The essential goal of hiring a Los Angeles Property Management Company is to enjoy a successful and profitable investment with no surprises along the way. Helping you understand how to set expectations will help you get a clearer picture of the entire process of hiring a property manager before even getting started.
This document isn’t intended to scare you! In our experience (and in the experience of many other well educated, experienced, professional property managers) the items listed below don’t happen frequently, but they ARE a possibility.
1. One of the biggest risks a landlord has is if a tenant doesn’t take care of the property, does severe damage or is an all around bad tenant.
The main focus of the application and background check is to ensure a tenant meets industry standard criteria. 650 minimum credit score, 3X the market rent as combined monthly income, 3 landlord/personal references that can verify the tenant is a great renter, employment verification and criminal/eviction check. There are several other criteria professional Los Angeles Property Management Companies abide by to in order to help determine if a tenant is eligible to rent your property.
Through this process a professional Los Angeles Property Management Company will determine if a tenant is sophisticated enough to pay rent on time and take care of your property. We share all applications with our clients and let them have the final say as to who to pick. Clients may defer this choice to us as well.
Having tenants go through a screening process and background check can significantly reduce the likelihood they will damage your property or not pay rent. However, as for everything in life, there are exceptions.
Example: We had a house in south LA I was managing for a client. We had an applicant woman apply. She looked nice, she smelled nice, she spoke nice, her car was nice, her clothes were nice, she had a nice job and a nice income with well behaved kids. Her credit score was PERFECT. Clean background and great references. The whole application process was a breeze. The owner loved her and so did we.
A month after she moved in she literally turned into someone we did not originally meet during the application process. It just happened out of the blue. We did not do anything nor did the owner.
This lady ended up playing every little game in the book: Paying rent at 11:59pm on the last day of her rent grace period, having us serve three day notices then paying immediately after the service, complaining about every tiny little thing in the house, not letting vendors in the house to perform maintenance/repairs, making vendors come back 3, 4 sometimes 5 times to finish a small job, etc. She played games with us her entire lease. We never had grounds to evict her though, she kept it right on the edge of staying legal! If we would refuse to complete a repair on something damaged by one of her kids, she would damage whatever the item was even further and then call the city of LA Housing Department and tell them we are slum-lords. The Housing Department HAS to cite the owner because all complains from tenants are public record. A citation is usually $400. She played a whole lot of other games, too.
We share this above story with you not to scare you, but to alert you to the possibility. We do everything we can to ensure a tenant will be GREAT, but unfortunately that can’t 100% prevent a bad tenant. The owner and us assumed this woman had a mental illness and stopped taking her medication.
Now, in lower income areas where finding sophisticated tenants is difficult, we put them on month-to-month rental agreements. If the woman we described above was on a month-to-month rental agreement and not a year lease, we would have served her a 30-day notice to vacate that first month! Another thing to keep in mind, if we had served her a 30-day notice to vacate and she didn’t vacate, we would have had to evict her.
2. Evicting a Tenant.
In California, tenant landlord laws are highly in favor of the tenants. If someone stops paying rent and won’t leave, the only way to get them out is by evicting them.
If we serve a notice to vacate and someone doesn’t want to leave, the only way to get them out is by evicting them.
If squatters break into your vacant house, reside there 30+ days and have enough resources to “prove” they live there, we would have to evict them.
A best case scenario eviction utilizing a superior unlawful detainer attorney costs about $900 – $1200 and takes 45 days. A worst case scenario eviction costs about $6500 – $8000 and takes 6 – 7 months.
If a tenant is savvy with the unlawful detainer process (VERY few are), they know every little move to delay to process of getting evicted. There are a hundred things tenants can do to delay the process, but most of these tactics require someone who knows the process extremely well and is very bold in the face of legal trouble. It’s not very often this occurs, but it is a possibility.
Our professional Los Angeles Property Management Company screening process is beyond industry standard but that can’t 100% guarantee a great tenant. It significantly reduces the possibility of things like this occurring. However, life happens. People get in accidents, divorces happen, lawsuits, alimony, medical bills pile up, un-planned children, insurance coverage for a prescription drug for bi-polar disorder ends, people lose jobs, money problems, cancer, etc.
We don’t provide legal service in our property management services, however, we work along side attorneys who are the BEST IN THE BUSINESS.
3. Frivolous Lawsuits.
There are always the people looking to make quick money. Fortunately, this has never happened to any of our Property Management clients, but we’ve heard stories from our attorney.
Someone can decide at anytime to “slip and fall and break their neck.”
And sometimes, they can win in court by saying: “the property wasn’t maintained.”
We encourage all of our clients to speak with our Farmer’s insurance agent Tim Weidenkeller: 562-706-1235. Tim is a property owner himself and knows exactly what you need to stay covered.
We also require tenants to carry renters insurance. This can also protect the landlord. Let’s say a tenant burns your kitchen down, admits to it, WANTS to pay you for it, but has no money to cover $50,000 in repairs. In some circumstances a renters insurance policy would indemnify the landlord.
Our attorney recommends that every six months owners pay for a professional inspection from a home inspector or licensed contractor. If a frivolous lawsuit ever occurs, having a un-biased 3rd party document that the property was in a well maintained condition can help win a case for the landlord. An inspection is anywhere from $200 – $500 and well worth the protection.
Anyone offering professional Los Angeles Property Management should perform inspections unless the owner opts out of paying for the inspections.
The fees in our pricing sheet for our Los Angeles Property Management Services are not changing. We don’t have any hidden fees or out of pocket fees. However, when it comes to legal services for notices and unlawful detainers, the owners are responsible for these fees. For serving change in management notices, 24 hour notice to inspect, etc. we bill the fees to the owner which are $7.
Cost to serve a notice (3-day to pay or quit, notice to vacate, notice to perform or quit, notice of new management, etc.) through The Law Office of Kenneth A. Freedman (recommended) is $60 – $70 depending on the building and number of notices. It’s always smarter to have an attorney serve notices and handle the legal proceedings. Why? Because if there is the smallest mistake such as avenue or street wasn’t specified properly, the judge can throw out your case and request you begin all over again! In most circumstances, If your case is thrown out because of the attorney’s error, they re-open the case and start all over again for free AND refund your money. If anyone other than someone within the law firm serves a notice and makes the smallest mistake, this will not apply!
Due to the nature of traffic in Los Angeles, we MUST use a lockbox for leasing. Why? Because when a tenant wants to see a property they want to see it immediately and on their terms. The sooner you get a tenant in a property the faster it gets leased. On top of that, using a lockbox reduces wasted time for no-shows and people who aren’t serious. Also, if we are unavailable at move-ins, lease signings, meetings, out of town, etc., it makes it easier for the tenant to go view the property on their own time.
However, we don’t use a typical lockbox. We use a highly innovative lockbox with revolving codes. We can unlock and change the code from our mobile device with a wi-fi internet connection or mobile data. It’s state of the art technology called “Rently.” For more information on the capabilities of these lockboxes and how they are changing the real estate industry please request their contact information from us.
The Rently lockbox tracks everyone who has entered the property in an online platform that we can share with you. Rently requires all tenants to have an ID and credit card on file before we release the combo. We also pre-screen tenants and hop on the phone with them as they view the property. ONLY qualified tenants are allowed to view the property.
Offering quality Los Angeles Property Management is all about volume. You can not run a property management business and not do volume. Running a property management business requires insurance, property management software costs, employee costs, gas costs, lockbox costs and many other costs. Utilizing lockboxes is a must. We provide the same attention to your property as we do for our other property management clients, but time wasted sitting in absurd LA traffic is not time well spent.
6. Rental Pricing:
To determine the right price for your unit our Los Angeles Property Management Company looks at comparable’s by selecting 3 or more similar properties within .5 miles that have leased or are pending. We compare apples to apples, similar square footage, similar bed/bath count, amenities, parking, lot size, etc.
Leasing a unit and determining the right rental price is all about supply and demand. If the unit is priced too high chances are it will be difficult to find a tenant or it will take 50+ days. Would you rather find a tenant in 7 – 14 days at a slightly lower (but still fair market) rental price or hold out and wait 30, 40, maybe 50+ days to get that extra $100 – $200 on your rental price? If a unit is priced competitively it usually takes 14 days max to find a qualified tenant. However, leasing is not something to be rushed! A vacant unit is MUCH better than a unit with a bad tenant! We will hold out as long as it takes to find a QUALIFIED tenant. You must defer to our experience on this; vacancy is not a bad thing when searching for the perfect tenant! Rest assured, we advertise on literally every online platform for vacancy listings so your unit gets maximum exposure! We have a way of tracking how many views a property gets for specific websites as well.
What determines a “competitively” priced unit? The best determining factor is actually putting the unit up for rent on all of the vacancy websites and tracking the response we receive. 3 – 5 calls per day usually means the unit is priced in the median range. 8 – 10+ calls per day usually means its one of the lower priced units on the market. A few calls trickling in here and there over the first week means the unit is priced at the top of the market and will probably take a while to find a tenant.
Factoring in all the information above, the price we agree on may not be the right price for your unit! Comparables’ are always a good indicator of value, but sometimes they aren’t 100% accurate. The good news is if a unit is priced too high it’s very easy to lower the price. We recommend that our professional Los Angeles Property Management Company puts your unit up for a certain price, tracks the response and then adjust it from there.
A lot of people ask: can we include your property management fee in the tenants monthly rent? Yes, of course, but tenants don’t look at it like that. Tenants see what their monthly rent price is and base their decision on that. So, if a unit’s fair market value is only $1000, which is top of the market, and then the client wants to include our property management service fee of $140 on top of that, the tenant sees $1140. Most of the time tenants will opt out of renting a unit if they have to pay for the owners property management services.
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