Today the current Saywitz Properties Portfolio is being self managed. There is extremely low maintenance and all of the units have been completely renovated as construction has been completed within the last year. All of the tenants are responsible for their own utilities for internal gas, electric and water for each of their units; therefore, there are no common utilities which the ownership would be exposed to paying.
There is no separate trash bill, as that comes on the property tax bill for each property. The tenants, as part of their leases, are responsible for maintaining all of the appliances contained in the unit at their sole cost and expense. The only maintenance items would be if something were to break in the unit. All of the appliances, as well as the plumbing, roof, heating and air conditioning, all come with either manufacturer or installer warranties which would then cover the costs of any potential defects for those items. These warranties would transfer with the sale of any property.
The tenants receive a monthly statement from our office delineating the monthly rent. Rent statements are then sent to our offices in Newport Beach. Any vacancies are dealt with by running an ad in the Pennysaver, Orange County Register or on CraigsList and of course by placing a sign on the property. We experience extremely low downtime when a vacancy occurs especially in the summer months where units are typically rented prior to the old tenant leaving. We typically have multiple applicants for each of the properties.
In the event of a roommate situation, all roommates fill out credit applications and sign joint and severally on the lease. In the event where it is necessary for a co-signer, we then have all individual’s parents co-sign on the lease for additional security.
The security deposits range from a minimum of one month’s rent to a maximum of two months rent depending upon credit and the specific unit. We have provided a copy of our standard boilerplate lease, please click on the boilerplate lease section for that document.
In the event that you do incur a management cost to oversee the portfolio, it is extremely limited and would not constitute a typical management fee of 3–5%.
As for the rentals themselves, the City of Newport Beach has had rental increases across the board between 7–10% over each of the last three years. We have experienced significant increases in rental rates due to the inability for tenants to purchase a home in this economic environment. Additionally, these properties are the nicest in terms of furnishings and finishes on the peninsula, and therefore command a premium over the typical market rent.
All of the leases are one year leases and in several instances the tenant has requested an even longer term lease, in which case the lease would be two or three years and would have annual increases built into the initial lease rate. All of the leases have language that provide for the owner to have the ability to terminate the lease with 60 days prior written notice in the event of the sale of the property to a buyer who intends on utilizing the building for their own purposes. Therefore, should a potential investor look to ultimately sell off individual units to potential owner/ users they would have the ability to do so and terminate the existing lease if they desire, or keep the existing tenants and their leases for the rental income as an investment.