Tag: Rental Property Management

Rental Manager

Investment Property ManagementA rental manager for a large property management company spends a lot of time advertising for tenants, interviewing tenants, approving tenants and setting rent levels as well as defending those levels to tenants and government authorities in jurisdictions that have rental controls in place. One of the worst nightmares that a rental manager can have is to rent to a bad tenant. They cause a lot of damage, do not pay their rent and it is hard to get rid of them. Screening of tenants is one of the most important things that a rental manager can do.

Rental Manager – Manage Rent Levels

Rent levels have to be set based on  market conditions. Also the type of tenant you want in your building, the amenities that are offered in your building. As well as the occupancy rate for your building. Rental managers must take all of these conditions into account when setting rental levels. They offer discounts in some cases to tenants as enticements at various times.

Low rents may attract the wrong type of tenant which means you get people who are not good at paying their rent. They do not have pride in the place they live. High rents can sometimes mean that units stay vacant for a longer period. You do not have the rental income. But then you do not have the damages either that many people cause.

Some governments have in place rental controls to avoid rent levels from increasing too fast. They will have prescribed increases that are approved each year. The rental manager must be able to justify their increases and show that they are within the level that has been prescribed by the government regulations. If the rent increases will be larger than allowed, sometimes they can be approved. However substantial documentation must be provided to substantiate the increases that are above the allowed limits.

Balance Income and Expenses

In addition the expenses must be covered by the rental income. There is a balance between income and what can be spent each year in terms of regular expenses to operate the building, maintenance, upgrades and a reasonable profit. This also must be taken into account by the rental manager when setting the rental rates for the coming year.

This is a significant balancing act that most rental managers must deal with in addition to dealing with tenants, reviewing applications and setting contracts / leases for units. There are good and bad tenants at all income stratas. The trick is to pick out the people who will always pay their rent on time and take care of the place they rent for you. No one wants a deadbeat renter.

You even have to be careful of rental managers who will say nice things about tenants merely to get them out of their building because they are in fact a bad tenant. This actually happens much more than you think.

Screen Tenants

Take the time to screen tenants and always use a screening service. The service may cost you some money, but it will be worth it in the long run when you avoid a lot of damage or lost rent when they skip town and do not pay their rent. This is money well spent. In one case we know of, a couple applied to rent an apartment and were in a bad credit situation.

They had over 20 credit cards and were not making he payments on these credit cards. Can you imagine if you rented to them. What do you think the chances are that  they would be able or willing to pay you the rent check on time? There is very little likely hood that they would pay your rent and then you would be facing court costs to get rid of them and collect what is owed to you.

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Rent Manager

Rent ManagerThe rent manager has a very important job to do. He or she can make the difference between a building that is running well with satisfied tenants who take care of their units and those that do not. A rent manager is accountable for quite a few different activities. Although most people would feel that they are the ones who decide who to rent to and collects the rental checks.

Renting to the wrong person can mean that the investor who owns the property ends up with a bad tenant. They damage the unit, do not keep it clean, etc. When they finally move out there is a lot of expense to clean the unit and repair damage. This cannot always be charged back to the tenant because of laws that various governments have put in place to protect tenants. In our experience, there are lots of good people who rent properties. Unfortunately, there are lots that make it bad for everyone and really do not take care of their units.

Rent Manager Responsibilities

The rent manager may advertise for tenants, he or she may screen tenants and make decisions about renting. They recommend that tenants be accepted or rejected from a building. For large buildings, the guidelines are established by the owners and the rent manager must apply those guidelines without too much interpretation. They also need to make sure that all applicable laws for the town or city they are in are followed.

Lease documents must be filled in and signed which for large companies will include auto-payment deductions directly from your bank account. In many situations, 12 post-dated checks will be requested. One for each month, however, this is becoming less and less common as more and more people move to EFT transactions.

The rent manager must also deal with troublesome tenants. Such issues as repairs in tenants’ units. Any problems with the building that may be caused by tenants or maybe causing difficulty for the tenants. In some situations, a rent manager may only focus on the rental of the units, particularly for a large building. In other situations, they may have a wider scope of control and responsibility.

Small Claims Court

Most landlords will take the tenant to small claims court to collect on the damages. Many will skip town that it is sometimes difficult to track them down. Also, rent managers will sometimes end up renting to a bad tenant. This is because they get glowing references from other rent managers who are trying to get rid of a bad tenant. There are also laws that restrict what you can say about customers and clients without the appropriate data to back you up. It seems that governments have gone out of their way to protect tenants and not so much the landlords. There is an image that the big bad landlords will take advantage of the poor tenants.

Of course, there are a lot more votes from tenants than there are landlords and the politicians will always go for the votes. They may not realize that they are creating the perfect conditions for dead beat tenants to take advantage of landlords. There are bad landlords of course, but sometimes the pendulum swings too far. Then no one wants to build rental buildings and they certainly do not want to rent to bad tenants. The cities will invest in subsidized housing. Generally, this has been a disaster with units, not wells maintained and tenants destroying units! It just costs the taxpayer a lot of money to support these people who by the way generally do not pay taxes. They also receive many other benefits such as free health care.

Rent to High Quality Tenants

One of the main jobs of a well-run building for a rental manager is to only allow high-quality people to rent from the owner. This means people who have jobs, who have a track record of paying their bills all of the time. Who do not skip out in the middle of the night? Everyone is happier including the tenants who do not have to deal with transient people coming and going.

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Rental Property Management Programs

Rental Property Management ProgramsMost people may have one or two rental properties and manage them themselves. They have to deal with all of the issues that renters will put land lords through and sometimes they even lose money over the deal as well. This can be from damages caused by the renter or perhaps the market just did not increase enough to compensate for all of the carrying costs and maintenance fees.

There also this feeling by renters that landlords are rich and can afford to lose a month’s rent or perform repairs to things that have been damaged. Some also think that by walking away in the middle of the night they can actually get away with it. They can be found and charged and most are, but who really wants to go through that?

Some land lords will group together under rental property management programs and agreements. These are known as rental pools in some circles and have a great advantage of spreading the risk across a number of owners. Cash flow is always maintained, although it does vary. There is never a month were you have zero cash flow, such as when your unit might be vacant. This is an excellent advantage when you have taxes and a mortgage to pay every month.

How Rental Property Management Programs Work

There are likely all kinds of rental property management programs, however the one that this writer has had experience with is the rental pool program. Basically it works by all owners pooling all of their rental money into one account. All expenses to manage the condo or apartment building are paid out of it. This includes all common expenses, such as common lighting, garbage disposal, landscaping, condo fees, and rental expenses such as advertising.

The rental pool also pays for units that are vacant for the month. They also pay for expenses associated with going to small claims court to claim rent that has not been paid. In most cases a property manager is hired to manage the rental pool and all renting of the units. There is a board of directors for the rental pool separate from a condo board.

The rental company is contracted to manage the rental pool, to pay all expenses and to pay all owners each month as well from the proceeds. When you pool units like this, owners can usually get a better price for the rental management side of things which also saves money.

Rental Pool Operation

Most rental pools that are part of a rental property management program run smoothly provided that you follow standard operating procedures. You must have a board made up of at least 3 members of the owners. The books must be audited each year and a tax report prepared each year for each owner to include in their tax filings.

Rental pools sometimes get into trouble when there is no oversight or very little oversite by the owners. Sometimes one owner will take control and that is usually when the trouble starts. Always make sure that there are at least 3 board members. They should meet with the property manager at least every 2 months and also review the books every quarter. The board should have an annual meeting that elects them and gives everyone to ask any questions that they might have.

An agreement for the rental pool should be set up. There should be a contract between the rental pool and the property manager. There should be an election of at least 3 board members each year. The board members staggered so that there is a combination of both new and experienced members on the board.

Simple Rules

Follow some of these simple rules for a rental pool as part of a rental property management program. Generally you will have no serious problems unless the property manager fails to do his or her job. Always maintain a reserve fund for the rental pool. As well to make sure you can deal easily with any financial surprises.

We will write more about rental pools in future posts. However if you have comments or want more information, please feel free to leave us some comments.

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