Month: August 2014

Selecting the Best Property Management Company for Your Properties


Matthew Whitaker - Saturday, August 30, 2014

If you have a rental property, you need property management specialists to help. The benefits of property management are numerous, from providing in-house maintenance to dealing with tenants and ensuring your cash flow is positive and steady. There are options available to you for property management help in Birmingham and the surrounding area, but not all options are created equal. Here are tips you can follow to select the best property management company for your real estate portfolio. Ask for the Vacancy Rate When choosing property management companies, the vacancy rate – the rate at which homes in the overall portfolio are without a tenant – is important. Here, at gkhouses.com, our vacancy rate is around six percent. Finding out the vacancy rate of the property managers you are considering is key, simply because you want your property to have a paying tenant. The higher the vacancy rate, the more difficult it will be for that to happen. High vacancy rates can speak to a variety of problems, such as marketing issues or with poor maintenance or poor customer service. Learn About Maintenance Options Additionally, it helps to know how your home will be maintained. The best property management companies have in-house maintenance personnel, consisting of a crew that can respond promptly to tenant complaints and deal with whatever issue may arise. It’s better than having to rely on outside contractors, both for time purposes and for financial reasons. See how your managers maintain their portfolio properties before making a choice. Find an Around-the-Clock Manager Finally, not all problems and issues arise from nine to five during the week. Many times, issues will emerge after hours, or on the weekend. You need property managers whose full-time job is property management, who focus on nothing but property management, and who can answer calls throughout the entire week and respond to any problem a tenant or you have. The more available your manager is, the better off you’ll be in the long run. For more information on property management, contact our professional team at gkhouses.com.

3 Questions to Ask your Birmingham Property Manager


Matthew Whitaker - Wednesday, August 27, 2014

Today I’m going to share with you the three questions that are absolutely essential to ask your prospective Birmingham property manager. 1. The first question I would ask is, “What are your screening and underwriting criteria for potential tenants?” At gkhouses.com, we look at five specific things when we are screening tenants for the properties we manage. We look at the applicant’s credit score; we look for the applicant’s ability to pay the rent consistently, we complete a criminal background check, we perform an unlawful detainer check and we talk to previous landlords to make sure the tenants have a history of paying rent on time and keeping the house clean and in good shape. Your property manager should have a similar set of criteria when it comes to approving applicants. We believe at gkhouses.com that this alone avoids 80% of all potential tenant problems. 2. The next question you should ask is, “What are your vacancy and collection percentages?” For example, at gkhouses.com our vacancy percentage is about six percent. Our collection percentage is 98.2 percent. These numbers are important to measure the quality of service a property manager provides to its property owners. If a property manager cannot answer these questions for you, I would be skeptical about their ability to successfully manage a portfolio of properties, including yours. 3. Finally, ask the property manager if they have someone who answers the phone 24 hours a day, seven days a week. When you hire a property manager, you should be hiring a professional to take all of your property’s potential problems out of your hands. It seems like most of the problems always happen on the weekends or late at night. Property management is not a 9-5 business, and you want someone who is effectively set up with systems and processes to handle things that happen in the middle of the night or on holidays, especially emergency situations. If you have any other questions on how to find the right property manager, what you should ask and how you should proceed, please take the time to contact us at gkhouses.com, and we’d be happy to assist you.

Home Sales Continue to Rise in July | Property Management Blog


Matthew Whitaker - Wednesday, August 27, 2014

Earlier, we talked about how home sales rose in the month of June in Alabama. This is in an ongoing attempt to gauge the local real estate market and take note of trends that our clients can use. According to the latest stats, provided by the Alabama Center for Real Estate (ACRE), home sales increased yet again in the month of July. There were 4,373 residential homes sold in July, which is a 2.1 percent increase from July 2013 and almost at ACRE’s monthly forecast. This is even more favorable when compared to national sales, which dipped by 4.3 percent in June. When compared to the year to date, home sales are a bit lower but still up by 1.9 percent from what they were by this time last year. This is mainly due to good months like June and July, months in which home sales saw an uptick. As home sales increase, so do prices. Home prices are up in 60 percent of Alabama’s local markets, and have went up by 3.8 percent year-over-year from last July. This is having the effect of reducing the number of bargain shoppers, since there are fewer bargains to be had. A good thing about the price increase is the pace; it is a steady pace, instead of a torrid one that could cause the beginnings of a bubble. Supply is still in favor of buyers in July. There were 7.8 months of supply last month, which puts us in a buyers’ market. This level has held steady over the past year. Demand has been constrained a bit due to fewer distressed properties, which help contribute to more sales. One thing to keep track of: the supply of quality inventory has become a bit tight in most markets. Metro markets like Birmingham have better situations, but on the whole, demand is higher than the availability of homes to satisfy the demand.

Housing Affordability Drops Across the Nation | Property Management Blog


Matthew Whitaker - Thursday, August 21, 2014

As property management professionals, we keep track of the real estate market, even though we deal primarily in rental homes. We follow the market because what happens with buying and selling impacts renting. Case in point: A recent study from RealtyTrac revealed that housing affordability – how easy it is to purchase and afford a home for most Americans – is declining throughout the nation. Specifically, the report analyzed 1,194 counties throughout the U.S. and found that a third went above their historical averages for affordability – meaning homes in those counties were becoming more expensive to buy. Homes have been extremely affordable over the past seven years, ever since the market crash, but the balance is starting to tip back towards the other end of the spectrum. There are several causes behind this phenomenon. The first is that home prices are rising. In June, the median sales price went up by 2.38 percent from May of this year in Birmingham alone. This has been the trend for the past couple of years, and it shows no signs of stopping. The second cause is rising interest rates. Gone are the days of historically-low interest rates. Now, rates are hovering between 4.3 and 4.4 percent for a 30-year fixed-rate mortgage. Rates have climbed by more than a percentage point over the last couple of years, which has contributed to the cost of buying a home – and probably pushed more than a few potential buyers out of the market. When put together, interest rates and higher prices have put downward pressure on housing affordability – which has had the effect of driving more would-be buyers towards renting, and has kept plenty of tenants who have thought about buying as renters for the foreseeable future. Property owners are the ones who are benefiting from this trend in affordability. They can convert their homes into rental properties and tap into the demand for single-family rental homes, and develop positive cash flow from their property.

2014 Birmingham Rental Market Forecast


Matthew Whitaker - Wednesday, August 20, 2014

I want to give you a brief 2014 rental market preview. First, I believe that rental rates are going to only rise moderately. I don’t think that across the entire landscape of the Birmingham and Hoover metro area, rents will increase significantly in 2014. I do think that in certain zip codes, the rental market will be very hot. Those zip codes are: Vestavia Hills, 35216 Homewood, 35209 Mt. Brook and Crestline Park, 35213 These areas will continue to grow rapidly because the inventory of available rental homes in those areas is very low, and yet they still remain desirable places to live for many renters. If you are looking at the landscape of the Birmingham investment community, the east side is going to be hotter than the west side. We have seen across our portfolio a movement of people from the west side to the east side. Be prepared for this trend to continue to grow the rental markets in the Center Point, Roebuck and Huffman areas. Finally, tenants are still in possession of pricing power. There is a lot of rental inventory for tenants to choose from. My advice is to get very aggressive on pricing your rental properties so you can be sure you are getting the best tenants into your homes. A rental property rented at a lower rate is always better than a vacant property! If you have any questions about what we will see in 2014 in the Birmingham metro area regarding rental properties, please contact us at gkhouses.com. We would be happy to tell you more about where we see the market going as the year continues.

Making Your Rental Home More Appealing | Property Management Blog


Matthew Whitaker - Tuesday, August 19, 2014

Turning a home into a rental property is exciting. As property management specialists, we help countless clients and property owners turn their homes into rentals, and give them the tools they need to put their home in the best position for success. One of the first steps in property management is to boost your home’s curb appeal. You want to grab attention and keep it, and position your home as the choice for prospective tenants. After all, a renter will make a split-second decision as to whether or not they’ll rent that property – and you want them to say “Yes”. Here are three simple steps you can take to make your home more appealing before it hits the market. Pressure Wash the Entire Home Consider pressure washing your home. This may seem like a chore, but it pays off. Pressure washing is great because it removes grime, dirt, mold, and other unsightly stuff that has built up on the outside of your home and gives it a clean look. You can pre-treat the outside of your home with a mixture of bleach and water, then pressure wash the exterior. You can definitely tell a difference, and so can your prospective tenants. Landscape the Exterior You can also pump up your home’s curb appeal with appropriate landscaping. You don’t have to go all out; start with the basics. Make sure the lawn is manicured, all gardens are weeded, and planted areas are neat. Then, try to incorporate some color into your yard. Flowers work great to provide pops of color throughout, color that adds a certain zest to your property. If you go the color route, use a dark mulch to contrast with the colors of the flowers and create a well-manicured look. Paint Your Doors and Shutters Finally, while it might sound strange, strategically painting your doors and shutters can go a long way in creating a great look. Try to use bold colors, colors that stand out and demand attention. Make sure they work well with your home’s exterior color and the color of your roof. The door, after all, is one of the first things a person notices about a home, so if you can create a favorable impression here, you can go a long way to making the entire home look better. For more property management advice, feel free to contact us; we’ll be more than happy to help.

Why Choose a Birmingham Property Manager with In-House Maintenance


Matthew Whitaker - Wednesday, August 13, 2014

http://youtu.be/-Q-bYQSPFnI Why is it important for a property management company to have an in-house maintenance staff? You should ask about maintenance and repairs every time you talk to a property manager you are thinking about hiring. First of all, the attentiveness to work orders cannot be beat with an in-house maintenance staff. Tenants want things fixed very quickly, and tenants will stay longer when they have property managers who take care of repairs right away. When you have a manager with in-house maintenance, they can get to tenants’ work orders a lot faster. That means you’ll have a tenant that stays in your property longer. Another good reason to look for property managers with in-house maintenance is that the maintenance staff can learn the house. When the same professionals are going to the property on a regular basis, i.e. two or three times per year, they are going to learn the house and know the intricacies of that property. That’s one of the great things about in-house maintenance. All repairs can be accomplished quickly because the maintenance people know the house and they have worked in the property before. Over time, they develop a vested interest in the house, and that works in your favor. Value pricing is another major benefit to in-house maintenance staff. Many times, there is less of a markup when you use your property manager’s maintenance crew. This is because third-party vendors have a lot of overhead that in-house maintenance people do not have to worry about. Finally, the most important reason to use a property manager who has an in-house maintenance staff: liability concerns. You can be assured that a property manager with in-house maintenance has all the correct licenses and insurance policies necessary. If something bad happens at the house while it’s being fixed, you know you won’t be held accountable, and you won’t have to worry about liability issues. It’s a good way to protect yourself and your investment property. We would be happy to talk more about the value of an in-house maintenance team, and how to find a property management company that has one. If you have any questions, please don’t hesitate to contact us at gkhouses.com.

Birmingham Named Most Exciting City in Alabama


Matthew Whitaker - Tuesday, August 12, 2014

As professional Alabama property managers, we like to keep up with the local scene – and not just the real estate scene. Part of our job is understanding local communities and keeping in touch with what’s going on, for our tenants and our property owners. It was with a lot of pride, then, that we read a story in the Birmingham Business Journal this week about how Birmingham was named as the most exciting city in the state of Alabama. This survey was conducted by Movoto, a real estate listing service. Movoto took a look at 64 cities that had a population of at least 10,000 and evaluated them on criteria such as nightlife per capita, arts and entertainment, parks and outdoor activities, non-fast food restaurants, the number of residents aged 18 to 34, and population density. According to the survey, 28 percent of Birmingham’s population is aged 18 to 34. Birmingham ranked fourth in the state for music, arts and entertainment options, and number 8 for active life (outdoor and recreational activities) options. And as we all know, Birmingham is filled with awesome restaurant and fine dining options, all throughout the metro area. The Magic City has gotten a lot of positive press over the past few years for its array of dining selections, so it isn’t a surprise that Movoto would find the same results. Birmingham also has a rich and vibrant brewery scene to further add to the city’s culture and appeal. Given the diverse options available for nightlife fun, entertainment, recreation, arts, and dining, it’s no wonder why the population of the metro Birmingham area continues to grow and will likely continue for the foreseeable future. We expect Birmingham will continue to be a destination city in Alabama for quite a while.

When Should I Get a New Property Management Company?


Matthew Whitaker - Thursday, August 7, 2014

Many of us have been fired at one point or the other in our lives.

It’s never pleasant, and sometimes it’s unfair, but it has to be done. The same goes for your current property management company.

If you use a property management specialist, you should always evaluate the relationship and whether or not you are getting what you need from your business association with the company. After all, if a landlord isn’t happy, and the property management company can do something about it, but doesn’t, that company needs to go.

There are several common problems people run into when they hire property managers. This isn’t to say that all property management specialists have these problems or flaws, but when a property owner needs to fire someone, there are usually typical reasons as to why.

Poor communication is one of the prime culprits. Some property owners expect to be in regular contact with their managers, especially if they have multiple properties under management. This is fine; an owner has the right to stay up-to-date on his or her property. Some companies do a poor job of staying in touch, keeping their owners informed, and being available.

Another common problem is late payment. Owners want to get paid on time. That is your right. A company that is habitually late with payments is a company you shouldn’t work with.

Lack of maintenance or responsiveness with tenants is yet another common problem. Tenants need to be kept happy just like owners. Otherwise, they’ll go somewhere else as soon as the lease is up, leaving the owner without a paying tenant. This happens more often than you would think with poor property management companies.

Therefore, if your tenants have reason to complain, you probably do, too. You may be happy with your current company. If so, terrific. But if there is a reason why you’re doubting whether or not you should continue your relationship with your property managers, don’t be afraid to fire them – and protect your business.

Home Sales Rise in Alabama Real Estate Market for June 2014


Matthew Whitaker - Wednesday, August 6, 2014

There have been two major trends in Alabama real estate over the past year: rising prices and falling sales and inventory. Both of these trends are related to each other, so it is no surprise to see them going strong heading into the second half of the year.

According to the latest report issued by the Alabama Center for Real Estate (ACRE), though, one of these trends reversed itself, at least momentarily. Home sales actually rose by 7.9 percent from June 2013, to a total of 4,445 units. This is a 13.9 percent increase from the average of homes sold from 2009 to 2013, too. Home prices are still rising throughout the state.

In June 2014, the median selling price was $144,125, which was 4.2 percent higher than the June 2013 figure of $138,270. This is also a 12.2 percent jump from May 2014, and a 10.7 percent increase from the average of the last four years. The month-to-month increase of 12.2 percent is nearly four times the historical average between May and June. We anticipate the same trends that are happening in Birmingham – lower supply creating upward pressure on home prices – will continue to occur throughout Alabama.

This is actually a major trend in residential real estate across the entire country. Investors who want to take advantage are using this opportunity to purchase properties, knowing that price appreciation will be something they can rely on in the foreseeable future as supply continues to remain constrained. We also anticipate downward pressure on vacancy rates and upward pressure on rental rates, as buying a home continues to become more expensive. The fact that interest rates are once again rising is making purchasing a home more expensive for typical buyers, which will only add to demand for single-family home rentals.

Positive Cash Flow for Birmingham Investment Properties


Matthew Whitaker - Wednesday, August 6, 2014

Today, we’re going to talk about cash-flowing rental property in Birmingham, Alabama.

There are four attributes of cash-flowing rental properties in this area, and if you can manage to do these things, you’ll earn a positive cash flow.

Focus on low-to-moderate income tenants. In Birmingham, this ranges from a rental price of $500 to $850 per month.

Next, be patient when it comes to finding a good tenant. We have had to show a house to 100 different people before we found a good tenant. That happens sometimes. One of the mistakes that I see people making is making a commitment too early to a tenant. Why is it a problem to make such a quick decision? Even though you want to lease the house as quickly as possible, you want to ensure that you lease it to the right person. You don’t want to lose the discipline of your underwriting criteria. Never sacrifice what you are doing to protect your investment simply to get someone in the property quickly. That is always the first part of a bad decision.

Next is to be attentive to work orders. We always hear stories about horrible landlords leaving air conditioners broken for months on end in the middle of the summer or other deferred maintenance. One of the things I think is most important is to make sure you keep tenants for the long term. A great way to do that is by making sure you are handling work orders in a timely fashion.

The last thing that is important is to remember that most low-to-moderate income tenants live hand to mouth. Often, you will need to be moderately flexible when it comes to your rent collection. That doesn’t mean that you want to let tenants get three or four months behind in rent payments. But it does mean that when the car breaks down, you are willing to be fairly flexible with when and how they pay rent.

It’s important to remember that having a low-to-moderate cash flow property is more of an art than a science. If you have any questions about achieving positive cash flow for your investment property, please don’t hesitate to contact us at gkhouses.com. We would be happy to talk to you about your goals and your rental home.

What Makes for a Good Rental Market?


Matthew Whitaker - Saturday, August 2, 2014

There’s no doubt that today, across the nation, rental markets are dominating. Returns are higher than they’ve been in a while, and vacancy rates are down considerably. A lot of would-be homeowners – especially Millenials – are being priced out of homes due to rising home prices, which is why many have turned to renting instead.

As property management specialists, we’ve seen the strength of the Birmingham market grow over the past few years, ever since the recession started in 2008.

What qualities should a potential landlord look for when assessing the potential of a local market? What factors come into play when determining how strong a market is? Here are three factors that you should consider when evaluating a market.

Low Unemployment Rate One important factor is the area’s unemployment rate. Unemployment keeps people from buying homes, but it also impacts how much of a rental home they can afford, as well. The lower the unemployment rate, generally speaking, the higher your returns will be (all other things considered equal). Birmingham’s unemployment rate for June 2014 was 6.2 percent, which is lower than the 6.8 percent rate for the state. The rate was as low as 5.5 percent in May.

Favorable Demographics Another important factor is the composition of the people who live in the market. It’s no secret that Millenials are prime targets for renting. A wide range of factors – from the economy to pressing student loan debt – is keeping many in this generation from owning, so renting is the only real option. Another demographic that lends itself to renting is Baby Boomers, who are largely downsizing from homes they have owned and are electing to rent instead of pay more for smaller homes.

A Quickly-Growing Population Finally, an area with a population that is experiencing rapid growth is ideal for renters. These areas are ideal because rapid population growth means a lot of people are moving into the area, usually related to employment opportunities. Renting is the first course of action for most, and some choose to stay renters even after they’ve become settled in the area – especially with rising home prices. For this reason, many destinations in the South and Southwest have become prime rental markets. Several parts of the Birmingham metro area are experiencing solid growth. If you have any other questions about the Birmingham rental market, consult with the property management specialists at gkhouses.com.

Is the Birmingham Real Estate Market Weak?


Matthew Whitaker - Friday, August 1, 2014

We like to keep track of the Birmingham real estate market, so it was with a fair degree of surprise that we read an article in the Birmingham Business Journal about our area’s housing market. The article title? “Housing market ‘weak’ but Birmingham is not alone”.

According to the piece, the Birmingham real estate market was rated by the Freddie Mac Multi-Indicator Market Index as weak. The Birmingham metro area received a market index of -3.31, which was good for 34th among 50 metros surveyed. This is below the national average of -2.64, and below the state index of -2.87.

The report assesses markets by examining where it is today versus its long-term stable range. It takes a look at home purchase applications, payment-to-income ratios, the proportion of current mortgage payments in each market, and the local employment rate.

The only metric that Birmingham scored relatively well on was the employment picture, where it received a -1.92 (the national average is -0.66). The payment-to-income ratio, which measures monthly payments versus homebuyers’ income, stood at -4.62, which fell by 0.21 points.

This suggests that monthly payments – representative of home value – isn’t keeping up with income growth, which is an indicator that prices aren’t where they should be.

Judging by this report, is the Birmingham real estate market really weak? Or, is this report just one indicator amid a ton of data about how the market is performing? It’s fair to say it’s a little bit of both. We know that prices are rising, which has helped homeowners considerably. And we know that demand has been rising, even if supply has been falling consistently.

When put against this report, it’s easy to see how Birmingham still has a ways to go to get to a stable, secure market. We’ll continue to follow the market and keep an eye on the market’s overall stability.