Frequently Asked Questions
"I've found Monterey Bay Property Management to be responsive and professional."
I am thinking of purchasing a second home on the Monterey Peninsula. What are the first things I need to know?
First of all, you need to know that none of us who own Monterey Peninsula real estate that was purchased with a traditional mortgage (20% to 25% down) have instant positive cash flow. There is simply too much discrepancy between what the property costs and what it will generate in rent.
However, there are some other good reasons to purchase property here. One is the long-term appreciation potential. Despite the recent softening of real estate values, the history of appreciation on the Monterey Peninsula matches or exceeds other locations. Another aspect to owning property here is that rents do go up. Sooner or later, the rent will catch up with, and eventually exceed, the mortgage payment. Many people purchase now with the idea of ultimately retiring to the area. The rental income certainly offsets the cost of maintaining the property.
Second, you need to know that Monterey Peninsula real estate prices cover a very wide range. There are properties in a few areas under $500,000.00 and a few for several million, and everything in between. As a general rule, the higher the purchase price, the wider the gap between property cost and rent, but this is not a hard and fast rule. It is affected by the location and condition of the particular property. Once we know your approximate price range, we can advise you as to the best properties for income production.
How do you determine what a property should rent for?
Rates for long-term rentals are based on the rents for comparable properties in similar locations. Since approximately fifty percent of residential property on the Monterey Peninsula is non-owner occupied, this is relatively easy to accomplish. We take a look at not only the properties that are managed by our company, but those managed by other companies and owner-operators.
Rates for short-term rentals are also based on comparable rentals, but there are fewer properties to which to compare, and the rents are much more dependent on location and condition of property. Rates are also dependent on the time of year and whether any special events are taking place. Owners of vacation rental properties should be flexible on the rates for short-term rentals, since there are times when they will be able to get more than the customary rate for their properties. At the same time, they should be prepared to lower the rate under special circumstances as an alternative to allowing the property to sit empty.
Some vacation rental owners make the mistake of thinking that their three-bedroom home should rent for the same rate as a similar number of hotel rooms. This is comparing apples and oranges. The vacation rental home is a different product than the hotel room, and it attracts a different clientele. A client who is looking for accommodations is shopping for either a hotel room or a vacation rental, but will rarely be comparing the two options. Therefore, to compare the rates between the two options does not give us a number we can rely on.
Rates are not set by totaling your mortgage payment, your taxes on the property, and your expenses! While it might seem reasonable to attempt to set your rate in this way, keep in mind that there is no correlation between what a property costs an owner and what it will generate in rent. The market sets the rates in our free-market society!
Information regarding rental rates is based on our experience in the business, and the material herein is original material, written by Jan Leasure. We are sorry to note that our written material has been plagiarized by other local managers. Thus we are compelled to state that all material on this website, as well as anything you may receive from Monterey Bay Property Management is original.
What services are provided in exchange for commission on the rent collected?
We offer full-service property management for your long-term rental or your vacation/corporate rental property, including single-family homes, condominiums, and small apartment buildings (less than 16 units). For those who need less than full-service management, we offer our Tenant Locator Service.
We will be happy to address your specific questions. Just fill out the Information Request Form to the right or contact us at firstname.lastname@example.org.
Why should I use a professional property manager?
Property management deals with the employment of business practices and "people skills" to obtain the greatest net income from a piece of real estate. It also integrates a minimizing of your susceptibility to the negative influence of an assortment of laws and regulations that impact the use of the property. A good property manager can maximize income, minimize expenses, and help you maintain the highest property value possible while avoiding legal hazards. A good manager sets high standards for tenants and inspires them to meet and sometimes even surpass these ideals. Read more about the benefits of professional property management, an article by our Broker.
Should my property be a long-term, unfurnished rental or a short-term, fully-furnished rental?
We can help you determine whether your property is best suited for a long-term or short-term rental, depending on your personal preferences. One of the personal decisions you must make is whether or not you want to use the property yourself. If your personal utilization of the property is important to you, you will want to consider the short-term, fully-furnished rental of your home to facilitate your own access.
On the other hand, ask yourself what tolerance you have for being surprised every month when you get your monthly statement. Short-term rental income is very erratic. In some months, it is great, and in some months, it is non-existent, so it is important not to be too reliant on the income stream. It is a mistake to elect short-term rentals in an effort to earn more income. While short-term rents are traditionally higher than long-term rents, the expenses are higher as well! Short-term management commissions are higher, utility costs are greater, and the cost of maintaining furnishings and equipment is more in a short-term rental than in a long-term rental.
For most homes, the net income to the property owner is greater with a long-term, unfurnished rental.
All material provided herein is original to Monterey Bay Property Management and Jan Leasure. We are flattered that other local managers consider our expertise worthy of imitation. However, if you have been provided this material by someone other than an associate of Monterey Bay Property Management, it has been "borrowed" without our permission.
Are there risks to renting my home?
Certainly no business endeavor is without risk. However, in all our years of managing property, we have seldom had to evict a tenant. We have occasional damage such as broken window. But it would be foolish to assume that major damage or the need for eviction will never occur. Nevertheless, with proper management, the risk in the rental business is low. Sometimes it is difficult for a property owner to make the transition from regarding his property as a personal residence to perceiving it as a business asset.
To be successful, the owner must look at it as a resource from which he will most certainly generate business income and from which he may sustain some business losses. It is also important to remember that unless a business asset is maintained, it will produce less and less income, so it is vital to keep the property in top condition at all times. There will be some wear and tear, just as there is wear and tear in your own home. For this reason, Monterey Bay Property Management works extremely hard to assure that the properties are being maintained in the condition that will generate the most income for the owners we represent.
What are the office hours of Monterey Bay Property Management?
Our offices are open Monday through Friday from 10 AM to 4 PM, except holidays. We do not close for lunch. We are also open on Saturdays by appointment. We will look forward to seeing you during those times and to being of the most possible assistance.
Where are your offices located?
Most members of the MontereyRentals.com Consortium of Property Managers are located at 816 Wave Street in the Cannery Row area of Monterey, right around the corner from the Monterey Bay Aquarium.