Credit bureaus are implementing some changes that can affect landlords in general and you personally. Transunion got together with Equifax and Experian and they announced a National Consumer Assistance Plan. Basically, they are trying to ensure that their data is as accurate as possible. Continue reading
What do you do if a tenant destroys your property? This is a common question, especially from first-time landlords. Everyone has the worst case scenario in their minds. Your course of action will depend on the severity of the damage and whether the tenant still lives in your property. Continue reading
San Diego investors are often asking what they can earn and what they will have to spend when they have a property to rent out. This is a quick and dirty way to figure out what your property will rent for and cost you. Continue reading
There are a few easy steps to follow for successful maintenance on your San Diego investment property. Continue reading
When you’re looking for tenants for your San Diego rental property, you want to screen for quality. The best tenants will pay rent on time, take care of your property, and follow the terms of your lease. Today, we’re discussing five important things that you need to remember when you’re screening. Continue reading
What type of repairs will your San Diego investment property need to be rent ready? To attract the best tenants and achieve the highest rent, you need to have an appealing and functional house to offer prospective renters. Continue reading
At Good Life Property Management, we manage single family homes, condos and small apartment buildings for San Diego landlords. Today, we’re sharing some reasons that you would want to work with us. There are lots of great things we do, but we want to highlight three service guarantees that make us a little different and provide extra value for San Diego owners. Continue reading
When an investor employs the services of a property management company to maintain their property, it gives them time to attend to other business where they can earn more income.
A reputable property management company should minimize on expenses while maximizing on profits. Some of the duties include handling contract issues with tenants, maintaining accounting records, finding qualifying tenants, rent collection, overseeing legal tasks of the property, performing maintenance services and managing property turnover between tenants. Services provided by a management company are not specific to every property as each issue that comes up needs to be handled uniquely.
Other tasks of a residential property management company include advising the property owner of other available property they could buy, evaluating the real estate property, bidding on behalf of the landlord, handling financial transactions on their behalf, handling contracts with tenants, using housekeeping, landscaping and maintaining contractors to improve the appearance of the property among other duties. In brief, the management company’s role is to meet individual needs of the property owner. To provide impeccable services, there is need for a manager to be acquainted with real estate law. This way, they will be well informed of implications of law when things go beyond mutual agreement.
Property management companies may comprise of a team of professionals or a single person. There are companies that can manage several investors’ properties or a single investor with numerous estates. In some instances, one company can handle several properties belonging to several or single entities. In some states, property managers must have licenses to work. In that case, property management certifications are available to individuals and companies.
For investors without the knowledge of property management, the key is to establish a close relationship with the company as well as its representatives. This is because once a stable relationship begins it may be an endless one depending on the mutual understanding between the two parties. In this case, both parties must be honest and flexible. At the same time, it is the duty of the company to give all valuable information to the property owner.
In real estate, we often hear that the three most important aspects of a property are location, location, location. While those three “rules” may apply when purchasing your dream home, there is another, possibly more important, factor to consider when purchasing an investment property. Capitalization Rate Valuation, or “Cap Rate” is a calculation method of estimating potential cash flow for a property, not simply how much the property might be worth.
To calculate the Cap Rate (expressed in percentages), divide the Net Operating Income by the Price or Value of the property.
For example, if the Net Operating Income (NOI) is $2,000, and the asking price is $100,000, the Cap Rate is 2%. Going further, the Cap Rate can estimate when a property can be fully capitalized (pay for itself). A 2% Cap Rate will take 50 years to capitalize, a 5% Cap Rate 20 years, etc. Obviously, the higher the Cap Rate, the better the investment. What is a “good” Cap Rate? A good Cap Rate depends on the return you are willing to accept for the risk you are taking. Also, what might be a good Cap Rate in San Diego, may be different in Orange County.
While a Comparative Market Analysis (CMA) values a property based off sales of similar property with similar physical characteristics, Cap Rates aren’t determined or affected by comparable properties.
Using the CMA method, the value of the property can be swayed by what a less-sophisticated investor was willing to pay on the last deal. Similarly, property located in prized areas are typically bid up to higher prices based off emotions. Moderately priced properties, in nondescript locations tend to have higher Cap Rates than their prized location counterparts. Here in San Diego, depending on which report you read, the Cap Rate is approximately 6%. Coastal areas were .5 to 1% lower, and inland areas were about 1% higher.
As a San Diego property management company, we’ve noticed that many of our clients that own multiple investment properties tend to stick with the less-glamorous neighborhoods. While these properties may not make the cover of Home and Garden, they do provide great cash flow for the owners.
A huge step in preparing your rental for market, is painting. The best tenants can rent anywhere, so in order to attract the best tenants, you have to have a great product. The paint you choose goes a long way in helping you attract a top quality tenant.
Using all white is a turn off to most renters, especially if you have white cabinets, floors, or countertops. While everyone has their own taste, it is wise to go with a neutral color that will appeal to a wide range of potential tenants. This is a color I like and use often:
It is called “Steve Welty1” and can be purchased a Frazee. While everyone may not like this color for their home, chances are you will appeal to more prospects, than you will with white. You want to stay away from very vibrant colors like orange or yellow. Your property manager will probably have a standard color they use, so find out what it is and make sure it makes sense for your rental property. Stay neutral and stay in the game!