Self Manage Or Hire A Property Manager

Should you self manage or hire a property manager for your rental property? Well, that depends on you. So let’s weigh the options.

 

Self Management

There is really only one perk to self management, and that is saving on the monthly property management fee.  Other than that, landlords who self manage get to look forward to dealing with maintenance calls, late rent, marketing their property and a whole host of landlord headaches.  After hiring several of our competitors prior to starting this company, we understand how you might not see the value in hiring a property manager.  We have had managers steal quarters from our laundry rooms, rent units for less than market and over pay family members to do repairs on our property.  Why would anyone want to pay for service like that?  We had no interest in paying a manager for that type of service, and neither should you.  The fact is a good property manager will create more value than the cost of their fee.

 

Property Management Company (Good Ones)

As we said before, a good property manager will pay for themselves through value creation.  Many of our clients have previously self-managed their properties and upon hiring us found their profitability increased while their headaches decreased.  How is this possible? Simple, our expertise, network and processes help drive revenue and while managing costs.  The fact of the matter is, someone who works a 9-5 office job does not have the time to effectively market their property to maximize revenue. See Previous Post On Leasing Strategies.  We have found landlords who self manage are often uncomfortable raising their tenants rents.  Over time this leads to rents that are even further below market.  Maintenance is another area where owners who self manage leave money on the table.  Because of volume and contractor relationships, we are able to get significant discounts that we pass on to our clients.

Conclusion

So to answer the question: self manage or hire a property manager, unless you are a full time real estate professional, we believe you are better off hiring a good property manager.

Tenant Screening And Selection

Tenant screening and selection is an important part of the leasing process.  Selecting the wrong tenant can be an absolute nightmare.  Selecting the right tenant is great for the bottom line and helps you sleep at night.

 

Tenant Screening.

During our aggressive marketing campaign, we generally receive numerous applications for each rental property.  How do you pick the best candidate?  We have a process for tenant screening and selection.  We stick to our process, and we believe it helps guide us in making the best decision.

First of all, the prospective tenant has to come view the property.  This is probably the most important part of the process.  Our property manager will be onsite during each of the mini-open houses (discussed in a previous entry).  The property manager will make sure to take time to speak to each prospective tenant.  These short conversations serve as informal interviews and are a great way to feel out the person and gauge their interest.  Our property manager will take notes on the prospective tenant so in the event they submit an application, we will have anecdotal information on the tenant.

If the tenant likes the property the property manager will send them a link to our online application.  Our online application allows us to collect their basic information.  We receive their social security number, employment history, income, and current bank account balances.  If we come to general terms with the prospective tenant, they pay an application fee and we do a background check.  We check their credit, criminal and eviction history.  Below is a sample of what our background check generally looks like.

Tenant Screening Report

Ideally, the prospective tenants income is 3x the asking rent and their credit score is north of 750. However, its common to see a prospective tenant either have great income or great credit, but not both.  Lacking in one of the two main financial qualifiers does not mean a prospective tenant will not be a great tenant.

Going Beyond The Numbers.

A lot of property managers will base the tenant screening and selection process almost exclusively off credit scores.  We prefer to go beyond the numbers and look at the tenant from a holistic approach.  Hands down, the worst tenant we have ever managed had a +800 credit score and great income.  In fact, they are the only tenant we have ever had to take to small claims court to collect rent.

If a prospective tenant lacks in one of the two main financial qualifiers, we learn more about the tenants specific situation.  There are many factors that can be detrimental to one’s credit score that do not necessarily make the prospective tenant a riskier tenant.  Divorce, medical bills, or identify theft are not necessarily indicators of a prospective tenant that is likely to become delinquent on their rent.  Additionally, the income stated on a tenants W2 might not be a full picture of the tenants income or financial picture.  We had a tenant apply for a property, that had a W2 that only showed income 2x the asking rent.  However, the tenant was making 100% of their salary moonlighting as a consultant.  This was verifiable through their tax returns and meant their actual income was 4x the asking rent.

 Mitigating Factors.

When a prospective tenant is leaving something to be desired in either of the two main financial qualifiers, there are strategies you can employ to mitigate the risk.  When a property manager shoots down a prospective tenant based only on their credit score or income, they maybe leaving money on the table.  We have found good tenants with less than desirable credit scores are willing to work with the property manager to help mitigate risk. Here are a few real examples of tenants who were lacking in one of the 2 main financial qualifiers and how we were able to mitigate the risk.

  • 3 college students had very limited income.  Their parents signed on as guarantors.
  • A recently divorced single mom with bad credit volunteered to an increased security deposit.
  • Young entrepreneur’s failed company destroyed his credit.  He offered to pay 3-months rent in advance with an increased security deposit.

Ideally, everyone in our portfolio would have income 3x the rent and credit scores north of 750.  However, unfortunately that can not always be the case.  The tenants that we have worked with to help get them qualified because of some challenge related to their credit score or their income have often been fantastic tenants.

If you are interested in applying to live in our of properties, we encourage you to check out vacancies HERE.

Lastly, and perhaps, most importantly.  Marterra Properties is an equal opportunity housing provider and we are proud of the diverse and vibrant homes and communities that we manage.

Equal-Housing Opportunity Provider

 

 

Leasing Strategies To Drive Revenue

We at Marterra Properties take great pride in our ability to push top line revenue for our clients.  As property managers, we implement several leasing strategies to drive revenue for our clients.  Although these strategies are simple, many of our competitors do not implement them, because they are more costly and require more work.  In this blog entry, we explore some of the leasing strategies that we implement.  We have increased rents by +40%, immediately after taking over a property that was previously managed by a competitor.

 

Marketing Channels.

We will begin our discussion on leasing strategies to drive revenue by exploring marketing channels.  The market price for any rental property is the intersection of the supply and demand curve.   While we can’t impact the supply of rental properties in the market, we can be a strong influence on demand.  In order for a prospective tenant to “demand” a particular rental property, they must first be aware that the properties exist.  This is the first step in the leasing process where we can add-value to our clients.

Some of our competitors (self-managing landlords) limit their marketing efforts to Craigslist and their own websites.  We maximize your rental properties exposure by listing it on literally hundreds of websites, including but not limited to: Zillow, Trulia, Apartments.com and Craigslist.  Different tenant profiles use different rental websites, so we try to capture every tenant profile by blanketing your rental property on a diverse platforms. Every prospective tenant in the marketplace sees your rental property due to our multi-channel marketing.

Photos.

There are plenty of websites that document the history of bad real estate photos. My favorite is:

http://terriblerealestateagentphotos.com/

I can keep going, but I think you get it.  Rental property photos have a massive impact on the first impression your property, because it is likely the first time a prospective tenant sees a rental home is online.   As we all know, you never get a second chance at a first impression.  So why do some landlords settle for such low quality photos?  We firmly believe that investing in high quality photos lead to higher rents and quicker lease-ups.  Below are photos from a property that we recently leased in Orange and one that we leased in Newport Coast.

Leasing Strategies To Drive Revenue 1

 

Leasing Strategies to Drive Revenue

 

The Application Process.

One of the things that frustrates us most about property managers is the way they show property.  Their showing process is not designed to drive traffic to the rental property. Rather their process is designed to drive application fee revenues for themselves and to limit the amount of time they spend showing properties. The sad thing is, this process is common place in the property management industry.

One property manager requires prospective tenants to come into their office and pay an application fee prior to seeing the property.  This process is burdensome and expensive for the prospective tenant and ultimately deters many from ever viewing the property. Our process is the opposite.  Our goal is to get as many prospective tenants into the property as possible. Since more traffic means more demand for the property, we try to make it as easy and simple for prospective tenants to see the property.  If the prospective tenant is interested in the property after seeing it, we send them an online application.

Showing The Property.

It is time consuming to show the property to every interested party, as a result, that is why most property managers try to decrease the number of showings and require the prospective tenant to come into the office first.  One of the most basic, yet important leasing strategies to drive revenue is what we call the “mini-open house”.  The mini-open house enables us as property managers to accommodate as many showings as possible while helping create a sense of urgency for the prospective tenant.

Generally, we schedule several mid-day open houses during the work week. These are great for service industry and retail workers who might need to work nights and weekends. We also schedule several mini-open houses weekday evenings and on weekends to accommodate the more traditional 9-5 hours of employment.  By limiting the showings to several convenient time slots, we are able to schedule several showings at the same time.  This helps create a sense of urgency with the prospective tenants.  We have seen this sense of urgency lead to rental applications offering rental amounts above the asking rate.

Conclusion.

These leasing strategies to drive revenue really work.  The results are undeniable. However, they require some additional work that many of our competitors are not willing to do.  We are often able to raise revenue by 10-40% after taking over a property that has been managed by another competitors or self managed properties.  Many of our clients find that the top line revenue growth we are able to achieve more than pays for our service.

Contact us today to learn how our leasing strategies to drive revenue can benefit your investment property!

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Pet Friendly Rentals In Orange County

In Orange County there is a shortage of pet friendly rentals.  We believe that creating pet friendly rentals in Orange County can be accretive to your investment.

 

The Issue:

Pets can cause significant damage to a property.  Their damage can include hot spots on grass, odors in carpet and furniture, and claw marks on doors and walls.  Pets can also create difficulties for property managers when trying to address maintenance issues for tenants who are away from the home.  But, at the end of the day, we love our pets and will do anything for them.  Given all the potential headaches allowing pets at your rental can cause, does it make sense?

Before we get into ways to address the issue, let me introduce you to our dog.

Innocent Dog

Pet Friendly Home

He is a total mutt.  I am sure he looks sweet and innocent in the picture above, but would a sweet and innocent dog do this….


The Damage Is Done

At 4-months old, our pup did this! He opened an unopened gallon of paint and had some creative free time throughout our entire house.  This is just the tip of the iceberg of the damage he did.  Point being, if there is anyone on the planet who understands the damage a dog can do to your property, I am that person.

 

The Solution:

There are certain upgrades that you can make to your property that will limit the damage that a pet could do to your property.  One upgrade that we like to recommend is to replace carpet with laminate wood flooring.  As a property manager, we recommend making this upgrade as it will reduce/eliminate the turnover costs associated with replacing/cleaning carpet.  This upgrade will benefit the landlord whether or not the tenant has a dog or not.

Additionally, by charging the tenant a pet deposit a landlord can in a sense insure their property against any damage the pet my cause.

Through our experience leasing units throughout Orange County, we have found, that pet friendly rentals in Orange County demand a premium and that renters are happy to pay a pet deposit.

See the link below to for some additional ideas on how to make your home safe for your fur babies.

Making Your Home Safe For Pets

We offer pet friendly rentals in Costa Mesa, Orange, Tustin, Huntington Beach, Irvine, Laguna Hills, Aliso Viejo, Fountain Valley, Santa Ana, Newport Beach and the rest of Orange County,

Creating Value For Our Property Management Clients

 

Welcome to the Marterra Properties blog—your Orange County Property Manager! In our blog entries we will present some case studies, discuss current events that are relevant to real estate investment, design trends and other various topics of interest.  Today’s blog entry will discuss creating value for our property management clients through a landscape renovation.

 

THE PROPERTY.

Today, we will discuss a landscaping renovation for a landlord at an apartment community in Costa Mesa, CA, also known as “Costamazing“. Upon taking over the management of this complex we conducted a SWOT (Strength/Weaknesses/Opportunities/Threats) analysis.  This analysis to helped define us our strategy for the property. When the property  management turned over to Marterra Properties, it was a rather large eyesore. Situated on a corner lot within a Costa Mesa neighborhood, this 6-plex had plenty of deferred maintenance.

 

THE PROBLEM. 

During our SWOT analysis, we identified several areas of opportunity.  One area of opportunity that surprised us was the monthly water bill.  The bill just for water was over $460 per month or 10% of the total operating expenses.  Not to mention, the landscaping was very dated and very unattractive. We came up with a landscaping design that featured decomposed granite, water saving succulents and artificial turf.  Before and after photos are below.

Before Photo

 

After Photo

 

 

THE SOLUTION.

The landscaping renovation cost a total of $12,000. It created a monthly water savings of +$200/month and a $20/month savings in landscaping maintenance. That is an annual return on investment of 22% for the landlord.  The landscaping is frequently complimented by tenants and neighbors. In addition to the savings, this remodeling process improved the properties curb appeal.  Besides the financial merits, the renovation is great for the environment, as water usage for the property was cut in half.

The Benefits Of Water Conservation

The image below shows the water usage at the property for the 11-months after we completed the project.  The water usage dropped dramatically from July of 2016 to July of 2017.  The water usage in the month of July 2016 was typical for the property prior to the renovation.


Water Bill 12-months later

We take pride in creating value for our property management clients. Contact us today to see how we can create value for you.