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What to look for in a good property manager?

by Kijner & Sons International Realty




Many KSI Realty’s clients inquire about the best property management tips out there. Since ringing in the New Year, we thought we would share some of the best resolutions and common advices we provide our clients day in and day out.

As a dependable real estate broker, we always strive to cultivate a strong working bond with our clients and customers, so in turn, we advise landlords to develop rapport with their property manager, creating a positive and lasting relationship with the person that will balance their tenants’ wellbeing as well as maximize the bottom end. We encourage you as a landlord to look for the following attributes:

  • A property manager that build trust. Someone who does what they say they are going to do, when they say they are going to do it. 
  • Someone who is communicative. Keeping you informed of pertinent issues, and doing so in a timely manner. Likewise, always responding to tenants’ calls as promptly as possible as well as yours. Look for someone who over communicates and establishes expectations upfront that he or she will stick to. Training you on what to expect from them.
  • A professional who over delivers. Making your objectives known, and then…do better. 
  • Someone who is realistic. Someone who is grounded, firm and who follows through and follows up.  Someone who accomplishes the mission you have hired him or her for.
  • Someone who suggests improvements. Welcome suggestions that will improve the property value or income generation. Trust the professional.
  • They listen and know what the owner wants. He or she won’t base their actions on assumptions. A good property manager will know what your expectations are, and have a clear plan in place to meet them.

Know that no one will do a better job than you - the owner - who has a vested financial interest in the property. Absentee owners often expect to delegate all and every task to a property manager. This is the first mistake. You must be realistic and handle certain delicate aspects of your investment yourself to ensure that your interests are best served but that your liability is minimized. Mitigate risk by:

  • Setting up and maintaining a reserve fund that the property manager can use for maintenance issues, emergencies, and daily matters.
  • Obtaining and maintaining proper insurance that also covers the property manager. Make sure to renegotiate every year premiums and get 5-10 quotes to ensure you are getting the best rate.
  • Having a direct communication channel with the property manager in the event you miss a payment associated with the property (property taxes, mortgages, HOA fees or insurance) so that your tenants are not impacted. Be proactive and not reactive.
  • Reimbursing the property manager for any expenses and by setting up a clear budget. Don’t run short on cash flow and don’t expect tenants to pay the bill on your behalf. High turnover signifies a problem of customer service or bad maintenance. Good tenants attract good tenants and long-term stay.
  • No renting the property without notifying the property manager or worst not putting the property for sale without informing your property manager. Fear can propagate fast among good standing tenants and jeopardize your cash flow.

Typically, the property manager addresses repair issues, either by doing the repairs him/herself, or more commonly, by hiring someone else to do the work. Before you sign the agreement with a property manage, take time to evaluate the property you have and the expected maintenance. Take note of any repairs that need to happen right away, as well as ones that can be deferred. Prioritize the repairs and discuss your list with your property manager to ensure he or she has a realistic picture of the task at hand.

If your property manager is not increasing your rental income, he or she should be building customer rapport and client retention with your tenants. Satisfied tenants tend to pay on time and look after your property as theirs. Keep in mind that your tenants might be your best buyers the day you may sell your unit. Most people take pride in their home and may consider buying the place they rent.

In addition to outlining needed repairs, you should be clear on whether the property manager needs your approval for all repairs. Or perhaps, just those repairs exceeding a certain cost that you set. Setting up a “rainy fund” or “emergency fund” is a good idea. Don’t use security deposit to handle emergencies. Instead, a good property manager should help you set aside reserves. 7% of your income is usually a good starting point. The more amenities or luxuries you offer, the more reserve you should set aside as you are dealing with more discerning customers that will have higher expectation. Remember, the owner of a Lexus will have higher expectations and needs than the owner of a Yugo.

Accounting responsibilities should also be addressed but shared.

Every State has its own laws regarding the accounting procedures that property managers need to follow. Ensures that your legal counsel assesses the risk and liability that you are exposed to. Any agreements you sign should support those laws, so make sure you are well versed on your State requirements, but over all, that your property manager is dully licensed and able.

The agreement should also specify the date by which you can expect to receive your money. The 15th of each month? The 30th? Be as specific as possible, so that everyone is on the same page from the start. This will help to limit complications later. A happy owner is one that gets paid on time systematically.

Avoid cash system and try to automate payments with direct deposits. Keeping a clear paper trail of monies ensures a clear accountability and limits risk of loss or theft. Monies should be handled by the fewest amount of hands and financials should be shared on a need-to-know basis.

Lastly, spell out responsibilities for evictions and terminations of tenancy. 

Most States outline specific guidelines regarding evictions and terminations of tenancy in their landlord/tenant laws, so you will want to be sure to abide by those. Your agreement should outline, though, the extent to which the property owner wants to be notified about and/or directly involved with such matters. Have your Real Estate attorney have a master lease drafted with eviction procedures in mind and have all papers handy so the process is timely and efficient.

As usual, don’t hesitate to contact us for all your real estate needs. Come and sit down at our KSI Realty’s Manhattan Midtown office to discuss your income producing or investment property needs. 

The Art of Doing a 1031 Exchange

by Kijner & Sons International Realty

 

Many clients of KSI Realty NY Inc. are savvy investors and one of our favorite topics of discussion is the 1031 exchange. Those 4 mysterious numbers are simply an IRS tax code identification that allows owners of a business or investment property to defer the recognition of the capital gain tax normally due upon the sale of the property as long as it is re-invested in a "like-kind" property of equal or greater value through the use of a qualified intermediary.

We often start our conversations with our sellers and prospective buyers by including their attorneys, wealth managers, bankers and accountants around one table to ensure that their short, mid and long term objectives are well understood. We start with a snapshot of their current state and open the discussion on their goals in 7, 15 and 30 years from now. It is crucial that all professionals have a clear understanding of what is happening first as many fields overlap and all professionals around the table will ultimately shape the final real estate deal decision making process. This is a pluridisciplinary effort.

Many misconceptions and issues can arise from the lack of communication between key professionals. Clients may sometime fail to realize that legal objectives may come in opposition with fiscal, or real estate ones. Having a clear overview and a dashboard of all mechanisms gives you the ability to take informed decisions. Multiple test scenarios are often studied in order to come up with the final approach. On a daily basis, we speak to our clients' attorneys, insurance brokers, accountants and other key financial actors to facilitate the deals. We never give financial advises, practice law or overstep in regulated and licensed industries but we talk, exchange and facilitate the flow of real estate related information to ensure that our client's end goals are achieved.

1031 exchanges are often looked as mysterious, difficult, lengthy and potentially cumbersome. To the contrary, they are actually very easy, reasonably fast and very transparent if you use the right professional. The cost is very minimal, most qualified intermediaries get a small service fee plus a percentage of the interest of the funds they hold.  This is often far less than the potential capital gain that may be paid especially for investments that have been kept for a long time. The likelihood of heightened capital gains is stronger over long periods as market prices often rise. A good business practice is to identify your qualified intermediary via your trusted professionals such as your licensed real estate broker, accountant, banker or attorney. A solid track record and years of experience in serving as a qualified intermediary is key. We advise our clients to research the nature of the guaranties offered by the qualified intermediary. Making sure their money will be safe and limiting the risk to see lifelong savings vanishing into the "wild".

Many clients forfeit the idea of a 1031 exchange thinking they have to find someone who is willing to swap, or worst that they have to buy the exact same type of property they are selling. Another classic misconception we see, is that the exchange must be simultaneous or that the entirety of the proceeds must be used for the replacement property(ies). This is all false. Even very complexed real estate deals such as REITS or other trust funds can have adequate solutions such as using DST's (Delaware Statutory Trusts) which are recognized 1031 exchanges. One of the main advantages of DST's is the ability to exchange immediately without delay on the day of closing ensuring the continuity of passive income as it is often one of the determining factors for many of our investors that are looking at ensuring the perennity of their flow of income. 

As licensed real estate brokers, we do not financially benefit from the 1031 exchange, we do not perceive a commission and at KSI Realty NY Inc. we are not qualified intermediaries. The benefit goes 100% to our clients. We share our vast knowledge of commercial and investment real estate as good business practices to allow our clients to maximize their reinvestment. Allowing them to use the deferment of the capital gain portion, which is in essence free leverage that can be used towards a new purchase until it is sold again and/or reinvested. Currently, there are no limitation to the number of 1031 exchanges one investor can undertake as long as the replacement property is kept for at least 2 years, although certain exceptions may apply. As with everything, nothing is static and clients should always seek the assistance of their attorney, accountant as well as wealth and estate planners to anticipate new regulations that are in discussion. For instance, the new tax plan law that President Trump is pushing may have repercutions to 1031 exchanges as well as state and local deductions that would be eliminated (SALT tax) or standard loan interest deductions that many homeowners and investors are relying on. This could put a serious damper to the vivacity that the real estate market has seen lately especially since the slow but steady recovery from the subprime crisis of 2008.

We advise our clients to constantly scan the fiscal and legal environment to make the best investment decisions. Also keep in mind that even failed 1031 exchanges can have benefits. If you are not able to identify a like-kind property or meet any of the restrictions rules imposed by the IRS in the allotted time, you simply defer the payment of your capital gain up to 6 months.

For more information on how to purchase income producing or investment properties, please contact us for your complimentary session.

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Article originally published on October 19th, 2017 on KSI Realty New York website at http://www.nyc2buy.com/blog/the-art-of-doing-a-1031-exchange

REBNY's Meeting - The State of the Manhattan Market

by Kijner & Sons International Realty




KSI Realty New York Inc.’s Broker and President, Marc-Henri J. Kijner, attended a panel discussion at the Real Estate Board of New York where top brokers and industry leaders discussed the state of the Manhattan market.

The 421 A program that was created by Mayor Bill De Blasio expired last January and experts composed of attorneys and industry leaders argued that due to the lack of tax incentives, developpers would most likely slow the development of affordable housing projects. Hence putting further emphasize on the hot market of the sub $3 million price range.

Resale units tend to stay on the market for less than a couple of days and buyers are competing even more to snatch their dream property. Higher cash reserves and better credit scores can certainly help strenghten the approval by the boards of both co-op and condominium buildings that prospective buyers are looking at.

New developments are generally not offering discounts but Attorney Steven Matz, one of the managing directors at Katz & Matz, expressed that they are seing more and more concessions on bigger deals such a free storage units being offered, upgrades given on fit and finish, or credit applied towards the transfer fees to attract buyers that are comparing with more affordable resale units, which tend to be larger but often in need of full gut renovation.

The conversation continued on the topic of rental market. Afterall, 70% of the real estate market in Manhattan is comprised of rental properties. Many brokers including myself, argued that June is the official kick-off month for the appartment hunt that thousand of new comers will engage in until late September.

There is no better time than now to find new rentals whereas landlords have updated, refurbished and repainted their units to attract as many quality tenants as possible. Using the help of a qualified and diligent licensed real estate salesperson can turn out to be an invaluable investment to help tenants snatch the best properties as soon as they hit the market. 



We at KSI Realty New York, believe that clients should sit down with our expert agents and discuss their needs. We help our valued customers pin point their area of interest based on their search criteria and finally draw potential property matches with the help of our online 
search tool.

During this panel discussion, we also talked about the emerging areas of Manhattan and everyone agreed that Harlem with Hamilton Heights was the most promising area. With beautiful browstone townhomes that can be up to 50% more affordable than their equivalents in the Upper West or East side of Manhattan, these products are a must buy! The extended subway lines on 2nd Avenue is also benefiting South Bronx and quality and affordable properties are also looking very promising for prospective investors.

For continuous update on the Manhattan market and lifestyle events about the city that never sleeps, please continue to follow us. For any questions, email us at nyc@kijner.com.

Knight Frank Global Cities - The 2016 Report

by Kijner & Sons International Realty




Kijner & Sons International Realty
is pleased to share with you Knight Frank 2016 Global Cities Report*. In a fast paced world where we are witnessing rapid population growth and innovative infrastructure projects that are creating new business hubs and transforming the geography of our global cities, the 2016 Report seeks to help property investors, occupiers and city planners with their investment startegies.

In this well documented report, you will learn more about this year "Gateway Cities" such as New York and Paris: two megalopolises KSI Realty is proud to serve with its local offices, teams of real estate experts and extensive network of licensed partners. 

The report covers the following additional topics:
> "Zaha Hadid: The Architecture of Inclusivty"
> "Super Cities"
> "Retail: All the World's a Stage"
> "Flexible Living: Short Term Thinking, Long Term Rewards"
> "Future Offices: Breaking the Mould"

To download the full report in English, click here.

To download the full report in Chinese, click here.

Looking to relocate to or invest in Paris, France and/or New York City, NY? Contact us today at info@kijner.com

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Source: http://www.knightfrank.com/globalcities

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Kijner & Sons International Realty
83-85 Boulevard de Charonne, 75011 Paris, France


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