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.

Property Management Fees, Part II

Like we mentioned in Part I, fees are important, but it’s unwise to make a decision on hiring a property manager based primarily on who charges the lowest fees. Here are a few more very important things to consider when you’re looking at what is and is not included in a property management fee. 

Advertising Fee

You can generate plenty of tenant leads using free resources like signs and Craigslist. But with vacancies, time is money. So prolonging the search process to save a few advertising dollars is a bad idea. This fee could be charged in addition to the leasing fee, so it’s important to ask who pays it and what the typical fees are. 

The better a property manager is at marketing, the less you’ll pay. If they have a good strategy and use modern syndication tools, this should be around $100 and not more than $200. Note: The Realty Medics does not charge any additional advertising fees. The Leasing Fee includes all marketing and advertising expenses. 

Lease Renewals

Some property managers charge this fee whenever they have to draw up the paperwork to renew a tenant’s lease. The fee typically ranges from $0-200. The process doesn’t require a lot of work, so a big fee should be a red flag. You should ask if they require lease renewals or if they allow tenants to go month-to-month after the initial term is up.

Reserve Fund Fee

These funds are used to pay day-to-day operating expenses, making sure that services are performed promptly and bills are paid in a timely manner. A reserve of $200-500 is normal for single-family properties.

Maintenance Fees

A key question for your property manager is, “Will you contact me with an estimate before performing repairs over a predefined amount? Is this negotiable?” Their policy may be to notify you if an expense exceeds a higher figure, like $500-1,000, but you may want to ask if this can be set lower starting out (say, $100-$200) and then increased over time as you become more comfortable with the property management company’s judgment. Additionally, if this notification is waived during “emergencies,” ask that they define what qualifies as an emergency.

Another key question is, “Do you have your own maintenance/repair crew?” Companies that don’t offer this may portray it as an ethical hazard, since the company could overcharge. But as long as you confirm that the billing rate and process is reasonable, it shouldn’t be a problem. If managed properly, an in-house crew is a benefit that can lead to cost savings and a more streamlined process. 

Here are some additional questions to ask regarding maintenance:

  • For larger remodeling/upgrade projects, do you act as the general contractor overseeing the work that’s done? Is there a fee for this?
  • Do you get at least three independent bids for larger ($500+) projects?
  • Do you belong to a network to get better repair rates on the work you outsource?
  • Do you charge a “mark-up fee”?

Eviction Fee

This is a fee for serving notices to tenants, dealing with attorneys, court appearances, evictions, etc. Hourly rates are typically $25-50, while a flat fee for the whole eviction process is usually $500-600 plus court costs. Find out if the property manager typically uses an attorney for evictions, and what their billing rate is.

Unpaid Invoice Fee

This is a small service charge (typically 1.5%) that’s added each month to all unpaid invoices that are past due.

Bill Payment Fee

This is a fee for making owner payments such as mortgage, insurance, homeowners association dues, etc. Some management firms don’t charge a separate fee, while others don’t even provide this service.

Sales Commission If Property Is Sold

Some management firms require an exclusive arrangement to broker your properties. If this is their policy, find out the brokerage rate and make sure there’s a limited term that will allow you to re-list with another firm if the property doesn’t sell within a reasonable period of time. 

Also, if the firm requires it, find out how much the sales commission would be in the event that a tenant wants to purchase the property they’re occupying. This is typically 1-3%, but we’ve seen higher fees. Always make sure to check the contract.

Other Income

Find out if the property manager will be keeping any portion of the following sources of income:

  • late fees
  • returned check fees
  • pet deposits
  • lease violation fees
  • interest on security deposits (may not be applicable depending on state laws) and owner funds held by manager
  • income from laundry and vending machines

Extra Duties Fee

Some contracts contain a list of extra services not included in the contract, along with the billing rate in the event that the owner requests that any of them be performed. Check to see if this clause exists, what services are listed and what the billing rate is. 

Our next post will talk about where these funds go and how your management company will handle both you and your tenant’s funds.

* * *

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.

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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