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Sacramento investors have a lot to account for when thinking of renting a property. While some expenses may seem obvious, this is not always the case. Scott Raymond is the founder of Raymond Property Management, now part of Mynd. Today, he is here to discuss with us the top three things that cost investors and landlords money in this competitive market.
Scott Raymond: I can hit anything you throw at me man, and we’ll hit it out of the park.
Alex: Let’s do this. Boys and girls, welcome to another episode of Scott and Alex talking about investing in Sacramento. Well, mostly Scott. I’m Alex with Mynd Property Management. My guest today is Scott Raymond. Scott, how are you?
Scott Raymond: I’m doing great, Alex. Hey everybody.
Alex: Hey, great, thank you. Look, just to set him up a little bit for you—Scott’s got over a decade of experience as a successful investor in Sacramento. He’s also a founder of a company called Raymond Property Management, a large company that’s now a part of Mynd. Very excited about that. Today’s topic is the top three things that cost Sacramento investors and landlords money. What are your top three, Scott?
Scott Raymond: Hey Alex, great topic. Number one, lease up time and vacancy loss. To me, this is probably the number one killer of investment return. This is basically the time that it takes for the units to sit vacant while they’re being worked on, painted, getting ready for the next tenant—the time that it sits vacant during the marketing and showing process to new tenants and ultimately getting a new tenant to move in. Think about it. It’s basically rental income that’ll never be recaptured. Every day that the unit sits vacant is rental income that will never be recaptured. So not getting the unit turned quickly, not pricing the unit properly, and not having a full online presence and automated showing and application process will inevitably result in significant vacancy loss for investors.
Number two is deferred maintenance. This is basically the fact that it invariably costs more to react to a deferred maintenance issue than to be proactive and have a set schedule of when certain things get updated and replaced. For example, a water heater that is well beyond its useful life will cost roughly about 800 bucks to replace under normal circumstances, but will cost somewhere between $1500 to $2000 to replace under an emergency situation where you’re calling someone in the middle of the night or on a weekend.
And then number three—really trying to self-manage. Self-managing really means being totally up to date on fair housing compliance, on code requirements, rent control regulations, and other regulations. Not being up to speed on these things will inevitably result in trip and fall claims, habitability claims, fair housing discrimination claims, eviction challenges, and a lot of other things that could be very costly for an owner. It’s far more costly than simply hiring a property manager. Those are my top three.
Alex: Very good top three. But look, there’s not all doom and gloom. There’s a lot of opportunity to Sacramento. Scott and I have another episode that talks about all of the advantages and opportunities of investing in Sacramento. Check out Mynd.co, M-Y-N-D.co. It’s our website. Just search for Sacramento investing and you will find a number of episodes on this subject. Hopefully today this video helped you out in your decision in potentially investing in or hiring a property manager within Sacramento. Scott, thank you very much for your time.
Scott Raymond: Thanks, Alex.
Alex: And thank you for watching.
Deciding to rent a property is a big decision. Doing so requires time, money, and quite a bit of attention. This is especially true for those looking to self-manage their property. Keeping on top of maintenance requests—particularly in an emergency—or simply accounting for vacancy loss are both necessities when making such a decision.
On the other hand, having a property manager to deal with such factors can be far less costly, especially for new investors. Whether it’s keeping up-to-date on codes and regulations or avoiding being gouged by vendors for emergency maintenance requests, property managers are simply the best way to navigate the Sacramento market and secure the success of your investments.