Sacramento Property Management

TIPS AND MARKET UPDATES DECEMBER 2009

By Lambert Munz MPM, RMP  Arbour Real Estate Management, Inc

TIPS

Here is a guide to file and have available for easy reference

“Wear and Tear” or “Damage”

This is a guide to show you the difference between normal wear and tear, which a tenant does not have to pay for, and damage, which comes out of your deposit. This list does not cover all situations, but it gives you a good sense of the difference between the two.

Visit our web site www. arbourpm.com   Click on NEW and read Chapter One of our new book soon to be published  HOUSE INVESTORS’ MANUAL

I will use my blog to wish everyone a happy thanksgiving. I am a blessed man with a super wife, successful children, 8 grandchildren and 1 great grandchild. Our business has been challenged because of our client’s foreclosure problems, but we are doing OK. My wife and I were remarking about the cost of turkeys. We paid .89 a pound.  I recognize that we are paying for a lot of bone, but turkey servings per pound is cheap compared to beef or pork. Thanks to everyone who we do business, our tenants, owners, vendors and agents.

I usually post my blogs on Thursday and Fridays, but I will be enjoying the holiday. So early posts for the week.

Most of my blogs are of business and serious stuff. Please allow me to post a true story that shows how the typical bureaucracy works.

I was going through a divorce and was living in an apartment that I co-developed.

The parking area close to our apartment had a curb cut that was a short distance from the corner of the street. If a car parked next to the curb cut a driver coming from the corner would be blinded from anyone coming onto the street from the parking area. One of the kids on a bike living in the apartment came out of the park area onto the street one day  and at the same time a car approacing from the corner hit him because a parked car blined his vision. Fortuntually no one was hurt.

Latter, I decided to ask the City to paint the curb red. This was small northern California farm town and I though it would be easy. They told me that I would have to present the request to the City council and then if approved would send it a traffic committee for study.

I was the co-owner of the apartment  decided that I would handle the problem myself and instructed the property manager to paint the curb red. They painted the red zone and I thought that would be the end of the matter.

One morning I was headed to work and notice a car parked in the red zone, but I also notice a parking ticket under the wiper on the windshield. The City was enforing our painted red zone.

That is not the end of the story. One year later the City maintance crews re-painted the curb. They were not only enforcing the law they were maintaining the zone.

The message here is to don’t deal with the bureaucracy otherwise it will never get done. The other message is the right hand doesn’t know what the left is doing.

All investments require management. Some require less than other investments. Real estate is more management-intensive than most other investments. You can do it yourself or hire a professional property manager.

I encourage new investors to try managing by themselves for a while to better understand what the professional has to handle.

Many of our new clients are former DIY owners who are frustrated and exhausted from handling details, demands, and personality conflicts with their customers, the tenants.

FINANCIAL REQUIREMENTS

Let us discuss the financial requirements of being a landlord. One of my colleagues made a profound statement in a class we were attending: “DON’T OWN REAL ESTATE UNLESS YOU CAN AFFORD IT.”  What did he mean? Most rental income won’t cover emergencies such as replacing a roof, major plumbing problems, or electrical, air conditioner, and heater failures. Other expenses are reserves for rent uptime and advertising. Some experts say that you should allow about $1,300 annually for maintenance of a single-family home. Depending on age, new homes would be less while older homes would be more.

An excerpt from my new book HOUSE INVESTORS’ MANUAL

WWW.ARBOURPM.COM

I wanted to alert investors to my friend’s class. He is an eviction attorney and has represented landlords in over 33,000 eviction cases. His class is carefully designed to protect you from unknowingly violating the rights of  your tenants and teaches you how to take full advantage of the many legal rights available to knowledgeable landlords. His name is Gary Link and the class will be giving at the Learning Exchange in Sacramento Ca January 28. www.learningexchange.com

The cause of a great deal of frustration with companies, employees, and customers is poor communications. We humans have the most sophisticated commutation tools available than any living creature. Yet we use our verbal and technology skills poorly.

We have a policy in our office that verbal orders, directions, and information is verboten.  We encourage our clients, tenants, vendors, and employees to use e-mail.

Owner phone calls are discouraged because memory is short when you are bombarded all day long with directives and issues needing immediate attention. The owner on the phone needs are most important to him/her at the moment, but you have other owners and your own business issues to manage.

E-mail gives a written record, eliminates phone tag, and memory loss. Gives recipient time to research answers to questions. Fax is second best.

When people call us cold about a question regarding their property we usually don’t have an immediate answer. It is like the doctor and lawyer. They have to refresh and brief themselves with your health or legal matters, simply because they are handling many patients and clients. The same with the property manager.

This is why we like voice mail. It is more efficient than a receptionist, no busy signals, eliminates being put on hold, eliminates repeating a long message to a receptionist. Just leave the reason you are calling allowing the recipient to research the questions or concerns.

I remind staff repeatedly that you may be working your tail off on the client’s behalf, but they don’t know it unless you communicate what you are doing.

Business will run much smoother, with less irritated clients, and  being smart using the communicating skills available to us.

Owners that hire a Property Manager usually have managed their property

themselves and have decided that they have had enough.

In many cases, the tenants know where the owner lives or has their

phone number for emergencies. After a property manager takes over the

management and the tenants usually do not like the new procedures, they

will call the owner to complain. It reminds me of when raising my children (I

raised six) if they could not get their way with Dad they would appeal to Mom and vice versa. The divide and conquer routine.

We as owners not to cave in after they instructed us to enforce certain

rules. This creates a paper tiger, loss of control and makes our job very

Difficult. Probably impossible.

The proper way is let us doing the dirty work and be the buffer between you and the tenant.

It becomes easier to manage because they know we can’t be lobbied or persuaded.

I hope this information has been of help to you in the understanding this

rental business.

There are agents doing commission sharing. Be careful because they may be selling you their listing. When they sell you their listing they are receiving both sides of the commission. There is no other agent involved to share the commission. What is wrong with that you ask?  You are receiving part of the commission, however the agent is representing the seller not you. No matter what they tell you they must represent the seller if no other agent  is involved. So be careful what you are buying.

It may be wiser to hire a buyer’s agent at a fixed fee to be paid when you are satisfied with the deal and request the discount from the seller’s agent. This way you have representation.

Remember this is a commission driven business and that becomes a dominant motivator for the seller’s agent. You can talk all day about professionalism, but when commissions are involved they sometimes  override professionalism.

I have been licensed 44 years and began  representing investors. I had to learn to protect my client’s interest to keep them as clients.  I remember sweating one large apartment deal I wanted it to close, but there was some problems that would damage my client. I refused to close until they were solved.

We are happy to announce the Leaning Exchange in Sacramento Ca has invited us to teach a class. The topic of the class is Rental Home Investing Uncovered. It will be based upon my new book HOUSE INVESTORS’ MANUAL. Learn what to look for and avoid in a rental house before you invest, what renters want, exit strategies and more.

My wife Judy Munz will teach the second part of the class. Learn the basics of property management, including setting rental criteria, advertising, qualifying prospective tenants and much more.

Included with the class will be a copy of my book HOUSE INVESTORS’ MANAUAL  and a bonus eBook by Christian Ramsey LAND RICH CASH POOR describing exit strategies for real estate investors to reduce the tax burden.

Class will be given January 2010.  Contact the Learning Exchange www.learning exchange.com or  916 929- 9200

The Learning Exchange offers many different courses on dozens of interesting subjects from gift making, Photography, cooking, investing, painting, travel, computer skills, business skills, and much more.

Lambert Munz