September 2014 - Vol. 8 Issue 9
Rental Housing Journal Valley
2. Three Important Steps For Building Property Management Compensation Plans - The Coach
3. Five Ps for Your Social Media Marketing Success 4. Multifamily NW Presidents Message How to Keep Your Competitive Edge
3. Dear Maintenance Men:
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WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC
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Fund your Retirement with Seller Carry Back Financing By Jade Bossert
M
ulti-family property owners have several options, to generate passive income in retirement, that are unique to owners of income property. They include placing your residential income property under professional management and forgoing the day to day management duties, effecting a IRC 1031 exchange into a commercial triple net leased property, or taking on the role of a lender by providing seller financing, to the buyers of your income property. Seller carry back financing is the most popular vehicle active owner/ managers of multi-family properties use to fund their retirement. The major benefit is“mailbox money”, which is a monthly check sent electronically or by mail to the seller every month, for a set period of time. The current market interest rate for seller financing is 5.5% to 6.5% interest. A strong down payment, of 20% to 30% of the sale price, is recommended when financing a buyer. Property tax, insurance and the monthly payment should be collected by a title company or bank and disbursed to the seller. The property should be collateralized by a note and deed of trust that detail the terms of the carry back. The terms should include a late fee. In the event the seller is concerned about being paid off, a steep prepayment fee of 12% to 20% of the principle balance should be detailed in the note. If the property is 5 units or larger, it is considered a non-consumer transaction and not governed by federal Dodd Frank Laws. Sellers are often able to get a sale Continued on page 7 Professional Publishing Inc. PO Box 6244 Beaverton, OR 97007
3 Proven Management Techniques That Work in Any Business Identify the ‘Influencers’ on Your Front Lines, CEO Advises
I
n business, the only thing that matters is what works, says Peder Johnsen, a third-generation specialist in senior living communities. “The people in your company who are dealing with your customers – the clerks, the caregivers, the customer service reps – are where the rubber meets the road,” says Johnsen, CEO of Concordis Senior Living, www.concordisseniorliving.com, which owns, operates and develops senior housing communities. “That’s why it’s essential for the company leaders, the men and women in the offices that are often far
from the front lines, to be where the action is on a regular basis,” he says. Concordis’ specialties include managing senior-living communities for other owners and developers, an art it has perfected, Johnsen says. “We developed certain practices over the decades, first by building assisted-living communities and then by operating them,” he says. “These practices work in any business because they keep the leadership actively involved in what’s going well – and not – on the front lines, and provides a system for regular communication through all layers of the
company.” Johnsen offers these tips for management that produces excellent results: Identify the ‘Influencers’ in each work group. As with most businesses, senior living communities require teams of staff, from administrators to housekeepers and everyone in between. Within the various groups that make up your business, identify the key players – the people who influence others’ behavior, whether or not they continued on page 6
Benefits of Hiring a Property Manager to Manager Your SingleFamily Investment. By Cliff Hockely
B
uying real estate as an investment has been a well-established investment strategy for thousands of years. You purchased or inherited a home or condominium and now you have to figure out how to get your arms around it. Perhaps you were transferred and don’t think it is time to sell the home yet, you want its value to appreciate more. From a management standpoint, you have two choices, manage the property yourself or hire a property manager to take
Current Resident or
care of it. This article will help you make a decision on which way to go. Setting investment goals First of all, realize that you need to set investment goals. In other words, ask yourself what you intend to do with the property. If it is free and clear you could save the money you earn and invest in more real estate… or pay for college tuition for your children. When they are done with college you could use the cash flow to prepare for or amend your retirement plans. If you have a mort-
PRSRT STD US Postage PAID Portland, OR Permit #5460
gage you have less cash flow to meet your needs which will affect your decisions. A few investments goals to consider:
• Hold the property until
it is paid off and use the income for retirement
• Hold the property
until the marketplace appreciates – then sell the property and:
• Reinvest in another
property/ properties (maybe in better locations)
• Take the money to the bank.
• Spend the
money you made.
• Sell the property and use it to:
• Buy another home in another part of the country.
• Refinance the property
after some of the equity has grown and buy an additional home.
Making the decision If you have time and are a hands-on investor, you will want to screen the tenants, make the repairs, complete the tenant turns and do the accounting yourself. More often than continued on page 6
Advertise in Rental Housing Journal VALLEY Circulated to over 6,000 Apartment owners, On-site, and Maintenance personnel monthly.
Call 503-221-1260 for more info.
RENTAL HOUSING JOURNAL VALLEY
Three Important Steps For Building Property Management Compensation Plans ©
by Ernest F. Oriente, The Coach {Article #220…since 1995}
D
uring the course of your professional career as a property management executive, building new compensation plans will be one of the most important projects you ever undertake. In fact, this project has the potential to be an explosive issue for your team of SuperStars and must be designed with great care. The information in this article will outline three important steps for building powerful compensation plans and will share many secrets for your success. When a compensation plan is built right, your team will love you and your company success will soar! Gathering information and setting objectives: Start by evaluating your current compensation plans to see how closely it aligns with the critical success factors for your property management company and your historical financial performance. Next, review what percentage of each person’s compensation is salary versus commission/bonus and compare this to competitive positions within the geographical locations you manage. Lastly, develop specific compensation objectives, such as: performance to budget or goals, occupancy for each apartment community, fiscal performance of this quarter compared to the same quarter last year, resident retention and/or resident satisfaction surveys. Tip From The Coach: Remember, each person on your property
• Driveways • Parking Lots
management team must see a direct connection between their efforts and their compensation plan. In addition, how you define the objectives for your compensation plans will be a direct reflection of the exact individual or team performance you will receive. Developing performance measurements and plan options: Once you have defined your compensation objectives, the next step is to determine how you will measure performance. For instance, will your new compensation plan reward individual performance, team performance or a blend of both? In addition, your compensation plans should also consider how often commissions/bonuses will be paid and what will be the impact if an individual or your team does not meet or exceed their compensation objectives. Next, design several compensation models on a spreadsheet so you can see how annual compensation will vary as you change or modify the performance/ pay variables. In addition, calculate the range of income your SuperStars will be able to earn over the next 12 to 60 months. Lastly, test and run your historical results through your new compensation plans to verify performance levels and income expectations.
few SuperStars in their company to gather some additional insight before finalizing their new compensation plans. In addition, some of our clients will grandfather the compensation for their current team but all newly hired team members will be paid based on the new compensation plan. Remember, there is no such thing as a perfect compensation plan, but there is a compensation plan that is well-suited for your property management company. Lastly, just because a compensation plan has worked in the past, does not mean it will work in the future as the property management profession is changing and evolving rapidly. Selecting and evaluating your options: Once you have tested your compensation plans for accuracy and performance expectations, select the plan that most closely aligns with your company objectives. Sometimes it can be helpful at this point to have another set of eyes, outside of your property management company, review your new compensation plan to ensure it’s clear and reasonable. Next, consult with your internal resources to be certain they can design and produce the information required by your new compensation plan. In addition, your team will
need a written description of their new compensation plans and a financial spreadsheet detailing exactly how this compensation will impact them over the next 12 and 24 months. Tip From The Coach: Once you have presented your new compensation plan to your property management team schedule a monthly appointment over the next six months to vigorously review and evaluate the results. In addition, ask for feedback on your new compensation plan and swiftly address any problems you or your teams discover. Want to hear more about this important topic or ask some additional questions about how to build powerful compensation plans? Send an E-mail to ernest@powerhour.com and The Coach will E-mail you a free PowerHour invitation. Ernest F. Oriente, a business coach/trainer since 1995 [31,500 hours], serving property management industry professional since 1988--the author of SmartMatch Alliances™, the founder of PowerHour® [ www.powerhour.com ], the founder of PowerHour SEO [ www.powerhourseo.com ], the live weekly PowerHour Leadership Academy [ www. powerhourleadershipacademy.com/pm ] and Power Insurance & Risk Management Group
Continued on page 5
Tip From The Coach: Some of our property management clients like to confidentially share preliminary compensation models with just a
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AFTER Rental Housing March Valley • September 2014
RENTAL HOUSING JOURNAL VALLEY
Dear Maintenance Men: By Jerry L'Ecuyer & Frank Alvarez
Dear Maintenance Men:
Can graffiti scratched windows be repaired? I have a number of windows that have been scratched or etched by graffiti vandals. Replacing the window is very expensive. Do you have any recommendations? Jessie Dear Jessie: Yes, graffiti damaged windows can be repaired. It is often a two step process involving removing the scratches or etching with a buffing compound and using anti-graffiti film over the glass. Cerium Oxide rubbing compound is typically used with an electric buffing wheel for getting the scratches or etching out of the glass. Cerium Oxide can be found on the internet, glass & stone shops or good hardware stores. 3-M makes a very good anti-graffiti film that can be used as preventive protection or as a sacrificial layer. If you decide to do the work yourself, be careful with the electric buffing wheel. Keep the buffing wheel moving over the scratches and never concentrate on one spot for long as it will burn the
glass. Removing scratches from glass is a bit of an art and we recommend contacting a repair firm specializing in glass graffiti removal.
recommendation for peace of mind would be to repaint the patio floors using the above information as a guide.
Dear Maintenance Men: While getting a unit ready for rent, I painted the concrete patio with flat concrete paint. The patio looks much better; however I am worried the surface may be slick when wet. Should I be concerned and what can I do about it now? Kristina
Dear Maintenance Men: I have a number of patio decks coved in artificial turf. Because of the sun and use, the “turf” is looking worn and tattered. What can I do to make it look better? Do I need to remove the old turf before putting down new artificial turf or can I glue down over the old? How do I remove the old turf and is it difficult? If I want to go back to a natural surface, how do I remove the adhesive? KC
Dear Kristina: Concrete patios can be slick when wet and more so after they have been painted. A simple solution is to use grit mixed in with the paint to give the concrete surface a bit of grip when walked on. Look for a clear non-slip polymer grip additive. The additive is mixed in with the paint or sealer and applied to the concrete with a roller. The polymer grit can be found at any hardware store in either the concrete or paint departments. Polymer grit infused paint can also be purchased if you do not want to mix in the grit. Avoid using silica sand or aluminum oxide; they both work, however they may change the appearance of the surface. Our
Dear KC: Sounds like you have your work cut out for you! In order to get the new turf/carpet to look good on the deck, the old must be removed. The new turf/carpet will not stick to the old carpet and the old glue will need to be removed as well. If you have a small area of glued down turf/carpet to remove, use a hand scraper to pry the carpet off the surface. If you have a large area; use a roofing scrapper to quickly remove the carpet. The old glue can be removed using a scraper
and applying an adhesive removal solvent or a heat gun. Never combine the heat gun and the solvent as the solvent is flammable. The solvent can be found at any hardware store and should be used in a well ventilated room. If you don’t want to use a solvent; use a heat gun to soften the glue and use the scraper to remove the glue. Both methods are messy and labor intensive; however the heat gun is the less toxic of the two. If you are not replacing the carpet and want to return to a natural surface; power sanding or media blasting may be needed to remove any trace of the glue. The surface will need to be sealed to complete the job.
Please call: Buffalo Maintenance, Inc for maintenance work or consultation. JLE Property Management, Inc for management service or consultation Frankie Alvarez at 714 956-8371 Jerry L’Ecuyer at 714 778-0480 CA contractor lic: #797645, EPA Real Estate lic. #: 01460075 Certified Renovation Company Websites: www.BuffaloMaintenance. com & www.ContactJLE.com www. Facebook.com/BuffaloMaintenance
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Five Ps for Your Social Media Marketing Success ship of smaller organizations often media because they “have” to and questions its effectiveness as a mar- don’t consider a plan of action before Small businesses and nonprofits keting tool and whether they’ll see a they do so. Make a list of what you want to accomplish. Is it to gain face a different set of circumstances return on their investment. I’ve developed and implemented more donors? Get a higher attenwhen it comes to social media maryour annual fundraiser? social mediaMETRO, strategies for a variety dance keting than their larger for-profit VALLEY, ARIZONA APT. atNEWS counterparts, namely, smaller bud- of organizations -- for-profits, non- Increase sales? Make it a priority to identify goals gets, fewer employees and a greater profits, and individuals. For all of priority on traditional forms of mar- them, I’ve discovered, when it comes so you can create the social media to social media, it’s important to strategies for meeting them. keting. For those charged with market- remember the 5 P’s: Patience ing, the biggest first step toward Nothing happens overnight. It Plan Oct, Dec making social media an integral Feb, Apr, Jun, Aug, Identify what you hope to accom- takes time to develop relationships component of the plan may be convincing your organization. Despite plish and create a strategy to take and establish credibility with your widespread use of social networks you there. Too many nonprofits and brand and your target audience. for personal connections, the leader- small businesses dive into social Over time, events and a steady pace will win out. Rushing leads to mistakes. The type of patience I’m referring By: Jeremy Juhasz
ON-SITE-NW SEATTLE Salsbury Industries
to is a long-term mind-set. When day-to-day activities seem arduous and, at times, unfulfilling, know that each day builds to the greater goal. March on. Persistence You must be stubbornly committed to your goals and your strategy. Keep plugging away and give your plan a fair amount of time and analysis before you pull the plug. If you know the plan is a good one, it’s not a good ideas to panic and change course simply because you’re not seeing results as quickly as you’d like. That said, circumstances change, not every strategy works, and you continued on page 6
ON-SITE
VALLEY, METRO, ARIZONA APT. NEWS
Salsbury Industries
Jan, Mar, May, Jul, Sep, Nov,
1010 East 62nd Street, Los Angeles, CA 90001-1598 Phone: 1-800-624-5269 • Fax: 1-800-624-5299
September
p
Octoberp
Rental Housing Journal Valley • September 2014
The Industry Leader in Quality
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RENTAL HOUSING JOURNAL VALLEY 16083 SW Upper Boones Ferry Road, Suite 105, Tigard, OR 97224 503-213-1281, 503-213-1288 Fax www.multifamilynw.org
Pam McKenna Multifamily NW President
How to Keep Your Competitive Edge
By Pam McKenna President, Multifamily NW This is a great time to be in the multifamily industry with strong rent growth, an increasing demand for apartment living, and new developments under construction in multiple regions. It is during the strong upturn that we need to be ready for what is ahead in the years to come. You not only want to make the most of how well things are going now but you want to be sure your business is prepared to sustain growth in the market. This September, Multifamily NW offers the Spectrum Educational Conference and Trade Show. At this conference you can attend valuable educational classes that will provide insight on how to stay ahead of the game. More than thirty experts from the industry will share their knowl-
edge and insight with you. You can learn marketing tips that can set you apart from the rest. Tune up your leadership and communications skills. Learn maintenance tips for the office team. Choose from several fair housing classes, from fair housing for maintenance to reasonable accommodations or medical marijuana. Don’t miss out on the Oregon or Washington Landlord/Tenant Law classes packed with valuable information. Develop your financial management skills or learn ways to avoid expensive mistakes from human resource. Enhance your sales skills and increase your customer service skills and much more. And don’t forget you can earn 1 CEU credit per class towards your continuing education credits. We will feature Colleen Kettenhofen, an award winning national speaker, author and workplace and leadership expert. “Colleen offers powerful advice and
eminently practical steps for both managers and employees looking to improve their professional performance and their lives!” Richard Jallichandra, CEO Technorati Media. This one-of-a-kind speaker blends humorous slice-of-life stories with valuable and actionable information on how to bounce back higher. And she shows how to implement this advice quickly and easily. On the trade show floor, you can visit any of the 150 industry supplier booths and learn the latest trends in products, services and technology. This one-on-one face time provides opportunities to network with suppliers you can partner with and others in the industry to share best practices. So who attends this event? Over
1,200 property managers, landlords, leasing associates, maintenance professionals, property owners, investors, property management personnel, marketing specialists and individuals looking to stay ahead of the curve. This is the event you won’t want to miss for 2014. Registration starts at 8:00 AM and General Session is at 9:00 AM September 18th, 2014 at the Oregon Convention Center Visit http://www.multifamilynw. org/ to register. I look forward to seeing you there!
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Multifamily NW
Upcoming Educational Opportunities September 9, 2014 9:00 AM - 5:00 PM CAM: Fair Housing (Portland, OR) September 12, 2014 12:00 PM - 1:00 PM It's the Law Lunch Time Series: Habitability Disputes: From Mold to Make Believe (Portland, OR ) September 18, 2014 8:00 AM - 5:00 PM Spectrum Educational Conference & Trade Show (Portland, OR)
September 30, 2014 9:00 AM - 12:00 PM 10 Common Fair Housing Mistakes to Avoid (Eugene, OR) October 10, 2014 12:00 PM - 1:00 PM It's the Law Lunch Time Series: Changing Ownership - How To Handle Transitions Into or Out of Properties (Portland, OR) October 15, 2014 7:30 AM - 9:00 AM Fall 2014 Apartment Report Breakfast (Portland, OR)
September 25, 2014 1:00 PM - 4:00 PM LARRC-Law and Rule Required Course (Eugene, OR)
October 16, 2014 4:00 PM - 7:00 PM COC Laser Bowling Party (Bend, OR)
September 29, 2014 9:00 AM - 4:00 PM CAM: Marketing (Portland, OR)
October 21, 2014 12:00 PM - 4:30 PM MWV Luncheon: OR Landlord/Tenant Law Part 1 - Move Ins and Start of Tenancy (Salem, OR)
September 29, 2014 1:00 PM - 4:00 PM 10 Common Fair Housing Mistakes to Avoid (Corvallis, OR)
October 23, 2014 7:30 AM - 9:00 AM SWV Apartment Report Breakfast (Eugene, OR)
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The Coach ...continued from page 2 [ www.pirmg.com ], has a passion for coaching his clients on executive leadership, hiring and motivating property management SuperStars, traditional and Internet SEO/SEM marketing, competitive sales strategies, and high leverage alliances for property management teams and their leaders. He provides private and group coaching for property management companies around North America, executive recruiting, investment banking, national utility bill auditing, national real estate and apartment building insurance, SEO/SEM web strategies, national WiFi solutions [ www.powerhour. com/propertymanagement/nationalwifi.html ], powerful tools for hiring property management SuperStars and building dynamic teams, employee policy manuals [ www.powerhour.com/ propertymanagement/employeepolicymanuals. html ] and social media strategic solutions [ http://www.powerhour.com/propertymanagement/socialmedialeadership.html ]. Ernest
worked for Motorola, Primedia and is certified in the Xerox sales methodologies. Recent interviews and articles have appeared more than 8000+ times in business and trade publications and in a wide variety of leading magazines and newspapers, including Smart Money, Inc., Business 2.0, The New York Times, Fast Company, The LA Times, Fortune, Business Week, Self Employed America and The Financial Times. Since 1995, Ernest has written 225+ articles for the property management industry and created 400+ property management forms, business and marketing checklists, sales letters and presentation tools. To subscribe to his free property management newsletter go to: www. powerhour.com. PowerHour® is based in Olympic-town…Park City, Utah, at 435-6158486, by E-mail ernest@powerhour.com or visit their website: www.powerhour.com
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ATTENTION COMMERCIAL PROPERTY OWNERS Need Financing for an Investment Property?
WARNING! Working directly with Chase Bank, Umpqua Bank, Union Bank, Opus Bank, America West, Fannie Mae, Freddie Mac, etc. can be Dangerous To Your Financial Health! You Should Be Asking Yourself These Questions: Do You Really Think Any Commercial Lender Is Working In Your Best Interests? NO ONE within those institutions is working for you. Staff employed by these lenders are making decisions based on what is in the best interests of the lender – NOT YOU! Doesn’t It Cost More to Use a Mortgage Broker? NO – in almost ALL cases I save investors thousands of dollars and weeks of frustration. Current Interest Rates Multifamily Mobile Home Parks Fixed rates start @ low 3% Office Retail/Industrial/MOD Fixed rates start @ mid 3%
What Lending Sources Do You Use? I have access to dozens of commercial lenders with dozens of different and innovative loan products. You have choices – and are not STUCK with just one lender and whatever they have for a loan program. How Do I Reach You? I will come to you! Doubtful you will get any other banker to come right to your home or office and sit down with you to discuss financing in detail. Free Framed Print When We Meet! If you are going to need a new commercial loan anytime in the next 12-24 months, you should seriously consider moving NOW. If you are ready to start the financing process, just email me or give me a call. When we meet, I will bring as a gift a beautifully framed print of the cartoon below with your name on it – a keepsake for your home or office.
Al Williams, American Commercial Mortgage al@apartmentfinancing.com
800.265.3860
“I listened to Al Williams.” Rental Housing Journal Valley • September 2014
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RENTAL HOUSING JOURNAL VALLEY
Five Ps ...continued from page 3
3 Techniques ...continued from front page hold a title or official authority. Meet with them on a regular basis so you can stay plugged in to what’s happening on the front lines. Identify areas that need improvement. Talk to them about systems and areas that need to be fixed, overhauled or eliminated, and about how team members are working together. They’ll often have ideas for innovations. The idea is not to look for people or problems to blame, but to work together to develop solutions and improve the team’s overall efforts. “The information you get in speaking with these key players is invaluable,” Johnsen says. “There may be nothing at all wrong, which is great, but these meetings give you, the CEO or manager, the information you need to constantly improve. It also reinforces the message to employees that they and their ideas are valued members of the team.” Figure out those “wildly important goals.” You can have the best people in the field working for you, yet if they’re not specifically guided to a certain goal, they are putting their time and effort toward an end that they’re assuming is correct. CEOs and other upper-level managers have the
6
30,000-foot view, so it’s up to them to guide everyone beneath them. “Short-term priorities may change slightly or drastically on a regular basis,” Johnsen says. “Your team may be self-sufficient, but their vision is limited to their daily duties. If they don’t know that a goal or objective has changed, they can’t work toward it.” Peder Johnsen is the CEO of Concordis Senior Living, www. concordisseniorliving.com, which owns, operates and develops senior housing communities. He’s a thirdgeneration assisted-living specialist whose grandfather and father built one of the first contemporary-style ALFs in Florida more than 30 years ago. Johnsen took over administration of two small facilities at age 18. Today, he runs the full spectrum of ALFs – from “ALF lites,” where most residents live very independent lifestyles but know assisted-living services are available if they should need them, to homes specializing in care for residents with Alzheimer’s and dementia. He is an industry leader in staff development and training, and has overseen the development, acquisition and financing of several communities.
need to also be willing to recognize that it is time to try something new. Be persistent in implementing your plan and in monitoring whether you’re reaching the objectives that will take you to your goal. Pay (what you can) These days, especially on Facebook, it’s a pay-for-play landscape. Pay where you can, if you can. The results can provide the spark you need to drive a specific campaign or to increase your overall visibility to your target market. It can also be a very affordable alternative to other digital advertising options. Prioritize I can’t stress enough the importance of time management. If your marketing staff consists of only one or two people, it’s essential that you stay on top of your social media strategy by prioritizing your quarterly, monthly, weekly and daily objectives and goals. Nonprofits and small businesses face countless new daily challenges. Sometimes we lose track of what’s most important. Take the time to identify those tasks critical to your success and make them a priority. You can succeed with social media even if your organization doesn’t ALLEY have the brand recognition of a multi-billion dollar corporation. If
you remain even-keeled and set realistic goals, the return on investment will follow. Jeremy Juhasz is a social media strategist at EMSI Public Relations and a panelist for the Tampa Bay Marketing Summit, (www.tampabaymarketingsummit.com) on Aug. 8. Jeremy has years of experience managing social media marketing for the nonprofit sector, including launching social media and online strategies for Feeding America Food Bank and Goodwill affiliates. His multi-media background includes work as a newspaper reporter and as a marketing professional. He’s a graduate of Alfred University and attended Kent State’s School of Communication and Information, public relations.
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Rental Housing March Valley • September 2014
RENTAL HOUSING JOURNAL VALLEY
Hiring a Manager ...continued from front page
Carry Back Financing ...continued from front page
lated to difficult tenants.
not, you get busy with life and don’t want to deal with the investment yourself. If you hire a property manager they deal with the myriad issues involved with property management for you.
Maintenance: Most property management companies handle property management emergencies 24 hours a day. They either have their own maintenance department to take care of your property or they have a vast pool of vendors that are prequalified to take care of your property issues. These vendors deal with many property issues from basic carpentry to plumbing, electrical, roofing and mold remediation.
Property managers handle: Rent collection: They know what it takes to get the monthly rent collected from tenants. They deal with the tenants that won’t pay/ can’t pay, up to and including tenant evictions, something most landlords are unfamiliar with and very nervous about.
Vendor selection: Property management companies have an extensive list of vendors they have good experiences with. Property managers need good results for their clients and take time choosing the vendors they work with. In addition, property managers are sensitive to property maintenance costs and look hard to find cost effective vendors. Bill paying – financial reporting: Not only are property managers required by licensing laws to submit monthly financial reports to their
Tenant selection: More often than not they have screened the tenants before move in, evaluated their rental history and their credit history and established their ability to pay. Property managers are like you, the fewer tenant turns they have the better, and the more money you make. Dealing with problem tenants: Sometimes a tenant goes through a divorce, a loss of a job, or some other crisis that turns them from being a cooperative tenant to an uncooperative tenant. Property managers know how to handle those situations and can typically solve problems re-
price premium, when offering seller carry back financing. The loan can have a balloon payment or can be fully amortized. Fifteen year fully amortized loans are a great option for owners liquidating in their mid sixties. The monthly payments to the owners would probably be between 40% and 50% of the current gross rents. The first ten years of retirement are considered the go-go years, with retirees traveling, golfing and pursuing activities that are relatively expensive. Usually, by their late seventies retirees slow down. A fully amortized fifteen year loan could provide the income for active retirees to pursue many of their dreams worry free. Just as you pay mostly interest in the beginning of paying on a mortgage, when financing a buyer, you collect mostly interest. Therefore, the principle of the loan is preserved for an extended period of time. It is important to review a buyer's credit report and financial strength, just as would any prudent banker.
Once you sell the property, you don't want to foreclose and revert back to being a landlord. Put yourself in the buyers' shoes and structure the deal so it is a win-win. If you know the property will need a new roof in the next couple of years, put it on before offering it for sale, Likewise, if a few units are ready for new air conditioners, replace them before selling. You can recapture the cost in your sale price. For generations, many people have funded their retirement and enjoyed their golden years by benefiting from seller carry back financing. It is one of the unique“ exit strategies” of real estate ownership. Jade Bossert has sold real estate in Arizona since 1979. She is an Associate Broker with Tierra Antigua Realty in Tucson and specializes in the sale of apartment complexes. Contact her at 520-797-6900 or tucsonrealestate@ mindspring.com
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See You There!!!
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