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Property Management New Year's Resolutions

New Year's property management resolutionsAs 2010 draws to a close, it’s a good time to reflect on lessons from the past year and apply them to the future. As you prepare to move into 2011, be sure that you know not only what didn’t work in 2010, but also what did. After all, the goal is not to create a cycle of constantly tweaking systems and procedures but, rather, to find methods that work optimally for you and your tenants and stick with them. For an overview of where 2010 leaves you, begin by honestly asking yourself the following two questions: What was the highlight of my property management year? What was the lowlight of my property management year? When you’ve answered both of these questions, you should have a good idea of where you stand. Say, for example, that the highlight of your year was filling 40 percent of your available vacancies throughtenant referrals. This indicates that you are doing a great job of keeping your units in good shape and keeping tenants happy—in other words, in both of these realms, you’ve already found a formula that works. Though you may want to make little adjustments in these areas here and there, for the most part, you should continue doing exactly what you’ve done in 2010 on into 2011. Conversely, once you’ve come up with the lowlight of your year, you’ll want to determine why it happened and what needs to be changed in 2011 to prevent a similar occurrence from happening again. Let’s say, for example, ......
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Finding the Right Multi-Family Property Investment

In many ways, the current economic climate makes for a great time to purchase a multi-family investment property. The prominence of short sales and foreclosures has given way to good purchase prices in many areas of the country. Add to this the fact that there are some incredible interest rates out there right now (even for investors) and the fact that many former homeowners have now found themselves back in the rental market, and there’s a very valid argument that this is a good time to get into the multi-family market. If you are considering making a multi-family property investment of your own, following are a few things to consider before taking the leap. Know what you’re looking for Before you even begin to look at properties, have a clear idea of what you’re looking for and what you’re willing to put into a property, both financially and in terms of your time. Of course, this is always subject to change if you find just the right place, but that doesn’t mean that you shouldn’t go into the house-hunting process without a fairly narrow baseline in mind. Aside from basics like location and size, you also want to have know whether you’re looking for a “fixer-upper” or a “as-is” property. Look at the whole package Looking for a multi-family investment property is different from looking for a single-family home and requires a bit more of a discerning eye. Remember that you will be renting multiple units out to different tenants. To......
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10 Signs Your Property Management Company is a Success

While profitability is one great sign of success, there are also many other less tangible indicators that your property management business is doing well. Following is  a list of ten signs you’re running a good property management shop. How many items on this list apply to your business? 1. Your vacancy rates are low. Low vacancy rates can mean any one (and often a combination of) several good things: 1) that you’re doing a good job marketing your property to new tenants; 2) that you’re maintaining existing tenants; and 3) that your units are generally sought-after. 2. You receive new property management clients from referrals. In business, referrals are the sincerest form of flattery. When existing clientele are referring potential clients your way, it is a sure sign you’re doing things right. 3. You receive new tenants from referrals. Chances are tenants who are displeased with your property aren’t going to recommend your property to their friends. As with client referrals, tenant referrals speak kindly of your work and may also indicate that you’ve successfully instated a good tenant referral program. 4. Your tenants stay put. They like you, they really like you! As with all business, it costs far less to keep existing tenants than it does to find new ones. If your tenants tend to remain in your units for multiple lease periods, chances are you’re pricing your units right and making tenants feel well cared for. 5. Other property managers contact you for advice. While it’s nice to......
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Realtors Turned Property Managers

Anyone who has made a career in real estate knows that the market is always changing. There’s no arguing the fact that real estate professionals must have the ability to accept that while there are times of feast, there are also times of famine. But even when buyers are hard to come by, opportunities for income generation exist. And one of those opportunities is property management. Adapting to change. It’s not news at this point: Over the past couple of years, the real estate market has taken a huge hit. With foreclosures running rampant, loan qualification processes that can be difficult at best, and severe job losses across the nation, successful real estate transactions have been hard to come by. Even successful transactions now require far more time and effort than they once did. While things are slowly beginning to turn around, the real estate market is cyclical — we will at some point see it dip again. This is why it’s so important for real estate agents to have a back-up plan when times get rough. Property management offers realtors a great way to remain in the field and put their skills to use, even when the market is down. Steady income. No matter what, people will always need shelter. Particularly during economic climates like that of the past couple years, home sales may go down, but renting goes up, with all of the displaced former home owners looking for new places to lay their heads. No matter what field......
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Are Renewal Incentives Worth It?

Are Renewal Incentives Worth It? Most landlords will agree that a vacant unit ranks right up there as one of their least favorite things. The bottom line is simple: A vacant unit is money down the drain. There are, of course, times of feast when rental units rarely remain vacant for even a few days in between one tenant and the next. But then there are the other, slimmer times, when people are saving their pennies and staying put. In this case, finding a new, quality tenant is much, much easier said then done — it can take weeks (in some cases maybe even months) to find the right tenant. And, of course, even if you are able to find a tenant, flipping a unit costs money. As discussed in our previous post, even those units that are left in good condition require some degree of re-investment — not to mention the cost of advertising and marketing available units. Which all seems to make it clear that, at least in the current economy, retaining good tenants is the best way to go. Not only will it save you the expense of turning the unit, but it will also prevent a potential lingering vacancy from sucking away at your bottom line. Sometimes, though, no matter how good of a job you’ve done taking care of your tenants and making sure that your property and their unit is in tip-top condition, a tenant just feels it’s time to move on. If a good tenant......
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Parking While Zoned

Seattle has proposed new legislation that will amend its Land Use Code (LUC) and eliminate parking requirements for some urban apartments -- if it makes it through public hearings and becomes law. Responding to the Environmental Policy Act (SEPA) and tree regulations, the City Council has proposed several important low-rise development zoning changes. The legislation will not affect any single-family zoning areas, but it could have a very positive impact on multifamily in these highly urban locations.   In addition to clarifying and organizing regulations, the Committee’s proposal will eliminate parking requirements for multifamily properties in urban villages within walking distance of mass transit stops. Rebecca Herzfeld, a supervising analyst on City staff well-versed on the proposed amendments, offered a specific definition of this particular zoning change.  She explained it this way:   "For our purposes walking distance is not something you can measure with a ruler the way the crow flies.  You have to measure the way someone would actually walk it, which does not include jumping over fences or going through somebody else's backyard."   In addition:   "Our traffic planners have defined a reasonable walking distance as 1325 feet, which is about a quarter of a mile.  A block outside of downtown is around 400 feet but neighborhoods vary, so it's between three, three-and-a-half, maybe four city blocks.  Of course, not everyone would walk that far to public transit, but again, our experts define this as an acceptable distance."   Herzfeld clarified whether or not Seattle's zoning laws grandfather existing buildings into some other zoning class.  They do not.  Per Herzfeld, zoning regulations blanket......
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Bike-Sharing: Will It Fly?

Paris, Stockholm, Vienna, Brussels, Barcelona, Copenhagen, Montreal, Lyons and even Washington, D.C. all have them with more cities on line to follow.  A concept gaining traction with urban planners is bicycle sharing.  The experience of several cities has produced enough data to show it’s popular with riders as well as another sustainable people transport strategy for cities.  Whether your city does or does not have a bicycle sharing program, however, consider one for your own property.   With vacancies up, tenant attraction and retention are an on-going challenge for most multifamily managers. Why not be the first in your neighborhood to implement a bike sharing program? Bike sharing has been used to reduce the traffic and congestion crippling the arterial infrastructure, but it can also reduce the number of cars you need to accommodate in your parking structure.   With bikes and walking back in vogue, some cities are even daring to close parts of streets to vehicle traffic with rave reviews from the public.  As the walking culture grows, bicycles can certainly be integrated into future designs that complement it.  Studies showing that greater walkability can be a key component in stimulating retail sales and a strong local economy makes for a vibrant, attractive community.   New York City joined the fray this week by closing portions of the famous Broadway theater district to all vehicle traffic. It is a pilot program intended to decommission difficult intersections and further discourage vehicle use. If it works as intended, the Mayor has telegraphed his intention to close more city streets to vehicular traffic.  New Yorkers appear to......
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Maximizing the Value of Utility Billing Programs

Many apartment communities have adopted utility billing programs as part of their energy management initiatives.  Properties will use these programs to help encourage conservation, share the burden of utility costs, advertise lower rents, and to pass along utility rate increases as they occur instead of waiting for the lease to renew.  These programs can be of value but ONLY if they are done correctly.  Unfortunately, I often find that there is substantial room for improvement.First, let's consider the business model of the billing company.  They get paid based on the number of bills they send out each month to your residents.  They don't get paid based on how effective the program is - meaning they don't have any incentive to ensure the program is meeting the property's goals.  Further, once a property starts a billing program it is hard to stop which means the billing company has a rather secure source of revenue.  These programs are hard to stop because the properties build them into their leases and rent structure.  Also, many of the billing companies try to get management companies to sign long-term contracts with auto renewals - don't do those.Before you begin a utility billing program for any utility type (water, electric, gas, etc.), I strongly suggest that the property take measures to make sure the consumption issues have been addressed prior to starting.  Trying to pass along the cost of utilities when consumption isn't where it should be is going to mean higher bills for your residents which......
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Have You Considered Specialization?

City ApartmentParticularly if you own a property in an urban area or near a university or center of business, many specialized tenant markets are just waiting to be captured. Specialized property management may be just the solution you’ve been looking for to decrease vacancies and guarantee steady rental income. When considering just a few of your options below, be sure that you take your property, location, property management style, and goals into consideration. Section 8 and low-income housingEssentially, the Section 8 program provides low-income individuals with government-assisted rent. Generally, tenants pay approximately 30 percent of a unit’s rent and the government pays the remaining balance directly to the tenant’s landlord. In such a scenario, the Department of Housing & Urban Development (HUD) will determine the unit’s fair market rate (FMR) and the landlord is not allowed to charge the tenant anything over this amount.  While it is up to you to choose whether or not to participate in Section 8, keep the following points in mind: You will be subject to property inspection to ensure you meet HUD’s Housing Quality Standards.You will not be able to charge a Section 8 tenant more than FMR.Regardless of your state’s laws, you cannot evict a Section 8 tenant without judicial action for eviction. While there may be some similarities, low-income housing is not the same as Section 8. Rather than receiving rental income from the government, property owners who run low-income properties are eligible for the Low-Income Housing Tax Credit (LIHTC). But it’s important to......
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FHA Multifamily Loans - 223(f) Acquisition or Refinance

With many lenders on hold the topic of the day has been FHA.The FHA multifamily loan programs have been in place for over thirty years.  They continue to be used regularly and have closed as much as $8 billion a year in new business.  With commercial lenders on hold there has been renewed interest in these valuable programs.  The following summarizes the 223(f) program.The 223(f) program provides high-leverage long-term permanent debt to refinance, purchase, or moderately renovate existing apartment communities on a fixed-rate, non-recourse, assumable basis.  The loan size is relatively unlimited and the properties can be located in any state, Puerto Rico, Guam, and the US Virgin Islands.The property must contain five or more  units and be at least three years old based on the final certificate of occupancy.  (HUD recently granted waiver authority to the field offices through September 2009  to refinance younger properties that have stabilized.)  Commercial space cannot exceed 20% of the total net rentable floor area or 20% of effective gross income, including a 10% vacancy allowance.  Repair cost are limited to 1) $6,500 per unit as adjusted to FHA's high-cost factor for the area; 2) a maximum 15% of "as-improved" market value; and 3) cannot involve replacing more than one major builidng companent.Borrower Advantages:  35-year amortization period; eligibility for both market rate, subsidized, and LIHTC properties; NO rent control restrictions, rental subsidies, or limitations on owner return; non-recourse; AAA credit enhancement with Ginnie Mae securitization.Guidelines:Term:  Up to 35 years fully amortizing with level payments.Loan Size:  Unlimited, nationwide.Loan Amount: ......
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