Posts tagged Multi-Family
GABHART INVESTMENTS COMPLETES MULTI-PROPERTY FUND AND RETURNS 24% ANNUALIZED TO INVESTORS
Oct 26th
For Immediate Release
SAN DIEGO, Release Date – Gabhart Investments Inc. sold the last property in its first micro fund, Gabhart Real Estate Opportunity Fund Series 1, LLC. The fund was invested in the purchase, rehabilitation and sale of multiple single-family homes over a 13-month period.
The homes were located throughout San Diego County with resale prices ranging from $250,000 to $500,000. All of the properties were bank-owned or short sale purchases with rehabilitation costs ranging from $30,000 to $100,000.
Gabhart Investments is currently managing three active funds focused entirely on 1-4 unit residential properties. “Our strategy with the funds is to minimize risk for our investors by purchasing multiple properties in each fund located in different sub-markets throughout Southern California. Investors benefit from an average of profits from several projects and they are also insulated from a lapse in one sub-market”, says Curtis Gabhart, CEO.
The investor partners in Fund 1 achieved a 22% to 26% (24% average) annual internal rate of return on their capital depending on their investment date. One of the many unique features of the fund is that as each property sells, investors receive a portion of their capital allocated to that project along with estimated profits. “This structure is attractive to our investor partners as it provides short-term cash flow and allows them to reinvest back into another fund or invest elsewhere,” says Nick Walsh, investment manager.
Gabhart Investments is currently partnering with multiple investors in their Series 5 fund. “We’re interested in working with partners that understand our current business plan and share our longer-term goal of expanding into new markets and investments. For example, we are in the process of creating a new fund to invest in first trust deeds within our niche market to provide investors with monthly cash flow and an alternative to our equity partnerships,” says Gabhart.
About Gabhart Investments Inc.
Gabhart Investments Inc., headquartered in San Diego, Calif., is a real estate investment and advisory firm specializing in the fundraising of micro funds for the investments of distressed single & multi-family residences in Southern California. www.gabhartinvestments.com
***The information within this site does not constitute an offer to sell or a solicitation of an offer to buy any securities. Financial results are un-audited company estimates only and are not necessarily indicative of future results which may vary substantially from those set forth herein.
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Due diligence list to use when purchasing an apartment building
Aug 30th
Multi-Family Due Diligence Request List
Here is a list to use that should help you with your due diligence when buying apartment buildings. Below are some of the things to request from the seller of a multifamily property.
I decided to post this list because of a comment I received on a previous posting I did named data collection and income & expense analysis of apartment buildings (click here to read that post).
Here is an excerpt from his comment
Remember that the SELLER always LIES so NEVER ever rely on the seller to give you accurate numbers. Do your own research that way you only have your self to pat on the back!!!
Below is a list of items I use (in San Diego) that you will want to request from the apartment buildings seller and/or broker listing the property.
Due Diligence Request List
1.     Annual profit and loss statements (P&Ls) past 3 years; one year of monthly P&Ls
2.     Rent roll and leases including term, deposit, and payment history, Section-8 housing documents, if any
3.     Tax returns (last 2 years)
4.     Receipts of utility bills (water, gas, trash, sewer, electric, etc for last 12 months) or recap report from provider showing usage and cost
5.     Any service or advertising contracts: (Trash, extermination, maintenance, management, commission agreements, union agreements, vending, billboard, pay telephone, etc. and any instrument or contract to be assumed by Purchaser)
6.     Copies of all appraisals, engineering reports, termite reports, environmental reports
7.     Insurance claims history for last 5 years (can be obtained from insurance agent)
8.     List and receipts of any major repairs done in the last 5 years (paint, fence, remodel, roof, water heater, etc)
9.     Insurance policy including all riders, risk assessments, and disclosure affidavit for carrier
10. Architectural and engineering plans and specifications (if available)
11. Payroll register: List of employees including name, position, wage rate, and entitled benefits
12. Business license
13. Litigation History: details of any past or pending litigation (if none, then affidavit from owner)
14. Environmental Inspection and Survey, if readily available: Key Issues: Asbestos, Lead Paint, underground tanks, wetlands
15. Warranties: existing warranties from roofers, contractors, etc. (passed to the new owner if possible).
Data Collection and Income & Expense Analysis of Apartment Buildings
Nov 28th
Here is the first post in many to come on analyzing residential income properties. This is directly from my course on property valuation and analysis which I will be discussing more of in my upcoming class on Buying and Selling Apartment buildings.
Learning Objectives of this Post on Analyzing Apartment Buildings and Residential Income Properties: Data Collection and Income & Expense Analysis
- Identify sources of data
- Describe the components of an income & expense sheet
- Understand how to arrive at Net Operating Income from Gross Scheduled Income
The first step to accurately determine the market value of a real estate investment is a solid program of data collection and analysis. Each property will have its own unique considerations
All should at least begin with
• Property type
• Overall condition of the improvements
• Type of construction
• Neighborhood analysis
• Overall market conditions
• Income and expense analysis
• Legal requirements, zoning etc
• Comparable property data
This list is broad in scope, but it’s a good foundation for the data collection plan. The data collected from the market on comparable type property will be used to determine the appropriate capitalization (CAP) rate and make market comparisons in a later step. The next step is the actual collection of the data.
Data Sources
The data required for the analysis is obtained from many of the same sources as the information used in residential sales:
• Owners records
• Multiple listing service (MLS), Costar, Loopnet, Commercial Agents & Property Owners
• Public records
• Census data
• Chamber of Commerce
• Local Housing Authority
• Appraisers
• Trade associations
• Local Council of Governments
• Tax assessment records
This should give you an idea of a few of the possible sources of data and the steps to begin the data collection process. Once the data has been collected the next step is the analysis of the data.
The Operating Report (Profit and Loss Statement)
When analyzing a real estate investment, we begin with an existing operating statement, also known as a profit and loss statement. The operating report will consist of both income and expense items attributable to the property. In the first step of the analysis we will only be concerned with the cash income and expense of the property. We will consider depreciation and other non-cash benefits in a subsequent calculation.
Gross Scheduled Income
The gross scheduled income is the amount of money that the property would produce on an annual basis if it were fully occupied. Included in gross scheduled income would be any income attributable to the property from non rent sources.
What types of sources can be included for determining gross scheduled income?
These sources could include income from laundry and vending machines, parking and storage fees, as well as other owner operated concessions.
When analyzing the gross income, consideration is given not only to the existing rents being charged, called contract or current rent, but also economic or market rent, which is the rent the property would command if it were available for rent in the current market. An adjustment can be made to the gross income if the market indicates that market rent differs from the actual rent. If such an adjustment is made, that should be plainly noted on the operating statement (see loss to lease).
Vacancy & Collection Losses and Effective Gross Income
The chief component in the calculation of effective gross income is the vacancy and collection loss rate. Most properties are not expected to remain fully rented for the entire period of ownership. When a tenant vacates, often there is at least some rental income lost during the turn over period due to repair or remodeling time. In addition to this consideration, one must face the reality that there may be a situation where a tenant becomes unable or unwilling to pay rent as agreed. In this circumstance there will be some rental income lost.
The vacancy and collection loss is usually expressed as a percentage of the gross annual rental income. There are several generally accepted methods for determining the amount of the vacancy and collection loss
• Historical data on the subject property
• Published figures for the community
• Market analysis
Other places to get historical operating data is
- IREM (institute for real estate management)
- Local apartment owners associations
- Commercial Agents
- Previous listings on subject property
None of these things by themselves will probably give you a 100% complete picture but combining different resources the picture will become much clearer.
Historical data and market analysis are perhaps the most accurate, because typically published figures for the community are an average, and may not be representative of the property you are analyzing. Once the appropriate rate has been developed, the loss is subtracted from Gross Scheduled Income to derive at Effective Gross Income.
Example:
Gross Scheduled Income                    $12,000
Vacancy and Collection Loss (5%)Â Â Â Â Â (600)
Effective Gross Income         $11,400
Gross Operating Income
To figure the gross operating income you go through the following steps:
Gross Scheduled Income
- Vacancy & Credit Loss
= Effective Gross Income
+ All Other Income (garage rent, laundry income, vending, etc)
= Gross Operating Income
The figure derived from this process is what we will call rental income. This is the actual income received after taking into account vacancy and credit loss against potential income.
Other income can come from a variety of sources. In apartments, it is quite often laundry, but it could be rental on furniture for furnished apartments, garages, etc.
The resulting figure of gross operating income is all the income left over after subtracting out the above mentioned items. It is your actual income in hand before expenses. Therefore it is a very important number.
Operating Expenses
The next step in the analysis process is to determine the total operating expenses for the property. Like income, expenses will be analyzed on an annual basis. The investor will do a detailed analysis of the expenses of a given property, so it benefits the practitioner to have done a thorough analysis in the beginning.
It is important to carefully analyze all categories of expenses to accurately portray the financial condition of the property. There are different categories of expenses, depending upon the type of property you will be analyzing, however all expenses are segregated into two basic categories, fixed expenses and variable expenses.
What are three fixed expenses and 10 variable expenses?
Fixed Expenses
A list of typical fixed expense categories will include
• Property taxes
• Insurance
• Landscaping and service contracts
• Any expense that does not change from month to month
What determines a “fixed” expense is the fact that the expense will not vary in response to changing levels of occupancy.
Mortgages are not part of operating expenses and are categorized elsewhere.
This group of expenses is not difficult to document for your analysis, but be careful to consider the fact that these expenses may not be the same for a new owner; i.e., the building insurance may go up and most likely the real estate property tax may be reassessed upon transfer.
Real Estate taxes can be one of the largest expenses so make sure to calculate any new tax increase or decrease in your analysis.
Variable Expenses
This category of expenses is much longer, and categories to consider will vary depending on the type and size of the property under analysis. This category will include all of the expenses necessary to maintain the income stream of the property and to provide agreed upon services to the tenant. To attempt a comprehensive list of all expense categories for all types of properties might be impossible and, certainly, is beyond the scope of our study. We will discuss the more common types of expenses in some detail, remembering that each property has unique characteristics and may include its own unique expense categories.
• Off-Site Management
Many properties will be managed completely by off-site personnel. The cost of off-site management is determined and subtracted as an expense of operation. It should be noted that a management expense is a valid deduction from income even if the owner is managing the property. There are many firms specializing in this field; they usually charge between 4% and 10% of the rental amount.
• Payroll On-Site Personnel
Resident management is used when the day to day activities of the property require constant supervision. A resident manager is sometimes given free or reduced rent. If that is the case, you must include the managers unit rent in gross scheduled income, then enter the amount of free rent as an expense. In California, if a property has 16 or more units it is the law to have a resident manager on site.
• Expenses/Benefits
This would be for other management costs. For instance, office and administrative expense, performance bonuses paid to an on-site manager, and any health insurance or retirement plan contributions would be listed here.
• Taxes – Workers’ Compensation
Whenever there is an employee, there are various taxes the employer is responsible for. Among these are: Social security tax, unemployment tax, as well as local, state and federal income taxes. These taxes are payable by the employer, and in addition, the employer is required to withhold some amount from the employee’s pay and forward it to the IRS.
• Repairs and Maintenance
This is the total amount of repairs and maintenance necessary for the year. This would not include any money spent on capital improvements. A capital improvement is any improvement which substantially increases the useful life of the property. If you find a property which has not had any maintenance expense in the recent past, you will probably find a trade off in the overall condition of the property.
• Utilities
This is probably the most difficult portion of the operating statement to complete accurately. This information is most easily obtained from the owner. NOTE: If the owner is paying the utility bills and is then reimbursed by the tenant, the full utility cost will be listed here and the amount reimbursed to the owner would be listed as other income (this is referred to as R.U.B.).
• Accounting and Legal
This is the amount for the bookkeeping required on the property. It will include any amounts paid for payroll reporting or for monthly profit and loss statements. This should also include any legal expenses associated with evictions, drafting of leases, etc.
• Advertising, Licenses and Permits
Many larger properties will have ongoing advertising expenses. At the very least there will be some cost at each vacancy. This includes the amount spent for advertising, as well as any licenses or permit charges; e.g., city business license, pool inspections, and/or housing code inspections.
• Supplies
This might include supplies for the vendors mentioned previously: Bug spray, batteries for smoke detectors etc.
• Miscellaneous
That’s right! There should always be a category for those expenses too insignificant to warrant their own category. This would include any additional expenses which were not accounted for elsewhere in the analysis.
• Contract Services
These are services which are supplied by outside vendors not already accounted for under fixed expense categories. These are additional services such as maintenance contracts, design services, appraisals and as many others as necessary.
Here is a list of the more common expenses in alphabetical order. Some of them we list without explanation because they are rather obvious:
• Accounting and Legal expense
• Advertising
• Gas
• Insurance
• Licenses and permits
• Miscellaneous and other expenses Property Insurance
• (Property) Management
• Payroll and Workers Compensation
• Real Property Taxes
• Repairs and Maintenance
• Services
• Sewer
• Supplies
• Telephone
• Utilities (Such as the electric bill)
• Water
Total Operating Expenses
This is the total of the expenses calculated. This is not to include vacancy or credit losses. Remember that what we are attempting is to give as accurate a picture as possible of the property’s financial condition. The property’s value will be dependent upon the ability to produce income, so it is important to be as accurate as possible in estimating both income and expenses.
The total operating expenses are now subtracted from the effective gross income.
Example:
Effective Gross Income $11,400
Total Operating Expenses (4,500)
Net Operating Income $ 6,900
Net Operating Income (NOI)
The net income that a property is capable of producing will be one of the first indicators of the worth of an investment. Later when we begin to apply the capitalization rate to the property, the NOI will be used to estimate total investment value.
The calculation of the net operating income does not take into consideration the effect of any potential financing of the property. This may seem odd at first, but in consideration, it will not take long to realize that the property should have a value that is completely independent of any financing that an investor might use to acquire that property.
Measure NOI correctly in order to properly value property
NOI is arrived at as follows:
Gross Operating Income
- Operating Expenses
- Capital Expenditures
Net Operating Income
Sales Proceeds
The sales proceeds that come from divesting yourself of a property are as follows:
Sales Price
- Selling Expenses
= Net Sales Proceeds
- Adjusted Basis _
= Taxable Gain
- Depreciation _
= Capital Gain / Loss
Data Analysis
Having discussed the income and expense analysis in detail, we will concentrate on the balance of the data and other considerations. The property will be analyzed for the following:
• Income quantity
• Income quality
• Income durability
• Special risks
All of these considerations will be compared to other investments available in order to determine the appropriate rate of return and measures of value for the property being analyzed.
Test Your Knowledge: Data Collection and Income & Expense Analysis Questions
1. What is the chief component in the calculation of effective gross income?
2. How do you come to Effective Gross Income?
3. Circle the following that are considered an operating expense:
Property taxes Insurance The owner’s income taxes
Mortgage debt service Payroll taxes Utilities
Property maintenance
4. How do you arrive at NOI from Gross Operating Income
5. How do you arrive at the capital gain / loss from the sales price?
Making Money in Housing – CNBC.com
Aug 31st
Making Money in Housing – CNBC.com.
Following is a 7 minute video that was aired the 24th of August on CNBC with Hessam Nadji of Marcus & Millichap Advisory Services, and Alex Goldfarb of Sandler O’Neaill & Partners.
The subject of the interview is how to make money in the housing sector right now
Here are some key points.
- Apartments leading recovery by demand, followed by industrial properties
- The Commercial Real Estate sector usually trails the economy by 6 months and Multi-Family is usually the first to recover (which is starting to happen) due to there short terms leases. The meaning is that since the apartment leases are usually a year or less they can be adjusted upward as the market or that segment improves.
- Starting to see multi-family REITS doing better. Raising there rents on average of 5% over the last 12 months.
- Home ownership is going down which is good for rentals.
- Some people are realizing that owning homes is very expensive and only having to write one check for their rent is attractive.
They also talked briefly about the fact that institutional investors are looking at core trophy properties and locations. They are much more conservative and are betting that once a recovery happens that there will be above average rent growth due to the supply constrained markets they are in and the lack of multi-family construction that has been done.
I know many of you probably wonder why a company (institutional/REIT) would buy buildings at 5 CAP rates and it is a good question. What you need to consider though is they are usually more conservative and they are comparing these investments to T Bills which are giving almost no returns.
Private investors are looking at non core properties B & C. This is what most of us will buy.
Personally I am thinking that it is time to start considering Apartments again (remember I am more of an apartment investor than houses but it is the houses where we are making the returns right now because there are not many attractive apartment deals we are finding).
I don’t believe in just jumping right (back) in. I like to wait until there is some type of pricing trend because right now there is not enough sales in San Diego to be able to accurately price apartment buildings.
It’s also good to watch other people work out the kinks and really study the market/niche you are going into. Knowing the market (your niche) better than your competition is how you create opportunities for yourself. For example if you know rents can be 20% higher than your competition because you know that segment better you have the advantage of making better choices.
Apartment Hunting
May 9th
You can’t plan opportunities but you need to jump at them when they present themselves.
I got a postcard in the mail from an agent out of the area selling a 50+ unit apartment building for what appeared to be a very attractive price.
As mentioned previously in the Blog I really had not been looking for apartment buildings because the returns generated by many of these buildings in San Diego have been disappointing. When Syndicating partnerships there has to be a great enough return to 1) pay the investors an attractive return 2) get compensated yourself based primarily on the performance of the deal.
So in an a typical multi-family deal here is a simple scenario of where the money is made.
- Cash flows from operations
- Appreciated value
- Loan pay down
Typically in San Diego most of the money has been made on the appreciation side with some cash flow during the operations. Right now the cash flows are better than they have been in quite awhile but when are we really going to see any appreciation? The exception to this are value added deals where you can come in and reposition the property to create a higher value in the near term.
By doing this your yield will go up substantially and in that situation you could accomplish giving your investors a superior return and if certain performance metrics are accomplished you would get rewarded. These deals are rare at this time.
This is what has led me to flipping the houses which so far have generated on average a return in the triple
digits because of the leverage I was able to achieve (Disclaimer – not every deal will make money which will take thereturn down. I have lost money on deals or had to keep properties I planned on selling in the past and am sure Ithese things may happen in the future if I buy enough properties. My goal is to try to achieve an average 15-20% IRR for my investor partners.
The opportunities in San Diego seem to be in the 1-4 unit (this is just my opinion and a lot of people who are a lot smarter than me are making money in other ways). With that being said I don’t seem to be the only person to know this and there is a lot of competition and the prices have substantially went up over the last 6 months. I feel very confident I can keep turning up these deals. The difficulty is doing at a large enough scale.
So back to my original point.. Apartment buildings….
The reason I am buying these houses is so I can keep active in this tumultuous market and generating money waiting for some bigger opportunities to come along in the form of Apartment buildings. These are what I want long term, thousands of units each generating hundreds of net dollars each.
Well for whatever reason someone hasn’t told the apartment market in San Diego there is the Great Recession happening. There is still be a big disconnect between what most buyers are willing to pay and what sellers are willing to sell for. There has yet to be a clearing or a sell off at a price buyers are willing to pay to generate any reasonable sales volume.
The best deals I have seen were in the upper 7 CAP range (in the hood, needed work). Even at an 7 CAP with 6.2% financing running about 40% expenses and a 5% vacancy the actual cash on cash returns is 6.25%. How can I feel right about Syndicating a deal with a 10% return to go around? That’s why I haven’t even attempted to chase San Diego apartment deals.
Well this deal I referred to at the beginning got me thinking very hard about where the future opportunities may lie. Apartments in markets that have been decimated like Phoenix, Las Vegas, the Inland Empire and select other areas. There are many other markets I am sure you could go to I just like that I can get to any of these places within hours (this is really important when doing research and due dilligence since I will have to travel there frequently when buying and researching these markets). I also like the fact that these markets typically have gone through BIG ups and downs. I explain a little more about what we are looking for here.
So with all that being said I found a deal (in neither of these markets but close) that so far has seemed extremely attractive. You may ask what makes it attractive Curtis and how do you know if it is worth pursuing.
The first thing I do is to try to figure out what is wrong with a deal. Why hasn’t someone smarter and better looking than myself snatched it up? Don’t tell anyone but I’m not that smart so if I see a good deal why doesn’t anyone else? I play the green light red light game or as CCIM teaches go/no go analysis. What I am doing is doing strategic research to decide whether I move on to the next step. If something comes up that kills the deal or makes me research that item more it is a RED light, if I am satisfied with my findings it is a GREEN light. I do this until I either hit a RED light that doesn’t let me go further or we buy it.
I run some stress tests on the numbers to see at what point would we lose money and then try to gather and verify data which will lead me to a conclusion on whether to buy or not.
It is kind of like a red light green light game. You keep on playing into you hit a red light. That red light could be information you find out that makes the deal no longer attractive. For example if I run the numbers at a certain rent level and after surveying local owners and property manager I realize those are not achievable one of two things need to happen.
- Drop out of the deal
- Reduce the price to a level that makes those new rents throw off an acceptable return
Let’s play red light green light with the out of area deal.
I received a postcard from an out of the area agent with a national company that doesn’t have the best reputation (that doesn’t mean the individual agents are bad BTW) who has this listing which is an REO in receivership. I normally would throw this into my circular filing cabinet except a few things caught my attention that caused me to proceed to the next step (gave me the green light to move forward).
- Price per unit is $15,000
- Price per square foot is $20 (it would cost about 4 times that to build it)
- In a city that I go to anyways and have friends who own property there
The first red light was that the property was only at a 8.5% CAP rate which to me is not that attractive in a secondary out of the area market. After doing some research the property is a 8.5% CAP because it has been in receivership and the occupancy has sunk to around 65% (I verified this by calling area owners and the current onsite manager).
So a couple questions I need answered.
- What is a reasonable occupancy level I can achieve on this property
- When
- How much will it cost me to get there? i.e. repairs, making units rent ready, has the previous owner totally neglected it and will it cost me a lot of money to make the units marketable, etc.
First – I talk to the broker and he explains why it’s 65% occupied and that he has underwritten the deal at 85% occupied and $150,000 per year in expenses. Now it’s time for me to research because at these numbers it is a stabilized CAP rate of 12.4% which is now getting much better.
Second – I call local property owners and property management companies to talk to them about the market (google is great for this kind of research)
Here are some questions I ask.
- How is the market. “Hard hit but things that are priced right rent”
- What is your vacancy rate? The vacancy rate was less than 10%
- Is $3,000 per unit reasonable for expenses? “very reasonable”
- What is the lease up time? “4-6 weeks”
- Do you think this deal (don’t tell them the address) is a good one? “YES!”
Ok well it’s a green light time to move forward with more research.
Now I start looking at the historical books and records and drilling down deeper into my due diligence. Here is what I found
Bank owned.
· Purchase Price $800,000 (purchased and appraised for $3,150,000 and a loan of $2,250,000 in 2006)
· 2.6 x GRM
· $20.17 per square foot
· $15,300 per unit (next closest deal on the market is a bank owned at $35,000 per unit)
· 2 Properties total.
o 22 & 30 units next to each other. This give more options on the exit.
· A 12.5 Cap at stabilized income.
o Assumptions
§ 15% vacancy.
· This building has had a historic vacancy rate greater than 95%.
o 15% would equate to triple the historic average
o 50% higher than the local property managers and owners I have already surveyed.
· This property has historically enjoyed high occupancy rates. It is located next to a college, a grocery store and residential homes.
· The building currently is at 65% occupancy
§ NOI of $100,825
· This is ½ of the historic NOI
· NOI in 2008 was $195,000
§ Expenses at 50% higher than 2006 numbers.
· IRR is in the high 20’s low 30% range over a 5 year hold based on the assumptions above for NOI . (if the NOI was back to the levels 10 years prior the IRR could be 10% higher than this)
o assumptions
§ financing in the 6.5% – 7% range the IRR is in the high 20% – low 30% range
§ Sale price $1,100,000 which would be about 1/3 of the price paid 10 years earlier.
· In the last 6 years there has been over $400,000 in improvements
o These renovations included air conditioners, new appliances, new roofs, resurface asphalt, carpet, fencing, painted six buildings, landscaping, laundry room, swimming pool, and renovation of 28 units.
o I have been told the property is still in good condition and not to neglected
[1] Information gathered from April 2006 Appraisal. Crown Appraisal Group collected historical property data.
[2] Interviewed 2 property managers and 1 owner totaling over 400 units. Effective vacancy is less than 10%
[3] Owners and managers say NOI is down 25% from 2006 levels.
[4] Information given to the appraisers from the sellers in 2006. Sellers renovated property in 2004
Deal Points
· Needs to be an all cash purchase
· Short due diligence – 14 days
· Quick close 21 – 30
· Stabilize 6-12 months and refinance out 65% or as much as possible at market rate interest
· Sell and exchange in 3-5 years
· Preferred return to you and equity split TBD
Here is why I like this.
$15,000 per unit & $20 per square foot. This is trading at a third of replacement cost and about 1/3 of the previous sale in 2006. In addition it is about 1/2 the cost of any other property on the market in Havasue.
Plan
- 15,000 Per unit 2006 sold for $60,125
- $20.12 per sq. ft and in good condition
- insurance underwriting it at $115 a foot.
- 35% vacancy because of being in foreclosure.
- Underwriting at 15% once stabilized
- As I have been doing due diligence talking to other property owners and property managers so far the 8-10% has been recommended.
- Rents are in line with market
- 4-6 week lease up period
- 2 Seperate buildings which will allow us to sell them individually. Having 2 smaller buildings will open up the possible pool of buyers which could increase the overall aggregate value.
- Using about $3,000 per unit for expenses which equates to about 50% of the Gross Scheduled Income. Considering the property tax only consist of about $160 of those expenses the rest will go to all the other expenses. This has been agreed on by property owners/mangers a very conservative number.
Will need to probably be an all cash purchase or bridge loan until the place is stabilized.
Exit strategy is to stabilize and get debt on it and pull out 65-75% of the cash invested while getting long term financing in the 7% range and sell it when we hit a our target IRR which I am still contemplating what that will be.
Sell it as
The IRR will be based on some reasonable sales price assumptions. Once the target is achieved we will sell (or whatever investors want to cash out they can) and exchange into other opportunities taking advantage of the tax deferral of a 1031 in addition to capital gains tax and depreciation along the way.
The lowest price active comparable is at least double the price per unit than this property
After purchase buy some more bank owned properties at the same price per unit. We will now be the new comp and can justify the lower price. This will drive down some other prices allowing us the opportunity to buy more.
Resident (tenant) welcome manual for apartment leasing – part 2
Mar 19th
IÂ have gotten a lot of request for the rest of the tenant manual that goes along with my lease and here it is the second part to the resident welcome manual post & a copy of the manual. We give this to all of our residents with there lease agreement and other forms like drug & smoke free housing, maintenance addendum (click for the post on the maintenance addendum), lead based paint, etc.
I didn’t write or invent this just modified it for my own use (I am all about making things better than creating things from scratch). If you make it better please share with me.
Consider using all or some of this for you tenants. I hope it improves your operations, increases retention, decreases misunderstanding and improves your residences experience.
If you don’t have the time or energy to do these things and are tired of the grind of owning apartments let’s talk and see if I may be interested in buying them. If you want or have to keep your property this should help.
- TOC
- TOC
We Would Like To Welcome You
We would like to welcome you as our newest resident and look forward to having you with us.
To achieve a successful tenant/management relationship, we prepared the Resident Handbook to assist you with your tenancy. We recommend that you keep it in a convenient location so that you can refer to it easily.
You will find maintenance guidelines, rental payment instructions, general information, safety tips, vacation guidelines, emergency instructions, holiday tips, and more.
We have also included forms for you to use when necessary. We want you to be prepared throughout your tenancy. Therefore, we want to provide important information and documents that you may need in the future.
If you need to contact us when you need assistance we have listed how on page 6.
If you have questions or concerns on any of the information contained in this documentation, contact our office at any time. We are here to help you.
We wish you a successful and enjoyable tenancy in your new residence.
Personnel
We have a complete staff to assist you. We have found “Teams” effective for assisting tenants during their residency. You should know your team at this time, but if you need more information, contact us for more information.
- Management Team: We may have assigned a management team to your account, consisting of a Property Manager, onsite manager and or Assistant Property Manager. They concentrate on assisting you with all the details of your tenancy. Contact them to answer your questions.
- Office Team: We ask that you contact the Management Team regarding questions concerning Tenant issues. The owners are available to assist you in verifying receipt of rent, any necessary forms, and basic information if your Management Team is not available.
| Position | Name | Phone + Ext. | |
| Onsite | |
||
| Managing Member | Curtis Gabhart | 4157menlo@ | |
| Assistant | 4157menlo@ |
Tenant Communication
On the next page, we have provided general office information, and we have just covered the teams on the previous page. Communication makes a difference in any area of life, and it can only enhance your tenancy by letting us know what you need.
Use the telephone, email, the property website email access, or written correspondence to contact us. What is important is that you DO contact us when you need assistance. Remember we are here to help you
Telephone Calls during Office Hours
During office hours, listed on page 8, there is normally a live person to answer your call. Please state the reason for your call, so that someone can assist you, or direct your call to the right party. Your team may not be available or in the office, and one of the office team members may be able to help you with your request.
Voicemail
If, during the day you reach our voice mail system, use the extension number for the party you are trying to reach, and if they are not available, leave a message, complete with your name and the telephone numbers where someone can reach you, both day and evening. Someone will return your call. The benefit of a voice mail system is the ability to leave a message twenty-four hours a day, seven days a week.
After Hours Calls
Of course, the voice mail system will take all messages after hours (please refer to the hours on the next page).
Emergency Calls
During normal office hours, immediately state if you have an emergency. If you reach the voicemail system during office hours, or after the office is closed, immediately choose the emergency option, xxx-xxx-xxxx or if not available call xxx-xxx-xxxx
Maintenance Requests
Please remember that all Work Orders must be in writing, unless it is an emergency. This is in your rental agreement. You can access a work order online at the property website, www._______ at the our office, and in this tenant handbook.
Change of Information
It is important that you notify The Landlord of any changes in telephone, fax, cell numbers, or email. An information change form is located in this handbook as well.
Email is a great way to communicate and we request that you send your email address to 4157menlo@gma. We will put your email address in our database. This enables your team to contact you quickly and efficiently, and when needed, send you important information
Please note that although communication by email is encouraged, We do not accept notices to vacate by email. You are required to give any notice to Vacate in writing, and this form is included in the back of The Tenant Handbook.
Website
The The Landlord website, website address ____, contains important information for tenants. Visit it regularly to use the Tenant services. There, you can easily download a work order request and The Owner has posted their tenant newsletter, on the site. You can also send emails to The Landlord directly from the website under the “contact us” page.
General Office Information
Address Information |
|||
| Mailing address | 7667 Vickers St, | ||
| San Diego, CA 92111 | |||
| Street address | 7667 Vickers St, | ||
| San Diego, CA 92111 | |||
Communication |
|||
| Business # | |||
| FAX # | 619 | ||
| Website | , | ||
Office Hours |
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| Monday – Friday AM | 9 – 12 am | ||
| Monday – Friday PM | 1 – 5 pm | ||
| Saturday | By appointment only | ||
| Sunday | Closed | ||
| Holidays | Closed | ||
Emergencies |
|||
| Call 619 or 858 emergency option | |||
Protect Your Rental and Credit History
| Copies of contracts (or $.50 per page) | $.50 |
| Mail box key duplicate | $35 |
| Lost key duplicate | $25 |
| Reference report | $10 |
| Smoke detector battery | $25 |
| Light Bulbs | $1 |
Some day you will eventually move out of the property. It is important that during your residency, you care for your rental history and credit. Most likely, you will either rent again or purchase a home. In either case, you will need good rental references and a good credit report. Avoid late rent payments, care for the property, and move out properly. Give The Landlord the pleasure of being able to provide a good reference for you when you vacate the property.
Rental/Lease Agreement
You received a copy of your rental/lease agreement, including maintenance instructions, move in checklist, and any other necessary documentation. We recommend that you keep this paperwork with this Handbook for easy reference. Please always remember a rental/lease agreement is a binding agreement. If you have any questions regarding your lease, please call your The management team.
Moving Checklist
There is a great checklist in this package for when you are moving. You will find the Moving Checklist in the back of this handbook.
Utility/Cable Companies
When you rented the property, The owner cancels the utilities, on the 1st day of your rental agreement. To avoid discontinuation of service, contact the utility companies immediately. The move in checklist contains the telephone numbers of the utility services.
Rental Payments
Rent is due on the first of each month and late if not received by the fourth. If you know that you will have a delay or problem paying by the due date, contact your management team immediately. Lack of communication can affect your payment record.
The Landlord receives rental payments by:
- Through the onsite manager
- By using ACH (Automated Clearing House) – this automatically takes your rental payment directly from your bank and deposits it into the Landlords bank, saving you time.
The Landlord does NOT accept rental payments in:
- Cash
- Rolled coin
- Credit cards
- Debit cards
- Post-dated checks
Fees/Charges
If you fail to pay rent on time and in full, you could incur the following charges:
- Late fee – the late fee is ten (10) percent if rent is not received by the fourth.
- Service fee – The service fee is $ 50.00, if a notice to pay or quit is served because your rent is not received in a timely manner.
- Maintenance charge – you may be billed if you have made an appointment with a vendor but failed to meet them at the scheduled time. If The Landlord receives a service call billing, you are responsible for reimbursement.
Maintenance Reimbursement
Generally, a vendor is assigned to perform the work you request in your residence. However, if you have contacted management or ownership and requested to perform a minor maintenance item and The Landlord has agreed to reimburse you:
- Pay the bill and send the receipt to The Landlord. The Landlord will reimburse the amount due to you.
- Do NOT deduct the amount from your rent.
Care of the Property
Getting To Know Your Residence
When you move into a property, it is helpful to know where important items are located. Take the time to know or locate the:
- Main circuit breaker in the event power goes out
- Gas shut off valve – turn off during emergencies/disasters for safety
- GFI plug(s) – so you can check them if your plugs or appliances in the bathroom, kitchen, patio or garage fail to work
- Electric and/or gas meters to check your utility bills
- The main water shutoff valve in case of major flooding
- Water shutoff valves below the sinks and behind toilets in case of water leaks
- Method of cleaning for the oven so you use the right products
- Time bake knobs on the oven – in the event the oven will not work, these may be on.
If you are uncertain about any of the above items, contact your the management team for help.
Maintenance
When you rented the property, your lease contained detailed maintenance instructions. Please review them before requesting a work order. The Landlord has more tips in this handbook.
Tenant Renovations/Alterations
It is our policy that tenants do not do repairs or alterations. You agreed to this in the rental agreement/lease. If you do want to make a special request for renovation or repair to the property:
- Submit your request in writing before making any changes.
- Do not proceed with any work until you are notified to do so.
- If the request is acceptable to the owner, tenants must do one of the following prior to vacating the property:
- Leave the alterations if this is part of the owner’s condition to accept the alteration/repair.
- Return the property to its original state if this is part of the owner’s condition to accept the alteration/repair and pay for any necessary repairs to restore the alteration/repair to its original state.
- Sign a The Landlord agreement regarding the alteration/repair.
Tenant Maintenance Responsibilities
We have a duty to maintain your residence to uniform codes of safety for landlord/tenant law. Therefore, The Landlord has provided you with Work Order Requests when there are legitimate repairs. We want you to report maintenance items.
However, there are items that are the tenant’s responsibility and we have listed them again (please refer to the 5-page maintenance addendum for more details on the list below):
- Replacing smoke alarm batteries
- Replacing light bulbs with the correct size, including the front porch light if it goes out.
- Replacing furnace filters, if applicable, every 6 months, and every 4 month if there is smoking in the property
- Reporting non-functioning smoke alarms immediately if batteries do not solve the problem
- Reporting all necessary repairs
- Professional steam cleaning and spot cleaning of carpets while residing in the property
- Normal insect control
- Normal rodent control, such as mice
- Reporting lack of landscape cleanup if a service IS provided in your rental agreement
- Reporting malfunctioning irrigation systems or sprinklers, even if it is the responsibility of an association
- Disposal of all garbage in the proper receptacles and using the weekly pick up service
- Disposal of animal feces on the property even if you do not have a pet
- If the residence has a fireplace, use caution and care when operating the fireplace and disposing of ashes or coals. Do not dispose of coals in the fireplace until they have cooled outside for a week.
- Check to see if damper is open before starting a fire in the fireplace.
- Disposing of toxic waste properly in accordance with local and county laws
Procedures for Requesting Maintenance
Before calling The Landlord
- Determine if there is a true emergency or a non-emergency.
- Check to see if you can determine the cause of the problem that you are experiencing, unless you have an emergency. Read examples of various problems in your maintenance addendum.
If There Is an Emergency
There are few emergencies. An emergency is a life-threatening situation such as a fire, flood and/or uncontrollable water, electrical problem, smell of gas, etc:
- Emergencies causing immediate danger such as fire, call 911
- Emergencies involving gas call the gas company and if necessary, 911
- Emergencies involving IMMEDIATE electrical danger, call the utility service or 911,
- After contacting one of the above sources, then call the office and report the problem.
- Emergencies such as backed up plumbing, call your onsite manager. If you can’t get a hold of them call 619-928-2878 The Landlord, and if necessary, call 911.
- An emergency is NOT heat, but The Landlord recognizes this is important and will make it a priority with vendors to have the heat working as soon as is possible.
- An emergency is not air-conditioning, non-working dishwasher, sprinklers, etc.
Non-Emergencies:
- Fill out a tenant “work order” request form. Fax, mail, or email the request to the office.
- Work orders are available in this handbook, on the property website, or we can send it via email.
- A representative will assign a vendor to contact you.
- We do not give vendors keys to the residences.
- Vendors are required to make appointments with tenants.
- Remember, this is a NON-EMERGENCY item and in most cases, the vendor will not be able to make an appointment immediately.
- Failure to show at an appointment can mean a charge to you. Therefore, be certain to call the Landlord office as soon as possible if you are unable to make the appointment.
- If you do not hear from a vendor or repairperson within 5 – 7 business days, call the Landlord office and inform your management team or a staff person that a vendor has not contacted you.
- We will contact the vendor to find out the cause of the delay, and then inform you when to expect the vendor to call.
- After a repair has taken place, if you have trouble, call us and let us know that you had a recent repair but there is still a problem.
- Recent repair means within the last 60 days and pest control work means within 30 days.
- If you fail to report an unsolved recent repair, and there is further damage or expense, you may be responsible for the cost, per your rental agreement.
Preventative Cleaning Tips
Cleaning tips were included in the maintenance addendum with your rental/lease agreement. Here are more tips:
Cleaning is easier when you use a “preventative approach.”
- Always put away food and wipe up food debris.
- Clean pet bowls regularly to avoid attracting ants and other insects.
- Do not allow grease to build up in kitchens; use a sponge and soapy water regularly on counter tops, stovetops, and hood filters.
- Avoid cooking with very high heat. This will add to more grease build-up and cause damage to appliances. It can also be dangerous.
- Avoid mildew by venting rooms and bathrooms properly, particularly after baths and showers.
- Clean bathroom tile or other surfaces regularly to prevent the buildup of grime.
- Clean toilets regularly to avoid build up of grime, rings, and mildew.
- Mop tile, wood, and linoleum to avoid “dust bunnies” and the buildup of grime.
- Do not use wax on linoleum or tile.
- Do not use “cleaning products” on tile
- Vacuum all flooring regularly, particularly carpets. This will save in carpet cleaning bills.
- Regularly pick up debris and pet feces in outside areas.
Additional Cleaning Tips
It is not always necessary to purchase expensive cleaning products. Vinegar, baking soda, ammonia, and salt are some inexpensive cleaning products with many uses. They also are helpful for people who have allergies to cleaning products. They can be better for the environment than commercial products
- Air freshener:
- Place a bowl of vinegar in the kitchen or bathroom to absorb odors
- Drains
- For a great once-a-month drain cleaner, pour 1/2 cup baking soda into the drain, follow with 1/2 cup white vinegar — it will foam. Cover and let sit 30 minutes and then flush with cool water.
- For stubborn, slow-running drains, pour 1-cup baking soda and 1-cup salt down the drain. Follow this with 2 quarts boiling water. Let sit 30 minutes, and then flush with cool water.
- Tile countertops:
- To clean ceramic tile, where mold and mildew accumulate, use a combination of 1/4 cup baking soda, 1/2 cup white vinegar, 1-gallon warm water, and 1-cup ammonia.
- Alternatively, regularly clean kitchen surfaces by using a spray bottle mixed with ½-cup vinegar and a quart of water.
- Glass cleaner:
- When glass-cleaning products leave residue on bathroom mirrors, mix 3 tablespoons of vinegar with a quart of water in a clean plastic spray bottle.
- Spray glass and wipe with a clean paper towel.
- Dishwasher:
- Empty the dishwasher, pour in a ÂĽ cup of vinegar, and run the dishwasher again.
- Even if you prefer not to use the dishwasher, run at least once a week to keep seals from becoming hard and cracked.
- Refrigerators
- Clean regularly and place a cup of baking soda in a bowl on a refrigerator shelf to absorb odors.
- A cup of dry unused coffee grinds can also absorb odors when placed on a refrigerator shelf.
- Washing machine:
- A half cup of baking soda can be added to the washing machine with regular detergent to help with mild odors
- Toilets:
- Remove waterline marks in the toilet bowl by pouring in 2 cups of white vinegar. Let soak overnight, then flush to rinse. If this does not work, rub the waterline mark with a wet pumice stone.
- Carpet stains:
- Vacuum the carpet if the stain is dry.
- If the stain is still wet, blot gently to remove excess – blot, do NOT rub.
- Lightly soak the carpet stain with clean water first to remove the stain – blot, do NOT rub.
- If the stain remains, mix a 3 Tablespoons of vinegar with a quart of water in a spray bottle and spray the stain; blot again; do NOT rub.
- If this fails, consult a professional carpet cleaner immediately; the longer you wait may mean the stain may not come out.
- Carpet odor:
- Regular vacuuming cures most carpet odors, but if carpet odors persist, lightly sprinkle the carpet with baking soda and vacuum thoroughly, removing all baking soda from carpet. Repeat if necessary.
Energy Saving Tips
Saving water is important for the environment and can mean a lower utility bill for your residence as well:
- Always report water leaks to The Landlord as soon as possible
- Report water dripping under sinks
- Running toilets are big water wasters
- Report malfunctioning sprinklers
- Report standing pools of water
- Report malfunctioning water appliances such as dishwashers and washing machines that come with the property
- Run the dishwasher when it is fully loaded.
- Replace your old washing machine with an energy efficient one – you could save the cost of the machine in water and energy bills.
- Check water hoses on washing machines for leaks; change hoses every three years.
- Adjust the water level to match the load, using less water for small loads.
- Avoid using flushing toilets to dispose of ordinary trash.
- Take shorter showers.
- Avoid letting the water continually run while shaving, brushing your teeth, or washing your face
- Be sure your water heater temperature is set properly. Note: do not turn the water heater up to “high,” this is a dangerous temperature level.
- Counsel all children on how to prevent wasting water.
- Do not “over water” landscaping; it is not healthy for plants and simply wastes water.
To lower air-conditioning bills:
- During warm or hot months, close the windows and doors to your home early in the day to “keep cool air in,” particularly when the air-conditioner is running.
- Close window coverings on the sunny side of the house during different times of the day; this can lower the temperature dramatically.
- Replace the air filter often and with the right size, at a minimum of every three months, monthly if you smoke. A clean filter helps the air-conditioner to run more efficiently.
- When leaving your residence, turn the air-conditioner up a few degrees, a closed house without activity normally stays cooler. This is particularly important when going on vacation.
- There is no reason to keep the residence in a frigid state while you are gone, but do not turn the air off on very hot days – it will only take longer and more energy to cool down.
To lower heating bills:
- During the cooler months, keep all windows and doors tightly closed.
- Report any major drafts to the Landlord office.
- Use a “reasonable” level of heat in the residence. Sometimes, turning down the heat just a few degrees can reduce an energy bill.
- Turn the heat down during the night and use warm covers and comforters.
- When leaving home, turn down the temperature on the thermostat.
- Do not turn the heat completely off. It will take more heat for a cold house than it will save. In addition, this could cause pipes to freeze, which will cause more problems.
- If there is a fireplace, close the damper if you are not using it, but please be sure to open the fireplace if you do start a fire.
- Replace the furnace filter often, at a minimum of every three months. A clean filter helps the furnace to run more efficiently
Renters Insurance
Property owners generally carry a standard fire and liability policy, and have additional coverage with “landlord/rental” insurance, but they normally cannot cover the contents or possessions of the resident. The reason that insurance companies do not provide this type of coverage is because they are “non-owner” occupied properties. Therefore, it is very important for you to have adequate insurance coverage for your contents.
If you think it is not important, sit down and write out a list of your possessions in one column. In a second column, list how much it would cost to “replace” them. You will be surprised how the list can really add up.
Contact an insurance agent if you do not have renters insurance. You can find them in the telephone directory, search the Internet, or ask a friend. The Internet can also provide both information and comparison-shopping. To avoid a loss, acquire renters insurance now.
Safety Tips
The safety of you and your family is important to The Landlord and many things can affect it. Here are some tips to follow:
- Unplug all heat-producing appliances like toasters, irons, and coffee makers when they are not in use to prevent fire hazards.
- Never leave a stove or oven unattended; turn off all stove and oven appliances when you leave the house.
- Never leave heating pads and electric blankets on indefinitely and turn them off when you leave the residence to prevent fire hazards.
- Never leave water running unattended in a plugged bathtub or when leaving the residence.
- If you have an upstairs bathroom and you see water in the ceiling below, particularly in a light fixture, report the leak immediately to The Landlord.
- Do not operate electrical appliances while standing or sitting in water.
- Avoid using blow dryers, curling irons, radios, TVs, or other appliances while in a bathtub or over a sink filled with water.
- If you have small children, use child protector plugs when you are not using outlets
- Do not overload extension cords with too many appliances.
- Place lamps on level surfaces and use the correct wattage.
- Avoid running extension cords over walkways, under rugs, or any other place that could cause tripping.
- If you suspect an electrical problem, report it to The Landlord immediately.
- Do not remove smoke alarms, particularly if they are beeping. Smoke alarms are for safety and removing them can endanger all residents and guests. Change the batteries if needed.
- Do not allow children to leave toys on walkways and sidewalks.
- Replace outside light bulbs so you can utilize lights properly when it is dark.
- Report any exposed tree roots to the Landlord office
- Keep a portable fire extinguisher in the kitchen and the garage; they are available in hardware supply stores.
- If you use a grill or BBQ, use common sense, never leave grills unattended.
- If you have a fireplace, be sure to store hot ashes and coals away from the residence. Do not place ashes in garbage receptacles unless certain they are cold.
- Do not store fireplace wood against the residence.
- Always be certain the damper is open before starting a fire in the fireplace.
- Do not build “roaring” fires in the fireplace; build reasonable fires suited to the size of the fireplace.
Vacation Checklist
When going on vacation, here are items to check before leaving:
- If going out of town for an extended period, please notify The Landlord how long you will be gone, and supply an emergency telephone number. Then should any problems arise concerning your residence, there is someone to contact.
- Check your rent payment to ensure it will not become delinquent. It would be a sad thing to come home to a late notice and charges.
- Notify all necessary parties such as your next-door neighbors, the paper delivery person, the post office, or any related service people. By doing so, you will avoid any panic that something is wrong.
- Select someone to pick up items on your doorstep to avoid giving signals to dishonest people.
- If leaving a vehicle in the driveway, remove any valuables and garage door openers that can be stolen, giving access to your home.
- Put garbage cans away or arrange for someone to take care of it.
- Place valuables and jewelry in a safe deposit box.
- Avoid leaving a message on your answering device telling people you are out of town and for how long.
- Set timers on interior lights, to deter burglars.
- Be sure to check all windows, window locks, and doors before leaving.
- If you have an alarm, be sure to set it.
- Turn off the water valve to your washing machine.
- Turn off all appliances, large and small, such as stove burners, coffee pots, irons, curling irons, etc.
- Unplug TVs and computers in the event of lightning or power surges.
- Turn your water heater to low or “vacation” setting, but do not turn the water heater off.
- Anything else living in your house besides you, such as plants or pets? Then be sure to water plants and have someone take care of your animals. Do not leave pets in the residence unless a reliable person is going to care for them daily.
Holiday Tips
Everyone enjoys the different holidays, but it is important to exercise care during the celebrations and remove decorations when each season is over.
- Hang lights and decorations properly and carefully.
- Before hanging, check for bad plugs and loose wires. If you find defects, dispose of the lights.
- Only use lights and decorations during holiday seasons; remove them immediately when the season ends.
- Dispose of holiday trees properly; never burn them in a fireplace.
- If you use extension cords, do not overload, do not staple them to the residence, and if outside, use only cords approved for outside use.
- Never leave holiday lights on when leaving your residence to avoid fire danger.
- For fireworks celebrations:
- Do not use illegal, dangerous, or explosive devices.
- Only buy legal fireworks and check where you can use them.
- Use common sense safety rules with fireworks.
- Do not use fireworks in or around your residence.
- Keep all fireworks away from any dry grass, trees, or roofs.
- Attend a fireworks celebration instead of buying them and enjoy the fun without the responsibility.
Emergency/Disasters
Unfortunately, emergencies and disasters happen all around the world. The best solution is to be prepared. In the back of this Handbook, you will find a convenient Emergency/Disaster Checklist that has items to do before and during an emergency/disaster.
There are different emergencies
- Maintenance emergencies:
- The Landlord outlined in the 5-page maintenance addendum that you signed during your move in what to do for emergencies such as flooding, electrical, gas, etc.
- We have also reviewed them on page 9 of this handbook.
- Please follow the maintenance instructions and call The Landlord when appropriate.
- The Landlord requests that you treat the Landlord staff courteously while under stress of the situation – we will do everything we can to help you as soon as possible.
- Area emergencies or disasters:
- Be prepared and use The Landlord Emergency/Disaster checklist enclosed with this information.
- When major emergencies or disasters such as a hurricane, tornado, earthquake, or some other force of nature occur, everyone experiences great inconvenience and difficulty. Remember this and be considerate of others and the degrees of different problems.
- The Landlord requests that you call emergency services first in a disaster.
- Then notify the Landlord office as soon as possible what has happened.
- The Landlord will assign priorities to work and during an area emergency/disaster, will work to assist you as much as possible
- When calling the Landlord office, we ask you to be patient and calmly state what problems you are experiencing. We will handle the problems as quickly as possible.
Drug Free Housing
The Landlord has a drug-free policy for tenants and it is a requirement of your tenancy as outlined in your rental agreement. However, people can encounter drug problems from other residents from the lowest income neighborhood to the highest. We want you to be aware of signs of potential drug problems in any neighborhood.
- Do not approach a house or building if you smell a strong chemical odor. Report it to the authorities. Drug houses may contain volatile chemicals and can easily explode.
- Do not pick up abandoned purses, suitcases, filled bottles, or packages. People place “meth labs” in objects of many shapes and sizes. They are highly explosive and dangerous; report any unusual or abandoned object to the authorities. Do not attempt to examine it yourself.
- If you see constant pedestrian or vehicle traffic in your neighborhood at all times of the day and particularly at night, it could be a drug house, particularly if you observe high security precautions surrounding the property.
- First, report unusual and disturbing activities in your neighborhood to the authorities, and then notify The Landlord of your suspicions as soon as possible.
- Educate and train children of all ages for the signs of drug activities or a drug house.
- Be aware and be alert – a drug house or drug activities are a danger anywhere and to everyone.
Frequently asked questions
We have put together a list of the most frequently asked tenant questions that may answer many of your concerns in advance.
Why did I receive a notice when I paid the rent on the 5th of the month?
- As outlined in this Handbook before, the rent is due on the 1st and late if not received by the 4th of the month. Once the 4th of the month passes, we begin preparing Notices to Pay or Quit. Obviously, we served the notice before we received payment. Notices arebased on state landlord/tenant law requirements.
Why can I not clean the carpet myself?
- We require professional steam carpet cleaning to preserve the life of the carpet. Home machines do not handle the deep cleaning necessary.
Can I install extra telephone lines?
- You can install extra telephone lines if you pay the expense and disconnect them when you leave. However, you must notify us and obtain written permission to install the lines.
Can I have a satellite dish?
- Yes, you can have a satellite dish. However, you must submit a request to us and sign an agreement prior to installing the dish. You also must take responsibility for removing the dish and repairing any damage. Call for details.
I did not have a pet when I moved in; can I have a pet now?
- Notify us in writing of your request for a pet. Do not move a pet into the property without permission. If we allow a pet, an increased security deposit will be required and a pet agreement signed. If the owner says no, abide by the decision and your rental agreement.
What happens if my pet dies or runs away, can I have my increased security deposit back?
- No, all security deposits remain in effect until all tenants vacate the property. Until a property is completely vacant, there is no way to check the entire property thoroughly.
What happens if I want another pet?
- Notify us of what pet you want. If we allow a pet, an increased security deposit will be required and a pet agreement signed.
My roommate wants to move, but I want to stay. What do I do now?
- Your roommate needs to submit a partial notice to vacate. We will need documentation from you to show you can support the property by yourself. We will not partially refund part of the security deposit to your roommate since it is a condition of your rental agreement. You and your roommate will have to settle any funds owed to each other, including any or all of the security deposit. Have your roommate use the Partial Notice to Vacate included in this handbook.
I want to add a roommate, now what do I do?
- The prospective roommate will have to submit an application and we must approve the person PRIOR to them moving into the property. You can obtain applications at the office. If The we deny the applicant, they cannot move into the property. If approved, you and the approved applicant must sign new rental/lease agreements.
Why do the owners want to see the property?
- We are showing responsibility toward the maintenance of the property, the condition, and our investment. We respect that it is your residence. It is also nothing to fear. This is why we have contacted you first to set a date and time.
When it is time to move
Giving Your Notice
Eventually, you will move, and we want you to be prepared when this is necessary. Tenants are required to give a 30 notice prior to moving. We have provided in this information a “Notice to Vacate from Tenant Form” to be used when you anticipate moving.
Before giving notice:
- Check your rental agreement/lease to see if you are eligible to give notice. It will specifically state when you can give notice. A lease is a binding agreement for a set period and you may still be bound to the lease.
- If you need to move and you are still committed to a lease period, contact your us to discuss your options.
- Notices must be in writing. The day the notice is received is the date the notice begins. For example, do not fill out a notice with the current date and mail it five days later, thinking the date you mailed is the notice date.
- We do not accept notices by email because of lack of signature; We do receive notices by fax.
- We do not not provide rental history to other landlords/property management companies unless tenants submit a written Notice to Vacate and the tenant gives the authority for us to give out rental references.
- The Notice to Vacate form for the Tenant contains the authorization for allowing us to give out rental references. This form is included with this information.
Setting Up Your Move-out Appointment
- After you submit your Notice to Vacate, We will send you a three-page letter. This will instruct you on what to do during the notice period, and how to set up your move out appointment.
- Appointment for move outs during weekdays is by appointment only between 8-3 pm on the weekdays
- It is the responsibility of the resident to deliver all keys and openers to us, either at the move out appointment or delivery to the office.
- Failure to deliver keys and openers could incur additional charges.
- Remember to supply a forwarding address and telephone number for your security deposit refund.
- Use the Moving Checklist so you remember important details.
Preparing the Property
When you are ready to move, if you have questions on how to prepare your residence, please call your management team, and discuss your concerns with them. We want your move to be a pleasant and successful one. The following are the steps to take for your move.
Cleaning
- Have the property clean throughout the interior and the exterior.
- This includes vinyl or tile floors, windows inside and out, window sills and door casings, mini-blinds, wiping out drawers and shelves, all appliances, sinks, toilets, bath tubs, showers, vanities, light fixtures, fireplaces, removal of cobwebs inside and out, etc.
- Tenant caused dirt is not normal “wear and tear.”
- Pick up debris and animal feces on the exterior of the property and place them in the proper trash receptacles.
Carpet Cleaning
- Carpet cleaning depends on time lived in the property for normal wear and tear, whether you have had pets, and also if the carpet cleaning exceeds normal wear and tear.
- You will be charged 100% at all times, if you have had pets and/or you have soiled carpets exceeding normal wear and tear.
- Up to one year: carpets will require cleaning. Tenants incur charges if tenant does not have carpets professionally cleaned. One to two years in the property, you will be charged 50% of the cleaning of normal wear and tear.
- After two years, there is no charge for normal wear and tear. However, there is a charge for carpet damage and stains.
- Do NOT rent carpet-cleaning machines, use home cleaning machines, or employ chemical cleaning companies. Only professional truck-mounted steam cleaning from a reputable company is accepted.
- Call The Landlord for a recommendation on a carpet cleaner who will give you reasonable rates on carpet cleaning.
- If you hire another carpet cleaner, the carpet cleaner must guarantee their work to the satisfaction of The Landlord, and a receipt is required during the walk through inspection.
- Tenants, please note: The Landlord will not reimburse for any carpet cleaning contracted by tenants.
Draperies/Window Coverings/Windows
- Do NOT wash draperies.
- You are not expected to dry clean draperies unless:
- You have caused excessive soil or allowed water damage from open windows. Draperies with water stains could require replacement. Discuss this with your management team.
- You have not been using the draperies provided and/or have not kept them in good condition
- Wipe all mini blinds – do not use harsh chemicals on the blinds.
- Clean all windows inside and out.
Replacements
- The following must be in working order to avoid charges when moving out:
- Burned out light bulbs
- Non-working smoke detector batteries
- Missing doorstops
- Furnace filters – change the filter just before you vacate the property, and make sure you use the correct size.
Pest Control
- If you have a pet, leave an adequate supply of insect/flea foggers. The minimum required is four (4) foggers. If you have three bedrooms, two baths, and 2-car garage home or larger, you must supply a minimum of six (6) foggers. There is a $10 charge per can if you do not leave the foggers unopened in the property.
- If you do not have a pet, you do not need to supply foggers unless you have not been exercising minimum insect control. If a property is found loaded with ants, spiders, cobwebs, etc., you can incur pest control charges. Therefore, follow the proceedings for using the foggers.
- All foggers must be left unopened and given to agent during walk through inspection.
- The Landlord will place and discharge them after the walk-through.
- If you fail to leave the proper number of foggers, there will be a charge.
Landscape Clean Up Where Applicable
- The outside area is to be neatly mowed, trimmed, pruned, fertilized, and watered for outside areas that apply in your rental contract.
- Remove all trash and debris, placing in the proper receptacles.
- Remove grease or oil drips; dispose of motor oil properly – it does not belong in the garbage receptacles.
- Pick up any animal feces whether you have an animal or not.
Trash
- If you have trash that exceeds the normal pickup, you are to arrange to have it hauled away at your expense.
- Place all other trash within the appropriate trash receptacles for normal trash removal.
- Do not overflow trash receptacles.
Painting
- We request that you do not spackle, putty, or touch up paint unless sure the paint will match.
- Charges can occur if unnecessary painting is required due to tenant painting.
- Charges for painting depend on whether it exceeds normal wear and tear, and the length of time in the property.
Your Security Deposit Refund
When you follow the move out procedures leave the property in good condition, it simplifies the task of refunding your security deposit. The Landlord remits security deposit transmittals within 21 days in accordance with California’s landlord/tenant law. Remember, We want your move out to be a pleasant and successful process.
Additional Tenant Forms
We have put together the following forms that could be useful to you in the future. If you need more forms, contact the our office. We have also included a copy of your rental agreements with your handbook.
- Moving checklist/utility numbers
- Emergency/disaster checklist
- Tenant ACH request
- Work order request
- Add roommate request
- Cable/satellite/TV request
- Request to add pet
- Partial notice to vacate
- Notice to vacate
Conclusion
We hope that you have found the The Resident Handbook useful and informative. It is our goal to prepare you for a successful tenancy and a pleasant move out when this occurs. If you have any questions on the enclosed information, please contact us.
Have a successful residency.
7667 Vickers St., San Diego, CA 92111
(Bus) 619-928-2878 * (Fax) 619-374-2903
So what steps can I take to minimize the risks right now of owning Apartment buildings in San Diego?
Feb 11th
A question was poised on www.sdcia.com that I thought would be a good one to address . The question was what steps can I take to minimize my risk of buying and owning apartment buildings right now?
That was a good question and one I had not been thinking about as much lately because of all the buying and flipping of properties I was doing. Until I had a bunch of rentals I needed to get occupied so I didn’t have a huge vacancy rate.
Well here is what I am doing to keep my properties operating effectively.
- Tenant retention
- You’ve heard the old saying in business it’s easier to keep a client than to get a new one. Well your tenants are your clients and unless your grossly under rented you need to retain as high a percentage of possible of your current apartment tenants.
- Keep a reminder in your calendar 60 days before there lease expiration so you can talk to them about renewing. If they are going to move it’s best to find out as soon as possible and also a good idea to find out why. Try to keep them.
- Either have a nicer product or better rents.
- Improvements
- Spend money on items that may cause emergency calls first or are unsafe. These issues will happen and if possible deal with them on your own time rather than them dictate to you. It also saves a lot of money and aggravation not to get calls at midnight.
- When making improvements to the units some of the best bang for your buck is to
- Paint the unit.
- I like to make sure the texture looks good (does not have to be perfect just not patches everywhere) and then paint the place in a two tone color. A wall color and white for the ceiling. This will initially cost more but once it is complete you will rarely ever have to paint the ceiling. You also want to paint the base, case, and doors a nice white color in semi gloss. The more you can make the place feel like a home rather than an apartment the better rents and retention you will get.
- Interior doors & hardware
- Flooring
- I like to use as much tile and or laminate (the stuff that looks like wood) as possible. It costs a little more the first time but lasts 5 times as much as carpet and you will probably get about 5% more in rent.
- Paint the unit.
- Improvements
- You’ve heard the old saying in business it’s easier to keep a client than to get a new one. Well your tenants are your clients and unless your grossly under rented you need to retain as high a percentage of possible of your current apartment tenants.
- Get ahead of the game
- If you have vacancies coming up get on it quick and return calls immediately.
- Track the market
- Do rent surveys & talk to other apartment owners of similar buildings in the are where you own property (send me an email if you want a how to do rent survey report & spreadsheet). This is also a great way of finding properties for sale. make sure to give everyone you talk to your information and let them know that if they ever think about selling give you a call.
- HAVE GOOD SYSTEMS IN PLACE
- We automate as many of the processes as possible by having good checklists of activities we do repetitively. Instruction sets are created on each item to make sure that we do it correctly and consistently, it’s hard to figure out what is and is not working if you don’t do things consistently so you can track them. It makes it so much easier to improve upon what we are doing. In addition it allows me to more easily hire people and get them up to speed quickly or if I lose someone I know how to do that task and I am not held hostage or overly dependent on any one person.
- Here is a quick example of a sample turnover procedures.
- Once someone gives us notice to vacate (here is a sample of one of our move out inspection flow charts)
For example we have our systems for
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- Pre-marketing,
- Final walk through (see sample flow chart of walkthroug, letters to go out to tenant with instructions on ours and there responsibilities)
- Once it is vacant
- (i.e. walk through checklists for repairs, vendor coordination, property showing, applications etc.)
- A few things we do to make it more efficient
- Use an electronic Realtor (sentry) lock box. This device allows my assistant to generate up to 10 random codes daily from the office. When someone calls my google voice number I get a text with the voice message which I forward to her which goes in our database, she calls gets the rest of there contact info including an email. We then send the prospect an email with instructions on how to get to the property, how to enter and THERE OWN code which we inform them to not give out to anyone because it is tracked (see sample form letter we EMAIL to prospects). We are then able to log on to see who and when looked at the property so we can follow up to see if they are ready to fill out an application and why or why not. Also now that we have there email address if they decide not to rent with us now we can update them in the future about upcoming vacancies 6 ,12,18,24Â months from now when they may be thinking of moving again.
Viewing instructions for our units
- If they want to fill out an application we use my smart move/transunion credit/criminal check which they do online and either pay for or they give us the cashiers check and we then pay for (I like this way better because they are more committed after giving us the credit check fee) which we get a copy and so does the prospect. With this service I do not have to collect social security codes and worry about certain compliance issues. In additiona it also speeds up the process. We then get a approve or disapprove based on our criteria and can then make a decision.
- Once an application is accepted we send them an approval letter/email/phone call and let them know they will shortly receive a lease package via email for electronic signature using a service called docusign which is legally binding.
- my assistant puts together the resident package which includes some of these items
- lease agreement
- resident welcome manual which spells out the rules in detail and what is expected from all parties
- non smoking/drug addendum
- maintenance addendum (look on blog for sample)
- etc.
- All of these are put into docusign for email/electronic email distribution. An email get’s sent out via email which is signed by both parties (legally binding) and no paper has to be printed. The fully executed copy goes in there file which is on our computer server for any reference in the future.
- A few things we do to make it more efficient
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Hopefully this can give you some ideas on better ways to operate your apartments which will reduce your risk. As always feel free to give me a call or drop me an email to discuss further.
