ESQPMG Real Estate Investment Blog

Commercial property management

Is Hiring a Property Manager Worth the Cost?

The cost of hiring a property management company to handle investment properties is significantly less than most property owners believe.  Investment property owners who manage their own property with the idea that property management costs are too much might be mistaken as to the actual real costs.  Additionally, a large percentage of property owners do not take advantage of all of the tax strategies available to them. For example, if a property owner manages their investment portfolio out of their home office there may be some business related items they are not expensing.  Interest in all forms including mortgage interest, equity lines of credit interest, and any business loan interest are all expenses which are typically deductible.  Losses like casualties, disasters, and thefts are expenses which properly accounted for are deductible.

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Property Management

What Are Property Managers Required to Know About Fair Housing Laws?

The Fair Housing Act, enacted as part of the Civil Rights Act of 1968 under President Lyndon B. Johnson, was designed to eliminate discrimination in housing. Despite its passage over five decades ago, violations of fair housing principles persist. For property managers, compliance with these laws is not only a legal obligation but also a professional and ethical imperative. Failing to adhere to these standards can result in lawsuits, reputational damage, and substantial financial penalties.  We look at key aspects of fair housing laws that property managers must understand, highlighting common challenges and best practices for compliance.

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Commercial property management

Are Property Managers Required to Find Potential Water Intrusion Issues?

During winter and rainy months property manager and professional property management companies need to be mindful of potential water intrusion problems with each and every property in their portfolio.  Many buildings start leaking right after construction, but do not manifest the water intrusion and building damage until years after the leakage has started.  Water intrusion can lead to structural damage, rot, mold, termite, sick building syndrome and eventually significant mitigation repair costs.

A prudent property manager will spend time during periodic inspections of the property to help prevent these issues from occurring and also ferreting out any existing and ongoing issues.  A property owner should expect nothing less from their property manager. If a property manager fails to take reasonable steps to detect and address water intrusion, they could be held liable for damages, particularly if the issue leads to further property damage or health risks for tenants. However, liability depends on the terms of the management agreement and whether the property manager acted within the scope of their responsibilities.

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Landlords

What are California Water-Saving Plumbing Law Requirements for Investment Properties?

A California law enacted in 2009 is finally taking effect and causing concerns among property owners, sellers, buyers, and realtors. California’s water-saving plumbing laws, such as the requirements under Senate Bill 407, have significantly impacted investment properties by mandating the use of water-efficient fixtures in all residential and commercial properties. Effective since 2017, these regulations require property owners to upgrade older plumbing fixtures, such as toilets, showerheads, and faucets, to models that meet specific water efficiency standards. For investment property owners, these upgrades can present an upfront financial burden, especially for those managing multiple units or older properties. However, the long-term benefits often outweigh the initial costs. Water-efficient fixtures can reduce utility expenses, making properties more appealing to tenants and increasing overall profitability. Additionally, compliance with these laws enhances the marketability of properties and prevents potential fines for non-compliance. Understanding and budgeting for these upgrades has become an essential consideration for property investors in California.

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Commercial property management

Are Property Management Professionals Required to be Educated in Real Estate Investment?

Investors seeking diversification have frequently turned to a rental property or a collection of rental properties to even out and spread risk across their investment portfolios.  As with any investment people should consider all of the issues, problems, and pitfalls along with the potential returns.

Unfortunately, a lot of investors aren’t aware of the potential problems and do not take the time to investigate these issues before they close escrow.  A property management course and a course in basic real estate investment would be great investment time for someone considering rental properties as a source of investment income and long-term investment.  Some of the problems and concerns are discussed below.

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Property Management

Are Property Managers Required to Screen Tenants and Report Credit Issues?

Property managers, or rental owners who manage properties on their own, who fail to take the necessary precautions when screening tenants are asking for headaches and potentially long down time for their rental properties.  Cutting corners in this process is a nightmare waiting to happen which will only increase the amount of time one will spend in pursuit of quality long-term tenants and diminish overall return on investment for the portfolio.

Today, background check screening software available from a professional property manager can quickly and accurately paint the prospective tenant’s employment background, criminal record (if any), eviction record (if any), and credit history.  Without using a professional property manager to help in this process is like dancing on a tightrope which could lead to problems.

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Commercial property management

Property Managers Must Know the Contractors They Refer to Their Clients

In addition to having one’s own list of construction trade vendors professional property managers get bombarded with numerous requests by their clients for the names of contractors; floor guys, cabinet guys, tile guys, plumbers, electricians, handymen, etc.

Before a true professional property manager refers any contractors or any vendors to their clients it is important to make sure you know who they are. Property managers and property management companies should seriously consider asking the following simple but extremely important questions below before referring contractors or vendors to their clients, or even before hiring them to do work on their clients’ properties.

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Property Management

Are Property Managers Required to Know About Lead-Based Paint?

Lead, (Pb on the Periodic Table from Chemistry 1A), has been an integral part of human existence for thousands of years.  It has been very useful and instrumental in the development of plumbing, waste disposal, and water diversion systems from early civilizations. Most importantly lead-based paint was used prolifically up until 1978 to paint the homes, dwellings, and buildings of the United States.  It is estimated that 38 million homes in our country have some form of lead-based paint in the interior or exterior.  Although lead has helped advance our human cause it has also presented hazardous health side effects which required laws restricting its use and requiring disclosures. Property managers, landlords, and owners who rent for a fee must be aware of the requirements set forth by State and Federal Law before renting, leasing or even selling a property built prior to 1978.

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Carbon Monoxide Detectors

Are Property Managers Required to Know About Smoke Detectors?

If you manage properties or rental units for a fee, or you are an individual who rents properties or rental units to people/tenants for a rental fee or leasing fee you should pay attention to what the law requires when it comes to smoke detectors or smoke alarms.  As a landlord you are responsible to know the law; ignorance is no defense to a wrongful death lawsuit or serious fire causing major property damage.

Smoke alarms and smoke detectors are critical residential components which must be handled with care and diligence as they are life-saving and property-saving devices which must not be taken lightly.  The undertaking of managing properties is wrought with legal pitfalls and unknown obstacles, however understanding the law is paramount to being a fiduciary for your client, or being on the right side of the law if something goes wrong.  A new 2014 law in California implements some standards which all property managers and property owners who rent to individuals must be aware of and abide by.

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