Posted: February 1st, 2011 One quick google search will give us the official definition of tenant. But the relationship between landlord and tenant is deeper than that.
You, a landlord, run a small business. Your property is like your storefront. A tenant collects the month’s revenue and hand delivers it to you. He watches the “store” and notifies you of any potential maintenance problems that could eat away at your asset. He turns out the lights at night, and even pays for your storefront’s utilities.
A good tenant is like a good business manager. A good business manager is someone you never want to let go. On the flip side, a bad business manager can destroy a business.
This is why tenant screening is crucial. Going back to our business manager metaphor, imagine you have an applicant (tenant) for your business with shaky credit, and imperfect rental history, who is willing to pay the full $2300/mo asking rent. Another applicant has spotless credit, income and rental history, but is only willing to pay $2250/mo. The wrong way to think is, “I’m losing $50 every month by selecting the better qualified applicant.” What you should be thinking is, “this ideal business manager is definitely worth me paying $600 more per year to retain.” How many true business professionals would gladly pay 2.2% more to the ideal applicant running their business? I’m sure many would pay even more.
The most successful rental property owners will do what it takes to find the right applicants and, more importantly, maintain those positive relationships.
Posted: January 24th, 2011 Our management fee is paid monthly at 5% of rent collected. Our optional leasing fee is 50% of the first month’s rent.
Why do we charge separate leasing and management fees?
Leasing and management, while equally important, are completely different aspects of investment property ownership. A management fee is the cost associated with the administration of day to day activities involving your property. A leasing fee is amarketing expense that only comes around when a home is vacant and needs marketing to attract new residents.
Typically, of the leasing fee we collect, half is paid as a commission to the licensed Orange County REALTOR who brings in the qualified new tenant. We use the remainder to pay for professional photography, signage, professional flier design, distribution, ad listings, and other items associated with the overall marketing strategy.
Some property management companies tout both services for a single fee (typically 8-15% of rent collected). There are a few reasons why an owner may want to avoid that fee structure. The first problem is these management companies collect that increased fee every month, even if you have the same tenants in place for 3, 4, 5 or more years. The second problem is, when it comes time to lease the home again, often these management companies see marketing as an area where they can cut costs to save their own money, which is the last place a property owner should look to cut costs.
It doesn’t make any sense to muddle a leasing and management fee together. By clearly delineating between management and leasing, you have a better idea of how your money is spent. With happy tenants often staying for multiple years, our fee structure saves you money in the long run, gives better accountability of how your leasing investment is used, and makes more sense.
Posted: January 7th, 2011 This turnkey home in the prestigious Canyon Point community has a great open and spacious floor plan. It is highly upgraded with Brand New high quality Emperor Garden pattern carpet, crown moldings, custom paint, and much much more. It is a corner unit in a quiet cul-de-sac location, ready for move right in. No one above and one common wall.
It features a gorgeous kitchen with granite counters & bar stool seating, oak cabinets, and travertine floors. All stainless steel appliances, including microwave oven, range & oven, and top of the line Bosch dishwasher. Separate laundry room off kitchen, with brand new, energy efficient washer and dryer. Roomy dining area, nice sized bedrooms separated by hallway. Higher ceilings, arched entry into hallway, very roomy.
Master suite and gust bedroom both have large walk in closets. Both bathrooms have been upgraded with granite counters and Italian ceramic tiles. The master bath is perfect for relaxing with its oversize oval tub.
Home include a large garage with a lot of storage space and a covered car port, there are many visitor parking spaces for friends and family. Full use of community facilities including pool, spa, gym, and club house. It is conveniently located, very close to great schools and many shopping centers ( Ralphs, Costco, Target, Kohls, Walmart, Lowe’s, CVS, a wide array of restaurants, a big movie theater, I can’t name it all, there are just too many, you’ll be surprised how convenient it is! ). 15 minutes to Laguna Beach. Come, fall in love with your new home.
School Information: District: Capistrano Unified School District
Primary: Oak Grove Elementary School
Middle: Don Juan Avila Middle School
High: Aliso Niguel High School
MORE PICTURES AND DETAILS CAN BE FOUND HERE
Posted: January 4th, 2011 A story I heard recently about a certain Santa Ana property management company made for an excellent cautionary tale.
I sat down to lunch with a client of theirs and asked about his experiences. He was frustrated that his property manager was difficult to get an hold of, didn’t return phone calls quickly, and had not updated him on the status of his duplex that had one unit vacant for over two months. He went on to share that this company charges him 8% of the rent they collect each month, plus an additional $1000 as a leasing fee each time a unit requires a new tenant.
I felt it odd that his 2 bedroom unit, originally priced at $1700/mo, sat vacant for so long. His property manager bemoaned the lack of traffic around the holidays and convinced him to lower his asking rent $100/mo and include $500 off the first month as an incentive. I knew the area well and this was well below market rent.
After doing a little computer work back at the office, I found that the property manager never listed this unit on the MLS. Where was this $1000 leasing fee going if no Orange County real estate agents, to whom a commission is usually paid from the leasing fee, have no idea this home is available? In fact, other than a single, two week old Craigslist ad wand a yard sign, I found no evidence this home was marketed anywhere! So it looks like $1000 will buy you an ad on a FREE classifieds website – something that the owner could have done on his own.
As if that’s not upsetting enough, let’s see what this really cost their client:
$4250 (2.5 months of vacancy loss)
$1200 (12 months of rent discounted $100 below market)
$500 (Unnecessary move in incentive)
$1000 (Leasing fee)
Added all up, that’s nearly $7000 this Santa Ana property management company cost their client…and why? So they could pocket the entire $1000 leasing fee rather than market the home effectively and offer a commission to other Orange County agents who represent tenants.
While companies like that are terrible for our industry, they also are a big reason why we are so successful and have never lost a client to dissatisfaction. We understand that the best property management companies owe a fiduciary duty to their clients. We always act with your best interests in mind. We do this while keeping our fees extremely competitive We charge 5% of rent collected for management and 50% of one full month for leasing. And you can rest assured that half of that leasing fee is always set aside as commission for cooperating Orange County agents.
-Brian Donlyuk
-Director of Property Management
Posted: December 20th, 2010 When heavy rain hits Orange County like it has this week,
individual property owners are often left out in the cold because
contractors are prioritizing the work they do for property
management companies. Imagine this: you are awaken by a midnight
phone call from a panicked tenant calling about a major roof leak.
Images of damaged carpet, walls, attic insulation, and personal
property flash in your mind as you reach for the Yellow Pages.
While you find no shortage of phone numbers for “24/7 Emergency
Roof Repair,” you quickly realize that not a single one of them
picks up the phone. You begin to google local companies but find
more of the same. Apparently you aren’t the only one in Orange
County with a roof repair emergency. One man was in this exact
predicament when he called our company. We were able to send a
roofer out that same day. The roofer inspected the problem,
immediately implemented a temporary fix to stop the leak and fully
repaired the roof when the weather improved. We earned a new client
that day and still manage all of his Orange County rental
properties. The problem for the individual who manages his own
rental property is that his single job is not their top priority.
It may get done, but it will likely come at a premium. This is
especially true during a time of high demand…and let’s face it,
air conditioning problems only surface in the summer, roofs leak in
the rain, furnaces fail in the cold. The individual owner needs his
repairs at the same time EVERYONE else does. To be a priority, he
often has to pay more. On the other hand, skilled service companies
and contractors flock to property management companies because we
can provide them an ongoing supply of work. Our office receives
hundreds of solicitations each week. We hand pick companies that
answer our calls, respond immediately, price themselves
competitively, and make our clients and the properties we manage
their top priority. The relationships we’ve established with these
companies, not having to answer your tenant’s midnight phone calls,
and avoiding the frustrations brought about by service issues are
just a few reasons you should hire Coldwell Banker Platinum
Properties as your property manager. We’ve made the decision easy
by charging a property management fee of just 5% of the rent we
collect. -Brian Donlyuk -Director of Property Management
Posted: December 13th, 2010 Do you have carbon monoxide detectors installed in your
rental homes? A new state law requires single family residences,
condos and town homes to have carbon monoxide detectors installed
by July 2011. Failure to comply with this regulation exposes Orange
County landlords and property managers to significant liability. In
2011 a fully functioning carbon monoxide detector is just as
important as a smoke detector. Another law passed at the end of
2010 could prove costly to unprepared landlords. Property managers
and individual rental property owners are required to collect tax
ids and report payments to the IRS on all vendors and property
servicers when payments for the year exceed $600. If you don’t
currently have the tax id numbers for you gardener, pool cleaner,
plumber, electrician, or handyman it is time to gather them. Along
with stiff IRS penalties for non compliance, it’s believed the IRS
may even reject landlord expense deductions if there is no
associated vendor 1099. While many property owners see this as a
major burden, we are proud to declare that Coldwell Banker Platinum
Property Management has conducted this type of reporting for years.
It is just one more service our clients enjoy for our management
fee of just 5% of the rent we collect. Please call us, Coldwell
Banker Platinum Property Management, with your Orange County
property management questions. 714-552-8687 (call or text). NOTE:
None of the preceding information should be construed as tax or
legal advice. Please consult your attorney or accounting
professional with questions specific to your situation. -Brian
Donlyuk -Director of Property Management
Posted: September 15th, 2010 NO TENANT…NO INCOME. This is the most important rule of
residential real estate investing. Vacancy loss, or the amount of
income you miss out on because your property is empty, cannot be
recouped. With that in mind, it’s important to make every attempt
to LEASE DURING THE BUSY SEASON. In general you can expect that
busy season to begin in March with traffic slowing significantly
around Labor Day. Most people prefer to move over the summer;
ideally before the school year begins. Very few people enjoy moving
during the November and December holiday season. Owners who cannot
avoid leasing during the offseason must be a little more flexible
in their asking rent, lease terms, and tenant restrictions (by
allowing pets or non-perfect credit for example). To avoid being
stuck in a pattern of repeated offseason vacancy, Orange County
property managers and landlords should create lease terms that have
leases expiring earlier in the busy season. Additionally, they
should avoid allowing leases to continue month to month
indefinitely after expiration. Negotiate with your existing tenants
and offer incentives for them to sign lease renewals with
expirations during those months when you can confidently list your
home for top dollar and expect to get it. -Brian Donlyuk -Director
of Property Management
Posted: August 27th, 2010 Are we heading for a double-dip recession?
Maybe, maybe not. But wherever our shared economic ship heads, it would be good advice for us all to follow the old sailor’s creed and be prepared for the roughest of seas.
So the question you got to ask yourself is: Are you and your property prepared to handle whatever Poseidon may hurl at our leaky ship next?
If Coldwell Banker Platinum Properties is your partner then most assuredly your answer to this question was a resounding “yes.” Just the peace of mind that comes from having someone to turn to for assistance in maintaining properties, rental property listing, locating investment properties or any number of property transaction or maintenance services gives you a leg up on a brutish economy.
The experts are pegging the odds of a double-dip recession at around 20 percent, according to a recent CNN article. But the Wall Street Journal recently released a poll showing that more than two-thirds of Americans believe the worst of the recession is yet to come.
Who to believe? Foreclosures continue at a pace of over 300,000 a month, unemployment remains above 9 percent, the economy’s growth slows… I have always said if it looks like a duck and walks like a duck, well, you know the rest.
Signs show something is different with this recession than those of the past. Historically the United States economy has had its ups and downs. The last three recessions (in 1981, 1991 and 2001) each lasted eight to 16 months. Many economist believe the current recession began in late 2007 or early 2008 — that’s almost three years.
There may not be much we as individuals can do to bolster the economy. But like an old sailor once told me, as the wind kicked up, the boat leaned, the sails filled and the rigging began to slide through my hands: “Hold what you got.”
I did. And in time the seas calmed and we found our way safely to shore.
Posted: August 27th, 2010 My condolences to apartment property managers everywhere. Until recently I never knew how difficult a job you had.
For the last few years I have lived in a one-bedroom apartment in a cozy, 12-unit complex. I have enjoyed the maintenance-free lifestyle and no yard to keep green. Any time there is an issue I pick up the phone and the problem is solved.
In the past whenever I had a problem I used to call a property management company. But the apartment recently sold to new owners. They dismissed the company, looking to save a few dollars, and chose instead to go it alone.
While they do a fair job and are responsive to tenant concerns, I have to admit I feel sorry for them and all the headaches they endure.
The new owners are an older couple — in their mid 50s — who were looking to invest some of their nest egg and enjoy a semi-retirement. Things started out fine. Everyone in the building liked the new owners. But in time, with familiarity came contempt. Both from some of the tenants for the owners and by the owners for some of the tenants.
There came hassles in collecting rent, ticky-tack issues with resident’s apartments, maintaining the grounds, handling emergency repairs (the water heater started leaking late one night), and just dealing on a personal, one-on-one basis with residents became a pain for the couple. They found themselves working full time when they were supposed to be enjoying retirement. And what’s more they (and the tenants) were becoming very unhappy.
I never knew any of this until about a year after the apartments had changed hands. The owners, Don and his wife Linda, were raking up some leaves and they paused to say hello and thank me for consistently paying my rent on time, a habit some of the other tenants apparently lacked.
They told me of the many headaches and the knots they would get in their stomachs every time they had to call a tenant for rent. I could see the stress it was causing them.
“Why not hire a property management company?” I suggested Coldwell Banker Platinum Properties.
Almost a year later I ran into Don and Linda at the grocery. They couldn’t thank me enough for the suggestion. The investment they made with Coldwell Banker Platinum Properties, by hiring the company for property management services, was paying them both huge dividends.
Sure, it was costing them slightly more than if they did everything themselves, but they had found peace of mind. The couple had security and confidence having hired a respected property management company and they had found the time to do all those things they had always wanted to do before, but were to busy to do because of the properties they had to maintain.
In return I told them it was also working well for tenants. I thanked them for their decision to place the apartments in the care of a professional outfit. I told them it felt good to know my home was being maintained by Coldwell Bankers.
Posted: July 22nd, 2010 Ever notice that in well-kept neighborhoods broken windows get patched up quickly? I have.
Less well maintained areas, lower rent properties, tend to have maintenance issues that linger. Yards grow weeds, paint peels and broken windows are not quickly repaired. I always feel nervous passing through neighborhoods like this.
Police departments around the country have taken notice of this trend. “The Broken Window Theory,” is how the cops refer to it.
According to the theory less maintained neighborhoods tend to attract crime. Fix the broken windows, maintain the properties and the crime rate falls while the community’s economic fortunes rise lifting all to higher ground.
Hiring a property management company, like Coldwell Banker Platinum Properties of Orange County, can take the worry off any residential or commercial property owner’s mind. It’s been my experience that maintaining something over time is far less expensive than deferring upkeep year after year until something major happens.
Not only will the property hold its value longer, but it will also maintain a higher rental value throughout its life and remain a benefit rather than possibly becoming a blight to the surrounding community.
I’ve discovered this might be the year to hire a property management firm, as property in the county is being devalued by about $500 million. That will translate to a cool $5.5 million in tax savings for Orange County property owners, according to the Orange County Assessor’s Office.
“The savings will begin with the first property tax installment payment due in November 2010,” according to a Jan. 1 posting on the Assessor’s web site.
And as recently as July 16 the Assessor’s Office reports 148,000 properties in Orange County will have their “taxable values reduced or kept the same as last year.”
This might seem like bad news to some, but the Assessor’s Office seems to be indicating the market is about ready to start surging again.
“There are some areas in the county showing a recovery in market value,” according to the July 16 press release found on the Assessor’s Office web site.
The release concludes that a slowing in residential properties loosing value over the last year “is reflecting a stabilizing residential real estate market.”
