Tools and Services for Savvy Real Estate Investors
Am I charging enough rent?
Southern California rents have risen significantly over the past 7 years due to a number of factors: shortage of rental units, increasing home process and strict mortgage underwriting. We perform rental surveys for new clients and find that 9 out of 10 are not charging enough rent. Owners’ expenses (property taxes, insurance, and maintenance) are always rising; it’s only fair that tenants pay the market price. A $100/month increase each year can bring the Owner an additional $7,200 over three years.
Is it better to keep a good tenant in place at less than market rent or raise the rent and hope they stay?
It depends. Tenants who pay promptly and rarely seek repair help are valuable, but their value needs to be regularly measured against the market. We recently took over management for a couple that had been managing their own rentals for 30 years. Upon reviewing their properties and completing a rent survey we were able to raise their rents and keep 5 out of 6 tenants. The tenants knew they had been paying less than market and all but one cheerfully accepted the increase. The increased rent was enough to off-set our property management fees and put another $600/month in the Owners pocket.
How to find and keep great tenants.
Great tenants are attracted to great properties. The nicer your property the greater the selection of tenants, but that’s just part of the story. Based upon our experience these tenants will pay more rent, stay longer and take better care of the property.
Will renovations allow me to raise the rent?
Yes, but it’s important to acknowledge that improvements and renovations can yield long and short term gains. Installing a new kitchen may not be necessary to meet the demands of the rental marketplace, but it may attract a superior tenant and will certainly add value to the property. The goal is obtain regular and predictable rent over the long term. As previously stated, a renovated and well-maintained property will attract the best tenants who will pay more, stay longer and keep better care of the unit.
Can a Professional Property Manager save me money?
In many cases, yes, in several ways:
Typically the greatest loss of rent occurs between tenants. Some of this is unavoidable due to repairs and renovations, but a professional manager may be able market, show and secure a new tenant before the existing tenants’ lease expires. Should the property need repairs or renovations, the professional manager can schedule trusted and experienced service providers well in advance. In Southern California daily rents may be $80/day to $180/day or more so there are thousands of dollars at stake. A fast turn-around may save the Owner the annual cost of property management.
Professional Managers have a distinct advantage when dealing with tenants: knowledge of the marketplace, knowledge of the law and a professional business approach. Our experience shows that tenants regularly exploit the emotions of Owners. Bad things can happen to good people and the experienced manager is able to react in an empathetic way while watching out the Owners best interest.
Our affiliate, Summit Property Management offers conscientious management for savvy real estate investors.
Check them out at: www.SummitPropertyManagement.com or call (805) 374-1366.