Property Manager Hiring Guide ebook stacked multiple

A good property management company can easily become one of your greatest assets.

But deciding on a company to protect your investment can feel like rocket science. Gain the knowledge you need to confidently evaluate and hire a property management company.

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Property Management Fees, Part I

While property management fees are important, they must be viewed in light of what other firms are charging, the scope of services provided and the quality of those services. 

The company you hire will be stewarding one of your biggest assets, so the last thing you want to do is make your decision based solely (or even primarily) on who charges the lowest fees.

A lower price may reflect either an acknowledgment that a property manager doesn’t provide top-tier service, or that they’re trying to gain business by undercutting the competition. The problem with the latter is that it leads to slim margins for the firm, which lowers the ceiling on the quantity and quality of service it can provide. If a firm under-prices its services across the board, they may try to make up for it by overloading their managers with as many properties as they can (or can’t) handle.

The truth is that price is one of the last things to consider. Not because it’s the least important factor, but because you should only think about price and hire a property management company after you’ve determined whether or not it can provide high-quality services tailored to your needs. What good are low fees if the management company does a poor job?

Other common mistakes are failure to identify all the potential fees for property management, as well as not making a true “apples to apples” comparison of costs between property management companies. A lower management fee can easily be wiped out by a lot of expensive back-end charges, and vice versa.

Remember that all fees are negotiable. So before you make your final decision, you should try to negotiate the best rate possible from the firm you think will do the best job. Ask prospective property management firms about the following fees so that you can fully answer the question, “How much will property management truly cost?”

Management Fee

There’s a big difference between commercial vs. residential property management fees, but the average management fee ranges between 4 and 12% of monthly rent. For a single-family home, you might expect to pay 10% in rental property management fees. This fee will vary based on the number of properties you need managed, the number of units in each property, the location and condition of the property, and most importantly, which services are included for that fee.

Other pricing models include flat fees, or a hybrid that sets both a percentage and a flat fee and allows you to pay whichever is less. Note: You should find out if your property management fees are billed to you or deducted directly from your owner account.

Vacancy Fee

Many management companies don’t require this. If they do, pay close attention, because some management companies charge a monthly vacancy fee ($50) that’s prorated when a tenant is landed. Other companies expect to collect the full monthly property management fee even if there’s no rent coming in. 

Make sure that the language in the contract specifies that management fees are to be paid out of “collected rent” or “rent collected,” as opposed to “scheduled rent” or “rent due.” Ensuring that this language is in place will also protect you from having to pay management fees in the event that a tenant stops paying rent.

Set-up Fee

This fee is for the time invested in setting up a new account, and it usually ranges from $0-300. Find out if the fee is per unit or per property, and if it makes a difference whether or not the unit is occupied.

Leasing Fee

Leasing fees compensate the manager for the time, effort and cost associated with getting you a new tenant. While this fee is common, some owners are opposed to paying it, preferring that it be padded into the management fee so there’s more incentive for the management company to find long-term tenants.

In truth, a good management company views the management fee (NOT the leasing fee) as the primary profit center. This is why leasing fees as a standalone service (meaning, without other property management services) are typically much higher (e.g., 75-100% of the first month’s rent). 

A transparent fee structure is laid out in such a way that high tenant turnover hurts, rather than rewards, the management company. The only time this isn’t the case is when the fee is excessive or there are significant vacancy fees. 

If you’re fortunate enough to have a long-term tenant, you’ll benefit by not having to pay a leasing commission that’s padded into the monthly management fee. Good questions to ask include the following:

  1. How much is the leasing fee? This ranges from 25% to 100% of the first month’s rent, but 50% is pretty standard. Instead of charging a percentage, some firms charge a flat fee, or a percentage of the gross amount for which the lease is written.
  2. Does their leasing fee decrease or get waived if it takes them an unreasonably long time to find a tenant?
  3. Is the leasing fee structured in a way that provides the firm incentive to bring in reliable tenants? This usually either means a full or partial refund (sometimes pro-rated) in the event that the tenant is evicted or breaks their lease within 12 months of the original move-in date. Some firms have a policy of only charging this fee once per 12 months per unit, which has the same affect.
  4. Do they use leasing agents? If so, what will you have to pay them in the event that they find you a tenant?
  5. Do they require exclusivity in advertising, or can you advertise the unit as well? If you find the tenant, do you still pay the fee?
  6. Are there any restrictions or extra charges for showings (e.g., they only do x number of showings per week, not on weekends, etc.)?

We’re going to cover the rest of the fees in the next post: Property Management Fees, Part II.

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The Realty Medics are the nation’s leaders in “Rocket Science Renting”: Rocket Science Renting is about keeping your life simple by letting someone else handle the complex work of property management for you. It’s knowing that your property is running smoothly, with no hiccups or glitches. It’s hyper-responsive customer service that gives you property management peace of mind. It’s advanced technology that could only be designed by a former NASA engineer like our owner, Ben Sencenbaugh. And it’s knowing that you’re always getting maximum value and ROI for your investment.

Orlando Property Management Hiring Guide

Let us handle the rocket science of renting for you!

CONTACT US

The Realty Medics
10027 University Blvd
Orlando, FL 32817

Phone: (321) 947-7653
FAX: (407) 965-3312

The Realty Medics are the nation’s leaders in “Rocket Science Renting”: Rocket Science Renting is about keeping your life simple by letting someone else handle the complex work of property management for you. It’s knowing that your property is running smoothly, with no hiccups or glitches. It’s hyper-responsive customer service that gives you property management peace of mind. It’s advanced technology that could only be designed by a former NASA engineer like our owner, Ben Sencenbaugh. And it’s knowing that you’re always getting maximum value and ROI for your investment.

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What Are The Benefits of Using a Property Management Company?

A competent property manager can add significant value to your investment, which is why many seasoned real estate investors will tell you that a good management company is worth its weight in gold.

Here are a few ways that good property managers earn their keep:

Higher-Quality Tenants

Think of tenant screening as the moat and drawbridge around your castle. It’s certainly possible to get a bad tenant out of your home once they’re in, but it’s a real hassle, and you’re way better off not accepting them in the first place. A thorough screening process results in reliable tenants who:

  • pay on time;
  • rent longer;
  • put less wear-and-tear on the unit; and
  • generally cause fewer problems.

An experienced property management company has seen thousands of applications. They know how to quickly dig for the real facts about candidates, and they know how to analyze that information for warning signs. By letting a management company handle the screening, you’ll also shield yourself from rental scams directed at owners, as well as discrimination lawsuits resulting from inconsistent screening processes. This kind of experience takes time, and because it means avoiding bad tenants, scams and lawsuits, it’s arguably one of the most significant benefits a property management company can provide.

Fewer Costly and Time-Consuming Legal Problems

Veteran landlords know that it only takes one troublesome tenant to cause significant legal and financial headaches. A good property manager is armed with knowledge of the latest landlord-tenant laws and will ensure that you’re not leaving yourself vulnerable to a potential lawsuit. Each state and municipality has its own laws. Coupled with various federal laws, these regulations cover a number of areas, including (but not limited) to:

  • tenant screening
  • safety and conditions of the property
  • evictions
  • inspections
  • lease addendums
  • terminating leases
  • handling security deposits
  • rent collection

Avoiding a single lawsuit can more than pay for the property management fees, as well as spare you time and anguish.

Shorter Vacancy Cycles

A property manager will help you perform three critical tasks that affect how long it takes to fill your vacancies.

  1. They’ll improve and prepare the property for rent. A property manager will suggest and oversee cosmetic improvements that maximize revenue.
  2. They’ll determine the best rent rate. If the rent is too high, you’ll be stuck waiting. If it’s set too low, you’ll lose money every month the tenant is in the unit. Determining the optimal price requires deep knowledge of the local market, data on recently sold comparables, and access to rental rate tools.
  3. They’ll effectively market your property. An experienced property management company has written hundreds of ads, so they understand what to say and where to advertise in order to get a larger pool of candidates in a shorter period of time. Additionally, their volume means they can usually negotiate cheaper advertising rates online and offline. Lastly, they’re familiar with sales, so they know how to close when they field calls from prospects and take them on showings.

Better Tenant Retention

It’s easy to see the effects of lost rent, but high tenant turnover rates create other, equally serious problems. The turnover process involves thoroughly cleaning the property, changing the locks, painting the walls and possibly installing new carpeting and completing small repairs—not to mention all the effort associated with marketing, showing, screening and settling in a new tenant. This time-consuming and expensive process can be averted by keeping tenants happy and well cared for. A good property management company will have a time-tested tenant retention policy that ensures happy tenants with lengthy stays in your properties. These kinds of programs require a consistent, systematic approach, which is exactly what a good property management company can provide.

Tighter Rent Collection Process & Easier Evictions

The way you handle rent collection and late payments can spell the difference between success and failure as a landlord. Collecting rent on time every month is the only way to maintain consistent cash flow, and your tenants need to understand that this is not negotiable. Hiring a property manager puts a buffer between you and the tenant. It allows the property manager to be the bad guy who has to listen to excuses, chase down rent, and possibly evict your tenants.

If you let them, your tenants will walk all over you. They have to be trained to follow every part of the lease or deal with the consequences. Property managers have an advantage, because tenants realize that they, unlike the owner, are only doing their job and are obligated to enforce the lease terms. Many property managers will tell you that it’s considerably easier to manage other people’s units rather than their own for precisely this reason.

Strict laws govern the eviction process. So doing it wrong, or trying to evict a “professional tenant,” can be a major fiasco. A good property management firm knows the law and has a good process for obtaining the best possible outcome, given the circumstances. Never having to handle another eviction can be a compelling reason to consider hiring a property management company.

Assistance with Taxes

Property management fees are tax deductible, as well as some other expenses involved in owning and renting residential property. (Note: The Realty Medics can provide an itemized cash-flow analysis broken down for the year or on a monthly level, if desired). This saves owners the significant time and hassle of saving every receipt.

Lower Maintenance and Repair Costs

Timely and effective maintenance and repairs keep tenants happy and preserve the value of your investment, which make them a critically important part of landlording. By hiring a management firm, you gain access to their in-house maintenance staff, as well as a network of licensed, bonded and insured contractors who have already been vetted for good pricing and quality work.

This can translate into significant savings compared to going online and hiring a handyman yourself. Not only is the firm able to get volume discounts on the work, they also know the contractors and understand maintenance issues, so they’re capable of intelligently supervising the work. (Note: All vendors hired by The Realty Medics are licensed, bonded, insured, and the work is warrantied.)

Increase the Value of Your Investment

Preventative maintenance is critical, and the best way to achieve it is by putting systems in place that can catch and manage maintenance and repair issues early—before they grow into larger and more costly problems. This requires a written maintenance check program, detailed maintenance documentation and regular maintenance visits.

A property management firm can also offer suggestions and feedback on upgrades and modifications in terms of how they’ll affect the rent you can charge, as well as their impact on maintenance and insurance.

Personal Benefits for Owners

  • Less stress. You avoid dealing with middle-of-the-night emergencies, chasing down rent, evicting people from your property, tenants who wreck your property, rental scams, lousy vendors and piles of paperwork.
  • More freedom. You can live and invest wherever you want, without the constraints of needing to be near your properties. Additionally, you can live and travel free of the need to always be available for your tenants. Once you’ve found a good management company, it doesn’t matter if you live in the same state as your properties. Some landlords live in other countries and simply collect their check every month without ever seeing the property.
  • Free up more of your time. Time is money, and for many investors, their time can be more profitably spent in areas other than servicing their properties. When you focus on asset management, you’re working ON your business. When you manage your own properties, you work IN it. Additionally, you have more time to spend with family or friends doing the things you truly love to do.

A Final Thought

Of course, this is an ideal scenario. These results can only be expected if a management company is competent, trustworthy and a good fit for your property. Be aware that a poor choice of a property management company can produce its own headaches.

Property Management Hiring Guide

Let us handle the rocket science of renting for you!

CONTACT US

The Realty Medics
10027 University Blvd
Orlando, FL 32817
Phone: (321) 947-7653
FAX: (407) 965-3312

The Realty Medics are the nation’s leaders in “Rocket Science Renting”: Rocket Science Renting is about keeping your life simple by letting someone else handle the complex work of property management for you. It’s knowing that your property is running smoothly, with no hiccups or glitches. It’s hyper-responsive customer service that gives you property management peace of mind. It’s advanced technology that could only be designed by a former NASA engineer like our owner, Ben Sencenbaugh. And it’s knowing that you’re always getting maximum value and ROI for your investment.

Areas We Serve in Florida

We’re happy to serve many of the surrounding areas here in Central Florida. Below are the current cities and locations that we operate in. If you don’t see your area listed, don’t hesitate to reach out to us and we’ll see if we can work together.

The Realty Medics Guarantees

We are very proud to be the highest rated and most reviewed Property Management company in Central Florida. We guarantee results and have the lowest rates to support our results-driven philosophy.

14 Day Rental Guarantee

If we don’t rent your home in 14 days you get one month FREE management.

90 Day Money Back Guarantee

If you, the Owner, is unhappy for any reason, we will refund your management fees

6 Month Tenant Guarantee

If a tenant is removed in first 6 months, We find you a new tenant free of charge.

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CONTACT US

Phone: (321) 947-7653
FAX: (407) 965-3312

LOCATION

The Realty Medics
10027 University Blvd
Orlando, FL 32817

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