Property Management Tip - Rent Collection and Arrears Management

Property Management Tip - Rent Collection and Arrears Management

 

There are several important points with rent collection to help landlords to minimise the likelihood of arrears occurring, and the amount of arrears potentially incurred.
  • Always check that rental payments have been made on the due date so you can initiate collection of arrears immediately
  • Automatic rent payments deposited directly into your rent account are preferable, and it is best to set up payments to coincide with the date of your tenants personal income payments to reduce the likelihood of missed payments
  • Have a zero tolerance policy to arrears and have direct and immediate contact with your tenant in the event of rent payments being missed
  • Arrange immediate repayment of arrears (preferably the next day) with your tenant and if repayment is not initiated as agreed start formal proceedings (e.g. issue of 10 day notice) straight away - this way if rent remains unpaid the tenancy bond is likely to cover the arrears incurred if you have to progress to eviction
  • Formalise agreements relating to repayment of arrears via a Tenancy Tribunal Mediation or Hearing and enforce Tribunal Orders when necessary to recover arrears
  • Lodge Tribunal decisions and 10 day notices with tenant databases such as Tenancy Information NZ ( TINZ ) to help protect other landlords from suffering the same problem from repeat offenders
By following the points above, you will collect rents on time more often. Rent collection is imperative to the success of a rental property. Learn from your mistakes and improve your rent collection policies as you go. By having a solid foundation to start with you will be better prepared if the time comes when a tenant stops paying.
While the information above is general knowledge, it is targeted at the New Zealand property management industry whether privately or professionally managed.
http://www.rentalmanagers.co.nz Property management Wellington. For all you property management needs, visit our website today!

Residential Property Management - The Value of Time

Residential Property Management - The Value of Time


 When an investor begins the process of residential property management, they often under estimate the amount of time involved with managing the property. Between finding tenants, completing timely and necessary property maintenance and keeping appropriate financial records, there is a great deal of time an investor unexpectedly spends managing the property. With a professional Residential Property Management company, investors can enjoy extra free time by spending surprisingly very little on the added assistance of an experienced professional.



Where the Time Goes
Property management often has the opportunity to be a major gain for an investor, but the time lost managing the investment sometimes does not pay for the profit. For example if an investor chooses to be the single point of contact for a tenant, they will find themselves answering the phone for clogged drains, for code enforcement issues from home owners associations as well as all of the contacts and work involved with finding tenants or renewing tenant contracts. All of this is easily eliminated with the help of a residential property management company.
A residential property management company has the staff, resources and skills to efficiently manage your property. Instead of the investor searching through the phone book or internet for multiple contractors to bid on a repair, the property manager already has a bank of qualified resources ready to complete the job. Designated marketing channels are already created by a residential property management firm, with leveraging opportunities and advertising expertise to help provide continuous rental contracts. Losing multiple months of rental income because of a lack of qualified rental occupants can adversely affect the overall profit of some rental properties extensively.
Hiring a property management company to assist with the day to day functions of a property investment is far less expensive than some investors may think. The typical cost of a residential property management firm is only 6-10% per month depending on the amount of services required at the rental. This is a very minimal fee compared to the time an investor would spend self-managing the entire rental property.

Mike Lautensack is the owner of Del Val Property Management LLC, a FULL service residential property management company located in Philadelphia, PA.
Mike advises real estate investors how to build wealth and financial security through hassle-free ownership of investment real estate with their "Total Property Management Program". This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation while it GUARANTEES you will never receive a late night emergency call, deal with a lengthy eviction proceeding or ever have to interact with an irate tenant. To inquire about our services, or get a FREE estimate, please visit http://www.delvalproperty.com/

Property Management Software - What it Does and How it Helps

Property Management Software - What it Does and How it Helps


Property software has become an essential tool for property managers. It can be used by everyone from renters to giant hospitality chains. Unfortunately, many managers still do not understand what it does and how it helps. In reality it can save time, money, and effort. Most importantly, it can provide an excellent return on investment or ROI. To better understand if this type of software will help you, here is an overview of what you get.

Property Management Software - What it Does and How It Helps
1. Centralization. A property manager is responsible for collected, maintaining, and interpreting a wide variety of information in order to make the right decisions. This includes dealing with rent collection, maintaining the property, tracking vacancies, and tracking income and expenses. By using property software, you can centralize all of this information, which makes it easier to track and interpret. This also has proved to be an effective tool for people and companies that hire property managers. Since all of this information is centralized, it is easy to see how effective the property manager actually is.



2. Module Utilization. Most property software has a variety of modules that will allow to do everything that you need to do. Common modules include: property/unit management, accounts payable/receivable, a general ledger, budgeting, bank deposits, work orders/job costs, past due letters/late fee processing, rent geared income, vendors, security management, custom reports, and the ability to create user-defined modules. With the ability to track and organize so much information, these modules can simplify the tasks of property management a great deal.

3. Streamlining Management Tasks. Property managers are required to maintain a variety of records such as vacancies, TCF (Total Cash Flow), and total income from rental properties. Property software allows a manager to keep track of every detail without having to calculate the values on their own. The biggest drawback to using excel-type programs is that the manager has to create on the formulas on their own, and the chance of mistakes is commonly high. The property software has been pre-programed to be able to do complex equations automatically, without the possibility of miscalculation.


Property Software In Review
What It Does - Management software is used to track a variety of variables from vacancies and work orders to income per property/unit to complete financial reviews. More importantly, all of this information is stored in a customized and centralized location that allows for automatic calculations without any additional effort on the part of the manager.

How It Helps - Property managing software provides a centralized location for managers to assess their financial situation with 100% accuracy. It allows for a streamlined method of record keeping while also providing all of the necessary calculations that are needed for financial records. It also helps store and track non-financial data such as vacancies, work orders, and records of the other necessary paperwork that must be kept. Finally, it provides managers a way to take care of everything from one location. In total, this ensures that property managers save time, money, and effort on a daily basis.

Read user reviews and ratings of the most popular property management software at http://www.propertymanagementreviews.org/software/

Property Management - How to Select a Professional

Property Management - How to Select a Professional

 

Most rental property owners at some point make the decision to turn the property management duties over to a professional property manager. This is especially true when the owner lives outside the area and simply can't service the property correctly. But other reasons, including an owner's desire to spend more time with the family or perhaps on the links, also motivate the decision.


Whatever the reason, however, logistic or personal, there are a number of realities surrounding professional property management companies worth noting.
Foremost, bear in mind that you will never find a company that will service your rental property as well as you do. This is not a dig at the professionals, but the reality is that you can't afford to pay any property manager to work your properties as you would. After all, the management company is in the business to make a profit and most likely would not find it cost effective to treat every rental property with the same intensity or compassion as the owner.
Okay, so what should you expect from the management company you hire?
  1. Your units rented at market rents
  2. As little vacancy as possible
  3. Operating expenses controlled and on a budget


These three specific things are really what will give you the most bang for your buck because they each, when successful, contribute to a favorable and profitable bottom line. The cost for professional property management (typically 5 to 7 percent of gross rents if off-site only and maybe up to 10 percent with an on-site property manager included) must be factored in, naturally, but at the end of the day a good management team should make you money.

Finding a reliable company to manage your property shouldn't be difficult. You might start by asking for suggestions from a loyal real estate agent or some other rental property owners if you know any. You can also do some driving around and look for signs companies often post at properties. And of course, there is always the rental section of your local newspaper.
Once you narrow down the field and start interviewing a property manager, here are some thoughts on the type of questions you might want to ask.
  1. What is their management fee?
  2. Do they charge extra for showing rentals or going to court on evictions?
  3. What are their business hours?
  4. Who covers rental calls on the weekends?
  5. What types of reports will they give you, and will they be mailed each month?
  6. How do they handle slow or nonpaying tenants?
  7. How do they set rental rates?
  8. What do they do to market vacant units?
  9. What dollar amount of expenses requires owner approval?


You get the idea. You want to ask the property management professional enough specific questions so you understand the philosophy of management to which the company adheres and how much effort they will devote to hands-on management. The bottom line is that you want to feel comfortable that the property manager you hire not only recognizes the profit goals you have set for your rental property, but knows that you expect them to earn your business.

About the Author
James Kobzeff is the developer of ProAPOD - leading real estate investment software solutions since 2000. Create rental property cash flow, rates of return, and profitability analysis presentations in minutes! Easy and affordable. Learn more at => www.proapod.com

4 Property Management Factors to Look For

4 Property Management Factors to Look For

How do property owners choose the property management company to handle their Tampa house rental investment? Is it based on how big the company is? Or is it because of the colorful ads they have out there?

These things are just outside appearances. And like all outer coverings, they do not last. And since you want your choice to last with you and your property, you definitely have to consider more important factors that a Tampa property management company should have.

Factor #1: Background of the company.

First and foremost, check how long the company has been handling Tampa rental properties, their performance and rating. Even if these things are important, they should not cloud your judgment regarding those property management companies in Tampa that are just new in the industry.

There are companies that are capable of providing better service even if they do not have the years and excellent rating that others have. It is best to check out as many options as possible. Do not opt for the first property management that you see or is referred to you.

Factor #2: Cost.

This would be the first thing you would consider when hiring a property manager. Fees vary from one property management company to another. The higher the fee does not mean it is the best. It would all depend on how the costs are distributed and if you think it is a fair amount to pay.

Besides the monthly retainer fee, there would be repair, maintenance, marketing and tenant eviction costs to consider. Property managers oversee these things for you. You can ask for a breakdown on how costs are distributed. Better yet, request for a regular accounting report so you will know how your fees are spent.

Factor #3: Customer Service.

Being a property manager means that he or she should know how to handle people. Your chosen company should have property managers that are organized, flexible, prompt and always available to answer any questions from you or your tenants.

Communication is important in this business. Be sure that your property manager can be contacted anytime that you have requests or inquiries. This should also be the same case when you already have tenants renting your property. Your property manager should be available to attend to anything that the tenant and your property require.

Factor #4: Rental Property Commitment.

Renting the property is just the first step. The duty of the Tampa property management company does not stop there. It is just the start. From then on, the property manager would have the house to monitor, rental fees to collect and reports to update.

Property owners are updated on the status of the rental property in Tampa via the property manager. Even if you are not anywhere near your property, you would know that you are in capable hands if your property manager is committed to making your home rental business smooth sailing and profitable.


Finding the right Tampa property management for your investment will be a lot easier if you consider all these factors.

For more information or for further inquiries, visit: Tampa Property Management, Rental Property Tampa

Real Property Management specialize in the management of residential properties all over the United States, and our Tampa office is locally owned and operated and serves Hillsborough County, Pasco County, Pinellas County, and Polk County. This gives us tremendous resources at the local level to assist you with your property management needs.

Article Source: http://EzineArticles.com/?expert=Joe_Hicks

Property Management Software - Protect Your Rental Property

Property Management Software - Protect Your Rental Property

As your rental property business grows, so does the need for a property management software system. Historically it has been the desire for more in-depth financial information that drives a property manager or landlord to abandon simple accounting software for property management software.


Today it is more important than ever for all property managers to use the same type of web based property management software as the larger asset management companies. There is more pressure to find reliable, rent paying tenants, with the possibility of an increased need for tenant debt collections, and the ever-looming threat of tenant landlord litigation.


Even with the best market outlook, the need to screen your prospective tenants is the top priority. Today's online tenant credit screening services allow you to access credit and criminal background information in minutes. With an integrated system, tenant screening information is automatically downloaded into your residential property management database. Later, you can review tenant payment history and property maintenance history and make smart decisions about lease management.


Providing tenants with online rent payment options, such as ACH or credit cards, helps to lower delinquencies and keep rental income at its optimum level. With integrated rental property management software, electronic rent payments reduce accounting errors and data entry, and trips to the bank. Automatic scheduled rent payments ensure that rent is received on time and eliminate past due balances.


With bad debt potentially on the rise, automated tenant debt collection services will also prove invaluable to property managers and landlords. The best property management softwares offer integrated access to national debt collections companies. These are the same programs that larger apartment management companies have been using for years.

Of course, some of these online property management services are available separately. Yet integrating all of these tools with one point of data entry can protect you from another, even more alarming threat-tenant landlord litigation. No matter how unjustified, the mere whisper of a lawsuit is enough to terrify any property manager. While litigation is a serious concern for real estate firms of all sizes, it can be particularly frightening for the small property management company which lacks the legal team of a regional or national real estate management firm.

Tenant credit screening services provide a valuable resource by providing a consistent, accepted process for making the best decisions. When you use quantitative tools for rejecting a tenant, you can be more confident in the leasing decisions you make. More importantly, having one database will help ensure all rental application data is captured and no mistakes are made.


What about cost? Historically cost has been a barrier to this type of software used by larger companies; today the web makes access to new online solutions much more cost effective. In many cases these online services, as well as services like internet listings and electronic rent payments, can be included in one low monthly fee. Hardware, server, upgrades, extra licenses, and other costs are eliminated as well, leading to considerable cost and time savings.

As the internet has been the great leveler across many industries, all rental property managers can now afford the property management accounting software that larger real estate management companies have been using for decades. The affordability of web based software is a trend with a positive impact on all professional property managers and owners. Property management systems no longer have to be reserved for the larger companies with deep pockets. They can be used by anyone with a computer and an internet connection who wants to protect their real estate investment.

Alison Cavano is Director of Customer Support at DIY Real Estate Solutions, developer of affordable property management software for property managers and landlords. DIY's online property management provides complete leasing and tenant management, including property maintenance requests, fully integrated accounting, credit and background screening and electronic rent payments services, along with personalized websites and resident portals. Visit the website at http://www.diyresolutions.com.


Article Source: http://EzineArticles.com/?expert=Alison_Cavano

Property Management


Property management pertains to the processes applied to maximize returns by effective administration of property--one of the major assets of most organizations. It also comprises the disciplines implemented on property rules and rental policies.

Property Management is a career profession that is a part of our growing business industry. A property manager's employment can either be directly under the supervision of a real estate property owner, or for a property management company, hired by an owner or legal entity to look after the real estate over a particular span of time.

A property management company is tasked with the responsibility of managing the multiple aspects which come along with the ownership of real estate. This is akin to the role of management in any business.

One of the important roles property management companies play is that of acting as liaison between the landlord and tenant. Their duties include posing appropriate gross rent, accepting rent, responding to and addressing maintenance issues, advertising vacancies for landlords, and doing credit and background checks on tenants.

In exchange for the service provided, property management companies charge landlords a percentage of the gross rent collected each month, in addition to lease commissions.


In addition to managing income and expense related activity, property managers may also manage construction, development, repair and maintenance on a property. The direction of repair and maintenance is quite a large part of a property manager's function.

Property managers should develop a relationship with the management company, property owner and tenants that is based on a mutual trust and complete confidence in one another. His alliance with tenants gives an advantage to the landlord and provides them the necessary buffer servicing their desire to profit and distance themselves from their tenant constituency.

There are many aspects to this profession, including participating in and/or initiating litigation with tenants, contractors and insurance agencies. Litigation alone is at times considered an entirely separate function, set aside for trained attorneys. Although a person or persons will be responsible for this in their job description, there may or may not be an attorney working under a property manager.

Special attention is given to Landlord/Tenant law and most commonly evictions, non-payment, harassment, reduction of pre-arranged services, and public nuisance are legal subjects that gain the most amount of attention from property managers. Therefore, it is a necessity that a property manager be current with new laws and practices in their given localities, cities and states.

Excellent property management can only achieved by top-notch managers. To be the best in this field, one must know and stay updated on local ordinances and state laws; be highly honest and ethical in enforcing property rules and rental policies; be detail oriented and organized with paper works; have good communication and computer skills; like working with the public; have a strong sense of duty and commitment; and be an exceptional follow-up person.

Copyright 2007 Ismael D. Tabije


Unlock the secrets of successful executives and professionals. http://www.BestManagementArticles.com -- the article directory with thousands of free articles in business and management--tips, advices, strategies and solutions for your success. Specialized articles in the field of Property Management may also be accessed at: http://property-management.bestmanagementarticles.com/

Article Source: http://EzineArticles.com/?expert=Ismael_Tabije

Top 5 Questions For Property Management Companies


Property management companies are an excellent resource to have on your side as a Dallas real estate investor. Most investors have numerous investment properties and not enough time to manage and maintain all of them on their own. This is where property managers step in and get the job done.
Word of mouth is a great way to find an excellent property management company. If you are an investor with a few contacts in the area, ask them for referrals and opinions on local companies. As an additional resource, I have compiled a list of the top 5 questions property management companies are frequently asked.
1) What kinds of properties do you manage?
There are all kinds of management companies out there, serving various markets. There are those that manage residential properties, single family properties, multi-family properties, commercial properties, etc. You'll want to make sure to use a company that manages the type of properties you own.
2) What types of services do you provide?
Some property management companies only offer one kind of service, while others offer many. An example of the types of services would be lawn maintenance, screening tenants, overseeing repairs (from bid process through completion) and even managing your accounts. To determine the types of services you will need from your property manager, you must first decide how involved you wish to be in personally managing your own property.

3) Is there a contract?
It's not uncommon for management companies to have their own contracts for owners to sign. You want to pay attention to the fine print and any fees that may be charged. Contract length and early termination fees are two of the most important things you should review and consider prior to signing anything.
4) What is the owner's level of involvement?
As previously mentioned, some management companies handle it all and some handle minor issues - HOW they handle these tasks can be a big issue. Some owners have no qualms about literally handing everything over to the property manager and letting them make big and small decisions without their approval. Others like to be updated on a frequent basis. Others do not want to be involved in the minutiae and only wish to be contacted in regards to bigger issues, such as tenant placement or large repairs. Ask the management company what their policy is in regards to keeping the owner updated on the property status.
5) How can I contact you?
It's important that your property manager has a way to be contacted at all times. Most managers have cell phones and an email address, which makes them easy to reach and gives them the ability to respond quickly. Others prefer to use landlines and voicemail. Whichever methods they prefer to use, it's important that they keep their numbers updated and check their messages frequently.
Be sure to do as much research as you can before choosing a property management company. Remember that these property managers are working with your Dallas investment property (a.k.a., your money), so you want someone you can trust and rely on. You want managers that have initiative, are self-motivated, trustworthy, reliable and responsible - all important traits that are needed to manage your properties well, keep them filled with good, qualified tenants and get repairs done as quickly, and reasonably priced, as possible.
Karissa is a real estate investing enthusiast and loves sharing the knowledge she has of this field with others. She is also a member of MyHouseDeals.com, which is where she gains access to investment property listings.

Apartment Property Management


Apartment property management is considered the managing of a multi-unit rental property and the residents or tenants that occupy it. These properties can range from small multi-unit buildings to very large complexes housing hundred of residents. Residential property management is a more industry used term and could include the managing of single-family homes as well as apartment complexes.
As you can imagine the managing of these types of properties can become quite complex and time consuming in comparison to managing a single-family house. Many owners of apartment buildings do not have the time, expertise or the desire to manage such on their own. In these cases, it is recommended to hire a qualified property management company that specializes in apartment property management.

Responsibilities of an Apartment Property Manager
Here are just a few apartment property management responsibilities that could be required of anyone managing an apartment building:
  • Rent collection
  • Showing available units to prospective tenants
  • Credit and background checks
  • Initiating lease contracts
  • Monitoring and processing lease renewals
  • Enforcing the rules of a lease contract
  • Dealing with violators of a lease contract
  • Handling an eviction from start to finish
  • Mediator when feuds between tenants occur
  • Utilities
  • Grounds keeping
  • Security and safety of premise
  • All types of maintenance issues or repairs you could think of
  • Knowledge of landlord/tenant law
  • Knowledge of fair housing laws

Not ready to manage your Apartment Buildings Yourself 
The good news is you can enjoy all the financial benefits of owning these types of properties but not have to deal with the managerial responsibilities of managing them. Some apartment building investors though may decide to take on certain responsibilities themselves. This is a great way to educate yourself, learn from real life experience the in's and out's of the real estate investing business and of course save some money. That being said, we highly recommend acquiring legal advice or counsel if you are unfamiliar with landlord/tenant and fair housing laws in your state and at the federal level.


Hiring an Apartment Property Management company
There are many apartment property management companies in your area who are well-qualified, licensed, and well versed in city, state and federal laws regarding the responsibilities between landlord and tenant. If you're ready to delegate the management of your apartment building today, we recommend interviewing several apartment property management companies. Having an apartment property manager on site at your apartment complexes is a good idea, especially when you cannot oversee the maintenance and renting business that comes with owning larger properties. Often, on-site apartment property managers that maintain apartments will be given their own apartment as part of their compensation.

Things to ask before hiring an apartment property management company
Experience - How long in business. Does the Apartment Property Management team have a proven system in place to streamline operations such as maintenance repair, timely statements, rental deposits, and communication channels? More companies are giving owners access to their property account information via a web site portal. Here you can view your statements, any repair items or rent deposits..etc.
Credentials - Does the Apartment Property Management team possess all licenses or certification required by state law? Unfortunately every state licensing requirement is different. We always recommend using a licensed Property Manager for all your rental property needs whether state required or not.
What percentage of their management portfolio are apartment complexes. If 90% of their portfolio is managing single-family homes, you may want to consider hiring one with more experience in managing larger multi-units.
Get references - Always ask for a current list of properties they manage (do some drive-by's) and talk to other property owners who are their clients.
We suggest hiring a local real estate lawyer to review the Manager/Owner contract and the Landlord/Tenant contract. And don't be afraid to request changes be made if necessary.
And go over all the fees involved in the management of your property. Set up fees, lease renewal fees, do they impose a mark up fee for service/repair calls etc. Find out what their cancellation policy is too. Once you think you've got all your questions answer, then ask this one "Are there any other fees I should know about that we have not discuss that may affect me?"

Investing in apartments for cash flow
Investing in apartment buildings is a great way to build your real estate wealth. Typically these types of properties do well for cash flow to the investor versus single-family houses where you may see appreciation in value more common. When qualifying these types of properties for your portfolio you will want to take into account the passive income that will be generated along with the expense ratio. It's all about the numbers. A good apartment property management company should be able to help you in your decision-making.
Karen McDaniel
Principal/CEO
Property Management Profile LLC
Property Management Profile LLC is an interactive online search engine for finding all types of full service property management companies nationwide. For any property management company that is looking to gain national exposure by capturing the attention of out-of-state investors or be found by local clientele, http://www.PropertyManagementProfile.com is the place to showcase their business model and expertise to these prospective clients.
Property Management Profile offers the most up-to-date listing of full-service property management companies. We have created our site with the idea of making it simple yet detailed enough with the right information for the investors to make wise choices when looking for a property manager to manage their investment properties.
We offer an opportunity for all property management companies to list their company on our website, whether you specialize in residential, commercial, vacation or community association management. We accept small to corporate size management companies. We also offer a Free basic listing, so you have no excuse for not being listed.

Property Management Profile has become a wealth of information and resource for the first-time landlord as well as the seasoned investors. We should know what we're talking about, as owner and creator of Property Management Profile, Karen McDaniel, has owned and managed many of her own properties. Today, all are managed by professional property management companies, so she now has more time to continue her work educating and helping others make better choices when it comes to finding a qualified property management company.
Visit us today at http://www.propertymanagementprofile.com

Rental Property Management Made Easy


Having your own rental property management plan is key to residential rental property investing.
Its 8:30 at night, your tenant calls and says water is leaking very badly under the sink. Its 8:30 at night, your tenant calls and says the toilets clogged. Its 8:30 at night, your tenant calls and says a window just got smashed. Its 8:30 at night, your tenant calls and says the roofs leaking. Its 8:30 at night, your tenant calls and says the heats not working. Its 8:30 at night, your tenant calls and says the bedroom doorknob fell off.
How about a gutter gets disconnected. No big deal, when it rains make sure your not standing underneath it. Winter comes, where water hits the ground, it starts to collect and then it freezes. Whoops, someone slips there and you get sued. Big problem. It pays to have a rental property management plan.
How about that exterior porch wood that needs painting. No big deal. Next year. Next year comes and goes and you saved 700 bucks not doing it. Three years later you spend $2000 having wood replaced because its to rotted. Big problem. It pays to have a property management plan.

You get the idea, whether something breaks or routine maintenance - things need to get fixed and maintained.  A good rental property management plan helps ensure easy and profitable multifamily property investing.
There are three main factors for a good rental property management plan. Knowing who is responsible for managing the properties maintenance, who is going to fix things and when will things get fixed  are the three main factors.  Having a game plan for these three things is vital for maintaining your rentals. Theses three factors should be addressed and included in the lease. This ensures the tenant knows ahead of time what to expect when things need repairing or maintenance.

Lets start with who will be responsible for managing your rental property.  Seventeen years experience of owning rentals has taught me that know one else will be better than the property owner for being  responsible for managing the maintenance of your rental units. So the most cost effective rental property management plan has the owner doing the managing.
Before you say, oh god, what a nightmare managing rental property is, let me say I have learned and you can too, how to make property management simple and profitable.
In fact, for those who understand and implement  a solid rental management plan correctly and continue investing wisely in cash flowing residential multifamily properties will find that their hourly pay time for managing  their rental properties is extremely lucrative.
Needless to say, I personally strongly advise against hiring a management company for residential rental property.
Lets address who is actually going to be fixing  broken items or doing the required maintenance?
You, the owner, your payroll help, a hired handyman, who is going to actually be doing the physical work for fixing and maintaining your rental units. Why is it important to have this be part of your rental property management plan?
Well, what you don't want is having every time something needs to be repaired become a stressful costly headache.
By knowing who is going to be doing the repairs  ahead of time, through your rental maintenance plan, you eliminate two potential problems.
One, when a problem does occur, your somewhat prepared by having had developed a list of contacts ahead of time. Secondly, being prepared like this, tremendously reduces stress and makes managing your rental property easy.
Hopefully you see the importance of knowing ahead of time who is responsible for and who is actually going to be doing the maintenance work.
Later, I'll tell you the third important key for a cost effective, easy to implement  rental property management plan.
A few additional things to consider regarding rental property management. If your just starting out and you buy a multifamily house, and your a  hands on type person you may want to do as much of the maintenance and repairs as possible.
If you go on to keep investing in multifamily houses you'll find actually doing the physical maintaining of your income properties to burdensome.
Understand that managing rental properties and doing the physical work are two different things.
If you decide to hire a maintenance man or handyman to do the maintenance, ask around local hardware stores for referrals or ask people in a Home depot or Lowes. They're not supposed to refer people but I have been pleasantly surprised how many people moonlight or know someone fair priced and reliable.
Look in a local paper for a handy man you can enlist to do the maintenance. Call a few people placing adds, not big print adds, rather the small adds and tell them what kind of help your looking for. Listen to them give their spiel, ask questions and ask if they can offer you anyone who they worked for in past as a recommendation. If they check out tell them you'll be giving them a call when you need them.
Personally, I do not recommend hiring an outside company to do your rental property management.
Another great place to get names of reliable people to do your repairs and maintenance is through your local REIA group. The more names and numbers for cost effective, reliable maintenance men, the better. Put their names, numbers and what they do into your cell phone or keep them in a special book. I'm sure I'm not the first or last person to put a name and number in a book and later not remember who they are or what they do!
Who might you want to have on your rental property maintenance list before you even need them? A few general handymen, a furnace repair man unless you  want to get repair contracts from the gas company if your property heats by gas, an exterminator ( I actually have contracts for quarterly prevention with exterminator on all my units), an appliance repair man if you supply appliances, a plumber, a drain cleaning company and someone to shovel or plow your dwellings.
If you went on to own a lot of multifamily units, you may want to considering hiring someone on full time for doing the physical maintenance work. Personally I prefer having a large network of contacts I can call on for maintenance and repair work over having employees.
If you follow these rental property management guidelines, managing your cash flow units is simply a very profitable job of receiving and making phone calls.
Earlier I mention there was one more important factor to address regarding how to manage your rentals.y.
When will things be repaired?  Put in the lease or addendum how long you have to make arrangements to have things fixed, twenty four, forty eight, seventy two hours? Put it in the lease so tenant knows how you maintain your property. It may seem silly, but I've found by having the tenants being aware of how you manage and maintain your rentals the less misunderstandings you'll have.
Remember, your in charge. Its your property and having a solid rental property  plan and informing your tenants how you maintain your rental property will make owning investment property all the better.
As they say in the hood, everyone knows what time it is.
Mark Petrelis has owned and managed his own rental property, primarily 2-6 unit buildings since "92". Rental property management has become easy and very profitable. Some of the rental properties were total rehabs while others had existing tenants and only needed cosmetics.
Did you find the above article helpful?
Learn from someone actually doing it, how to successfully own rental property as well as follow Marks day to day land-lording experiences.

Property Management Software - What to Look For

Property Management Software - What to Look For

While many property managers still use Excel spreadsheets or a pencil and paper to manage their investments, there are much better tools available. The property management software you choose should be flexible, inexpensive and easy to use. You need a really flexible rental property program because, as a property manager, you never know what tomorrow may bring. You might need to get details about a property or tenant at home, in the office or even out at a property. You might need to have other members of your company get records themselves, from their own computers. Your business might double, and you don't want a tool that won't server your needs any more. The most flexible property management programs are those running over the Internet.

Because the records are kept on a Web server, you - or anyone else you authorize - can get to them from any Internet-connected computer. And unlike Windows property management programs, on-line property management software doesn't limit the number of units (doors) you can manage. Surprisingly, you don't give up any security features when using the right on-line property management software. True, the records aren't on your computer. Instead, they're maintained on a computer that typically has much better protection than your own. It'll be kept in a locked room, fire-safe room, with daily backups and multiple storage devices. The best on-line rental property programs also use SSL security so that all of your work is encrypted - and therefore completely off-limits to hackers. All on-line rental property programs are sold by subscription.

Look for one that doesn't require a long-term commitment or a single annual payment. You want to be able to cancel without any penalties. Because property management programs can be complex, look for one where support and training are included in the subscription fee. You want a company that looks to maintain a healthy long-term relationship with its customers. This is actually another advantage of on-line tools; they have to keep you satisfied for a long time, not just for the first 30 or 60 days. Support and training should be offered on your schedule. Make sure your software vendor has extended support hours, especially if your office is on one coast and theirs is on another. It goes without saying that the best property management software is developed by actual property managers. However, some developers rely on their own very limited experience. For example, they may know all about single-family houses, but have no clue about the special needs of commercial property investing or multifamily units.

Make sure the company you choose relies on a wide variety of property managers, landlords and other experts to get product design tips. In addition, you want your property management software to be responsive to your specific needs. Companies making Windows property management software can never be that responsive to customers, because upgrading the software is such a hassle. Such companies often only release upgrades every year or two, and when they do, their customers have to go through what may be a very messy upgrade process. On the other hand, on-line property management software can be upgraded whenever the company has a new feature that has been fully tested. The next time customers log in, the new features are ready for them to use. Here are some of the features that you will absolutely want in your property management program.

o A full accounting package. Your program should support whichever accounting method you prefer, cash (simpler) or accrual (more detailed and preferred by most property managers). It should include a number of accounting reports that you can run at any time and for any period. You should be able to calculate late fees and discounts automatically

o Check writing. When you have to write a lot of checks for your business, it's great to be able to just print them off on your computer. Your software vendor will put you in touch with at least one company that makes the kind of check forms you will need. One word of caution: to print checks with blank check stock, you will need a laser printer and a special magnetic ink cartridge. The laser printer probably won't be an issue, but the magnetic ink cartridge may be. A simpler solution is just to order preprinted check forms. These forms will have the basic information such as MICR numbers (the numbers at the bottom of the check, which are always printed in magnetic ink). You'll still print checks, but just the amount, payee, date and other fields that don't have to be in magnetic ink.

o Reminders. You should be able to set up reminders for appointments, projects, and other tasks. You should also get automatic reminders for the two things every property manager wants to be aware of: late rent payments and expiring leases.

o Many different data fields to let you store all the information you want, but not that many mandatory data fields. You should be able to use your software for as little or as much work as you like.
o Fast and easy data management. You'll spend a lot of time entering records and finding what you need in your property management software. You don't want something that will make it complicated and difficult to handle these tasks.
Look for wizards and maybe even a "Quick Start" feature to make loading fast, and fast searching and sorting to let you very easily find what you need. What if you find a property management program that is great, but not perfect? Many property managers will quit using a program because it doesn't have the one specific report or calculation they really like. They then have a choice; they can keep on going with Excel or written ledgers, or they can continue on an endless search for the perfect program that simply doesn't exist. Instead, why not contact the company you are interested in and see if they can add the feature you want? You might learn that they're already working on it. If not, they may be happy to add it to keep you satisfied.

Brendan is the developer of Property Master property management software. Our landlord software runs on any Web-connected computer with full accounting, alerts, nearly 50 reports, and many other great features. http://www.pcpropertymaster.com

Facts about Property Management

Facts about Property Management


Property management is the concern of many of us, taking into account the fact that our society is in continuous movement and change. Property management information is available not only in specialized magazines and research papers, but also online, on websites that have as their major concern study, market research, covering issues regarding marketing and leasing, land use and development, maintenance and other important subjects. There are also property management companies that offer their consultancy and assistance during an investment and management period.

The advantage of reading property management magazines is that they present both the academic and professional point of view. Besides, some of them are available online, too. Another advantage of property management magazines is that some of them are focused either on the national or international perspective regarding important issues. Property management magazines are a valuable resource for people who want to be informed about changes of this domain.

There are various online resource centers offering news and information about property management. You can find there information about property and real estate, tax deductions for landlords, frequently asked tenants concerning the legal or practical issues of tenants and landlords. Property management resource centers also offer useful tips for landlords and valuable details about usual issues. Tenant injuries is a subject discussed by online property management resource centers, pointing out insurance facts and landlord liability. There are also legal updates to previous information offered on the website so that the landlords would be well informed about recent changes.

Landlords may be amazed by the fact that there is property management software available. This property management software is of great help for landlords with a few rental units and for management of big properties. In this way, you can have your rental properties organized, benefiting from the smart Windows based software. This popular property management software reminds you of expiring leases, late rent, providing extensive reports in various categories. Property management is made easier and more accessible with simple software that provides necessary and valuable information in due time.

There are also National Property Management Associations focused on personal property and fixed-asset professionals. These associations can offer training, educational opportunities as well as certification programs, all of them concerning the subject property management.
You can find information and assistance concerning agriculture, industry property management. There are property management divisions concerned with some particular branches: real property, personal property and physical property. Property management can become easier with support, implementation and monitoring of procedures, regulations and policies for the management of real and personal property.

Property management companies have to deal with multiple responsibilities and aspects of management of ownership of real estate. These companies offer to negotiate and stabilize the relationships between landlord and tenant. They also manage income and activities involving expenses, repair, maintenance and other aspects of the construction and development.
Property management is much more than a matter of responsibility, awareness and information. It requires time, intelligence and witness, great attention to details, but also management qualifications.
Property related issues explained clearly at http://propertymeet.info Up to date property business and management factors that are affecting your monetary return.

Real Estate Investing: Apartments - How to Find a Good Property Manager

Real Estate Investing: Apartments 

How to Find a Good Property Manager


How do you find good property management? After all, you'll pay if you don't have a skillful, competent, honest property manager.
How do you find good candidates for property management? The secret is referrals, lots of them. I speak with a lot of property owners about the possibility of my company buying their property, regardless of whether they are interested in selling. I ask them who currently manages their property and whether they are happy with them.
I ask other property managers who manage other types of property - retail, for example - if they know of a good multifamily property manager. I ask everyone else I come across in related businesses, including attorneys and insurance agents. I like to get several referrals to the same property manager.
Make sure your investment focus matches your property manager's expertise. Don't have a luxury class A property manager manage your working class C properties. Do your needs match the skills of the property manager? Do you need rehabilitation managed? Match the size of your properties with the size and capacity of your property manager. You don't want to be your property manager's smallest property. Calls get returned quickly when you are one of the largest customers.
Interview your property manager, inspect one of the properties the manager currently manages and ask to see a rent-ready unit. Is their definition of rent-ready the same as yours? I remember one prospective property manager stepping over some trash on the ground outside a managed property. They just didn't care. Find out who their favorite contractors are for plumbing, electrical, roofing, etc. What are the reputations of those contractors?
Does the property manager know what's going on in the rental market and how to react to it?
Make sure your contact and discussions set the groundwork for a constructive business relationship. Make sure you are clear about your property manager's repairs expense limit. Make sure you are on the same page about handling non-paying tenants and evictions.
Monitor and verify. What do your monthly financials look like? Is it clear what your expenses are? How quickly are vacant units being made ready? How quickly are they being rented? How does the property look compared with similar properties in the area? When something doesn't go as planned, what corrective action is being taken? One definition of insanity is doing the same thing over and over and expecting different results. Is that what your property manager is doing to rent your vacant units?
In one market, I have a college student who takes pictures of potential property purchases. If I haven't recently been by a property I own, I'll have her go take pictures of it for me.
Patrick Leblanc is the president of Reflex Investors Inc. and has been investing in real estate since 1991. Reflex Investors buys multifamily properties by offering investors a fixed 10% return in private mortgage notes. Patrick can be reached at [http://www.Reflex-Investors.com] and http://www.Solid-Return.com

Property Management Fees Explained

Property Management Fees Explained

When you hire a property management company to serve as the liaison between yourself and your tenants, you want to be sure you're getting the best possible property management services for the money. The services a property management company provides can range from ala carte to an all-in-one inclusive package. Along with that comes an array of fees for each. There is no set in stone fee structure we can provide you. But we can educate you on what common fees to expect and what each is commonly for. In the end it will be up to you to compare company fee structures and choose the best one that fits within your budget. Below are some of the most common fees and what service they provide.


Commission
This is an ongoing monthly fee charged to the owner to compensate the property manager for the responsibilities of overseeing the management of their property. This fee can vary from as little as 3% to over 15% of the monthly gross rent. In place of a percentage some managers may charge a flat monthly amount which again can vary from $50 to over $200 per month. All property management companies generally charge this fee.

Lease-Up or Setup Fee
This fee is charged to the owner to compensate the property manager for their initial time invested and resources used in setting up an owners account; showing property and/or other activities resulting in tenant placement. I guess you could look at it as a "finders fee" for placing a tenant in your property. Once a tenant has been placed and first rent income comes in, the property manager will deduct this fee from the rent proceeds. Some property managers have been known to require this fee upfront prior to tenant procurement. Usually this fee is non-refundable once the property manager has started the process of tenant procurement or any legwork has been initiated with the property. This fee can vary from none to as much as the first months rent, and usually is a one-time fee per tenant.

Lease Renewal Fee
This fee is charged to the owner when a property manager renews a current tenants lease and covers the costs of initiating paperwork or communication involved in implementing the new lease document. A property manager may also justify this fee if they perform a year end inspection of property. This fee can vary from none to $200 or higher, and may be charged every time a lease renewal is implemented.

Advertsing Costs
Depending upon the property management company's contract, either they will pay the advertising costs or the owner or they could split the costs. If the manager is willing to cover this cost, most likely they will charge the lease-up or setup fee as outline above. If the management company covers this cost make sure to find out what type advertising or marketing of your property is included. If it's placing your listing on their own web site and other free online classified sites you may not be getting your monies worth. They are many good rental or tenant resource online web sites that bring in qualified tenants for a reasonable fee and you will want to consider these. And don't forget about print media, yard signs, listing on the MLS or even an open house. Nothing is worst than having your property vacant, bringing in no money only because you or your property manager skimped on advertising.

Maintenance Mark-up Charges
This is one of those costs you may never really of known about or had it disclosed to you. A "Mark-up" is a charge over and beyond the final bill on maintenance and/or repair work done to your property initiated by your property management company when using their vendors or in-house maintenance staff. This should be disclosed in your Manager/Owner contract which usually will state the markup as a percentage above the final invoice from vendor. For example, your manager had to call a plumber to replace the dishwasher in your rental property. Total charges for completing the job: $400. If your property manager contract states you will incur a 10% markup on all maintenance work the actual cost to you will be $440. Just one of those things to be aware of as these all eat into your profits.

Early Cancellation Fee
The dreaded "3 months and no tenant". Your property manager insist he or she's doing everything they can to find you a tenant. But here it is 3 months and still no tenant; what do you do. Well, look at your Manager/Owner contract and that might be your deciding factor. I am not a fan of this fee, and believe it to be an unnecessary fee and for you manager out there this could be the deal breaker. I'll tell you why; if a property manager is doing their due diligence and keeping the owners in the loop as far as decision making, market conditions and communication lines open an owner will not be second guessing his property managers abilities. The odds of this scenario happening is unlikely but you must be prepared for it. A cancellation fee can range from none to over $500. To be fair, some managers legitimately deserve this fee especially if they have pocketed advertising costs, incurred lots of legwork and time invested in your property.
"You've Got To Be Kidding Me" Fees - These are ones I have personally had the pleasure of running into.
  • Your property is vacant, but we still will charge our monthly commission or a small flat fee.
  • "A For-Rent Yard Sign Fee". I believe this was $25/mo.
  • "Preventive Maintenance Fee". This was to cover the "just in case" and changing out A/C filters. If "just in case" never happens they still pocket the money. I believe this was $20/mo and I still was charged for filters.

In Summary
Read your Manager/Owner contract, understand what you are signing, ask lots of questions and know what the fees will buy you in services. A good real estate lawyer can help in negotiating the terms in a contract that suit both parties. These contracts are not set in stone. If your property manager will not negotiate, there are other property management companies that are eager to earn your business.
Karen McDaniel
Principal/CEO
Property Management Profile LLC

Property Management Profile LLC is an interactive online search engine for finding all types of full service property management companies nationwide. For any property management company that is looking to gain national exposure by capturing the attention of out-of-state investors or be found by local clientele, http://www.PropertyManagementProfile.com is the place to showcase their business model and expertise to these prospective clients.

Property Management Profile offers the most up-to-date listing of full-service property management companies. We have created our site with the idea of making it simple yet detailed enough with the right information for the investors to make wise choices when looking for a property manager to manage their investment properties.

We offer an opportunity for all property management companies to list their company on our website, whether you specialize in residential, commercial, vacation or community association management. We accept small to corporate size management companies. We also offer a Free basic listing, so you have no excuse for not being listed.

Property Management Profile has become a wealth of information and resource for the first-time landlord as well as the seasoned investors. We should know what we're talking about, as owner and creator of Property Management Profile, Karen McDaniel, has owned and managed many of her own properties. Today, all are managed by professional property management companies, so she now has more time to continue her work educating and helping others make better choices when it comes to finding a qualified property management company.
Visit us today at http://www.propertymanagementprofile.com

Top 9 Questions to Ask a Property Management Company

Top 9 Questions to Ask a Property Management Company


Now you have an investment property the next step is to find someone to take over its management. Do your research and list questions you want to ask when interviewing prospective property management companies. Short list a few companies that interest you.
Phone them to ask questions then, if you are still interested; make an appointment to visit in person. Visiting in person gives you an idea of how they conduct their business and you can meet the people who will represent your interests. Here are the top five questions to ask when you interview a property manager.

1. Does the Company have a Dedicated Management Arm?
You want to know whether the property management company offers a complete service or if it is just a side line for a real estate office. Who and how will your property be managed. How many staff are in the office? Who will deal with you and your tenants if staff leave or are sick?

2. Does the Company Owner/Director get Involved in the Business?
Most property management companies are divided in two - selling real estate and managing real estate. Usually the company director is involved with the sales side as it is the high profit area of the business and a property manager takes care of leasing. If the company director is involved with the property management arm of the business, you may find they take it more seriously than others.

3. How well do they know the Rental Business?
Check with the property manager how long they have personally been dealing with property management. Just because you are talking to a well known real estate company does not mean their staff have a lot of experience. It also does not mean they provide top quality customer service.
Some property managers start out working in a real estate office as the office person and work their way up. Some move into property management and the rest into sales. Other property managers have specifically chosen property management as their career.

4. How long has the Property Manager worked for the Company?
You want a property manager that is stable in their employment, and who takes looking after your interests seriously. There is a lot of stress involved in property management, with a high turnover of staff. In six months time, you want to be talking to the same person to build a business relationship that understands your needs and the property. This is a good reason to look for a property manager dedicated to it as a career.

5. What Area does the Company Service?
You are right to consider companies that have expert local knowledge but, if you intend buying more properties in the future, how far does their expertize reach?
You do have a choice - either hire a property management company in each geographic area or find one that covers a wider area to take on all your properties.

6. How do they Conduct Property Inspections?
This is really an important one - the last thing you want is for a property manager to just hand out your keys to prospective tenants. Too much can go wrong. You want to know that the property manager will give good customer service and personally take prospective tenants to inspect your property. Or, they may hold open houses at specific times. This gives them a chance to get to know a future tenant better.

7. How many Properties does the Company Manage?
You want to know how many properties the property manager manages personally. Some may have 200 or more. If they do, I wonder how they can give you and your tenants top customer service. Others may have only up to 150 but charge more for their service. This may be a better option to get peace of mind and, ultimately, make a good return on your investment property.

8. Does the Company's Staff Work Six Days a Week?
You want a property management company that can show your properties when it is convenient for the tenant. After all, you want tenants that can pay the rent so that means that most will be at work during normal business hours; unless it is a commercial property for rent. In the world of internet advertising, inquiries come in 24 hours a day. This comes down to their availability and ability to deal with maintenance issues as well.

9. Does the Property Manager Check New Tenant's Credentials?
It is important to ask how the property management company checks out the credentials of short listed prospects. You need to reassure yourself they check people's credit and rental history, and their past and present employment.
All prospective tenants must be screened carefully. Does your property manager have adequate access to information for this purpose? Do they provide you with a written report that backs up their claims when handing over short listed prospective tenants?
You now have plenty of information to help you seek out the very best property manager for your growing property portfolio. Enjoy your investment.
Property Maintenance of London offers help to landlords in the areas of end of tenancy cleaning, electrical work, garden maintenance, regular property management services, and plumbing in London.

 

Real Estate Property Management - Managerial Types

Real Estate Property Management - Managerial Types


Real estate property management is a complicated task and quite difficult for a single person to handle it. It should be handled by a number of skilled professionals with expertise in their specific areas. The portfolios that are generally assumed to manage properties are as follows. They are the onsite managers, the leasing agent, the tenant representative, the manager of different properties and the portfolio manager. However it has to be borne in mind that in practical work scenario the professionals who are involved in managing the different properties may not stick to the defined job descriptions. There will be a lot of situations where one will overlap the other.
The first professional on the real estate property management team is the onsite manager also called the resident manager. He is the person who looks into the everyday issues of managing different aspects of a property. The onsite management position is usually considered to be at the beginning of the career ladder of jobs that deal with managing of various properties. The onsite manager is usually given accommodation in the premises of the property, whether commercial or residential, that he is managing. This is done to ensure better work efficiency and saving time. He is entrusted with the routine activities of the job that involves management of realty. This includes daily interaction with the house owners and the tenants, collecting the fees from the tenants and performing the routine maintenance jobs.
The real estate property management team includes the leasing agent who is responsible for getting new tenants for a premises and finalizing the tenancy deal. It involves working in a sales profile and does not require one to visit any property premises every day and taking care of the maintenance activities going on there. A leasing manager might be given the responsibility of a single property if it is large and a number of properties if they are small. A junior level leasing manager can be placed under the supervision of an onsite manger while a senior level manager might be placed under the direct supervision of the portfolio manager. The leasing activity can also be taken care of by the onsite manager or the property supervisor without appointing a dedicated leasing agent.
Real estate property management professional under consideration is also the tenant representative. The tenant representative works essentially on the same jobs that a leasing agent does but he takes care of the property related issues from the point of view of the tenant rather than the side of the owner. Tenants occupying commercial premises usually hire them. They assist and advise a prospective tenant in finding a property of their choice and help out in negotiating and finalizing the deal.
The next property professional to be considered is the manager of the property. The manager of the property is also called the realty manager. He takes care of a number of properties. Real estate property management under the supervision of the manager of the property involves visiting each property and looking after how well the management and other property related work is going on in each property. He supervises the onsite manager. He also works as a consultant in formulating management policies and budget plans for properties. He sees to it that the overall expenditure is within the limits of the budget plans. The manager of the property reports to the portfolio manager who is usually considered the highest professional in the team. He is also called an asset manager and he takes care of a large number of properties.

What You Should Know About Property Management of Commercial Properties

What You Should Know About Property Management of Commercial Properties

Now that you have made an offer to acquire a commercial property and are waiting to close escrow, you may want to start looking for a property manager to professionally manage the property. Your real estate investment advisor should present you with 2 or 3 local companies, each with its own proposal. Your job is to decide which company you will hire. The property manager will be the main point of contact between you, as the landlord, and the tenants. Her main job is to:
  1. Receive and collect the rents and other payments from your tenants. This is typically simple until a tenant does not send the rent check. A good property manager will somehow get the tenant to pay the rent while a lousy one will throw a monkey on your back!
  2. Hire, pay, and supervise personnel to maintain, repair and operate the property, e.g. trash removal, window cleaning, and landscaping. Otherwise, the property loses its appeal, and customers may not patronize your tenants' businesses. The tenants then may not renew their lease. As a consequence, you may not realize the expected cash flow.
  3. Lease any vacant space.
  4. Keep an accurate record of income and expenses, and provide you with a monthly report.
A good property manager is critical in keeping your property fully occupied at the highest market rent, the tenants happy and in turn helps you achieve your investment objectives. Before choosing a property management company, you may want to:
  1. Interview the company with focus on how the company handles and resolves problems, e.g. late payment.
  2. Talk to the person who will manage the property day to day as this may be a different person from the one who signs the property management contract. You want someone with strong interpersonal skills to effectively deal with tenants.
The property managing company normally wants a contract for at least one year. The contract should spell out the duties of the property manager, compensation, and what will require the landlord's approval.
Agent's Compensation: you will have to pay someone to manage and lease the property. You may have one company to manage the property and a different company to lease the property. However, it's best to work with one company that handles both managing and leasing to save time and money.
  1. Management fee: the fee varies between 3-6% of the base monthly rent for a retail center, depending on the amount of work needed to manage the property. For example, it takes much less time to manage a $2M retail center with just a single tenant than a $2M retail strip with 12 tenants. So, for the center with 12 tenants, you may have to pay a higher percentage to motivate the property manager. You should negotiate the fee as a percentage of the base rent instead of the gross rent. Base rent does not include NNN charges. Ideally, you want a lease in which the tenants pay for their share of property management fee.
  2. Late fee: when a tenant pays late, he is often required by the lease to pay late fee. The property manager is allowed to keep this fee as an incentive to collect the rent.
  3. Leasing fee: this fee compensates the property manager to lease any vacant space. In a typical lease contract, the leasing company wants 4-7% of the gross rent over the life of the lease. It also wants the leasing fee to be paid when the new tenant moves in. In addition, the leasing company wants around 2% of gross rent when the lease is renewed. The tenant may also ask for Tenant Improvement (TI) credit, typically between $10-20 per square foot to pay for construction expenses. So if a new tenant with a 10-year lease goes under after one year then you may lose money. As the landlord you should:
  • Approve a long term lease (10 years or longer) only when the tenant's financial strength is solid. Otherwise, it may be better to reduce the lease to 3-5 years.
  • Make sure the new lease has a provision for some kind of rent escalation, preferably based on Consumer Price Index (CPI), i.e. inflation which is 3-4% a year instead of lower fixed 1-2% annual increase.
  • Consider TI request from the tenant as one of the factors to approve a lease. The TI credit depends on whether you need the tenant more or the tenant needs you more.
  • Negotiate for a flat rate renewal fee, e.g. $500 instead of paying a percentage of the rent for the life of the lease. The negotiation is easier with one company that handles both leasing and management.
  • Negotiate to pay the leasing agent a lower percentage, e.g. 4% when no outside leasing broker is involved.
You can see that it's very important to minimize tenants' turnover rate as it has a direct impact on the cash flow of your commercial property. A good property manager will help you achieve this goal.
Monthly Report: each month the property manager should send you a report on income received, expenses incurred, and property status. You should Review the report to see if the numbers make sense. You should:
  1. Request a report showing both rent and CAM fees received.
  2. Request a separate bank account for your property and have a monthly bank statement sent to you. Without this, the property manager will deposit and commingle all the rents from all properties that she manages into her company's bank account.
If you instruct the property manager to send you the excess cash flow then you will also get a check.
Landlord's Approval: the management contract should specify the dollar limit for exceptional maintenance expense above which would require your approval. This amount varies from landlord to landlord as well as the type of property. However, it's typically somewhere between $500 to $2,000 dollars.
Communication with property manager: in the first few months, you and the new property manager should communicate often to make sure things go smoothly. You should give instructions in writing, e.g. email, to your property manager and keep records of all your correspondence. If the property manager does not do what you instructed, you may refer to your records and minimize disputes.
If you want to work hard for your money, you may want to manage your own property. However, if you want to work smart, your partner should be a good property manager.
David V. Tran is the President and Chief Investment Advisor at Transmercial (formerly eFunding, Inc.), a commercial real estate & loan brokerage company in San Jose, CA. His website is http://www.transmercial.com He may be contacted at (408) 288-5500. Transmercial does business in all 50 states. He is the #1 US commercial real estate expert author. David currently offers 3 FREE real estate investment seminars:
  1. How to invest in commercial real estate for early retirement income.
  2. How to maximize cash flow with 1031 tax-deferred exchange.
  3. TIC: Fractional ownership in high-value commercial properties.














David's blog features a daily list of Best Commercial Properties in the US to invest for early retirement income.
You are welcome to share this report, unedited and in its entirety, with anyone you like. You may not remove this text. © 2007-2009 Transmercial.

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