Author: melissa

What To Look For In A Property Management Agreement? How To Terminate It?

Posted on by melissa

A property management agreement is a necessary and valuable tool in any business deal between a property owner and a management company. But, it is not always easy to know what these contracts should contain. Learn what to look for in a property management agreement below.

 

The Importance of a Property Management Agreement

What is a property management contract? Also known as a property management agreement, a property management contract is a legally binding form or document between a property owner and a property management company or manager. Property management contracts stipulate what each party expects from the other, including payments and responsibilities.

Why is it important to have a property management agreement? You might wonder why there is even a need for a contract. As a property owner, you need to protect yourself and your investment. A good way to do that is to sign an agreement between you and the firm you have hired to manage your rental property. Since these agreements contain property management terms and conditions, it is imperative to have one.

It is worth noting that you are legally required to sign a property management contract if you enter into a business deal with a property manager or company. Before putting your signature on any legally binding document, it is best to have your attorney look over it first.

You can easily research a landlord’s property management agreement template online. There is also a property management agreement template available on the U.S. Securities and Exchange Commission website.

 

What to Review in a Property Management Contract

Which would you expect in a property management contract? Normally, a property management agreement will include the terms and conditions of your business relationship with a company or manager. It formally puts into writing things like how long the contract will last, how much you should pay the company every month, what services you are entitled to, etc.

While part of the contract will spell out boilerplate items, there are a few key items you must watch out for, such as the following:

 

Fee Structure

What is included in a property management agreement? One of the most important parts of any property management contract is the section that talks about fees. It is imperative that you review the company’s fee structure prior to signing the agreement. This way, you know how much you need to pay the company on a monthly basis.

Not all companies have the same fee structure. Some companies charge a flat fee every month, while others take a portion of the monthly rent. If you are dealing with the latter, see to it that the company takes their fee from the rent amount collected and not the due amount.

Most companies also charge other fees in addition to the standard monthly management fee. This can include an initial setup fee, a vacancy fee, a tenant placement fee, and even an eviction fee. It is also worth asking whether there are any fees that apply to your tenant instead of you. Carefully reviewing all of the prices and costs involved will save you the trouble of dealing with surprise fees.

 

Property Manager Responsibilities

What responsibilities does a property manager have? Your property management agreement should outline them as well. Some companies offer their services on an a la carte basis, while others provide full-service rental management services. You should know what to expect from your property manager or company. This way, you can keep track of whether or not the company or manager is fulfilling all of their required duties according to the contract.

It is also important that each outlined service goes into further detail. For example, if your management company will market your property, the contract should describe how. Are they going to list your property online? Will they include your listing in newsletters? Part of successful rental management is finding quality tenants to fill your vacancies.

 

Property Owner Responsibilities

This is another section of your property management agreement that deserves attention. This section should dictate what you, as a property owner, should and should not do.

A common contract obligation of property owners is keeping a reserve fund. Property owners must have a separate account purely dedicated to covering expenses related to the rental property. The property manager or company can dip into this reserve fund to address various daily expenses, maintenance and repair problems, and emergencies.

Property owners are also usually required to secure the right insurance for their rental property. The agreement should go into detail about what types of insurance you must obtain as well as the coverage amount for each one.

When it comes to what property owners cannot do, common restrictions include finding tenants and entering the property without prior manager approval and tenant notification.

 

Spending Authority

You already know about the reserve fund most contracts require you to open and maintain. But, there must also be a clause in your contract that limits the property manager’s spending authority. This should specify how much money the manager or company can spend without obtaining your approval. You should not give your property management company or manager unrestricted access.

 

Equal Opportunity Housing

What is required in a property management agreement? For legal purposes, a property management contract should include a section specifically stating their support for Equal Opportunity Housing. It must include a section stating that the property management company will comply with federal and state fair housing laws, including the Fair Housing Act.

 

Hold Harmless Clause

It is equally important to look over the hold harmless clause, which limits liability on the property management company’s part. This clause protects the company against liability unless it exhibited negligence. Keep in mind, though, that the property management company cannot be held liable if a third party has been negligent.

You should see to it that this portion of the agreement consists of a reasonable care clause. This states that the company is not responsible for the negligence of a third party if they practiced “reasonable care” when hiring them. In other words, the company should make sure to vet any vendors or contractors they hire.

 

Contract Duration

It is unwise to enter a contract with a property management company you have never worked with before. This is because you have no way of determining firsthand whether or not they can deliver good results. Therefore, try to avoid signing an agreement with a long contract duration.

What is the standard term for a management contract? Most management contracts last for a minimum of one year. This is usually not in your favor because it means you might find yourself stuck in a long-term business relationship with a bad company. If a company will not sign for less than a year, make sure the agreement gives you the option to end the contract early.

 

Termination Clause

A termination or cancellation clause is an essential part of every property management agreement. This clause should specify when either party can terminate the contract as well as why. The next section will cover more information on how you can end your contract with your management company or manager.

 

How Do I End a Property Management Agreement?

There should be a section of the agreement covering the termination of contract, usually referred to as the termination clause. A contract’s termination clause will usually cover the following:

 

Reason to Terminate

The first thing you should do is check whether you can terminate your contract without reason and without penalty. It is best to have such language included in your agreement before signing it, though not all companies will allow this. You should also make sure the contract specifies your right to terminate if the property management company fails to secure a tenant for your property within a set period of time.

 

Notice Requirements

You need to give your property manager or company advance notice of your intention to end your contract. The exact notice period can vary from contract to contract, though it usually falls between 30 and 90 days’ notice. Failure to comply with the notice window might put you in legal trouble for breach of contract.

Additionally, you should make sure notice requirements cut both ways. That means your property management company should also give you at least 30 days’ notice of their intent to terminate.

Here is a notice of property management contract termination template you can use:

property management contract

Download Your Notice of Property Management Contract Termination Template Here

 

Termination Fees

Ideally, you would not need to pay any fees when you decide to terminate your contract before its expiry. Unfortunately, that is not the case for most companies.

You will usually need to pay a termination fee. This can range anywhere from a few hundred dollars to the total property management fees for the remaining months of the contract. For instance, if your fees total $1,000 a month and there are still nine months left on your agreement, the termination fee would be $9,000.

 

Duties Upon Termination

Your termination clause should also include the responsibilities of each party upon the cancellation of the contract. Some companies will require you to sign a separate contract termination agreement. Examples of duties include but are not limited to:

  • The property management company must notify the tenant of the change.
  • Any party that owes money to the other party must pay the amount due within 30 days of the termination.
  • The property management company must deliver copies of all tenants’ lease agreements within 14 days of the termination.

 

The Final Word

You might be eager to sign with a property management company since it means you will have more freedom and less stress managing your rental property. But, in the confusion and excitement, you might skip over essential clauses and details. Always make it a point to review your property management agreement carefully, preferably with the help of your attorney.

Are you on the hunt for the best property management company? Find one near you today with Rental Choice! Our online directory will help you to search and contact property management companies easily.

 

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How To Terminate A Property Management Contract

Posted on by melissa

There will eventually come a time when owners will want to terminate a property management contract. And when that time comes, it is important to know just how to do it.

 

Want to Terminate a Property Management Contract? You’re Not Alone

Owners hire property management companies because they offer a lot of benefits. When an owner is too busy or ill-equipped to manage a rental property on their own, they generally turn to trained professionals. But, it is not entirely unheard of for owners to cut their management company loose. And this can happen for a number of possible reasons, such as:

  1. The owner is not satisfied with the quality of promised work and services their property manager is delivering. For example, the property manager does not respond to tenant concerns on time (or at all), does not address maintenance and repair issues, fails to screen tenants properly resulting in eviction, and/or fails to conduct routine property inspections.
  2. The property manager has breached Fair Housing laws, thereby exposing the owner to legal trouble.
  3. The property manager has misused tenant and owner funds.

Keep in mind, though, that termination usually requires just cause. The contract will typically detail why and when either party can cancel a property management agreement. As such, before terminating the contract, it is imperative to read through it carefully. Owners may also benefit from consulting a lawyer for advice.

 

How to Terminate a Property Management Agreement

There is more to ending a contract than simply serving the company with a firing notice. Given that contracts often have legally binding durations, terminating them before their expiry can be considered a breach of contract.

Here is how to go about property management contract termination the right way:

 

1. Check the Termination Clause

The first thing rental property owners must do is check the termination clause. This clause will detail what owners must do to end a property management contract, including any specific requirements owners must follow and any fees associated with cancellation.

To ensure the cancellation clause is fair, owners should review this section of the contract prior to signing. Some management companies will intentionally make it hard for owners to terminate the contract early. Other contracts have auto-renew clauses stating that the contract will automatically renew for another set number of years unless the owner cancels before a specified date.

 

2. Give Appropriate Notice

Property management contracts will normally spell out how much notice an owner must provide the company if they want to cancel. The notice requirement can vary from contract to contract, though most require between 30 and 90 days. It is best to follow this notice period to avoid a possible breach of contract. Companies will usually not honor a termination request if notice is not given within the set time period.

In addition to following the notice requirement, owners should also send the termination notice in writing via certified mail. In doing so, owners can make sure there is physical evidence of the notice. This acts as an audit trail in the event of a legal dispute. Even if an owner has already informed the company of their intention to cancel through the phone, sending a written notice is still the gold standard.

A notice period may seem troublesome to a few owners since it does not immediately cancel the contract. But, such notice periods exist to facilitate a smooth property management termination. If an owner is switching to another company, this notice period will also allow the current company to send all necessary information to the new company.

 

3. Get Ready to Pay

Owners must prepare to pay fees when they end a property management agreement. Cancellation fees are common among such contracts, though the exact dollar amount can vary. Some companies charge a flat rate or the equivalent of one month’s worth of management fees. If an owner cancels the contract early, a company may also charge the owner the rest of the management fees for the remaining months on the contract.

In addition to the standard termination fee, a company may also forward any unpaid invoices or work orders. Owners must prepare payments for these after they cancel their contract.

 

4. Make Sure the Company Notifies Tenants of the Change

When property management companies take over the duties of the landlord, they also assume the responsibility of communicating with tenants. This responsibility extends to notifying them of the change in management.

Owners must make sure the exiting property manager informs all tenants that they will no longer be the main contact person. If there is a new property management company involved, the notice should include the name of the new company as well as their contact details. This way, tenants will know who to call for problems and where to send their next rent payments. The notice should also include an effectivity date.

 

5. Obtain All Pertinent Records and Documents

The final step in the termination process is to request the company for all pertinent records and documents. This includes the original lease agreement with tenants, tenant application forms, copies of renters insurance, property condition reports and photos, maintenance records, financial reports, and HOA forms. Owners should also retrieve the keys from the property management company.

 

What Owners Should Do If the Company Terminates

Of course, termination can go both ways. Sometimes, instead of the owner, it is the firm that will want to cancel a property management contract. This may seem like an unlikely situation, but it does happen.

Here are some possible reasons why a company would want to terminate a property management contract with an owner:

  1. The owner refuses to purchase landlord insurance.
  2. There are possible health risks in the property that the owner cannot or refuses to address.
  3. There are safety risks in the property that the owner cannot or refuses to address.
  4. The owner does not want to fix maintenance issues.
  5. It is no longer possible to remain in compliance with local building and safety codes.
  6. The owner is rude to or mistreats staff members.
  7. The owner is not open to compromise and is generally unaccommodating.

When the company terminates the contract, what should an owner do? First of all, the owner should make sure the company is not breaching its own terms. They should have just cause to terminate and pay any applicable fees, too. Owners can consult an attorney for guidance.

The next likely step is to find another management company that will take over. Once the current company sends its termination notice, owners should start looking for a new firm. This way, there is enough time for the transition to take place.

 

The Final Word

At a glance, it might seem difficult to terminate a property management contract. But, with the right steps and careful consideration, owners can even cancel their contract early. They just need to have just cause and be prepared for the possible costs that come along with it.

On the lookout for a new property management company? Start your search today using Rental Choice’s comprehensive online directory.

 

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The Pros And Cons Of Tenant Screening Services

Posted on by melissa

The tenant screening process is essential, but it can also be very time-consuming to conduct comprehensive tenant credit and background checks. As such, many landlords turn to tenant screening services for more expedient evaluations. Before you try it out for yourself, consider the pros and cons of tenant screening services.

 

How to Screen Tenants: Do You Need Tenant Screening Services?

Tenant screening is the process by which landlords or property managers evaluate prospective clients on their capacity to meet the lease agreement. Through this tenant verification and evaluation process, landlords can double-check the information listed on a prospective tenant’s rental application form to see if it is true and accurate.

 

Why Do You Need a Background Check for Renters?

A tenant background check can tell you whether a prospect has the capacity to pay rent on time, follow tenant rules and regulations, and take care of your rental property. Here are the standard items included in a tenant screening report and why they are important.

  • Copy of ID: Each applicant submits this for identity verification.
  • Income: A tenant’s income must be able to cover monthly rent payments. Most landlords require tenants to have a 3:1 income-to-rent ratio or rent should be 30% of gross income.
  • tenant screening reportEmployment History: A landlord should check if a tenant has a stable employment history. This ensures that a tenant has a steady source of income for rent payments. It’s important to also ask for their current employer, job description, and employment references.
  • Credit Report: A tenant credit check is a crucial part of the screening process. You may decide to accept or deny an applicant based on their credit score. If their credit score is not strong enough (below 650), landlords may decide to ask for a higher security deposit or require a cosigner for the lease agreement.
  • Criminal Background Check: A tenant background check also checks if an applicant has a criminal record. While landlords must not have discriminatory screening practices, knowing an applicant’s criminal history can tell you about their ability to pay rent on time or whether they might pose a security risk for your building or other tenants.
  • Rental History: The screening process helps determine how an applicant will be as a tenant in your property. As such, it’s important to look at their rental history. One of the most important things to look for is previous evictions. A tenant who has been evicted once may have a higher risk of being evicted again.
  • Landlord References: Talking to an applicant’s previous landlord can reveal a lot of useful information such as late payments, lease violations, complaints from other tenants, and cases of property damage.

 

Pros of Tenant Screening Services

Landlords know the importance of conducting comprehensive tenant background searches. However, this screening process can be very tedious and time-consuming, especially if you are evaluating a lot of applicants. Here are the pros of tenant screening services for landlords:

 

Quick and Convenient

A tenant screening service can deliver your results in a matter of minutes. You’ll get the information you need to properly assess the background and financial capability of a potential tenant. It’s also very convenient as everything is done online. Landlords just have to enter the details and they’ll get a report within minutes.

 

More Efficient Tenant Screening

With a tenant screening service, landlords can approve or deny applications at a much faster rate. As you’re able to screen more applicants, you have a much better chance of finding quality tenants and avoiding bad tenants.

 

Consistent Screening Process

A tenant screening service uses the same procedure for evaluating your applicants. As such, when you deny applicants, they won’t be able to accuse you of employing screening practices that are discriminatory or go against the Fair Housing Act.

 

Low-Cost

Most tenant screening services offer bundles or charge on a per report basis. This is more cost-effective than a subscription-based service. Some also offer different tiers or packages based on the extent of the background check. Landlords won’t have to spend more than they have to. Just keep in mind that you’ll also get what you pay for.

 

Cons of Tenant Screening Services

When deciding on a professional tenant evaluation provider, here are some potential risks to consider.

 

Higher Risk for Errors and Inaccuracies

While instant tenant screening reports are convenient, there’s a potential disadvantage to it as well. In order to deliver quick results, tenant screening services use automated programs to compile information about your prospective tenants. Most databases have errors that automated programs cannot detect. As such, there’s potential for your tenant screening report to have errors or inaccuracies, especially since there’s no one to double-check your report.

 

Lack of Personal Touch or Qualitative Data

Another potential issue with tenant screening services is that there is a lack of personal touch. Since a machine is compiling the data, it may miss out on qualitative data that would be easily discovered with a hand-compiled report. For instance, an automated report can tell you how many evictions a tenant has had, but it may not tell you why these evictions happened.

 

Tenant Involvement

A lot of tenant screening services have tenant involvement. The service uses an applicant’s email address to obtain and verify personal information. However, not all tenants will complete these requests. There are many reasons: laziness, lack of time, or in some cases, they won’t even see the email request. If the applicants don’t complete the process, you won’t get your report.

 

tenant evaluationIssues with FCRA Compliance

The Fair Credit Reporting Act (FCRA) aims to protect the rights of prospective tenants, particularly when it comes to using their private information for a background check. They have a right to dispute inaccurate, incomplete, and unverifiable information that may be included in a tenant screening report. If a tenant screening service is not transparent with its practices, you cannot be sure if they are complying with the FCRA or not. If there are compliance issues, you could end up being reported or sued by your applicants.

 

Lack of Customer Support

A lot of tenant screening services do not offer customer support. Even if they do, the level of service might be questionable at best. As a result, landlords may have a hard time following up on the information contained in a tenant screening report. If you are left with lingering questions, you may end up with issues with prospective tenants including disputes and compliance issues.

 

 

Is There an Alternative to Tenant Screening Services?

For landlords who simply have no time to perform comprehensive background checks, a tenant screening service is the best alternative. However, it’s important to remember that not all tenant screening services are the same. For instance, you cannot really expect much from free tenant screening services or those that charge a very low price.

In order to protect yourself from potential liabilities, make sure to choose the best tenant screening services. Practice due diligence when searching for a tenant screening service. Learn about how they perform background checks and what information will be included in the tenant screening report. You may end up paying a higher price, but you have better peace of mind knowing that the tenant screening report is accurate.

On the other hand, if you want a more personal tenant screening process, you can also consider partnering with a property management company. They will have the expertise to conduct a thorough background check. If they won’t do it personally, they will still have a network of the best tenant screening services. With this option, landlords can be confident with the quality and content of their tenant screening reports. A property manager can also be invaluable when it comes to the day-to-day operations of your rental property.

 

Tenant Screening Services Can Make Landlords’ Lives Easier

Landlords should take the time to find the best tenant screening service. If a tenant screening service leaves you with more doubts and questions, It’s probably not worth it. Make sure that you find a reputable company so that you can enjoy all the benefits and not have to worry about the potential risks or issues mentioned in this article.

If you need help finding tenant screening services in your area, feel free to browse the Rental Choice online directory. You can find top-rated property management companies that can guide you through the entire tenant screening process.

 

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How To Find Tenants That Are Reliable And Trustworthy

Posted on by melissa

Perhaps one of the most difficult parts of managing a rental property is learning how to find tenants — and not just any tenants, but good tenants. Luckily, you can land high-quality tenants by adopting a few key practices.

 

How to Find Tenants for Your Rental Property

With 43 million renters in the United States, it’s clear that the rental market is a lucrative one. But, after investing in a rental property, you can’t simply expect a tenant to fall into your lap. As a property owner and landlord, it’s your job to find a tenant. Oftentimes, that means weeding through a sea of bad tenants just to find a good one.

What do most landlords look for in tenants? The number one quality that most landlords look for in a tenant is someone who pays rent on time and in full. But, you also want a tenant who takes care of your property and behaves like a good neighbor. In short, good tenants follow the terms of your lease.

While listing down your must-have qualities in a tenant is one thing, finding good tenants is an entirely different battle. If you have never experienced the search process before, you’re most likely asking yourself, “How do I find the best tenants?” The answer, though, involves more than one action. To find renters who are reliable and trustworthy, you often need to go through a series of steps — from advertising your property to tenant screening.

Here is your guide on how to find good tenants:

 

1. Improve Your Rental Property

If you want to attract great tenants, you must first have a rental property worth their time and attention. You can’t land good tenants (or even bad tenants) if you have a poor-looking property. That means swapping out old carpets with new ones, repairing or replacing run-down appliances, and applying a fresh coat of paint. Your property could also use a thorough cleaning, especially before you take listing photos or a property showing.

 

2. Advertise Through the Right Channels

How do I find a prospective tenant? A surefire way is to advertise through the proper channels. More often than not, you can find tenants online through real estate websites like Zillow, Apartments.com, and Rentals.com. These services usually cost a small fee per listing. Keep in mind that good tenants are probably not looking for rentals on Craigslist or other sketchy websites since they are a hotbed for scammers.

There are also other means of marketing your rental property. You can take out an ad in a local newspaper, print out and distribute flyers, or post your ad at community boards or local businesses.

Apart from tackling “the where,” you must also address “the how.” Namely, how do I advertise my property for rent? Your rental ad should include key details, such as the number of bedrooms and bathrooms, location, monthly rent, and any other special features or amenities worth mentioning. You should also include high-quality photos of your rental property.

 

3. Have Prospects Fill Out a Rental Application

You need to collect personal information from prospective tenants, and the best way to do that is through an application form. When creating your application form, make sure to ask for the following details:

  • Names of applicants
  • how to find good renters Prior addresses
  • Children’s names (if any)
  • Pet details (number of pets, breed, etc.)
  • Sources of income and amounts
  • Employer’s contact information
  • Previous landlord’s contact information
  • Driver’s license numbers
  • Social security numbers
  • Personal references

Some states allow you to charge a non-refundable application fee to pay for any background checks. This fee usually dances between $25 to $40. It’s also worth informing applicants about your rental policies upfront to avoid wasting time. For instance, if you don’t allow pets in your rental property, applicants with pets can simply move on.

The information you ask for on a rental application can be sensitive, so make sure to practice confidentiality and professionalism. Additionally, you must comply with the Fair Housing Act and any fair housing laws in your state.

 

4. Screen Your Prospects

Tenant screening is a critical part of how to find good renters. How do you screen a tenant? Screening a tenant usually involves checking their employment history, credit score, rental history, criminal history, and references. This background check will allow you to filter through your applicants.

You may wonder, “How do I find my tenants history?” You can use the information you obtained through the rental application form. There are many services that offer to check credit scores and criminal histories for a fee. You can also check their employment status and history yourself by contacting their current and past employers. The same goes for personal references — just make sure they aren’t family members.

To check rental history, you can contact the applicant’s previous landlords. Ask about the applicant’s behavior. What is considered bad rental history? It depends on the landlord. But, a tenant is generally considered to have a bad rental history under one or more of the following terms:

  • Consistently paid rent late (or not at all)
  • Committed lease violations
  • Left the rental property in terrible condition
  • Has been evicted

 

5. Require Renters Insurance

If you’re a property owner looking for tenants, renters insurance is a must-have. Renters insurance covers the cost of any damages your tenant might cause to your rental property. It also typically covers the cost of the renter’s belongings.

It’s imperative to let tenants know during the application process that you require renters insurance. This way, they can obtain renters insurance before moving in. On the day of the move-in, make sure to ask for proof that they have, in fact, obtained renters insurance.

 

6. Set Up a Meeting Before Signing the Lease

A face-to-face meeting with rental tenants will allow you to assess their personalities and behavior. You will be dealing with your tenant for a long time, so it’s important to get a feel of how they act prior to signing the lease. This meeting will also give you the opportunity to ask critical questions such as:

  • Why are they moving house?
  • How long do they plan to live in your rental property?
  • What are they looking for in a home?

When asking questions, always keep fair housing laws in mind. Never ask about or discriminate against applicants based on their race, color, national origin, sex, religion, familial status, or disability. Your state’s fair housing laws might also include other protected classes.

 

7. Ensure Payment Before Giving the Keys

It’s standard procedure to ask for the first month’s rent and a security deposit prior to allowing the tenant to move in. But, don’t immediately hand over the keys after receiving the checks for these payments. Make sure to wait until after the checks clear before giving them the keys to your rental property.

 

8. Don’t Settle or Rush Into Things

If you want to learn how to find tenants, you should approach it carefully. Some landlords don’t want to spend time looking for tenants, but this can ultimately put you at a disadvantage. The tenant searching and screening process takes time, so you shouldn’t rush it.

It would also be unwise to sign with the first applicant that contacts you — unless they pass your screening process. Settling or rushing things will only increase your chances of getting stuck with a bad tenant for the entirety of your contract duration.

 

how to find good tenants9. Trust Your Gut

While screenings are effective tools for filtering out bad tenants, they can’t judge a tenant’s character. When it comes to renting tenants, you should always trust your instincts. Even if a tenant passes your screening tests, you might feel that there is something not quite right about them. Plenty of landlords has been scammed by tenants who faked their identity during the application process.

 

10. Ask for Help

Finding tenants without an agent is certainly possible if you have the time and resources for it. But, more often than not, property owners have other priorities to manage.

There is no shame in asking for help either through a tenant service or a property manager. You can easily find a tenant service with a quick search online. These services specialize in finding a tenant for your rental property. If you want something more comprehensive, you might be better off hiring a property management company. A property management company manages everything about your rental property — from tenant screenings to rent collection.

 

The Bottom Line

Learning how to find tenants can be a challenge if you have never done it before. When it comes to the best way to find tenants for rental property, you can never go wrong by following these tips.

Start by improving and advertising your property to attract potential tenants. Once you have their attention, ask them to fill out an application form and then screen your tenants carefully. Always trust your instincts, and don’t be afraid to ask for help.

In need of a property management company? Find the best one in your location today using Rental Choice’s online directory.

 

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The Ins And Outs Of Rental Property Maintenance and Repairs

Posted on by melissa

As a landlord, you have a responsibility to perform regular rental property maintenance. But, what does property maintenance even entail? And should all maintenance tasks fall under the landlord’s duty?

 

The Importance of Rental Property Maintenance

Why is property maintenance important? This is a common question many landlords ask, and one with a fairly obvious answer. It’s simple — property maintenance keeps your rental unit in good condition. Tenants are your main source of rental income, but you can’t attract good tenants if you have a poor rental property.

It’s also more difficult to retain quality tenants when you fail to perform necessary maintenance and repairs. And, as landlords know, the turnover process and the search for good tenants can be costly. Therefore, in the long run, paying for maintenance will actually save you money.

Additionally, keeping your rental property in tiptop shape will help preserve and even increase its property value. So, when the time comes for you to sell, you can sell it for a profit. The bottom line is, regular maintenance ensures higher yields and helps you receive a return on your investment.

 

What Does Property Maintenance Involve?

What is considered maintenance on rental property? Does property management include maintenance? As with any type of property, rental properties demand routine maintenance. This can range from the exterior and interior cleaning to damage control.

But, it can be hard to know what exact maintenance tasks you should complete without a proper guide. Use this rental property checklist to make sure you stay on top of property maintenance:

 

1. Do Some Pressure Washing

property maintenance servicesExterior cleaning should be a part of any building maintenance checklist. A great way to extend the lifespan of your property is to clean it using a pressure washer.

There’s nothing like the combination of high-pressure water and cleaning detergents to get rid of stubborn dirt, grease, mold, and mildew. Apart from exterior walls and surfaces, you can also pressure wash your gutters to unclog them and prevent water damage.

Although you can rent pressure washers at your local home improvement store, it’s generally best to outsource the job to a pressure washing service. Operating a pressure washer can be confusing, and you might end up causing more damage than cleaning surfaces.

 

2. Replace Filters

Whether or not utilities are included in the rent, you should change the filters in your air conditioning or heating unit at least twice a year. When you allow the filters to get dirty, it can lead to higher utility bills because the unit needs to work harder. Worse yet, it can start to break down. Dirty or clogged air ducts will also require professional cleaning, which is an added expense on your part.

 

3. Check All Smoke and Carbon Monoxide Detectors

Safety is of paramount importance when it comes to rental property management. Therefore, you should make a point to inspect all smoke and carbon monoxide detectors on the property. Test them out to make sure they’re working as intended. You may need to change the batteries or conduct some repairs if they’re not working properly.

It’s best to take note of when you first purchased your alarms and detectors. A smoke alarm usually lasts for a decade, while carbon monoxide detectors have an average lifespan of about five years or so. Keeping track of these dates will allow you to determine when it’s time to replace them.

 

4. Inspect for Water Leaks and Water Damage

Rental maintenance should also include regular inspections for water damage or leaks. Look for signs such as soft spots on the walls, ceilings, or roofs. You should also check showers, toilets, around windows, and under sinks.

Generally, this type of maintenance work should take place after heavy rain or when snow or ice has started to melt away. It’s also a good idea to check for water leaks on days when it’s hot and humid, as pipes usually sweat as a result of the temperature.

Spotting water leaks before they worsen can save you a lot of money and trouble. Addressing these leaks early on will prevent water damage, which can be very expensive to fix. Additionally, water damage can cause mold to grow. And, according to the CDC, mold can pose health risks.

 

5. Schedule Regular Exterminations

Pests such as rodents and insects are not only nuisances, but they can also cause damage to your property. To address or prevent the issue, make sure to schedule monthly exterminations. If you own an entire apartment complex, it’s recommended to exterminate the entire property instead of just one unit. This will ensure that no pests remain. As with pressure washing, exterminations are best left in the hands of a professional.

 

6. Drain the Water Heater

Over time, sediment can accumulate in water heaters and lead to clogging. When you leave it as is, your water heater can start to malfunction and require replacing, which usually costs a lot of money. As such, make sure to include flushing the water heater as a part of your rental property checklist. Do this once or twice a year.

 

property maintenance company,7. Unclog the Sinks

A clogged sink is one of the most common plumbing issues landlords face. The good news is you can prevent sinks from clogging through routine cleaning. If your sink is in healthy condition, you can even do it yourself using household items. Pour half a cup of baking soda first, then wait five minutes before continuing with a cup of vinegar and hot water. After waiting another five minutes, finish it off with more hot water.

 

8. Survey Caulking and Grout

Well-maintained caulking and grout ensure water doesn’t leak through the walls and floors. Therefore, you should assess the state of your shower caulking and the grout between your tiles. If you find any cracks or openings, make sure to seal them up.

 

Who Is Responsible for Property Repairs and Maintenance?

Is it the tenant’s responsibility to replace light bulbs? Do landlords take care of landscaping? As a landlord, these are only some of the questions you might ask.

Generally, the landlord is responsible for any maintenance work that ensures the property remains a habitable home. Some of the maintenance and repair duties that fall under a landlord’s care include but are not limited to:

  • Comply with all building and safety codes
  • Maintain all common areas
  • Providing proper trash receptacles
  • Providing running water
  • Ensuring all essential services are working (such as electrical, plumbing, heating, gas, and included appliances)
  • Make repairs to maintain the livable condition of the property

Tenants should also perform maintenance in the following ways:

  • Properly dispose of trash
  • Maintain a reasonably clean unit
  • Ensure there are no safety hazards
  • Comply with building and housing codes
  • Take general care of the property

It’s a good idea to include such language in your lease agreement. Though, you aren’t allowed to write a clause that stipulates that the tenant shall take responsibility for all maintenance and repairs.

 

How Much Does It Cost to Maintain a Rental Property?

You can’t really predict how much you will spend in a year on property maintenance. A good rule of thumb, though, is to follow the 1 percent rule. According to this rule, landlords should allocate 1 percent of the total property value for maintenance costs. Other experts recommend setting aside 50 percent of the monthly rent for monthly maintenance and repairs.

 

Why You Should Consider Professional Help

Performing landlord duties, including property maintenance, can be time-consuming. If being a landlord isn’t your full-time job, it’s best to seek professional help. There are many companies that offer property maintenance services for a monthly fee. A property maintenance company will also usually have its own rental checklist, eliminating the need for you to draft one yourself.

On the other hand, you can hire a rental property management company. These rental management companies usually include property maintenance as a part of their package. Some companies even allow you to select services on an a la carte basis if, say, you don’t need extensive services.

 

Fulfilling Property Management Duties and Responsibilities

Property maintenance is an essential component of rental management. As a property owner, you must protect your investment. As a landlord, you must give your tenants a livable home. You can accomplish both with the help of a property management company.

Look for a property management company that suits your needs today. Filter through Rental Choice’s online directory by area to make your search easier!

 

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11 Reasons Why You Should Hire A Property Manager

Posted on by melissa

Many landlords are hesitant to hire a property manager because of the price tag. But, the benefits of hiring a professional property management company actually outweigh the cost.

Why Hire a Property Manager?

Rental property owners juggle a myriad of responsibilities on a daily basis. And while many have already made the decision to outsource the job to a professional, there are countless others who prefer to take a DIY approach. These landlords opt to forgo a property manager for a number of reasons, chief among them being cost. But, hiring a property management company actually has more pros than cons.

Not convinced? Here are the benefits of hiring a property manager:

 

1. They Understand the Law

Managing a rental property requires a deep understanding of the law. This includes federal, state, and local laws. Owners who choose to do things on their own must familiarize themselves with the Fair Housing Act, state Fair Housing laws, landlord-tenant laws, and even local building codes.

More often than not, though, owners lack legal expertise. As a result, they end up violating a number of laws in the process. This exposes owners to potential liability.

In comparison, property managers are already well-versed in the law. They also make it a point to stay up-to-date on the changing laws that might affect rental properties. This includes tax updates, changes to short-term rental restrictions, and more.

 

2. Better Quality Listings

There are so many listing websites available today that it can be easy for owners to feel overwhelmed with the options. A property manager will know exactly which mediums to use. Beyond that, they can take professional and attractive photos of the property as well as craft persuasive copy that will entice potential tenants. This will help widen the pool of renters. Owners can also find tenants quicker, thereby reducing the vacancy period.

 

hiring a property manager3. Rent to Better Tenants

Owners can’t simply rent out their property to the first person who shows an interest. Not all tenants are good. Some tenants won’t take care of the property and even intentionally damage parts of it. Bad tenants are also more likely to pay rent late and break the terms of the lease.

To weed out the bad tenants, property managers use a careful screening process. They do their research and ask for supporting documents from applicants. They do credit checks, employment checks, and background checks. Property managers can even call past landlords as references. This way, they can pinpoint quality tenants.

 

4. Set the Right Rental Rate

Owners don’t always know how much to charge in rent. They either end up charging too high, which can scare away potential tenants, or too low, which won’t be enough to cover expenses.

Property managers, on the other hand, can conduct market research to determine what the right rental rate is for any given rental property. They do this by looking at the average rental rate in the area as well as taking into account other economic factors. What owners end up with is a fair rental rate that will still earn them profit.

 

5. Overdue Rent? No Problem!

One of the hardest things about being a landlord is collecting rent. Most tenants pay their rent on time and in full. But, there are some bad eggs that consistently pay their rent late. Dealing with such tenants can be a pain.

A property management company can take over rent collection duties from the owner and, in turn, ease their stress, too. If a tenant is late on their rent, the property manager will take action by sending a notice. Rent collection is also made easy because property managers will receive the rent money and deposit it directly to the landlord’s account.

 

6. Better for Vendor Relations

Managing a rental property also comes with maintenance responsibilities. Every now and then, owners will need to seek help from vendors such as contractors, handyman services, cleaners, and other suppliers. But, finding and vetting these vendors can also be burdensome.

Property management companies will either have in-house maintenance personnel or an established relationship with a network of trusted vendors. They can coordinate with suppliers, maintenance workers, and repairmen on the behalf of the owner. In case of emergencies, they also know which vendors are available at a moment’s notice. They do all of this while staying within the owner’s budget.

 

7. It Keeps Things Professional

Far too often, landlords become too friendly with their tenants. The relationship will then turn personal, and some tenants will take advantage of that fact. Similarly, some landlords might not feel comfortable collecting overdue rent when they have become such good friends with their tenants.

A good solution to this is to hire a property manager. A property manager makes sure to maintain professional relationships with everyone in the business. This includes both the owner and their tenants. Taking a professional approach ensures that managers can make decisions without bias or personal judgment.

 

8. Evictions Made Easier

Unfortunately, there may come a time when a landlord will have to evict a tenant. Typically, this is due to unpaid rent, though it can also stem from some other lease violation. But, evicting a tenant is not as easy as it sounds.

The laws governing evictions can vary from one state to another. This makes it particularly difficult for landlords who own several properties across many states. But, it is part of a property manager’s job to know the law and manage evictions legally. All the owner has to do is provide support and pay eviction costs (including any associated court fees).

 

hiring a property management company9. More Free Time

Because of the nature of their position, landlords often don’t have a lot of free time on their hands. This is especially challenging for property owners who have 9-to-5 jobs or families to look after.

Hiring a full-time property manager is a great way to cut back on these duties and have more free time. The only things owners will have to do is check their account balance from time to time (for rent payments) and approve withdrawals.

 

10. More Flexibility With Investments

With a property management company, owners are not confined to a single location. They have more freedom and flexibility to invest in properties outside of their home city or state. This maximizes their earning potential without all the stress of hands-on rental management.

 

11. Peace of Mind

Finally, when owners hire a property manager, they tend to have more peace of mind. No more worrying about maintenance problems, agonizing over unpaid rent or losing sleep over 3 a.m. phone calls from complaining tenants. Owners can rest easy knowing their property manager has everything under control.

 

How Much Does It Cost to Hire a Property Manager?

Of course, all of the benefits outlined above come with a price. If owners are wondering how much to hire a property manager, money-wise, it depends. A lot of factors can affect the cost of property management, including location, the size of the property, the type of property, and the extent of services involved.

Some companies also charge a flat rate every month, whereas others charge a percentage of the monthly rent. Generally, though, owners should expect to pay 8% to 12% of the monthly rental rate. It is best to make sure that the contract specifically states that the percentage is taken from rent collected instead of rent due. This way, owners won’t be paying the company if they fail to collect rent.

 

How to Hire a Property Manager

It is clear that the benefits of hiring a manager outweigh its costs. But, what exactly is involved in the hiring process? Here is a brief guide on how to hire a property management company.

  • Determine Needs. First, owners must identify what services they need or want. Are they looking for someone to just collect rent or someone who will do everything? Keep in mind that the broader the scope of work, the higher the fees.
  • Do Research. Next, owners must do their research. Look for management companies online and check their reviews, too. They can also ask other landlords for referrals.
  • Interview Companies. Before choosing a firm, it is imperative to interview each candidate. Sit down and ask the right questions.
  • Check Qualifications. See to it that the company is qualified for the job. Check their licenses and certificates, references, and insurance.
  • Iron Out the Contract Terms. Finally, it is time to negotiate the terms of the contract. Make sure the contract details everything, including the scope of work, fee structure, and a termination clause. Owners would do well to consult an attorney to ensure the contract is not unfair.

 

Should I Hire a Property Manager?

The question of whether or not owners should outsource property management depends on their individual situation. Though it is not always necessary, there are definitely many advantages when owners hire a property manager. It allows more flexibility in terms of investments and time while simultaneously maximizing earnings.

Are you ready to hire a property manager? Find the best one in your area today with the help of Rental Choice’s comprehensive online directory.

 

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Property Management Services: What Can You Expect?

Posted on by melissa

Landlords who lack the time and expertise to manage their rental property can always turn to a property management company. But, what property management services do these companies typically offer?

 

The Need for Property Management Services

Property management is no simple task. While there are owners who prefer to take the DIY approach, there are many more who would rather outsource the job to a trained professional. One might wonder why a landlord would even bother to pay someone else to manage their property. After all, that would mean less profit for them. But, there are several reasons why an owner would choose to avail of property management services.

What is the purpose of property management companies? Property management companies make it significantly easier for landlords to accomplish their duties. Essentially, property management companies take over the day-to-day management of rental properties.

Landlords may want to hire them for one of the following reasons:

  • The owner/landlord does not have enough time to devote to property management.
  • The owner/landlord lacks the skills or expertise to manage their rental property.
  • Hands-on property management just does not interest the owner/landlord.
  • The owner/landlord owns several investment properties (whether in the same area or not).
  • The owner/landlord does not live near the rental property.

Clearly, there is a demand for professional property management. But, what do property managers do anyway?

 

What Services Do Property Management Companies Provide?

Property management companies come in all shapes and sizes. Some offer all-around rental management services, while others only offer a select few. Additionally, the exact nature and extent of services landlords receive from their company will depend on their agreement. These services must be expressly outlined in the property management contract to avoid misunderstandings.

What services does a property management company provide? Though it can vary from one company to another, owners should generally expect the following:

 

1. Rental Rate Setting

First up on this property management services list is the rental rate setting. Owners don’t always have a good understanding of the rental market in their area. This often leads to setting a rental rate that is too high or too low. Neither is beneficial for landlords, as too high a rental rate can turn off potential renters and too low a rental rate can result in a net loss.

A property management company can perform thorough market research of the local area to determine the optimal rental rate. Of course, they will also factor in the rental property itself. For instance, if the property comes with nice amenities, that could drive the rate higher. With a professional setting the rental rate, landlords can maximize their earning potential while retaining quality tenants.

 

best property management services

2. Property Listing and Showing

Listing a property online may sound easy, but there is a lot more that goes into it than it seems. A property management company can create a compelling ad for the rental property and accompany it with visually appealing photos. Companies also know which channels and websites to use to truly widen the search pool.

If there are any interested tenants, a property manager can take over property showings as well. This eliminates the need for landlords to be on call for the entire time the property remains vacant.

 

3. Tenant Screening

Tenant screening is one of the more common property management company responsibilities. Companies know just how valuable a good tenant can be, but they are hard to find. Thus, they use established screening strategies to separate the bad tenants from the good ones. A typical screening process involves background checks, credit checks, and employment checks, as well as calling previous landlords for reference.

 

4. Tenant Application and Move-in

Once a tenant shows interest in the property, they can apply for it. Companies already have application forms tenants can fill out. They can also take care of drafting the lease agreement according to the specifications of the owner. From there, they can facilitate the signing of the lease and ensure a smooth move-in process for the tenant.

 

5. Property Inspection

As part of their services, property managers will conduct property inspections on a routine basis. This is to identify any potential maintenance issues early on and remedy them before they get out of hand. It also acts as a way to ensure the tenant has not damaged the property. In addition to routine inspections, property management companies also perform move-in and move-out inspections, complete with reports and photos for documentation.

Property inspection is an important part of managing a rental. As such, owners should include it on their list of non-negotiable property management duties and responsibilities.

 

6. Rent Collection

Rent collection is one of the more typical services for property management. It is almost impossible not to find a company that collects rent on behalf of the owner or landlord. As rent is the primary source of a landlord’s income, it is easy to see why it is a staple of property management services.

Property managers will make sure that tenants pay their rent on time. In addition to handling rent payments, managers will impose late fees and send pay or quit notices.

 

7. Tenant Management

If a landlord only has one tenant, fielding their calls comes relatively easy. But, many landlords manage several tenants at once, making it immensely difficult to keep track of them.

A property management company has the required resources and manpower to deal with all of those tenants combined. They have established systems that classify each tenant and tag service requests to individual accounts. Property managers can also act as the point person, taking calls from tenants in place of the owner, including emergency calls. That means no more waking up in the middle of the night to constantly ringing phones.

 

8. Budget Management and Reporting

Professional property management services also normally offer financial management. This involves managing owner and tenant funds, carrying out maintenance and repairs while staying within the budget, and even submitting monthly financial reports to the owner. Moreover, property managers will often be the ones to send out payments to vendors and other parties, including insurance providers, contractors, and HOAs.

 

9. Property Management and Maintenance

Another one of the more common property management company services is maintenance. By hiring a professional, owners need not worry about constant property maintenance and repairs anymore.

On top of conducting regular property inspections, property managers will coordinate with maintenance personnel (either in-house or third-party vendors) to get issues fixed early. Property management and maintenance also cover general cleaning, preventive maintenance, large-scale projects, landscaping, and the like. If the company does not have an in-house maintenance crew, they usually have a network of trusted and licensed vendors prepared to do the work for them.

 

10. Legal Compliance

Property management requires a comprehensive understanding of the law. There are many laws that apply to rental properties, such as the federal Fair Housing Act, state-level Fair Housing laws, and landlord-tenant laws. Local building codes and ordinances also exist.

Part of a property management company’s job is to ensure the rental property and, by extension, the landlord remains in compliance with the law. This protects the owner from potential liability.

 

property management services list11. Eviction

When a tenant has stopped paying rent or broken the lease, eviction is often necessary. But, eviction is not a simple undertaking. In fact, because of the requirements and procedures involved, a lot of landlords just endure bad tenants. Not with a property management company, though.

A property management company can process evictions for owners. They can prepare all the documents needed as well as provide legal counsel. This property management service, though, usually comes with an extra fee attached.

 

12. Tax Assistance

Last on this list of property management services is tax assistance. While companies will not do the owner’s taxes for them, they typically provide help for taxes and deductions related to the rental property. This includes supplying a 1099 form. Keep in mind that not all companies offer tax assistance, though.

 

Find the Best Property Management Services

All things considered, it is clear that hiring a property management company poses plenty of benefits. With all these services included, property owners can rest easy knowing their investment is in good hands.

Are you in need of property management services? Start your search for the best company in your area using Rental Choice’s online directory.

 

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