THE FUNDAMENTALS OF PROPERTY MANAGEMENT

Presented byCarmen Hirciag, MBAResearch 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?

Yes49%

No51%

Increased Involvement in Property Management

Q: What percentage of your business consisted of property management?

Percentage of Business in Property Management

0% 1 -5% 6 - 10% 11 - 20% 21 - 50% 51 - 80% 80%+0%

5%

10%

15%

20%

25%

30%

35%

21%22%

14%13%

16%

8% 8%

32%

16%15%

10%

13%

6%8%

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)

0 - 2 years 3 - 5 years 6 - 10 years 11 - 20 years 20+ years0%

5%

10%

15%

20%

25%

30%

14%

22%

24%

18%

22%

Years of Experience in Property Management

Q: How many years have you engaged in property management?

0 - 2 years

3 - 5 years

6 - 10 years

11 - 20 years

20+ years

0%

5%

10%

15%

20%

25%

30%

35%

14%

19%

27%

17%

23%

7%

24%

17%

21%

32%

Investor with <5 proper-tiesInvestor with >5 proper-ties

Most Managed Properties are Residential

Q: What type of properties do you manage?

Other

Commercial retail space

Commercial office space

Multifamily/apartment building

Condominium/townhome

Detached single family home

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

7%

14%

15%

44%

56%

85%

Most Manage Only Residential Properties

Q: What type of properties do you manage?

Only

Resid

entia

l Pro

perti

es

Both

Comm

ercia

l and

Res

iden

tial

Only

Comm

ercia

l Pro

perti

es0%

10%20%30%40%50%60%70%80%90%

78%

20%

3%

Majority Manage their Own Properties

Q: How many of the properties that you manage do you own?

0

1

2

3

4

5

6

7

8

9

10+

0% 5% 10% 15% 20% 25% 30% 35% 40%

37%

16%

13%

10%

5%

4%

3%

1%

2%

1%

7%

Num

ber

of

Pro

pert

ies

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.

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

0% 10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

9%

30%

39%

41%

48%

62%

69%

78%

82%

92%

93%

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?

Radio

Print Publications

Other

Internet

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1%

26%

30%

90%

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?

Other

None

Daily Pilot

Company Rental List

LA Times

PennySaver

Local Newspaper

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

35.6%

6.8%

2.7%

2.7%

4.1%

5.5%

50.6%

Marketing Expenses

Q: How much do you typically spend on marketing per unit?

$0 $1 - $100 $101 - $200 $201 - $300 $301 - $1,000

$1,000+0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

38%41%

8%5% 6%

1%

Technology in Property Management Business

Q: How frequently do you use each of the following in your property management business?

Digital camera

GPS (not smart phone)

Tablet

Laptop computer

Desktop computer

Cell phone

Smart phone

Email

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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%

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?

Loan Analysis

Graphics/Presentation

Comparative Market Analysis

E-signature

Social Media Management Tools

Transaction Management

Document Preparation

Electronic Contracts/Forms

Contact Management

Multiple Listing Service

Property Management

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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%

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.

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

0% 10%20%30%40%50%60%70%80%90%

16%

4%

6%

15%

30%

77%

Referrals are Most Important in Finding Clients

Q: How do you typically find your clients?

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

0% 10% 20% 30% 40% 50% 60% 70%

14%

16%

26%

26%

27%

28%

31%

37%

39%

56%

61%

66%

Nearly Half Paid by % per Property

Q: Which of the following best describes your client fee structure?

Percentage per property

Flat fee per property

Percentage per unit

Flat fee per unit

Other0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

49%

20%

13%

4%

14%

Median: 8% Per Property

Q: What percentage of the rent do you charge per property?

1% 2% 3% 4% 5% 6% 7% 8% 9% 10% >10%0%

5%

10%

15%

20%

25%

30%

4%

0%2% 2%

9%

13%13%

22%

5%

25%

6%

Percentage Charged

Median: $125 Per Property

Q: How much do you charge per property?

$1 - $100 $101 - $300 $301 - $500 $501 - $1,000 $1,000+0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

44%

25%

4%

10%

17%

Median: 8% Per Unit

Q: What percentage of the rent do you charge per unit?

1% 2% 3% 4% 5% 6% 7% 8% 9% 10% >10%0%

5%

10%

15%

20%

25%

30%

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 1% 2% 3% 4% 5% 6 - 10% 10%+0%

5%

10%

15%

20%

25%

30%

35% 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?

1 - 10 years

11 - 20 years

21 - 30 years

31 - 40 years

41 - 50 years

0% 5% 10% 15% 20% 25% 30% 35%

33%

23%

24%

15%

5%

Gender

Q: What is your gender?

Male49%

Female51%

Marital Status

Q: What is your marital status?

Married72%

Single21%

Other7%

Majority are College Educated

Q: What is the highest level of education you have completed?

High school

Vocational/technical school

Some college

Four-year college

Graduate school

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

4%

7%

27%

43%

19%

Annual Income

Q: What is your annual income?

< 100,000 100k - 200k 200k - 300k > 300k0%

10%

20%

30%

40%

50%

60%

52%

36%

8%

4%

Ethnic Background

Q: How would you describe your ethnic background?

Black/African American4%

Other6%

Hispanic/Latino9%

Asian10%

White/Caucasian

71%

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