5 Hidden Costs of Poor Property Management
Dustin Edwards • May 21, 2021
Evaluate these Aspects to Maximize Your Investment
When you are considering making a move to a property management company in Long Beach it can be easy to focus on “what are the monthly fees?”. Of course fees are only part of the story when it comes to having a property management company. Find out more about the five hidden costs of poor property management to help you find the best possible match for your goals.
- Vacancy Periods - Each day that your property isn’t occupied with a tenant it is costing you money. Even if you own your property outright there are still baseline expenses of maintenance, taxes, and insurance that you will have to pay if you don’t have a tenant in place. As you are interviewing property management companies to see if they could be a good match for your property, dig deep to understand how long properties that they manage stay vacant. Ask specifically how long properties like yours (i.e. a 3 bedroom/2 bathroom home in the Los Altos neighborhood) stay vacant after a tenant leaves. Get them to be as specific as possible given both current market conditions as well as moments a few years back to help you see how long properties are truly staying empty that they manage.
- Cost of Maintenance - When most people think of the cost of maintenance they are thinking about the hard cost of a specific repair but that is only half the battle. Of course you do want to be cognizant that you are getting a fair deal on repairs ranging from a faucet to a water heater, but more importantly what repairs could be missed that could cost you more money later if they aren’t addressed? Items such as not replacing older dishwashers or having rubber hoses on laundry units (vs. braided lines) can result in massive repairs vs. addressing at smaller increments over time. Take the time to ask prospective property management companies how they approach maintenance, how they ensure on-going maintenance is fairly priced, and their philosophy to mitigate major items that could be avoided.
- Missed Rental Increases - Far too often we hear from new clients that they have had the same rent for years and that is because “they are afraid of losing a great tenant”. While we certainly don’t want properties to be vacant, we also don’t want to see owners miss out on additional income. While it might be easy to avoid a rental increase, not raising the rent (based on solid analysis of competitive market rents) is one of the ways to have your asset truly underperform. To help you avoid this pitfall ask prospective property management companies how they approach increases, when they recommend maintaining rents, and even how much of an increase could be expected when they do raise the rent.
- Unexpected Fees - All too often a good presentation or even a guarantee can have owners miss out on the total costs of a property management company. While most owners ask about the percentage of management fee they sometimes forget to ask if that is ALL of the costs of working with the management company. Don’t forget to ask for a sample invoice to see if there are move-out fees, marketing fees, or other such items that could impact your total cost of engaging with that company.
- Stress and/or Anxiety - Whether it is unexpected fees or something such as a lack of communication, the wrong property management company can cause you stress! Stress and anxiety can hurt your passion for real estate or worse put strains on your relationships with friends and family. To help you minimize the potential for stress, take the time to really ask questions of potential property management companies ranging from their communication strategy to even asking if you can speak to other owners to see how they like working with that company.
Finding the right property management services from the right company can be a challenge. If you’d like to find out how we can help you avoid the above mentioned pitfalls for your Long Beach rental call us today at (562) 888-0247. When you want a quick check to see how much your property could fetch in rent we invite you to fill out our Free Rental Analysis
where we perform a comprehensive comparison to share your rental stacks up to the competition.
Share this post
With the real estate market as competitive as it is, many landlords are looking into building an Accessory Dwelling Unit (ADU) or Jr. ADU to improve their bottom line with additional monthly income. While this is a great way to earn more, you need to be sure you’re investing in the right upgrade to your property. Below are some of the key differences between ADUs and Jr. ADUs; this way, you can make the right decision for your property. Differences between Junior ADUs and ADUs On the surface, the primary difference between an ADU and a Jr. ADU is the square footage. However, there are many considerations for each type of ADU , significant differences include costs and build limitations. ADUs are generally seen as a larger and more versatile build when compared to a Jr. ADU. They can be built detached from the main home, converting an existing structure, most commonly the garage. In Long Beach, an ADU can be up to 800 square feet or 50% of the gross floor area of the primary dwelling, whichever is smaller. For reference, an 800 sqft living space can be arranged as a 2-bedroom 1-bath home, though with creative use of the space, many investors have been able to fit 2 bedrooms and 2 bathrooms comfortably. If listing the ADU for rent is the goal, this can produce a higher yield, though at the cost of a higher initial investment. Jr. ADU, on the other hand, can only be a maximum of 500 sqft and must be built attached to the existing single-family home. While you can build an entire new addition to accommodate the Jr. ADU, it's not uncommon for homeowners whose homes are bigger than they need to convert a bedroom into a Jr. ADU in order to have additional income . A Jr. ADU does still require an efficient kitchen. Bathrooms can be shared with the main house, though this can deter some prospective tenants. Additionally, the utilities are oftentimes shared with the main house, which can simplify installation, though it can complicate utility costs with your tenant. When an ADU is Right Being able to build a full ADU provides an entirely separate and private living space, which is more desirable to prospecting tenants. This is the preferred choice for most investors, especially those who have unused space in their property. By being built apart from the main house, an ADU may cause less disturbance to those living in the main house, whether that be yourself or another tenant. In Long Beach, CA. ADUs can’t be listed as short-term rentals on apps like Airbnb; that being said, an ADU can command more in rent because of the aforementioned features. If you’re looking for a long-term investment, ADUs increase your property’s value while generating a consistent cash flow. Finally, if you ever plan on selling your rental property, the additional ADU can improve the appeal of your property to future buyers. When a Jr. ADU is Right While a Jr. ADU doesn’t have the same potential as a full-sized ADU, Jr. ADUs are far more budget-friendly. These are a great option for investors who have limited funds. Since Jr. ADUs generally require less work to be done in less time, allowing you to begin making a return sooner. Finally, if your property doesn’t qualify for a full-sized ADU permit due to the size of the property lot, a Jr. ADU can be built primarily through interior work, which may only require reconfiguring existing interior space. Whether you choose a full-sized ADU or a Jr. ADU, the decision depends on more than just the size of the structure, you’ll have to manage filling the vacancy and managing the new tenant. If you need help choosing which ADU is right for you or you need help managing your Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
Summer is a great time of year where people enjoy a number of outdoor activities. Though for landlords, summer brings with it a list of maintenance items and preventative care for their properties. Below, we’ve gathered three of the most important maintenance items to do before summer starts. Service your HVAC System Southern California summers are getting hotter and hotter, if you want to maintain tenant satisfaction you’ll need to have the HVAC or any A/C or cooling system properly serviced . Filters should be cleaned or replaced, and the ductwork should be inspected. For rentals with window units or mini-split systems should also be thoroughly inspected as well for optimal cooling. Doing proactive maintenance can reduce the risk of the cooling system breaking down during peak usage while also improving the system’s efficiency. This can lower utility costs for your tenants while extending the lifespan of your cooling system, saving you money in the long run. Additionally, consider inspecting your window and door seals for leaks. If the seals are broken, it allows hot air into the living space, this increases the cost associated with cooling while adding more load to the HVAC or cooling system. While not directly a part of the HVAC system, ensuring there aren’t any breaks in the seals helps extend the lifespan of your cooling system which is beneficial to your bottom line. Inspect your Roof The condition of a roof is oftentimes ignored since they tend to last over twenty years, and some property owners may not even be sure when the roof was last replaced . A poorly conditioned roof is one of the primary ways for a rental property to drive up the costs of repairs and tenant complaints. A damaged roof can inefficiently insulate a home, making it harder to keep it cool. It can also lead to water leaks during rainfall, which can lead to water damage, stains, and mold growth. While summers tend to be dry, the coastal cities such as Long Beach may see unexpected shifts in weather, which can bring sudden rainstorms or increased humidity. Fixing a small roof leak is relatively inexpensive, however, leaving said leak to grow can result in an emergency repair can cost thousands especially if a tenant has already moved in. A thorough roof inspection is a great maintenance item to do during a vacancy period especially as this can result in a positive experience with new tenants. This can lead to a long term stay with many lease renewals. Check for Signs of Pests Pest infestations are one of the fastest ways to ruin a tenant’s stay while also damaging a landlord’s reputation. Pests such as ants, cockroaches, other bugs, and rodents are common in many beach cities, especially during the warmer seasons. Being in a city, you’ll likely never truly be rid of pests, though, even a single complaint about an excess of bugs or rodent droppings can lead to bad reviews online, service calls, and in severe cases, lease termination. These pests not only create an unwelcome environment for your tenants, but they can also cause real damage to your investment property. Cockroaches are known to damage small wiring in appliances, ants can ruin food and get in everything, while rodents can chew through walls, plumbing, and even electrical wiring. Landlords should schedule regular ppest inspectionsto check for early signs of pest activity before the hotter season begins. Much like everything in this article, preventative maintenance is significantly cheaper than an emergency call, in this case to an exterminator. If you want to keep your tenants happy and your property well taken care of, preventative maintenance is a must. If you’re unsure about the signs to look for when doing routine inspections or you need help managing your Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
A Solar Battery is an important party of a solar panel system. However, is it valuable for a rental property? Read on to discover.
