Utah Property Management and Investing
An Ever-changing Landscape
For many Utahns involved in utah property management, it is more by necessity than by choice. You purchase a home, life is great, then you decide to make a career change or your career decides to make a change for you. You are now relocating to a different city, state or even country. This leaves you with a few options: quickly try to sell your property, leave it vacant for the time being with the plan of figuring it out sometime in the future when things settle down or rent the property out. Depending on your financial situation there may be benefits to any of the mentioned options. For most home owners, who will need an additional revenue source to help cover mortgage payments the option that they end up with is renting the home out. This is usually a short term option meaning they plan on selling the Utah home within the next 5 years.
Utah Property Management Tip!
There are many benefits in hiring a Utah property management company to help you achieve your financial goals when dealing with a short term rental property in Utah. Your professional management company will give you access to better marketing as well as tenant application and pre qualification processes. Also an experienced property manager in Utah will know the local market and help you price it well so you can get top dollar with little to no vacancy time. When placing a tenant in the property, as the time nears that you are interested in selling the home it is important to time the end of the lease so that it will end at the optimal time to sell the Utah rental property. The perfect time can be different for every market and a quality Utah property management company will help you identify and coordinate your lease to line up with that. If the property manager that you are dealing with is also involved in real estate sales in Utah they can market the property for rent prior to it becoming vacant and in many cases have it sold with very little vacancy time.
It is important when considering Utah property management to keep in mind what your end goal is with the property and make a plan from the beginning on how you can get there. If you have any questions or would like to discuss options of how we can help you rent or sale your home, please feel free to give us a call at (801) 621-2121.
Why Is The Utah Property Management Industry Growing?
3 Questions You Must Ask As A Potential Property Manager
The real estate industry in Utah has changed dramatically over the last 5 years. One of the unforeseen changes to the market has been the explosion of property management companies. Many real estate professionals have tried to find creative ways to maintain clientele or to create a supplemental income to offset diminished annual commissions.
As a result, many real estate agents and brokerages have jumped haphazardly into the professional arena of Utah property management. In many of these situations, a real estate agent can bite off more than they can chew and can actually damage the relationships they have with clients that they were trying to protect by getting into the Utah property management industry in the first place. Like any job, there is a right way and a wrong way to approach it. If you are looking into Utah property management as a possibility for yourself or your property, there are a few questions you will want to answer first before making a decision:
Utah Property Management Question 1: How will you advertise your inventory?
Are you familiar with the different advertising methods that will allow your property to be seen both locally and nationally? The longer a rental property sits vacant the more likely you will have an angry owner and less chances of keeping them as a client. It is very important to know what marketing channels and mediums you have available to make sure your client’s property gets maximum exposure locally, and nationally.
Utah Property Management Question 2: Do you have a property management agreement ready?
Do you have a well-written legal agreement that will protect you in worst case scenarios? If not, you may be able to slip by with many of your dealings. It’s the deal that goes terribly wrong, and you have no paperwork to back up your actions, that will cause you to regret you didn’t take care of a proper management contract. Spend the extra money, and have a good attorney put together a contract that protects you and your client.
Utah Property Management Question 3: Are there other options besides doing property management?
What other options are out there besides you doing the property management for your clients? There are many professional property management companies in Utah that have been in the business for many years, and many of these property managers offer a referral fee back to an agent for a new property management account and will keep that agent’s information on file for when the client looks to sell the property. This can be a great option – if you are not feeling equipped to handle the property management needs of your client, this may be a better option for you. If you have clients with Utah property management needs, this is a quick and easy way to get involved in the business profitably, and serve the needs of your client.
Over the last 5 years, Utah property management has definitely grown due to home prices decreasing, the ability for new buyers to get a loan has become more difficult, and the need for housing has continued to grow. Finding a solution that fits your needs and those of your clients will be essential to growing your real estate business in the future, and for many, it’s the difference of staying in business or not.
Learning About Real Estate Insurance
For anyone involved at any significant level of real estate investing, insurance will be an important factor. While this is a step of the process that’s expensive and can seem like a hassle, it’s a vital part of succeeding with your investments.
At Froerer, we’re here to help with any and all insurance questions. Here’s a primer on the basic types of insurance you can get, liability coverage, and penalties you may incur in certain situations.
Types of Insurance
When it comes to real estate, there are two primary kinds of insurance: Actual cash value policies (ACV) or replacement cost policies.
ACV situations are common in situations where a home requires some fixups or maintenance – in fact, in some of these scenarios, the ACV will be your only option. In these cases, the insurance company will cover the amount you paid for the property, minus the value of the land it’s on. All ACV policies will cover small losses, though their additional coverages will vary. For buildings that may undergo major structural damage, ACV insurance can be pretty limited.
A replacement cost policy, on the other hand, is preferable in most cases. It comes with more comprehensive coverage in general, including coverage for the full cost of any covered loss minus your deductible amount. To qualify for a replacement cost policy, the property will have to be in good condition.
With most policies, the possibility of what’s called a coinsurance penalty will exist. This is a penalty if you come in more than 20 percent under market costs – say your home will cost $200,000 to rebuild, and you’re insured for under 80 percent of this, or under $160,000. Any claim you make in this situation will be paid out at that same ratio, not at a different one. Ensure you’re up to speed on the value of your home is being replaced at in these kinds of scenarios.
Most standard limits for liability coverage are at benchmarks of $300,000, $500,000 and $1,000,000. In most cases, we advise shooting for the higher coverages – it usually doesn’t cost much more to get them, and they provide much more value. Also, for rental situations, we recommend that all renters be required to carry renter’s insurance so that your liability coverage isn’t the only one on the hook.
For more information on real estate insurance, or to find out about our residential or commercial property management services, contact the pros at Froerer today.