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By Neil Fjellestad | Property Manager in San Diego County, CA
  • FBS Property Management eNewsletter for Clairemont 92117

    Posted Under: Agent2Agent in Clairemont Mesa West, Rentals in Clairemont Mesa West, Investment Properties in Clairemont Mesa West  |  January 9, 2013 1:45 PM  |  897 views  |  No comments

    Best Practices for Independent Rental Owners – The New Year is Your Opportunity
    By Lucinda Garland, CPM®, GRI®
    FBS Property Management

    Many rental properties are owned and operated by independent owners. Though their rentals are subject to evolving market requirements and demands of a new generation of renters some owners manage their real estate under the philosophy that they are in the best position to decide their operating practices. They choose who and how daily management, leasing and maintenance are done. These can be decisions of commission or omission. The question is two-fold: are best practices being employed? How does an independent rental owner identify best practices?

    For answers to these questions and more we have asked FBS Vice President, Lucinda Garland, to present a series of articles “Best Practices for Independent Rental Owners” that will be available in various publications from time to time and become a regular feature at Rent Sense.

    Lucinda is a Certified Property Manager (CPM) and a Graduate of the Realtor Institute (GRI). Her 25-year distinguished property management career has been refined with earning these internationally recognized professional designations. Ms. Garland is an industry leader currently serving as a board member for the local chapters of two of the most influential national trade organizations within the real estate industry; the National Apartment Association and the Institute of Real Estate Management. She is an expert on “best practices” and therefore an indispensable resource to our independent real estate investors. Neil& Chris

    Part one of a series

    When you own rental property, the beginning of the New Year is an opportune time to study where you have been and decide if you are making the right decisions to get you where you want to be – have you been postponing that deferred maintenance because you can’t figure out how to pay for it? Is it time to think about making some improvements to increase the value of the asset? Have you put off the conversation with your property manager about how your objectives have shifted? Have you taken the time to reconcile your stated objectives with your real goals? Is it time to make a fresh start with new staff and/or Management Company?

    To prepare for a New Year of managing rental property a written strategy should be drafted: budgets are drawn and discussed, staff is evaluated for effectiveness, historic occupancy is challenged, Net Operating Income is re-forecast, and expense is analyzed to assure your money is spent in the “right” places. And knowing that your management team is on the same page and operational decisions flow from an approved game plan. Understanding what you want your property to do in the coming year is the necessary first step. A strategy to achieve can be drafted for consideration, evaluation, and approval. A written plan can be implemented and quantified for incorporation into monthly reporting.

    Back to step one, take some time to evaluate what you want:

    Do I intend to keep this property long term or am I looking to sell in the next 24 months?

    Comment: Being able to relay this information to your management team empowers them to make decisions on your behalf that work toward your priority goals.

    What is more important to me – making sure the rents are reflective of the market or sitting with the status quo and keeping my building fully occupied?

    Comment: Sometimes, having 100% occupancy is not the best decision – each dollar lost on market rent has an adverse effect on the value of the property as a whole.

    Is my management team maintaining the building and grounds?

    Comment: Have they become complacent with the appearance of the property due to age of the structure or lack of funds for improvements. It doesn’t cost much to assure a property is maintained in a clean condition. You cannot make an older asset new, but you can certainly keep what you have in clean condition. There should always be a short term and a long term physical plan. Example – long term might call for complete exterior paint while short term routines include power washing and touching up the main entrance.

    Are my financial needs/goals being met?

    Comment: Much of the answer to this question needs to be related back to the answer in #1. Unless your management company knows what you want, they can’t get you there, unless by happenstance. If your management team knows your goals but cannot seem to turn these into practical milestones it is time to make a change.

    Often times, we continue to do what we always have because we aren’t aware that there are other options or because we fear change and what might happen. And remember, if we continue to do the same things, we will continue to get the same results. Is that what you want? Definitely 2013 can be a great year to own rental property but only if you employ Best Practices.
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  • Rental Owners in Clairmont 92117 Need to Know Why

    Posted Under: Agent2Agent in Clairemont Mesa West, Rentals in Clairemont Mesa West, Investment Properties in Clairemont Mesa West  |  December 21, 2012 11:29 AM  |  875 views  |  No comments

    Rent Sense: Investor Types
    By Neil Fjellestad and Chris De Marco
    FBS Property Management

    Our business for the last four decades has been advising independent real estate investors, acquiring rental property with potential to fulfill their designated strategy and providing complete management to ensure that potential is realized. It continues to be our experience that real estate investors can be divided into several types- situational, speculative and strategic. Let us explain.

    Situational investors would not choose to become rental owners if their circumstances did not require it. Market conditions often don’t allow a real estate owner to sell their property profitably when they are motivated to do so. Perhaps their employment relocated them leaving a property unable to sell but mortgages to pay or a buyer’s market makes it favorable to buy another property but not a good time to sell their unwanted real estate. Sometimes a family situation (divorce, death of a spouse or inheritance from parents) has put them in the position of rental owners. Maybe current situations call for the rental of a property that at some future date they want to occupy. In most of these situations the owner will remain a rental owner only until their situation changes.

    Speculative owners, developers and real estate entrepreneurs are a special breed of situational investors. Owning real estate is only a “means to a short term end” for the speculative investor until building it out, fixing it up and selling it to an end- user. Capital resources cannot remain tied up in owning property since the real estate is actually inventory to the speculator. Turning it into a rental is a last resort because a tenant is another complication in the way of returning the speculator’s working capital.

    Strategic investors acquire, own and operate real estate as a rental business satisfying the primary priorities of financial independence: safety of capital, inflation hedge and tax-favored income. The rental owner business can be the surest method to build wealth and reliable cash flow for their retirement. They like the security and flexibility of being an independent real estate owner though like any smart business owner they utilize comprehensive advisory and complete management services. Strategic investors acquire well located real estate, keep it well maintained and managed, optimize revenue, pay off the loans and retire on tax-advantaged income.

    It shouldn’t be difficult to determine which type of investor enjoys a favored retirement, is it?

  • FBS Property Management eNewsletter for Clairemont 92117: Renter Insurance

    Posted Under: Agent2Agent in Clairemont Mesa West, Rentals in Clairemont Mesa West, Investment Properties in Clairemont Mesa West  |  October 29, 2012 11:19 AM  |  903 views  |  No comments

    Rent Sense: Renter Insurance
    By Neil Fjellestad and Chris De Marco
    FBS Property Management

    Renter insurance is an ounce of prevention that every renter should have. It is an inexpensive method to safeguard their financial and lifestyle. Renters can start with their existing auto carrier for best rates. Rental owners wonder whether renter insurance is something that they should make mandatory. We tell them that most national apartment operators are going to mandatory renter insurance; many have had such requirements in place for years. It is smaller property management companies and independent rental owners that have been less aggressive to make the coverage mandatory as a condition of move-in and renewal.

    There are always “unforeseen events” that take place at an apartment community or in the rental neighborhood. How does requiring renter insurance protect a property owner and/or management company from losses?

    Your rental business is adding a new and valuable layer of risk protection for the property owner and/or agent. Implementers have found that the accumulated recoveries from these carriers has mitigated losses formerly being charged to repair and maintenance, concessions or were lost due to the property deductible and therefore were not being reimbursed prior to the liability requirement.

    Properties have been able to reduce costs of coverage by raising deductibles. Mandatory renter liability coverage has reduced claims and losses at properties which lowers insurance costs.

    An unexpected finding is that residents actually prefer communities that have an insurance requirement and may be more likely to rent. Implementing a mandatory approach seems to have a positive effect on occupancy, rent collection and the competitive position of the property. Increased income and decreased uninsured losses will increase NOI. In addition, a lower likelihood of incurring insured losses might increase the value of the real estate asset. Renter insurance makes rent sense to both residents and rental owners.

  • Rental Property Management in Clairmont Mesa

    Posted Under: Agent2Agent in Clairemont Mesa West, Rentals in Clairemont Mesa West, Home Ownership in Clairemont Mesa West  |  July 6, 2012 11:01 AM  |  1,016 views  |  No comments

    Rent Sense: What Renters Want
    By Neil Fjellestad and Chris De Marco
    FBS Property Management

    We can’t tell you how often a rental owner comes to us with a vacancy problem and wants to tell us what the rent needs to be and their concerns for a qualified renter at that rate. Perhaps in no other industry do small businesses (independent housing providers) of goods (rental homes) and services (renter services) spend so little time responding to their customers or even asking what priorities do their renters deem important?

    On the other hand, property management companies are very concerned about what our rental customers want and we talk to them a lot to find out. If we don’t keep our finger on the pulse of renter requirements and preferences how can we continue to produce optimum results for the independent rental owners we have represented for over four decades.

    Certainly, there is a myriad of concerns when a potential renter looks at one rental property and compares it with another as they work out the best solutions to their financial and lifestyle requirements. These concerns have been addressed in past columns.

    There are also concerns a renter has when considering doing business with one housing provider compared to another.

    Here are a few priorities-

    ·         The rent payment needs to be securely handled with accuracy every time.  Scams flourish that somehow extract rent from a trusting potential renter without delivering product or avoid total accountability for rents, fees, and deposits upon move out. Most qualified renters prefer (68%) paying their rent to a regular rental management company versus an individual landlord.

    ·         All renters want their security deposit held in a separate account where these funds are subject to reasonable review.

    ·         The rent payment is time sensitive and should be subject to late penalties. Having said that, qualified renters are busy and over loaded. Most renters (59%) want to utilize an online rent payment option for speed, convenience and financial security.

    ·         Renters want an emergency contact available at all times for possible property issues that need immediate attention. In addition, renters rely on smart phones and the internet to convey their routine maintenance concerns at their convenience.

    ·         Financially concerned renters want the handling of their move-out:  inspection of condition, returning keys and refund of security deposits to be transparent, direct and fair. 

 
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