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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Responsibilities and Representations

Property management contracts can range in size from 3 to 10 pages, but 5 to 6 is average. Some contracts are comprehensive; others are basic. While we can’t tell you exactly what the agreements you see will look like, there’s a good chance they’ll contain some of the items outlined below. 

Remember that each management company must be viewed in its entirety when compared against another. While some issues are more important than others, making a true comparison among the property manager  you interview requires taking into account the full scope of their management fees and services. Here are some things to pay attention to in the property management contracts you review.

Introductory Paragraph(s)

Most contracts start by stating this is a legally binding, exclusive management agreement. Then they name the parties to the agreement and the legal address of the property being managed. This is also typically the section that communicates that the broker will be working on behalf of the owner in managing the property. Terms like “Grant,” “Employ” and “Appoint” all communicate that the owner is transferring agency to the broker. 

Agency is defined as “the relationship of a person (called the agent) who acts on behalf of another person, company, or government, known as the principal. “Agency” may arise when an employer (principal) and employee (agent) ask someone to make a delivery or name someone as an agent in a contract. The basic rule is that the principal becomes responsible for the acts of the agent, and the agent’s acts are like those of the principal.” (dictionary.law.com)

Broker Responsibilities (a.k.a. “Authority and Powers”)

This is the section of the contract that should specify exactly what services you will be receiving and how those services will be performed. We’ve already covered most of this section in the following posts:

  • Handling Tenant and Owner Funds
  • Property Maintenance and Inspections
  • Setting and Collecting Rent
  • Marketing, Screening and Retaining Tenants

Make sure that the contract contains a due diligence clause (a.k.a. “best effort”), where the management company states that they will do their best in the management of the property.

Extra Duties

Some contracts contain a list of services that the agreement does not include or qualify as “work exceeding normal management duties.” If this clause exists, you need to find out which items are listed and the billing rates for these services. If a billing rate is listed, it may be “an hourly fee equal to the current monthly management fee.” Otherwise, the contract may state that the fee shall be agreed upon before the work begins, in which case you’ll want to find out more to eliminate surprises down the road if you need any of these services. 

If the list contains services that the property manager doesn’t provide under any circumstances, then make sure that you’re comfortable foregoing or outsourcing the items listed. Services typically listed include modernization, refinancing, fire restoration, rehabilitation, process serving, advising on proposed new construction and assisting sales agents or appraisers. That said, sometimes the list can be more comprehensive and include things that you might have assumed would be included in the management fee. Bottom line: It’s important to check the contract.

Legal Compliance

Some contracts have a section titled “Equal Housing Opportunity” that outlines compliance with fair housing laws. This is only part of the equation. Here’s an example of a more comprehensive legal compliance clause:

“The parties will comply with all obligations, duties, and responsibilities under the Texas Property Code, fair housing laws, and any other statute, administrative rule, ordinance, or restrictive covenant applicable to the use, leasing, management, or care of the property.” (austinlandlord.com PDF)

Advances

This clause addresses the issue of the Agent expanding its own funds to pay owner bills. Many contracts clearly indicate that the management company is not required to advance the owner funds. Others go further, stating that while not required to advance funds, the firm retains the right, at its sole discretion, to advance funds to cover necessary expenses. The owner is of course obligated to make immediate repayment, and fees may be assessed if repayment is late (1.5% of invoice per month is average).

Owner’s Representation

The purpose of this clause is pretty straightforward. You’re simply disclosing the facts about the property and your ability to enter into the agreement. Read it carefully and make sure you let the company know if there are any potential conflicts, or if you’re not sure about certain points.

Owner’s Responsibilities/Duties

There is where the owner’s responsibilities in the relationship are outlined. Pay close attention to see what you’ll be committing yourself to. The following are some items that may be included, with some being more common than others. The contract may specify that the owner agrees to:

  • Not hire any other company to lease or manage the properties included in the agreement while the contract is in effect.
  • Not take any action that would jeopardize the management company’s ability to offer the property for rent in compliance with fair housing laws.
  • Abide by restrictions on entering the property. This will vary, but the basic idea is that owners cannot enter their property whenever they want once it’s occupied, as this would be in violation of the tenant’s rights. The restriction may only require informing the tenant beforehand, or it may require the owner to notify the agent and work through them to schedule a visit.
  • Transfer security deposits paid by existing tenants to the management company. (This may not be applicable, depending on the laws in your state.)
  • Provide broker with all necessary records and documents that the management company will need to do their job.
  • Reimburse the management company for expenditures they make on behalf of the owner in the management of the property.
  • Immediately notify the management company in the event that the owner’s representations as described in the contract are no longer valid, or if other circumstances have arisen that are legally required to be disclosed to the agent, are necessary for the agent to know to perform their duties, or would affect the habitability of the property.
  • Immediately inform the manager in the event that the owner has missed payments (becomes delinquent) for financial obligations related to the property, such as property taxes, insurance, HOA fees, and most importantly, the mortgage payment.
  • Not rent the property to anyone without the management company’s prior consent.
  • Not deal or negotiate with current or prospective tenants about anything related to the management or leasing of the property, but instead refer them directly to the broker.
  • Maintain the property in a condition necessary for it to comply with all relevant laws.
  • Set up and maintain a reserve.
  • Maintain insurance (see below).

Insurance

Find out what kind of insurance and what amount of coverage the property manager requires you to maintain. The contract will likely require that the policy cover the management company in the same manner as the owner, and require notification in the event that coverage is changed in the future. In some cases, the contract may actually authorize the manager to purchase insurance on your behalf (at your expense) in the event that you lack sufficient coverage now or in the future. 

In the next post, we’ll find out how the terms of your management contract will affect your (or your property management company’s) decision to break off the relationship early.

* * *

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.

A woman smiling while holding a phone looking to here computer screen

11 Questions for Determining if You Need a Property Management Firm

While every investor’s situation is different, certain factors typically predispose owners one way or another.

The following questions will help you determine whether or not to hire a property manager.

1. How far do you live from your rental property, and how frequently can you visit the property on a regular basis?

If you’re close, you might be able to make the regular visits required for maintenance, inspections, collections, etc. Otherwise, the farther you live, the higher your travel time and expenses will be. The longer the distance, the more temptation there will be to NOT keep a close eye on things, and that can be a recipe for disaster. You should plan on making frequent visits, as well as for those middle-of-the-night emergency calls that require your immediate attention. In the long run, is this feasible for you?

2. How do you deal with stress? Do you consider yourself to be a tolerant person?

This is a tough one. We all like to think of ourselves as level-headed and even-keeled, but at the end of the day, it takes a special kind of person to deal with the ups and downs of property management.

Behind the seemingly simple task of collecting rent every month is a litany of unpredictable problems that can push people to their limits. Ask yourself how you would react in the unfortunate event that your tenants:

  • fight with other tenants or neighbors;
  • have domestic disputes;
  • conduct illegal business in the dwelling;
  • throw late-night parties or violate noise ordinances;
  • try to sneak extra people or animals into your home;
  • decide to sue you;
  • trash your property;
  • incite the wrath of your HOA because of repeated deed restriction violations; or
  • refuse to pay the rent because they are a “professional tenant” and know how to work the legal system for the maximum amount of free housing at your expense.

3. Are you currently overwhelmed with your property(ies)?

Managing rental properties can become quickly overwhelming, even for experienced investors. Something always requires attention, and things can quickly get out of hand. Hiring a property manager can help you regain control and restore stability to your properties and your life.

4. How many rental properties or units do you have?

As your portfolio grows, so do your management challenges. It becomes easier for things to fall through the cracks. Investors with large portfolios stand to reap significant benefits by leveraging the efficiencies a property manager can provide. Portfolio size can also constrain investors’ ability to consider purchasing new properties if they’re already maxed out managing their current holdings.

5. How much experience do you have with maintenance and repairs?

If you can’t do it yourself, do you know who to call? Finding reliable handymen and contractors can take a while. In the meantime, you may unknowingly hire people who are unethical, uninsured, do poor quality work, overcharge, etc. Maintenance and repairs are significant components of landlording, and if you question your ability to ensure that the work is done quickly and well, you might want to consider hiring a property management company.

6. How quickly are you able to get your unit rented?

Advertising, fielding calls and showing the unit can quickly eat up your time. But because vacancies can quickly eat into your profit margins, they’re critical tasks. If you question whether you have the skills or time to make this happen, OR if you have historically had an unacceptably high vacancy rate, you may want to consider hiring a property management company.

7. Are you capable of handling the accounting and record-keeping for your property?

From profit and loss statements to tax deductions, this area needs special attention and becomes increasingly burdensome for owners of larger portfolios. Some owners (especially those with a background in finance) will do just fine. Others may opt to hire an accountant to help with the bookkeeping. If you feel like this might be a weak point for you, you might want to consider hiring a property management company.

8. Are you willing to be on call 24/7/365?

It’s important to answer this question honestly, because ignoring emergencies at your property is NOT an option. Your special event, important meeting, vacation or personal crisis doesn’t relieve you of your obligations to your tenants. These emergencies don’t happen all the time, but when they do, you’re obligated to handle them immediately. Can you handle being called at 2 a.m. to fix someone’s overflowing toilet?

9. Are you willing to confront tenants about late payments, and evict them from the property if necessary?

Many new owners dislike feeling like the “bad guy” in a landlord-tenant relationship, so they go out of their way to make exceptions to the rules. The problem: This only invites additional abuses and excuses by tenants. Late payments must be dealt with immediately, and while sometimes a friendly reminder is all that’s needed, other times it can be a very confrontational process that needs to end in eviction. Unlike running a charity, running a successful rental business means enforcing the rules—even if it means evicting a single mother who lost her job and won’t be able to pay the rent anytime soon.

10. How well do you understand the laws governing landlording?

Ensuring that the property is run in accordance with the law is critical in preventing lawsuits and shielding yourself from liability if you’re sued. Familiarity with contracts is also very important, as your rental agreement is the only binding agreement between you and the tenant.

11. From a financial standpoint, is managing your property the best use of your time?

Ultimately, your decision to hire a property management company should hinge on whether or not it fits your lifestyle and makes good financial sense. Individual investors will have to assess the opportunity cost of both options based on their unique circumstances.

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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