Saturday

What Do You Look for In a Management Firm?


  1. Valid Brokers License: In may states a brokers license is required to operate a property management company. You can check to with the local dept of real estate to validate it and see if it has ever been revoked or suspended.
  2. Management Fees: Property Management fees are generally a percentage of rental income. Fees can vary from company to company and you should shop around. Expect fees of 5% or more as a percentage of rental income. If you own a single family home or a duplex that has a low rental income number, you may get quoted a flat rate.
  3. Maintenance Staff: Does the firm have its own maintenance staff? Are they 24 x 7 for emergencies? Will they provide you with itemized statements and for larger jobs three independent bids? Does the company charge a fee on top off the management fee for major upgrades?
  4. Working Relationship: Are they friendly and is the staff easy to reach at during normal business hours? Is the office clean and uncluttered? Do they respond in a timely fashion and can they provide referrals or testimonials for you to contact. In short, do you want to work with them?
  5. Reporting: All property Management firms should have software that will provide you with clear and professional monthly statements. Accounting: When will the manager mail your check to you? Can you use direct deposit? State laws usually dictate accounting rules for managers its good to have that information at hand. On Line Statements: Many firms will have on line monthly itemized statements available to owners. This convenience will increase transparency and save you time. EFT: Does the management firm allow tenants to pay online. This would allow bounced checks to be discovered sooner and that increases your cash flow. 1099: Will the management company provide you with an IRS-1009 and a summary profit and loss statement for tax purposes?
  6. Reserves: Most companies will require you leave some funds on deposit for small needs your property may require. This way they don't have to call you each time they need to send someone to fix a small item. You should ask how much reserves the company requires. Also, set a limit on how much a company may spend on your property for maintenance or repairs without contacting you for approval. Is $500.00 appropriate or $750.00, discuss your comfort level before you sign
  7. Vacancies: Do they charge a rental fee? Often companies will charge a percentage of the months rent for the service of renting a unit. The screening should process include an application, a credit report, a conversation with the prior landlord and income verification using the 1040 for self employed or pay stubs. The service should include reporting a qualified tenant to you and a proper lease. We provide a lot of info on tenant screening information. Be familiar with the process so that you can determine for your self that a good job is being done. You only want good tenants, evictions are expensive. Viewings: Some companies will be there for a showing to groups of people interested in the unit. Other companies allow prospective tenants use of the keys with a small deposit. Find out how viewers can see your property and whether you are comfortable with the procedures. If the management company staff shows the unit ask how often they will show and especially on weekends.
  8. Advertising: How will they advertise the vacancy? Be clear on all costs involved and have limits or a system of approval. Do they use the web? If so, can they create virtual tours or use photographs. These skills should translate into quicker rentals and better cash flow for you.
  9. Evictions: This should require a lawyer and the proper legal procedure for your area. How do they charge for this and will the lawyers fees be invoiced so that you can see the true cost.
  10. Termination of your Agreement: We like contracts that can terminate in thirty days with a written notice and without penalties. An exit plan that is agreeable to you is critical.
The housing markets are so dismal that i thought a decent look at property management firms and how to evaluate them might be helpful for those who are going to hold on for better times.
yourpropertypath.com has a large selection of articles useful for owners and managers. Mostly written in a how to style that allows you grab and go quickly.

Thanks for reading
Howard bell
www.yourpropertypath.com

Interviewing A Property Management Company





Property Management companies come in all sizes and shapes. It seems that many of them are a small business or family business. If you have a large portfolio of properties or a large multi-family income property you can attract a variety of companies because many are paid as a percentage of rental income. If you have a single family home or a smaller rental property its just not that attractive to many companies because they won't see much income from it and you may not get the attention you deserve. You may find better service from a smaller property management firm.

How Do You Find Them?

Check with the standard sources such as referrals. You can also ask:
  • Local Real Estate Agencies - They may have a local property manager they often recommend to or perhaps one of the agents also manages property.
  • Check with your local Property Management Association or apartment association for a list of local firms
  • In rural areas the State Apartment Association may be a good resource for a firm near you.

What Do You Look for In a Management Firm?
  • Valid Brokers License: In may states a brokers license is required to operate a property management company. You can check to with the local dept of real estate to validate it and see if it has ever been revoked or suspended.
  • Management Fees: Property Management fees are generally a percentage of rental income. Fees can vary from company to company and you should shop around. Expect fees of 5% or more as a percentage of rental income. If you own a single family home or a duplex that has a low rental income number, you may get quoted a flat rate.
  • Maintenance Staff: Does the firm have its own maintenance staff? Are they 24 x 7 for emergencies? Will they provide you with itemized statements and for larger jobs three independent bids? Does the company charge a fee on top off the management fee for major upgrades?
  • Working Relationship: Are they friendly and is the staff easy to reach at during normal business hours? Is the office clean and uncluttered? Do they respond in a timely fashion and can they provide referrals or testimonials for you to contact. In short, do you want to work with them?
  • Reporting: All property Management firms should have software that will provide you with clear and professional monthly statements. Accounting: When will the manager mail your check to you? Can you use direct deposit? State laws usually dictate accounting rules for managers its good to have that information at hand. On Line Statements: Many firms will have on line monthly itemized statements available to owners. This convenience will increase transparency and save you time. EFT: Does the management firm allow tenants to pay online. This would allow bounced checks to be discovered sooner and that increases your cash flow. 1099: Will the management company provide you with an IRS-1009 and a summary profit and loss statement for tax purposes?
  • Reserves: Most companies will require you leave some funds on deposit for small needs your property may require. This way they don't have to call you each time they need to send someone to fix a small item. You should ask how much reserves the company requires. Also, set a limit on how much a company may spend on your property for maintenance or repairs without contacting you for approval. Is $500.00 appropriate or $750.00, discuss your comfort level before you sign
  • Vacancies: Do they charge a rental fee? Often companies will charge a percentage of the months rent for the service of renting a unit. The screening should process include an application, a credit report, a conversation with the prior landlord and income verification using the 1040 for self employed or pay stubs. The service should include reporting a qualified tenant to you and a proper lease. We provide a lot of info on tenant screening information. Be familiar with the process so that you can determine for your self that a good job is being done. You only want good tenants, evictions are expensive. Viewings: Some companies will be there for a showing to groups of people interested in the unit. Other companies allow prospective tenants use of the keys with a small deposit. Find out how viewers can see your property and whether you are comfortable with the procedures. If the management company staff shows the unit ask how often they will show and especially on weekends.
  • Advertising: How will they advertise the vacancy? Be clear on all costs involved and have limits or a system of approval. Do they use the web? If so, can they create virtual tours or use photographs. These skills should translate into quicker rentals and better cash flow for you.
  • Evictions: This should require a lawyer and the proper legal procedure for your area. How do they charge for this and will the lawyers fees be invoiced so that you can see the true cost.
  • Termination of your Agreement: We like contracts that can terminate in thirty days with a written notice and without penalties. An exit plan that is agreeable to you is critical.

Wednesday

Why Multi Family is so Strong

yourpropertypath.com is a real estate information resource on the web. We are all aware of the disaster developing as a result of the real estate correction. Its not only painful for the foreclosed and the speculators. Many of these recent buyers were just looking at their piece of the American pie. They never really thought of themselves as speculators or risk takers, just grabbing an opportunity and trying to get in under the wire.

These folks, the lenders and the banks that provided the liquidity are now feeling the pain of a reversal of fortune. Many of the paper investors, hedge funds and Wall Street firms are now accepting foreign aid (in the form of new partners) to stay afloat and weather the latest storm. It always amazes me that the watchdogs and safety features built into markets seem to dissolve periodically and big time.

But the multi family market is holding up quite well. Owners of rental units and the property managers they hire are smiling and here's why...

The national Real Estate Investor has an excellent article on the good fortunes of rental property, perhaps the only good market sector today.

Supply:
The boom created a hot market for TIC and condo conversion. This created a dearth of supply of rental units as they were taken off the market and owners that sold or converted their rental property during these heady times did quite well.

Higher Land Prices:
The boom also created a land buying frenzy that increased prices. According to via the National Real Estate Investor: "insights from members of NAHB's Multifamily Leadership Board suggest that developers of rental apartments were virtually shut out by the deep pockets of publicly traded home builders and condo developers at the peak of the housing boom."

Cost of Construction:
No doubt China has something to do with this. The cost of building materials like copper and concrete have been increasing for many years as boom builders such as China buy up construction materials worldwide. The cost of land plus the cost of construction kept multi family new building in check.

Thanks for Reading
Howard Bell
www.yourpropertypath.com

Saturday

Foreclosure Programs: Lets Take a Good Look

With foreclosures hitting record highs and this sub prime mess begins to unfold and look very much like the S&l crises, some Government action is beginning to take place.

1. The FHA Modernization Act of 2007 was recently passed today by the Senate authorizes lenders to help borrowers who are in default.
a. lower down payments
b. Allow FHA to insure bigger loans
3. Allow FHA more pricing flexibility

Increased loan limits would also help people living in high-cost areas; current FHA limits make the program unusable for expensive areas.

2. FHASecure: FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates. A HUD program program designed to provide borrowers with strong credit histories with the ability to qualify and secure new mortgages should conditions otherwise prevent it. In the first 4 months of the program, FHASecure will have helped 53,000 families and received more than 127,000 refinance applications from families whose loans are current or past due. They can be reached at 1-800-CALL-FHA

To qualify for FHASecure, eligible homeowners must meet the following five criteria:
1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
2. Interest rates must have or will reset between June 2005 and December 2008;
3. Three percent cash or equity in the home;
4. A sustained history of employment; and
5. Sufficient income to make the mortgage payment.


3. Hope Now. An alliance between counselors, servicers, investors, and other mortgage market participants to help them stay in their homes and create a coordinated plan to reach and help as many homeowners as possible. The approach here is to help people in distress by providing information and alternatives to the foreclosure process before the reset period. This is preventative medicine and a work in progress.

Mortgage Company Private Initiatives: Mortgage companies a fast-track program that would freeze the interest rate at the introductory rate for five years for existing ARM's. According to the Wall Street Journal some borrowers who don't qualify for fast-track may be able to refinance into a new mortgage, with a good credit score and equity in their home. Those that wont qualify for the fast track and do not get help on an individual basis may be able to refinance into Federal Housing Administration loans or other mortgage programs.

Other Helpful Links for Counseling Information:

NeighborWorks America
Homeownership Preservation Foundation
Through our 888-995-HOPE hotline, the Homeownership Preservation Foundation has a single mission: to help homeowners avoid foreclosure. We are an independent nonprofit that provides HUD-approved counselors dedicated to helping homeowners.
MyMoneyManagement

Wednesday

New Freddie Mac and Fannie Mae Guidlines

It will be harder to Get into a Property

The Washington Post has a good article on the changes taking place that will make owning a home harder and more expensive than before the crisis. If your FICO is less than 680 you will find it more expensive and harder to qualify.

According to the Washington Post: "Fannie Mae and Freddie Mac are imposing significant increases in fees for a range of borrowers with down payments of less than 30 percent who formerly were treated as "prime" credit applicants. At the same time, the two largest private mortgage insurers -- MGIC and PMI Group -- are raising premiums on consumers who have low down payments and scores in the mid- to upper 600s on the FICO scale developed by Fair Isaac Corp. The added costs for some home buyers could total thousands of dollars, either at settlement or in the form of higher interest rates. "

Here's a quick overview of the new policies from Fannie and Freddie affecting loan applications in which the down payment amount is less than 30 percent: If the borrower's credit score is less than 620, a new 2 percent fee will be imposed. If the score is between 620 and 639, the surcharge will be 1 3/4 percent. If it is between 640 and 659, the add-on will be 1 1/4 percent. On scores between 660 and 679, the surcharge will be three-fourths of a percent.

Thanks for Reading
www.yourpropertypath.com