1. 1 Property Management Working with Investors to Increase Sales

2. 2 Gene Tsair Property manager since 2009 Over 500 properties managed in partnership, mostly residential Of the residential ~½ are single family Gene focuses single family and multifamily residential, we have network property managers for commercial properties Gene’s clients are owners, investors, real estate brokers, their agents and other property managers

3. 3 Overview Informal and Straightforward Fast, 15-25 minutes of slides Today’s focus: To use property management to solicit investors and increase sales. I.What is it? II.Where is the $$$? III.Working with Investors Please hold all questions to the end, please make a note of the slide number to reference slides. Slide #’s located at lower right corner

4. 4 Slides can also be found online www.Calmanager.com Or email: genetsair@gmail.com for this presentation

5. 5 Property Management Working with Investors to Increase Sales “You can have everything in life you want, if you will just help other people get what they want.” - Zig Ziglar Before we begin Something to ALWAYS keep in mind…

6. 6 Property Management Working with Investors to Increase Sales I. What is it?

7. 7 Property Management What is it? Core Services 1.Receive Rents 2.Pay Expenses 3.Reporting (Statements and Filing) 4.Consultation (Business Opinions)

8. 8 Property Management What is it? 8 Top Functions Performed by Property Managers Source: Fundamentals of Property Management, California Association of Realtors dated 4/25/2014

9. 9 Property Management What is it? 1.Legal advice: DO NOT write contracts, boiler plate ONLY 2.Accounting/Tax advice: Report the numbers only, DO NOT do their taxes or financial planning for them. 3.Maintenance: Property managers coordinate repairs, they DO NOT do it themselves. 4.Onsite Resident Management (required 16 units+): We help hire, screen and oversee. DO NOT do’s in Property Management

10. 10 Property Management What is it? 1.Receive the call/complaint from tenant 2.Schedule a meeting 3.Determine if repair or replace (and document) 4.Schedule to come back if complicated 5.If necessary, get owner approval 10-step repair order 6. Make sure it is fixed successfully (and document). 7. Receive Invoice (and file/document) 8. Pay Invoice on time 9. Track outgoing check (make sure it is not lost) 10. Photos before and after sent to owner and FILED If ANY step in the chain is skipped, in a timely manner, the repair FAILS The problem is not that it is difficult, it is often tedious and time-consuming

11. 11 Property Management Working with Investors to Increase Sales II. Where is the $$$?

12. 12 Property Management Where is the $$$? In the brokerage! If we are maintaining our business relationships anyway, might as well manage their properties and get paid for it! “Typical real estate investors are not limited by the capital they have, but by their tolerance for headaches, they will buy as many properties they can without being overwhelmed.” -Tito Velasco, Property Manager

13. 13 In aggregate, Investors hold for 5 years and 59% wants to buy another investment in the next two years. (up from 8 and 47% in 2013) Homeowners, hold for 8 years and 37% wants to buy an investment in the next two years. (up from 11 and 22% in 2013)

14. 14 According to NAR 2013 Profile of Home Buyers and Sellers:

15. 15 Source: 2013 California Investor Survey, California Association of Realtors

16. 16 Source: 2013 California Investor Survey, California Association of Realtors

17. 17 Source: 2013 California Investor Survey, California Association of Realtors

18. 18 Property Management Working with Investors III. Working with Investors

19. 19 Property Management Working with Investors The Language of Real Estate: For Investors Capitalization “Cap” Rate IRR (Internal Rate of Return) Cash-on-cash return Cash Flow Owner carry / Terms Gross/Net Operating Income Gross/Net Lease Debt Service Absorption (rate) Capital Expenditures Operating Expenses Capital Gains Sale-leaseback Loan-to-Value (LTV) Opportunity Cost Rent Escalations Gross Rent Multiplier (GRM) Tenant Improvements (TI)

20. 20 Property Management Working with Investors In Focus: Cap Rate Purchase Price (10 unit Apt):$2,000,000 Rent received per unit per year:$20,000 Gross Income*:$200,000 Operating Expenses**:$110,000 Net Operating Income (NOI):$90,000 Capitalization Rate: 4.5% (Purchase Price divided by NOI) *Mostly rents received, most common other income are for laundry machines **Typical Expenses: Vacancy Reserves, Property Taxes, Insurance, Utilities, Maintenance, Management Fees, Gardening

21. 21 Property Management Working with Investors to Increase Sales IV. Conclusion

22. 22 Property Management Working with Investors to Increase Sales Typical property management fees Q: What percentage of the rent do you charge per property? Source: Fundamentals of Property Management, California Association of Realtors dated 4/25/2014

23. 23 Property Management Working with Investors to Increase Sales Property Management: Passive income opportunity Condo+SFR+4-plexMixedApartment Avg. rent collected $1,400$2,200$1,900$1,800$1,600 Properties managed 304080125400 Gross rent per month $42,000$88,000$152,000$225,000$640,000 PM Fees (%) 6% Total PM Fees ($) $2,520$5,280$9,120$13,500$38,400 Referral to agent MONTHLY PASSIVE $504$1,056$1,824$2,700$7,680

24. 24 Property Management Working with Investors to Increase Sales …and, 59% (Investors) WANT to buy within 2 years. How many MORE real estate opportunities can YOU see? …and, 88% IS WILLING to list with an agent they used before. …and, 2/3 of Investors rent their properties. …and 2/3 of those who rented managed it themselves.

25. 25 Property Management Working with Investors to Increase Sales Full Service Referral We do everything You do nothing 20% of the gross property management fees collected Funds paid monthly

26. 26

27. 27 Sample Statement* * More statements and documents found at www.Calmanager.com

28. 28 Property Management Working with Investors to Increase Sales What do I need to do? Add two more questions: –Do you own any rentals? (would you like to own one?) –Can I apply for the job of managing headaches? No additional technical knowledge required!

29. 29 Property Management Working with Investors to Increase Sales Summary The goal is very simple, we want to run a high volume, low margin business. We do this by getting into relationships with agents and other managers by helping them maintain their relationships with their owners so the owners will buy more, so we can manage more units.

30. 30 Property Management Working with Investors to Increase Sales Call Gene at (626) 375-8450 As quick or as detailed as necessary Not an accountant Not an attorney We are business people, ask for business opinion Call CAR legal hotline Need help to get started?

31. 31 Property Management Working with Investors to Increase Sales Stuff residents say to Property Managers…

32. 32 Property Management a primer, increase your $ per hour

33. 33 Property Management Working with Investors to Increase Sales End of Presentation Contact our team below for more details! www.Calmanager.com For Sample Statements (Owner Page) Gene: (626) 375-8450 Karen Wong: (714) 261-9868 Ken Singh: (714) 414-9194 Tito Velasco (Back Office): (714) 231-2830 Thanks for your attention!