Buying a Condo? You’ll still need Insurance- Via Military.com

Buying a Condo? You’ll Still Need Insurance
-Military.com

A new trend has taken over the real estate market — owning condominiums. More consumers want to buy condominiums instead of traditional homes. Condos became popular because they are a lower-cost alternative to traditional homes (depending on the area), according to published reports.

New condo sales prompted the insurance industry to offer insurance just for condominium owners. However, there are several different offerings and it might be difficult to know which one is best for you. State Farm Insurance recommends the following options:

The Condominium/ Association Master Policy
Because it can be more efficient or economical, your association may insure all the building and common elements under a single package policy, commonly called an association master policy. The three typical ways to provide coverage, all through an association policy:

1. Insures the building (walls, roof, floors, elevators) but leaves you responsible for insuring appliances, carpeting, cabinets, wall coverings, and other items in your unit.
2. Insures both the basic building and the items within your unit other than personal property.
3. Insures both basic building and includes unit owner fixtures and improvements.

Building Coverage

When an association master policy insures some of the buildings, a condominium unit owners policy provides coverage for:

1. Items not covered by the association master policy that may be your insurance responsibility.
2. The value of building additions or alterations made by you, at your expense.
3. Value added. For example, if you replaced the carpet in your condo with a higher-end or better quality carpet, this coverage would make up the difference in case of loss.
4. Damage to your unit not compensated because of the master policy deductible.

If this sounds a bit complicated, it is. Building coverage is one of the more complex parts of insuring an association. You should discuss your needs fully with insurance agent.

Your Personal Property Coverage

Because you have a large investment in your personal property, you need enough coverage to compensate you if you suffer a covered loss. One study found that many condominium/ association unit owners are underinsured in terms of their personal property. Whatever type of association you live in, a good way to be certain you have adequate coverage is to complete an inventory of your possessions and their purchase date and price. Some insurers have inventory forms available to assist you. Put your inventory listing in a safe place outside your home. Photographs or video will supplement your inventory. To speed up your claim settlement if you have a covered loss, save receipts for major purchases. Check to make sure your policy has an inflation-guard feature — one that automatically increases coverage for belongings.

Other Special Needs

If you operate an office or small business in your home, you may need special coverage. Check with your agent if you have a home business. This will help make sure that you have the right kind of coverage.

Putting it all together

Condominium association living has grown in popularity, and the insurance industry has responded by providing a broad selection of coverages and policies. Remember, that conditions in condominium association bylaws and other governing regulations may vary widely. Be certain that your policy covers any potential gaps in the condominium association master policy.

Discuss these needs with your insurance agent — someone you most likely already trust for you car, life and health insurance needs.

Don’t delay. The best protection against financial loss is well-planned coverage of your home and your possessions.

New Law Regarding Carbon Monoxide Detectors

California Senate Bill 183 was signed into law to regulate the installation of Carbon Monoxide detectors. The law is a two-part law that requires an update to the Transfer Disclosure Statements used in a real estate transaction, and puts into law the Carbon Monoxide Poisoning Prevention Act of 2010.

The first part of the new law requires that as of July 1, 2011, Transfer Disclosure Statements (TD forms) include a line item regarding the presence or absence of a Carbon Monoxide detector in the same manner as Smoke Detectors, for all residential units that are sold. This applies to just about all types of occupancies from single family owner-occupied and rentals, to multi-family housing. If the property is being sold, it must now include a CO Detector if the dwelling has gas appliances, fireplaces, and/or attached garages as described below.

The second part of the law enacts the Carbon Monoxide Poisoning Prevention Act of 2010 which requires that all residential properties, not just those being sold, be equipped with a Carbon Monoxide detector when the property has a fossil fuel burning heater or appliance, fireplace, and/or an attached garage. All single-family homes in structures with 1-4 units (owner or tenant occupied) must be equipped with a detector on or before July 1, 2011.

All other multi-family residential units must be equipped with a detector on or before January 1, 2013, not just those being sold.

For rentals, the Carbon Monoxide detector must be operable at the time the tenant takes possession. A tenant is responsible for notifying the owner or owner’s agent if the tenant becomes aware of an inoperable or deficient carbon monoxide detector within his or her unit. The owner or owner’s agent must correct any reported deficiencies in the carbon monoxide detector and will not be in violation of this section for a deficient or inoperable carbon monoxide detector when he or she has not received notice of the deficiency or inoperability.

The bottom line is that ALL SINGLE FAMILY residential dwelling units as of July 1, 2011 must have a CO detector, even those that are not being sold. All other dewlling units (multi-family, dormatories, hotels, motels, etc) must have CO detectors installed by January 1, 2013.

Los Angeles property managers are experiencing some powerful economic trends affecting rental prices and vacancy rates

VIA All Property Management- August 2009

Los Angeles property managers are experiencing some powerful economic trends affecting rental prices and vacancy rates.

LA has one of the lowest vacancy rates in the country, hovering around 4%. They are experiencing high foreclosure rates. According to RealtyTrac, LA has one foreclosure for every 113 households. In addition, they have a challenging real estate market. Home prices have continued to decline over the last year. KB Homes, one of the largest homebuilders in the US, expects California prices to fall another 10-15% in the next 18 months.

How do these factors affect property management and the rental market?

• Low Vacancy Rate- The supply is tight, prices increase
• Homes Foreclose- homeowner forced into rental, reduces supply, prices increase
• Housing Slump- would-be buyers rent until market is less turbulent, reduces supply, prices increase

Economics 101 tells us these things combined would cause rental prices to go through the roof. Los Angeles property managers can charge $2000 a month for an average two- bedroom rental property. How high can prices go?

There is one outcome of these economic factors favoring tenants. Los Angeles property managers are finding that property owners are placing more condominiums and homes in the rental market. Rather than having properties sit empty because they are not selling, investment property owners are hoping to collect rent to cover their costs. Will this addition to the rental property inventory keep rents stable over the next couple of years? Only time will tell.

Los Angeles REAP and General Managers Hearing

Lately I’ve seen a rash of REAP hearings and General Managers hearings……….is it for money?  Is the city of LA just trying to raise extra funds to cover the shortfall?  I think REAP has it’s Pro’s and Con’s but the Con’s sure seem to be outweighing the Pro’s lately!

 

Are you familiar with REAP?  Is your property being threatened by the city to go into REAP?  Let us help you…..email me.  thomas@powerpropertymanagement.com

Luck or Success?

We’ve successfully re rented 2 separate units in 2 separate cities within 3-15 days of the previous tenant moving out!!  This includes rehab!  Some might call it success while we like to call it “HAVING OUR SYSTEMS IN PLACE!!!” Getting Lot’s of turnover?  Call us to see how we can help!

Vacancies give renters room to negotiate

This article is right on with what I’m seeing while talking to property owner…

L.A. County’s vacancy rate rose to 5.3% in the first quarter. As more Southland apartments go empty, property owners are more willing to negotiate lease details.

By Lauren Beale - LA Times
July 5, 2009

On a recent bright afternoon in Redondo Beach, rent signs baked in the sun outside half the small stucco apartment buildings along the stretch of Beryl Street between Flagler and Harkness lanes.

“I’ve never seen it this saturated with rentals,” said property manager Vickie Callahan, who owns a three-unit and a four-unit building in the area. “It’s very scary.”

It’s a scene playing out across the Southland. As the struggling economy and high unemployment take their toll, vacancies are rising, rents are falling and property owners are increasingly willing to negotiate lease details.

“It’s definitely a renter’s market,” said Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate.

The last time vacancy rates were this high in Los Angeles County was in the early 1990s, when they hit 5%.

The rate climbed to 5.3% in the first quarter from 3.8% in the first quarter of 2008, said Victor Calanog, director of research for Reis Inc., a real estate research company in New York that tracks 90% of buildings countywide with 15 or more units — more than 750,000 apartments. In contrast, vacancies had been hovering between 2% and 3% for the last decade.

“Households are choosing to double up, triple up,” Calanog said, and the consolidation has left rentals standing empty.

Not only are adult children moving back to live with parents, but “we’re seeing the reverse, parents living with adult children,” USC’s Conway said. “To bring in income, they’ll rent out the mother’s house.”

Changes in renter behavior were the subject of a Rent.com white paper released in late June. Users of the website are increasingly using the search term “roommates” and looking for two-bedroom units instead of one to share the expenses, Rent.com President Peggy Abkemeier said. The listing service also found that users are spending more time searching online for apartments and are more interested in basic amenities than luxuries.

The first quarter saw the largest rent decline in a decade for Los Angeles County, Reis’ Calanog said. Effective rents, those that take concessions into account, fell 1.7% in the first quarter of this year from the fourth quarter of 2008, while asking rents dropped 1%.

Although rental houses aren’t tracked the way apartment buildings are, area landlords are resetting rents in response to the leaner market.

Laguna Beach-based rental owner and manager Steve Dexter has had to lower the prices on several of his six rental houses to keep them occupied. He recently dropped the rent $255 a month — to $1,195 from $1,450 — on a 1,450-square-foot, four-bedroom, two-bathroom home in San Bernardino.

“In the Riverside-San Bernardino area we’re seeing $100 to $150 rent drops from $1,200 to $1,400 a month in some pretty good neighborhoods,” he said.

It’s a delicate dance. Dexter said he had cut the rent for people he liked, but he was inclined to reject potential tenants who were too aggressive.

“I don’t want them,” he said, “if they start asking for giveaways upfront.”

Potential tenants who do want to negotiate might spend some time getting to know the landlord first.

For their part, some landlords are playing the “concession game” by adjusting the length of the lease to keep units occupied, Calanog said. “They’d rather have income for three to six months than nothing.”

Or they’ll have a tenant lock in for two years in case rents fall further, he said, in “a flight to certainty.”

Tony Forte, a recent Cal State Chico graduate, and his girlfriend, Tiffany Comfort, found a 625-square-foot, one-bedroom apartment in Oceanside for $965 a month after a two-month search. Both are working as temps and wanted to live between Los Angeles and San Diego in case their employment changed. They were able to persuade their landlord to give them a month-to-month rental rather than the advertised one-year lease.

In the nearly 14 years she has been a Redondo Beach landlord, Callahan has consistently priced her units under the market to keep them occupied, a strategy that usually results in no more than a two-week turnaround time between renters. She charges $1,300 for two-bedroom, one-bathroom apartments in an area where $1,500 is the market rate. But this year one unit sat vacant for three months.

Unfortunately, Callahan said, she doesn’t have much wiggle room to drop her rents further. “Sewer, gardening, taxes have all gone up.”

So for the first time, she is allowing a tenant to pay rent in two installments a month rather than risk a prolonged vacancy.

“I never would have done this in the past,” Callahan said. “But you have to be creative.”

Even in pricey Westwood, landlords Nancy and George Heimler dropped the rent on an apartment — and for the first time allowed a tenant to have dogs.

Renters seeking more expensive units, such as those doubling and tripling up, will be the most likely to find reductions and other concessions as landlords try to buy some occupancy, said Greg Willett, vice president of research and analysis for MPF Research of Carrollton, Texas. Part of the reason is there are more rentals going begging at the top end of the price range.

“A lot of these buildings were going to be condos,” Willett said. “They made the switch to rentals and didn’t have time to pre-lease.”

Incentives that renters said would most motivate them to sign a 12-month lease were ranked in a recent Move.com survey. Leading the list was one or two months of free rent, followed by two months of free utilities, a free flat-screen or LCD television, and free cable, satellite or WiFi.

For people with low incomes, rents are still high even with the increasing vacancies, said Larry Gross, executive director of the nonprofit Coalition for Economic Survival, a tenant rights organization that covers the L.A. area.

Gross hasn’t seen giveaways being offered to renters in this segment of the market.

“They don’t need microwaves and TVs,” he said. “They need affordable rents and jobs.”

Andrea Zuniga, who works as a box-office manager of the LATC performing arts center in downtown Los Angeles, had been trying to find affordable housing near a Metro Rail station so she could commute to work. In a recent three-week period, she looked at about 10 rentals in the Lincoln Heights, Highland Park, Boyle Heights, East L.A. and Westlake areas.

Zuniga and her boyfriend, Diego Robles, a math tutor who is also working on a documentary film, needed a place that would accommodate their small dog and that had an extra bedroom for Robles’ father, who is in town several times a month on business. Their budget was $1,100 a month.

Even with good credit, no history of eviction and full-time jobs, Zuniga said that it was tough to find something in their price range and that she hadn’t found any great bargains.

“I called some places that advertised move-in specials, but the rent was like $2,400,” she said.

They eventually took a one-bedroom in Echo Park for $950 a month — smaller and farther from a Metro station than they had hoped.

Student housing also remains costly because of the high demand. Near UCLA, rents at a 29-unit student building with a waiting list remain steady at $2,400 to $2,600 a month, landlord Nancy Heimler said.

“If you are near a university where kids want to be able to walk,” she said, “prices don’t go down.”

Hiring a Property Manager

Having someone else manage your property seems counterintuitive to what you have been taught as a child. The idea that someone else is helping you manage something makes sense. When one invests in stocks and bonds, it is normal that an investment banker handles the money.

Stock advisors help steer you in the right direction. The same concept is evident in property management. The property is still solely yours, only a person with the credentials manages all aspects of your property for you. Realty property management is not easy.

Here are some things to look for in finding a property manager:

• Are they knowledgeable of the area in which your property is in? This question is important because this will determine the rental rates that are set for tenants.
• Do they have the prowess of a salesman? Car salesmen can be annoying at times and sometimes they lose deals because of their aggressiveness. The key is to find one that is not pushy and has good communication.
• Do they have managerial experience? Often rookies in the field don’t have as much success as the veterans do. If there is a proven manager, use their services.
• Do not consider the location of the management company. Because a management company is close to your property doesn’t mean that they will be the most effective.

Do you stand out?

What set’s your vacancy apart from the others?   Does your rental STAND OUT?

We are starting to see a higher volume of vacancies……not a huge surprise to anyone!  Although I can write a long blog that can give you 101 ideas to set your vacant rental unit apart, I think there are only a handful that are meaningful.  In my opinion they are:

1)  Know your competition-It’s important to know what your competition is.  What are the going rental prices in the area?  What kind of amenities do the other rentals offer?  Drive the neighborhood and find the pro’s and con’s of each rental/competing property. Obviously if you’re having your unit professionally managed then your manager should be able to provide this information for you.

2) Know your unit’s value (amenities)- What does your rental/unit have that others in the area might not?  Extra parking?  Private garage? New Construction? Smaller building?  Security?  Just because it’s your favorite unit or your favorite interior color that doesn’t give it value.  You have to dig deep if you can’t think of a few items that help make your unit stand out from the competition!  Don’t be so quick to spend a lot of money on fancy upgrades with thoughts that it will net you top rental dollar.  It doesn’t always work and in fact can back fire on you!  You don’t want to be the most upgraded unit on the block because the truth is, the best unit still has all of the bad units around it.  This is where a good property manager can really help bring your unit’s value out.

3) Pricing is KEY- You hear this time and time again, pricing is key!  Losing one month’s rent can drastically affect your bottom line numbers.  In this market, it’s important to keep the vacancy rate LOW.  Changing a rental rate on a daily/twice daily basis right now is a good idea.  Unlike the sales market, renters don’t know what a property was listed at prior unless they have  been following your unit.  I’m a big numbers person.  If your unit is listed for rent at $2,400.00, but the going rate is $2,200.00, then one month vacancy at $2,400.00 is worse  than getting a renter inside the unit at $2,200.00 in the first month.  You still lost the same amount of money and it may take additional time to rent if you lower the price late ($200 x 12 months= $2,400.00)!   You can gauge pricing very quickly by seeing how many calls you get within the first few days of going on the market (if not hours).  We believe that you have to find the sweet spot in the market by lowering a rental 50-100$ daily until the calls start to pour in…… waiting to lower the rental amount to market price only delays renting the unit out.

4) Be available- It blows me away when I call a competitor and the person picking up the phone (owner/manager/assistant) starts telling me when I, as a renter, can come by to see a unit.  ARE YOU KIDDING ME?  Do you not realize there are thousands of other rentals available on the market?  If I’m a renter and I want to see a unit at 3 PM on a Sunday afternoon then that’s the time you show it to me……..PERIOD!  Be available to show your unit. My staff has a vacancy mobile phone that is answered 7 days a week during most hours; we make sure our staff/units are available to show at any time (obviously within reason).

I know that after reading the four items I mentioned above, you’re probably thinking, “Being a landlord right now isn’t the best idea”.  However, the fact is that we are in a cycle and cycles turn.  Good landlords adapt and plan for the change in the cycle.

Right now, due to slow down in the real estate sales market, we are seeing a lot of home owners put their homes on the market for rent instead of sale.  I’m not telling you to take any tenant/application that comes your way or any price offer that you receive.  I’m telling you to realize that due to the changing economy, you have to be very aware of what’s going on around you.  Don’t worry about what the media tells us every day, instead get in your car and drive the neighborhood, ask a professional, learn firsthand what you are up against.  Each area throughout Southern California is experiencing slightly different impacts in this market.   I’m seeing declines anywhere from 5-20% of rental rates from what they were last year!

If you want me to be more specific about what is going on in your area, feel free to email me at Thomas@powerpropertymanagement.com and as always if you need ANY assistance in the management or rental of your units, we’d love to hear from you!

Do you need another reason to hire a property manager?

Do you still more reasons to hire a proffesional property management firm like Power Property Management? Read away……

U.S. Apartment Rents, Occupancies Fall Amid Rise in Job Losses

(Bloomberg) — Apartment rents and occupancy rates dropped for the third straight quarter in the U.S. West and South as the recession led to a rise in unemployment and forced some renters to combine households.

The average monthly rent dropped to $978 in the three months ended March 31 from $993 both in the previous quarter and a year earlier, Novato, California-based RealFacts said in a survey of more than 12,500 apartment complexes. The occupancy rate fell to 91.4 percent from 92.2 percent in the fourth quarter and 92.6 percent a year earlier.

The U.S. unemployment rate rose in March to the highest level since 1983, the Labor Department said earlier this month. The economy lost 663,000 jobs in March, bringing losses since the slump began to about 5.1 million. The increase in unemployment is a primary reason for the decline in occupancies, said Caroline Latham, owner of RealFacts.

“Unemployment is creeping up, and that usually means a reduction in demand for apartments,” Latham said. “If they’re young singles, they band together and share an apartment or they go back and live with their parents.”

The Bloomberg Real Estate Investment Trust Apartment Index has fallen 23 percent this year, compared with a similar drop for the Bloomberg REIT Index and a 7.2 percent decline in the Standard & Poor’s 500 Index. The apartment index includes 13 companies, including Chicago-based Equity Residential, the largest U.S. REIT that owns apartments, and Denver-based Apartment Investment & Management Co.

California Rents

In the RealFacts survey, among 31 metropolitan areas tracked, rents fell the most in California’s San Jose, Sunnyvale and Santa Clara region, where they averaged $1,612 a month in the first quarter, down 3.7 percent from the previous three months and 2.9 percent from a year earlier.

Rents in Washington’s Seattle, Tacoma and Bellevue area fell 3.4 percent from the previous quarter to $1,067, and in the Oxnard, Thousand Oaks and Ventura area of Southern California they dropped 2.8 percent to $1,473, RealFacts said.

The Seattle area also had the biggest drop in occupancies, falling to 92 percent in the first quarter from 94.4 percent in the previous three months, followed by Fresno, California, where occupancies declined to 92.5 percent from 94.5 percent in the fourth quarter, RealFacts said.

In the first quarter, 1,737 apartment units were added to the rental-housing supply in the markets RealFacts tracks. Should that rate of construction continue, 6,948 units would be added this year, down from 13,560 last year and 33,750 in 2007, RealFacts said.

Los Angeles DWP has new rules….

You should make note of the items below because property owners that do not adhere to the ordinance will be fined.

RULES REGARDING USAGE

WATERING THE LANDSCAPING:

• Automatic sprinkler systems may only be used on Monday’s and Thursday’s. Using the systems on any other days will result in a warning letter on your first offense. The second offense will result in a $100.00 fine and the fines increase to $600.

• You may not water, irrigate landscaped areas between the hours of 9:00 am and 4:00 pm on any day, including Mondays and Thursdays.
• You may use a hose and hand water on days other than Monday and Thursday before 9:00 am and after 4:00 pm but you cannot leave the hose unattended.
• When using an automatic system you may only water for 10 minutes per watering day per station.
• You may not water in a manner that allows excess or continuous water flow or runoff onto an adjacent sidewalk, driveway, street, gutter or ditch.
• You can be cited and fined for watering during periods of rain even.

DECORATIVE FOUNTAINS, PONDS, LAKES AND OTHER AESTHETIC WATER FEATURES

• You must have a recirculation system if you are going to use water to fill, clean or maintain water levels.

WASHING CARS:

• Nobody is allowed to wash a car with a hose that does not have a self closing water shut off device.

WASHING SIDEWALKS, WALKWAYS, DRIVEWAYS AND PARKING AREAS

• You may not use a hose to wash these areas unless you are using a Department-approved water conserving cleaning device. (A simple Spray nozzle does not qualify)

NEW RATES:

The new rates go into effective June 1, 2009 as well. At this time the Tier 1 allotment for each property will be reduced by 15%. This means that if your property is presently using all of the Tier 1 water allotment you will now be charged Tier 2 rates for the last 15% of the water used. This could be a substantial increase because Tier 2 rates are set to be increased by 44% as part of the new rate plan. All DWP customers must do their best to reduce their overall usage by 15% to avoid paying substantially more for the water each month. If you do manage to reduce the usage by 15% below your current Tier 1 level you should see a savings. If you want to determine your Tier 1 level you can do so on the DWP website lapwd.com . You will need your customer number and address. You can also find tips to reduce your water consumption on this website.

The DWP website ladpwd.com has information about these new laws and rates. In addition to this site. You may also view articles recently published on the topic at

http://www.latimes.com/news/local/la-me-lawn-watering23-2009apr23,0,2958435.story

A summary of the ordinance can be found on the DWP website as well or by clicking on this link.

http://www.ladwp.com/ladwp/cms/ladwp010964.pdf <http://rs6.net/tn.jsp?et=1102561090829&amp;s=131&amp;e=001nDY10gFZ8twhOfzf5eW8WEBFb6VL5Rzbq6sCaeCP072BD1uByssNyfY0rz5v7jJtZNUmsa_SApvuZEm6xOMVzaYOElEtFsLaAUhlH54LG99E_xnSN-uYjWov2NSu1eEXBxVzfotGMbIz4vAYf72eWg==>