THE FUNDAMENTALS OF PROPERTY

MANAGEMENT
Presented by
Carmen Hirciag, MBA
Research Analyst
Survey Methodology
• email to random sample of CA REALTORS® in September &
October 2013

• 744 respondents conducted property management business
within the 12 months prior to September/October 2013
California Rental Market
12.6 million
5.8 million
1,200
Source: U.S. Census Bureau 2012 American Community Survey
Nearly Half Impacted by 2008 Financial Crisis
Q: Has your business model changed as a result of the 2008 financial crisis?
Yes
49%
No
51%
Increased Involvement in Property Management
Q: What percentage of your business consisted of property management?
Percentage of Business in Property Management
21%
22%
14%
13%
16%
8% 8%
32%
16%
15%
10%
13%
6%
8%
0%
5%
10%
15%
20%
25%
30%
35%
0% 1 -5% 6 - 10% 11 - 20% 21 - 50% 51 - 80% 80%+
2013 2007
86% of REALTORS® have 3+Years Experience in
Property Management
Q: How many years have you engaged in property management?
(Mean: 13 , Median: 10)
14%
22%
24%
18%
22%
0%
5%
10%
15%
20%
25%
30%
0 - 2 years 3 - 5 years 6 - 10 years 11 - 20 years 20+ years
Years of Experience in Property Management
Q: How many years have you engaged in property management?
14%
19%
27%
17%
23%
7%
24%
17%
21%
32%
0%
5%
10%
15%
20%
25%
30%
35%
0 - 2 years 3 - 5 years 6 - 10 years 11 - 20 years 20+ years
Investor with <5 properties
Investor with >5 properties
Most Managed Properties are Residential
Q: What type of properties do you manage?
7%
14%
15%
44%
56%
85%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Other
Commercial retail space
Commercial office space
Multifamily/apartment building
Condominium/townhome
Detached single family home
Most Manage Only Residential Properties
Q: What type of properties do you manage?
78%
20%
3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Only Residential Properties Both Commercial and Residential Only Commercial Properties
Majority Manage their Own Properties
Q: How many of the properties that you manage do you own?
37%
16%
13%
10%
5%
4%
3%
1%
2%
1%
7%
0% 5% 10% 15% 20% 25% 30% 35% 40%
0
1
2
3
4
5
6
7
8
9
10+
N
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b
e
r

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f

P
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o
p
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Most Property Managers Reside off the Premises
Q: Do you currently reside on the premises of one of the properties that you manage?
Reside on
premises
11%
Do not reside on
premises
89%
Top Functions Performed by Property Managers
Q: Please check all the management functions which you perform.
9%
30%
39%
41%
48%
62%
69%
78%
82%
92%
93%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other
Initiate Legal Actions
Make Mortgage Payments
Make Tax Payments
Perform Large Repairs/Upgrades
Initiate Evictions
Perform Small Repairs
Collect Rent
Marketing
Take Tenant Applications
Select Tenants
Ways to Generate New Clients
Q: How do you generate new clients for your property management business?
Referrals 31.2%
Word of mouth 17.1%
Internet, marketing online, websites 11.4%
Existing clients, repeat clients, investors 9.4%
Ads, advertising, advertisement 4.7%
Craigslist 4.7%
Local paper, newspaper, newsletter 4.4%
MLS 3.7%
The Internet is the Most Preferred to Market Vacancies
Q: How do you market vacancies?
1%
26%
30%
90%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Radio
Print Publications
Other
Internet
Craigslist is the Most Popular Website for Marketing
Q: On which websites do you market your vacancies?
Craigslist 73.7%
MLS 22.5%
Trulia 13.0%
Zillow 12.6%
Postlets 9.2%
Our own/personal website 5.7%
Westside rentals 4.6%
Hotpads 4.2%
Realtor.com 2.7%
Print Publications for Marketing
Q: In which print publications do you market your vacancies?
35.6%
6.8%
2.7%
2.7%
4.1%
5.5%
50.6%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Other
None
Daily Pilot
Company Rental List
LA Times
PennySaver
Local Newspaper
Marketing Expenses
Q: How much do you typically spend on marketing per unit?
38%
41%
8%
5%
6%
1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$0 $1 - $100 $101 - $200 $201 - $300 $301 - $1,000 $1,000+
Technology in Property Management Business
Q: How frequently do you use each of the following in your property management business?
12%
12%
17%
32%
41%
50%
54%
56%
12%
7%
11%
14%
13%
11%
10%
12%
21%
11%
11%
17%
10%
11%
12%
16%
39%
18%
10%
14%
14%
11%
11%
12%
17%
52%
51%
23%
23%
17%
13%
4%
0% 20% 40% 60% 80% 100%
Digital camera
GPS (not smart phone)
Tablet
Laptop computer
Desktop computer
Cell phone
Smart phone
Email
Daily
A few times a week
Afew times a month
A few times a year
Never
Software Use in Property Management Business
Q: How frequently do you use the following types of software in your property management business?
2%
5%
8%
10%
13%
16%
17%
18%
19%
25%
26%
2%
7%
11%
10%
8%
6%
17%
17%
9%
9%
6%
10%
11%
21%
15%
11%
10%
21%
20%
15%
14%
11%
20%
23%
33%
24%
11%
12%
27%
35%
15%
27%
13%
66%
55%
26%
42%
56%
56%
18%
11%
43%
25%
42%
0% 20% 40% 60% 80% 100%
Loan Analysis
Graphics/Presentation
Comparative Market Analysis
E-signature
Social Media Management…
Transaction Management
Document Preparation
Electronic Contracts/Forms
Contact Management
Multiple Listing Service
Property Management
Daily
A few times a week
A few times a month
A few times a year
Never
Mobile Apps for Property Management Business
Q: Which mobile apps do you utilize in your property management business?
Zillow 15.8%
MLS 14.0%
Trulia 8.8%
Maps, GPS 7.0%
Docusign 5.3%
Appfolio 5.3%
Zip forms 5.3%
Craigslist 5.3%
Texting/messaging/email 5.3%
CLIENT/AGENT
RELATIONSHIP
Over ¾ Clients are Individuals Owning <5 Properties
Q: Please describe your clients.
16%
4%
6%
15%
30%
77%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Other
Corporations with commercial properties
Large institutional investors in residential real estate
Individual investors who own more than 10 other properties
Individual investors who own 5-10 other properties
Individual investors who own fewer than 5 properties
Referrals are Most Important in Finding Clients
Q: How do you typically find your clients?
14%
16%
26%
26%
27%
28%
31%
37%
39%
56%
61%
66%
0% 10% 20% 30% 40% 50% 60% 70%
Other
Social media
"For Sale" sign
Client responded to my ad
Open house
Client is a relative
Prior dealings with my brokerage
Client found me online
Referral from another agent
Client is a friend
Referral from a previous buyer
Referral from a friend
Nearly Half Paid by % per Property
Q: Which of the following best describes your client fee structure?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Percentage per
property
Flat fee per
property
Percentage per
unit
Flat fee per unit Other
49%
20%
13%
4%
14%
Median: 8% Per Property
Q: What percentage of the rent do you charge per property?
4%
0%
2% 2%
9%
13%
13%
22%
5%
25%
6%
0%
5%
10%
15%
20%
25%
30%
1% 2% 3% 4% 5% 6% 7% 8% 9% 10% >10%
Percentage Charged
Median: $125 Per Property
Q: How much do you charge per property?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$1 - $100 $101 - $300 $301 - $500 $501 - $1,000 $1,000+
44%
25%
4%
10%
17%
Median: 8% Per Unit
Q: What percentage of the rent do you charge per unit?
0%
5%
10%
15%
20%
25%
30%
1% 2% 3% 4% 5% 6% 7% 8% 9% 10% >10%
0% 0%
3%
0%
3%
21%
9%
24%
0%
27%
12%
Percentage Charged
Charge per Unit
Mean: $8.8
Median: $8
Mode: $10
Monthly Vacancy Rates are Low
Q: What is your average monthly vacancy rate?
0%
5%
10%
15%
20%
25%
30%
35%
0 1% 2% 3% 4% 5% 6 - 10% 10%+
33%
15%
9%
9%
3%
13%
9%
10%
Monthly Vacancy Rate
Greatest Opportunity in Property Management
Q: What is the greatest opportunity in your property management business?
Extra money, income, making money 17%
Expansion of business/property 9.9%
Potential new listings/buyers/sellers 8.6%
Future sales and purchases 6.9%
Turning renters into buyers 5.2%
Growth, growth of renter/housing market 5.2%
Meeting people/clients/owners 4.3%
Referrals 3.9%
Finding good clients/tenants 3.4%
Establish relationships, make friends 3.4%
Top Challenges in Property Management Business
Q: What is the biggest challenge in your property management business?
Finding good tenants 16%
Repairs/maintenance 12%
Tenant issues/problems 12%
Government regulations/interference 5.0%
Time management, finding time 4.5%
Tenant paying rent on time 4.5%
Getting more business, growing the company 3.7%
Finding new clients/tenants 3.3%
Evictions 3.3%
Vacancies 3.3%
AGENT DEMOGRAPHICS
Most Managers are Very Experienced
Q: How many years have you been licensed to sell residential real estate?
33%
23%
24%
15%
5%
0% 5% 10% 15% 20% 25% 30% 35%
1 - 10 years
11 - 20 years
21 - 30 years
31 - 40 years
41 - 50 years
Gender
Q: What is your gender?
Male
49%
Female
51%
Marital Status
Q: What is your marital status?
Married
72%
Single
21%
Other
7%
Majority are College Educated
Q: What is the highest level of education you have completed?
4%
7%
27%
43%
19%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
High school
Vocational/technical school
Some college
Four-year college
Graduate school
Annual Income
Q: What is your annual income?
52%
36%
8%
4%
0%
10%
20%
30%
40%
50%
60%
< 100,000 100k - 200k 200k - 300k > 300k
Ethnic Background
Q: How would you describe your ethnic background?
Black/African
American
4%
Other
6%
Hispanic/Latino
9%
Asian
10%
White/Caucasian
71%
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