Our basic labor rate is $60 per hour. While professional property managers realize that this is on the low-end for licensed, bonded skilled labor in the Puget Sound, I sometimes hear from owners something to the effect of, “I’m a CPA and I don’t even make $60 an hour!” Of course, I’m sure that CPA’s company bills her out at $150 an hour, but she makes a good point- it does seem expensive!
Here’s a breakdown of a $60 labor hour in the State of Washington:
Total cost is $48.32 per hour! Of course, there are a lot of hours I can’t (or don’t) bill for and this comes straight out of the profit. After it is all said and done, there are little drips that come out of the remaining $11.68 “profit”.
Most contractors for larger projects make up some of their additional costs by charging for things such as “mobilization/de-mobilization”, a 15-20% flat charge to cover overhead, materials management, project management, etc. And we all rightfully charge 20-40% premium on materials because afterall you’re paying us to know what type of materials to use and plus, we often negotiate lower prices with our vendors anyway, so our markup turns out to be a wash for the client.
And yes, you could go to a one-man show type of guy who has less overhead and pay him $35-40 per hour directly. However, you’re at the mercy of his schedule, he can’t deliver the communication and accountability our clients expect, if something happens to him there’s not another person to pinch hit, he may not know landlord/tenant laws--- and it could cost you in the end because when Guy In A Truck doesn’t have a tool or the knowledge to finish a job, you’ve got to call someone else in to finish the job!
Obviously, I make money most of the time otherwise I would just close my doors and do something else. It’s a constant dance of refining and retooling the way we do things so that we can continue to deliver
I haven't updated the blog in so long because I've been working on another project--- Rental Restoration LLC!
Rental Restoration LLC is a general contracting firm that focuses solely on rental properties in the Seattle area. To fully introduce you to the company, I've prepared a little Q&A- which I'll publish in shorter chunks for your blog-reading pleasure:
Wait, I thought you were a property manager!
Yes, I worked with Seattle Management Group Real Estate for a little under a year. The brokerage is owned by some old friends who needed help with marketing and business development. Prior to working with them, I was involved with residential and capital construction, an active landlord, and real estate investor. While working with them, I realized how much time PMs spend managing vendors instead of managing properties! I started Rental Restoration while still working at SMGRE and continued to learn more about what property managers need in a reliable contractor. In the spring, I left SMGRE to focus full-time on Rental Restoration. I no longer manage properties (except my own!) or hang my real estate license with any brokerage.
What exactly does Rental Restoration do?
Rental Restoration is the only general contracting firm in the area that focuses strictly on rentals. We understand the need for speed, affordability, excellent communication and quality. I created this company with a crystal clear vision of providing services that would make the lives of property managers easier! Rental Restoration offers affordable maintenance, repair and renovation of rental properties. We do everything from simple handyman service calls to major updates to rental properties.
Do you do the work in-house or do you subcontract?
Right now, we have 8 employees with varying specialties. We're able to handle most services in-house. However, we also have negotiated special rates with journey-level plumbers and electricians to offer our clients an affordable solution when the nature of the service exceeds our on-staff crew. My business partner and I have been in the construction and real estate field in Seattle for many years and we have an extensive network of specialty subcontractors such as roofers and appliance repair.
Do you have a website?
Of course! You can find Rental Restoration at www.rental-restoration.com. We're adding some new functionalities to the site such as client log-in, so you can place work orders, check the status of work and look at the billing.
MORE Q&A TO COME!
Are you excited about having your very own reliable contractor or what?!!?!?!?
All best,
Eleanor
With April wrapping up, there is some good news on the rental scene, and in the real estate market as a whole. It seems to me that like the weather, things are heating up a bit.
Here in Seattle, the real estate professionals I know are getting busier by the day. Anecdotally, home inspectors are reporting an increase in business, as are friends in other related professions such as title, escrow and lending.
I got to feeling so confident that I put one of my own homes out on the market and got a great response. We had a ton of quality showings and really great feedback. Of course, the house is a great deal-- I've got a contract for about $80k less than it would have sold for last year... but that was last year! It was funny to see how many people came around multiple times to "kick the tires" and how many agents wanted to be "kept in the loop". It seemed like nobody wanted to make a move until someone else made a move- which was exactly what happened and we ended up with three offers. But either way, it goes to show that buyers are not white unicorns of our imagination. Of course, inventory is low in Area 705 (Ballard-Green Lake), it's a truly fantastic house, and the price was low enough to make it pretty hard to pass up.
I'm seeing the same thing in the rental market... a ton of tire kickers and people taking their sweet time to make a decision. Whereas it would normally take only a few showings to rent out a place, it's taking a lot more showings. This makes sense because the rental inventory is so high- there's a lot for a renter to see! Prices are definitely low and needing to stay low- and I've finally settled into the idea that we're not going to see those prices creeping up for the "summer rush" like we normally would. Homes that are priced too high are definitely going to sit empty.
So, with great effort and lower prices... what's the good news? The good news- er, the GREAT news- is that places that are marketable and reasonably priced are ACTUALLY RENTING! Nothing was more frustrating than Feb & March where we had lots of great properties at a steal of a price and nobody wanting to sign a contract.
Kinda like everyone everywhere, you have to feel grateful for what IS going right. We're ALL working twice as hard for less financial reward, but hopefully, those who are working are grateful to have a job!
My two pieces of advice for those who have a rental property this month are:
- Be prepared to show your property a TON.
- If your place hasn't rented in a month or if you go a whole week without a single serious call on your property, this is a clear indication that you're priced too high. (Obviously, this is not ALWAYS the case, there are certain properties that are unusual and take a longer time to attract the right tenant... but those cases are rare.)
My firm has a great reputation and enjoys a very steady stream of referrals. We serve Seattle, the Eastiside, some Snohomish County, and Bainbridge/Kitsap. However, we get multiple calls per month from agents and potential clients looking for property management for Pierce County and Kent, Sumner, Auburn, etc. We have taken a few clients in Kent, but found that the distance from our Issaquah satellite is just a bit too much to deliver the level of service our clients have come to expect. I really prefer to pass along resources rather than saying, "Sorry, I just don't have any contacts in those areas!"
Is there anyone in this group that covers those areas? If so, can you email me and perhaps we can get together for coffee or lunch? I want to be able to have a good understanding of who you are and what your firm's philosophy is so that I can refer people on with confidence.
Best wishes for prosperity to all!
Eleanor Trainor
Seattle Mangement Group Real Estate
Most people know that "days on market" is real estate-ese for how long a home has been on a market. Lately, with all the homes on the rental market, I've coined a new term... "DAYS ON LAWN".
Days on Lawn is how long a home sits for rent by owner. I'm seeing a lot of homes coming on the market -- and sitting on the market-- from "Accidental Landlords" and new landlords whose rental rates are a bit unrealistic. These well-meaning folks don't have the resources to analyze the current rental market to set an appropriate rent, market the property beyond Craigslist, or properly show the property and therefore they accumulate far more Days on Lawn than necessary.
I genuinely feel compassion for people who are trying to rent out a home right now without professional advice. As I've said so many times in my blog posts, I think it shows a great deal of savvy to see homeowners trying to ride out the market by renting rather than selling and new investors taking advantage of the opportunities to build a rental portfolio. However, I wonder how often this savvy goes unrewarded because the house never actually sees a tenant... or the house has so many Days on Lawn that the owner grows evermore exhausted and market-weary.
The Days on Lawn phenomenon has an impact on all of us in the rental market. Many of the property owners I speak with on a daily basis have been doing their homework in preparation for renting their property by running their own comparative market analysis on Craigslist. They look at CL to find similar properties in their area to get an idea of what rent might be appropriate for their property. Unfortunately, CL doesn't tell you how long a given property has been vacant or how much comparable homes ACTUALLY rented for. So, while the house down the street might be advertised for $2800... you don't know that this is week 31 on Craigslist. In my latest post on luxury rentals, I show how the math pretty clearly favors dropping the rent a few hundred dollars to attract a tenant immediately rather than playing a waiting game at a higher price.
I'm not saying Craigslist isn't incredibly useful! Of course, Craigslist is part of my arsenal of tools to help clients set a rent range. Like any tool, however, it's only useful if you know how to use it well.
A well-respected member of the real estate community here in Seattle recently said that the most important words in real estate have gone from "Location, location, location" to "Drop your price".* For the moment, this is as true for the rental market as it is for the sales market.
*(Alright people, before you jump in on that one, I think we all know location will always be king! It is simply an illustration of the times.)
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