16601 Alliance Ave, Tustin CA 92780

RES429

Property Management

This essay will summarize the property management of 16601 Alliance Ave, Tustin, CA 92780. To relieve themselves of the mundane daily tasks, most owners higher property managers. The property manager is responsible for collecting rents, finding future tenants, ordering repair services and replacement parts, altering or constructing new space for the tenant. Most investors are busy seeking their next money making venture so managing their properties can be time-consuming and require organization and follow thru. A property management company that is organized and well versed will put the property investors mind at ease. Good word of mouth and track record with clients and tenants will be useful when trying to secure new business.

ANS Property Management, Inc. goal is to become a premier property management company and provide our client’s with the best service. ANS is managed by values that require us to develop and maintain an atmosphere that is grounded in honesty, ethical behavior, and integrity. ANS intends to preserve its good name with current and future customers by maintaining the high standard of performance as well as striving to exceed them while maintaining a strong commitment to quality, safety, and dependability.

A property manager is a company or individual who oversees the daily operations as it pertains to real estate. The word “Management” indicates the need to be monitored, accountability, and cared for, to keep its usefulness. Marketing also plays a major role in property management. Part of the property manager job is to market the property for rental as well as maximize potential income on the owner’s behalf. Excellent research and a plan are the keys to executing an effective marketing plan. (Woodson, 2006, p. 25)

In our society, everyone is sue happy; this is an excellent reason to have a management firm that knows the proper property management protocols. Moreover, it is essential that property managers follow a code of honor and ethics. A code of ethics is also important because word of mouth can both make or break your reputation. It is suggested that all your forms should be created or at the very least be reviewed by a practicing attorney.

16601 Alliance Ave is considered a multi-family home in Tustin, CA 92780. (Zillow, 2019) It consists of a total of twenty-five units. These units are a combination of one, two, and three bedroom apartments. The buildings total square footage is 20,564, and it sits on a lot totaling 39,204. This property was built in 1968 and was last purchased by a husband and wife in 1987, for $1.5 Million. 16601 Alliance Ave is near Pepper Tree Park, Frontier Park, and Tustin Centennial Park. There are five elementary schools, five middle schools, and three high schools in the area. The neighborhood has a walk score of 63 out of 100 and a transit score of 40 out of 100 (Zillow, 2019).

The property also boasts assigned open parking spots and single car garages. It has onsite laundry and a community pool, for residents. It is priced at approximately $204 per square foot. The average rent is $1800 per month. The lower units are wheelchair accessible, and all units have furnace heating and in-wall air conditioning units. The exterior appears to need some cosmetic upgrades. According to public records, the units have not had any significant renovations since its purchased in 1987. (Tax.ocgov.com, 2019) So it would appear that all the units would need to be inspected and significantly upgraded. According to negative Yelp reviews from previous tenants, there seems to be a bug infestation, electrical issues, and the owners should not be property managers; they do not have the proper acumen. (Yelp, 2019)

The interior of most of the units has carpets and linoleum. Each unit is at least 800 square feet, and the building is currently at fifty percent occupancy. The units are prewired for local cable service. There is high tenant turn over, and there appear to be several complaints against the owners for not meeting city codes on the furnaces. “Under the California Civil Code, landlords must ensure that certain conditions are met which make the living space habitable and safe for potential lessees,” (Stimmel Law, 2019) They include proper plumbing, gas, and electrical systems. If the owner/landlord does not meet these requirements, the resident has the right to deduct the repair costs from his rent or leaving the property without constraints. According to complaints filed by the gas company, they could not turn on new gas service in some units because the existing furnaces did not meet city code.

The curb appeal needs to be addressed as well. The property has a jungle like feel due to overgrown bushes and trees. The outer structure needs to be repainted, and there appears to be some wood damage (possible termite). Because the buildings are moved to the outer edge of the property, there is no room for expansion without a teardown. The parking in the neighborhood is bumper to bumper so it may be hard to have guests as there is no guest parking on the property. The current owners have been responsible for the upkeep and maintenance of the property. There is no additional staff involved in the management of the property. Maintenance is the state of being maintained. (Webster’s Dictionary) A significant element of property management is the successful maintenance of the asset/ property.

Maintenance policies should include data that pertains to the tenant’s obligations, and a list of possible fees for typical damage that may occur. In this essay, I will call the management company ANS Property Management, which will be preparing this report/paper to present to the property owners of 16601 Alliance Ave, in Tustin California (Zillow, 2019) in an attempt to when the contract for their property management. The maintenance plan will show the property owners, how ANS can assist them with this property for future growth and maintenance, how ANS plans to maintain the property by routine care, corrective, and preventative maintenance.

Meanwhile replacing fixtures, pest control, and outdoor maintenance will also be taking care of. The goal of ANS Property Management is to oversee and maintain all properties with the highest level of excellence. The immediate goals are to make sure Alliance Place is pest free, livable, and meet the federal and local guidelines. The long term goals are to follow the detailed schedule maintenance. ” Maintenance policies and procedures affect personnel, purchasing, service contracts, and budgeting.” (IdoniManagement.com, 2016) Proper maintenance also requires significant record keeping to keep track of inherent information such as warranties, and utility consumption. This information helps make long-term decisions about the property.

Routine maintenance consists of projects that are prepared for and occur on an arranged basis. Routine maintenance addresses problems emerging from continued wear and tear on the property and machinery, due to abuse and or accident. Routine maintenance by nature is non-emergency replacements or repairs to the building, the equipment, and the grounds, for example, trash removal, lawn care, snow removal, mopping and sweeping of common areas.

Preventive maintenance is a service that is programmed and is intended to avoid more severe problems at a later date like changing the oil in your car. If you do not change as directed, you may cause more damage in the longer run. It also assists in secure items that are often in repair. Preventive maintenance allows staff to manage problems in their initial stages and therefore prevents future extensive and expensive repairs.

Corrective maintenance involves real repairs that keep the buildings utilities, equipment, and amenities functioning correctly. These include repairing or replacing a broken HVAC, the toilet, or leaky faucet. Many of these expenses are often covered under warranty if not too old. Therefore, it will be in the ANS Property Management’s best interest secure the original warranties on the updated appliances and other components from the time of purchase (Woodson, 2006).

The property manager will manage, repair or replace any item on the Property for which state law dictates as its responsibility. Also, the property manager will be responsible for the structural components, exterior painting, and siding, roof, doors, locks, keys, windows, foundation, plumbing, electrical, water heater, and ceiling.

Property managers new to real estate frequently have unrealistic expectations before they thoroughly understand their potential customers and competitors. You should start with a market analysis as early as possible or before purchasing the potential rental property. A market analysis enables you the ability to review the local market trends and help answer questions like What is a fair rental rate? How do I maximize the profits on this property? Is there new construction in the area and will it affect me?

I will be using a supply-based analysis. This analysis recognizes rental properties within the market that are similar to the subject property. Looking at your competition will help determine where is the best place to invest your resources and dollars to stay contentious. Since you can change issues, like location, distance to public services, or convenient stores. You can make adjustments and upgrades that can make your property more desirable.

The best place to start is researching the following information about properties in the properties area: Rent in the area, the number of days units sit on the market, average vacancy rate, potential tenant profile: age, length of tenancy, occupation, size of families or singles, established vs. new construction. Part of a market interpretation is determining what is a competitive price for the size unit you have to rent. This analysis should be done at the end of every lease to ensure that you are maximizing your properties value.

The internet makes analyzing this information less laborious and significantly more accessible. Competitor websites, business reviews, and Social media sites provide valuable information about how your competitor communicates with consumers and potential clients.

Licensed appraisers use three approaches when calculating the value of a property; the sales comparison approach, and the cost approach, and the income approach. The Sales Comparison approach requires the collection of accurate sales data that is most applicable for this property’s value estimate. For the data to be accurate, you must use trusted sources for data collection and “collect sold comparable properties that occurred about the same time as the subject’s date value,” (Betts, 2008 p. 227) This shows what like homes where provides the amount other sellers have sold for and how long it took to get that price.

“16601 Alliance Ave is a 25 unit multi-family building in Tustin, CA 92780. This 20,564 square foot multi-family home sits on a 0.9-acre lot. This property was built in 1968. Nearby schools include Robert Heideman Elementary School, Saint Jeanne de Lestonnac School, and College And Career Preparatory Academy. 16601 Alliance Ave is near Pepper Tree Park, Frontier Park, and Tustin Centennial Park.” (Zillow, 2019) I was only able to find one possible comparable property: 1102 Wass St, Tustin, CA 92780. The Wass Street Villas are occupied with a mixture of long term and new tenants. The Wass Street Villas has composed four separate buildings consisting of one four bedrooms two baths, four three bedrooms two baths and six two bedrooms two bath units. All units are well-designed with a patio or balcony, central heating and cooling, and a shared laundry room. Additionally, there are ten double car garages, two single car garages, and additional open parking spaces available for residents and guests.

“The Cost Approach, surmises the replacement cost (RC), the cost of reconstructing a duplicate building and deducts the depreciation value (D) accumulated for the subject property leaving the depreciated cost (DC). ” (Betts, 2008) “The cost approach is a valuable approach to use when appraising newer homes that might have little or no depreciation; however, for homes older than a few years, it is not very reliable.” (Graham, 2015)

The Income/Capitalization Approach is inferred from the relationship between value, income, and the rate of return on an investment (Betts, 2008 p. 408). The contrast between the estimated gross annual (GI) income and vacant property cost (V) is the effective gross income (EGI). Subtracting the annual operating expenses (OE) from the effective gross income is the net operating income.

Zillow confirms that as of December 2018, its average home value is $547,000. The average rent in this area is $1850 to $2000 and forecasted to increase by 4.3% in the next year. I believe that this is a sound investment. Moreover, I would hire a management company to handle the day to day operations after some considerable upgrades to the units and the common areas.

References

IdoniManagement.com (2016), 3 Essential Property Maintenance Systems You Must Have, https://www.idonimanagement.com/3-essential-property-maintenance-systems/

Lapin, J. S. (2018). Should Take to Improve Maintenance. Journal of Property Management, 83(3), 27–30. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=bsh&AN=129490057&site=eds-live&scope=site

Realtor.com, (2019), Retrieved from https://www.realtor.com/realestateandhomes-detail/16601-Alliance-Ave_Tustin_CA_92780_M19813-93007

Stimmel Law, (2019), Landlord Obligations for Habitable Premises – The Basic California Law, Retrieved from https://www.stimmel-law.com/en/articles/landlord-obligations-habitable-premises-basic-california-law

Treasurer-Tax Collector, (2019), tax.ocgov.com, Retrieved from: http://tax.ocgov.com/tcweb/search_parcel.asp?streetname=16601%20Alliance%20Ave&t_city=TU&t_parcel_no=40229106

Webster’s new collegiate dictionary. (1981). Springfield, Mass.: G. & C. Merriam.

Woodson, R. Dodge. (2006). Be A Successful Property Manager. New York: McGraw-Hill.

Yelp (2019), Yelp.com, Retrieved from: https://www.yelp.com/biz/madeleine-apartments-tustin?hrid=LtXDAkzvst9UzYWrFzoFJQ&utm_campaign=www_review_share_popup&utm_medium=copy_link&utm_source=(direct)

Zillow: Real Estate, Apartments, Mortgages & Home Values. (n.d.). Retrieved April, 2016, from http://www.zillow.com/

Zillow.com, (2019), Retrieved from https://www.zillow.com/homes/for_sale/globalrelevanceex_sort/33.738243,-117.836548,33.735653,-117.838315_rect/18_zm/