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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A look into the life of a Property Manager:

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A look into the life of a Property Manager:

“We are all varying degrees of crazy. When in public, you hide the crazy in order to conform to what society deems “appropriate behavior.” Some are better at this than others. When you get home, within the confines of walls and away from watchful eyes, you can let your crazy run free without worry of judgment, public persecution or jail time. It’s where you can let your freak flag fly high and proud. This is what makes my job… interesting. I am privy to all of it—the freak flags and the secrets. It’s not a job for the thin-skinned, the weak-stomached or the easily-angered. It is a job for me: the Property Manager.” – Erin Huss

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

Property Managers Prepare for More Renters and Fewer Vacancies

rent-demand-handsIn today’s housing market there are some unmistakable trends that I’ve commented on in recent articles. The number of owner-occupied dwellings is dropping while rental vacancies are vanishing. Put another way, recent data from varying sources—including the Census Bureau—verifies that vacancy rates have fallen to a 30-year low. Residents are finding fewer choices available to rent than at any time since 1985.

At the end of the 2nd quarter of 2015, the vacancy rate plunged to 6.8% while the year-over-year growth in the number of new households jumped from 115 million to over 117 million. No wonder rental housing availabilities are dropping! Some developers call it “The Perfect Storm.” In the aftermath of The Great Recession that began back in 2008, fewer and fewer adults can afford to own a home. Lending qualifications have tightened as well.

At the same time, employment numbers took a huge hit. The number of unemployed soared while companies cut back on spending and operating costs. Employment numbers have improved during the last two years, yet the actual wages paid have hardly increased.

Wages and benefits paid by U.S. employers this past spring rose at the slowest pace since the second quarter of 1982, the Labor Department revealed. The employment cost index, which tracks salaries, wages, and benefits gained 0.2% in Q2, compared with a 0.7% gain in Q1.

These factors contributed to a slowdown in new construction of multifamily complexes and apartments. While new buildings have begun to be built there’s a lag time before they’re ready to rent. The construction lag helps fuel demand and, subsequently, rental rates will continue to rise for at least the next five years as the Millennial Generation continues to delay entering the homeownership market.

“Millennials” as they are often dubbed, mainly refers to the generation of people born between the early 1980s and the early 2000s. Perhaps the most commonly used birth range for this group is 1982-2004. The Millennials are also known as Generation Y, because it comes after Generation X—those born between the early 1960s and the 1980s. The population of Generation Y is believed to be over 80 million in the U.S. alone.

This huge demographic group has been slower to leave home than their parents’ or grandparents’ generations. The economic fiascos of the past 15 years have made it more daunting for Millennials to strike out on their own. According to a Pew Research Center analysis, a young adult in the 18-to-34-year-old age range is more likely to live with his or her parents now than in 2008. Reasons include student debt and increasing housing costs.

This reality has powerful ramifications for the overall economy and for the housing industry specifically. As a result, property managers all across America are becoming active in the possible solutions.

Working in close cooperation with local and regional housing authorities, property managers are networking to come up with viable ideas. Some are forming ad hoc task forces to make things happen. As a critically important election year approaches, property managers are also letting political candidates know that landlords, property owners, and residents are deeply concerned. Historically low vacancy rates coupled with a rising number of motivated applicants leads to shortages and rental rate inflation. Consider taking an active role in offering ideas that will benefit all involved.

This article originally appeared on PropertyManager.com.