Author: melissa

Digital Property Management: Which Services Should You Digitize?

Posted on by melissa

Back in the day, property management companies had to do things the old-fashioned way. Digital property management, though, is the new norm in this industry. Whether you are looking for a property management company or are one, there are some services you must digitize.

 

Understanding Digital Property Management

Real estate investors often find it difficult to manage multiple rental properties. By hiring a third-party property management company, they can save a great deal of time and effort. Property management companies can facilitate the needs of their tenants.

It is important to research potential property management companies carefully in order to find the best possible fit for you. There are many benefits to having a property management company.

In addition to managing the day-to-day operations of your properties, they have comprehensive digital service offerings. When looking for the ideal property management property, look for one that digitizes the following:

 

1. Resident Fee Payments 

keyword with big pay key | digital property management

Even if you have a small number of properties, it is wise to have your residents pay for their rent electronically. The property management company that you will hire should have systems in place to facilitate the digital payment of fees.

The reason for this is that having digital fee payment systems will encourage your tenants to make their rental payments on time. This, in turn, will improve the cash flow of your rental investment property business. 

Many times, property management companies will be able to have an email or text message reminder system in place to further help in collecting required fees from your tenants. When choosing the right property management company for your investment properties, be sure to look at how they are collecting payments. From this, you can determine whether they are an ideal choice for you.

 

2. Maintenance Requests

Depending on how many rental properties you have, there will be maintenance requests that will occur frequently. If you do not have a third party to manage those requests, it can be easy to fall behind and have your tenants frustrated with you as a landlord. The best way to mitigate this risk is to have a property management company with digital services in place. 

Digital real estate management allows tenants to make their requests rapidly and without interrupting their daily lives. If your tenants feel that you are not properly managing the rental property, they will have the incentive to move sooner or even bring legal action if the maintenance issues violate local building codes.

By choosing a property management company with digital systems, you can shield yourself from many potential liabilities in the future.

 

3. Emergency Contact 

emergency contacts | two men talking | digital property management

In addition to traditional maintenance requests, there will also be times when emergencies happen at any of your rental properties. These emergencies can become even more complicated if your rental property is located in a different state or city that is far from where you reside.

With a digital property manager, it will be much easier for tenants to report emergencies. The property management company can then handle those issues quickly. If emergency issues are not reported right when they occur, more damages that could have been avoided might occur.

 

4. Prospective Tenant Screening Processes

Another role of many property management companies is to assist property owners in finding qualified tenants for their properties. It is best to work with a property management company that has established practices on how to screen tenants. This way, you can ensure they are making sufficient income to be able to afford the rent of your property. 

By failing to screen tenants, you could end up with ones who cannot pay their rent. This can then lead to complicated eviction procedures. It is usually best to work with a property management company that has digital tenant screening processes with forms to fill out online.

Your property will likely have more qualified applicants if the application process is simple and easy to complete. Digital property management is a great strategy for rental income generation.

 

5. Marketing to Potential Tenants

two men talking | digital property management

Property owners find it hard to market their properties to qualified tenants who are interested in signing a lease. Marketing to potential clients is an expensive and exhausting process. Therefore, it is wise to work with a property management company with existing digital services.

In addition to reducing overall costs, digital property management companies have experience in various aspects of digital marketing. This includes social media, SEO, and professional websites that can attract more prospective tenants. By having digitalized marketing services, a property management company can fill your vacant properties quicker with less hassle.

 

6. Progress Tracking App 

Recently, many property management companies have designed apps to enable their clients to see the status of various repair projects at their investment properties.

Having an app tracking the status of multiple work orders is effective for a number of reasons. For one, it informs the real estate investor how much the various repair services will cost. It also lets them know whether the repair request was handled quickly.

With an app, a property owner can know how the management company is using repair funds. This allows for maximum potential profit for their investment property.

An app also boasts convenience for property owners. They can access up-to-date information remotely as they are traveling or conducting other business. When interviewing potential management companies, ask them about their extra offerings.

An app or software program with a comprehensive dashboard and up-to-date information is a definite plus. It offers substantial value that will absolutely benefit property owners, ensuring they are well-informed and have realistic expectations of their profit margins. 

The app should also contain all related contracts and leases for easy viewing. Above all else, with an app, you can ensure that repairs are taking place according to the law.

If you believe your community can benefit from digital property management, give us a call and we’ll be glad to discuss it with you.


11 Reasons To Hire A Rental Property Management Company

Posted on by melissa

Managing a rental property can be challenging, especially if you lack the time or skills for the job. This is where rental property management companies come in. But, what does a property manager do anyway?

 

What Is Rental Property Management?

The definition is in the name itself — rental property management. Simply put, it is the management of rental properties, be it residential or commercial. It involves the overseeing and performance of day-to-day tasks, usually by a rental property manager, to ensure smooth operation.

What do rental property managers do? Specifically, rental property managers are in charge of marketing your rental property, finding and screening tenants, collecting rent, and overseeing various maintenance and repairs. Their property management duties and responsibilities can also include tenant retention and ensuring compliance with the law.

Many people wonder whether there is a difference between property management and rental property management. The two are essentially the same thing, which means you can use the terms interchangeably.

 

The Benefits of Hiring a Rental Property Management Company

Commercial and residential property management is no easy feat. If you own a rental property, consider the following reasons to hire a rental management company:

 

1. Manage All Your Properties

Is it hard to manage a rental property? If you only have one rental property to think about, it is definitely possible to manage it on your own. But, as your real estate assets grow, it will become increasingly difficult to keep up with the demands of rental property management. After all, how many rental properties can one person manage?

The beauty of hiring a rental manager or company is that you don’t need to divide your time between all your rental properties. Companies have the resources required to stay on top of all the daily tasks without suffering burnout. If you try to juggle multiple rental properties by yourself, you will almost certainly feel exhausted — and that doesn’t even factor in your full-time job and personal life.

 

2. Quickly Fill Vacancies With Quality Tenants

One of the hardest aspects of managing a rental property is finding good tenants to fill vacancies. Rental management companies can help with that, too.

These companies can create a compelling online listing for your property and find tenants fast. They will also be the ones to screen your tenants to make sure you get high-quality renters. Property management companies have dealt with countless applications, so they know how to identify red flags and false information. With their help, you will have a tenant that never misses the deadline for rent and consistently takes care of the property in no time.

 

3. Higher Tenant Retention Rate

property management companyA low tenant turnover rate means fewer costs and headaches associated with the turnover process. That includes changing the locks, repainting the walls, exhaustive cleaning, and the like. You also don’t need to go through the entire process of finding and screening tenants all over again. Plus, when you have a great tenant, you naturally want to keep them from moving out.

As a landlord, you want to minimize turnover and improve your tenant retention rate. A rental property management company can do that for you. Such companies usually have retention tactics that keep tenants happy and satisfied with their accommodations.

 

4. Set the Right Rental Rate

How do you know whether or not you’re charging the right amount of rent? Although researching the average cost of rent in your neighborhood is a good place to start, property management companies have more thorough ways of setting the right rental rate. They usually conduct in-depth market studies that allow you to charge the highest rate possible without sacrificing your vacancy rate.

 

5. Collect Rent With Ease

Does a property manager collect rent? Yes, property managers and companies do handle rent and all the issues related to it. Apart from setting the right rental rate, rental property management companies also collect rent on your behalf.

By making use of their services, you can save yourself the trouble of constantly following up with your tenant about the rent. Though, if you already got their help, to begin with, you probably already have a quality tenant that pays rent on time.

 

6. Cost-Effective Maintenance

How much does it cost to have a rental property managed? Although professionals do charge a fee (usually 8 to 12 percent of the monthly rent), the cost is certainly worth it when you factor in how much time and money you’ll save on other tasks. One such task is property maintenance.

As a landlord, you must protect your investment and keep your tenants satisfied by performing regular maintenance and repairs. This type of work, though, can cost a lot of money. Instead of hiring different vendors for each service, you can take advantage of a property management firm’s in-house maintenance staff. This is much cheaper compared to managing maintenance yourself.

 

7. Access to Trusted Vendors

Some property management services don’t have in-house maintenance personnel, but that doesn’t mean they’re any less good. Most companies have a wide network of tried-and-tested, licensed, and insured contractors. These preferred vendors can give you cheaper rates while simultaneously performing quality work. Who knows? You might even get discounts and freebies.

 

8. Deal With Legal Issues

property management companyThere are a lot of federal and state laws to keep in mind when you’re handling a rental property, such as Fair Housing laws and Landlord-Tenant laws. Such laws cover several areas of rental management, such as tenant screening, property conditions, lease agreements and addendums, lease terminations, evictions, and even rent collection. One misstep (or perceived misstep) can land you in hot water.

With the help of professional rental management services, though, you have someone who can navigate the rental process while avoiding legal problems. Hire a property management company to ensure compliance with federal, state, and local laws.

 

9. Help With Taxes

Tax season is always troublesome, but a property management company can make it more bearable. These companies have a better understanding of tax laws, which means they can tell you which expenses are tax-deductible and which ones aren’t. They can also help you with the necessary forms and supporting documents for those claims. Even the fees property management companies charge can be written off from your taxes.

 

10. Avoid Management Headaches

How do you manage a rental property? There are so many moving parts and tasks associated with rental property management that it can feel overwhelming. It can even take a toll on your physical and mental health. Everything from tenant screening and rent collection to dealing with legal issues and taxes can weigh on you.

A professional service, though, has the necessary resources and rental property management software to make the process smoother. Plus, you don’t need to hire employees or balance management tasks with your personal life. It’s also a good idea to turn to a property management company if you have a regular 9-to-5 job, live far away from your rental property, or are just not interested in property management.

 

11. Reap Personal Benefits

Let’s face it — rental property management demands your time, attention, and effort. If you have none of these to spare, then a rental management company is your only choice. With professional help, you can look forward to less stress and more freedom. You’re also free to invest in other properties that don’t necessarily need to be near one another. Considering all these benefits, the property management company fees will surely be worth it.

 

The Final Decision

Should I use a property management company for my rental? As a rental property owner, you want to make the most out of your investment. A good way to do that is to hire a rental property management company that can perform related tasks effectively and efficiently.

Start your search for the best property management companies in your area with the help of Rental Choice. Our online directory makes it easy for you to find and choose a company worth your time.

 

RELATED ARTICLES:


Managing Tenant And Owner Funds The Right Way

Posted on by melissa

Managing tenant and owner funds usually falls under the scope of responsibility for property managers. But, it is easy to make mistakes and become a victim of poor fund management.

 

Property Manager Responsibility: Handling Tenant and Owner Funds

Being a landlord is often a challenging position. There is so much more to it than simply buying a rental property. Landlords must list their property online, attend property showings, interview possible tenants, collect rent, respond to tenant concerns, and oversee maintenance, among many others. With so much on a landlord’s plate, it does not come as a surprise that property managers are in high demand.

Property managers basically make life easier for landlords. They assume all the responsibilities that a landlord normally would. This includes the above tasks and many more, including keeping up-to-date with landlord-tenant laws, preparing taxes, and coordinating with vendors. For a landlord with only one rental property, doing all of that may come easy. But, for those who own multiple properties, hiring a property manager is definitely the best option.

Managing tenant and owner funds is one of the major responsibilities of property managers or management companies. Landlords or owners typically entrust everything to their property manager, including their money. But, when money is involved, there is always room for mismanagement. Property managers would do well to use good standards and practices when it comes to funds management.

 

How to Manage Tenant Funds

While it is the owners who hire property managers, their money is not the only thing on the line. Tenants basically entrust their landlords and, by extension, their property managers, to take care of their security deposit. They also make rental payments, trusting that property managers will pass it on to the owner in good faith.

Here is how property managers should correctly handle tenant funds:

 

Security Deposits

The security deposit tenants pay to the property manager will be returned at the end of their lease. Property managers can also use the security deposit to cover any damages to the property after the lease expires. But, the way a property manager must handle the security deposit can vary depending on the state.

For instance, in Pennsylvania, the law on security deposits is pretty exhaustive. According to Pennsylvania law, the maximum security deposit for the first year must not go over two months’ worth of rent. The tenant is also entitled to any interest earned on the deposit after the second anniversary of paying it. Property managers must hold the security deposit in a separate bank account. Any security deposit amount over $100 must go into an escrow account in an institution regulated by the state or federal government.

In contrast, the law is not as strict in Texas. The only law that applies to tenants’ security deposits in the Lone Star State is that property managers must return the amount within 30 days. Here, there is no maximum amount permissible for either a security deposit or a pet deposit. There is also nothing in Texas law that requires a property manager to return any interest earned to the tenant.

When managing security deposits, it is wise to check state laws to avoid liability. Even if the law is silent on the matter, it is still a good idea to keep the security deposit in a separate, interest-bearing bank account. This way, property managers will not lose track of the money. At the same time, it can earn interest while it sits there throughout the duration of the lease.

 

Rent Payments

Similar to security deposits, there are also state laws that can apply to the management of rent payments. Again, such laws can vary from one state to another, so it is important for property managers to check their own state laws.

An example of a state law governing rent payments exists in Minnesota. According to Minnesota law, for any rent increases, a landlord must provide their tenant with a written notice for one rental period plus one day before the change is expected to take effect. In Arizona, on the other hand, no such requirement exists.

There are also laws that apply to late fees. In Maine, for instance, landlords cannot impose a late fee above 4% of the rent amount. Landlords must also notify their tenants of the late fee upon signing the rental agreement. In contrast, Tennessee law states that landlords can charge a late fee as high as 10% of the rent amount.

It should go without saying, of course, that the laws above also apply to property managers. After all, property managers are essentially doing the work of landlords.

 

How to Manage Owner Funds

Technically speaking, most of the money property managers handle belongs to the owner. While the security deposit will eventually make its way back to the tenant (within reason), rent payments are transferred to the owner. But, handling rent payments is not the only fund management property managers do for owners.

Here is how property managers can manage owner funds the right way.

 

Mailing Checks

Property managers receive rent payments from tenants, whether electronically or physically. They should then forward these payments to the owner or landlord. Property managers must follow the requirements stipulated in the management contract, including but not limited to:

  • On what day of each month will property managers mail checks to the owner?
  • Will the payments be made through physical checks, direct deposit, or some other method?

 

Providing Statements and Reports

Rental property owners have a right to know how their business is doing. The only way to quantify the success of a business is through financial reports. Thus, property managers should provide owners with monthly reports detailing the financial situation of the property. At the very least, owners must receive an income and expense report on a monthly basis.

Property managers should also consider sending these reports electronically. This adds a layer of convenience on the side of the owners.

 

Payments to Third Parties

Managing a rental property does not come free. Landlords will likely need third-party vendors, from maintenance companies to insurance providers. And then there are payments to other institutions such as homeowners associations and mortgage lenders. It is part of a property manager’s job to prepare and make these payments in a timely manner. Such expenses should also appear in the monthly financial statements.

 

Taxes

Not all property managers offer this service, but those who do should do so carefully. A property manager must provide owners with an IRS-1099 as well as a summary profit and loss statement. As an added bonus, they can also give advice on tax deductions. In doing so, owners will have an easier time preparing their taxes.

 

Tips for Handling Tenant and Owner Funds

All the strategies mentioned above will greatly help property managers with financial management. But, here are a couple of additional tips that will surely come in handy.

 

1. Maintain Accurate Records

The art of accounting is something that not all property managers have mastered. But, it is a necessary component for the success of the owner and tenant fund management.

Property managers must keep careful and accurate records of all their financial transactions. This includes invoices, receipts, and the like. The idea is to keep an audit trail that promotes transparency in the business relationship. This way, property managers can earn the trust of owners. In addition, keeping accurate records may also help when legal problems come up.

 

2. Use Software

Property managers are humans, too. And humans are nowhere near perfect. To help ease the burden of financial management while simultaneously allowing for accuracy, property managers should consider using software. There are many types of property management software, and they come at varying costs. There are also programs that solely focus on financial management.

 

The Key to Successful Fund Management

Handling tenant and owner funds is no easy feat, but property managers must do it anyway. To prevent mismanagement, property managers should keep these valuable insights in mind. As for landlords or owners, they should look for a property manager with experience in fund management.

But, finding the right property manager or management company can be a challenge without the right resources. Start your search today using Rental Choice’s online directory.

 

RELATED ARTICLES:


Everything You Should Know About Rent Collecting

Posted on by melissa

Many landlords struggle with one of the most important parts of rental management — rent collecting. Considering rent is how you make money, though, you should arm yourself with everything you need to know about how to collect rent.

 

A Landlord’s Guide to Rent Collecting

Managing a rental property is a difficult undertaking, requiring the completion of a multitude of tasks, often simultaneously. After finding and screening tenants to fill your vacancy, the next step is to sort out rent details so that you can draft your lease agreement.

But, there is more to rent collections than just setting a rental rate and waiting for the checks to come in. You must also set a due date for rent, know how to charge prorated rent, provide rent receipts, and decide whether you should accept partial rent payments. Let’s take a closer look at each of these areas of rent collecting below.

 

Setting a Deadline for Rent Payments

collecting rent onlineTo start, settle on a due date for rent payments. You can pick out any date you want, but it is generally recommended to set it on the first of every month. This way, your tenants can easily remember when rent is due.

But, you don’t even have to collect rent monthly. Depending on what you and your tenants have agreed upon, you can also decide to collect it on a different frequency. You can collect rent every week or every two weeks if that is what you prefer.

Some tenants find this type of setup easier because they can pay in smaller amounts instead of a lump sum. It is worth noting, though, that collecting rent this way can be more troublesome on your part as the landlord.

Is it illegal to ask for rent early? While you can certainly request that your tenant pay rent in advance, you can’t demand it. Rent is only legally due on the date specified in your lease agreement. As such, you can’t punish a tenant for refusing your request. Besides, just as you wouldn’t want your tenants to pay rent late, tenants also don’t want to scramble for rent money earlier than normal.

 

Moving In: All About Prorated Rent

The first month’s rent is usually the trickiest, especially if you will charge a prorated amount. Landlords usually prorate the rent amount if a tenant is set to move in or out of the property in the middle of the month.

It might seem inconvenient to take this extra step, so you may feel tempted to just wait until the start of the next month to have your tenant move in. But, the longer your rental remains vacant, the more money you lose. Therefore, you naturally want your tenant to move in as early as they can.

To calculate prorated rent, you first need to figure out how much you charge in rent on a daily basis. You can calculate this amount using the formula below:

Monthly Rent Amount / Number of Days in the Month = Daily Rent

Now that you have your daily rent amount, you can calculate the prorated rent amount using the formula below:

Daily Rent * Number of Days Your Tenant Lives in the Property = Prorated Rent

Keep in mind that you should only start collecting rent — including the first month’s rent — after both parties have signed the lease agreement. Make sure to wait until the check clears before you hand over the keys to your tenant.

 

Providing Rent Receipts

Is it necessary to provide a rent receipt to your tenant? The answer is yes. It is always a good idea to issue a receipt to acknowledge that you have, indeed, received the rent payment. Many states, such as New York and Maryland, even have laws requiring landlords to issue a rent receipt.

Beyond following the law, receipts can also help you in case a tenant sues you. Additionally, receipts are a good way for your tenants to track their rent payments. It serves as concrete proof that they have already settled rent for the month and can even aid them when they go through future tenant screenings.

 

Partial Rent Payments: Yes or No?

Should landlords accept partial rent? The decision is fully yours to make, except when you have started the eviction process. In that case, you should not accept partial rent or else you may need to start the eviction process all over again. Other than that, though, you are free to decide whether or not to allow partial payments.

Of course, there are drawbacks to agreeing to such a setup. Accepting partial rent might signal to your tenant that you’re not serious about collecting rent. And, from there, it’s a slippery slope.

To avoid coming off this way, you should clearly inform your tenant that you expect the rest of the rent to be paid. Set a due date for when you intend to collect the remaining balance. It’s wise to have both parties sign an Agreement for Delayed or Partial Rent Payments. In doing so, you can legally bind your tenant to pay the rest of the amount and protect yourself from liability as well.

 

Collecting Unpaid Rent from Previous Tenants

Can landlords sue their tenants for unpaid rent? This is a question landlords commonly ask. If a past tenant still has an outstanding rental balance with you, you can deduct it from their security deposit. If the security deposit fails to cover the full amount, you can file a lawsuit against the tenant. You can then subsequently take them to small claims court to force payment.

 

Best Ways to Collect Rent

1. Collect Rent Online

rent collectionWhen you ask, “What is the best way to collect rent?” Most people will say online.

Collecting rent online makes it easy and convenient for your tenants, especially when they’re on the go. Additionally, many online services also issue receipts.

There are tons of online rent payment websites, such as RentMerchant and RentMatic. You can also use a rental payment app or a general payment app such as Venmo or PayPal.

Some of these services charge a fee, while others have certain requirements that you must follow. When shopping around for the best app or service for you, make sure to consider all your needs as well as whether or not you’re willing to pay for them.

Keep in mind, though, that you must also accept another mode of payment to accommodate tenants who can’t pay rent online with bank accounts, apps, or other virtual means.

 

2. Collect Rent Personally

Another way to collect rent is to do it in person. You can go door-to-door come due day and personally receive rent payments. A benefit of this method is that you immediately get the money, especially if tenants pay you in cash. But, there are also pitfalls to collecting rent personally, such as having to coordinate schedules with your tenants. Plus, this rent collecting method can be quite bothersome if you live far from your rental property.

 

3. Collect Rent via Mail

Collecting rent by mail is still a viable method since you don’t have to do much but wait. However, a huge downside to this is that you might not receive rent payments when you expect to since delivery takes a while. It also allows for tenants to send only partial payments to buy themselves some time or to make the clichéd excuse that their payment “got lost in the mail.”

 

4. Drop-Off Rent Collection

You can also ask tenants to drop off their rent payments at a certain location. This could be your office or place of business. Don’t allow your tenants to drop off payments at your home address — unless you live in the same property as your tenant.

It’s also a good idea not to allow cash payments when utilizing this method since there is a risk of theft. Additionally, tenants might claim they dropped off the exact rent amount when, in fact, they only put in a partial amount and lied about it.

 

5. Hire a Rent Collection Service

If you don’t want to deal with the hassle of collecting rent yourself, you can always hire someone else to do it. You can use a rent collection service.

What is a rent collection service? It is a service, usually provided by a rent collection agency, involving the collection of rent payments and, sometimes, even chasing after a tenant. Rent collectors make it easy for landlords to obtain payments, though their services also cost money.

Do property managers collect rent? Yes, in addition to rent collecting, property managers perform a wide array of rental property management tasks. This includes marketing your property, screening tenants, managing maintenance and repairs, and even drafting your lease agreement. Hiring a property manager or management company is an all-in-one solution.

 

How to Encourage Tenants to Pay Rent on Time

Ideally, the tenant screening process would have filtered out any bad tenants and only left you with quality tenants who pay rent on time. Unfortunately, not all landlords can be as lucky, and some bad tenants might slip through the cracks. Here are three simple ways to encourage on-time rent payments:

  • Charge a Late Fee. Provided you follow state laws and include such a clause in your lease agreement, charging a fee when the rent becomes past due is a good way to get tenants to pay on time.
  • Offer Incentives. If you’re willing, you can also provide incentives. You can offer a discount on rent if tenants pay early or shave off a certain percentage if a tenant never misses a due date for a set number of months.
  • Make It Easy to Pay Rent. Sometimes, tenants fail to pay rent on time because the single payment method you accept just isn’t convenient. Consider using a few different methods to make it easier for your tenants.

 

Part of the Job

Rent collecting is often no easy feat, but you can make the process smoother by keeping these pointers in mind. After all, as a landlord, rent is the primary way you earn income through your rental property. Therefore, you should understand how to collect rent as much as you can.

No time or patience for rent collection? Find a property management company to do it for you. Begin your search for the best property management companies in your area using Rental Choice’s online directory.

 

RELATED ARTICLES:


Rental Inspection Checklist: Use This Before Leasing Or Renting A Property

Posted on by melissa

As a landlord, it is your job to conduct regular inspections of your rental property to ensure it remains in good condition. This is where a rental inspection checklist can come in handy.

 

What to Include in a Rental Inspection Checklist

What is a rental inspection checklist? Simply put, it is a checklist consisting of items in your rental property that you must inspect prior to tenant move-in or after move-out. You can also use the checklist as your guide when you conduct periodic inspections of your rental property.

It is important to have your landlord inspection checklist when you perform a rental walk-through with your tenant. What is a rental walk-through? A rental walk-through takes place prior to a tenant moving in and after a tenant moves out. It involves the thorough inspection of a rental property to assess its condition.

What do they check in a rental inspection? The contents of your rental inspection checklist depend on the specific items within your rental property. Each property is different, and one property does not necessarily have the same appliances as another. It is best to tailor your checklist according to your exact needs.

Generally, though, your inspection checklist should include all the fixtures on your property. That includes the walls, ceilings, doors, windows, floors, appliances, and electronics. It should also include plumbing and electrical fixtures.

 

Why Is Rental Inspection Necessary?

An apartment inspection is necessary because it helps the landlord and tenant identify any pre-existing damages to the rental property.

Once identified, the landlord cannot take these damages against the tenant once they move out. The landlord must also repair any major damages to the property and provide livable conditions for the tenant, as is their right to a habitable home.

 

Types of Rental Inspections

There are four different types of rental property inspections:

  • Move-In Inspection. This inspection takes place when a tenant first moves into your rental property. Have a move-in inspection checklist with you when performing this. After the inspection, your tenant should sign the form and include the date. It is also a good idea to document any damages with photos.
  • Move-Out Inspection. This inspection takes place when a tenant moves out of your rental property. It serves the purpose of checking the condition of the property, and any damages caused by the tenant should be covered by their security deposit.
  • Routine Inspection. This inspection takes place every so often to ensure your tenant is taking care of the property. Routine inspections will also help identify any damages that you, the landlord, should address before they worsen. It is good to have a rental inspection checklist around when performing this type of inspection.
  • Drive-by Inspection. This inspection is limited to the exterior of the property, which means you do not need to enter the unit itself.

 

Rental Inspection Checklist Template

Whether you need a rental walkthrough checklist, a quarterly rental inspection checklist, or a periodic inspection checklist for rental units, the template below can act as your guide:

Rental Inspection Checklist

Download Your Rental Property Inspection Checklist Here

 

Frequently Asked Questions on Rental Property Inspections

 

Who should perform rental property inspections?

It is entirely possible to perform the inspection yourself. With the help of a rental inspection checklist, the task should come easy enough. But, you also have the option of hiring a professional service.

Veteran rental property inspectors are more adept at examining properties and assessing their condition. They already know what to look for and how to identify problem areas. Plus, most services provide you with a detailed yet easily understandable report after the inspection, complete with photos.

If you employ a property management company or property manager, they usually conduct rental inspections, too. Be sure to check if such a service is included in their overall package, though.

 

How do I prepare for a rental inspection?

As a landlord, you must prepare a rental inspection checklist prior to an inspection to make sure you do not miss any crucial items. You can use the template above as a jumping-off point, though you will probably need to add or remove items that are unique to your property.

You should also coordinate schedules with your tenant so that you can lock down a date for the inspection. It is best to have your tenant present when you conduct the actual inspection so they can personally view the condition of the property and sign documentation. Having your tenant attend the inspection will also allow you to talk to them about any required repairs.

Tenants, on the other hand, can prepare for a rental inspection by assessing the property themselves first. It is a good idea to repair minor damages and clean the place up. Landlords will appreciate the effort and see that you are taking good care of their property.

 

How often can you inspect a rental property?

Ideally, you should inspect your rental property every three to six months. This will allow you to stay on top of any normal wear and tear as well as damages to your property. It is also a way you can ensure your tenant is remaining compliant with the terms of your lease.

 

Can a landlord do a surprise inspection?

Generally, you must give your tenant prior notice when you intend to perform an inspection. The exact notice period depends on laws specific to your state, so make sure to check with an attorney to stay out of legal trouble. It is also worth noting that most states do not allow surprise inspections.

 

How much notice is required for a rental inspection?

It depends on where you are located. For instance, in Washington, landlords must provide tenants at least two days written notice, except in the case of an emergency. Some states have specific notice periods, while others only say that the notice period should be reasonable. Check your state laws to know for sure.

 

Can a property manager take photos during an inspection?

Yes, a property manager or landlord can take photos of the property during an inspection. Photos act as supporting documentation of the property’s condition. But, it is best to keep any personally identifiable or valuable items out of photos. This includes people, pets, photographs, laptops, cellphones, jewelry, and the like.

 

Make Property Inspections a Breeze

Property inspections are an essential aspect of rental management, but it is not always easy. A lot of things can go wrong, like skipping over items and failing to document the process.  But, with a rental inspection checklist, you can ensure you cover everything and leave nothing to chance. Plus, you can have tenants sign the checklist or form as proof of their acknowledgment.

Tired of being a landlord? Leave the property management duties — including inspections — to an experienced professional. Look for the best property management company in your area with the help of Rental Choice.

 

RELATED ARTICLES:


20 Questions To Ask Property Managers Before Hiring Them

Posted on by melissa

Entrusting your rental space to a property manager is a major decision. However, this can be the help you need to get the best return on your investment. Before signing a contract, though, here are the most important questions to ask a property manager or a property management company.

 

Questions to Ask Property Managers: Establishing Qualifications

In this first section, we’ll dive into important questions to ask a property manager when it comes to establishing their qualifications.

 

1. Do You Have a License for Property Management?

When hiring a property manager, it’s important to check if he or she is licensed. A license means that the property manager has the skills and qualifications to perform essential duties.

In most states, property managers are required to have a real estate broker license. This is because they also perform real estate activities such as advertising, showing, and leasing properties, as well as collecting rent. Meanwhile, Washington, D.C., Montana, South Carolina, and South Dakota require a property management license.

Even if your state does not require a real estate or property management license, it’s better to choose someone who has the right credentials. Check if your property manager candidate has certifications from organizations like the National Property Management Association (NPMA) and the National Association of Residential Property Managers (NARPM). With these qualifications, you can be confident about the skills and abilities of your property manager.

 

2. How Many Years of Property Management Experience Do You Have?

A license alone is not proof of one’s capabilities. As such, ask your property manager candidates about their years of experience. If they have been in the business for many years, they should have a proven track record. If not, this could be a potential red flag for your candidate.

 

3. How Many People Work for Your Property Management Company?

It’s important to include this question to ask a property management company. If your property manager works for a large company, he or she will have more tools and resources to utilize. Since you will be entrusting your rental property, it’s also important to know the people who are working behind the scenes. Ask about the roles and infrastructure of your potential property management company.

 

4. How Many Rental Properties Do You Currently Manage?

Check if the size of the property management company is proportional to the number of properties currently being managed. If your property manager is handling a lot of properties, he or she may not have enough time to focus on your rental space. Thus, they may not be able to provide the quality of service that you expect and deserve. Choose a property manager that has enough time to handle even the minute details of your rental space.

 

5. Can You Provide References?

A reputable property management company will have no problem providing you with references. It should be easy for them to pull up records to showcase the quality work that they have done. If they refuse to provide references, it could indicate that previous clients were not happy with their property management services.

 

Essential Service Items for Your Property Management Questionnaire

When interviewing potential property managers, it helps to have a list of questions pertaining to their services and procedures. You can refer to this questionnaire to ensure that all the important bases are covered. Here are service-related questions to ask property manager candidates.

 

6. What Property Management Services Do You Offer?

questions to ask a property managerNot all property management companies offer the same services. You need to find the one that can provide the services that your rental property needs.

For instance, some property owners want someone to take complete control of their rental space while there are some who only want help with certain tasks such as collecting rent or managing finances.

From the start, you should know what services your property manager is capable of offering. This question is a good way to set expectations. That way, you won’t be wasting time and money in the future because you need additional services that the property manager cannot provide.

 

7. What Are Your Property Management Fees?

How much do property management companies charge to manage HOA or rental spaces? Some property managers charge a fixed fee while others charge a percentage of your monthly revenues. For the latter, the standard is about 7 to 12% of revenues.

Be cautious when dealing with property managers who charge higher than that. You need to make sure the property management fee is reasonable based on the services provided.

Asking about property management fees outright also ensures that you’re not surprised by hidden charges later. Some property managers may have a low, fixed fee but will charge extra for evictions, viewings, court cases, maintenance, tenant finder fee, and other miscellaneous fees.

 

8. How Do You Calculate Rent?

A property manager should have a scientific or mathematical basis for setting rent. Though experience is important, they shouldn’t merely rely on instinct or a gut feeling.

Choose a property manager who uses comparative market analysis when calculating rent for your property. They should be able to assess your rental property, real estate market trends, and other information to come up with a competitive and reasonable rental rate.

 

9. How Do You Collect Rent?

Late or missed rental payments can have significant consequences for your finances. Property owners rely on rental income to pay for operating expenses, management fees, taxes, insurance, and so on. As such, it’s important for your property manager to have an effective and reliable method for collecting rent each and every month.

You should also ask about which payment channels the property manager uses. Cash and check payments are not only outdated and inefficient, but they’re also more susceptible to potential theft or fraud. Online payments may be more reliable and it’s also more convenient for both you and your tenants.

 

10. What Is Your Screening Process for Tenants?

Owners will have to rely on their property manager to find the most qualified tenants for their rental space. A property manager should know how to choose tenants that will pay rent on time. This means conducting a comprehensive background check on potential tenants.

Looking at their employment status, credit report, rental history, previous landlord references can tell you a lot about a tenant. Check if your property manager can do this. If not, will they hire someone to perform the background check, and who will pay for the background check?

 

11. What Is Your Marketing Strategy for My Rental Property?

Marketing is one of the most important duties of a property manager. Does your property manager candidate have a strong marketing plan that will allow them to find and advertise to potential tenants?

Given the massive Internet boom, make sure to choose a property manager that can leverage digital marketing strategies as well. For example, social media marketing for real estate has proven to be very effective and lucrative.

 

12. Who Performs Maintenance and Repairs for My Rental Property?

hiring a property managerHow will the property manager handle maintenance and repairs? Will he do it himself or hire a handyman?

If your property manager relies on contractors, you also need to know who these contractors are. This is to make sure that they are capable and charge reasonable prices.

You need to make sure that the property manager’s maintenance approach aligns with your own. Maybe you prefer a property manager who can perform in-house maintenance work because it will come out cheaper. Or, do you want the best possible maintenance for your rental property? Then, choose a property manager that has an extensive network of maintenance professionals.

 

13. How Often Do You Perform Property Walkthroughs?

Managers will have different schedules for property walkthroughs. Some may do it weekly or monthly while for others, it may be quarterly.

Ideally, you want someone who can perform regular walkthroughs. That way, they’ll be able to catch and address minor issues before they lead to property damage, which is significantly more expensive to mend. It may be worthwhile to pay your property manager to conduct more walkthroughs because you can save more money in the long term.

 

14. Do You Keep Proper Documentation?

Choose a property manager that keeps proper documentation on all activities related to your rental space. For example, a Move In and Move Out Checklist (with before and after photos) can help you keep track of your rental property’s condition in between tenants.

A property manager should also be able to keep important documents such as lease agreements, lease addendums, maintenance reports, inspection checklists and pull them up quickly when they are needed.

 

15. How Often Will You Update Me About My Rental Property?

Even though owners surrender property management duties to their managers, they still expect to receive updates about their rental property. Choose a property manager that can meet your expectations when it comes to property updates.

If you need weekly updates but the property manager cannot provide them, it could lead to misunderstandings and conflicts down the line. Even if you don’t agree on a specific number, a property manager should make the effort to update you from time to time. If not, it could be a sign that things are not going well.

 

16. What Is Your Preferred Method of Communication?

You may prefer to communicate with your property manager by phone, but does your property manager prefer the same? He or she may prefer text or email given the time constraints. No matter what, it’s important to establish a method of communication so that there are no surprises or disappointments down the line.

 

Additional Questions to Ask Property Managers

In this final section, we have interview questions for condo property managers that are just as important to ask. Answers to these questions can provide property owners with the assurance they need in case something bad happens.

 

17. Do You Have a Cancellation Policy?

Do not sign a property management contract that does not have a cancellation policy. Make sure that there are provisions for ending the contract in cases of negligence or failure to provide the agreed-upon services.

Likewise, the property management company should have an option to end the contract for specified reasons. A cancellation policy will likely include termination fees and the amount of notice required for terminating the management contract.

 

18. Do You Have Property Management Insurance?

questions to ask a property management companyLook for a property management company that has adequate insurance coverage. This is to protect your rental property from potential issues or liabilities.

Ideally, your property management company should have as much insurance coverage as possible but a $1 million general liability policy will be a good starting point. Make sure to ask about their insurance limits, as well as terms and conditions for their insurance policies.

 

19. Do You Provide Legal Assistance?

In case you are sued by disgruntled former tenants, can your property management company offer you legal assistance? Some property managers can advise you on tenancy laws while others may even represent you in court cases. It’s good to ask about a property management company’s legal history and success rate.

 

20. Are You Ready to Hire a Property Manager?

Preparing for a property management interview questions and answers is one thing, but hiring a property manager is a whole other matter that you need to prepare for. Before entertaining property management candidates, think about the specific needs of your rental space.

Come up with ideal answers that you want to hear from your interviewees. When you hear answers that match your expectations, you’ll know that you’ve found the right property manager for your rental property. Be prepared because the search process may take a long time, but it’s always better to be thorough!

 

Now that you know the important questions to ask property managers, it’s time to begin the search. If you don’t want to be overwhelmed by all the choices, feel free to browse the Rental Choice online directory to find the best property management company in your area.

 

RELATED ARTICLES:


Broker, Owner, And Landlord Responsibilities

Posted on by melissa

What does a real estate broker do? Do they share the same responsibilities as a property owner or landlord? Whichever role you assume, you must understand your function and the duties you are obliged to fulfill.

 

What Does a Real Estate Broker Do? Answered!

There are plenty of lucrative opportunities in real estate, which is why many investors choose to spend their money on properties. But, real estate sales and management are not as easy as they seem on the outside. In truth, it involves a number of parties — from real estate brokers to landlords and property owners. To stay on the right side of the law, you must attain a deeper understanding of the differing responsibilities of these three occupations.

 

All About Real Estate Brokers

What is a broker? How does a broker differ from a real estate agent or realtor? What are the real estate broker duties and responsibilities? This section covers all the basics concerning real estate brokers.

 

What Is a Real Estate Broker?

A real estate broker is someone who coordinates, mobilizes, and negotiates real estate transactions. Becoming a real estate broker requires a license.

What does a broker do? A real estate broker can work as a traditional agent with duties such as marketing and showing properties, negotiating prices, and overseeing property sales transactions. Additionally, brokers can also work as designated brokers, which are brokers who own or manage a real estate firm.

 

Real Estate Broker vs Agent vs Realtor

Some people — even those who work in the industry — mistakenly use these three terms interchangeably. While there is some overlap when it comes to their duties, real estate brokers, agents, and realtors are not one and the same.

What does a real estate agent do? A real estate agent is simply someone who holds a license to practice real estate sales. They are, in essence, salespeople. The requirements to become a real estate agent can vary from state to state. For instance, in California, those who wish to apply for a real estate license must be at least 18 years of age and must have finished three college-level real estate courses.

What is the difference between a real estate agent and a real estate broker? Compared to a real estate agent, a real estate broker has typically had more training. A broker is like an agent, but with added education and an accompanying real estate broker license.

Can you practice real estate without a broker? The short answer is no, though specific regulations can vary depending on the state. Generally, though, unlike agents, real estate brokers can work independently. Brokers can also start their own real estate firm and hire agents to work under them.

What is a realtor? Is there a difference between a real estate agent and a realtor? A realtor is simply a real estate broker or agent who belongs to an organization known as the National Association of Realtors (NAR). Realtors pay annual dues to NAR and must abide by their strict code of ethics. Therefore, all realtors are either an agent or A broker, but not all agents and brokers are realtors.

 

Real Estate Broker Responsibilities

You know what a real estate broker is and how the position differs from agents and realtors. Now, it is time to go into a broker’s responsibilities. What does a real estate broker do?

Real estate brokers who are working for property sellers usually take on the following responsibilities:

  • Market the property through various mediums
  • what is a real estate brokerList homes for sale on the local Multiple Listing Service (MLS)
  • Share the listings with other MLS brokers
  • Help the seller prepare their property for listings and showings
  • Oversee property showings
  • Report property showing results to the seller
  • Manage and also present offers to the seller for review and deliberation
  • Negotiate offers
  • Attempt to close deals
  • Carry out a purchase contract with a buyer
  • Facilitate the transaction process, including submitting and explaining documents, disclosures, and other items
  • Assist in closing
  • Help with seller’s move-out of the property

Real estate brokers who are working with property buyers usually take on the following responsibilities:

  • Assist with the property search process while taking into account the buyer’s location choice, price range, and other criteria
  • Schedule visits and also accompany the buyer to property showings
  • Help the buyer come up with an initial offer and purchase agreement
  • Negotiate with the seller (or seller’s agent/broker) on the buyer’s behalf
  • Facilitate the transaction process, including submitting and explaining documents, disclosures, and other items
  • Arrange property inspections
  • Negotiate repairs
  • Assist in closing

Real estate brokers can also choose to become designated brokers, otherwise known as supervising or managing brokers. In that case, their responsibilities include:

  • Recruit and hire agents
  • Negotiate agent contracts
  • Supervise as well as instruct all agents working under them
  • Oversee operations
  • Ensure all agents receive continued licensing
  • Provide further training for agents
  • Take responsibility for their agents’ performance, actions, and legal compliance

 

All About Property Owners

After purchasing a property, the owner can choose to do whatever they please with it. They can opt to live in the home or rent it out for extra income. In the case of the latter, what duties must a property owner fulfill? This section covers property owners and their responsibilities.

 

What Is a Property Owner?

A property owner is exactly as it sounds — it is someone who owns a property. These individuals go through the real estate transaction process, usually with the help of a broker or agent, to become property owners. Additionally, a property owner can own a residential or commercial property, which they can open up for rent.

 

Property Owners Responsibilities

Many property owners hire a manager or management company to handle their rental property. While property managers or companies do most of the work, there are still some responsibilities that a property owner must not skip over, such as:

  • Registrations. Depending on the location, the local government may require owners to register their rental property. While owners can ask a property manager for advice, they must not rely solely on their managers to complete this critical step.
  • real estate broker responsibilitiesTenant Screening Instructions. Most property owners want to be removed from the tenant screening process and only be notified after a tenant has been approved. But, owners must not completely disassociate themselves from the process. Property owners must provide their manager with directions — such as any pet or vehicle restrictions — when choosing a tenant. Moreover, owners must not discriminate against any class, as that would be a violation of the Fair Housing Act.
  • Maintenance and Repairs. Property managers usually take care of maintenance and repairs. But, if something requires the approval of the owner, property owners must provide or deny approval immediately. This will prevent any maintenance or repair issues from worsening.
  • Property Improvements. Owners must have a separate fund for property improvements, such as repaintings, replacements of items or fixtures, and upgrades. This will help keep the property in good condition and preserve its value.
  • Mortgage, Insurance, and Taxes. There are property management companies that offer this type of service, but it usually costs extra. Even if property owners delegate this responsibility to their manager or company, they must ensure proper completion and settlement. After all, the owners are the ones who will suffer should any of these payments be missed.
  • Legal Fees. Property owners who find themselves in legal proceedings (like an eviction) are responsible for paying the fees involved.

 

All About Landlords

Is a landlord the same as a property owner? What responsibilities does a landlord have? This section covers landlords and also the duties they must fulfill.

 

What Is a Landlord?

A landlord is someone who owns and rents out a property. Typically, landlords are also property owners who have chosen to take an active role in managing their rental property instead of hiring a manager or management company.

 

Landlord Responsibilities

A landlord has the following roles and responsibilities:

  • Mortgage Payments. Missing mortgage payments can have a negative influence on a landlord’s credit score. Worse yet, it can also lead to a lender foreclosing on the property.
  • Taxes. All property owners and landlords must deal with taxes on an annual basis. Therefore, it is important that these owners familiarize themselves with the tax process, including what counts as a deductible.
  • Insurance. Landlords must make sure they have all the necessary insurance policies. Homeowner’s insurance is a given, but there are also other types of essential insurance. This includes an umbrella policy as well as coverage for fire, flood, natural disasters, and even lawsuits.
  • Safety Codes. Landlords must also stay up-to-date on and ensure compliance with all federal, state, and local safety codes. Failure to comply can lead to legal issues.
  • Utilities. If utilities are included in rent, landlords must also religiously pay utility bills and keep tenants happy. When landlords fail to pay utilities, they run the risk of violating their lease agreement and having tenants take legal action against them.
  • Maintenance and Repairs. Landlords must also perform preventive maintenance as well as routine maintenance on their rental property. This includes regular exterminations, ensuring all smoke and carbon monoxide detectors are working, cleaning all common areas, and the like. After all, tenants have a right to a habitable home.

 

A Helpful Guide

Real estate brokers, property owners, and landlords all have different roles and responsibilities. If you are looking to go into one of these occupations, it is imperative to first gain an understanding of each one. What does a real estate broker do? And how does a property owner differ from a landlord? Hopefully, this guide has answered your most critical questions.

Property owners are often too busy to perform landlord duties. If you need help managing your rental property, look for a property management company with the help of our online directory. Rental Choice allows you to search for the best company in your area.

 

RELATED ARTICLES:

 


How To Analyze A Property Management Contract

Posted on by melissa

It is crucial that landlords carefully review their property management contracts before signing them. In doing so, they can make sure they are not agreeing to unreasonable terms or hidden costs.

 

Understanding the Parts of a Property Management Contract

For a lot of property management companies, the contract simply represents another deal. It contains standard information that they would normally include in all of their agreements. But, for landlords, the property management contract is far more important. The contract outlines all of the details of the agreement between the two parties, including what the company is expected to do for the landlord.

It is important that all landlords understand what their property management contracts are saying. Apart from the basics, there are also clauses that may or may not hurt the landlord in the long run.

Here are the parts of a standard property management contract and what they mean.

 

1. Scope of Work

A property management agreement must detail, in clear terms, the scope of work. This should dictate what the property management company is specifically responsible for. The scope of work should, at the very least, include the following:

  • Services the property management company must provide each month
  • Details of the screening process, including how the company approves tenants (if the scope of work includes tenant screening)
  • Responsibility to collect rent as well as overdue rent
  • Maintenance and repair responsibilities
  • How maintenance and repairs will receive approval and funding
  • Reports the company must send to the property owner as well as how often they must be sent

Obviously, the more responsibilities a property management company has, the higher the fees. The opposite is also true. The scope of work will generally define how much a property owner needs to pay.

 

2. Owner Responsibilities

Even though property owners outsource most of their duties to a management company, there are still some responsibilities left for them to fulfill. The contract will also typically state what these responsibilities are.

A common obligation of the property owner is to create and maintain a reserve fund. Owners must deposit a certain amount of money into a separate bank account, which the property management company will use to fund maintenance and repairs. The reserve fund can also normally be used for emergencies.

Another common obligation of the property owner is to buy and maintain proper insurance. Owners should not expect the company to do this for them. It is generally the owner’s responsibility to pay for insurance, though owners can receive guidance from their company. The contract will detail the types of insurance required as well as the amount of coverage necessary.

Apart from what the owner must do, the contract may also cover what the owner is prohibited from doing. Common examples include finding tenants (if the company is responsible for tenant placement) and entering the property without notifying the property manager and tenant.

 

3. Fee Structure

Property management contracts are never complete without describing the fee structure. The contract should detail the different property management fees the owner must pay. This includes the monthly management fee as well as any other fees the company charges on the side. The agreement must also include cost estimates for man-hours, benefits, and the like.

Monthly management fees typically come in one of two forms. The first is fixed-rate or flat fee property management. This is when the company charges the owner a flat rate every month. The rate will usually depend on the size and type of the property as well as the nature of services provided.

The second is fees collected as a percentage of rent. This is when the company collects a percentage of the monthly rent as their management fee. The percentage can vary from one company to another, though the general range is between 8% and 12%. Landlords should make sure that the percentage is based on rent collected instead of rent due. Otherwise, they will be paying the company a fee even when they fail to collect any rent from the tenant.

 

4. Duration, Renewal, and Termination

The terms of a property management contract should indicate the duration of the agreement. It should have a beginning and an end date. There must also be renewal provisions, which should tell the owner how they can renew the contract if they want to.

Keep in mind that some contracts do contain an auto-renewal clause. This means that the agreement will automatically renew for another set number of years if the property owner does not cancel the contract within the required time period.

Speaking of cancellations, the contract must also indicate how each party can terminate the contract. This includes any terminations made early (i.e. before the contract expiry). Termination clauses should include the following:

  • Notice to Terminate. How much notice must each party provide the other before terminating the contract? Typically, this plays between 30 and 90 days.
  • Reason to Terminate. Owners should make sure to enter a contract that does not require them to provide a cause to terminate the contract early.
  • Early Termination Fee. Generally, a company will charge the owner a fee if the latter opts to end the contract before its expiry. This fee can vary from one company to another. Some companies charge a fixed termination fee. Meanwhile, others will charge the owner the total cost of the monthly management fee for the remaining months in the contract.
  • Obligations After Termination. The contract should outline the list of obligations the property management company must perform and how long they have to complete each obligation upon contract termination. This includes turning over all related bank accounts to the owner and sending the owner the original copies of all tenants’ leases.

 

5. Liability and Indemnification

All contracts will have a section that addresses what the management company can and cannot be liable for. The objective behind this is to set limits and eliminate misunderstandings in the long term. Typically, a contract will be broader and more comprehensive in terms of what the property management company requires the property owner to indemnify them from.

 

What Does Indemnification Mean?

Indemnify means to compensate for a loss or damage or to provide security for financial reimbursement to an individual in case of any particular loss incurred by the person. Indemnification is essential in contracts because it is one of the fundamental legal theories that protect the parties.

A comprehensive example of a property management contract indemnification clause is outlined below. Please note that it is not wise to apply this direct text to your particular agreement. It only serves as an example of what types of elements appear in an indemnification clause.

 

Example of an Indemnification Clause

“Liability and Indemnification:

1. The broker is not responsible or liable in any manner for personal injury to any person or for loss or damage to any person’s real or personal property resulting from any act or omission not caused by Broker’s negligence, including but not limited to injuries or damages caused by:

    1. Other brokers, their associates, inspectors, appraisers, and contractors who are authorized to access the property;
    2. Acts of third parties (for example, vandalism, theft, or other criminal acts);
    3. Freezing or leaking water pipes;
    4. A dangerous condition or environmental condition on the property; or
    5. The property’s non-compliance with any law or ordinance.

2. The broker is not responsible or liable in any manner for:

  • Any late fees or other charges Owner incurs to any creditor caused by late or insufficient payments by any tenant in the Property; or
    1. Damages to Owner caused by a tenant’s breach of the lease.

3. Owner agrees to protect, defend, indemnify, and hold Broker harmless from any damage, costs, attorney’s fees, and expenses that:

  • Are caused by Owner, negligently or otherwise;
    1. Arise from Owners failure to disclose any material or relevant information about the Property;
    2. Are caused by the Owner giving incorrect information to any person; or
    3. Are related to the management of the property and are not caused by Broker, negligently or otherwise.

4. Owner is responsible and liable for all contracts and obligations related to the Property (for example, maintenance, service, repair and utility agreements) entered into before or during this Agreement by Owner or by Broker under Broker’s authority under this agreement. The owner agrees to hold Broker harmless from all claims related to any such contracts.”

Reasonable Care Clause

Even though the contract typically holds the property management company liable for its acts of negligence, they are not liable for the negligence acts of those whom they hire to work on their behalf. While it would be unreasonable to expect them to be responsible for all the actions of the third parties they hire, they need to at least be responsible if they hire someone with a history of bad work and should have performed more due diligence to disqualify the unqualified candidate.

To protect the property owner, it is a good idea to add a clause requiring “reasonable care,” such as:

  • “Agent may perform any of its duties through Owner’s or Agent’s attorneys, Agents, or employees and shall not be responsible for their acts, defaults or negligence if reasonable care has been exercised in their appointment and retention.”

 

Property Management Contract Boilerplate Items

The following are common clauses owners will find at the end of many contracts. Owners should understand what these clauses mean so that they can reference them later in the event of a dispute.

 

1. Entire Agreement

An Entire Agreement provision establishes that, regardless of what the owner talked about with the management company beforehand, this contract is the final version of the agreement and supersedes all prior written and oral proposals. A simple way to remember this is that the contract is confined to the four corners of the document.

 

2. Modification

The contract should clearly define how modifications work at the very start of the agreement. The modification clause will typically state that neither party can alter the contract unless both provide a written agreement amending it.

 

3. Assignments

Assignments are a grey area that many individuals do not understand. This is when a company reserves the power to transfer the contract to another company without the owner’s permission. It is always best to make sure the owner has a say before the company transfers the contract to another firm. Owners may also negotiate to remove assignments from the contractual agreement.

 

4. Timing

It is imperative to specify particular dates and times. It is also wise to write the date in both letters and numbers to avoid any misunderstandings in the future. Many jurisdictions have a statute of limitations, which defines how long an individual has to bring a court case. Make sure to have clear dates on your contracts to protect you from unnecessary lawsuits.

You also need to have clauses about timing in terms of the scope of your property management agreement. The following serves as an example:

  • “The property management company must provide the property owner with at least 30 days’ notice if they would like to terminate this Contractual Agreement…”

 

5. Governing Law; Venue

This clause determines which states’ laws will govern the interpretation of the contract and may also specify the country in which all disputes should be handled. Specifying the country and state is important since the laws vary depending on where the case is heard.

 

6. Severability

Severability is important to understand. At times, a certain clause of a contract can be invalid, but the rest of the contract can remain intact. Severability enables a clause or certain clauses of a contract to remain valid and enforceable even if a specific clause is determined to be unenforceable. This helps to promote efficiency in avoiding canceling entire contracts if only one clause needs to be canceled.

 

Final Thoughts

Knowledge of the parts and functions of a property management contract is critical to every rental property owner. Familiarity with the contract not only gives them the ability to negotiate better but can also protect their interests.

Many owners find it hard to manage their rental property alone. Find the best property management company today with the help of Rental Choice’s online directory.

 

RELATED ARTICLES:


Property Management Fees: What Are Property Owners Paying?

Posted on by melissa

One of the things that hold most landlords back from hiring a property manager is the perceived cost of their service. But, how much exactly are property management fees?

What You Need to Know About Property Management Fees

Plenty of landlords can handle their rental properties fine on their own. This is usually the case for landlords who only manage one or two units. But, for those with a lot of units on their hands, it makes sense to hire a professional to do the job in their place.

A property management company performs all the tasks that landlords would typically do. This includes finding and screening tenants, collecting rent, overseeing maintenance and repairs, responding to tenant complaints, conducting property inspections, and even processing evictions. Of course, their services do not come free. But, that is not to say that property management fees are unaffordable.

Cost is a common reason why a lot of landlords refuse to hire property management companies. And worrying about the cost is only normal. Sooner or later, though, many crumble under the weight and pressure of their responsibilities. It does not take long before they become open to the idea of outsourcing their duties to a property management company.

But, how much do rental management companies charge anyway?

 

What Factors Affect Rental Property Management Fees?

Not all property management companies are made equal. How much does it cost to hire a property manager? It depends on a number of factors.

 

1. Type

When people hear about property management, they usually think about apartments and vacation homes. But, property management is not just about residential units. Property managers can also manage other types of properties, such as commercial properties and mixed-use properties. They can even manage properties with no tenants.

The type of property an owner has can influence how much they pay. Some companies might charge higher commercial property management fees because there is a lot more that goes into the work.

 

2. Size

Smaller rental properties typically don’t need a lot of maintenance and repairs, so they may command a lower price compared to larger properties. In other cases, though, a property management company will charge the same rate no matter the size.

 

3. Location

The location of the rental property has a significant influence on the price of property management. Properties located in more affluent areas with higher rent tend to be more expensive to manage.

 

4. Condition

Maintenance is a critical part of property management. When a property is old, it tends to have more maintenance issues. As such, older properties may cost more to manage compared to newly built or newly renovated properties.

 

5. Services

Lastly, the nature and extent of services a property management company provides will greatly affect the final cost. The more services a property management company provides, the higher the price. In contrast, if an owner only wants the company to find tenants and collect rent, that may not cost as much.

 

Types of Property Management Fee Structure

Property management companies commonly use one of two types of fee structures to charge their monthly management fee.

 

Flat Rate

Flat fee property management is when a company charges a fixed monthly rate for its services. This rate, though, can still change depending on the type and size of the property as well as the services included. For single-family properties, owners should expect a flat rate of around $100 a month.

 

Percentage of Rent

Instead of charging a fixed rate, most companies charge a percentage of the monthly rent for their services. Again, this percentage can vary from one company to another. Typically, though, a property with 10 units or more tends to command a lower rate because of the higher total rent. In comparison, a company might use a higher percentage for a property with only one or two units because of the opposite reason.

What is the average property management fee for rental properties? Using the percentage of rent structure, owners should expect to pay between 8% to 12% of the gross monthly rent.

 

Property Management Fee Calculation: Rent Collected vs. Rent Due

It is important to understand the difference between the rent collected and rent due. If a contract stipulates that the property management company will collect their fee from the rent due, then it means owners will need to pay the fee regardless of whether or not the tenant pays their rent.

As such, owners should make sure their management contract states that the fee should come from rent collected. This way, the owner will only need to pay the company if they actually collect rent successfully.

 

Other Property Management Company Fees to Know About

Aside from the monthly management fee, there are several other fees that companies may charge. It is important that owners ask for the complete property management price list to find out if there are any hidden costs the company failed to disclose at the initial meeting. Keep in mind that not all companies charge the fees below.

 

1. Initial Setup Fee

The overall rental property management cost typically does not include the initial setup fee. This one-time fee covers the expenses associated with setting up an owner’s first account with the property management firm, including but not limited to:

  • Opening a new bank account
  • Inspecting the property to assess its condition
  • Sending written notifications to tenants informing them of new management
  • Assisting with any required licenses

 

2. Vacancy Fee

Property management companies also manage vacant properties. If a property is vacant, there is usually a fixed vacancy fee on top of the monthly management fee. This fee covers additional work, ranging from performing weekly property inspections and repairing damages. Vacant properties usually need more attention as they attract squatters and trespassers.

 

3. Tenant Placement Fee

Also known as a leasing fee, the tenant placement fee is what it costs to find tenants to lease the property. This may come as a flat rate or as a percentage of the rent. Tenant placement fees usually cover the costs of the following:

  • Advertising the property
  • Screening tenants
  • Showing the property
  • Preparing the lease agreement
  • Performing move-in inspections

In some cases, a property management company will refund this fee if the tenant they find gets evicted or ends their lease early. This fee can cost up to one month’s rent, though every company is different.

 

4. Inspection Fee

A property manager will normally conduct routine inspections, even with a tenant in place, to make sure the property remains in good condition. Doing regular inspections allows them to locate small problems and repair them before they worsen.

While some companies include this as part of their monthly management fee, others will charge it separately. Those that do charge it separately may charge a lower monthly management fee. They may charge a fee for every inspection or a one-time fee covering an entire year’s worth of inspections.

 

5. Maintenance Fee

As for maintenance, it usually falls under the umbrella of the monthly management fee. However, some services may cost extra. Owners should carefully read through the contract to understand what is included in the monthly fee and what is not. Typically, the contract will set a limit for how much the company can charge extra in maintenance.

Property management companies may also keep a separate bank account containing a reserve fund. This fund is used for necessary repairs to the property. The money, though, will come from the landlord’s pocket. Depending on the agreement, the landlord may authorize each withdrawal that comes through the account or allow their manager control over it.

 

6. Late Payment Fee

When tenants do not pay their rent on time, a late fee usually applies. Some property management companies, though, will also take a percentage of the collected late fee. This percentage varies, but owners should expect a range of 25% to 50%.

 

7. Lease Renewal Fee

The lease renewal fee covers the expenses associated with renewing a tenant’s lease. This includes any adjustments made to the lease as well as an analysis of the market to allow for any rent increases. Companies may charge a flat rate or a percentage, though it usually does not go over $200.

 

8. Eviction Fee

If a landlord wants their property management company to handle evictions, too, then they will usually need to pay an eviction fee. Processing evictions is no easy feat, especially in some states (such as Vermont). But, an eviction is better than having to put up with a tenant who does not pay rent or constantly violates the terms of their lease. In addition to court costs, companies will normally charge between $200 to $500 to evict a tenant.

 

9. Early Termination Fee

Sometimes, the partnership between a landlord and their management company will not work out. If a landlord wants to terminate their management contract before its expiry, it usually comes with an early termination fee. Some companies charge only a single month’s management fees to terminate the contract early. Others will ask the landlord to pay the equivalent of the contract’s remaining months’ fees. In worst-case scenarios, a company may even sue.

 

Educate Yourself

It is imperative that landlords understand the different property management fees they may have to pay when they hire a property management company. This way, they will not be blindsided by hidden costs and charges.

Shop around for the best property management companies with the help of Rental Choice. Our online directory allows you to search for property management companies in your area.

 

RELATED ARTICLES:


A Complete Guide to Hiring Property Management Services

Posted on by melissa

Is a property management company worth it? Here’s a complete guide to hiring property management services to determine if it’s the right move for your rental property.

 

6 Compelling Reasons for Hiring Property Management Services

Not all landlords or owners need to hire a professional service to take care of their rental property. However, given the many advantages of hiring a rental management company, it can provide you with a better return on investment (ROI). If you’re still on the fence, here are some compelling reasons for hiring property management services.

 

1. You Have a Vast Rental Property Portfolio

Managing a single rental property is already hard enough, what more if you had several rental properties? A residential property manager can ensure that each of your rental spaces receives the proper care and attention that it needs.

 

2. Your Rental Property Is Underperforming

It takes time to learn the ropes of rental property management. If you’re a first-time investor, you may have difficulty getting the results that you want. A property manager can help you determine the best rental rates and ensure that your units are fully occupied. As a result, you can generate more passive income and better ROIs.

 

3. You Live Too Far from Your Rental Property

It’s hard to be a good landlord if you live far away from your rental property. Driving back and forth each day can be very inconvenient. It also makes it hard for you to respond to emergencies or urgent situations. If you want to become more responsive to the needs of your tenants, consider hiring a professional for apartment management services.

 

4. You Still Have a Full-Time Job

For property owners who still have full-time jobs, it’s virtually impossible to also become a landlord. Landlord duties and responsibilities are never-ending and you’ll have to deal with tenant concerns or complaints 24/7. If you do not have the time or energy to spare, it’s much better to have a rental manager take care of your investment property.

 

5. You Lack Property Management Expertise

There’s more to being a landlord than collecting rent. You need to have a specific set of skills to be able to market your rental space properly, manage finances accurately, and understand the technical aspects of maintenance, among many others. Rental property management companies can take care of everything and thus, relieve you of the burden of having to learn all these tasks on your own.

 

6. You Don’t Have a Network of Professionals to Call On

One advantage of hiring a property management company is that they already come with a vast network of professional plumbers, electricians, carpenters, painters, and contractors. If there’s an issue with your rental property, all they need to do is get on the phone with their go-to guy. This is much more convenient and efficient than you, personally, having to find a handyman. It’ll take a lot of time to vet their qualifications, as well as ensure they are fully bonded and licensed,

 

What Does a Property Management Company Do?

Now that we’ve established a need for property management services, it’s time to clarify exactly do these property management companies do? If you’re wondering what’s included in property management services, here’s a rundown of the essentials.

 

  • rental management companySetting and Collecting Rent

Rent is one of the most important aspects of property management. A property manager must be able to calculate a competitive and reasonable rental rate for your property. They also handle rent collection each month to ensure a steady flow of income.

 

  • Tenant Screening

Tenant screening is another core property management service. A property manager is tasked with finding the most qualified tenants for your rental space. They should know how to perform a thorough background check to see if a prospective tenant can pay rent on time as well as take good care of your property.

 

  • Financial Management

For many landlords, financial management is the deciding factor in hiring property management services. Without an adequate financial background, it can be difficult to create budgets, track expenses, maintain financial records, calculate tax deductions, and handle security deposits. Owners can rest easy with a manager handling the financial aspects of property management.

 

  • Rental Property Marketing

Marketing is included in services that you can expect from your property management company. They will create a solid marketing plan to attract prospective tenants to your rental property. This includes offline marketing strategies, such as print ads and fliers, as well as digital marketing strategies — which include online listings, social media advertising, and content creation.

 

  • Maintenance and Repairs

Some property managers also handle maintenance and repairs while others call on handymen to get the job done. Whichever option they choose, a property manager is responsible for handling tenants’ maintenance requests. It’s their responsibility to ensure that your rental property is safe, habitable, and well-maintained. As such, property management services also typically include routine inspections from the manager.

 

  • Rental Market Analysis

Property management companies may also offer rental market analysis in their service offerings. A property manager can assess the condition of your rental space and compare it with similar properties in the area. With a better understanding of your rental property, you can implement strategies that will allow you to stay on top of the competition.

 

What to Look for in a Property Management Company

Apart from a wide range of property management services, make sure to choose a property management company with the following:

 

Licenses and Certifications

Look for a property management company with licensed professionals. Depending on your state, a property manager is required to have either a real estate broker license or a property management license.

If you live in one of the few states that do not have license recruitments, you still need to make sure that your chosen company is qualified to perform property management services. Look for certifications from reputable organizations such as the National Association of Residential Property Managers (NARPM) or the National Property Management Association (NPMA).

 

A Proven Track Record

Years of experience is another qualification to look for in a property management company. An established company should have no problem providing you with references to showcase its excellent track record. If a company refuses to hand out references, it could be a sign that former clients were not satisfied with their property management services.

 

Insurance and Legal Protection

A property management company should have adequate insurance coverage in case there are issues with their managers or services. Ask if they have general liability insurance, professional liability insurance (also known as errors and omissions insurance), property insurance, workers’ compensation insurance, among others. The more protected the company, the more you can avoid potential liabilities and legal issues.

 

A Cancellation Policy

A cancellation policy is a must for any property management contract. Both the property owner and management company should be able to cancel the agreement in case of negligence or violation of contract terms. Look for required advance notice and termination fees in the provisions of the cancellation policy.

 

Frequently Asked Questions About Property Management Services

Still need more information? Here are the answers to frequently asked questions about property management services.

 

What Is Included in Property Management Services?

Not all rental or condominium property managers perform the same services. It depends on the terms of your contract. Most property management companies have different packages to suit the specific needs of owners. The range of services may also depend on your budget or the agreed-upon property management fee.

 

what to look for in a property management companyWhat Does Full Service Property Management Mean?

Owners who opt for full-service property management can expect their property managers to perform a wide range of services — including tenant marketing and screening, rent setting and collection, evictions and legal services, accounting, bookkeeping, and so on.

Some owners who want to stay involved with their rental property may prefer to have a part-time manager or choose to have essential or specific services such as tenant screening and financial management.

 

What Do Property Management Services Charge?

Management fees will depend on your agreement with a property management company. Most companies will charge either a fixed monthly fee or a percentage of monthly revenues. They may also charge for additional services such as tenant placement, vacancies, maintenance, evictions, and other miscellaneous fees.

 

Can You Negotiate Property Management Fees?

Most property management companies are willing to negotiate fees with potential clients. However, keep in mind that lowering fees may also mean more limited services. Choose a property management company that can provide the services you need at reasonable prices.

 

Finding the Best Property Management Services for Your Rental Space

This property management services guide aims to provide owners with all the information they need to get started on the search process. Finding the best property management company will take some time and effort. Make sure to utilize different avenues such as personal recommendations, customer reviews, and online directories. With this comprehensive guide, you’ll be able to determine if a company can provide the property management services that your rental space needs.

Need help with the search? Feel free to check out Rental Choice’s online directory to help you find the best property management companies in your area.

 

RELATED ARTICLES: