Home Decoration & Real Estate

Posts Tagged ‘Questions’

Buying a new home can be a very exciting time in a person’s life. There are many considerations one should be aware of before taking the plunge into new homeownership. Before you make this huge life investment, you should ask yourself the following questions:

Can I afford a new home?

When buying a new home, you have to consider the financial implications of homeownership. You have to consider the mortgage payments, the down payment, fees such as closing costs and lawyer expenses, taxes, and other costs. Use an online financial calculator that takes your income and debt and calculated it to determine how much you can afford.

Does the new home meet my requirements?

Make a list of all your needs. Consider children and pets. Are there enough bedrooms and bathrooms? Is the yard big enough for a pet? Do you need a home office? If you have children, check to see if parks and schools are close by. Do you have to travel a long distance to work? What is the crime rate like in the neighborhood? How close is your home to supermarkets and malls? Is their a neighborhood development association that imposes strict rules?

Are there any hazards?

Check to see if the home is in a high risk area such as flooding, earthquakes, tornados, and hurricanes. You may have to pay higher insurance premiums. Also, find out what home inspections are needed.
What are the sale closing costs?

Closing costs are the costs associated with the sale transaction. This can include fees for legal documents, recording deeds, escrow fee, real estate commission fee, reconveyance fee, and Title Insurance.

Is the exterior of the house in good condition?

When assessing the exterior of the house, ask such questions as: What materials were used for the exterior? Do the trim or sidewalls require painting? Is weather-stripping installed? Do windows and doors have insulated glass or storm windows? What is the condition of the gutters? Is the foundation in good condition? Is the ground sloped away from the foundation? What material is used for the foundation?

Is the interior of the house in good condition?

Are there cracks in the walls and/or ceilings? Has the interior been recently painted?

Are the kitchen cabinets installed properly? Do the doors open and close properly? Are there exhaust fans in the kitchen and baths? Is the interior trim in good condition? What is the condition of the door knobs and locks? Are there any visible structural defects? Is the attic area insulated? Are there any sloping floors in the home? Is there an attic fan for ventilation?

What is the condition of the heating, electric system, and hot water system?

Is the incoming electric service properly installed? Is the main electric panel easily accessible? Are there adequate light fixtures throughout the home? Are lighting fixtures installed at all exterior entrances? Is the number of electrical receptacles in each room sufficient for modern living? Are ground fault circuit interrupters (GFCI) installed?

What type of furnace or boiler is installed? (Hot air, hot water, heat pump, etc.) What type of fuel is used for heat? Does the home have central air conditioning? Is the size water heater adequate for your needs? Are there heating/cooling outlets in each room?

What is the condition of the plumbing system?

What is the source for water and sewer? (City, private, well, septic) What materials are used for water and sewer pipes? (Copper, PVC, iron, etc.) What is the quality and quantity of the well water? Do the plumbing fixtures work properly? Is the water pressure adequate?

Buying a new home is a serious life commitment with lasting costs. Before buying a home, make sure you consider all of the positive and negative aspects of homeownership so that your final decision will be the right one.

As an apartment or condo association, your board has to make some tough decisions. One of the toughest – what property management option to choose. And anyone who’s been put through the paces by an incompetent or untrustworthy manager understands the risk the wrong choice can be.

Take the example of Ohio-based condo association Lakewood Condominium Association, which is suing their property management group on allegations of stealing over $830,000 and allowing overdue association bills to go unpaid. The property management group is charged with, among other things, lying about the association having over $217,000 in CDs in the bank. The CDs, according to court documents, were withdrawn in January 2006, and over $378,000 in reserve funds remain missing.

 It’s hard enough deciding to hire an outside firm to manage the property. The impact on profits is significant enough that many associations opt to handle the management side in-house. But if the task is too much for your association to handle, there are ways to approach hiring an outside firm that can help lessen your risk.

Determine your needs:

What do you expect the management company to handle?
Decide the parameters of your relationship with the property manager.
What percentage of rented or occupied units do you require as a minimum?
Will your manager oversee property projects, such as remodels or upgrades?
Will the manager set the annual budget, and who will handle annual inspections and reports?
How will you verify monthly financial statements?

When looking for a manager, ask the following questions:

Is the company licensed (if applicable in your state)?
What are the manager’s insurance coverage amounts? Get copies of all policies, including those covering the company’s employees?
Does the manager have experience managing similar properties?
What’s the collection process for rent and association fees? Delinquencies?
What does the manager charge? Are there any additional fees? If so, for what?
Will the manager be proactive in preventing issues, or is it a more passive response process?

Get and check references. Also, make sure the company has a physical location and visit it. Expect your property manager to be present at board meetings. Work with the manager to establish a transparent financial relationship so that your association doesn’t become a victim. For more help in building a sound property management process, give us a call.

What have your experiences been with property management?

While most property investors spend a huge amount of effort and energy finding the right property to purchase, they rarely spend the time looking for a good property manager. This is asking for trouble! A good property manager is like an insurance policy on your investment. The main criteria most landlords use to select their managing agency is price alone. This is very short sighted. As the old saying goes ‘you get what you pay for’. A cheap rental real estate agency will typically be operated by over worked staff trying to manage hundred of properties, constantly chasing their tail to keep up with the basics. A dedicated property management agency will ensure that your investment property is thoroughly managed. Your property should receive a higher level of service; more time spent on tenant selection, market research and scheduled inspections. This will ensure that your property is looked after, leased to the most appropriate tenants and achieved the highest rental yield possible.

Some property owners even try to manage their property themselves assuming that property management is simply collecting rent. Property manager’s job is much more than this. A good property manager should:

-          Understand the current local real estate market, market forces and how to market your property effectively.

-          Price the rent on your property at the right level to quickly rent out investment.

-          Perform thorough tenant checks and background checks.

-          Write up a comprehensive lease to protect the landlord.

-          Lodge a bond on behalf of the landlord, to the authorities.

-          Handle all repairs on the property, using only qualified tradesmen.

-          Pay insurances, council rates and outgoing on behalf of the property owner.

-          Keep up to date on complex and constantly changing legal issues.

Below is a list of 10 questions you should ask your property management agency before signing up for their services.

Is the real estate agency a specialised property management firm? Many real estate agencies offer property management as an after thought to the sales team. Property managers are seen as unimportant and are often overworked, looking after much too many properties badly instead of a smaller number effectively. Does the agency have local real estate knowledge and experience? Local rental market knowledge is critical in achieving the lowest vacancy rates and achieving the maximum rental price. Will I receive regular updates on my property? A good property management agency should keep the landlord well informed about their investment at all stages of the leasing process. Will I be assigned one dedicated property manager to deal with? Make sure that you are assigned only one property manager to deal with so that you can achieve an open and communicative relationship. Will my property manager attend court on my behalf? Your rental property manager should manage all aspects of your rental property, including attending court on your behalf if need be. How many properties do your property managers manage? Some mainstream agencies assign up to 300 properties to their property managers. This is much too many for an effective job to be done. Regular inspections, negotiating the best rent, keeping up to date with the property market all take a lot of time and energy. At most we suggest that 100 is the maximum properties a rental agent can effectively manage. Does your agency make regular rental increases on your property? A good property manager should be informed about the rental market and understand what the optimum rent achievable is for your house, unit or apartment. Is the managing director/rental agency owner involved in the property management agency on a day-to-day basis? A well-run rental real estate agency should have the director highly involved in the day to day running of the business. Do you do thorough checks on potential tenants to avoid my house/unit being rented out to bad tenants? All investment property owners should be informed about all lease applicants and their background before deciding on who are the best tenants to lease their property too. Is your agency up to date with the latest Internet advertising media? With all sort of social media around now days, it wpould be waste not to take advantage of these advertising avenues. Make sure your agent is maximising your properties exposure, therefore minimising your vacancy rates.

Just Rent Sydney would answer yes to all of the above!

Just Rent Sydney can handle the transfer of your rental property from your current real estate agency over to us without you having to be involved, making the transition seamless and easy.

Make the smart move.

This is part 2 of a 4 part series where we have outlined important questions to ask a property management company before hiring them.

Series 1 Companies Credentials
Series 2 Property Management Services
Series 3 Property Management Fees
Series 4 Tenant Screening Process

Property management companies come in all sizes, capabilities and expertise. Just because one works for one investor does not necessarily mean they will work for you. Below we have outlined some important questions to ask a company during your initial interview process regarding services they provide. Their answers to these questions will give insight into their business capabilities and can provide you with an understanding of the type of services they offer which are important to you.

Series 2 – Property Management Services

Properties they manage – Property management companies are as different as car dealerships are to each other. For example, a Mercedes dealership will have the best inventory and the most knowledge of the latest selection of new Mercedes. You could visit the Toyota dealership in your neighborhood, but chances are you will not find what you are looking for. Of course, they would love your business and will try and talk you into why a Toyota is a better fit for you than a Mercedes.

Same with a property manager, they are not created equal when it comes down to their property portfolios. You need to ask what types of property they manage and make sure your type of property is one they manage. If you own a single family home, a company that manages mostly large apartment buildings or commercial property would not be a good match. In this case, your best match would be a company that has a minimum 50% or greater of single family homes in their rental pool.

Some companies manage all types of investment properties…single family homes, apartments, commercial and community associations, but chances are they hold a specialty in one or two areas.

Inspections – A thorough property inspection should never be overlooked by a property management company. A property inspection needs to be conducted upon tenant move-in and at move-out. A property inspection can range from drive-bys, a walk-through or a video inspection. If disagreements arise between tenant and manager as to items missing or damaged, actual documentation from the move-in inspection and pictures of before and after hold validity versus a verbal agreement.

A video inspection of the interior as well as the exterior of property is the best option. Still pictures are good, but sometimes do not capture all areas of property. The video will not only capture all areas, but is easily interpreted and validated as the subject property. A signed checklist at move-in from tenant validates that tenant concurs with the inspection findings.

Maintenance – When it comes time to performing maintenance or repair work to their rental properties some property management companies have their own in-house maintenance personnel. These are usually employees of the company and are paid a salary through the company. The costs or hourly rate of any maintenance or repair work that is required will be dictated by the management company itself.

On the other hand, the management company may decide to outsource all or some maintenance work to outside vendors. These vendors could range from a handyman, specialized tradesman such as a plumber or a large facility that performs all types of maintenance work.

There are pros and cons to both and I do not advocate one over the other but will outline a few points of interest:
In-house Maintenance

Pros:

- More readily available, since they work within the management company
- Direct communication with management company and their policies
- More intimate with property…they are the “one” contact and know the history of your property

Cons:

- May be more of a “jack of all trades” versus being specialized in a certain field and having the appropriate licenses
- May not be as determined to perform or finish maintenance work in a timely manner as he/she is not being paid based on the job. Whether he/she finishes in 2 hours or 8 hours, its all the same.
- If in-house maintenance crew is not available, either the repair work waits or the company will need to search for a outside vendor on short notice

Outsourcing Maintenance

Pros:

- This allows the property management company the luxury of competitive bidding among vendors, which could equate to lower costs
- Vendors will be eager to sign contracts with a property management company that can bring stable business to them, and as a result will most likely perform quality work in a timely manner
- Most vendors will be specialized tradesman carrying all required licenses, insurance and being bonded

Cons:

- Some property management companies will add a surcharge or mark-up above the actual cost of any repair work to cover their time in acquiring these bids.
- If work was not completed properly, it may be difficult to get the vendor back on the job.

Another option is coordinating all maintenance work yourself. This may work for you if you have reliable contractors you have work with and are dependable. You can probably save yourself some money but this will involve a bit of your time on your part.

Accounting – Most full service property management company will offer as a customary service some type of accounting procedure. This usually comes in the form of a monthly paper statement itemizing all income and expenses funneled through the management company on your property for that particular month. It will show rental income and any expenses such as management fees, repair costs, lawn care service, advertising charges, lease renewal fees and possibly utility charges. The monies owed the owner also referred to as the net amount should be clearly spelled out on this statement. The monthly statements are usually mailed every month to the owner along with a deposit check for the net amount. You should also be provided with a end year statement along with a 1099 for tax purposes.

With the advancement of online technology many management companies are now offering their owners the ability to view and print their monthly statements via the companys’ website or online portal. These portals have the ability to store other documents such as the management contract, vendor invoices, pictures of property, inspection reports etc…all at your fingertips.

Another great advantage of working with a savvy property management company is their ability to setup automatic deposit of your monthly checks. No more waiting for the postal service, your deposit checks can be deposited directly into your bank account. Chances are they will also have the ability to setup automatic debit of tenants rent from either a checking account or credit card.

Finding a good property manager is like any other vendor search – it’s worth your time up front to make the best possible choice. That’s because a bad manager can cost you a lot of money, up to the entire value of your rental property investment. Consider:

• Your property manager will be receiving rent and fees on your behalf. A crooked manager could steal you blind.

• Your manager will be in charge of finding new tenants. A naïve or slipshod manager could bring in bad tenants who trash your building.

• Your manager will handle maintenance. A greedy manager could charge a fortune for simple repair jobs.

Here’s a thirty-question checklist for interviewing prospective property managers. The answers you get will provide a very solid understanding of each manager’s qualifications. You can also get an impression of a prospective manager from other cues – I’ll explain those at the end.

Finally, remember that you have to compare managers to others within an area. It’s possible that none of the prospective managers in one city will match the high standard of your terrific manager in another. On the other hand, if you can’t find a good manager in a city where you plan to invest in real estate, maybe you shouldn’t invest there.

The first questions have to do with finding good tenants, which I think is the key to a happy building. A building with good tenants tends to have fewer maintenance and other issues.

• How many vacancies do you have right now? Out of how many total units that you manage?

• What is the average length of time it takes to fill a vacancy?

• Is that average time getting longer or shorter?

• How do you market your rental units?

• Do you require an exclusive arrangement for marketing to new tenants?

• How does your web site look?

• What factors would make you reject a prospect?

• Would you accept a tenant who met your qualifications in some areas, but not others? Which qualifications are most important to you?

• What screening methods do you use?

You want a manager who finds good tenants reasonably quickly. He should use a variety of methods to find prospective tenants, such as a web site, Craigslist postings, newspaper ads, signs, flyers and more. Your manager should follow an extensive screening process, but be willing to accept a “maybe” tenant if the situation is right. You want a look at the web site to make sure that is inviting to prospective tenants, and constantly updated.

As for the exclusive arrangement, property managers never mind when you or somebody else finds prospects for them. However, in almost all cases, they will still want a rental fee for moving the prospect into your rental unit. Make sure you have a clause that if the unit hasn’t been rented for some time, and you or someone else you find brings in a new tenant, the rental fee is cut in half. You don’t want it cut to $0 because the manager will still have to screen prospects.

The next questions relate to tenant management. It’s just as important to keep good tenants as it is to find them.

• What does your lease look like?

• What is your late rent policy?

• What other rules do you set for tenants?

• What percentage of tenants do you have to evict?

• How does the eviction process work here?

• How do your tenants contact you?

I recommend sticking with the manager’s preferred lease, late rent policy, and rules unless you have a really major objection. If the manager is really experienced, chances are they’ve developed smart rules and policies over time. Tenants should be able to contact the manager through a variety of ways during the day, and have an emergency number for off hours. If the manager is always evicting tenants, he’s bringing in bad tenants.

The next questions relate to maintenance.

• Which kinds of maintenance jobs are handled in-house?

• Which ones do you use an outside handyman for?

• Which ones do you use professional contractors for?

• How many quotes do you get for jobs?

• How expensive does a job have to be for you to contact me before doing it?

• What are your rules for contractors being inside occupied rental units?

• Who are your preferred contractors?

Managers should have a well-thought-out system for assigning jobs to different parties – in-house employees, handyman and professional contractors. Almost any plumbing, heating, or electrical job should be handled by a professional. Other jobs, such as paving a parking lot, require special equipment that usually only professionals have. But most small jobs can be done by handymen who will cost you less.

You want multiple quotes for major jobs – say, anything over $500. You should also have a rule that contractors can never enter an occupied unit –even if the tenant is not home at the time – without a manager’s representative being there. Finally, you want the names of preferred contractors so you can run a quick check on them.

The last group of questions relates to experience. You want managers to know the local real estate world inside and out.

• How long have you been a property manager?

• How long have you been a manager in this area?

• Can I see some of the other properties you manage?

• Do you personally invest in real estate in this area?

Finally, you need to understand your arrangement with the property manager.

• What is your fee structure?

• How will I get reports?

• Do you require an exclusive arrangement to broker the property?

• How much notice will you give before terminating a contract?

The manager’s fees aren’t really important unless they are much higher than everybody else’s, or are so high that you really can’t afford them. Reports are very important because they are your only window into how your investments are performing. The best way is to get them on your own computer, on your time – as may be the case if they use on-line property management software.

You should not accept any exclusive arrangement to broker properties unless they have a limited term. In other words, if the properties don’t sell after a certain time, you can re-list with a different broker for no penalty.

Also, you should require good notice for the contract to be terminated – at least 30 days. That gives you time to find another manager.

Here are some other things to watch out for:

• A manager with a messy office or personal appearance. Chances are he doesn’t much care about the condition of the properties either.

• A manager you have a hard time reaching by phone or email. If he won’t return your messages now when he’s trying to get your business, what are the chances that he’ll do better later?

• A manager whom you sense is trying to intimidate you with knowledge. The “don’t ask stupid questions, I know all about this” approach is often a cover for not really knowing much at all.