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Should I Sell My Rental Property in Santa Barbara? 8 Important Things to Consider

Selling rental property in Santa Barbara is a decision that should be made based on the current state of the market and your property asset. It’s a subject we discuss a lot with our clients at Santa Barbara Property Management. It’s important to analyze the property and determine whether it’s a good time to consider selling. We recommend that these 8 simple questions be answered when you’re making the decision about whether to sell your rental or hold onto it.

1: Should you sell as soon as possible and exchange your home for a higher value property before interest rates rise?

2: Should you hold onto the property and enhance its value with capital improvements, and then sell? We have lots of expertise and success with this option, and we can help you.

3: How long have you owned the home, and what is its current market value? This is something we can quickly analyze for our clients to help them make the best decision.

4: What is the current debt service on the property, and is that debt variable? You’ll also need to know if there are any prepayment penalties on your loan.

5: Is the current market conducive to receiving the best sales price?

6: Is there a lot of inventory for sale, and what similar properties will you be competing against if you do put it on the sales market?

7: Are the tax implications in your favor? Sometimes, a 1031 exchange will be a better course of action if you decide to sell.

8: Do you have a source of highly qualified buyers who will pay fair market value for your property today without a lot of run around, stress and drama involved with traditionally brokered sales deal?

Should I Sell My Rental Property in Santa Barbara 8 Important Things to ConsiderAt Santa Barbara Property Management, we have an extensive book of clients, some with an excess of $150 million in assets who are highly qualified and actively seeking residential income properties to acquire. We deal with these clients directly, and eliminate the usual broker drama.

If you want to discuss feasibility and current market value, please contact us at Santa Barbara Property Management. We’d love the opportunity to help you decide whether you should sell or hold your Santa Barbara rental property.

Can I Increase My Home Value by 40 percent? Tips and Tricks from a Property Management Expert in Santa Barbara

Today we are talking about something we have done very successfully over the last six months with four of the properties we manage in Santa Barbara: we increased their values by 40 percent.

We did this is through our aggressive management techniques. These statistics are based on equal cap rates, it’s not a function of the market but it is done directly through our process.

Property Improvements

Our results are earned by using a comprehensive method. Our process to raise your property value starts with a thorough analysis of your property. Then, we recommend certain leasehold improvements that are minimal to you but can be a great return. Often, many owners spend money in the wrong places when they are improving their property, and don’t get the right return. We can do this quickly and cost effectively. We have a book of contractors who can do very good work for affordable rates.

Strategic Marketing

Can I Increase My Home Value by 40 percent? Tips and Tricks from a Property Management Expert in Santa BarbaraWe also have some techniques with demographics and screening. We want to make sure you are marketing your property to the right demographic for the area. Sometimes certain properties play well to one group over another. We make sure to get you the maximum amount of rent for your home based on our targeted marketing approach.

It’s not rocket science, but it has to be done right with qualified people. If you would like to learn more details about this and learn how you can take advantage of our resources, please contact us at Real Property Management Santa Barbara. We look forward to hearing from you.

Short Term vs. Long Term Rentals in Santa Barbara: Which One Makes More Money?

Many of our clients ask us a lot of questions about short term rentals. They wonder if they should get into what they think is a lucrative short term rental market rather than keeping their properties as long term rentals.

Higher Expenses with Short Term Rentals

The short answer is: probably not. The expenses involved with short term rentals are much higher and you have to pay an 11 or 12 percent bed tax, depending on the city or county that your property is located in. Your management fees will be around 20 percent, and you’ll have to pay for furnishings. That can be expensive because people expect nice furniture in a short term rental. The utilities also have to be paid by you and you’ll need to keep up with regular cleaning. All in all, if you’re not getting more than double what you would get for your long term rental, it’s probably not worth it.

City Laws and Zoning

Beyond the additional costs that are included in short term rentals; the city of Santa Barbara is cracking down on properties that are rented out in the short term. Homes that aren’t zoned for short term rental business are under more scrutiny. After 2016, the city will aggressively police that market. They have hired staff and will call on rental ads that offer properties for the Short Term vs. Long Term Rentals in Santa Barbara Which One Makes More Moneyshort term. If you are advertising such a property but you’re not within the zone for short term rentals, you will find yourself in the middle of a sting operation. They can fine you $10,000. This is really not worth the risk. A lot of this legal effort is put forth by the hotel lobby, which is trying to end the competition for the hotel business in town. Look into it closely if you’re thinking about doing a short term rental.

If you want to talk more about the pros and cons of renting a property out in the short term, please contact us at Real Property Management Santa Barbara.

4 Costly Mistakes that Santa Barbara Landlords Make When Renting Their Homes

Today we are talking about the four most costly mistakes that landlords make when they’re renting out their own properties.

Not Using a Property Manager

The first mistake is that they don’t hire a property manager. You would expect me to say that because I am a property manager. But, we’re in this business for a reason. We offer a great service that is very much needed in the industry because most owners don’t have the education and experience that they need to be successful. Then, they rent out their property a little too quickly or they don’t have a lot of time to show it or do the proper marketing. That can result in renting it for below market rent, and losing that money is a lot more costly than hiring a professional property manager.

Not Screening Tenants Properly

A lot of landlords also don’t screen tenants thoroughly. They might not have the time, the expertise or the resources to do full background checks or call previous landlords. They don’t verify employment or qualify the tenants financially. More importantly, they don’t do what property manager can do well: when I interview a tenant, I usually know whether or not they are well qualified within five or 10 minutes of speaking to that person. Usually, I can tell more than the background checks but when we combine both the interview and the background check, we get solid tenancies. We have not had an eviction in over 10 years because we prevent it up front with thorough screening.

Not Collecting Rent on Time

Letting tenants pay rent late is a huge mistake. Don’t set the precedent. As soon as you do it once, tenants will pay late every month and it will grow into a problem. There will always be an excuse if you tolerate late rent. This is not a good business practice to get into.

Deducting Maintenance Costs

Some landlords will let their tenants deduct maintenance costs from rent, and that’s another very bad precedent to set because once a tenant does that, they’ll want to fix things and deduct from rent all the time. They probably don’t have the 4 Costly Mistakes that Santa Barbara Landlords Make When Renting Their Homesexpertise to fix whatever’s broken and they probably won’t put a lot of effort or money into fixing it. Also, if you allow them to deduct something once, they’ll look to do that over and over. We never allow tenants to deduct from rent. It’s much better to use professional contractors with warranties. This is a more professional way to run the business. You know the problem has been fixed properly when the work is done by professionals.

These are the four biggest mistakes, and you want to avoid them. If you have any questions about how to get more out of your property, please contact us at Real Property Management Santa Barbara.

How Much Does Property Management Cost in Santa Barbara?

A question we get asked on a daily basis is: how much does property management cost? This is a bit of a loaded question because lately in the industry, a lot of Realtors, specifically the selling Realtors, are telling people not to pay more than five percent to a property manager because it looks bad on the balance sheet when it’s time to sell.

Maybe when you’re looking at a pro forma spreadsheet, five percent looks like it helps the bottom line. But that kind of management fee is misleading, at best. Having been in the business for 30 years, we know that any property management company in the country, but particularly in California, operating on a five percent management budget must be operating on a shoestring. That means they will not be able to do the best job they can do for you.

Low cost property management companies will have to rent properties quickly and cut corners which means you could get a less than qualified tenant. A tenant who isn’t highly qualified means you’ll risk having increased turnover and the potential for property damage if the home isn’t treated well and kept in great condition.

Because these property managers need to rent quickly, they might also rent it for below market rents. The data we have collected shows that a property manager charging five percent is renting out a property for about 20 percent below market. So if you hire a five percent property manager thinking that you’ll save some money, you’ll actually lose as much as 20 percent off your bottom line. The tenant quality won’t be as good, and at the end of the year your 3 percent savings is actually a net loss of 17 percent.

We rent to highly qualified tenants. I personally interview every single tenant. We place tenants and have an average length of stay of four years. They are happy with our management and they like the properties they are living in. They get a good response when they have a maintenance issues and those tenants pay on time. They feel they are paying a justified rent How Much does Property Management Cost in Santa Barbarabecause the property is managed well.

If you meet a property manager who will rent a property for five percent, run – don’t walk – away. You’re getting into a situation where you won’t get the service you need and deserve.

It’s important to get everything you can out of your rental property. If you’d like to talk about how we can increase the value of your property by up to 40 percent in six months, contact us at Real Property Management Santa Barbara.

5 Reasons to Choose RPM Santa Barbara to Manage Your Montecito Home

On our blog today, we’re talking about the five reasons you should choose Santa Barbara Property Management as your property manager.

Increased Property Values

We can show you how comprehensive tenant screening and minimal capital improvements can increase the value of your property by up to 40 percent. That may sound outlandish, but we have done that with four of our multiplexes in the last six months. These are real numbers based on equal cap rates. It’s not a function of the market. It’s a function of our aggressive property management techniques.

Low Turnover

The tenants we place stay in the property an average of four years. That is probably one of the lowest turnover rates in the state of California. People who rent from us and deal with our management company are very happy. Happy tenants will always lead to happy owners. When tenants stay in place, we know they are satisfied with the way we take care of issues or problems that they might have. That saves owners a lot of money on turnover.

No Maintenance Markups

We do not mark up our maintenance costs. Most other property managers in this area will mark up outside contractor maintenance costs by as much as 100 percent. We don’t do that by one penny. We enjoy relationships with local vendors and they know we have a book of business to pass along to them, so we get aggressive pricing and we pass those savings on to you.

No Vacancy Fees

We do not charge for vacancy. We generally don’t have vacancies with our properties, but when we do have a vacant home, we don’t charge the owner for that time. It’s up to us to get that property re-rented and we don’t feel an owner should pay for down time.

Management Rebates

5 Reasons to Choose RPM Santa Barbara to Manage Your Montecito HomeWe offer management rebates on the sale and acquisition of property. We take our contractual relationship with you very seriously, and if you decide to sell a property or acquire another one, we can offer rebates through our sales staff. All of our owners are very pleased with the way we handle this side of our business.

If you have any questions about any of these subjects, we’d be happy to talk to you about them. Please contact us at Real Property Management Santa Barbara.