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Omaha, NE Real Estate Property Management

A new concept in property management!

Real estate has long been recognized as a viable investment vehicle and a good part of a well rounded portfolio. Income producing property, such as home rentals, can be a good tax shelter and provide a nice income stream in addition to having the potential for capital appreciation. In the current market many sellers are opting to rent out their homes instead of selling.

Rental real estate can be an outstanding investment vehicle or a source of aggravation. The determining factor often is the way it is managed. The key to being successful is having good tenants and keeping costs down. That is where our property management services can help.

Below is a comparison between the traditional property management fee structure and our hourly fee structure. The fees are based on an average single family home renting for $1800 per month with a one year lease that was renewed for a second year. Note: Management fees vary from company to company. The rates below are typical for the industry.

Service Typical
 Berkshire R.E. Notes
Initial Account Fee $   300
$     25

Leasing Fee
$   800
$   750
Assumes 10 hours to find & screen tenant
Lease Renewal Fee
$   300
$     75
Assumes 1 hour to revise lease & get signatures
Ongoing Management Fee $4,320
$   150
Assumes 2 hours per year for misc. issues

Our cost in the above illustration is 2.3% of gross revenue, their cost is 13.2%.

Q. Your rates are obviously better, but how does your service compare to the traditional property manager?

With the traditional system, because the manager is paid a set rate, the less they do the more they make. If a landlord or property needs extra services or attention, the traditional property manager is in essence paying for it. With us, since we charge for the time we spend, extra services are a source of revenue. We do what ever is needed to provide the services our landlords need or the property requires. While we try to minimize your costs by not doing things that aren't needed, we are ready willing and able to provide any level of service our landlords require.

Q. Are there any types of properties that are not well suited to your fee structure?

Generally, the lower the rent amount the less benefit is derived from using an hourly fee. Properties that need a lot of attention are not well suited either. Our system works great for moderate to high rent properties that are in good condition. Attracting quality tenants is key, and they gravitate towards nice properties. Problem properties or those with a lot of deferred maintenance require too much time. Paying the property manager a percentage of the rent may end up being more cost effective on those types of properties.

Q. Is there an easy way to tell if renting is a good choice, financially?

A cash flow test should be the first test used to see if renting is a good option. Find out how much your house is likely to rent for and deduct the mortgage payment, association dues or any other cost of holding the property. The tenant is normally responsible for utilities and yard maintenance so those would not be included. If you have rent left over you have a positive cash flow.

Even if your cash flow is slightly negative renting still may be a good option. You have to make sure that you can afford to pay the deficit and that doing so is better than other options, like selling. It may make sense to see if refinancing the loan may help reduce monthly costs. We can give you a free analysis to see if refinancing makes sense.

Q. How can I determine if renting makes sense from an investment standpoint?

Assuming the property is in good condition and is not likely to become a money pit, there is a simple calculation that can be done to determine rate of return. If the rate of return is acceptable and competitive or better than other investments, renting should make sense. Take the net annual rent after taxes, association fees, insurance and expenses and divide by the market value of the property. As an example, if you have a house with a market value of $160,000 and you collect $15,600 a year in rent ($1,300 a month), pay $3,600 a year in taxes and $1,000 a year in insurance you would have a net income of $11,000. Your rate of return would be 6.9%. $15,600 - $3,600 - $1,000 = $11,000 / $160,000 = .069 (6.9%). If there were vacancies or repairs the rate of return would be lower.

Professional investors look at a variety of metrics to determine viability of an investment. There are a lot of other tests, but the two above should serve as a good initial indicator. The handy Rental Calculator at the bottom of the page can do the above calculations for you and test out various scenarios.

Q. What kind of properties do you manage?

Quality single family homes are our primary focus. We have found that a quality property attracts quality tenants and quality tenants cause few problems, maintain the property and pay their rent. In addition, we treat tenants and potential tenants with respect, which keeps turnover low and keeps both landlords and tenants happy. These factors lend themselves well to our management system, because minimizing problems minimizes the amount of management needed which minimizes the cost of management.

Q. Do you offer "rent to own" programs and if so, how do they work.

"Rent to own" is a great tool for attracting tenants and increasing return on investment.  With our program the monthly rent is increased by $100 - $200 to cover the option to purchase. A purchase agreement is attached to the lease which sets the terms for the purchase of the property should the tenant choose to exercise the option prior to the expiration of the lease. The landlord may not sell the property to anyone else, but earns an extra $100 - $200 a month. If the tenant does not buy the property, the landlord keeps the extra rent. If the tenant does buy the property, the landlord normally nets more for the property than normal due to the lower cost of the sale and strong purchase price. The tenant benefits from locking in today's price and building equity through the rent payment and possibly market appreciation. They also get to know the house because they are living there. Rent to Own programs are not a good idea for landlords in strong demand markets. They are better suited to flat or declining markets.

Q. What if I decide to sell the property?

You can sell your property at any time. We can help you market the property, if you'd like. We have the lowest full service rates and one of the most comprehensive marketing programs in the area. For more information on our full service, discount brokerage programs, click on the Sellers link.

Q. Where do you advertise the properties and how much will it cost?

We use major national and local real estate sites to attract qualified tenants. In addition, if needed we may place advertisements on the Multiple Listing System, which gets the property on local real estate company's search engines. Anyone searching on the major broker sites, BHHSamb.com, NPDodge.com and our site will find your house! Best of all, the advertising costs you little to nothing.

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Berkshire Real Estate
418 South 166 St. Omaha, Nebraska 68118
Phone: 402-397-2800