Property Management: Should I Get One For My Rental Property

Although a property manager is not a necessity for the owner of every rental property, the truth is that the combination of the right landlord with a competent and able property manager can really be a very helpful and rewarding experience. If you are considering such a coupling, the nine questions that follow can be a great help in coming to a determination on the best property management.

1) Is The Rental Property Involved Near To Your Home?

The fact of the matter is that the further away from your home that the rental property is, the more difficult it is to manage properly. For example, if you reside in New York and the rental property is located in Florida, things like maintenance issues, tenant complaints and even making certain the rent is collected on time are big concerns best handled by efficient property managers. In the long run, they are going to make certain everything is properly taken care of and can actually be saving you money at the same time!

2) Exactly How Many Units Do You Actually Own?

It goes without saying that your responsibilities increase along with the number of units that you own. The more tenants involved, the more complaints, maintenance concerns and of course, vacancies that will occur. And should your units be spread over a variety of different locations, you will be spending a great deal of time traveling to them to deal with the issues of the properties concerned.

3) Just What Experience Do You Have In Handling Property Management?

You should keep in mind that if you are seeking to invest in the real estate market and do not have any experience in the field of property management, seeking out competent property managers makes the most sense.

The fact of the matter is that taking too long to fill a property, or hiring a repair person to fix a problem which is not competent, will all have a big effect on your potential positive income. And you certainly do not want to have to deal with things like being accused of being a slum lord because proper repairs are not made or being discriminatory because you have no understanding of the Fair Housing laws.

For these and a variety of other reasons, you want to make certain that the property manager you do hire is a competent and able one. Failure to do whatever research is necessary to ensure this is a major mistake and one not to be made!

4) Is Hiring A Property Manager Something You Can Afford To Do?

You have to carefully assess your financial situation before hiring a property manager as there are, of course, costs involved in obtaining one. On average, the costs that a property manager will charge will range between 4% and 10% of the property’s monthly gross income. Typically, the 10% fee applies to a single-family rental property while those instances where the property is ten units or greater will garner a fee somewhere in the 4% – 7% range.

You should also be aware that many Mesa property management companies also charge a fee for placement of a tenant in a vacant property and this may range from a few hundred dollars up t a full months rent.

5) Do You Currently Have Sufficient Time To Manage Your Property In A Competent Fashion?

If you are investing in property while you are holding down a full-time job and do not have the time to devote to the attention to the property that it requires, hiring a good property manager is truly a priority. Always remember that managing a property takes time and time is money. If managing the property is going to interfere with making money on your job, or if it is going to restrict you from investigating and moving onto other ventures that can benefit you, locating and employing an able property manager makes so much sense!

6) Are You Willing And Able To Cede Control?

The scope of what the property manager does can range from everything from the collection of the rents due to the filing of the taxes on the property. Do you have it inside you to give that control over to someone else? And even though they do have the necessary experience and proper certification to carry out these matters, is their passion for the investment as intense as yours?

7) Are You Willing To Accept The Potential Liability Of A Manager For Your Property?

You must always be aware that along with their ability to make decisions on your behalf, property managers can also make mistakes on your behalf, and these could be quite costly. Very often the agreements with them contain a “hold harmless” clause that places the responsibility on the owner of the property rather than the manager for instances other than gross negligence.

As an example, let’s say that in the search for tenants, the Fair Housing laws are violated by the property manager and a complaint is lodged. The truth is that you may be held liable even though you did not do this because you are the one who hired the property manager!

8) Do You Have Problems With Your Cash Flow Or A High Vacancy Rate?

Able property managers have good skills locating and screening tenants efficiently to fill the vacancies and they also typically have an extensive list of reliable repair-persons to meet all emergencies. In addition, they will usually have a good grasp of the landlord-tenant laws, and this is so important in reducing the risks of having to deal with a lawsuit.

9) In Dealing With Tenants, Just What Is Your Tolerance Level?

Is the stress of dealing with maintenance issues, complaint, and evictions bothering you and taking its toll? Always remember that the competent property manager is so adept at handling the tenant-landlord conflicts. They are simply great at serving as the buffer or middle-man for all these issues and concerns. And very often, understanding they are dealing with a third party leads the tenant to conduct themselves in a more professional manner!

Considering Buying a Condo? The Pros and Cons

Buying real estate can be a stressful undertaking, but it doesn’t have to be if research is done ahead of time. Buying a condo is much the same as buying a house, but there are distinct differences. The best way to know what lies ahead when considering buying a condo is to assess the pros and cons.
Before discussing the pros and cons of buying condo real estate, it is important to know the difference between a condo and a single-family dwelling. Condominiums (condos) share common areas that are jointly owned by other condo owners, whereas a single-family dwelling is privately owned. Condos are managed by a governing board that oversees the maintenance and upkeep of common areas, whereas a single-family dwelling is managed by the owners who are responsible for all aspects of owning their home.

Pros

Location – Condos tend to be built in popular locations such as downtown, within proximity to a wide range of amenities. For singles or young couples, living in a downtown condo if often preferred as they have access to shops, restaurants, and theaters within short walking distances. On the other hand, senior living condos tend to be built in quieter locations.

Security – Condos tend to be located within gated communities and may or may not have security staff patrolling on a regular basis. Access to the community is usually by buzzer or key code, thereby preventing non-residents easy access. Residents often feel more secure going on vacation knowing that their neighbors will notice non-residents in the community and alert police to suspicious behavior.

Maintenance – One of the big benefits to condo living, especially for busy people, is that all maintenance of common areas and the exterior is undertaken by employees hired by the condo association. How much of the property is maintained and repaired as part of the condo dues differs from community to community, so research is needed to have a clear understanding of what is included. Condo associations often have a list of trusted contractors available for hire should an issue arise within a condo that is not covered by the association, and these contractors are often on call 24 hours.

Amenities – Most condo complex common areas will include a swimming pool, maybe a spa, tennis courts, a gym and a clubhouse. All of these areas are made available to all condo residents as part of their agreement. Condo owners can often save money by not having to pay additional fees to avail themselves of these facilities outside of the condo complex.

Cons

No land ownership – While a condo buyer can purchase the building (condo) itself they do not get to own the land it is built on. That land is owned jointly by every other condo owner within the complex.

Fees – Condo association fees are charged to cover the cost of maintenance of the common areas and exteriors of the condos, and these fees vary and can be raised if a large repair or replacement of plumbing, for example, is required. These fees need to be factored into the monthly cost of owning a condo.

Condo Association – Each condo complex is managed by an association that is often made up of a property management company’s representative and several elected members who are condo residents. These people, while they may mean well and feel they have the best interests of all the condo residents at heart, may not have the best business experience necessary to manage a condo complex effectively.

Rules and Regulations – Condo owners are often restricted in what they can and cannot do to and with their condo. For example, some condo complexes will restrict the paint colors condo owners can paint the exterior walls of their condos. The erection of satellite dishes for television signals may have to be approved by the condo association and may require that a condo owner waits until the monthly association board meeting before being able to proceed.

Resale Value – Condos tend to feel the effects of a weak housing market quicker than single-family dwellings and are often the slower to recover when the market begins to strengthen again.

Financing – Getting a loan on a condo can often be more difficult than on a single-family home. This varies from lender to lender and is influenced by the financing a prospective buyer is seeking. As condos are more easily influenced by drops in the housing market lenders often require buyers to put down a larger deposit.

To apply for an FHA loan on a condo, it must be listed on the FHA list of approved condos. There is quite an extensive list of requirements a condo must meet to qualify as suitable for FHA lending. These conditions can make it tough for certain condos to be approved as suitable, which in turn limits the number of condos that a prospective buyer can consider for purchase if they want to apply for an FHA loan.

Some of the requirements an FHA lender may place on a condo complex is that at least 50% of the condos be owned by residents and not investors, that a limited amount of floor space of a condo building be allocated to non-resident or commercial use, and that the percentage of condo association fee delinquency be low (usually no more than 15%).

Conventional lending varies from lender to lender, but they too will have a list of requirements to be satisfied before a particular condo will be deemed suitable to grant a loan on. Ensuring that the lender’s money will be at the least amount of risk is the lender’s primary concern, so an issue such as a high rate of association fee delinquency will severely impact their decision. High rates of delinquency mean the association does not have the funds to cover maintenance and upgrading costs, which in turn may lead to deterioration of the condo itself and the surround common areas, which in turn leads to a drop in the valuation of the property.

While there clearly are distinct advantages and disadvantages of buying a condo, it often comes down to the area and the lifestyle of the prospective buyer as to whether condo living is right for them. As with the purchase of any real estate, buying a condo is a large investment, and it is important that a prospective buyer makes the right decision