Property owners find making the decision to rent or lease out their home a difficult personal choice. For some property owners, the decision to lease is because the home is an investment property. For other property owners, the decision to lease a home comes because the home has been on the market, is not selling and needs to relocate or downsize or move to a larger home. Whatever the reason, Hanaro Investments treats a home the way property owners would want. Below are some of the important ways we handle the transaction of leasing your home. Know that you and your home are in excellent, professional realty property management hands!
Hanaro Investments primarily serves Long Beach, alongside other cities such as Lakewood, Cerritos, Signal Hill, Cypress, and Bellflower.
Hanaro Investments primarily manages residential and commercial units. We are not able to manage Home Owner Associations, vacation rentals, mobile homes, and certain types of condominiums.
While pools have reputations of being high maintenance and low return items, if managed correctly they can add to the value of your investment. We strongly recommend that all pools have safety fences and that a monthly pool service be furnished to the resident.
For more information on our services or to schedule an appointment you can request a Management Information Package or let us know that I’m interested — Please Contact Me. regarding any questions you may have. We’ll send you a management agreement and/or schedule a “no obligation” appointment to meet you at your property for an overall assessment.
Real Estate Investing
Rent is only one component of figuring the return on your real estate investment, and it may not even be the most important. You must also consider:
• Appreciation – Besides being a good hedge against inflation, real estate usually appreciates over the long term. For example, in the years 2004-2008, area real estate homes appreciated by about 4%. When you consider that most properties are mortgaged, a 4% appreciation can be great. For example, if you put $60,000 down on a $300,000 home, which then appreciates by 4%, your return on appreciation alone is 100%!
• Tax Savings (State and Federal) – Remember, with an investment property all costs are deductible including fees, maintenance, and insurance. In addition, you may depreciate the cost of the home over 27.5 years. Depending on your tax bracket, these savings can substantially add to your return.
• Future Rent Increases – Typically, as the value of your property rises so does the rent. With your mortgage payment remaining fixed, rising rents will increase your return over the life of the investment.
• Reduction of Principal – Part of your mortgage payment each month goes to reduce your principal. With a rental property, your tenants are, in essence, paying off your mortgage.
• Leverage – Real estate may be the only investment where you can borrow most of its value. In a rising market this leverage will multiply your returns. However, it does not come without a cost in the form of a higher mortgage payment which may temporarily hamper cash flows.
Yes. Far and away, the single most important step in a successful real estate investment is the purchase. Not even the best property manager can overcome a poor purchase decision. Over the years, Hanaro Investments has purchased various types of properties for our clients and we know what to look for in an investment property. And you will know what the true rent will be on each property so you can make a sound business decision.
Obviously we are strong believers in real estate investing, especially given the current market’s upside potential. However, in the event that you need to sell, we will refer you to several realtors with strong performance records and then work with them closely to make sure that all aspects of the sale are fully coordinated. Before selling you should consider a 1031 exchange (see below).
Due to the burdensome tax consequences of selling, we also strongly suggest that our clients consider a tax-deferred 1031 exchange as an alternative to selling. A 1031 exchange is a great investment tool that allows you to sell one property and purchase another while paying no taxes. More details on 1031 Exchanges.
Property appreciation is a critical piece of your investment return and is too often overlooked. One of the services we provide is a comparative property valuation for our clients.
One criticism of property management firms is that they are little more than “glorified rent collectors”. We know that in order for us to prosper, our clients must prosper also and we recognize the importance of adding value to your real estate investment. One way we do this is by offering timely and accurate information and advice. We feel like we know the market and more importantly, we know about the little things that really make all the difference. We regularly pass this knowledge on to our clients – often on a personalized and individual basis. And don’t worry – there’s no extra charge!
Hanaro Investments charges 7% of collected income depending on the size and type of property. These fees cover every service we offer.
Our firm follows a traditional accounting cycle by collecting rents at the beginning of each month; paying expenses during the fiscal month; and closing out and issuing reports and disbursements at the end of the month. It normally takes about 5 days to compile reports, make copies of invoices/correspondence, and cut disbursement checks. There is no mandatory hold period or required reserves. You may request funds be sent to you at anytime during the month.
No. As a full-service management firm, Hanaro Investments handles all communications concerning your property. In the event that someone contacts you, we ask that you refer them to us so we can take it from there.
As an Hanaro Investments client you will have a property supervisor assigned to your property that will oversee all aspects of managing your property. Whenever you have a question, you may call, e-mail, or fax your supervisor so they may respond promptly. Contact our Management Team.
If you are experiencing differences in personality, investment philosophy, or performance expectations with your current property manager, you may want to consider a switch. If this is uncomfortable or inconvenient for you, Hanaro Investments can handle the whole process for you.
Maintenance, Inspections, & Insurance
The answer to this question really depends on numerous factors. However, over the life of the property, maintenance costs can average between 8-12% of the rents. Obviously newer properties with higher grade materials (block fences, tile roofs, etc.) are going to have much lower maintenance costs, while older homes may have higher maintenance costs. And of course, the quality of the tenant plays a major role in keeping costs down.
Our maintenance supervisor and coordinators closely scrutinize all maintenance requests and takes great care to minimize your costs. In the event where the cost of a repair is expected to exceed the stated limit, you will be contacted for approval.
Home warranties cover the repair and/or replacement of major mechanical systems and appliances at your property for an annual premium ranging from $300-$400. This takes a lot of the unpredictability out of maintenance costs.
Interior inspections are one of the most valuable services we offer. We do a formal and comprehensive interior inspection of every home we manage at least once annually. During this process, our inspector checks to make sure that the residents are abiding by the lease and that there is no serious damage to the value of the property. He will check for such things as unauthorized residents and pets, maintenance issues, and hazardous conditions. Since implementing this inspection program in 2002, we’ve identified and eliminated several potentially dangerous situations that could have resulted in injury and even death – followed, of course, by lawsuits.
We require that our clients have a minimum of $300,000 in property liability coverage. Anything less is just too risky.
Leasing Your Property
Many factors come into play when trying to lease any unit: location, time of year, price, quality of applicants, and more. Although we do not like vacant properties, we understand that finding the most qualified tenant takes patience on both our end, and your end.
In addition to our posted signs and banners, we market our vacancies on hundreds of websites, including on our own, Craigslist, Zillow, Trulia, and many more.
The amount a property rents for really depends on numerous factors: location, size, amenities, and market rent. Request a free, no obligation rent analysis on your property by emailing email@example.com.
Our typical marketing time is 1-3 weeks. Time of year, type of property, and asking price all have significant influences on marketing time. Our average marketing time (from the day listed to a signed lease) has been 16 days, compared to the Southern California MLS average of 24 days. Assuming a rental rate of $1500/mo, those 8 fewer days of marketing time saves you $400. We lease your home quicker, saving you money!
We complete a Comprehensive Market Analysis (CMA) of the rental value of your home before listing. Existing inventory, age of the home, size, number of bedrooms and bathrooms, condition, and schools all have an impact on the rent you can get for your property.
We closely monitor traffic and the competition when your home is for lease. If it is vacant and we have not received an application after 2 weeks, we will generally lower the asking price by $25/mo. Let’s look at a hypothetical house that we have listed for $1400/mo. After 2 weeks of vacancy, you have lost $700 in potential rent. $25/mo less in rent will cost you only $400/year in lost rent. Minimizing vacancy is the key to financial success in rental properties.
Depends. Great, answer, I know. We usually list properties for lease while the departing tenant is still in place, approximately 20-30 days before the end of the existing lease. It is possible, and does happen occasionally, that one tenant moves out on the 31st and a new one moves in on the 1st. We will only hold a property vacant for a new tenant for 14 days.
Sorry, this is another ‘Depends’ question. The answer is as short as 1 year, as long as 9 years (in our current portfolio, that is). The average that we suggest investors budget for is a turnover every 2 years. We do everything possible to minimize turnover, as turnover and related make-ready, marketing and vacancy expenses are the largest cash-flow killers.
Anyone that is qualified (more on that later), and No. We comply with all Federal, State and Local Fair Housing Laws and Guidelines. One of the many things that you hire a professional property manager for is to know all those regulations so that you don’t have to. Owner involvement in tenant selection slows down the process (remember, we want to minimize vacancies!) and opens up the process for (real or imagined) Fair Housing or Discrimination complaints.
Our tenant qualification criteria is posted here. In a nutshell, we are checking for 1) income, 2) rental/ownership history, 3) credit history, and 4) criminal record. Occasionally, tenants may be deficient in one area, which may be compensated for with a larger security deposit or co-signer.
Hendricks Real Estate maintains all security deposits and other owner & tenant monies in a separate Trust Account, as dictated by LA Property Code and the LA Real Estate Commission. The funds are held in a local, FDIC insured bank.
There are 3 fees, and only 3, that most owners will see from Hendricks Real Estate: 1) a monthly management fee (% of rent income that is collected); 2) a leasing commission for placing a new tenant; and 3) renewal fee for renewing an existing lease. Fee amounts depend on the size of your portfolio and type(s) of properties you have. Contact us today for an exact quote.
We have several ways to assess the condition of your home. Our trusted contractors, whom we have been working with for years, are our best eyes and ears. We get reports back on any condition that causes concern when a contractor is in your home. At a minimum, that is once per year, for an annual HVAC maintenance service.
Before a renewal is offered to an existing tenant, we complete an interior and exterior inspection of the property. Condition of the home will have a factor in the renewal process.
Lastly, we are always out and about in our market. Exterior drive-bys are completed frequently. The exterior condition is usually a decent indicator of how the interior is being maintained. If we see something that concerns us on the outside, an interior inspection will be completed.
Owner statements and direct deposits are sent out on about the 10th of each month (can vary +/- a day based on holiday schedule, day of the week, etc). We collect rent from the tenants, deduct the management fee and any invoices that had to be paid for work completed, and direct deposit the balance to your bank account. You receive an emailed statement showing all transactions on your account for the month. If you wish to access copies of actual invoices or more detail, you can log in to the owner portal at any time.