How to Rent Your Property Faster

According to the research firm Reis. 58 of the 79 markets they track are showing negative rent growth led by declines in New York at 1.9%; Miami with a decline of 1.8%; and San Bernardino, Calif., down 1.4%.

Based on market conditions, even strong markets like San Francisco can expect continued softness in rent rates and increasing vacancy rates.

Rent rates are important. You can call them cash flow, cap rates or GRM, but they are the best most sensible way to price an income property. Showing a consistently low vacancy rate at is the very definition of less risk.

How to Rent Your Property Faster

Determining the Right Rent

A rental price that is below market may rent very quickly and now you are receiving less income for the length of the leases. In a rent control environment you may suffer from that below market mistake for many years because now your future increases are based on a lower base.

If your price is too high then you may wait one to three or more months before you finally succumb to accepting a lower market rate. If it takes three months for reality to dictate, you have effectively given up 25% of your annual rental income on that unit.

Finally, The sale price of a property can be measured in a variety of ways. The Gross Rent Multiplier or GRM uses income (rent) to arrive at value. For example, If similar properties, in your area is selling for a GRM of 10 and you have under-estimated the rent by $100.00 or $1,200.00 annually. GRM methodology would suggest that you have reduced the immediate sale price of the property by 10 x $1,200.00 or $12,000.00. Always rent and manage with one eye towards marketability.

Pricing the Unit

Leasing agents lack bench marks. Real estate agents have the MLS. Owners still have to determine the marketplace for rent rates. So....you have to be creative. I like to use two sites to find an approximate comp.

Its good to use more than one source to measure the market. Craigs list is very helpful, so is apartment.com. With these tools, you can approximate local comparable rates by searching for similar size in your area. Then, if you like, you can drive by or call to get a better sense of the amenities available. Price your vacancy accordingly.

Managing Rents in a Rent Controlled Environment

In San Francisco as well as many other cities,rent increase are mandated for many owners. The rent board determines the annual allowable rent increase - this year its 2.2%. If you have to reduce rent by $100, to rent your vacancy, consider how long it would take to recoup that loss, If your base rent was $1500 now lowered to $1400. At $1400, assuming maximum annual increase of 2.2% it might take you four years to get back to a base rent of $1500.

Some Tricks

1. Keep the rent at $1500, but offer gift certificates or other amenities. A rent reduction to $1400 is a $1200 annual loss. Perhaps an offer of a new notepad from Assus ($350) is attractive. If this worked, you would have kept your base rent at $1500 and saved $ 1150 this year and in forward years.
2. Offer one months free rent. Never make this the first month, since you may find yourself with a tenant that doesnt pay in the second month either and now you have a squatter. Tenants are open to this and it allows you to preserve your base rent.
3. Increase your market depth by considering pets, you can reduce risk by asking for a pet deposit in addition to the security deposit. be sure not tow exceed 2 x rent for unfurnished or 3 x rent for furnished rooms.
4. A really great idea is to offer amenities that improve or increase the value of the unit. Amenities that tenants cant take with them such as: stackable washer/dryers or microwaves, or dishwashers. Tenants really do like the added convenience and it adds value to the unit. A good win-win choice.
5. Section 8 housing credits. Many in San Francisco dont accept section 8 prospects because of the extra paper work. It requires an additional layer of rules and contracts.
6. Maximize your marketing presence by using Craigs List and an internet listing company such as apartments.com
7. Consider hiring a property management company to do the leasing for you. If it saved you just one month you would be ahead of the game.

Photo thanks to pheen77

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Howard Bell

www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

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Reefer Madness!!

San Francisco May Legalize Pot: We Need the Money

Tom Ammiano, supported by Sherrif Hennessey and Betty Yee who is chair of the State Board of Equalization all think that pot is a money maker.

The idea would be to regulate it, just like other alcohol and cigarettes.

According to the Chronicle, an analysis done by the State Board of Equalization concluded that the state could collect an cool 1.3 bilion in new tax revenue. They envision a $50 per ounce tax on retail sales of pot.

This same analysis also concludes that the price would drop by half and consumption would increase by as much as 40%.

Would we be able to smoke pot in bars.....can you imagine the conversations....all the while, munching feverishly on gold fish and salt pretzels. Maybe this one is best left alone.

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Howard Bell
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A web site of over 450 articles related to real estate focused primarily on property management.

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Obamanomics and the Plan to Save the World

Well, few are actually convinced this plan will even pull us out. Personally, I think this is just the prologue to the big event. The Obama team will peer into the banks books under the "stress test" mechanism to determine which banks could survive with help and which ones should be let go without tax payer money.

This is the psychological set up that will allow the Govt to declare the problem is worse than thought. Im sure we will see a replay of that great film Casablanca, where Claude Rains shuts down Ricks cafe. Im shocked, shocked to find that gambling is going on in here...



We have spent trillions to prop up the financial system and still its a black hole. I think everybody knows that the banks are insolvent. My guess is that we will find trillions more in bad debt or debt that cannot be evaluated. Once this is out and the damage revealed, the rest of the plan to save the world will be unveiled to a public that is willing to go the distance....this is gonna cost

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Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

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The Ultimate Landlord tenant dispute

The most common management issue is the landlord tenant relationship. I think there is a natural mistrust, the tension between the tenants privacy rights and the owners property rights. Both are entitled and there is often overlap. But this is the most bizarre owner-tenant war I have ever heard of....

The owners of a building on Clementina Street wanted so badly to evict their tenants they actually cut the joists supporting the floor of the tenants unit and then when that didnt work they reported the tenant as a vagrant sleeping in the building. The Police came and removed him at gunpoint.

I have known of some shady tricks to scare tenants. One property manager had a three day notice to evict served by a processor dressed as a biker (point taken). But cutting the floor joists to collapse the tenants floor! Too much....

The trial is scheduled for April 20.

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Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

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How Much Have San Francisco Home Values Declined Since their Peak?

Below is an analysis of San Francisco neighborhoods comparing dollar per square foot ($/sq.ft.) at what is estimated to be the most recent peak value, to what the $/sq.ft. was for sales occurring Oct 15th, 2008 – January 30th 2009. (Sales occurring after 10/15/08 reflect the impact of the 9/15/08 financial meltdown on the SF market.) Only neighborhoods with enough sales to generate what appear to be reliable statistical results were analyzed as many areas of the city did not have sufficient sales.

Also important to note is the fact that different areas reached peak values at different times – in 2006, 2007 or 2008 – and the asterisked notes denote the estimated peak value period that pertains. The price ranges of the sales were chosen because we felt them to be in a standard range of value for the area and property type specified – thus attempting to eliminate both the ultra high and the ultra low end, which often distort averages.
Key to Estimated Peak-Value Period for the Chart :

• Peak values estimated to have been reached 1/1/06 – 6/30/06
• Peak values estimated to have been reached 1/1/07 – 6/30/07
• Peak values estimated to have been reached 1/1/08 – 6/30/08
  

In the SFH (single family homes) analysis, only homes with parking were included. Also Price per square foot ($/sq.ft) was chosen because it is more trustworthy than median prices. Median prices have dropped significantly more than $/sq.ft. because less expensive homes now make up a much larger proportion of sales than they did previously for a variety of reasons (most of them obvious in today’s current economic and financing climate).

Final but important note: the changes delineated probably understate the actual decline in values for 3 reasons:

1. In a declining market, sales data – which typically shows up 30 to 45 days after acceptance of offers – will always be a step behind current activity, i.e. offers being accepted right now.
2. The market has definitely shifted to smaller, less expensive homes (less expensive as to total sales price). All things being equal, a smaller home will have a higher dollar per square foot value than a larger one, therefore skewing current values higher than they ought to be in an apples-to-apples comparison.
3. In a sellers’ market, virtually everything sells, but in a buyers’ market, typically just the best homes sell – best appearing, best condition and/or best value. So the $/sq.ft. for the recent period applies to the “best homes” while the $/sq.ft. for the peak period applies to homes of a much wider range of quality.

Thanks to Meredith Martin for permission to reblog her insightful post. Meredith is a Senior Real Estate Advisor for the Paragon Real Estate Group. She can be reached 415.738.7067 direct or by cell @ 415.312.1616 or via her web site: http://www.meredithmartin.com/


Thanks for Reading
Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

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Earthquake Retrofit:: It May be Mandated

WIKI: A typical soft story building is a several-story apartment building located over a garage or series of retail businesses. Buildings are classified as having a "soft story" if that level is less than 70% as stiff as the floor immediately above it, or less than 80% as stiff as the average stiffness of the three floors above it.

The mayor is leaning towards mandating that all soft story structures be reinforced at the owners cost. This is HUGE - The study included nearly 60,000 residents and 7,000 employees but represent just a 10% of the total amount of buildings believed to be at risk.

The Chronicle says The total cost to shore up the largest so-called soft-story buildings, which are believed to be the city's most vulnerable, would be about $260 million, but about $1.5 billion in possible damage could be prevented. For building owners, the cost could range from $9,000 to $28,000 per residential unit.

Ive seen quite a few retro fits and they can be much more than this. Here is the devil in the details: The report does not provide details about the specific codes that should guide the retrofit work or what materials would be used. Much of the work needed is on brick foundation and to really address the problem of earthquake safety will cost a lot more than $9-28,000 per building they are suggesting. Dont believe that for a minute!

Im all for it.....but I wonder where the money will come from. Banks arent lending and thats a lot of cash. Im guessing many owners wont have it.

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Howard Bell
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A web site of over 450 articles related to real estate focused primarily on property management.

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SF Rent Board

San Francisco Rent Board

The new numbers for this year are as follows:

Allowable Rent Increase: 2.2%

Interest on Security Deposits: 3.1%

SF Rent Board Fee: $14.50

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Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

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SF Grease recycling Program: A Model For The Nation

Sustainable Fuel Production

The Mayor along with the EPA and the California Energy Commission have won a grant for one million dollars to create the nations first brown grease to bio-diesel plant.

California will break new ground for sustainable fuel production thanks to the EPA grant. The purpose is to create a model program that can be copied by other cities and states.

The fuel will be used for city fleets that will convert to bio-diesel as well as boiler fuel to run the sewerage plant. Further savings will come from removing grease before it gets into sewers causing more than 50% of all sewer blockage, saving the city 3.54 million every year.

This is an offshoot of the successful SFgreasecycle program initiated in 2007, collecting waste vegetable oil from City restaurants for FREE and recycling them into biodiesel for the cities fleet of cars.

"This is the perfect marriage between local sewage plants and the ability to generate a sustainable resource for the benefit of the public and the environment," said SFPUC General Manager Ed Harrington.

Kind of a low cholesterol diet for the city....

Thanks for Reading
Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

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Over, Under, At - SF Home Sales: January 26 - February 1, 2009

Welcome back to the “Over, Under, At” weekly feature. It’s a simple breakdown taken from MLS data that shows the number of closed sales that sold Over Asking Price, Under Asking Price or At Asking Price. This is a reblog from Luba Muzichenko,a real estate agent with Zephyr in San Francisco

*Just a reminder that new construction sales are rarely included in this list since they don’t get posted on the MLS.

Happy Monday folks. Single family home sales have just barely dipped, but there were many more listings that sold under asking this week, including one that sold for $354,000 or 27% UNDER the asking price! Most other “under” single family homes in SF sold from anywhere from a few thousand dollars to 10% under the asking price. Condos sales climbed up a smidge, and the over/under/at stats stayed pretty much proportional to last week. And TIC’s, well, those sales have slipped a little (3 sold last week, to 1 sold this week.)

Keep in mind that these reports are meant to be helpful for potential buyers and sellers - but to really understand the pulse of the SF real estate market, talk to a local real estate agent. We’re in the trenches and these closed sales went into escrow a month ago (sometimes less, sometimes more). We are much better in tune with what’s going on in the market TODAY and can give you much more in depth information than any set of statistics can.

Here’s a quick breakdown of closed San Francisco home sales for the week from January 26 – February 1, 2009:

Single Family Homes - 16 Homes Sold

4 Sold OVER Asking Price

10 Sold UNDER Asking Price

3 Sold AT Asking Price

Condos/Lofts/Co-ops’s - 9 Homes Sold

2 Sold OVER Asking Price

5 Sold UNDER Asking Price

2 Sold AT Asking Price

TIC’s - 1 Home Sold

0 Sold OVER Asking Price

1 Sold UNDER Asking Price

0 Sold AT Asking

* Special thanks to Zephyr real estate agent, Luba Muzichenko for permission to reblog her San Francisco market observations. Luba can be reached at 415-307-1392

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Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property Path news Brief
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Snap News updates real estate markets and all things of interest to property owners and real estate professionals

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Section 8: What Is It

From the HUD web site: Section 8 Rental Voucher Program increases affordable housing choices for very low-income households by allowing families to choose privately owned rental housing. The public housing authority (PHA) generally pays the landlord the difference between 30 percent of household income and the PHA-determined payment standard-about 80 to 100 percent of the fair market rent (FMR). The rent must be reasonable. The household may choose a unit with a higher rent than the FMR and pay the landlord the difference or choose a lower cost unit and keep the difference.

Landlords Can Find Suitable Tenants by Considering Section 8

The Section 8 Housing program is a rent subsidy program in which low-income tenants pay 30 percent of their income and the state or local housing agency pays the difference, based on the fair market rent as determined by HUD. T

Free Listings

San Francisco Housing Authority has a section 8 free rental listings area to help you rent to section 8 tenants.
You can now list, edit and delete your own property listings directly on the Housing Authority website. You can also fax your listing to 415-715-3287.


Thanks for Reading
Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property Path news Brief
http://yourpropertypath.blogspot.com/
Snap News updates real estate markets and all things of interest to property owners and real estate professionals

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