First Rate Property Management Blog

Part 3 - How to Manager Your Manager

Melissa Sharone - Tuesday, July 9, 2019

Thank you all for your great feedback on this series of posts summarizing Tony's presentation with the AVID Investors Club in June. In Part 1, Tony discussed the importance of selecting the right property manager and ancillary services. Part 2 described some of the areas that Tony is really involved in the management of his own rental properties.  In Part 3, Tony discusses maintenance, inspections, and an inadvertent phenomenon that can occur with property managers.  Finally, he discusses building your team when investing and managing your real estate assets.


When it comes to maintenance, Tony explained he leaves the property manager alone. When it comes to inspections, many property managers offer periodic preventative maintenance inspections.  Tony believes these types of inspections are beneficial and save the investor money in the long term by taking a proactive approach with maintenance.  Also, property managers should do regular exterior visual inspections by driving by to check items such as the yard and roof condition.  Again, Tony leaves the property manager alone and his involvement is only based on actions initiated by the property manager.  Although not as frequent, Tony walks his own properties as well.  Tony states he tends to identify future capital improvements, not necessarily maintenance issues.  Tony does not view move-in inspection reports and the only time he really analyzes move-out inspections reports is when there is a lot of work and expense involved, or a decision to repair or replace is needed.

Tony tends to use the property manager's preferred vendors.  Property managers have a relationship with the contractors, should be receiving a volume discount, and have an idea of the quality of workmanship. The cost of labor, office and warehouse space, and supplies are going up, so the cost of maintenance has gone up.  It’s a hard pill for Tony to swallow.  Except for above budget or large capital expenses, Tony doesn't require multiple bids.  It slows the process down and can inconvenience the tenants too long.  With that said, Tony explained there is a shortage of contractors in the Boise area now.  Many contractors aren't doing bids right now because they have so much work.  They have to make sure to keep up with the guaranteed work in their queue, and taking time away from guaranteed projects is a challenge when it is for a potential job they may not get.  There is another issue with multiple bids and the example Tony used in his presentation is the best way to explain it.  "We have a licensed trade contractor who has always been the cheapest for work within their trade".  Not once has a competing bid been lower.  Nonetheless we have clients who request competing bids.  Well after asking these different companies for bids, but never awarding the job to them, the contractors no longer want to provide bids, or they just throw out a high number so they can move on."  With that being said, Tony agrees sometimes it makes sense to pay a service charge to receive 2nd opinion, or consider different equipment brands, to save money.

Sometimes a property investor can find what appears to be a cheaper contractor.  It's not always the case, as the cheaper option doesn’t always mean the same quality of workmanship.  The contractor may charge a lower per hour rate, but maybe they take 2 hours to do a 1 hour job.  The biggest issue with investor contractors is the contractors generally do not have the appropriate licenses, registered as a contractor with the State of Idaho, and do not have the appropriate insurances.  Also, does anyone have history with the contractor and know the quality of their workmanship? 

Double Edged Sword:

As Tony pointed out, investors should be involved to a degree in the management of their investment properties.  Investors need to ask questions, discuss options, and work with their property manager on making good decisions.  Both the property manager and investor need to keep these discussions on point, professional, and respectful.  When Tony discovers what he believes to be a mistake, or maybe thinks a different action should be taken, he doesn't call the property manager and blame - he calls and discusses.  After hearing the entire story, most often Tony agrees with the decisions that were made.

However, not all owner's respond in the same way.  An investor’s response to their property manager’s recommendations or discussions can create a learned behavior, which can cause problems.   Here is what Tony said during his presentation.  "If you yell at your property manager every time they call, the property manager will call less.  If you deny every recommendation the property manager makes, they may stop making recommendations.  If you tell your property manager you are broke, they may try not to alert you about every little thing.  If you cause paralysis by analysis over everything, it's going to affect communications from the property manager and obviously the biggest problem is action is never taken or is delayed way too long."

Building your team:

Below is a list.  However, in each and every case you need to identify an expert in each trade who has experience and knowledge when it comes to residential income properties.  For example, you may have used a really good home inspector for when you bought your personal home.  However, when buying a multi-unit rental, you may want to consider a professional property inspector who has experience with these types of properties.

1.  Lender

2.  CPA

3.  Real estate attorney

4.  Real estate agent

5.  Property Inspector

6.  Title/escrow officer

7.  Property manager

Stay tuned for Tony's bonus material, which is the material he prepared but didn't present for time co

Melissa Sharone

President, First Rate Property Mgmt

Part 2- How to manage your manager

Melissa Sharone - Tuesday, July 2, 2019

Earlier this week, we posted Part 1 of 3 of How to Manager Your Manager.  In part two, Tony explains further how he assumes the role as the asset manager and the areas he concentrates his efforts as part of the team managing his investment properties.

Tony explained to the AVID Investor Club that he reviews his monthly financials very closely. Sometimes it can take hours per property and he almost always has questions.  Generally, the explanations to his questions suffice, but sometimes it takes a bit more.  Sometimes, Tony does find mistakes or has additional questions and/or requests that require action from the property manager.

1.  Balances.  Confirm that the current month's beginning balance matches the ending balance of the previous month's statement.  If not, Tony stops and awaits for a new statement with an explanation.  When Selling investment         properties, Tony reviews             financials from many different property managers and has seen notes on statements stating to ignore minor differences from the beginning and ending balances.   Generally this is an innocent mistake caused by the date of a posting to the ledger or a correction.            Nonethless, Tony recommends not ignoring these and making sure things tick and tie each month.

2.  Type of Statements.  On larger multi-family properties, Tony likes a P&L to include an actual to budget columns.  This can help identify issues, like high utility bills.

3.  Rent roll.  Your statement should include a rent roll.  Tony compares posted rents on the statement to the rent roll.  If full rent was not received, he expects to see an explanation, such as:  Pro-rated move-in or move-out rent, or perhaps the tenant only made a       partial payment.  In the event the tenant only made a partial rental payment, then the investor should have already been made aware and already had a discussion with the property manager to make payment arrangements or to file for eviction.

                The investor should look at lease expiration dates.  If any are coming soon, Tony recommends a discussion with the property manager about market rents and what rent the property manager recommends for a renewal.  On his personal properties, Tony tends to            look at current rent and market rent and choose a renewal rent somewhere in between.  While looking at lease expiration dates, Tony looks for a couple of things.  For one, he wants to avoid lease terminations in the late fall, through the winter, and early spring.  Typically vacancies are longer during this period and property managers are unable to lease at top rent.  The exception to this rule are rentals near Boise State.

                Lastly, Tony warns investors that some property managers do not push rents aggressively because it makes their job easier.  Tony recommends the investor to have a discussion about market rents and work with their property manager on fair and reasonable renewal           rents.

4.  Expenses:  The property manager should include copies of all expenses.  Tony reviews his statement line-by-line and compares the posted expenses to the actual bill.  Is it the right property?  Is the price fair and reasonable?  Should the expense actually be a tenant expense?

Nest week, we will post part three of the summary of Tony's presentation where Tony discusses what areas of Maintenance he gets involved with.  Additionally he reveals an inadvertent psychological condition that he sees happen with property managers based on the feedback and discussions  they have with the investors.  Lastly, he will discuss who all should be part of the team involved in the management of the investor's asset.  Tony did prepare a section on the PITA rating, but due to time constraints, did not discuss it.

Melissa Sharone

President, First Rate Property Mgmt.

How to Manage your Manager Part 1 of 3

Melissa Sharone - Tuesday, June 25, 2019

Earlier this week, Tony Drost spoke to the AVID Investors Club on How to Manage Your Manager.  Since Tony owns First Rate Property Management and FRPM manages all of his rentals, the attendees were expecting Tony to state "If you need to manage your manger, maybe you need a new manager".  Not so.  Tony explained to the group that although he allows the property manager to do their work, there are parts that he is very active.  "There needs to be some check and balances" said Tony.  "I let the property manager do the day-to-day work and I play the role of the asset manager.  I keep my eye on the big picture."   A good property manager performs hundreds of tasks that the investor should not be involved with.  A good example is tenant screening.  Tony believes that the investor should review the property manager's screening criteria, and if acceptable, let the property manager do their job.  However, there does need to be a good fit between the investor and the property manager.  "Along with a good fit, comes TRUST", says Tony.  Without a high level of trust, the relationship will likely not work out, or at a minimum, always be strained.

Selecting a property manager:

Tony said the first question from most perspective clients is, "What do you charge".  Although price is very important, Tony recommends that it not be your first question and explains further later in his presentation.  Tony suggests landlords do their due diligence and to create a list of services they are looking for.  He provided the group with two links to help investors with some questions and scoring criteria to shop property managers. and  Price needs to be worked in the equation and Tony admits that pricing is no longer easy to calculate.  It's like the banks anymore.  Banks offer free checking, but you get charged if you go below a minimum balance.  You get charged for over drafts, returned checks, hard copy statements, ATM fees, inactivity fees, and the list goes on and on.  They even charge when you deposit cash.

Property managers learned that the first question a perspective client ask is "what's the management fee?"  So many property managers lowered their management fee and created a list of fees similar to what the banks do.  So, it's important to review the entire management agreement and add it all up.  Generally what you find, is that once all added up, the "effective management fee" (management fees plus all other fees) costs you more.

Ancillary Services:

Everything has become specialized these days.  Look at the medical field.  Tony's family is full of doctors dating back to the 1800's.  Tony recalls that his Grandpa and Uncles seemed to be able to fix anything and everything that came to them.  Today, you go to the family doctor who refers you to a host of specialists.  With property management being big business these days, Tony said that there are hundreds of support systems for property management that all focus on their specialty and they all come at a cost.  Who pays for it?  Who benefits? and Who profits from it?  A couple of examples provided were (1) are experts in screening applicant's pets and support/companion animals.  (2)  Filter Easy is a company that recognized that tenants do not replace their furnace filters on a regular basis, so they provide a service that delivers the proper filter at the proper time for the tenant to replace.  (3)  Renter's Liability is another product that benefits both the tenant and the property owner.  (4)  Property inspectors and property inspection reporting has really progressed, but also has become very expensive.

Next week Tony discusses the areas that he plays an active role in along with some areas that he stays completely out of and trusts the recommendations from the property manager.

Melissa Sharone

Got A Minute To Consider Interest Rates?????

Melissa Sharone - Wednesday, May 29, 2019

Below is a brief article from Jack Harty on interest rates. 

On 5-22-19 the Fed released minutes from its most recent meeting that concluded on May 1 with no increase in short-term interest rate.

The Fed minutes suggest it will take a “patient approach” in determining whether rates should be raised at future meetings.  The CNBC report below summarizes:

CNBC 5-22-19

Fed minutes: No rate moves are coming ‘for some time’ even if the economy improves

“Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time, especially in an environment of moderate economic growth and muted inflation pressures, even if global economic and financial conditions continued to improve,” the meeting summary stated.


“…[S]ources of uncertainty remained. In light of global economic and financial developments as well as muted inflation pressures, participants generally agreed that a patient approach to determining future adjustments to the target range for the federal funds rate remained appropriate.”

Image result for photo punch bowl

It is fair to say that the Fed has no current intention to take the punch bowl (read: low interest rates) away from the party (read: economy) in the short-term.

Over the past seven months (since November 2018) the 10 Yr Treasury bond yield has fallen almost 100 basis points.

As of 5-23-19 the entire Yield Curve is inverted, i.e., Short-Term Treasury bond rates are higher than the 10 Yr Treasury Bond rate (2.31%).  Surely some thanks should be given to Brexit and the Trade War with China.

Some market watchers consider an inverted yield curve to be a harbinger of recession - stay tuned.  In the meantime, enjoy the ride on the low-interest-rate train.

Image result for photo thomas the train

Jack Harty


950 W. Bannock St - Ste 402

Boise ID 83702

Main:   208 344 4141


Melissa Sharone

President, First Rate Property Mgmt

Beware of Rental Scams

Melissa Sharone - Tuesday, May 14, 2019

Now that summer is here and the rental activity has increased, so has the amount of rental scams posted on craigslist.   We can’t stress enough how important it is for a renter to do their research when looking and applying for a property.  Below are some guidelines to follow along with some red flags which may indicate a scam

  1. Look for pictures that are watermarked in the advertisement.  The watermark usually has the company name so it's best practice to get in touch with the company directly to verify the property is in fact, for rent.  Once you verify the property is available, then go through the company to apply.  Scammers even go as far to say they are helping the said company, so verify they are an employee by going to that company’s website to see if they have staff listed or see if their e-mail matches with the company name.
  2. When inquiring about a property pay attention to the questions that are asked about you as a renter.  The red flag here is if you are asked any discriminatory questions in regards to a protected class.
  3. Ask to see and read through the entire lease prior to signing or paying anything.  In fact, asking for the lease prior to even applying is not a bad idea.
  4. Be cautious about paying anything even the application fee prior to viewing the property first. 
  5. If the add states they are a private owner- verify the owners name on the county's assessor page. 
  6. Most landlords do some sort of screening, so if you inquire about a place and they offer to let you move in without applying or any type of screening, then it is likely a scam.
  7. Be cautious when they are pushy with time limits especially with accessing the property through a self showing box.  Scammers tend to target the properties with a self showing option. 
  8. Also be aware of those that will only text or e-mail.  Do what you can to verify the phone number and attempt to call them.
  9. Scams usually have spelling, punctuation and grammar errors.
  10. Last but certainly not least, if it seems too good to be true it probably is.

We know moving can be a stressful but please take the time to do your homework.  Taking 30 minutes to research all of the things listed above will be worth it when you save your self thousands of dollars that could end up in the hands of a scammer.

Melissa Sharone


Pros and Cons of Airbnb

Jim Sharone - Wednesday, May 1, 2019

Recently the Idaho Statesman published an article, How Airbnb hurts Boise's affordable housing:  'It has driven up rental prices', which spiked some interest from our rental property owners.  The gist is that much of the affordable housing is being converting to Airbnb.  The number of short-term rentals in Boise has increased from 336 to 1,183, according to the article.  First Rate Property Management is in the business of long-term rentals, not short term, and our knowledge of Airbnb is only from what we have read and heard, but we think the root of increasing rents is simply supply and demand.  It's pretty hard not to drive around and see multi-family properties being built everywhere, yet this new construction can't seem to keep up with the constant stream of new Boise area residents.

We have some clients with Airbnb's and they state they are performing a little better than when they were long term rentals.  But they admit, the short term rentals take up a lot more of their time and question if the extra time to manage, is worth the little extra money.  We also have a client who had an apartment complex that was completely short term rentals and he hired us to convert to long-term rentals.  His motivation; to simplify his life.  As short term rentals, he had constant turnover which required onsite staffing and a lot of his own time.  Now as long-term rentals, the rents are lower, but there is very little tenant turnover and maintenance costs have gone down.  We'll see, but we're guessing that after a full year with long-term leases, the investor will actually see a higher bottom line.

Let’s examine the pros and cons of both:

Air BNB’s tend to fetch higher rents on a daily basis, but have a much higher overhead. You are looking at a huge increase in vacancy, turnover costs, management fees, advertising fees, insurance, and costs to furnish & inventory the units. Tenants come and go frequently and usually do not form any kind of ties to the neighborhood or community.  With Airbnb's, you can charge top market rent and be flexible as market conditions change. A general rule of thumb is to be a good amount cheaper than neighboring hotels. From what I can find online concerning Air BNB occupancy rates, is that they appear to run right around 50%. Some HOA’s do not allow short term rentals.

Full Time rentals - tend to have lower overhead as they take less time to manage. You typically know what to expect with days vacant. You will pay a lower management fee. Rent rates are restricted and can only be changed at lease expirations. Renewals are usually done at about $50 a month under peak market value due to the fact that the unit will not be freshly turned over. Long term rentals can be more effected by market dips.  We're also told that long term rentals have more tax benefits than Air BNB’s.

Jim Sharone, Vice President 

First Rate Property Mgmt

1st Quarter Vacancy Update!

Melissa Sharone - Monday, April 29, 2019

The SW Idaho Chapter of NARPM just released their 1st quarter vacancy report. It shows that vacancy overall is up from 3% to 3.4%. This is pretty typical for this time of year. The activity for rentals has definitely picked up in the last few months. The market is heating for single family homes with higher rents and lower vacancy then last quarter. FRPM still remains at about a 1% vacancy for both multifamily and single family rentals.  We expect to see rents continue to rise and the vacancy to stay low throughout the next quarter even with the increased rental activity. FRPM on average is renting properties within 15 days from the time notice is given.  Things still look promising for the Boise market.

Read full report here: SW Idaho Chapter of NARPM 1st quarter vacancy report 

Melissa Sharone, President 

First Rate Property Mgmt

Boise Rents Support High Prices

Tony Drost - Monday, April 15, 2019

Monthly, I calculate some key performance indicators to get an idea of where the market is trending within Ada County (Boise area).   In my opinion, the market remains strong with no flags of trouble.


On average, we're seeing 4 plexes sale at about $140,000 per door.  However, two  4 plexes built over 10 years ago just listed at $610,000.  Any new four plexes listed in the Boise and Meridian areas will likely we be well over $150,000 per door.  As you can see on the below graph, we've been trending upward.  So prices are going up.  However, as I explain below, rents are supporting the higher prices.


Base on Capitalization rates (Cap)  and Gross Rent Multiplier (GRM), rents are supporting these higher prices.  The trailing 6 month GRM average has been holding that $150 line fairly consistently.  The consistency, not necessarily the number adds confidence to me.  Also, Cap rates have been fairly consistent around the 5.25% range.  A  downward trend would concern me.

Days-On-Market (DOM):
 Last month my reported average DOM were incorrect due to a formula error on my graphs.  The below graph is correct.  Four plexes are not staying on market very long at all.

Tony Drost, Chairman

First Rate Property Management

Please contact me with any questions 

FRPMs Operations Manager Receiving Residential Property Manager Certification!

Julie Tollifson - Friday, April 12, 2019

FRPMs very own Operations Manager, Jim Sharone, received his Residential Property Manager (RMP®) Certification awarded to him by the National Association of Residential Property Managers (NARPM®), Southwest Idaho chapter! We are proud to have such an experienced, professional and now certified member of our leadership team! 

First Rate Metric Update

Melissa Sharone - Tuesday, April 9, 2019

We wanted to take a moment to update you on some metrics that First Rate tracks to help keep you updated on the market and any new trends that are headed our way. With the first quarter completed for 2019, things are looking great!

Vacancy – 1.85%- 

It happens to be turnover week which is why this may seem higher than the last time we posted. Out of 20 current vacancies 14 of them are rented and tenants will move in later this week. We anticipate our vacancy rate to be back under 1% by next week. Low vacancy is a great indicator that the market is strong and that we can continue to push rents.

Average days on market- 16.5 days

This tells us that there is a lot of activity in this market and that there is a high demand for rentals. FRPM starts advertising as soon as the tenants give notice and this metric tells you that on average the property is rented in 16 days. This means that the property is usually rented prior to the old tenant even moving out!

Turnover days – 4.87 days

This is a metric that we track to help show owners that we are committed to making sure that their investments are occupied as much as possible. Our maintenance team works hard to get the turn over inspection done the same day we receive keys and then the work is scheduled to be completed, usually in 3-5 business days, depending on condition. Our average of 4.87 days is a great turnover time and under the goal of 5 days that strive for day in and day out! We hope to keep on this pace as our leasing activity picks up into the summer.

Stay tuned for another metric update in a few weeks.  We are currently working on publishing a metric page that will be on our website and updated frequently.

Melissa Sharone, President 

contact me with further questions - 

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