8 Insider Secrets You Must Know Before Hiring a Property Management Company
These tips will save you at least $600 a year on each rental property you own. You will be amazed at all the hidden fees and overcharging that occurs in this industry on a regular basis. It is in your best interest to be well informed.
1) What is Your Leasing Fee?
A large percentage of management companies charge 100% of the first month’s rent to find a tenant for you. I would recommend paying no more than 50% of the first month’s rent. There are true expenses in finding a tenant. bathroom remodeling philadelphia pa . A property manager typically will list the property in a Multiple Listing Service, run a Craig’s List Ad, and put up signs at your rental property. All of this takes time and money, but it certainly doesn’t equate to a full month’s rent.
Make sure the leasing fee is only due when they successfully rent your rental property. Some of companies try to charge you this fee up front whether they are successful or not.
2) Avoid National Real Estate Companies with a Property Management Division.
Because most of these companies are franchises they charge a ton of extra fees and higher commissions because of their franchise fees.
Their main business is selling homes and not providing quality property management services for the long haul. This is usually just a sideline business for the owner/broker and is a good way to develop future listings for his or her company to sell.
Stick with a local, non-brand property management company that does not sell homes for the majority of their business. You want a company that specializes only in property management. These companies will typically provide better services and are much more creative in finding you a qualified tenant.
3) Late fee to owner if tenant pays late.
This is ridiculous because they also charge the tenant a late fee. Why should you pay extra to have them do their job? That is why you pay them a management fee in the first place
4) Advertising Fee:
There shouldn’t be any advertising fees, but I have seen some management companies charge up to $750. They claim it is necessary to pay for all the advertising they do in newspapers and magazines. Let me point out an important change in every market place, newspaper ads do not work anymore! CraigsList is far superior, free, and dominants all markets with exception of small, rural towns. longboard complete . We get 8 times more calls from our CraigsList ads as compared to newspaper ads.
The real estate magazines also do not generate much interest because their primary purpose is to sell homes and not to rent them.
5) Set-up/Application Fee:
Many companies charge you $300-$500 to set up and process your rental property into their system. This fee really upsets me. It takes 5 minutes to put a rental property into a typical property management software. This is simply a profit center and should not be paid.
Once again it only takes 5 to 10 minutes maximum to enter your rental property into the computer. Even if it took 2 hours, $250 is a bit high for data entry work.
6) Can You Fire Them Without Penalty?
This is a tricky one that really costs a lot of property owners. You should request their management contract and review it very carefully. Sunbrella Furniture . Most of these contracts state that you cannot fire them without paying $500-$1000 in penalties.
Their explanation goes something like this; “we spent a lot of time and effort finding you a tenant and deserve to earn the management fee for the entire year.” Your answer should be that you covered that time and effort by paying a leasing fee. If they are doing a poor job or overcharging you, you should be able to fire them with a 30 day notice. If they do not agree, you should find somebody else.
I have found numerous examples of management companies holding their owners hostage and threatening law suits if they fire them before the management contract is up. Be very careful about this because you do not want to be stuck with a management company that is doing a horrible job.
7) Check to Make Sure You Know of Every Additional Fee
You will be very surprised about the various little fees some property management companies tack on in addition to the management fee. I have already mentioned some above but there are other ones. For example, they might charge you $50-$100 to give a 3 day notice to the tenant in the event that he or she is late with the rent. They could also charge you extra money if you request copies of receipts for maintenance done on the property.
The company might tack on a fee to send your money by check instead of direct deposit, or vice-a-versa. It would be best to make sure they put everything in writing, in the management contract. You want no surprises.
Can you talk to the Owner of the Company?
You want to speak to the owner and ask him about the items I mentioned above because the owner is the only one who can negotiate and you get the real answers from the horse’s mouth.
It is a good idea to casually ask the owner if he or she invests in rental properties. It is a positive sign if the answer is yes. Listen closely to how you feel when the owner answers your questions. He should convey a feeling of professionalism and competence. Make sure you request some testimonials or references from other customers. If any excuse is made about not providing them, politely find another company.
Thank you for providing such high quality content. I’m very impressed with how you are able to write your material in such an interesting way.
Sometimes I read an article that truly impresses me. Your informative content has done that. I agree with many of your views within this writing. You are good at keeping the attention of your readers.
I wish I could come up with something profound to say, but wow is the only word that comes to mind after reading your article.
You have made some great points here that are thought-provoking and intriguing. I am glad I found this article. I really appreciate all the work you put into this content. This is very impressive work.