Property Management SolutionConsumers and investors are looking for a property management solution for their rental properties. They can always find some company to manage their property for them at various prices. These companies provide a variety of services. They include everything from renting their unit, collecting the rent, paying for advertising. Also managing the cash flow, paying for and managing repairs and upgrades if needed and so on. Many consumers like the idea of owning rental property as an investment. However they really do not want to have to deal with the details of renting and managing the property. This is where a property management solution comes in that can save you money. A management company can remove some of the headaches as well.

Property Management Solution and Rental Pools

One type of solution for multiple investors is a rental pool. This situation occurs when you have a condominium project with the majority of units owned by individual investors. It needs to be managed as a single properly to reduce the overall cost of the property management.

With a condominium, there is already a board of directors in place to manage the common elements of the property. All owners participate in the condo corporation. This board has nothing to do with renters or investor issues or with the interior of the units.

Establish a rental pool with a board made up from the investors. They have the responsibility of managing the renting of the units for the investors. Also interior unit cleaning and repairs and interfacing with the condominium board. This property management solution involves two separate distinct budgets, bank accounts and cash flows. There is also corresponding financial reports for both entities. It sounds a bit complicated, however if you keep both entities separate, a rental pool can work quite well.

Hold annual meetings for the rental pool. Make decisions with respect to rent increases and distribution of excess funds. Pay investors a monthly income from the rental pool. They would use this payment to pay their own personal mortgage on their units along with taxes. All other expenses for utilities etc would be paid either by the tenant or the rental pool.

Do Rental Pools Work Well as a Property Management Solution

The answer is yes provided that there is a commitment by the investors to make it work. In addition they follow an agreed structure similar to the condo. For example in terms of bylaws, running meetings, electing board members etc. All investors must sign an agreement form that documents all of the bylaws.

As a previous board member of a rental pool and a condo board, my experience has shown that once a condo and rental pool are running smoothly, you never hear from the owners and investors. The single issue that gets everyone’s attention is huge increases in the monthly condo fees. Or a cash call to pay for some repair that is not covered. Especially if it cannot be covered by the reserve fund. This is when owners get upset. It hits them directly in their wallet. With proper budgeting, an annual increase in the condo fees will ensure that there is always enough cash. This also assume that you are making contributions to the reserve fund every year. Based on an engineering study of the life time replacement of various elements of the condo building.

A simple example might be the paving of the parking lot. The engineering study may suggest that the parking lot needs to be repaved every 10 years. It could cost one hundred thousand or more. You had better be saving ten thousand a year to pay for this cost. A special assessment to pay for something that is known and planned does not go over very well with owners.

No Surprises

Property managers must communicate in such a way that there are no surprises for the owners. The same applies to condo and rental pool board members. If anything over communicate and let people know that the budget is going up by XX% and why. If you do it right, you may have all of the proxies at your meeting. Make decisions efficiently and correctly. They benefit all of the owners taking into account the practical issues of managing the building.

 

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