When you decide that you want to buy one or more rentals, or other investment property, your first decision is choosing an agent and property manager.
Don't just choose the first person who answers the phone, or the one who works for the big, well advertised franchise agency, or the one your mother goes to church with. You surely wouldn't choose a mate that way. No matter how big the company, you'll only get the services of one person, so choose wisely. In fact, your chances of finding a really sharp manager at a large, well known company may actually be worse. That's right. Typically new agents are only able to get a start in a big company. They're not yet prepared to operate without constant supervision. They'll need to gain some experience, before they can opt for their office of choice. The fact is that you'll find a few good agents in most realty companies, regardless of size, name, or fame. Try calling candidate offices late on a Saturday night or on a Sunday afternoon and see how willing they are to help you then. You're definetely going to want a property manager that is available for you, or your tenanats on a 24/7 basis. You never know when an emergency will arise. Meet several, on your own turf, and spend some time interviewing each one, just like you would when hiring any potential employee. Let them know they don't automatically get the job, just because they're the biggest, or they saw you first, or because they "dress for success."
Your agent is going to have a huge influence on the success of your purchase, so choose one who has experience; who knows the job, the laws, the market, the mortgage lenders, the builders, the area, the city, the county, the neighborhoods, and maybe even the neighbors. Choose someone who has some knowledge of the building trades, the building codes, what it costs to replace all the windows, or the roof, or remodel the kitchen, or new carpet, vinyl, tile, or simply what it takes to fix a leaky faucet.
Choose an agent that understands the entire process of buying AND managing property. Your agent will interact with everyone involved with your purchase, including your mortgage lender, your escrow agent, your home inspector, and anybody involved with repairs or improvements to the property you buy. Any lack of skill and understanding in any one of these areas can have disasterous results for YOU.
Choose an agent that cares about you and what YOU want. Choose an agent that you can TRUST! You have innumerable decisions and choices to make, so pick an agent that understands what you want and whose goal is for YOU to ultimately be happy with your choices. Many agents and brokers seem to forget that they will get a paycheck when the sale closes, so all they need to do is learn about you, learn from you, answer your questions, give answers to the questions you haven't asked, but will or should ask, so that you end up getting what you really want. Your agent isn't selling you anything! You're buying. Your agent is your facilitator. The agent's actual job is to find it, and they can't find it, if they don't know what it is. You and your agent must communicate and understand each other. Your agent must also help you find the things that you don't know to look for as well as what to avoid. In other words, your agent must truly care about YOU!
Finally, choose an agent that is a good fit. Your agent will spend a lot of time with you, your family, and maybe even your friends. Get one that's comfortable for you and that makes you confident that they really know what they're doing!.
It's no secret that the best agent or manager might be found anywhere. From a big famous company, or a small company; driving the nicest car, or the most common; dressed in dapper attire, or very casual; outgoing, or even shy; the first one you meet, or the last one, none of these things necessarily makes the best agent, or manager. Find a comfortable fit; someone you can TRUST; who cares about what YOU want; someone who has the experience and expertise to know the entire process, from beginning to end.
Avoid putting too much importance on personal, emotional, and often useless issues, such as smokers, or pets, etc. Just for example, advertising "pets negotiable" will always bring more applicants. Of course, some of those may not be suitable, but you may just find that perfect tenant, with the perfect dog. Remamber that it's not the dog that matters, it's the people. Meticulous people, will be just as particular with their pets, as they are with everything else. That's always a good thing!
Being a good property manager requires superior balancing skills. Your next tenant is going to be very important for your future. They will need to know that their needs are also important to us. So, we’ll strive to make them satisfied customers, as well. As your agents, we are committed to looking out for your best interests first. That will sometimes be manifested in our looking out for your tenants’ interests, too.
When you're looking for rental property, you'll want something that will attract the best tenants, rent as quickly as possible, and command the highest rents, while at the same time provide the best overall value appreciation, for that day down the road when you'll want to sell and reap the biggest profits of your investment. Rental property should be considered a long term investment. When to add to your portfolio and when to liquidate are a matter of timing. We know this local market intimately, as well as keep up to date with what’s happening nationally.
There are a lot of choices. We want to help you make the best ones. Regardless of what you want to buy, we want you to find the property that’s right for you. Even if we need to bring in someone with more expertise to fit the property, we'll do it. We’ll ask questions, you’ll tell us volumes. It’s team work and we'll build however big a team as we need to get the job done right, without any extra cost to you. We've done it many times before, on projects from which most larger companies would turn away. We’ll show you as many options as you need. We might show you more options than you want. That’s good too. When you have found just the right opportunity for you, then we’ve done our job
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The Benefits of Professional Property Management
by: Craig Johnson, CCIM, RECS
The reality is that commercial real estate properties and portfolios that are actively managed, not only perform better on an operating basis, but in most cases, they yield more on disposition as well. That said, my question is this: Why is it that so many commercial real estate principals still attempt to manage their own portfolio? While the answers clearly vary on a case-by-case basis, the most common reason usually boils down to the perception that money can be saved by not paying third party management fees. Indeed, the age old dispute between “do it yourself” and “do it for you” business models is alive and well in the commercial real estate industry. In the text that follows, I’ll make the case for professional management as a value added service that contributes to overall property returns.
Let’s begin our discussion with discussing the difference between property management and asset management. It was not too long ago that there were very distinct differences between these two disciplines. Property managers were deemed to be tactical in nature, focusing on day-to-day operating issues such as routine maintenance, minimizing vacancy, collection of rent/lease payments, and first tier communication with tenants. Asset Managers on the other hand were strategic in nature focusing on adding value to the property by making positioning decisions that would increase net operating income (NOI) and valuation. While these distinctions still exist among some firms, the increased sophistication of professional management firms over the past few years have caused the lines to be blurred to the extent that many firms now provide both disciplines in an integrated service offering.
As an owner of commercial real estate, unless you’re a very large and sophisticated commercial enterprise, attempting to do it yourself, or to hire internal staff is not only inefficient and very expensive, but in this author’s humble opinion it’s very short sighted. You see, the right question to ask is not can you manage your own portfolio, but should you? Let me provide an analogy for illustrative purposes…I could do my own taxes, I have the financial acumen to do so, and who knows my financial position better than I do? Why should I pay a CPA to do something that I could clearly do myself? Following is how I viewed the decision to outsource my tax work:
1. Time: It is not the highest and best use of my time. I simply have better things to do, and it would take me much longer to organically prepare the return than it would my CPA. I would also likely e incur greater amounts of frustration than I care to subject myself to.
2. Competency: While I’m generally capable of synthesizing my financial information and preparing the returns, I’m not immersed in tax law on a daily basis. I think I know what I could do, but am also certain I’d miss opportunities and end-up leaving money on the table.
3. Risk: If the accounting firm makes a mistake it is their error, and ultimately it will be there problem to resolve. If I’m audited I’ll have them to represent my interests in dealing with the IRS.
4. Cost: I’m certain my accounting firm saves me more in taxes than I pay them in preparation fees. It simply makes financial sense to use a professional.
Do you prepare your own taxes? Do you perform your own legal work? Think about all the areas in your business where you choose to seek professional advice and counsel. Why would you deviate from a proven model when it comes to managing your commercial real estate assets? The fact of the matter is that the professionals you select to represent your interests work for you. You are still in control, you call the shots, you are simply leveraging down through delegation to a service provider who is a better resourced subject matter expert. Why would you choose any other path?
It is important to expand on the roles and relationships touched on in the last paragraph to point out that as an owner you want to collaborate with the best professionals in any given field to produce the best possible outcome, managing risk along the way, at a reasonable price point. You utilize and collaborate with your contractors, architects, engineers, etc., why not professional management firms?
The following points are just a few representative examples of how you can benefit from the use of professional management firms:
1. Strategic Planning – Professional management firms will collaborate with you to determine how your properties should be positioned or repositioned relative to current market trends and competitive properties. They will advise on issues that may lower operating expenses, increase NOI or add new sources of NOI.
2. Cost Savings – Professional management firms typically offer leverage and economies of scale that individual principals cannot bring to bear. Management firms use the aggregate size of their portfolios to negotiate prices, to assure high quality, and rapid response time. They simply have greater scale than the typical property owner and can deliver bottom line savings as a result thereof.
3. Domain Expertise - Professional management firms have the depth and breadth of knowledge, skill sets and competencies to deliver the right turnkey solution as needed. Having someone apply state of the art technology and tools toward improved property performance is a far better solution than a cobbled together in house attempt.
4. Regulatory & Compliance – Professional management firms are familiar with state and local municipal codes and regulations as well as with federal laws (ADA, EPA, DEQ, etc.) which may impact your property. 5. Responsiveness – Do you really want to deal with the phone call that comes when you’re in a meeting, out with your family, on the golf course, etc.? Professional management firms are on call 24 hours a day - 7 days a week. 6. Vendor Management – Using your management firm as a single point of contact to manage vendors is tantamount to found time. Not having to deal with the brain damage of managing multiple vendor relationships is worth its weight in gold. Bottom line…you can go it alone and convince yourself that you’re saving money and spending your time wisely and efficiently, but it is precisely this type of thinking that your competition is hoping you employ. Any reasonable litmus test will reveal that professional management exists for a reason. It improves the lives of property owners, and puts money in their pocket at the same time.
By: Craig Johnson, CCIM, RECS
An active member of the commercial real estate community, Craig Johnson is a member of the Certified Commercial Investment Member (CCIM) Institute. As such, he is a former president of the Oregon/SW Washington CCIM Chapter and has earned the prestigious CCIM designation. He currently serves as co-moderator for the Chapter's monthly real estate marketing sessions. Additionally, he is a member of the Real Estate Cyberspace Society, Meaningful Arrangements of Real Estate Transactions (MART), Commercial Association of Realtors Oregon/SW Washington, Washington Association of Realtors, and National Association of Realtors. Among Craig’s accolades are twice receiving the Clark County Association of Realtors "Realtor of the Year" award; the Multiple Listing Service of Clark County's "Lifetime Member" and "Outstanding Professionalism" awards; and the MART "Exchanger of the Year" award.
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REAL ESTATE INVESTMENTS and PROPERTY MANAGEMENT are our SPECIALTIES! If you are considering rental properties, or want to invest in any type of real estate, we know how to help you select the best properties to fit your goals, and how to manage them with minimal risk. Keeping you informed of all your options, and the pros & cons, is essential to our goal, which is to help you reach YOURS. Your satisfaction and recommendations are our greatest reward!
The key to success in rental investing is in finding just the right properties, that will be in the most popular locations, which will attract the most reliable tenants, and maintain the highest values. We excel at doing just that! Then, selecting the right tenants is of equal importance. All these require great skill and experience. Who can better help you find the best rental properties than the one who'll manage those properties for you? Choosing the best agent and property manager is paramount to your success in owning rentals. We have a stellar reputation and an outstanding record with many successful and satisfied investor clients across the USA and around the world!
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PROPERTY MANAGEMENT is the cornerstone of J.R. PROPERTIES. We’ve been doing this for over 20 years, so we have the experience to do it with the least possible risk to you and your investment. The most important aspect of managing rentals is in selecting the best tenants. We focus on how confident we are that the applicant will: 1.) Pay the rent every month on time and, 2.) Take the best care of your property. Your next tenant will be evaluated with these parameters used as the most important issues in making our selection. Everything else will be, and should be considered almost irrelevant. Keeping an open mind about so many of the common worries is the wisest approach.
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