9 Sneaky Fees to Watch for When Hiring a Property Manager

security-deposit-piggy-bank-moneyTo many landlords, property management services are superfluous, cutting their profit margins to a minimum in exchange for basic services. But the reality is that property managers can make your life extraordinarily easier—and most charge a reasonable enough rate that you can draw a monthly profit from your properties (headache-free).

However, when you’re searching for a property manager to handle your landlord responsibilities, it’s important to note that not all fee structures are the same. If you don’t understand how a manager’s fees work, you won’t be able to compare apples to apples, and you might end up shaving your profit more than necessary if you aren’t prepared for those fees when they come up.

9 Fees to Watch For

These are some of the most common “hidden” fees, extra fees, and differences in fee structure to watch for when comparing providers or finalizing a contract:

1. Rent Due and Rent Collected

Many property managers will charge fees as a percentage of rent, but watch how this is worded—there’s a difference between charging as a percentage of rent due and a percentage of rent collected. A percentage of rent due means your company will charge you based on how much money a tenant owes you; a percentage of rent collected means your company will charge you based on how much money a tenant actually pays you—and is generally more favorable. If you’re charged based on rent due, you’ll end up paying for property management even when your property is vacant and you have no money coming in.

2. Early Cancellation

You may also be charged an early cancellation fee should you break the contract with your property manager before the end of its outlined term. For example, if you agree to work with them for a year and you want out after eight months, you might pay an additional few hundred dollars. Be especially wary of this fee with untested property managers.

3. A La Carte Management Fees

“A la carte” management fees refer to a suite of extra fees a property manager may charge you in addition to basic services. Usually, a property manager will either charge a higher price (and no additional fees) or a lower price, with multiple additional fees, somewhat evening out. Accordingly, it pays to know what fees are applicable and what they might run you. The remaining items in this list could all be classified as a la carte management fees.

4. Vacancy

If a company isn’t charging you the full cost of management while your property is vacant, there may still be an additional vacancy fee. Rather than collecting a percentage of rent due, they may collect a smaller amount from you as a kind of retainer.

5. Advertising

When it comes time to seek a new tenant, some property managers may charge you an additional advertising fee. This would cover the cost of creating media (such as taking photos) and placing it on sources like online listings or paper publications.

6. Leasing

A leasing fee may apply when you find a new tenant for your property. This covers the cost of drafting and securing a new lease agreement and is generally low in cost. If the cost here is high, it should raise a red flag, especially if your resulting tenant turnover seems to increase.

7. Lease Renewal

Lease renewal is even simpler than initial leasing, but it may still require a fee. You may need to draw up new paperwork or renegotiate terms with a tenant, and that means your property managers will be doing a bit of extra work. Expect minimal fees here as well.

8. Maintenance

Property management fees should cover basic instances of maintenance and repair, but some companies may charge extra for big jobs, or for an inspection between tenants.

9. Eviction

Eviction can be a messy process, and if you ever need to evict, you’ll be grateful you have a property management service in your corner. Most property managers will handle the eviction completely on your behalf, but some will charge you an extra fee for the extra work involved. Expect to pay at least a few hundred dollars for this process.

Apples to Apples

Different companies might charge money in different ways, but if they’re offering similar services, you’ll likely find the bottom-line price of each to be competitive with one another. The big difference here is how you plan on using your property management company; for example, if you’re looking for long-term arrangements, an early cancellation fee shouldn’t factor much into your decision. Try to consider all these factors and all price points when comparing providers and making your decision.

Source: biggerpockets.com

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10 tips to finding the best tenants: part one

1Tenants are an important part of your investment property succeeding, so how can you secure the right ones every time? In the first of this two-part series, Matt McCann, CEO of LocalAgentFinder.com.au shares his 10 tips on getting the best tenants and avoiding high turnover.

1. Find the right property manager Finding the right team to manage your property is crucial and by following these tips you can ensure you’re getting the best from your property manager:

  • They must have a dedicated property management division
  • They should be experienced and have previous success with problematic tenants
  • The agency principal should be involved in the function of the property management division
  • Your manager will attend inspections even on weekends or during extended hours to cater to tenants’ needs
  • The agency has good programs and processes for vetting applications and monitoring rental arrears.

 

2. Update your property By keeping your property in top condition, you’ll attract tenants who take care of their belongings and property, and it will also keep you ahead of the competition. Ensure property updates suit your target demographic; talk to your agent and find out who your potential tenants would be and how you could better present your property to them.
3. Set the right price Keep your rental price in line with similar properties in the area or other landlords will gain a competitive edge in the search for good tenants. Ask your real estate agent about the current market and how much similar properties in the area are being rented out for before deciding on a realistic price. This is also why it’s important to be aware of the market your property is in.
4. Consider a short-term lease If you’re on the fence about a candidate because they have very little established credit but do have steady employment (such as a recent graduate), you could ask your property manager about offering them a shorter lease as a trial period. The contract could then be extended or terminated according to both parties’ needs.
5. Check your agent has run a credit check It’s a good idea to include a credit check in the screening process as it is usually safer to choose a tenant who has good established credit. Your property manager should look to see if any late payments by the potential tenant on their previous rental were a one-time deal or persistent, and how recently they occurred. Your property manager should be doing all these checks anyway, but open communication with them will make sure they are doing their due diligence.

Source: smartpropertyinvestment.com

Emerging Laws for Landlords: Emotional Support Animals

1The intelligence, intuition and emotional connection displayed by trained service animals is remarkable. Service animals have been known to predict impending seizures, perform complex household tasks, protect their companions from oncoming traffic and even provide a calming influence for sufferers of autism or post-traumatic stress disorder. Registered service animals, as defined by the Americans with Disabilities Act, or ADA, are limited to canines and miniatures horses, and are required to endure months of rigorous training to qualify for a service role.

In contrast, emotional support animals, or ESAs, may be untrained members of almost any animal species who are said to provide some therapeutic benefit to their human companions. Applications for ESA certifications are up 279 percent since 2011, reflecting a huge increase in this trend. But how, exactly, does an ESA differ from a registered service animal? And, for a landlord faced with a prospective renter demanding tenant rights to fair housing, what reasonable requirements are necessary under the ADA and the Fair Housing Act?

Service animal vs. emotional support animal

The overarching difference between a service animal and an ESA is training. A service animal must undergo a lengthy preparation and evaluation process, while an ESA does not require a single day of doggy school. In fact, an ESA need not even be a dog.

Service animals

According to the ADA, service animals are defined as “dogs that are individually trained to do work or perform tasks for people with disabilities.” The emphasis here is on the word “trained.” A service animal is generally required to complete a complex and diversified training program, typically beginning in puppyhood and lasting at least two years.

Upon completion of this training, the animal must also be certified by the state regulatory agency. Then the animal is granted “public access,” meaning “state and local governments, businesses and nonprofit organizations that serve the public generally must allow service animals to accompany people with disabilities in all areas of the facility where the public is normally allowed to go.”

Gray area: Assistance animals

The Federal Housing Administration maintains a somewhat more inclusive definition of service animals and refers instead to “assistance animals.” As a landlord, you should understand this definition because penalties for refusing access to a real assistance animal can be extreme. In general, you must make reasonable accommodations for an assistance animal even if your property maintains a no-pets policy.

Unlike the definition set forth in the ADA, an assistance animal does not have to be trained for a particular set of tasks as long as the animal “works, provides assistance, or performs tasks for the benefit of a person with a disability, or provides emotional support that alleviates one or more identified symptoms or effects of a person’s disability.”

Emotional support animals

An emotional support animal, as traditionally regarded within the service animal community, is an animal without specialized training that serves as a companion for those suffering from the effects of certain mental health disorders, including anxiety and depression. The term is not recognized by the ADA and is only vaguely mentioned in some interpretations of the Fair Housing Act.

However, the “emotional support” referred to in the ADA-approved definition above pertains to mental health assistance provided by the animal to an owner suffering from the emotional side effects of an underlying recognized disability, including PTSD or autism. To obtain certification as an ESA, which is a wildly unregulated frontier, an owner need not suffer from an underlying disability as long as he experiences regular bouts of anxiety or emotional instability.

Landlord’s responsibilities and obligations

The Department of Housing and Urban Development has issued several interpretive statements regarding a landlord’s duties with regard to renters seeking accommodation for an assistance animal. First, you may not ask for documentation if the disability is obvious or apparent. If the disability is not obvious, you can ask only these two questions:

  • Does the applicant have a disability as defined by the ADA?
  • Does the applicant have a disability-related need for an assistance animal?

If the answer to either of the above questions is “no,” you are within your rights to deny the request for a waiver of your no-pets policy. In making that decision, you can request medical documentation from a licensed doctor indicating that the applicant does, in fact, suffer from a disability, though you cannot ask to review the applicant’s medical records.

For emotional support animals, you only need to make a reasonable accommodation if the support is needed to relieve the effects of a pre-existing disability; again, you can request documentation. Emotional support animals that only serve to make the owner more comfortable, alleviate stress or lessen anxiety symptoms may be excluded if the owner is not actually suffering from a documented disability.

On the other hand, you must accommodate a support animal, even if untrained, that provides stability for a renter with a documented mental or psychiatric disability.

You also may not impose weight or size restrictions on an assistance animal, provided the animal can be kept on the property without lowering the property value or creating undue financial hardship.

Source: zillow.com

Ask the Attorney: Co-tenant wants to be removed from the lease

ask-the-attorneyThe Landlord Protection Agency®presents John Reno, Esq.,a highly experienced Landlord – Tenant attorney based on Long Island, NY.

Q:  Dear Mr. Reno:

Tenants are boy-friend and girl-friend that have signed lease together but he does not leave in the property. This is a condo situation that only allows 1 rental per year.

The couple is in the midst of a personal battle.
She wants to get out of the unit and wants me to remove her from the lease, I said that can not be done since she signed a 1 year lease, she than asked me for a letter stating that she has no more responsibility for the lease and I am a little edgy about signing it and characterizing a new lease from the condo stand point? What is your take? Should they resolve that between themselves?

Mauro A Bonatti, FL

A: Yes, they should not depend on you to sort out their issues. When the lease expires, they can go their separate ways, or whatever. Until then, that’s a contract. A lease is a contract.

Legal Disclaimer
The Landlord Protection Agency’s “Ask the Attorney” column is for informational purposes only. The questions answered by Mr. Reno on this site do not constitute an attorney – client relationship and are not to be considered legal advice. Not all questions will be answered and some may appear in the LPA Q&A Forum.
The Landlord Protection Agency recommends that you seek legal advice before using any of the material offered on this web site, and makes no guarantee on the effectiveness, compliance with local laws or success of any of the material offered on this web site. The Landlord Protection Agency is not engaged in rendering legal advice.

Top 10 Mistakes Landlords Make

1People enter the landlord business for many different reasons. Maybe you’re an “accidental landlord” who decided to rent out your former residence, or you gained a property through an inheritance. Or, maybe you diligently researched properties for sale and chose to purchase one (or more) as an extra source of income. Regardless of how or why you entered the business, being a landlord can be a profitable endeavor — or a costly one if you stumble into some common pitfalls.

Here are 10 of the most common mistakes landlords make and how to avoid them.

1. (Not) Understanding your local market

The three most important words in real estate investing continue to be location, location, location. This is two-fold: First, it means making sure your rental is in a desirable area so you can attract more potential tenants. Just because the price is right doesn’t mean that the location is. Get to know the neighborhood, including access to transportation, grocery stores, area features and businesses. Second, understanding your location means learning about the dynamics of the local market, researching area taxes and determining what you can charge for rent — all of which are key to estimating the return on investment for your property.

2. (Not) Understanding fair housing laws

Before you start looking for tenants, you need to understand fair housing and discrimination laws; otherwise, you risk getting into legal trouble. Fair housing laws are federal statutes that ensure equal access to housing for everyone. It is illegal to discriminate against anyone on the basis of race, color, religion, national origin, sex, familial status or disability. Many local and state governments have additional protections that you’ll want to become familiar with. A general rule of thumb is to focus on the property and amenities in your advertising and conversations — not on a group of people, who you think the ideal renter would be or features geared toward a specific group. The bottom line is to treat and communicate with every applicant and renter in the same way.

3. (Not) Putting your best marketing foot forward

While advertising a rental property may not be as sexy as advertising a hot new car, there are many similarities. Just like the best product ads, you’ll want to feature high-quality photos of your rental — and the more, the better. It’s worth the expense to have professional photos taken during the spring and summer months so your property looks its best. You’ll also want a clearly written, accurate and error-free description of the property and amenities. Consider posting your property for free on Zillow Rental Manager to reach as wide of an audience as possible.

4. (Not) Conducting a thorough tenant screening

While speed is important in filling your vacancy, you still want to choose a highly qualified renter. Create a documented process and criteria for finding, screening and securing a tenant. Make each potential renter fill out an application and verify everything from employment to past addresses (and get landlord references while you’re at it). You’ll want to perform a tenant background check and run a tenant credit report. Confirm that renters have paid the rent on time and have not caused problems for their previous landlords or employers.

5. (Not) Completing accurate leasing paperwork

A lease serves as a binding, legal agreement between you and the tenant. As such, you’ll want to make sure it thoroughly addresses the rules, policies, and conflict resolution procedures for living on your property, and clearly defines tenant and landlord responsibilities. Remember to put everything down in writing: A handshake or verbal agreement won’t hold up in court. You can find many generic leases online, but you’ll want to review the lease requirements specific to your state or municipality and incorporate them into your rental agreement. Have it examined by a legal professional to ensure that the terms protect your interests and comply with local and state regulations.

6. (Not) Knowing your landlord responsibilities

Securing a tenant for your property is a huge milestone. But, your work is not done. As a landlord, it’s your job to meet your terms of the lease agreement: Check in with your tenants, keep tabs on the condition of the property, complete regular preventative maintenance and seasonal maintenance, and respond quickly to requests. Make sure your property is a healthy and safe place to live, and that you keep up on your taxes and financial reporting. Neglecting your residents and your property can result in higher turnover, more vacancies, lower cash flow or even lawsuits.

7. (Not) Anticipating maintenance costs

Be prepared for the possibility that your property won’t always be occupied. If you aren’t able to fill a vacancy right away, do you have enough cash set aside to pay for the mortgage, utilities and other maintenance costs? Maintaining a rental property comes with unforeseen expenses, such as damages and unexpected repairs, and the bills still need to be paid. Complete a cash flow analysis and establish a budget so you’ll be able to cover these potential costs, then track your expenses to ensure you’re staying in the black.

8. (Not) Knowing when to hire a professional

If you live in the area, are handy around the house and have the time to quickly respond to requests, you can keep up with some of the general maintenance and management of your property. However, if you have several properties or are juggling an investment on top of a full-time job, you may be better off enlisting the services of a professional property manager. Also, depending on your experience and the condition of the rental after a tenant leaves, you might want to hire a contractor to make significant improvements or repairs.

9. (Not) Managing your time efficiently

For many landlords, managing even one investment property can be a full-time job. Between securing a tenant and keeping up the books, you should understand that any investment property is a big time commitment. No matter how much you love what you do, make sure to take time for yourself and create a list of people you can rely on for backup. Having a network of people who can help in a pinch is important for the maintenance and safety of your property.

10. (Not) Treating your rental like a business

However you got into landlording, your rental property is a business — and you need to treat it that way. Consider setting up a Limited Liability Company (LLC) for ownership. This can help protect you personally from legal actions or claims. In addition, consider using accounting software or a spreadsheet to keep close track of your income, expenses and ultimately your return on investment. Document all of your procedures and communications with applicants and tenants, and make sure to stick to your procedures. When you’re renting a property, you will hear a lot of different stories, and some of them may be sad. There are many opportunities to help your community, but you want to make sure any action you take makes good business sense.

Successful landlords leverage skills from many different areas: customer service, marketing, accounting and home repair, among others. Reduce the risks that come with being a landlord by educating yourself and networking with other experienced landlords and related professionals. Join local or national landlord associations to keep up with changing rules and regulations, and share your experiences, so you can avoid the most common landlord mistakes.

Source: zillow.com

General rules to follow for an efficient and fire hazard free dryer:

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General rules to follow for an efficient and fire hazard free dryer:

1. Clean the lint trap screen after each dryer cycle.

2. Wash the lint trap screen after 20-30 loads. Let it air dry before replacing.

3. Use a vacuum hose to suck out any remaining lint inside the dryer where the lint trap is stored.

Happy Ask a Stupid Question Day

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Happy National Ask A Stupid Question Day! Now’s your chance to ask us questions you’ve always wanted to about #Leasing and #PropertyManagement, but didn’t because you felt they might be “stupid”.