Posts Tagged Rental Properties
Property Managment Fees – Know What to Expect
Posted by patandkrislarkin in Property Management on March 4, 2011
Managing rental properties is not for everyone. When you make the decision to hire a property management company to manage yours, the information can be overwhelming and confusing. This article will help to “untangle” the sometimes convoluted fee structures property managers use.
When you bought your rental property, more than likely, you did your homework to try and figure out whether or not it was the right deal for you. Similarly, when we bought our property management company, we did a lot of due diligence also and learned that there are two basic types of property management fee structures out there: 1.) Low Base Fee and 2.) The All-Inclusive Fee. Which one you choose has a lot to do with what services you may need.
The Low Base Fee is just as the name implies . . . it is a low fee for minimal services. This fee structure provides for collecting rents, screening Tenants, writing leases and paying you, the owner, any funds left over at the end of the month. The range of rates charged for this type of a property manager is between 4% and 6% of the monthly rent. For a property Renting for $2,000 per month, assuming a rate of 5%, the fee adds up to $1,200 annually ($2,000 per month X 12 months X .05).
The thing to watch out for with Low Base fee structure is the “Lease Up Fee” or “Leasing Commission” as many refer to it. Most Low Base Fee property managers do NOT include this cost in their fees and they can double your property management fees right off! If you figure a 5% leasing commission (which is common), that is another $1,200 per year just for the lease up fee! Another thing to watch out for is that some of the Low Base Fee property managers may also charge a fee for any payments they make on your behalf; mortgage, property taxes, HOA dues, so do your homework!
The all-inclusive fee structure on the other hand, pretty much includes all of these fees in it’s single fee. Now, don’t misunderstand me, at 8% to 12%, the all-inclusive fee structure usually will be higher than the low-base fees structure at first glance. But when you add up all of the extras and compare them most times the all inclusive fee structure will work out to be less money.
One other thing to consider when assessing property management companies and their fee structures: the all-inclusive property manager typically pays the lease commission out of their pocket… up front. So, they have a vested interest in finding you a good renter who will stay in your property for more than a year.
On the other hand, the property manager who charges extra for a lease-up fee or leasing commission each time they rent your property, has a vested interest in the other direction… to have you pay them the commission every year. This could translate into more of a cavalier attitude about finding you a long-term renter.
In summary: If you will be performing some of the property manager functions like leasing your own property, paying your mortgage, insurance and property taxes then, the low-base fee structure may be best for you. Conversely, if you don’t plan on having anything to do with managing your property, for instance if you will be living out of the area for a while; the all inclusive fee structure may be better suited for your needs.
If you found this article interesting, you can view a short video at: http://bit.ly/eWcFid
After selling their property management business in 2009, Pat and his wife founded and developed “Manage To Make Money” which is a resource for property managers providing Books, Documents and Forms, Live Seminars, E-Books, Free Webinars, Tips and Private Consulting. The website is: http://www.ManageToMakeMoney.com
Eviction Attorney – How Do You Find a Good One?
Posted by patandkrislarkin in Property Management on February 23, 2011
If you are serious about managing rental property, you will need a good eviction attorney on your team. This article will give you some tips on just how to find a good eviction attorney. In a previous article we posed the question: How do you collect rent? And the answer was three things; !Get a Good Eviction Attorney, 2. Get a Good Eviction Attorney and 3. Get a good Eviction Attorney! Gee, that is all well and good but how do you find a good eviction attorney? Let’s start there.
We recommend that, if at all possible, you need to go from personal reference; from a friend or your local Board of Realtors or Apartment Association. If that isn’t a possibility for you then check your local yellow pages or search the web in your area. Once you have the names there are three things you will want to make sure of: 1. That they only do evictions (unlawful detainers) or at least it is a regular part of their business. You don’t want a family law attorney who will do one for you “this time”.
Your eviction attorney should be well versed at the ins and outs of evictions, changes in the law and so on. if they are not, when pitted against a “professional Tenant” (a Tenant who know the laws and how to navigate between them) they will lose you valuable time in getting your property back. Next, check their references. You want to make sure that they have done a good job for others they have done work for. Remember, you aren’t necessarily looking for a “nice” eviction attorney…they need to be tough and assertive. Our eviction attorney wasn’t particularly nice to us…but he was good at his craft! Finally the third thing is to have your eviction attorney in place BEFORE you even rent your property . . . or at lease before you need them. As we discussed in our article “Collecting Rent” having the eviction attorney is essential in collecting rent if you have a Tenant that is slow to pay…he will help to back up any threats (promises) you have to make to your Tenants.
In summary: when looking for an eviction attorney, just you would in any trade; you want to find the best expert you can to be on your team. Be sure they are well versed in evictions (or unlawful detainers).
To view a short video on this same subject go to: http://bit.ly/eopPc1
DON’T “UNWITTINGLY” ALLOW YOUR TENANTS TO MOVE IN EARLY
Posted by patandkrislarkin in Property Management on February 14, 2011
Few of us would ever allow our Tenants to move in before their lease begins but . . . many of us do unwittingly!
Would you ever knowingly allow your Tenant to move into your property early? Perhaps unwittingly.
Think about this scenario for a minute: You have rented your property and the lease begins on the 1st of the month which is a Sunday. For our convenience, many times, we may be inclined to give the Tenants the keys on a Friday or Saturday, so that we don’t have to do it early Sunday morning. What happens so many times is that the Tenant is excited about their new place and now that they have the keys they go by just for a look . . . just to “breathe it in”. When they get there, they remember those two boxes in the back of the car . . . “Gee, if I get those out, then I can start with an empty car on moving day.” Once those boxes go from their car to the house or condo, technically, they have “moved in”!
Now, let me ask you, what is the effective for their renter’s insurance? Chances are, it doesn’t take effect until the 1st. why would it start sooner? Without that date (the now NEW move in date) being covered in their lease or their renter’s insurance being in effect . . . you, the Landlord, are liable for any damage, or injuries they may occur during that time between when they moved the boxes in until the lease start date on the lease!
To solve this issue, we always wrote the lease to begin on the day we gave them the keys and, required the Tenant to have their renter’s insurance effective on that date also. You don’t necessarily need to charge them for the extra days rent . . . just cover yourself legally and from a liability perspective.
In summary, think through the date relating to move in dates and “possible” move in dates. You might just save yourself some heartache.
To view a video on this same subject click on this link: http://bit.ly/flzcQR
ALWAYS . . . GET A CREDIT REPORT
Posted by patandkrislarkin in Uncategorized on February 14, 2011
Screening prospective Tenants can be difficult but here are a couple of tips that will help you to minimize your risk of getting a bad Tenant.
One of the main elements in screening your Tenants is to get a credit report. There are many other ways to check out your tenants but a credit report will do the best job of surfacing potential issues in their ability to pay rent and in general will help you to sort through your applicants. You can get a credit report in a couple of different ways; First, is to have your prospective Tenants run their own credit report. But be careful, free credit reports are available but rarely have a credit score. A credit score is key. Without the credit score you are subjected to reading through reams of credit information… some good and some not so good and having to figure out if this applicant is a good risk or not. The credit score will do all of that for you. Secondly, you can find many companies on the web that you can sign up with to run credit reports for your applicants. These companies will of course check you out first to be sure that you are trustworthy enough to be dealing with such sensitive information and that you will get the proper authorizations from your applicants.
As to what credit scores are good and bad; that depends on your market but I can give you some very rough ideas: a stellar credit score is 800+ and a score in the 500 range is going to be due to a lot of late payments, possibly judgments or even a bankruptcy. If you are renting high-end properties, you probably would not want a Tenant with a credit score below 700. If you are renting blue collar properties or low income properties scores in the 600’s would be “golden”!
In summary, a credit report will “tell the tale” about your Tenants. Be careful though not to be too restrictive; these are tough economic times we live in and you need to hear everyone’s “story”.
To view a short video on this subject go to: http://bit.ly/eCprVn
24 HOUR NOTICE OF ENTRY
Posted by patandkrislarkin in Property Management on February 14, 2011
What do you do when need to access your rental property but are unable to coordinate schedules with your Tenants? There are times when you need to get into your property to make repairs, show it to prospective Tenants, show it to prospective buyers or just to inspect the property and you can’t get a hold of your Tenants. We suggest that you go by the property and post it with a “24 Hour Notice of Entry” This is a legal document which tells the Tenant that in approximately 24 hours, you will be coming into the property to; and then you state your purpose.
Now you have to be judicious with the use of the 24 hour notice and not use it every week to go into your property. Your Tenant is entitled to the quiet use and enjoyment of the property. If you are using the notice to have repairs done… always accompany your workmen into the property. Also, it is a best practice that if/when you enter a Tenant’s property, that you have someone accompany you. In our our litigious world, this is for your own protection. It is also a good idea to try to contact your Tenant “one more time” before you enter the property. Also, document all the attempts you made to reach them or access the property.
You will be amazed at how when your Tenant receives their 24 Hour notice, they are miraculously available to meet you there!
In conclusion If you can’t reach your Tenant for access to the property, post a 24-Hour Notice of Entry, document all attempts to communicate with them and be sure that you accompany your workers when you/they go in.
For our 24 Hour Notice of Entry form or more down-to-earth tips on how to effectively manage your rental property, visit our web site at: http://www.ManageToMakeMoney.com or call at 949-689-4344.
To view a short video on this same subject go to: http://bit.ly/fiFr1T
DO YOU HAVE A GOOD PET CLAUSE?!
Posted by patandkrislarkin in Property Management, Uncategorized on February 2, 2011
We recommend that you include a “pet clause” (pun intended!) in every lease or rental agreement you enter into. It doesn’t matter whether or not you allow pets in your property . . . always include language concerning conditions for having a pet. If you don’t allow pets and you lease it with that condition, Tenants have been known to bring pets in anyway (say it isn’t true!). Seriously, a Tenant may get the emotional tug at their heart strings by a cute, sad-eyed puppy and they simply can’t resist. They buy the dog and decide to hide it from you. If that dog . . . especially if it is a puppy, causes damage to your rental property, and you have no terms and conditions the Tenants have agreed to, recouping costs for repairing damage caused by the animal can become fuzzy at best. If you allow pets and your Tenant signs your agreement regarding pets all the better!
For our lease addendum form including a pet clause with “teeth” (sorry, I couldn’t resist) or more tips on how to effectively manage your investment property, visit our web site at: http://www.ManageToMakeMoney.com or call 949-689-4344.
See the Video: http://bit.ly/fwdptV
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