Managing Home Maintenance Costs

As in any industry, there are terms and buzzwords that are unique to residential real estate. I you do not understand or know what these terms are, it can be pretty confusing. When you put your home on the market, you should know what those terms mean. It will save time and cause less confusion during what is a very stressful time for many people. Here are definitions for the most common Real Estate Selling Terminology :

Real Estate Selling Terminology

Fair market value: This is an estimate of how much a specific home will sell for in today’s market, taking into account what similar properties in the area have sold for recently. Another term used in conjunction is, comparables. These are homes similar to yours.

Seller’s Agent: That would be me, the REALTOR® who is helping you sell your property. I would also assist you in finding and buying your next home.

Buyer’s Agent: This is the REALTOR® who is representing the buyer of the property you want to sell.

Pre-approved Mortgage: This is a statement (often in the form of a certificate) from your bank or other lender that states that you qualify for a mortgage for a particular amount of money. A pre-approved mortgage adds credibility to any offer you make on a new home.

Staging: This is a strategy where a home is purposely prepared so that it appeals to potential buyers. Staging may involve cleaning, de-cluttering, rearranging furniture, redecorating, and more.

Survey: This is a document that defines the boundaries and measurements of your property and any structures on it.

Offer: This is an offer of purchase, in writing, for a particular property.

Conditional Offer: This is an offer to purchase, but with conditions. For example, such as “conditional on a satisfactory home inspection” or “conditional on arranging suitable financing”.

More information about selling real estate is available, click here.

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Property management maintenance is so important for owners as well as renters and most of the time neither is completely happy. It is never good enough. Owners feel that the maintenance costs too much. That renters are damaging their property. They just do not care enough to take good care of the building they live in.  It is a fine line. At the end of the day, there must be enough money to pay for everything and still make a profit for the owner without totally gauging the tenant.

Property Manager Caught in Between

Caught in between is the property manager. They must work to find a balance between both parties without spending more money than what they need to. Sometimes he or she will assess the tenant for obvious damages. Sometimes they will delay minor repairs to group several together. They can save money by only having one service call. And sometimes they will delay major maintenance by using temporary measures. But the property manager ultimately works for the owner and is the owners representative on the property. It is the property managers responsibility to implement the policies and guidelines of the owner. At all times they must use their best judgement in many different situations.

Making matters worse is the government. Which regulates how quickly you can raise rental rates to pay for increasing taxes, interest rates and property management maintenance. These all go up almost every year. Building a budget that factors in these increases. The rent increases sometimes will help property managers and the owners keep a building looking great for many years. In fact budgeting for repairs and building up a fund to handle emergencies and major repairs is just sound business practice.

Property Management Maintenance – Budgeting

Rental properties are some of the most difficult buildings to manage from a maintenance perspective for many of the reasons mentioned above. In addiction, for rental buildings there usually must be two separate and distinct budgets.

Set up a budget to manage all tenant related expenses associated with the units that are being rented.  This would include any repainting, carpet cleaning and repairs after a tenant moves out. If the repairs are normal wear and tear, then the owner must absorb these costs out of the general revenue for the property. Appliances only last so long. Carpets need to be replaced. Damages must be repaired for and paid. Usually prior to collecting anything from the tenant. This all must be accounted for and included in a budget. They must pay for them prior to collecting from the tenant.

Another Budget

Set up a second budget for the building itself. This would include all common expenses. It may also include cleaning, window washing, common lighting, snow removal, garbage removal, repairs to the roof or windows and so on. Some of these expenses are operational in nature in that they occur on a regular basis weekly or monthly. A roof replacement is a good example. In addition, ideally money should be set aside every year to handle all major repairs such as this. In some locations, budgeting for these expenses is in fact part of the bylaws of the building.

There is a lot of responsibility for property managers. They are accountable for everything that goes on at the building they are managing. Hire an excellent property manager who has experience. They should have a good relationship with all parties will make a huge difference with everyone.

For a lot more posts about property management topics, click here.

A property management system must have a many features that help the property manager. They help manage the rent of the units they are managing but many other activities around the property. They must  keep track of all cash flows which include rent income and expenses. Include all work orders that are associated with the property for repairs. In addition any  maintenance that needs to be completed. Some owners want a lot of detail. They review how costs are being managed. This is something that can be used by the property manager to differentiate your business from other competitors.

Property Management System – Information Readily Available

They must have these reports and information available should the board call for the information. Or the board asks for an audit of all cash flows and expenses. Complete an audit every year. Assure  owners that all cash flows are correct.

An excellent property management system will allow you to meet your own property management needs. In addition as well as the owners of the buildings that you are managing.

Reporting should be excellent as well. The manager can quickly tell how many units are rented at what rent level. Who is coming up for renewal. How much money is being spent on each unit? Flag units that are triggering a lot of unnecessary expenses.  Sometimes there are a lot of incidental expenses which by themselves are not very expensive. But over a year can add up to more than expected.

Information for Owners from Property Management Systems

Reports also need to be available for the owner or investor of the building. The minimum requirement is accounting reports showing the total income and expenses by all categories. Also bottom line summaries. These reports should allow drill downs to individual units that may have higher numbers than what are the average for advertising or repairs as an example. While paper copies are helpful, with today’s systems, online reports that allow browsing of the results and drill downs into more detail should be available.

Investors also want alerts for high expense, for rent renewal, for non-payment of rent etc. Track large numbers of items with property management software. This helps the senior management team manage large numbers of units and stay on track with various issues. Weekly reviews and monthly reviews of all of the top line numbers with exception analysis should be the norm. A good property management system can help a great deal to make this process smooth, while providing the answers at the same time.

Complex Property Management Software

Property management software is becoming more and more complex all of the time. Property managers either must invest in training for their people to learn how to maintain and use these systems or they need to hire someone who knows your software inside out so they can deliver all of your needs. There is nothing more frustrating when the support people from the software company tell you that a feature or report is available, when your people should have been able to deliver these results from the beginning.

Software systems can be expensive, but they can deliver significant results. Invest in appropriate training for your system and utilize the train the trainer approach to keep everyone up to speed on all of the features. Invest wisely and use your customers requirements as a means to select the best system for your needs.

For more posts about property management, click here.

In our last post we talked about having your home monitored while you are away on vacation or away on an assignment for your employer. Vacant Home Property Management is also important from an insurance perspective. The next question that many people have is what should they expect to pay for this kind of service.

We find that many people do not have any idea of what this service costs and are surprised when they receive a quote. They may be already stretched when it comes to paying for their vacation and then the charges for home property management are added. It is just too much and they decide to pursue other ideas for someone to look after their home, whether it is friends or family. Note that if you are away for work related purposes, most employers will allow you to expense any charges for looking after your home.

What factors go into determining the appropriate charges?

If you have ever hired a repairman to come and fix an appliance, then you already know that they charge a high fee just to show up at your home and then for the time to repair your appliance. In this situation of property management, the property manager is not in your home for any significant period of time. They need to check the security of your home; they need to confirm the heating system is working and that there are no water leaks.

In addition they will collect news papers and flyers. Also perform any other special duties that you may need and have placed on your contract. This is what most people think about and consider that the charges should be based on and yes they are partially correct.

Most people fail to fail to consider travel time to and from your home. This can vary a great deal depending on where you live relative to the property management firm. In addition there are charges to cover wear and tear on a vehicle and gasoline charges to drive to your home. Most property managers must also charge the appropriate taxes for state or local provincial authorities. These charges can add up especially if you live some distance from the property management firm.

Vacant Home Property Management – Charges for Other Services

The basic charge is for a visit to your home to check on the security of your home. This should meet the requirements of your insurance company. Many people require additional services as well. Depending on how long you will be away, you may need someone to cut the lawn or clear snow from the driveway. In dry periods, the lawn may need to be watered. If you are away for a long period, hedges may need to be trimmed as well. Most property managers are comfortable with sending pictures to customers, prior to any additional work being undertaken.

In one situation that we came across, a customer had hired a property manager for a year to manage a home. During that time the shrubs grew a great deal. They really needed to be trimmed to keep the home looking as if it was well looked after. We simply took pictures of the offending shrubs. The home owner decided on what they wanted to have done.

In some cases home owners will do nothing. While others will be comfortable with the work being completed. This work is in addition to the visitation charge and usually is based on an hourly rate. Always ask for a quote prior to agreeing to have the work completed. This applies to all other charges, whether it is snow removal, pool maintenance and lawn care.

Property Management Charges

If you are concerned about the charges for home property management, ask the property manager to explain the charges. Ask for several quotes prior to agreeing to hire a specific company. Also make sure you have a signed contract. It should clearly specify the charges as well as the detailed services that are going to be provided. If they are not on the contract, chances are that they will not be provided. Adding services after the contract is signed will usually involve additional charges.

If you found this post helpful or have other points to add, please leave a detailed well written comment for our readers. Our objective is to educate our readers so that they hire the right company for home property management.

For more information on vacant home checklists, click here.

In every major city and most small cities and towns across the country, there are Property Management firms offering a variety of services to clients who need to have someone look after their home, their apartment or their rental property.  You can have an excellent service or end up with a nightmare if you are not careful.

Hopefully, some of the things we talk about in this web site will help you in your selection of a residential property management company for your home while you are away or for a rental property that you own.

This web site is focused on property management for urban consumers who are either renting a home out to a 3rd party and want someone to look after the rental and the management of their home, the rental contract, etc or are leaving their home vacant for a long period and need someone to look after their home while they are away.

This latter group comprises snowbirds who are spending the winter in the south, business people who are away traveling or people who have been transferred to other locales. Property managers also look after rentals in the same city that you live in as well as properties that are located in other cities from where you live.

What Should You Look For in Property Management Company

There are numerous items to consider and we have tried to list some of the more important things in this post. If we miss any that you feel are important, please leave us a comment so that we can update this post to alert our readers.

• A contract that states the services they will provide to you
• Rental philosophy that matches with you and the type of person you want to rent to
• Regular reports that clearly show revenue and expenses
• The final annual report you can use for tax purposes
• Emergency number to call for your renter and yourself
• The designated contact for you to call
• Process for collecting rents, payment of bills and deposit of rents to your account
• Reasonable property management fees
• Advertising costs are prorated across all rental units they manage
• Emergency repair process
• Repair approval process
• Handymen at reasonable rates for standard repairs
• References from other property owners
• Monthly, quarterly reports that meet your needs

These are just a few of the areas you want to consider. We will discuss some of them in more detail to give you a flavor for what we are considering in these items.

Rental Philosophy

At one time we had a property manager who believed that having a low vacancy rate was the right way to manage a property. Yes, the property was always rented, however, the people we rented to were not some of the best people to have in our units.

All of the bad things that you can imagine occurred. They skipped town, they had a lot of damage in the unit, they missed rental payments and on and on.

It is very difficult in some jurisdictions to collect from these delinquents and it costs more money to collect from them for missed rent and money to cover damages. We came to the conclusion it was better to have a unit sit vacant for a month while we found a better class of tenant who had great references and was not going to wreck the place! The cash flow was usually better even though the unit sat vacant for a month.

Property Management Reports

• Look for regular reports that meet your needs. They should include:
• Monthly cash flow for your unit
• Quarterly cash flow for your rental unit
• Comparison to forecast so that you can see how you are doing
• Annual statement for tax purposes
• A managers report in narrative summarizing activity concerning your property

This seems like a lot, but it is necessary to ensure that there are no surprises. Some people will not hear anything regarding their property for an entire year and then get a big surprise when they find they have to pay more money for major repairs or that cash flow is not what they expected.

Property Management Contacts

This applies equally to your renter as well as yourself. The renter needs to have someone they can contact in case of an emergency to solve his or her problems. If there is a water leak on a long weekend, you want it fixed that day and not after everyone comes back to work.

Also if you the owner have a question, who do you call to get answers to your queries about information given to you on the property management reports. Remember to not be a pest either. Be professional and business-like in your dealing with the property manager.

References for Property Managers

Always get references, although sometimes that may be suspect. Spend an hour talking to other owners to compare notes. There are two fundamental things to look for:

• Does the owner you are speaking with have the same business approach as you do
• If so, are they satisfied with the service they get from the property management firm?

There is really no sense in speaking with someone who never talks to the
property manager, does not want reports and only wants to be called if there is a problem. Of course, they will be happy with a property manager who never calls them and gives them the annual report they need for their taxes. I am exaggerating a bit here, but hopefully, you get the point.

If you both want monthly results with an accounting report and a narrative report and the person you are speaking with finds the reports meet their needs, then there is a better chance that you will also be satisfied with the firm you are considering.

As we said earlier, if there are major thoughts missing in this post about property managers, please feel free to leave a comment.

For more posts about a variety of property management topics, click here.

Believe it or not most people are more concerned about someone breaking into their homes while they are away on vacation or business. The reality is that there is more danger of damage from a variety of other things than what you might not think of. One of the main ones is that your insurance company may require someone to check on your home every couple of days. They need to make sure that the furnace is running and that there is no leaking water. This could be a condition of insurability so we tell everyone to check with their insurance company. Determine what is actually required before they head off on vacation for a couple of weeks. Residential Property Management Categories should be considered by everyone. They are all different.

Residential Property Management Categories

There are lots of reasons for hiring someone or arranging with a neighbor or family member to look after your home while you are away. These categories cover the occasional all the way through the full time professional. The following list comprises some of the main reasons why you may want to consider having someone do this on your behalf ( In all cases except for pets, we assume you are gone for a week or more):

• Pets at home ( Have someone come in to feed and care for your pets)
• Insurance requirements (24/48/72 hour intervals)
• Landscaping ( including cut the grass, water the plants)
• Water indoor plants
• Make the home look lived in(lights on timers, move lights)
• Pick up the mail ( hold or send to the homeowner)
• Remove advertising and papers from front step
• Check on the water, including sump pumps
• Turn on the water to fill traps(if vacant for more than 2 weeks)
• Check security of the home
• Snow removal
• Check on the home and report to the homeowner
• Monitor home improvement while the homeowner is away
• Rent the home
• Rental property management

There are probably many other reasons for having someone look after your home while you are away or if you plan to rent your home out to someone while you leave the country. It also may be a vacation property or an investment property. If you are reading this post and notice something missing please feel free to leave us a comment.

Additional Property Management Requirements

The requirements are also much different depending on whether you have a traditional home with a front and back yard, vs. a townhouse, a condo or a rental property. The time of year also is a factor since you must arrange for someone to cut the lawn and trim during the summer, while the winter requires someone to clear the snow from the walkway and driveway if you live in areas that receive snow. These all need to be taken into account if you planning on hiring a residential property manager, a house sitter or arranging for someone to look after you home while you are away.

We will be developing customized checklists for people in these various categories.  If they do not quite fit or you have a special situation that we have not covered, please leave us a comment and we will update our lists. We plan on issuing a new post every two weeks so stay tuned to watch for our latest post.

For more posts about a variety of property management topics, click here.