Overview of Services & Fee Structure
Property Acquisition
Our team walks the existing inventory of property as it comes to the market to determine which houses are the best investments. There are pictures provided, an inspection report and a return-on-investment analysis of the potential for a property to be a successful rental for the investor. This information will give the investor adequate information to make a decision to make an offer on a given property. We will submit offers on request from our clients and advise as to the potential of success in the negotiation process.
Our Project Manager will walk a property first to determine the scope of the work required to bring the property to habitable and “Rent Ready” condition. We are working with multiple contractors to rehab the properties at a price that is very competitive in the market today. The focus during the rehab is to make the property clean, safe and livable and do this while adhering to the bid for the project to avoid cost over runs. The investor is provided with before and after pictures to give them a comfort with the progress of the rehab. We are in constant contact with the investor to keep them aware of the progress and any issues that may arise with the project. Fees will be agreed upon on a per property basis.
New Owner & Property
On occasion, an owner will call us and need our office to manage, handle, and complete thousands of dollars in repairs and clean-up of a distressed property BEFORE we ever manage it, or make it available for the first time to the renting public. These houses are usually transferred to us from other management companies that have not handled the properties to the expectations of the owners. Based on the condition and circumstances we require the owner to make a minimum initial deposit of $500 with our company to bill against for work required getting the property “Rent Ready” and cash flowing. If a rehab is required additional funds will need to be transferred before the work can begin. In this specific instance we charge 10% of the repair cost for overseeing the rehab project.
There will be a setup charge per property of a minimum of $150 this fee will include, working with previous management company to ensure a smooth transition, setting up owner and tenant in software for online access, meeting with tenant to build repore and ensure a smooth transition with rent payments. An inspection of the property with a full array of pictures and analysis of what is needed to get the property “Rent Ready” if vacant. In many cases, we find issues outstanding that require immediate attention and will need to be addressed with properties we take over from other companies:
- Outstanding water bills and water affidavits
- Unpaid taxes
- Liens that need to be resolved
- Tenant issues
- Maintenance issues
- Rehab minor and major
- Securing the property from vandalism
- Coordinating contractors
- Rekey of the property
Tenant Placement & Property Management
The Tenant Placement Fee is equal to one months rent basically to cover the costs of marketing, screening potential tenants and showing the property... time, gas, wear and tear on the car etc. The cost of ongoing management of your property is 10% of the gross monthly rents collected.
We guarantee the tenant up to 1/2 of their lease term. What this means is that if they were to sign a years lease and stay only 3 months, then we would put in a new tenant without charging an additional Tenant Placement Fee. Of course, there could be an additional Referral Fee because this is paid to outside agents not affiliated with our office. If the tenant were to stay 9 months of a 12 month lease, then we would charge the Tenant Placement fee again when a new tenant was found. We figure that if the tenant only stayed a couple of months of a year term, then they probably were evicted, and possibly it was something we could have foreseen. On the flip side, things happen, and if they are in the property for at least 6 months, their departure was probably something that nobody could have foreseen, and that's just part of the land lording business.
When is it paid? This is probably the most confusing "accounting" issue that new owners have. Usually, the biggest reason for the confusion is because owners forget the tenant placement fee is going to be a one time initial charge for placing the tenant. The payment for this comes out of the tenants initial rent money and shouldn't be confused with a "Referral Fee" which is money paid to an outside broker that brings us a qualified tenant that is accepted. Property Management fees are billed monthly against gross collected rents.
Each time a tenant in the property renews a lease after the first year; Owner will pay a renewal fee of $100.00. The renewal fee is compensation for the leasing agent efforts to secure a signed lease to ensure ongoing continuity with rent payments to the owner. The renewal fee does not apply to month-to-month extensions.
Charges for Services:
- We hold a $250 reserve per property to pay for maintenance expenses or other expenses as directed by owner. The reserve is deducted from the rent paid in the second month of the lease.
- There is a $50 annual administration charge per property for handling the processing of property insurance.
- There is a $50 annual administration charge per property for the paying of city and county taxes.
- There is a $75 charge for a drive by to check occupancy and take pictures. Pictures along with occupancy status will be emailed to owner.
- Rekey upon tenant move out is $150.
- Vacant properties may need to be secured from vandalism the fee is a minimum of $350.
- Owner will pay Agent $75.00 per hour for Agent’s time expended in court appearances, in any legal proceeding or deposition related to the Property; including, but not limited to, evictions, tenant disputes, security deposit disputes, and suits for damages or insurance claims.
- If Owner requests Agent to perform services not included in normal property management or specified above, Owner and Agent will agree to a fee for these services before the work begins.