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Want to Invest in New Properties? Here’s What You Should Know Before Signing the Check.

For multifamily property investors, the question of how much to grow an existing portfolio can be a difficult one to answer. On one hand, creating new streams of revenue is always an enticing proposition. But on the other hand, those new opportunities also come with more risk. Some of this risk can be mitigated thanks to greater economies of scale when it comes to purchasing insurance and preventive services (think water leak detectors and smart HVAC systems). Scaling up a portfolio also means building a team that collectively has a wider range of skills and more bandwidth to take care of properties and fix problems quickly. However, there’s no getting around the fact that having more properties means more ways things can go wrong — and more factors that need to be considered. But with the real estate market currently booming, many investors might be tempted to overlook the risks. They’re worried that if they act too slowly, they could be missing out on a once-in-a-lifetime opportunity. This is precisely the time, however, that investors and owners need to be extra diligent, taking every risk into careful consideration before grabbing up a new property. Otherwise, they might find that their long-term investments are harmed by short-term thinking. So what risks should multifamily property owners and investors be on the lookout for when trying to expand on their investments? Here are the biggest issues that have the potential to slip by unnoticed and create expensive headaches down the road (and how to avoid them)......
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What are Resident Performed Inspections?

ResidentPerformedInspectionsWhat if your residents could gather information and help you get work done?  That could save a tremendous amount of time for your maintenance staff on move in inspections, for example.  While the quality of information may vary from resident to resident for quarterly or annual inspections, residents can provide valuable pictures and other information providing insight to issues before turning the inspection into a complaint form.  Plus, during the pandemic, this may be the only option for collecting this valuable information.  Inspections provides you a way to integrate residents into your maintenance process making them part of the solution versus complaining about the problems. Sure, there’s still the tried and true method of providing residents a paper inspection and asking them to fill out, sign and turn in to the office.  Yet, that method lacks pictures, and is typically filed in the resident’s folder.  They are difficult to use for corrective or future action unless someone does the extra work of having them digitized.  Just keep in mind that by using paper, you are providing your residents and staff with an unwritten message about how you view technology and the convenience that it provides. So, what options do you have?  Well, there are a lot of inspection systems out there, and not all of them support resident-performed inspections.   For those that do, you will need to evaluate them based upon features that offer you value and efficiency.  Starting with the basics, you’ll be looking for systems that not only perfor......
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Top Methods to Increase NOI in a Softening Market (Or Any Other Time)

Top Methods to Increase NOI in a Softening Market (Or Any Other Time)

 

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Strategies for Creating the Right Budget Now and in the Future

It’s budget season!  For many companies, this is a several month-long process of fact finding, planning, and negotiations.  Your budget and budget process can have an enormous impact on your operations, so we’ve outline several different methods of creating budgets, their pros and cons, and how to prepare for implement such methods in the future.   Method 1: Increasing last year’s budget by X% – Problematic if the prior budget is off The easiest way to setup a budget is to look at last year’s budget and actuals and then increase a combination of those numbers by a certain percentage based upon expected market conditions.  However, what it makes up for in simplicity, may cause problems down the road.  Did last year’s budget create the optimal operational incentives to achieve your goals?  Does it provide the right incentives for your star performers? Pros: Simple to implement if you have a prior year budget Cons: May not be accurate May create disincentives for strong performers and reward weak performers What if your best property manager has managed to optimize the performance of their property.  Occupancy is high, rents are strong, and expenses are kept at a minimum, and their next year’s budget is based upon their stellar performance.  You are essentially rewarding them with a more challenging budget due to their great prior year performance, which could cause them to not make the effort to meet the less achievable numbers, or worse, they could decide such unfair treatment is a reason to quit. ......
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Inspections: Failing is not an option!

Inspections: Failing is not an option!
If you own a property in Los Angeles then you know how important inspections are. Inspections could be the breaking point of your profit if you fail, therefore it is important for owners to be informed of the inspection process. The Los Angeles Housing Code Enforcement Divison is cracking down on unapproved construction and unsafe living conditions. It is stated in the their mission statement "It is the mission of the Los Angeles Housing Department Code Enforcement Division to identify and facilitate the abatement of physical conditions and characteristics of substandard and unsanitary residential buildings and dwelling units which render them unfit or unsafe for human occupancy and habitation and which conditions and characteristics are such as to be detrimental to or jeopardize the health safety and welfare of their occupants and of the public." On top of the routine inspections given by the Housing department, there is a separate division under it called the Complaint Department. This department's sole purpose is for tenants living in a property who feel their living conditions are unsuitable for them to live in. The city inspection department answers within 72 hours. After, the department has spoken to the complainee, an inspector will come to visit the property and unit of the tenant that made a complaint. In most cases the owner is unaware of the inspection happening because it is not required to inform the property owner until after the inspection is completed. If the inspector finds three or more violations in the building,......
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Why It's Okay to Outsource Your Property Management

OutsourcedA guest post by Brooke McDonald, Apple Valley Property Management, Minnesota As we all know, outsourcing is a risk that can turn out to either be the best decision you ever made or the worst thought to ever cross your mind. When it comes to property management, you have to decide: Am I willing to put the care of my rental property into the hands of a stranger? Will the investment be worth it? The stereotyped and semi-popular sitcom Outsourced didn’t last long on NBC, but it aired long enough to remind Americans of a poignant truth: Any kind of outsourcing involves some kind of learning curve, frustration, and a little bit of humor. Thankfully, outsourcing your property management does not have to be as hairy as Todd Dempsy’s struggles to run his Indian call center, nor will it require working with an office on another continent (unless you hire a property management company in another country, which we don’t advise). No, local property management companies can, in fact, be an incredible benefit to you as a property owner, saving you time and money and providing real estate expertise that can protect you from legal trouble. When you think of the word “outsourcing” in terms of property management, get rid of the negative connotations you often hear. Retrain your mind to hear the word “outsource” in conjunction with “property management” and think smart, wise, and worth it. Outsourcing can be an outstanding decision Doing all the management yourself is a heck of a lot of work ......
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World's Worst Tenants

By Salvatore Friscia, San Diego Premier Property Management, San Diego, CA I have to admit that recently I started watching a new cable show called “World’s Worst Tenants” on Spike TV. The premise for the show if you haven’t seen it depicts three individuals who are hired by various property management companies to handle unusually odd tenant related issues. The issues range from your basic nonpayment of rent to more bizarre and serious issues that can leave any self-respecting property manager shaking their head in disbelief. The show makes for great TV and entertainment, but on a serious note it can offer some insight to the importance of exterior and interior property inspections. I noticed that usually the trio of characters hired to resolve the tenant related issues would indicate that the out of state owner or property manager had lost communication with the tenant and in most cases both were unaware of the property condition. This dangerous combination usually lead to disastrous situations leaving the rental property completely destroyed, and in some cases declared uninhabitable by city, state, and federal laws. I can’t help but think that regularly scheduled inspections would act as a deterrent in the outcome of some of these situations.Here at SDP Management our company policy is to conduct two exterior and one interior inspection annually. At the lease signing we advise the tenants of this policy and make it known that the property owner and the management company have a vested interest in making sure that......
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