| These tips will save you at least $600 a year on | | | | minutes to put a rental property into a typical |
| each rental property you own. You will be amazed | | | | property management software. This is simply a |
| at all the hidden fees and overcharging that | | | | profit center and should not be paid. |
| occurs in this industry on a regular basis. It is in | | | | Once again it only takes 5 to 10 minutes |
| your best interest to be well informed. | | | | maximum to enter your rental property into the |
| 1) What is Your Leasing Fee? | | | | computer. Even if it took 2 hours, $250 is a bit |
| A large percentage of management companies | | | | high for data entry work. |
| charge 100% of the first month's rent to find a | | | | 6) Can You Fire Them Without Penalty? |
| tenant for you. I would recommend paying no | | | | This is a tricky one that really costs a lot of |
| more than 50% of the first month's rent. There | | | | property owners. You should request their |
| are true expenses in finding a tenant. A property | | | | management contract and review it very |
| manager typically will list the property in a Multiple | | | | carefully. Most of these contracts state that you |
| Listing Service, run a Craig's List Ad, and put up | | | | cannot fire them without paying $500-$1000 in |
| signs at your rental property. All of this takes | | | | penalties. |
| time and money, but it certainly doesn't equate to | | | | Their explanation goes something like this; "we |
| a full month's rent. | | | | spent a lot of time and effort finding you a |
| Make sure the leasing fee is only due when they | | | | tenant and deserve to earn the management fee |
| successfully rent your rental property. Some of | | | | for the entire year." Your answer should be that |
| companies try to charge you this fee up front | | | | you covered that time and effort by paying a |
| whether they are successful or not. | | | | leasing fee. If they are doing a poor job or |
| 2) Avoid National Real Estate Companies with a | | | | overcharging you, you should be able to fire them |
| Property Management Division. | | | | with a 30 day notice. If they do not agree, you |
| Because most of these companies are franchises | | | | should find somebody else. |
| they charge a ton of extra fees and higher | | | | I have found numerous examples of |
| commissions because of their franchise fees. | | | | management companies holding their owners |
| Their main business is selling homes and not | | | | hostage and threatening law suits if they fire |
| providing quality property management services | | | | them before the management contract is up. Be |
| for the long haul. This is usually just a sideline | | | | very careful about this because you do not want |
| business for the owner/broker and is a good way | | | | to be stuck with a management company that is |
| to develop future listings for his or her company | | | | doing a horrible job. |
| to sell. | | | | 7) Check to Make Sure You Know of Every |
| Stick with a local, non-brand property | | | | Additional Fee |
| management company that does not sell homes | | | | You will be very surprised about the various little |
| for the majority of their business. You want a | | | | fees some property management companies |
| company that specializes only in property | | | | tack on in addition to the management fee. I |
| management. These companies will typically | | | | have already mentioned some above but there |
| provide better services and are much more | | | | are other ones. For example, they might charge |
| creative in finding you a qualified tenant. | | | | you $50-$100 to give a 3 day notice to the |
| 3) Late fee to owner if tenant pays late. | | | | tenant in the event that he or she is late with the |
| This is ridiculous because they also charge the | | | | rent. They could also charge you extra money if |
| tenant a late fee. Why should you pay extra to | | | | you request copies of receipts for maintenance |
| have them do their job? That is why you pay | | | | done on the property. |
| them a management fee in the first place | | | | The company might tack on a fee to send your |
| 4) Advertising Fee: | | | | money by check instead of direct deposit, or |
| There shouldn't be any advertising fees, but I | | | | vice-a-versa. It would be best to make sure they |
| have seen some management companies charge | | | | put everything in writing, in the management |
| up to $750. They claim it is necessary to pay for | | | | contract. You want no surprises. |
| all the advertising they do in newspapers and | | | | 8) Can you talk to the Owner of the Company? |
| magazines. Let me point out an important change | | | | You want to speak to the owner and ask him |
| in every market place, newspaper ads do not | | | | about the items I mentioned above because the |
| work anymore! CraigsList is far superior, free, and | | | | owner is the only one who can negotiate and you |
| dominants all markets with exception of small, | | | | get the real answers from the horse's mouth. |
| rural towns. We get 8 times more calls from our | | | | It is a good idea to casually ask the owner if he |
| CraigsList ads as compared to newspaper ads. | | | | or she invests in rental properties. It is a positive |
| The real estate magazines also do not generate | | | | sign if the answer is yes. Listen closely to how |
| much interest because their primary purpose is to | | | | you feel when the owner answers your questions. |
| sell homes and not to rent them. | | | | He should convey a feeling of professionalism and |
| 5) Set-up/Application Fee: | | | | competence. Make sure you request some |
| Many companies charge you $300-$500 to set up | | | | testimonials or references from other customers. |
| and process your rental property into their | | | | If any excuse is made about not providing them, |
| system. This fee really upsets me. It takes 5 | | | | politely find another company. |