In the last installment of this Rental Guide series, we talked about making the list of what you must have (vs. what you'd merely like to have- or can't live with) as the beginning of your rental home search. Once you have a list of the location and features you need, you're ready to find a rental home based on your budget. A good rule for this is that your total monthly income (before taxes, etc) should be about 3 times your monthly rent. Or, looking at the another way, your rent should be no more than about one third of your monthly income. Banks and property managers use this as a qualification formula for mortgages and rentals, so you'll be a step ahead to plan based on this.
The Rental Guide has some basic budget tips and a budget worksheet to guide you in putting this together.
It's important to make sure your monthly rent fits comfortably within your income, since housing expenses such as rent are usually your highest monthly expenditure. But also consider things like utilities, furnishings, and other costs which may be higher or lower based on the location and features you identified. It's no use having a large view condo if you can't buy groceries and have no furniture from which to enjoy that view.
Start by making a list of your monthly income and expenses. It doesn't have to be complicated, you can make a list with two columns, money coming in and money going out.
Monthly Income
Income sources may include:
Be sure to account for taxes, retirement savings and other withheld amounts. Include expendable income only.
Monthly Expenses
Organize your monthly expenses by dividing them into the following categories:
Tip: Rent will usually be the highest expense, usually around 30% of income. Other targets for estimating your expenses are food, (8-15%), clothing (5%) and entertainment and recreation (5-10%).
Fixed Expenses
These are regular payments that you pay every month. These include things such as:
Optional or variable expenses
These items are things you pay for on a non-regular basis, but can still be tracked and should be included in your budget. Look through your checking transactions, ATM withdrawals and credit card statements to identify when and where you tend to spend money on these types of things, which include:
The balancing act
Once you have your list completed with fixed and optional expenses, compare your expenses with your income. A good rule is to have your expenses be at least 10% less than your income so you can have some wiggle room.
If your budget does not come out balanced, you'll have to reexamine your expenses and figure out where you can make cuts. Take a look at your optional items, (most likely your entertainment and recreation expenses) and stick to your new budget!
Rental Budget Constrained?
When examining your largest expense, rent, you may find that your rental budget is constrained. It is better to find this out before you start looking at apartments than on the first of the month. Go back and re-examine your "must-have" features, and see which of these you can actually move to "nice to have's", I'll bet you find some additional savings to be had.
Also, be sure to check to see how much you are going to be expected to pay up front. Some apartments require first and last month's rent and a security deposit. Make sure that this up front expense won't leave you in the hole.
----------------------------------------------------------------------------------
About RD House Real Estate and Property Management: We are a leader in relocation, in-town condo and executive Seattle rental properties, working with Microsoft, Amazon, Fred Hutchison Center, the Bill & Melinda Gates Foundation, Alaska Airlines, Nordstrom and others. Many of our listings have video blogs/tours, and can be found on our website at www.rd-house.com.
If you are a Corporate relocation specialist and in need of help placing clients or employees, please contact our relocation team at (206) 728-6063.
RD House Real Estate and Property Management
Leaders in Property Management
159 Denny Way #110
Seattle, WA 98109
(206) 728-6063
I'm sure many of you have had the same experience that I have lately- lamenting that not only is my favorite shop on the corner closed, but so are several others in the same building and many more businesses around the city. Here in Seattle it's a bit unnerving as I see all of the "For Lease" and "Closed" signs in shop and business windows- in fact it feels eerily like walking through a graveyard looking at headstones.
Do you remember that horrible Tsuanami in Thailand several years back, when witnesses all said "the sea just disappeared" before the giant wave struck? Well, a sea of businesses have disappeared, and according to some, the giant tsunami wave that is about to hit is the wave of commercial real estate foreclosures, which could do to our already weak economy what that wave did to the seaside villages.
According to a recent article in the Wall Street Journal, Federal Reserve and Treasury officials are working to prevent the commercial real estate sector from "delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat". At issue is the downturn in commercial business that is beginning to drive property foreclosures- the delinquency rate in July for commercial loans rose to 3.14%, more than six times the level a year earlier. Just like what happened the past couple years in residential real estate, banks lent commercial owners money on the assumption that occupancy and rents of their office buildings, hotels, stores or other commercial property would keep rising, which hasn't happened as a result of the recession, and owners are beginning to struggle making payments as vacancies increase. Nor can owners refinance easily, by the end of 2012, the WSJ article predicts that $153 billion in loans are coming due, and close to $100 billion of that will face difficulty getting refinanced. Until now, banks have been able to manage commercial real estate losses by extending debt when it has matured, because the underlying properties were generating enough cash to pay debt service. Unlike the residential market, banks have had an incentive to refinance commercial loans because accounting standards for these have enabled them to avoid marking the value of the loans down.
In a related New York Times piece, author Terry Pristin notes that "even though industry lobbyists were able to persuade Congress to extend a loan program aimed at prodding the stalled securitization market back to life, several analysts said it was unlikely to head off a spate of defaults, foreclosures and bankruptcies that could surpass the devastating real estate crash of the early 1990s. It will prop up a few deals, but you can't stop the wave that's coming", the article quotes from Peter Hauspurg, the chief executive of Eastern Consolidated, a New York brokerage firm.
Some experts point to this as somewhat of an expected trend, as commercial real estate often follows residential downturns during a recession, as job losses and business cutbacks sink demand; however, what we're navigating has been no ordinary recession, and with the job market recovery yet to be clear, this commercial downturn could be just extraordinary.
So if you find a "For Lease" sign in the door of your local donut shop in the morning, don't expect a new one to replace it anytime soon. In fact, in this current economy, you're better off hanging on to that $1.50 anyway.
---------------------------------------------------------------------------------
About RD House Real Estate and Property Management: We are a leader in relocation, in-town condo and executive Seattle rental properties, working with Microsoft, Amazon, Fred Hutchison Center, the Bill & Melinda Gates Foundation, Alaska Airlines, Nordstrom and others. Many of our listings have video blogs/tours, and can be found on our website at www.rd-house.com.
If you are a Corporate relocation specialist and in need of help placing clients or employees, please contact our relocation team at (206) 728-6063.
RD House Real Estate and Property Management
Leaders in Property Management
159 Denny Way #110
Seattle, WA 98109
(206) 728-6063
...and how an 8% management quote turned into an 11% total management cost
As a property manager, we spend a lot of time educating owners about our specific value to them as a professional resource with sound expertise. So it was...I'll say ironic, when we found ourselves square in the middle of a great lesson, courtesy of a property management company we ourselves hired in San Antonio, in the real costs that can accrue to an owner when this expertise may be lacking. What our experience provided was the opportunity to truly see the issue from an owners perspective, and a rare chance to analyze the actual out of pocket costs, in detail, that can result from a lack of sound management practices.
Owning residential rentals and operating them profitably can take nerves of steel and an unwavering focus on running all of the different aspects right- every time. There are a lot of moving parts that need to run well; 3 critical aspects, and how can cost you money when they aren't run properly, are:
•· Solid market knowledge and aggressive advertising, with excellent advertising plans and leasing performance, ensures that units are priced optimally and vacancies are kept to an absolute minimum. If a property manager doesn't market your property aggressively, it will sit vacant longer, which costs you lost rents. In our case, after 6 weeks without hearing from the property manager, we found that he couldn't give us a clear answer as to how many showings had been done, what people's feedback on likes and dislikes with the unit was (which would have been very useful in addressing any needed changes to make the unit more appealing), or how long he felt the unit would be on the market before a renter was secured. As it turns out, in San Antonio, the property manager rarely shows their own properties directly- they rely on listing rentals in MLS and having other agents find, show and close interested tenants. Thus, they do little direct advertising, and aren't involved in the majority of inquiries or showings with interested tenants. As a result, the unit was vacant for a full 2 months, during which the property manager had no real sense of how well the unit was showing or what the overall response was. Over the course of the 4 years, with 3 turnovers per unit (we have 2 of them), this added up to about $895.00 in additional vacancy due to longer time on market than if the property manager had been more aggressive and directly engaged in marketing the units
•· Consistent, legal and assertive execution of lease terms, to protect the owner, the tenant and minimize cost and disruption to the physical maintenance, as well as the financial operation of the property. We had several maintenance issues which the property manager never investigated, but which they paid for repairs and charged us the cost. One was a damaged garage door over the weekend a tenant moved in. Obvious to the casual observer was that the tenant had backed into the door with their moving truck. We understand accidents happen, and would have been willing to perhaps split the cost with the tenant, however the property manager insisted that it was caused by "nearby construction crews" and charged us the entire $350.00 repair bill. In another case, the property manager failed to call for approval to make a $432.00 repair to repair the sprinkler system in the front yard- which is maintained by the HOA. Another cost we had to cover, but shouldn't have had to.
•· Hidden fees. The property manager we hired charged a 10% "service fee" on top of all vendor repair invoices. It didn't seem like a big deal at the time we signed the contract, but over 4 years (and the above unnecessary charges), this added about $320.00 in direct costs. A good property manager with hawkish attention to repair and maintenance issues, and keen oversight of vendor, HOA and tenant responsibility and performance in this regard, shouldn't be incented to drive commissions from repair and maintenance invoices. Our property manager also had a "fine print" clause upon contract termination that future management fees for leases in effect would be due through those lease terms, which added a whopping $912.00 in costs when we terminated the contract. This type of assessment against future rents isn't even legal in most states, but is apparently standard in Texas.
All up, the above items, based on the practices our property manager employed, cost us $2,969.00 over the 4 years they managed our properties. While we thought we were getting an 8% management rate with them, these costs actually raised the total management cost by an additional 3.7%, totaling 11.7% in management costs.
So how can you be sure you select a reputable property manager, to avoid issues like these?
•· Check their professional affiliations. NARPM (National Association of Residential Property Managers) is the largest, and membership with them ensures that the property manager adheres to standard best practices, ongoing education and certification, and a national code of ethics. If a property manager doesn't belong to this, it's worth inquiring why.
•· Check their local affiliations and involvement. Here in Seattle we have several property management associations, chambers of commerce, and other community organizations. Participation in these shows that a property manager is interested in running the business professionally, and is willing to engage, learn, and improve business practices in conjunction with other business owners (and that they may have things to share with other owners as well).
•· Ask a lot of questions, and think through typical scenarios with them. "How do potential tenants reach you to see available properties", "what are the steps that occur when a maintenance issue arises", and a detail of fees are all good starting points.
•· Look at the properties they manage. This is a very easy way to tell a lot about a property management company. Get a list of available properties they are advertising, and drive by them. Do they appear well maintained? Are they as advertised (views, location, etc)? These types of details reveal the detail with which they run the business, and how they will manage your property.
And even if everything is running perfectly, you'll still have the occasional unexpected issue that has to be dealt with (water heaters burst on holidays more than any other time, for some unknown reason), but that should be the exception, not the rule.
---------------------------------------
About RD House Real Estate and Property Management: We are a leader in relocation, in-town condo and executive Seattle rental properties, working with Microsoft, Amazon, Fred Hutchison Center, the Bill & Melinda Gates Foundation, Alaska Airlines, Nordstrom and others. Many of our listings have video blogs/tours, and can be found on our website at www.rd-house.com.
If you are a Corporate relocation specialist and in need of help placing clients or employees, please contact our relocation team at (206) 728-6063.
RD House Real Estate and Property Management
Leaders in Property Management
159 Denny Way #110
Seattle, WA 98109
(206) 728-6063
RD House Real Estate & Property Management has put together a really nice site that serves as a resource for rental house (and apartment) hunters. It's called the Rental Guide and is at www.seattlehouserentals.net. Broken into three main topics, it takes you through tools to "Discover" -prioritizing the features you need, how to make a budget and a really detailed area info page; "Search" with more topical articles and a couple resources to search for available properties; and "Live" with articles and tips about general information- online banking, renters insurance, area information, etc.
The site is new, and it's worth a look. So as part of my regular blog series, I thought I'd review some of the most topical articles from the Rental Guide, to give an idea what's there and how you might find it useful.
Figuring out what you must have and what you definitely don't want in a new place is about taking the time to carefully consider your wants and needs, and your budget for them, as the first step to a successful search for a new place. You probably have an idea of the major features you need- bedrooms, bathrooms, size, & location. But what about others, like appliances, laundry, parking, pet policy, etc. These are important features that we don't always consider right away, which means you can spin you wheels tracking down a place, and realize when you get there that it's not going to work. Making a good list ahead of time also reminds you to ask the right questions when inquiring and viewing a property.
One good example of a feature that gets overlooked in first glance is a yard. Some people cherish the extra space and enjoy exercising their green thumbs with gardening and landscape care. So this would be something they find they really want in a rental home, and would make this a priority to look for. Others specifically don't want a yard- they don't have the time or the inclination to worry about one, and if they did they might just kill it anyway. This is also something they should make a priority to look for- to make sure potential places don't have one! Another example might be the age of the property- some people love old time charm and quirks; others would rather have brand new units with things like a never-had-dishes-in-it-yet sink. Big difference to consider, and an important question to ask.
A couple of other good tips:
Don't pick price before features. The other elephant in the room when talking about a "want" list is budget. A lot of people I talk to approach this as "I know how much I can spend, and once I find something in that price range, I'll worry about the other details". But consider this: especially in this economy, if you think really hard about what you absolutely must have, and what you absolutely don't want, perhaps your price range is different than you think it is. For example, one of the biggest cost factors in a rental is the # of bedrooms. For example, suppose you're single and looking in the $1,200 range for a 2 bedroom unit because you want 1 bedroom, or 1 bedroom and a home office (effectively 2 bedrooms). But what if you could find a 1 bedroom with a dining area or small den that would suffice? This would save you a couple hundred dollars, which case you'd be looking on the $900-$1,100 price range. If you think carefully about what your absolute priorities are first, your budget will be better served.
Choose carefully- features affect price. Of course, the flip side of the above is that, yes, every feature has a cost to it, which is why prioritizing them helps. By choosing the things most basic to your needs, you'll have a better idea what your bottom line really is, and when comparing units, your decision will be easier. And, it sets you up for a more realistic search, because if you're looking for a 3 bedroom in the city with a view and washer/dryer in unit, and your budget is $900.00, you're going to spend a lot of time looking at units you can't afford.
Think of location as a feature, and be aware of general rents for the areas in which you're interested. This is really an extension of the above, but some people miss it. Properties in high demand and desirable locations are more expensive when compared to like properties in other areas. So, do some checking to see what general prices are for certain areas in order to help you prioritize the rest of your needs for a rental in that area. You may find a great deal for a 3 bedroom unit with a view in the city, but you'll be giving up parking, laundry, and size; if the location is a must have an the others aren't, great, If it's not, you'll want to look in other areas that have the features you really need.
To help you prioritizing your needs, the Rental Guide has a Features checklist that you can print to work from.
Next time, I'll talk about the next step in the search process- how to create a realistic budget that won't leave you eating top ramen on Saturday nights.
About RD House Real Estate and Property Management: We are a leader in relocation, in-town condo and executive Seattle rental properties, working with Microsoft, Amazon, Fred Hutchison Center, the Bill & Melinda Gates Foundation, Alaska Airlines, Nordstrom and others. Many of our listings have video blogs/tours, and can be found on our website at www.rd-house.com.
If you are a Corporate relocation specialist and in need of help placing clients or employees, please contact our relocation team at (206) 728-6063.
RD House Real Estate and Property Management
Leaders in Property Management
159 Denny Way #110
Seattle, WA 98109
(206) 728-6063
It's not really a silver lining, but I realized the other day that, as tough as 2009 has been property owners and property managers, I will have some good lessons from it to help me in the future. The thing is, when markets are booming, marketing a property management company to new clients can be tough, because people think it's easy and there are 6 tenants for every unit (not so much, but more on that later). We spend quite a bit of time educating property owners of the benefits of professional property management, as opposed to them going it alone, and the hardest thing to quantify is the value of a firm grasp of the market, what's needed to market and fill units in the most timely and beneficial way, and how to keep them that way with good maintenance and tenant relations. In a really difficult market though, the value of a good property manager really becomes clear, which makes at least that part of my job easier.
This epiphany came to be when I saw a newsfeed article on the front page of a local independent owners association, (which, even though we compete for the same clientele, I do peruse along with a number of sources of market and industry news each week to keep up with the latest information and influences to the business). The article was titled "Why you should ask for lower rent", and outlines general national trends and a depiction that in this economy, everything might be on the table for tenants to negotiate, and implies that tenants should strike a deal, in essence, while landlords are down. It was an ironic choice of articles for a property owners association to be highlighting, but I did a double take because I could just imagine these owners getting pelted with calls from tenants, having read the article, threatening to move and demanding concessions. Only toward the end, almost as an aside, did it mention that markets are local and conditions will vary from one area to another; what it didn't mention was the need to do apples to apples comparison of property rents based on location, size, age, features, amenities, and condition. The problem this kind of article causes for owners is that these are the most important factors in a property's relative rent within the market, and people too often overlook this (and indeed the association didn't include this additional analysis alongside the article either).
You see, a good property manager works in the field day in and day out, and knows what's happening block by block with the market. And certainly, rents in Seattle, depending on the area you're in, have been volatile this year; layoffs, unemployment, a thinning pool of qualified renters, and lots of inventory are all taking their toll. However, our company has been adjusting rents (where appropriate), working hard at retention and tweaking the management plans for each property to balance the value, quality, and highest/best use of the property all year. So our tenants and owners are in relatively good shape and aligned with the market realities. As we lease units, of course we get questions about price and concessions, and tenants can see by the comps and information I provide that the unit they are in, or looking at, is priced appropriately for the market based on all the criteria above; tenants with expiring leases are offered renewals based on the same information, and occasionally we offer a longer lease term or other items to keep them there.
So when there's an article that kicks up dust about demanding lower rents or other market alarms, my owner clients don't have to sweat it, because navigating the market is the biggest part of the value I provide as a professional property manager. Except that in good markets, it's not as tangible to owners; but in this market, my value becomes crystal clear. And to those owners who are fielding demanding calls from frantic tenants, it makes that part of my marketing message all the more tangible to them.
---------------------------------------
About RD House Real Estate and Property Management: We are a leader in relocation, in-town condo and executive rental properties, working with Microsoft, Amazon, Fred Hutchison Center, the Bill & Melinda Gates Foundation, Alaska Airlines, Nordstrom and others. Many of our listings have video blogs/tours, and can be found on our website at www.rd-house.com.
If you are a Corporate relocation specialist and in need of help placing clients or employees, please contact our relocation team at (206) 728-6063.
Redefining Property management with Pride of service ownership, Getting the basics right all the time Delivering Exceptional Management SERVICE for OWNER’S & Tenants WE LIKE WHAT WE DO & It Show
Ricky D Sadler, Designated Broker and Senior Property Manager
Ricky brings extensive experience in local property management. His career includes experience in every
aspect of property management and operations with several property management companies before
opening RD House. He has deep experience in all aspects of the business and is highly respected client
owners and tenants alike, and excels at delivering remarkable turnarounds with properties requiring deferred
maintenance, improved unit and building appeal, vacancy challenges and rental income parity. His strengths
enable RD House to offer crucial expertise to property owners, while enabling us to design and operate a
company that employs the best business practices available to achieve more competitive results.
In Ricky's own words, "Knowing each property, personally- driving by often, walking the neighborhood,
being aware of what's going on, is the single most important way to care for an owners property as if it
were our own"
"seek qualified tenants, get to know them and what their needs are, take care of their concerns
effectively, and treat them with respect, and they will occupy the property as if were their own"
Robert Armstrong, Business Manager
Robert has spent years in the software technology industry, and is able to help us reach forward to build
innovative solutions to business, owner and tenant needs. Our property management system integrated with
Microsoft Office, and our email, web presence and internal business systems are based on Office and OfficeLive
software. He also has an MBA and key business experience that enable us run the management and operations
of the business effectively.
we love what we do and it shows!
Our operational management is more efficient, more responsive, more cost effective and provides better results, because we build technology and innovation into our operations from the ground up, including automatic debit for rent payments, automatic deposit for owner funds disbursement, online bill payment for vendors, and other computerized systems to provide faster, better service to every part of the business.
Single Family and 2-4 Unit Buildings
Standard Management Package
This includes the property leasing services, plus
Optional services
Platinum Management Package
This includes the property leasing services and Standard Management Package, plus
5-16 Unit Buildings
Property Management
Unit Leasing
Business Planning and Market tracking
17 or more unit buildings
We can create customized plans to meet the many specific needs of larger buildings, to include
Sorry We Have High profile Owners ! per request of Families
The fundamental management of a property defines how well it performs financially, how it competes for tenants in the local rental market, and how satisfied the owner is with their property investment. Nothing else we provide owners makes sense unless we execute the basics extremely well"
Thank you for your Business!
Ricky D Sadler
RD House Property Management INC.
206-728-6063
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved
