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Touchstone Properties!
Orchestrating Maximum Profit
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(213) 389-8600"
611 S. Catalina St., Suite 414"
Los Angeles, CA 90005 "
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Full Service Property Management
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• Rent collection!
• Biweekly building inspections!
• Weekly bill payment!
• Computerized management and accounting!
• Income and expense analysis!
• Maintenance and repair administration!
• Trilingual staff (English, Spanish and Korean)!
• Tenant management including 24-hour voicemail!
• Vacancy preparation, marketing and leasing!
• Monthly bank reconciliation!
• Monthly owner reports (email available)!
• Monthly profit distribution (direct deposit available)!
• Monthly trial balance review!
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Licensed • Bonded • Insured
(copies available upon request) Table of Contents
Property Management!.................................................................................5!
Why You Should Hire Professional Management!..................................................5!
Questions You Should Ask When Interviewing Managers!.....................................5!
Who Touchstone Properties Is!...................................................................................6!
What Touchstone Properties Will Do For You!........................................................6!
Achieving Maximum Profit!........................................................................7!
Increasing Income!.......................................................................................................7!
Lowering Expenses!.....................................................................................................8!
Figure 1 – Average Occupancy Statistics!................................................................8!
Capital Improvements!................................................................................................9!
Less Owner Stress!.......................................................................................................9!
Management Systems!................................................................................10!
Banking and Reporting!............................................................................................10!
Timelines of Service!..................................................................................................10!
Daily!............................................................................................................................10!
Weekly!........................................................................................................................10!
Monthly!......................................................................................................................11!
Semi-Annually (April and December)!...................................................................11!
Annually (year’s end)!...............................................................................................11!
Upon Vacancy!............................................................................................................12!
Plan of Action!............................................................................................................13!
Sample Financial Reports!..........................................................................14!
Balance Sheet!.............................................................................................................15!
Profit and Loss Statement!........................................................................................16!
Statement of Cash Flow!............................................................................................17!
Cash Receipts Journal!...............................................................................................18!
Cash Disbursements Journal!...................................................................................19!
Customer (Tenant) Ledger!.......................................................................................20!
Case Study!...................................................................................................21!
3615 Keystone Avenue!..............................................................................................21!
Figure 2 – Keystone Net Income!............................................................................21!
Figure 3 – Keystone Value!.....................................................................................22!
Other Services!.............................................................................................23!
Property Tax Reduction!............................................................................................23!
Recent Tax Reductions!...........................................................................................23!
Multi-Family Dwelling Brokerage!..........................................................................24!
Homeowners’ Association Management!...............................................................25!
Real Estate Investment!.............................................................................................25!
Notes!.............................................................................................................26!
Property Management
Touchstone Properties is a leading property manager in the Los Angeles area. With our handson management philosophy and over two decades of experience, we provide our clientele with
the very best in property management.!
Because we have managed dozens of buildings for many years, we know the marketplace and
can therefore ensure that your property is being rented at its maximum market potential.
Touchstone Properties maintains a highly visible and approachable relationship with all the
tenants. All policies and lease obligations will be enforced on an evenhanded basis to protect the
building owner as well as the tenants.!
Touchstone Properties, using cost-effective techniques and having a results-orientated attitude,
will increase your profits and handle the inevitable problems of building ownership. Our goal is
to maximize your investment and minimize the problems for you of owning income-producing
real estate.!
Why You Should Hire Professional Management
Increasing the profit of residential income property is management intensive. This is where
Touchstone Properties can help. We will handle absolutely everything in regard to your
property. The only thing you will need to concern yourself with is reviewing the financial
reports and depositing your profit at the end of the month. And you can get their professional
management for effectively no cost. When we take over the management of a building, the
increase in profit that we effectuate typically exceeds the cost of our management fee. The end
result is professional management of your property, more profit for you, and the elimination of
the headaches of income-property ownership.!
Questions You Should Ask When Interviewing Managers
1. How long have you been in the business and who is the licensed real estate broker of the
company? California requires all property managers to be licensed real estate broker. An
agent’s license is not sufficient. You can check the status of a licensed real estate broker by
going to the Department of Real Estate website at http://www.dre.cahwnet.gov/. By going to
licensees in the left column, you will be able to research any licensed salesperson, broker or
corporation operating in the State of California to check how long they’ve been a broker and
if they are in good standing.
2. Do you personally own an apartment building? You are assured of getting the very best in
management if the manager manages your building as she manages her own. Can someone
who doesn’t own an apartment building really know what it is like to manage one for
maximum profit?
3. Do you manage other properties in the area of mine? The property manager may not have
easy access to your property location. Some take accounts far away from their service areas.
It is important to learn if the property manager actually manages other properties in your
area. In an emergency, your property manager must be able to respond quickly and
efficiently.
4. Do you review my existing rental agreements, and are you able to upgrade these contracts
with my existing tenants at no additional cost? In the absence of rent control, you may
upgrade your existing rental agreements by simply issuing a Change of Terms of Tenancy
Notice. In these cases, you can effectively change the terms of the tenancy, without the
existing tenant’s signature.
5. Do you have experience with rent control issues and housing department code enforcement
concerns, and have you actually been to any hearings with these entities? Some violations, if
left unresolved, can result in criminal prosecution against you. Hands-on experience with
code enforcement concerns is imperative.
6. Do you advertise my vacancies, and how long do you think it would take to fill a vacancy in
my building? Are you able to advertise on different Internet sites as well as newspapers and
trade papers? There are many free websites advertising vacancies. Newspaper and trade
papers can be expensive. It becomes cost prohibitive to advertise a lower priced rental in
some of these publications. If your property manager manages properties in the same general
location of your property, you can benefit by getting the rental inquiry overflow from their
other properties.
7. Does your company offer a website, and can your company communicate with me via email
If you are able to communicate with your property manager via email, you should be kept
up-to-date no matter where you are, even overseas. We communicate (sometimes daily) with
clients as far away as South America.
8. Are there members in your company who are bilingual, and do they speak Spanish? If your
property manager does not speak Spanish, you will lose many potential applicants who may
qualify for your vacancy. You may also have difficulty in communicating with some
workmen.
9. Does your company offer other services, such as financing, brokerage or property tax
reduction that may tie into their property management services (and save you money)? This
can benefit you greatly.!
Who Touchstone Properties Is
Touchstone Properties is staffed with professionals who have experienced every facet of
property management and have effectively dealt with its many challenges. We are all qualified
personnel using the best technology available including a 24-hour voicemail system and
advanced property management software. Our accounting system generates thorough financial
records and accounting reports in an easy to understand format. !
Our small size allows us to provide service that is customized to the specific needs of the
property owners and their respective tenants. Touchstone Properties’ basic philosophy is that if
the tenants are happy, they won’t move, turnover costs will be minimized and the property
owners will enjoy optimal cash flow.!
What Touchstone Properties Will Do For You
Touchstone Properties provides each client with a customized line of services including:!
•
Rent collection and administration of rental increases, common area maintenance increases, lease violation notices, notification lists and any other correspondence required.!
•
Semimonthly building inspections to ensure that your property is being maintained according to the highest standards.!
•
Weekly bill payment to assure avoidance of late fees and penalties.!
•
Monthly profit distribution including comprehensive financial reports to keep you informed on the status of your investment. Our reports are available by mail or email. Direct deposit of distributions is also available.!
•
Income and expense analysis including review of insurance coverage, property taxes
(which we are often able to reduce; see Property Tax Reduction later in this brochure),
maintenance contracts, leases and any other related documents to ensure accuracy and
cost effectiveness.!
•
Maintenance and repair administration coordinated with pre-screened vendors. Due to
the volume of business we give them, we are able to establish competitive prices while
retaining quality. Nevertheless, we still bid out large repairs or improvements in order to
obtain the best value possible. When possible, jobs are given to our handyman to get the
lower cost of labor.!
•
Tenant management including 24-hour voicemail so that we can respond to building
issues and emergencies in a timely manner.!
•
Vacant unit renovation, marketing and leasing handled promptly to maximize cash
flow. !
•
Monthly bank reconciliation and trial balance review to assure accurate accounting.!
Achieving Maximum Profit
Through years of experience, Touchstone Properties has developed systems to deal with every
aspect of property management. These systems allow us to consistently increase the profit on
the buildings that we manage. They also allow us to prevent problems and quickly solve those
that are unavoidable.!
Increasing Income
The quickest way to increase profit is to increase rents. However, care must be taken in doing so.
Many cities (including Los Angeles, Santa Monica and West Hollywood) have rent control laws
that limit how often and by how much rent can be increased. In order to avoid penalties (and
perhaps litigation), familiarity with these ordinances is paramount. Through our extensive
experience, we are intimately familiar with all rent control laws in the cities in and around Los
Angeles county.!
Touchstone Properties’ rent increase system has been designed to work within the constraints of
rent control. It automatically reminds us when and by how much to raise the rent on every unit
we manage by taking into consideration the rent control for that area, market rents for that area,
when the tenant moved in, when their rent was last increased and by how much. Based on all of
these factors, we will increase the rent by an appropriate amount. We are careful not to raise it
too much to avoid having the tenant move out (unless that is our goal). This system allows us to
maximize your rental income on a continual basis.!
Touchstone Properties also examines other sources of income such as the laundry room and
telecommunication services. We carefully review the laundry lease and look for ways to
increase income from this source. Sometimes we can re-negotiate the laundry lease so that a
higher percentage of the income is paid to you. Or we may be able to resell the lease for
thousands of dollars to a different provider.!
The newest profit center for multi-family properties is packaging telecommunication services.
We can often negotiate a profit sharing arrangement with providers to offer packages including
telephone, cable, satellite TV, and Internet access.!
Lowering Expenses
The second way Touchstone Properties increases profit is by lowering expenses. Expenses can
be lowered in many ways. Vacancies are the largest controllable expense because they include
lost income, rehabilitation costs, advertising, prospective tenant screening costs and, in some
cases, legal costs to get delinquent tenants out. Keeping vacancies to a minimum is our highest
priority in managing your property. We have developed detailed systems for keeping vacancies
to a minimum and minimizing the cost of vacancies that do occur.!
The best way to minimize vacancies is to ensure that your tenants are happy with their
apartment. It is much less expensive to keep an existing tenant happy than to have to deal with
a vacant apartment after that tenant moves out. Touchstone Properties is always available to the
tenants. We have a 24-hour voicemail system as well as a convenient and user-friendly
maintenance request system. Satisfied tenants will take better care of their apartments, thereby
reducing rehabilitation costs when they do move out.!
Figure 1 – Average Occupancy Statistics
Vacant
Paid Late
Figure 1 shows the monthly average vacancy factor, move-out factor and late payment factor on
the buildings Touchstone Properties has managed in the past several years. A low vacancy
factor indicates an efficient use of resources. With more units rented, more income is generated
which increases profit. A low move-out factor indicates happy tenants. With fewer units being
vacated, there are fewer rehabilitation costs and a lower vacancy factor. A low late payment
factor indicates responsible tenants who are satisfied and who tend to take better care of their
units. With tenants paying on time, bills are paid on time, thus eliminating late charges and
allowing for fewer reserves to be held. And that ultimately means more cash flow to you.!
Inevitably, there will be vacancies. The key is attracting the highest number of prospective
tenants but at the lowest possible rehabilitation cost. Touchstone Properties knows which
improvements are most attractive to prospective tenants and can get them done at the lowest
possible cost.!
Prospective tenant screening is also very important. If we can eliminate troublesome tenants
before they move in, we eliminate the often-exorbitant costs (legal fees, lost rent, and
rehabilitation) of getting them out. Touchstone Properties diligently checks prospective tenants
for poor credit, bad check writing, unlawful detainers, judgments and criminal records. We
verify previous and current residency and employment. We firmly believe that it costs less in
the long run to do a thorough check and have a unit vacant for a bit longer than to lease to a
questionable tenant and deal with the potentially expensive consequences.!
Because the professionals at Touchstone Properties have managed properties for so long, we
have worked with many vendors. Over the years we have found the highest quality vendors.
We have negotiated the lowest possible price with them for the highest possible quality. We
verify that all the vendors we work with are properly licensed and have liability and
workman’s compensation insurance. If you have established vendors with whom you regularly
contract with, we will continue with them, if you prefer. Through our availability to tenants and
our thorough biweekly property inspections, problems at the building are quickly discovered
and repaired, thereby keeping the tenants safe and happy. Regular inspections can also save
money on utility bills by reducing wasted water and electricity from faulty fixtures. Finally,
ensuring a well-maintained property greatly reduces the risk of accidents and possible
litigation.!
Capital Improvements
Touchstone Properties’ semimonthly property inspections will discover improvements that can
be made that may increase the building’s value thereby improving profit at the time of sale or
refinancing. Their expertise in knowing which improvements to make coupled with the low cost
they are able to negotiate to make the improvements makes this a potentially huge profit center.
Using their profit-maximizing and expense-minimizing systems to increase cash flow also
allows them to make, in most cases, these improvements from cash flow, not requiring capital
contributions from you.!
Less Owner Stress
Managing multi-family properties for maximum profit requires a great deal of expertise and an
immense amount of time. In addition to that, it is fraught with problems that can lead to major
stress. There is nothing worse than getting a call from an irate tenant at 2:00 a.m. regarding a
water leak. If you are managing your building yourself, this is a problem you have to deal with
immediately. You need to have capable and responsible personnel to deal with these situations.
If you have someone else managing your building, you need to trust that they have these
personnel in place and that they do not contract these jobs out at an exorbitant cost to you.!
Touchstone Properties has contracted with trade professionals to handle these types of
situations. We have pre-negotiated prices already established. We confirm that they are properly
licensed and insured. We also have systems that minimize these problems in the first place.
These include inspections of units by us and by the tenants and convenient tenant maintenance
request procedures.!
Management Systems
Every step of the management process that Touchstone Properties uses is documented and
includes a flow chart, checklist, or both. These systems have been refined over two decades and
are able to deal with all aspects of management in a consistent, fair, and efficient manner. And
of course they have been optimized to increase the profit of the buildings they are used on.!
Banking and Reporting
Touchstone Properties will open an operating account for your building exclusively at an FDIC
insured bank. They will make deposits one or more times a week and pay all bills related to
your building from this account. At the end of each month, they will send you the net cash flow
by check from this account.!
Touchstone Properties typically prepares a Balance Sheet, Profit and Loss Statement, Statement
of Cash Flow, Cash Receipts Journal, Cash Disbursements Journal and Tenant Ledger each
month. At the end of the year they send a Balance Sheet and Profit and Loss Statement for use in
your tax preparation. If you would like additional reports or at different intervals, they will
customize the financial reporting to your liking. Please refer to Sample Financial Reports later in
this brochure for examples of these reports.!
Timelines of Service
In addition to day-to-day operations such as phone calls, preparing correspondence and
meetings with tenants, venders and owners, Touchstone Properties’ team members follow
timelines for other tasks they perform. Following are the timelines for those tasks. Nearly every
step in the timelines has a detailed, written or computerized system for implementation.!
Daily
Account for tenant payments received
Account for vendor invoices received
Review and schedule tenant-requested repairs
Weekly
Day
Task
Tuesday
Bank deposits, advertise vacancies
Wednesday
Pay bills
Thursday
Inspect vacant apartments
Friday
Bank deposits
Monthly
Day
Task
1
Archive previous month’s records
2-4
Collect rent and post late reminders; inspect buildings
3-5
Deposit rents; schedule repairs
4-7
Collect late rents; serve 3-day notices to non-paying tenants
8 - 11
Send paperwork to attorney to start evictions
12
Reconcile bank accounts
13
Review previous month’s trial balances
14
Prepare 30-day notice of rent increases
15
Mail previous month’s financial statements to owners
16 - 19
Inspect buildings; serve rent increase notices
20
Schedule repairs
21
Call tenants with balances due and schedule payments
25
Check status of evictions
26
Pay management fee
Last
Distribute net cash flow to owners
Semi-Annually (April and December)
Pay property taxes
Annually (year’s end)
Update, close and archive records for year ending
Send year-end financial statements and management summary to
owners for tax preparation
!
Upon Vacancy
Send tenant city mandated information.
Inspect apartment.
Send “Post-Occupancy Inspection” report to owner for approval.
Schedule repairs and cleaning.
Inspect apartment for rent-ready condition.
Account for and refund security deposit as required by law.
Advertise in newspaper and on internet.
Advise tenants in building of vacancy and referral fee.
Thoroughly screen applicants.
Meet applicant at apartment for inspection and completion of
paperwork.
Give keys to the new tenant.
!
Plan of Action
In order to facilitate a smooth and trouble free transition from your current management to
Touchstone Properties, they have designed this Plan of Action.!
1. Meet with you to understand and establish your goals and objectives so that a management plan of action can be developed for your property. Once established, our plan will
be implemented immediately.!
2. Notify tenants of change in management.!
3. Notify vendors of change in management. Have them mail any unpaid invoices to us
along with a copy of the contract for your building(s).!
4. Conduct a thorough inspection of the property utilizing our own staff. Based on this inspection, we will provide a comprehensive report noting specific problems. We will also
make suggestions as to the best way to correct these problems and ways to improve the
value of your investment through capital improvements, cost-cutting measures or additional income streams.!
5. Conduct a thorough inspection of any vacant apartments to verify that they are rent
ready. Make any necessary repairs and cleaning. Install a “For Rent” sign. Immediately
begin advertising.!
6. Review tenant accounts for delinquencies. Notify tenants of balances and establish a
timetable for payment.!
7. Review vendors for quality work and competitive pricing.!
8. Establish a report format and schedule suitable to your needs. Establish procedures for
bank deposits and cash distributions according to your wishes. Our local office will perform all accounting, collections and billings.!
9. Conduct a thorough review of all property files for your building including real estate tax
information, rent role, leases, budgets, maintenance contracts and any other applicable
files.!
10. Ensure tenant, vendor, governmental and property insurance concurrence. Review and
implement security programs if deemed necessary.!
11. Develop the following documents and procedures. Present them to you for your approval
within 30 days after the commencement of management operation.!
a.! List of preventative maintenance programs and procedures for all mechanical and
associated equipment for your property.!
b. Rules and regulations regarding occupancy as well as tenant improvements and remodeling.!
c. Insurance requirements to contractors and tenants.!
d. Recommendations based upon our inspection and review of property improvements
and service contracts.!
e. A lease abstract summary for all tenants’ leases.!
!
Sample Financial Reports
!
!
!
• Balance Sheet!
• Profit and Loss Statement!
• Statement of Cash Flow!
• Cash Receipts Journal!
• Cash Disbursements Journal!
• Customer (Tenant) Ledger!
!
Balance Sheet
006 - 5345 La Mirada Ave.
c/o Touchstone Properties
4311 Wilshire Blvd., Suite 302
Los Angeles, CA 90010
Balance Sheet
As of August 2007
12/18/07
5:48:58 PM
Assets
Current Assets
Cash On Hand
Checking Account
Total Cash On Hand
Accounts Receivable
Total Current Assets
Total Assets
Liabilities
Current Liabilities
Accounts Payable
Security Deposits Held
Total Current Liabilities
Long-Term Liabilities
Mortgages Payable
Total Long-Term Liabilities
Total Liabilities
Equity
Owner's Equity
Owner's Withdrawal
Total Owner's Equity
Retained Earnings
Current Year Earnings
Historical Balancing
Total Equity
Total Liability & Equity
$1,000.05
$1,000.05
$210.72
$1,210.77
$1,210.77
$3,065.49
$167.00
$3,232.49
($1,379.87)
($1,379.87)
$1,852.62
($53,495.03)
($53,495.03)
$2,009.85
$45,389.61
$5,453.72
($641.85)
$1,210.77
Profit and Loss Statement
006 - 5345 La Mirada Ave.
c/o Touchstone Properties
4311 Wilshire Blvd., Suite 302
Los Angeles, CA 90010
Profit & Loss [With Year to Date]
October 2007
12/18/07
5:49:36 PM
Selected Period
INCOME
Rental Income
Other Income
Laundry Income
Late Payment Fee
Returned Check Fees
Repairs Income
SCEP Fee
Annual Registration Fee
Total INCOME
Adjustments to Scheduled Rent
Pass Throughs
Tenant Late Fee
Total Adjustments to Scheduled Rent
% of Sales
Year to Date % of YTD Sales
$9,395.67
98.4%
$92,236.23
97.8%
$120.00
$0.00
$0.00
$0.00
$29.60
$0.00
$9,545.27
1.3%
0.0%
0.0%
0.0%
0.3%
0.0%
100.0%
$1,348.50
$100.04
$35.00
$192.00
$296.00
$93.50
$94,301.27
1.4%
0.1%
0.0%
0.2%
0.3%
0.1%
100.0%
$0.00
0.0%
$0.00
0.0%
$9,545.27
100.0%
$94,301.27
100.0%
$99.42
$868.37
1.0%
9.1%
$1,967.85
$3,909.77
2.1%
4.1%
$0.00
$3,177.00
0.0%
33.3%
$3,296.36
$3,177.00
3.5%
3.4%
$0.00
$500.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0.0%
5.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
$375.97
$500.00
$84.75
$470.00
$106.00
$165.96
$65.00
$1,525.78
$208.20
0.4%
0.5%
0.1%
0.5%
0.1%
0.2%
0.1%
1.6%
0.2%
$71.50
$165.00
0.7%
1.7%
$786.50
$3,056.33
0.8%
3.2%
$0.00
0.0%
$542.30
0.6%
$0.00
$4,881.29
0.0%
51.1%
$9.00
$20,246.77
0.0%
21.5%
$4,663.98
48.9%
$74,054.50
78.5%
Other Expenses
Interest Expense
Mortgage Interest
Total Other Expenses
$1,971.26
$1,971.26
20.7%
20.7%
$19,669.21
$19,669.21
20.9%
20.9%
Net Profit / (Loss)
$2,692.72
28.2%
$54,385.29
57.7%
Gross Profit
EXPENSES
Utilities Expense
Natural Gas
Water & Electricity
Taxes & Insurance Expense
Property Tax
Insurance
Maintenance & Repairs Expense
Electrical
Flooring
Fire & Safety
HVAC
Janitorial
Lock & Key
Paint & Sundries
Plumbing
Misc. Maintenance & Repair
Management Expense
On Site Management
Services Expense
Garbage Removal
Landscaping
Administrative Expense
Rent Control Expense
Annual Registration
Fees Paid
Banking Expense
Total EXPENSES
Operating Profit
Other Income
Statement of Cash Flow
006 - 5345 La Mirada Ave.
c/o Touchstone Properties
4311 Wilshire Blvd., Suite 302
Los Angeles, CA 90010
Statement of Cash Flow
October 2007
12/18/07
5:50:07 PM
Cash Flow from Operating Activities
Net Income
Accounts Receivable
Accounts Payable
Mortgages Payable
Net Cash Flows from Operating Activities
$2,692.72
$221.50
$868.37
($401.37)
$3,381.22
Cash Flow from Investing Activities
Net Cash Flows from Investing Activities
Cash Flow from Financing Activities
Owner's Withdrawal
Net Cash Flows from Financing Activities
Net Increase/Decrease for the period
Cash at the Beginning of the period
Cash at the End of the period
$0.00
($4,500.00)
($4,500.00)
($1,118.78)
$0.20
($1,118.58)
Cash Receipts Journal
006 - 5345 La Mirada Ave.
c/o Touchstone Properties
4311 Wilshire Blvd., Suite 302
Los Angeles, CA 90010
Cash Receipts Journal
10/1/07 To 10/31/07
12/18/07
6:13:53 PM
ID#
CR
CR
CR
CR
Acct#
Account Name
10/4/07
Payment; Aaron Kraft
CR000172 1-1160 Undeposited Funds
CR000172 1-1200 Accounts Receivable
CR000172 1-1200 Accounts Receivable
10/4/07
Payment; Erika Dowdell
CR000173 1-1160 Undeposited Funds
CR000173 1-1200 Accounts Receivable
Debit
Credit
$1,004.46
$117.50
$886.96
$1,020.21
$1,020.21
10/4/07
Payment; Joseph Ayala
CR000174 1-1160 Undeposited Funds
CR000174 1-1200 Accounts Receivable
$886.96
10/4/07
Payment; Tyler Compton
CR000175 1-1160 Undeposited Funds
CR000175 1-1200 Accounts Receivable
$940.31
$886.96
$940.31
CR
10/4/07
Payment; Chane't/Dennis Johnson/Moore
CR000176 1-1160 Undeposited Funds
$911.01
CR000176 1-1200 Accounts Receivable
$911.01
CR
10/4/07
Payment; Jorge & Reina Loarca
CR000177 1-1160 Undeposited Funds
CR000177 1-1200 Accounts Receivable
CR000177 1-1200 Accounts Receivable
$46.00
$912.46
$958.46
CR
10/4/07
Payment; Patricia/Carlos/Matt Estrada/Guy/Jones
CR000178 1-1160 Undeposited Funds
$1,300.00
CR000178 1-1200 Accounts Receivable
$1,300.00
CR
10/4/07
Payment; Patricia/Carlos/Matt Estrada/Guy/Jones
CR000179 1-1160 Undeposited Funds
$2.96
CR000179 1-1200 Accounts Receivable
CR
10/4/07
Payment; Julio Chavez
CR000180 1-1160 Undeposited Funds
CR000180 1-1200 Accounts Receivable
$776.72
10/4/07
Payment; Sonya Vasquez
CR000181 1-1160 Undeposited Funds
CR000181 1-1200 Accounts Receivable
$990.96
10/4/07
Payment; Jenepher Lattibeaudiere
CR000182 1-1160 Undeposited Funds
CR000182 1-1200 Accounts Receivable
$854.72
CR
CR
CR
Page 1
10/4/07
Bank Deposit
CR000183 1-1110 Checking Account
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
CR000183 1-1160 Undeposited Funds
$2.96
$776.72
$990.96
$854.72
$9,646.77
$1,004.46
$1,020.21
$886.96
$940.31
$911.01
$958.46
$1,300.00
$2.96
$776.72
$990.96
$854.72
Job No.
Cash Disbursements Journal
006 - 5345 La Mirada Ave.
c/o Touchstone Properties
4311 Wilshire Blvd., Suite 302
Los Angeles, CA 90010
Cash Disbursements Journal
10/1/07 To 10/31/07
12/18/07
5:50:30 PM
ID#
CD
13938
13938
CD
Page 1
Acct#
Account Name
10/3/07 Kevin Saunders
1-1110 Checking Account
3-1200 Owner's Withdrawal
$4,500.00
10/10/07 Ismael Sanchez
1-1110 Checking Account
2-1200 Accounts Payable
2-1200 Accounts Payable
$65.00
$100.00
auto
auto
10/15/07 World Savings
1-1110 Checking Account
2-1200 Accounts Payable
$2,372.63
13940
13940
10/24/07 White Oak Insurance Services, Inc.
1-1110 Checking Account
2-1200 Accounts Payable
$3,177.00
13941
13941
10/24/07 Quality Maintanence & Repair
1-1110 Checking Account
2-1200 Accounts Payable
13942
13942
10/24/07 Gas Company
1-1110 Checking Account
2-1200 Accounts Payable
$99.42
13943
13943
10/24/07 Athens Services
1-1110 Checking Account
2-1200 Accounts Payable
$71.50
CD
CD
CD
CD
Grand Total:
Credit
$4,500.00
13939
13939
13939
CD
Debit
$165.00
$2,372.63
$3,177.00
$500.00
$500.00
$99.42
$71.50
$10,885.55
$10,885.55
Job No.
Customer (Tenant) Ledger
006 - 5345 La Mirada Ave.
c/o Touchstone Properties
4311 Wilshire Blvd., Suite 302
Los Angeles, CA 90010
Customer Ledger
10/1/07 To 10/31/07
12/18/07
5:53:08 PM
Date
Src
Page 1
ID#
Joseph Ayala
10/1/07 SJ 00000140
10/4/07 CR CR000174
Memo
Transaction Amount
03
Rent; Ayala, J
Payment; Jose
$886.96
($886.96)
Total:
Julio Chavez
10/1/07 SJ 00000141
10/4/07 SJ SJ000034
10/4/07 CR CR000180
$0.00
10
Rent; Chavez,
Chavez, Julio:
Payment; Juli
Total:
Tyler Compton
10/1/07 SJ 00000142
10/4/07 CR CR000175
Erika Dowdell
10/1/07 SJ 00000143
10/4/07 SJ SJ000033
10/4/07 CR CR000173
$0.00
02
($43.00)
($43.00)
$974.21
$0.00
($1,020.21)
($24.32)
$949.89
$949.89
($70.32)
($46.00)
($70.32)
01
Rent; Dowdel
Dowdell, Erik
Payment; Erik
$1,302.96
($1,300.00)
($2.96)
$0.00
Total:
$870.01
($911.01)
($41.00)
09
Rent; Kraft, A
Payment; Aar
Total:
Rent; Lattibe
Payment; Jene
($41.00)
$26.00
$854.72
($854.72)
$0.00
$854.72
$0.00
$958.46
($958.46)
$0.00
07
Rent; Vasquez
$0.00
$870.01
($41.00)
($91.50)
$0.00
Total:
$0.00
$912.96
($1,004.46)
08
Rent; Loarca, J
Payment; Jorg
$0.00
$1,302.96
$2.96
$0.00
$117.50
$1,030.46
$26.00
04
Total:
($27.00)
Total:
Total:
Sonya Vasquez
10/1/07 SJ 00000149
($27.00)
$749.72
$749.72
($27.00)
$0.00
$897.31
($43.00)
Chane't/Dennis Johnson/Moore
06
10/1/07 SJ 00000145 Rent; Johnson/
10/4/07 CR CR000176 Payment; Cha
Jorge & Reina Loarca
10/1/07 SJ 00000148
10/4/07 CR CR000177
$0.00
$897.31
($940.31)
Patricia/Carlos/Matt Estrada/Guy/Jo
05
10/1/07 SJ 00000144 Rent; Estrada
10/4/07 CR CR000178 Payment; Patr
10/4/07 CR CR000179 Payment; Patr
Jenepher Lattibeaudiere
10/1/07 SJ 00000147
10/4/07 CR CR000182
$0.00
$886.96
$0.00
Rent; Compto
Payment; Tyl
Total:
Aaron Kraft
10/1/07 SJ 00000146
10/4/07 CR CR000172
$776.72
$0.00
($776.72)
Balance
$990.96
$0.00
$46.00
$1,004.46
$46.00
$46.00
($4.00)
$986.96
Case Study
3615 Keystone Avenue
The owner purchased this building in the summer of 1996 for $370,000. He hired Touchstone
Properties to begin managing the building at the close of escrow. The building was in poor
condition and the rents were accordingly below market. In addition, the operating expenses
were unnecessarily high. The current tenants had also taken advantage of the previous owner
who managed the building himself. They paid their rent late on a regular basis; didn't take care
of their apartments; and they convinced the owner to lower their rents several times.!
When we took over, we distributed a copy of our Apartment House Rules to each tenant. Within
a few months, every tenant was paying by the third day of the month. The repair costs were
also reduced because we held the tenant responsible for the vast majority of the problems in
their apartment. The tenants were required to pay the cost of repair for all non-wear-and-tear
damage. If they did not, they were evicted and the cost was deducted from their deposit. We
then raised everyone's rent the maximum allowed under rent control.!
Figure 2 – Keystone Net Income
Income
Expense
Net
The combination of these actions inspired some of the tenants to move out. In fact, over the first
two years of management, 71% of the original tenants moved out (a goal of the owner).
Granted, this led to increased expenses for rehabilitating the apartments. But the end result was
new, well-screened tenants paying substantially higher rent. We orchestrated these actions so
that there were never more than two vacancies at the same time. Thus cash flow was not
significantly reduced. Figure 2 illustrates the net income of this building. As you can see, it has
increased dramatically through the implementation of our profit-maximizing systems.!
To lower the operating expenses, we did a thorough review of the invoices and discovered that
the utilities were unusually high. After inspecting the property, we installed low flow toilets in
each apartment, had a plumber inspect all the plumbing and repair any leaks, installed a new
water heater, and changed all outdoor incandescent light fixtures to florescent. Again, this
immediately increased expenses but these improvements lowered operating costs over the long
run.!
Because multi-family properties are typically valued based on a multiple (determined by the
market) of the income that they produce, the value of a building rises along with the income if
the multiplier remains constant. Figure 3 illustrates the value of this same building over the
same time period.!
Figure 3 – Keystone Value
!
The building runs with a low turnover rate, which helps keep the operating expenses down. In
fact, the building is operating at a 28% expense factor, which includes our management fee. The
rents are at or near market levels and the building is very profitable, having thousands of
dollars of positive cash flow each month.!
The building was sold the summer of 2006 for $1,232,250. Much of that profit was the result of
good management.!
!
Other Services
Property Tax Reduction
There are many property owners who are overpaying on their property tax bills. This is a result
of the devaluation of their property for a variety of reasons ranging from a change in the
economy to a change in demographics including the designated use of the property. Yet the
government does not automatically reduce the tax bill when a decrease in value occurs.
(However, they do automatically raise it when they think it is worth more.) There is a lengthy
and difficult process involved that the property owner (or their agent) must instigate and then
complete in order to get their taxes reduced.!
Touchstone Properties can help owners to reduce their property taxes. It is not necessary that we
manage the property in order to reduce the taxes if they are excessive. However, the more
familiar we are with the property, the better our chances of success in getting a reduction and
the reduction would probably be greater. We handle the entire process, from the initial filing
through the commissioner hearings and follow-up paperwork.!
We have saved our clients thousands of dollars in property taxes (see the list below). No
property is too small or too large. We have handled dozens of reassessments on single-family
dwellings, apartment buildings, retail centers, industrial malls, office buildings, churches, auto
centers and even vacant land.!
Recent Tax Reductions
Property Description
Old Value
New Value
First Year Tax Savings
244 units, Mid-Wilshire
$25,000,000
$13,500,000
$143,750
204 units, Canoga Park
18,000,000
11,500,000
81,250
Retail center, Santa Monica
4,800,000
2,600,000
27,500
Industrial center, Compton
4,832,000
2,700,000
26,650
110 units, Hollywood
4,100,000
2,000,000
26,250
Retail center, Tarzana
6,200,000
4,550,000
20,625
SFR, Belair
5,100,000
3,450,000
20,200
26 units, North Hollywood
2,585,000
1,750,000
10,438
Industrial center, Santa Monica
8,000,000
7,300,000
8,750
785,000
420,000
4,563
Vacant land, Palos Verdes
!
Multi-Family Dwelling Brokerage
Managing income producing real estate gives Touchstone Properties a great advantage when it
comes time to buy or sell. It is amazing when you realize that most commercial brokers don’t
own or manage multi-family real estate, the product they sell. Could you imagine a computer
sales person who has never owned a computer? Managing property to maximize profit as we
do allows us to sell the properties we manage at the highest possible price. And knowing how
to maximize profit allows us to help sellers whose buildings we don’t manage to get top dollar
too.!
If you are selling property, we will use the following methods to expose your property to the
highest number of buyers:!
•
Multiple Listing Service
•
Broker’s Forums
•
Direct Mail to Brokers and Owners
•
Networking with Brokers and Owners
•
Newspaper Advertising
•
Internet Listing Service
Brokers sell the vast majority of multi-family properties. Therefore the focus of our marketing is
to them. We have established relationships with many brokers over the years that we have
worked in the real estate industry. We let them all know about the properties we have for sale.!
Knowing what is involved in managing to increase profit also allows a Touchstone Properties to
find those great deals on properties for sale. We use our broker network, as well as other
methods, to find these great deals. Rest assured, if there is a property for sale that meets your
requirements, we will find it.!
Once the property you are interested in has been found, our broker will determine what it is
worth. The average broker will do only a market analysis of the property you are considering.
After all, they are not familiar with all of the intricacies involved in managing multi-family real
estate. Our broker does a market analysis like other brokers but then goes a step further.
Managing properties gives us the added ability to do an in-depth analysis of the building's
condition, books and records, rents and other income, expenses and ultimately, cash flow.!
One of the axioms of real estate investing is that the majority of the profit is made at the
purchase. In other words, purchasing the property at the right price is of utmost importance.
Having us represent you will help you buy a property without paying too much and knowing
the future profit potential before investing a dime.!
!
Homeowners’ Association Management
Touchstone Properties applies its hands-on management philosophy along with our experience
to also manage homeowners’ associations. We handle all standard accounting including
collections, hiring and supervising vendors for repair and maintenance, addressing owner
complaints and other day-to-day management of the HOA.!
We will help prioritize the work that needs to be done to the common areas and get
competitively priced bids to have the work completed in a timely manner. We will prepare
financial statements in the form and frequency that the board requires.!
Another facet of our management is to make sure that the association is in compliance with
state and local laws. We also make sure that you have the proper insurance and enough reserves
for common area repairs and replacement.!
Touchstone Properties will manage the association under the complete supervision of the board
of directors within the guidelines of the association’s CC&Rs and state laws.!
Real Estate Investment
Investing in multi-family properties can be a lucrative place to invest your money and watch it
grow. Unfortunately, many would-be investors lack the funds necessary to cover the associated
down payment and closing costs. !
Touchstone Properties can help aspiring property owners to reach their investment goals by
gathering groups of these like-minded people into what is known as a syndicate. We combine
their investments and purchase a property that meets their investment criteria. We negotiate the
purchase, manage the property and the syndicate, and dissolve the syndicate at the end of the
predetermined investment period.!
The investors will receive their share of the net cash flow and, upon the sale of the property,
receive their investment back along with their share of the profit. They can then roll their money
into a new syndicate to purchase another property with us or, if they have built up enough
money, purchase a property on their own, which we would be happy to help them do and then
manage it for them.!
!
Notes