Whether you are hiring a local Lake Elsinore property management company, or using a regional professional property manager, it is important you understand the basics of how your investment can perform better based on their performance. Your rental property cap rate usually depends on these factors: Rental income, vacancy rates , maintenance, taxes and HOA. Notice how your management company has the ability to affect three key factors on your rental investment return.
Lets use some examples to show you how our property management company performance earns our owners free management. Recently at Access Asset Management Inc. we took on several owners with local Lake Elsinore rental condos. The average condo is a 3 bedroom, 2.5 bath with approximately 1,200 sq feet. The average monthly gross rental income was $1,300-$1,350 per condo, depending on location and garage size. Upon analyzing the rents and pulling comparable data we were able to increase rents to $1,445-$1,495. An immediate increase of $145-$195 to our owners. This 10-11% increase was not unique, as many new owner acquired properties saw increase of 8-15% as well.
Second, in thinking about maintenance of your home, the industry average is to pay 7-9% in maintenance towards your home. In the case of a condo renting for $1,445 you should expect $115 in costs a month towards repairs e.g., move-outs, heating and air, water heaters, plumbing, painting, carpet replacement etc. Here at Access we strive to perform as a professional property management company, we run our numbers and find our maintenance costs to be between 4-6%. Using a 5% average we can save our owners $43 dollars a month, $516 a year!
Further, your rental home vacancy rate. An empty home is an empty wallet and we do not get paid until your home is rented. The industry average vacancy rate is 7% Source: Y-charts. With our professional rental marketing, licensed showing agents, and expert property managers we have been able to boast 5-6% vacancy rates, again performing above expectations. This means an average gross income of $260 based on the before-mentioned condos. These owners saw a gross increase of $209 just by switching to a better property management company. With our fees only at $99 a month they are netting $1,320 a year because they hired the right property manager.
Lastly we will discuss other factors to consider. First, tenant move-outs. Consider a good property manager vs a poor one. A good property manager will know your home and have sufficient evidence to charge tenants for their damages/liabilities. They will also understand what is a tenant charge and what are owner charges to keep you from unnecessary small claim court disputes. A poor property manager can easily miss carpet, paint, or other damages easily costing you thousands that you may not find until years later. Also, does your property management company have reliable vendors? Poor vendor management can cause you increased vacancy and down time and possibly higher price gouging.
Poor rental marketing is another factor to consider. Here at Access Asset Management we take professional pictures and edit them to create the perfect picture to market your home. We also have two licensed on-call showing agents who take all incoming leads for our homes. They also keep every lead in case one is rented they will show them another. When thinking about vacancy, a home rented weeks faster can earn you hundreds.
Our closing remarks ends with one key factor we are all concerned with, communication. Does your property manager communicate with you the things you want to know? Do they communicate with your tenant? For example, this past weekend we had a tenant place a work-order for a hot water-heater not working. A poor property manager would simply send a plumber and cost the owner at the minimum a service call of $45-$65. Our property manager made sure he communicated with the tenant before sending someone and found out the problem was merely a unlit pilot light, they were able to help the tenants light the pilot over the phone and save the owner a headache and money.
Here at Access Asset Management we take great pride in being a regional professional management company. We have great policies, procedures and seasoned property managers throughout the Inland Empire, Riverside County, Orange County including all cities in these areas and the cities of Lake Elsinore, Corona, Murrieta, Menifee, Temecula, Perris, Hemet, Riverside, Orange, Anaheim, Santa Ana, Ontario, Redlands, The high desert to include Palm Springs, La Quinta, Palm Desert.
