to adapt and work with their personalities.  That is not to say that you be totally co-dependent on your Owners, but learn how they like to do business and make your best efforts to conform your practices to their idiosyncrasies.

Our philosophy is that the Owner has hired us so that they don’t have to deal with the day-to day-issues of managing properties.  We try to spare them the gory details of the everyday stuff, but then involve them in the bigger decisions.  At what level your Owner wants to be involved in the details, you will have to just learn and figure that out.  We suggest when you are having your initial conversations with your Owners that you ask them some qualifying questions on this subject before you enter into a management agreement.

Qualifying questions for potential Owners

1)    While we will always attempt to contact you whenever we have to spend money for service, we normally will respond to a service request under $100.00 without having to speak directly to you.  We may leave a voice mail or an e-mail to let you know what is going on.  Does that work OK for you?

2)    Do you have e-mail?  Are you willing for us to use e-mail as our primary method of communication?

Their response will give you a better idea as to whether or not you should do business together.  If they aren’t going to be happy with you, you certainly are not going to be happy with them!

Types of Owners

 The Involved Owner:  Some Owners are very detail oriented and want to be involved in many aspects of the management of their property.  Others want to be involved to a fault and may attempt to micro-manage or second-guess your actions.  You may find yourself asking the question “Why does this person want a property manager?”  There are a couple of issues at play here;

1.) Some people are simply very involved until you have proven that you are trustworthy and they are convinced that you indeed have their best interests at heart.

2.) Others are simply control freaks and no matter what you do, will be in your business all the time.  With this second type of Owner, you will have to do some soul searching as to whether or not this is a positive situation for you.  If it works OK, then great.  If not, then there may be another property manager out there who it works fine for.  That may be the best solution for both of you; to end the relationship sooner rather than later.

The Uninvolved Owner:  On the other end of the spectrum, we have Owners who don’t want to hear about their property.  They just want a monthly statement and a deposit in their bank account.  The less they hear from you the better.  While this type of Owner has a lot of positive attributes, this is the Owner that you also want to be very proactive with. You don’t want to pester them with details . . . remember, they hired you so they wouldn’t have to deal with all that stuff.  However, be proactive with your communication with them, and this is true for all of your Owners.  Document your actions in writing either by sending them an e-mail or by leaving them a voice mail and documenting it in a communication log.   How technologically savvy they are will determine which method of communication you use.  The uninvolved Owner can be a bit disarming at times.  Don’t think their seeming lack of involvement means a lack of interest.  The truth is they are very interested in the outcome of your management of their property.  Continue to keep good records and keep them informed, even if they appear uninterested.

Be Dialed In to the Type of Properties you are Willing to Manage:

 While this is a personal decision, we want to share some pros and cons we have observed in this area.  We are not making a character judgment about any of the groups listed below.  These are simply our observations as a result of our experiences in working with all of the groups.

 White Collar Properties:

Also defined as high-end properties, these can attract very good renters.  These renters have typically owned expensive homes and as a rule will take very good care of your property.  On the other hand, our experience is that the high-end renter can have a very entitled mentality and can be difficult to work with.  Things like requesting and scheduling maintenance, seemingly pretty simple things can become very challenging with these tenants.  Another aspect of the high-end tenant is that if you don’t meet their expectations, they do have the resources to come after you legally. White collar renters will typically have more financial resources and are executives or self employed.  You will find them to be fairly well insulated from an economic downturn.

 Gray Collar Properties:

These are properties in the middle of the economic spectrum rented by the gray collar worker.  What is a gray collar worker?  I’m glad you asked!  It is typically a middle management person; the manager of the local electronics, or grocery store.  This renter is generally conscientious and will take care of your property.  They are typically regular people and most all adults in the home are working full time.  They are generally easier to work with than the white-collar renter when it comes to requesting or scheduling maintenance work.  They possess moderate financial resources and will be somewhat insulated  from an economic downturn.

 Blue Collar Properties:

This renter is at the lower end of the economic spectrum.  They usually work in the trades, i.e., construction worker, car mechanic or truck driver.  Generally, all adults living in the property work full time.  They are also just  regular people and are generally easier to work with than the white-collar renter when it comes to requesting or scheduling maintenance work.  They possess more limited financial resources and will be the first tier to be affected from an economic downturn.

 Don’t Let Fear Deter You:  If at anytime during your due-diligence/interviews with an owner you get that gut feeling that this guy just ain’t going to work out . . . heed the warning!  This could be anything from not having a good connection with your communication or that he wants you to manage a type of property that you are not set up for.  We are all different and there is nothing to be ashamed of in that.  There are people that I am just too different from and will have difficulty doing business with in a way that will make them happy.  Conversely, there are people out there that are just different enough from me that they would have a tough time keeping me happy either.  Embrace your differences and rather than being fearful that you will lose face or be embarrassed, nip it in the bud!  Do both of you a favor and save a lot of heartache and hard feelings; decline to do business with them.  Perhaps you could refer them to another property management firm.

So, how do you do that?  I learned a great technique from my pastor, of all people.  I simply tell the prospective owner that based on our conversations, it is apparent to me that we may not be a great fit for one another.  There are a lot of great property management companies out there and I am sure that one of them would be a better fit for their needs than I can be.  I wish you the best of luck.  And . . . don’t let them talk you into it . . . you know what your gut just told you!  HEED THE WARNING!!

Thank you for reading!!

Pat and Kris Larkin

For more information and resources for profitably managing your rental property visit our Website

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RESUMES AND MARKETING YOURSELF IN TRANSITION


 

Let’s assume that your construct confirmed your suspicion that you would be well suited for a career in property management, what are the next steps.  How do you put together a resume which will convince the people hiring that you are a good bet in property management even though you may not have as much experience in the field as some of the other applicants for the same position?

Resumes and marketing yourself is a vast subject and to do yourself justice you will really want to take advantage of some of the information that is out there which will take you to a much higher level of detail than we will here.

We do, though, have a lot of experience in the hiring side of things . . . both from the perspective of the employer as well as the employee.

In today’s wide-open Internet world, the possibilities for you to market yourself to countless numbers of people are nearly endless.  It is really just marketing.  Experts tell us that you only have seven seconds to make your first impression and that is why a great format for communicating to the decision makers is so important . . . scratch that . . . it’s imperative.

In my travels I have finally come across a resume format that literally turns heads.  I’ve even had interviewers at the end of an interview say to me, “This resume looks great, it really got my attention.  Where did you get it?”  So in the spirit of sharing my stuff, I am sharing it with you.

Resume:

First you start with what I call the “Billboard” section of the resume.  Remember the 7 seconds to make a great first impression?  That’s what the billboard is all about.  Please refer to our sample resume in the appendix at the end of this chapter to see what I am talking about.

Billboard – This at the top of your resume and it is going to give a quick snapshot of who this great applicant is (you).  It will contain the title of the general position you are seeking and then a short (perhaps two lines) summary of who you are and how wonderful you are. Next part is just words in bold type that describe your skills and talents.  Below this section is a section describing even more incredible skills and talents you have.  I say that a bit tongue in cheek, but it is true, you need to be selling yourself and this is the place to do it.

Selected Career Highlights –  This is where you list the previous positions you have held at various companies.  Be careful here.  Remember, you are not going to write this, as you would have when you were looking for another job in your old industry.  You are changing industries so you need to find similarities between your previous positions and the one you are seeking.  If you were a purchasing manager for a medical supply company and you want to be a property manager, you will want to find the things like: Balanced multiple projects simultaneously or Relate quickly and easily with all diversities, personalities and business levels.  Tell what you did, such as: Contracted with major pharmaceutical companies balancing multiple priorities continually.

Don’t misunderstand me, I don’t want to put words in your mouth and I don’t want you to be dishonest.  Tell the truth or you won’t be able to own it.  Be sure and tell the part of the truth that won’t distract them and will show them the part of you that they want.

Be sure to limit your information per company to four or five bullet points in your first listing and less for the subsequent listing.  This is of course unless one of your subsequent listing has the most in common with the position you are seeking.

You will want to continue to list previous positions to show at least the last five years of employment and, ideally, your entire career.  You will need to balance this with length of your resume.  Perfect world length is one page; I think 2 is OK, but I recommend that you not go over that.

Other Relevant Experience, I use this section in my resume for a position I held many years before the last job listing on my resume because it showed particular relevance to the position I was seeking but, did not fall into comfortable chronological order with the others.

Education – Just list the schools attended and degrees earned.  If you didn’t finish college, as I did not, just list the schools you attended. I don’t call attention to the fact that I didn’t get my degree.  The people looking at this are smart and will ask you about it if it is important to them.  If it is a non-starter for them, then it is.

Professional – List your licenses, any and all Trade Associations you belong to, or special training seminars you have attended, and computer skills along with particular software you are proficient with.

Personal – You don’t want to make this too long or too personal.  Just list your marital status – any children and what you like to do on your time off.  Sitting on the sofa sucking down beers while watching the game probably wouldn’t be a good idea!

References – I subscribe to the idea that in your first exposure to folks, your mission is to make that great first impression.  It is not to overwhelm them with paper work.  I don’t include references with my resume but I do tell them that I will provide excellent ones if they would like.  Again, if this is an important issue for them, they will ask.

 

Hopefully, this has been helpful to you.  For more information and resources about transitioning your career to Property Management go to our website.

 

See you next time!!

 

 

 

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TRANSITION YOUR CAREER TO PROPERTY MANAGEMENT

Once you answer that nagging impulse in your heart telling you that you need a change, then there are some action steps you can take to get you headed in the right direction.  This exceprt from our book; “Mange To Make Money . . . with a Career in Property Management” should prove to be helpful.  I hope you enjoy it!

 

So you’ve decided that a change in career path is for you.  You are not alone in that thought.  From time to time, our economy will help us to see that our career path may be leading to a brick wall . . . or a dead end . . . QUICK . . . turn or make a change before you crash!

Making that determination is an important step, but, now what?!  Moving into a different area of discipline can be challenging. What is the next step in pursuing a new career . . . a career in property management?

Let’s roll up our sleeves and see.

The first step is to explore what other careers you might be interested in.  Our opinion is that we can all do OK in a career that is not necessarily in our gift set.  What does that mean?  Well, I believe that we were all created with gifts and natural talents that are unique to each of us.

For instance, I am well equipped for managing processes, I am creative, I am a good speaker and enjoy teaching people things that I know.  Now, if I decide that I want to be a doctor, beside the obvious void in my education, do I have the God-given gift to be a doctor?  Do I have the aptitude to understand the stuff I would need to learn in order to be a doctor?  The answer in my case is a resounding NO.

Think with me for a minute about people who are in the wrong career paths.  We’ve all run into them; they don’t really like their job and we are an imposition to them for expecting them to do their job.  You know the cranky store clerk, the non-helpful customer service person.  I’m not talking about someone having a bad day, I am talking about someone who is terminally unhappy in their job or in the wrong career.  That would probably be me if I chose to pursue being a doctor!

The first step in this direction is to identify what it is you were gifted to do.  OK well, that is like asking someone “how long is a string?”

We have created a short little construct to help you identify what it is you like to do.  Now, it is impossible to learn all of our gifting from one little construct.  Our gifts are like a treasure hunt; we have gifts that we may not discover for years.  For instance, Kris and I only learned that we love teaching just a few years ago.  But I have to say this; it was after a great deal of self-discovery coupled with chance.

You can only find this construct and other self-evaluation tools in the appendix of chapter 3 of our book.  You may purchase the book as well as many other helpful property management tools at our web site:  www.ManageToMakeMoney.com

Thank you for reading!

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PROPERTY MANAGEMENT DYNAMICS AND ECONOMIC DRIVERS

So what drives the property management industry? Let’s talk first about what property management is: basically, it is managing a real estate asset for the owner of that property.  It is driven by that owner purchasing a property, whether it be a commercial, industrial, institutional or residential property, and then hiring someone . . . a property manager, to do all the things necessary in order for that property to continue to be a viable and income producing asset.

At any given time, there are a certain number of properties out there in the marketplace which are in service and being managed by a property manager.  That number is going to change very little.  If anything, though, over time, the number will tend to increase.

What creates income property or rental property as you might call it?  The commercial, industrial and institutional markets are driven by new buildings being built or sold.  In the residential market, which is the primary focus of this book, a change in use or a sale of property are primarily responsible for creating rental properties.  Another, very minor contributor to the rental property market is new construction.  Depending on your locale, new homes or condos may or may not be at a price point to compete with the resale of homes.

Our experience with our owners was that most of them created new rental property by purchasing a home for the specific purpose of creating a rental property investment.  Others would purchase a new home for themselves and move out of their old home and put it in service as a rental.

OK, I went through all of that rigmarole to say this; with my background in home building and land-development, I have been through some pretty gnarly economic times.  Consequently, I tend to view things through my worst-case glasses.  So when I look at the residential property management industry I ask; so what will cause this industry to slow down or crash?  In home building the vitality of that industry is tied primarily to jobs and interest rates.  If people are not secure with their jobs or if interest rates are too high, they don’t buy as much.   But what about property management?  Do people quit renting when the job market gets sucky (sucky is a technical term!)?  Not directly.  But if the job market is horrible, as in, jobs are moving out of your area, then rents will slow down and the rental rates will trend downward.  But the real story is that if the job market gets sucky, people are less inclined to purchase a home, but they will rent instead.  What about interest rates?  Same story.  People are more inclined to rent a home and wait out the interest rates.  Remember . . . they have to have a place to live.

The two places where we have seen vulnerability in the property management business are: softening of rental rates when the job market is soft and a sell off on the backside of an economic downturn.  What the heck does that mean?  Picture this scenario; property owners are continually buying and selling their rental properties . . . for various reasons . . . life happens.  When the economy gets nasty and property values take a nose dive, owners (unless they are in dire circumstances) stop selling their properties.  This is due to a couple of reasons: 1.) They are upside down on their property . . . they owe more on their mortgage than the property will sell for.  2.) They don’t have to sell and to sell in a down market causes them to lose money.  They will simply wait the market out.  And wait the market out they do!

Our experience is that once the market returns, or at least starts to improve (the backside of the economic downturn), owners who chose not to sell earlier are now incentivized to sell.  It is a sort of a mini pent-up demand for selling.  Property values are now finally high enough that they can sell and pay off their mortgage, or, their loss will be less.

In a recession, in which at its worst, property values dropped 25 to 28%, we experienced a 10% sell off of properties on the backside of the downturn.  Not great, but had we been the owners of all that real estate, we would have been looking at much greater losses.

The key: continue to increase your business with the static market during the downturn.  That way, if you do experience a sell off, you can hope to end up where you were prior to the economic downturn.  If not . . . you have 10% more business . . . WOO-HOO!!

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CAREER TRANSITION . . . PROPERTY MANAGEMENT

MANAGE TO MAKE MONEY . . . With a Career in Property Management

Managing properties for someone other than yourself.

The following post is an excerpt from our new book:  “Manage To Make Money . . with a Career in Property Management”.  I will be posting various excerpts from it as it is a great resource for re-tooling your career for one in residential property management.

The property management company which we owned and operated was started back in the early eighties.  It wasn’t necessarily a deliberate or planned event . . . it was more by default.  The woman who started the company was a real estate broker and was selling homes and condos around The Orange County, California area to the many professionals there.  After a few years, these professionals began to move up the corporate ladder and their companies began to transfer them around the country and the world.  Knowing that if they sold their home in this expensive and forever appreciating market, and ever wanted to come back and buy another home it would be very difficult for them.  They contacted the lady who sold them the home in the first place and asked her to keep an eye on their property for them and keep it rented while they were away for the next two or three years.  They agreed on a fee and the company was born.  Now, this was a one-at-a-time sort of deal. But over the years, with her doing the excellent job she did, her reputation spread throughout these companies, and as more and more people were transferred, they sought her out.  After several years, her property management firm was managing 120 privately owned homes and condos!

As I said, the start up of our firm was clearly by default.  Little did Lynn, the founder, know when she started managing properties that the area which she was operating in had two very key elements present that are very helpful for a property management firm:  1.) the area she was operating in has one of the highest education levels per capita of any major metropolitan area in the county and 2.) this area also has the highest percentage of non-owner-occupied homes (Owners who don’t live in their property) in the State.   As it turns out, those proved to be a couple of very important ingredients to her success. Now that doesn’t mean that you have to have those ratings in order for your property management endeavors to be successful, but . . . you will want to be sure that they are at least, present in your demographics.  The more they are present, the better the chances for success you will have.

If this positing has been helpful or interesting to you and you would like more to discover at your own rate, the book “Manage To Make Money . . . with a Career in Property Management” (along with many other resources) is available at our website: http://www.ManageToMakeMoney.com

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