Pulaski County Property Management 101
Introduction
Though it is more complicated than just posting an ad, signing a lease, and collecting rent, using single-family homes to create extra income is becoming increasingly popular. To maximize the potential of your property, you need to navigate the complexities of property management. Some owners choose to manage themselves; others decide to find a property manager to handle the process. If you are in the latter group, you'll want a good understanding of property management in Pulaski County.
What Services Does a Property Manager Offer?
Marketing and Advertising
Tenant Placement
Rent Collection
Maintenance Coordination
Accounting
Reducing Liability
What Responsibilities Does a Property Manager Have?
There are 2 main ways that a property manager can represent you in the Fort Leonard Wood area. Those two ways are a Landlord's (or Seller's) Limited Agent and a Transaction Broker. Before getting into a property management agreement with any company, you should know what way they will represent you. In this article, we'll go over the 7 main responsibilities that a Fort Leonard Wood property manager has to the homeowner, when the property manager is a Landlord's Limited Agent and is part of a Full-Service Property Management Agreement. We will attempt to explain these responsibilities as fully as possible, without getting too deep into real estate laws and practices. So let's get started!
Abide by the Written Agreement
This is the first and most clearly defined responsibility for a Fort Leonard Wood Property Manager. Before a property management company can do any work for you (finding a tenant, collecting rent, etc), you will have to sign a property management agreement that will outline the responsibilities of you as a landlord, and the property manager as your representation. This document will also state what type of real estate relationship you'll have with the property manager, what you'll be paying for their services and any miscellaneous agreements. It is strongly recommended that you read over the agreement and ask any questions of the manager before you sign.
Since everything has been clearly written out and explained, the property management agreement should be referred to if there is ever any question about whether or not the property manager is doing their job correctly. These contracts must be approved by a lawyer in order for a Realtor to use them, so they may contain some difficult "legalese." If you ever want to or need to, you should take your agreement to a lawyer you trust to help you understand the parts you have questions about.
Look Out for the Best Interest of the Home Owner
As a Landlord's Limited Agent, your property manager should be looking out for your best interest and the interest of your Fort Leonard Wood area property. Since you are the one hiring them, they should be representing you in a dispute with your tenant or a vendor. Missouri real estate law states that the property manager should "promote the interested of the client [landlord] with the utmost good faith, loyalty, and fidelity." This includes not disclosing to tenants anything about you or your property that would lead them to believe they have leverage when negotiating rent prices or lease agreements. This also extends to maintenance and finances. A property manger should know quality vendors in the Waynesville, St. Robert and surrounding areas and know what is a reasonable price for work. They should also know when preventative or emergency maintenance is needed, which will save you money in the long run.
Open and Honest Communication
This responsibility ties into the previous one, but it is worth talking about on its own. Sometimes, looking out for the best interest of the homeowner may include delivering news that is hard for a landlord to hear. Tenant issues, property damage and legal problems are some of the difficult conversations that a property manager should not hesitate to have. It is important they communicate openly and honestly with you, rather than try to beat around the bushes or only tell you what you want to hear. The ultimate goal of the property manager is to protect your Fort Leonard Wood area investment property, so they should be confidently advising you on the best ways to handle difficult situations. Also, if you ever need to speak with your property manager, they should be easy to get a hold of and respond to you quickly.
Responsible Accounting
Any money that comes into the office, whether from rent, maintenance payments or security deposits, needs to be accurately documented and quickly taken care of. Also, all of the company's financial processes need to be in accordance with state and federal laws. For instance, in the state of Missouri, all security deposits must be held in a separate, non-interest bearing account. Your property manager is also responsible to provide you with regular financial statements, which will be outlined in the management agreement.
Your property manager can also help you during tax season by putting together tax statements and cash flow statements for you. If you didn't know, there are many tax deductions you can get as a landlord. A property manager won't know all of them, so it is always recommended to consult a tax professional.
Maintain Confidentiality
Since property managers work with financial, credit and personal records from landlords and tenants, confidentiality is an important focus for companies. Missouri law requires property managers to keep confidential landlord information secret from tenants and vice versa. So, when a tenant applies, a property manager cannot disclose items like credit score, income, criminal history, etc. And when a tenant speaks with the company about your Fort Leonard Wood property, the company is not permitted to share details like how much your mortgage is, where you are located or what the minimum rent you will allow.
Another part of the reasoning for keeping information confidential is to prevent miscommunications between tenants and homeowners. You don't want the tenant to receive the your contact information and reach out you about maintenance or rent issues instead of your property manager. You've hired them to handle tenant issues for you, so you shouldn't have to worry about it.
Understand and Uphold Landlord-Tenant Laws
Missouri property management companies must be run by a real estate broker licensed by the state. To get that license, a broker has to have a strong understanding of landlord-tenant laws and get regular continuing education to stay up to date on any changes. Hiring a good property manager will protect you from legal issues that come from insufficient leases or tenant problems.
Know When to Say "I Don't Know"
A property manager shouldn't claim to know everything. Property management overlaps many industries including utilities, finance, construction, legal and others! When a property manager doesn't know the answer, they are responsible for directing you to someone that can help. For instance, if you have questions about your property management agreement or a tenant has questions about the lease, the property manager can answer the best they can, but they are not licensed to explain the legal repercussions or consequences. They should refer you to a licensed attorney for those answers. Another example would be that your property manager is not licensed to help you with your taxes. They can provide you with the documents you need, but they would have to refer you to a certified tax professional to explain any tax-specific questions. State law prohibits a property manager from advising you on things they are not experienced in. That could cause more problems for you if they were to give you bad advice.
How Much Will a Property Manager Cost?
Every company will charge for property management differently. We are not able to cover the differences between property management company fees in the Fort Leonard Wood area. Frankly, we don't know the fees that every company may charge. But, these are the most common costs that you may find when interviewing property managers.
Most Common Fees
For the most part, common fees are based on rent price. They are usually charged as a percent of rent, but some companies may charge a flat fee.
- Monthly Management - It's common for most companies to charge you a monthly fee to perform the day to day functions for your property (rent collection, maintenance coordination, accounting, etc.). These are often charged as a percentage of the rent price (some websites will say between 8% and 12% of the monthly rent), but some companies will charge a flat fee for property management. This means that, no matter the rent, you are always paying the same price.
- Leasing & Advertising - Another common fee is for leasing and advertising. It takes more time and expenses for a property manager to advertise and show your house to prospective tenants. This is typically a one-time fee that is paid when a tenant moves in. Just like the monthly management fee, it can be a percent of one month's rent or a flat fee.
- Maintenance - Not as common as the other two, but still pretty common, are maintenance upcharges. You may find that a property manager will raise the price that a repairman charges to cover costs of maintenance coordination. Once again, this can be a percent of the repair cost or a flat fee.
Add-ons and Conditional Fees
These fees are charged based on infrequent work or "add on" services. Sometimes, these are optional charges, only charged when the homeowner requests that service.
- Vacancy Charge - This cost is incurred as a monthly fee when your property is vacant. The intent is to help with property management costs for advertising and showings.
- Inspections - Sometimes, a property management company won't include the inspection fee in the monthly management fee. Or, they may charge for additional inspections beyond the move-out inspections.
- Termination Fees - A property management company may charge a fee for terminating the property management agreement. It is usually a one-time flat fee paid to start the termination process.
- Evictions - Unfortunately, sometimes a tenant must be evicted for violating terms of their lease. When this happens and a property manager handles the eviction, they may charge you a flat fee plus attorney fees to represent you through this process.
- Sign-up fees - A property manager may charge for signing the paperwork to manage your property. It is usually a flat, one-time fee paid when you sign.
This is not an exhaustive list of costs for hiring property management companies. Be sure to ask about these fees during your property management interview process to get the whole picture.
Understand the Contract
In the state of Missouri, all of the fees that you are charged should be written out and agreed to in the property management agreement. If you have any questions about the fees listed in the agreement, talk with your property manager before you sign. Your property management agreement will also define the responsibilities of your property manager, so it's important you understand the contract before signing.
Do I Really Need Someone to Manage My Property for Me?
Many people successfully manage their own rental property, find great tenants and handle their own repairs. At first, going "For Rent By Owner" looks appealing because you can save yourself some money by not hiring a property manager. But, if you are seriously wanting to rent your house yourself, you need to consider more than just some financial savings. Here are 5 questions that will help you understand the whole picture of being your own property manager.
How Far are You from Your Rental?
This is the first question to ask yourself when deciding whether to hire a property manager because it is the main reason why landlords hire a property manager. It is easy to see that managing a property you are close to is much more manageable than one in another town or another state. You can drive past the house to see the condition, meet potential tenants for showings and collect rent in person if you need to. If you need to rent because you are leaving the area or even going overseas, you may want hesitate to rent your house on your own.
Most landlords that move away hire a property manager to keep an eye on the property for them. Some property management companies will do routine drive-bys and inspections to make sure that the tenants are taking care of the property and the yard. Also, many landlords that hire a property manager appreciate that a local manager knows good repairmen that can be trusted, which saves them the time to have to research and make phone calls.
How Much Time Do You Have to Dedicate to Finding a Tenant and Managing your Rental?
One of the biggest time-vampires is finding a tenant. This is a big selling point of property managers. Some property management companies offer advertising and tenant placement services separate from their complete management package for those landlords that want to save some time. A landlord with a vacant rental will most likely be posting their house in the local paper, sharing the home on Zillow and other rental sites and finding potential tenants on Facebook. The owner will also be fielding calls from potential tenants and trying to coordinate showings, as well as screening them to determine if they will be a good tenant that will pay rent on time and not destroy the property. In some situations, this can be a full time job for a "For Rent by Owner" landlord. There are programs that will aid a landlord in the tenant screening process by running background checks and credit checks on their potential tenants. The cost varies for these systems and some landlords skip screening completely to save money.
Two other time-wasters for independent landlords are rent collection and maintenance. If you have a tenant that is past due on rent, you spend a lot of time calling, texting, emailing and visiting them to get the rent due. Many times, owners find themselves in negotiations with tenants that have not paid rent, trying to agree on a date and price to pay. For maintenance, you’ll need to consider how much time you plan to spend calling different vendors to getting estimates about a repair project or how much time you will spend at the property repairing it yourself. A property management team saves landlords this time by having team members specifically assigned to handle these tasks for all their properties.
How Accessible Are You When Your Tenant is Having Issues?
One of the most popular complaints that landlords have is dealing with tenant phone calls at 2 AM because their dishwasher is leaking or their fridge isn’t working. Independent landlords have to respond to these calls immediately or, at the least, have systems in place about maintenance requests that the tenants understand when they move in. If you are wanting to go "For Rent by Owner," you will need to consider how accessible you are. Can someone reach you through calls, text and email? How quickly do you respond? Will you require your tenants to reach you using only one method, or are you flexible about the way that someone contacts you? If you wait too long to handle maintenance, your tenants could get angry and fight to break their lease.
Property managers should have processes in place to handle tenant emergencies during and outside of business hours. This allows a landlord to get a restful sleep and the property manager deals with the 2 AM phone calls.
How Will You Handle Maintenance and Repairs?
It’s inevitable. Every property will have to have maintenance. As a landlord, you must budget for unexpected repair expenses. When managing yourself, you have the option to find a repairman to fix the issues at your property or do it yourself. You can save some money if you fix it yourself, assuming you have the know-how. You can also save money by having good business relationships with local vendors. However, if you don't know quality vendors that charge fair prices, you can easily find yourself in a situation of hiring a repairman to fix what the last repairman messed up. This part of property management is where "For Rent by Owner" landlords lose most of their rental income. According to studies reported by All Property Management, landlords who try to handle maintenance themselves can spend over 20% of their rental income on repairs alone.
Landlords who use a property management company have access to the wide array of vendor relationships that management team has crafted over the years. In some instances, managers have pre-negotiated rates with vendors because they use them almost exclusively. Likewise, the property manager knows the vendors’ quality of work and timeliness, so landlords don’t have to worry if the job was done properly, the property manager ensures it was.
How Much Do You Know about Rental Laws and Processes?
This is a slippery slope for many landlords that rent themselves. Tenant-landlord laws are different for every state, and it is imperative to understand your responsibilities as a homeowner if you choose to rent yourself. Without a general understanding, you can find yourself in legal hot water, or you may be stuck with a horrible tenant because you have not protected yourself with an enforceable lease.
In today's society, not all tenants are bad. More often than not, a landlord may never experience issues with tenants, especially if they have taken great care in finding a quality tenant. It is still important to be ready if a problem arises, and understanding landlord-tenant law can go a long way in protecting you.
In the state of Missouri, property management companies must be operated by a licensed real estate broker. These brokers are responsible for knowing Missouri landlord-tenant law because they are entrusted with protecting their client’s real property. A good property manager or property management team will have a legally-enforceable lease that has been approved by a lawyer. They will also have office policies and processes in place that protect them and the landlords they work for from legal consequences.
Truthfully, it is easier than ever to rent a property yourself, thanks to technological advances helping to find tenants and make communication easier. But that is not to say that you won't have issues as an independent manager. It is important to look beyond the short-term financial savings when deciding whether or not to go "For Rent by Owner." Your rental property is an investment, and you want to make sure that investment is protected. A property management company can help take the stress of owning a rental away. If you are want to learn more about options hiring a property manager, click here.
How Do I Know Who is the Best Property Manager?
When looking for a property manager in the Fort Leonard Wood area, you'll want to know that the company you hire to protect your investment property will do the best job for you. These are some of the top qualities that make a good property manager a great one.
Proven Operational Procedures
In order for a property management company to be successful and productive, they need to have proven operational procedures that allow them to find and approve tenants quickly, manage issues effectively and keep you in the loop the whole time. One way that a property management company may implement these operational procedures is by having a team of specialized individuals that are dedicated to performing one task for your property. Many times, the team is divided into leasing, maintenance and inspections. This helps property managers focus on one thing without jumping from one process to another.
When interviewing property managers, you can learn about their processes by asking them how they would handle different issues. For example, you may want to ask what happens when a tenant calls and says they have a maintenance issue at their rental. Or you may want to ask them about what a tenant has to do in order to move in to a property. Organized processes can take a property management company to the next level of customer service.
Innovative and Flexible Mindset
The landscape for real estate and property management is rapidly changing. With regular advances in technology and new innovations that make it easier for people to find and rent houses, a property management company must stay relevant in order to stay in business. A good property manager will understand new developments in their industry and take advantage of new innovations.
Detail-Oriented
Whether it comes to screening a tenant, handling rent payments or performing inspections, a quality property manager will take great care in being detailed in the way they do business. By paying attention to details when screening and approving tenants, they have a clearer understanding of how responsible the tenant will be. One way they can do this is by having a thorough vetting process which includes credit checks, background checks and contacting references.
When handling any finances, it is imperative a property manager takes great care. Missouri laws explain how money should be handled by a property management company. During an inspection, a property manager should be detailed so they can have a complete picture of the property's condition. By taking detailed notes and quality pictures, a landlord can get a clear picture of the condition of their investment, even when they are not in state.
Vendor Relationships
When you have moved away from Fort Leonard Wood and trusted your property to a quality manager, you won't have the time or the connections to get the best price for the best work. You'll need to rely on your property manager to get you in touch with vendors that will do the best work for your investment. A good property management company will be constantly reviewing their vendors' work and the prices they are charging to make sure their landlords are getting a good price and the work doesn't need to be done more than once.
Transparency
A very important aspect of being a quality property manager is being transparent with clients. Since you are trusting someone in a different state to take care of your real estate investment, you should expect them to be upfront and honest with you. If there is an issue at your house, you should want them to contact you immediately and speak with you about solutions. They should be transparent with you about why they would or wouldn't suggest a vendor for a specific project. They should be transparent about expenses you should expect during your contract with them. Not only is this just good business, it will relieve your stress of wondering if you made the right decision when hiring a property manager.
How Do I Hire Someone to Manage My Property?
There are lots of options in the Fort Leonard Wood Area for property management. How do you get started hiring one of them? You'll want to be thorough when interviewing them to make sure that you are confident you picked the right one.
Shop Around
Take the time to search for local companies and select a few that you would be interested in working with. Most people shop comparatively for any significant investment –from purchasing a car to a new smartphone. With an investment as substantial as a home, you owe it to yourself to compare multiple companies to find the best fit. Narrow down your selection to 2-3; this should give you a proper sample to research.
Ask for References
Most of us would not hire a babysitter without personal references, or onboard a new employee without a background check. The same concept should apply to selecting a management company. Ask for a list of references and do your research. Before calling, make a list of questions to ask, and then speak with other owners who have worked with them.
Here are some suggestions for questions you might ask:
- Would you work with this company again? Why or why not?
- Was the property well maintained?
- Were there any problems?
While this isn't a foolproof method, people can be biased; it will give you a good idea from other owners of what to expect from the company.
Research the Company
Most home rental management companies will have available listings online. Follow these links to see real examples of current listings. Do they take time to write compelling descriptions of the home or only list the basics such as beds, baths, and square footage? Are there high-quality photos? Are the listings easy to locate and navigate? If you were a tenant, would you want to rent from this company?
Interview the Company
The final step is meeting with the company to interview them. You are the client, and a good company will be happy to spend time explaining their advertising, leasing, and management policies. Additionally, this is a great time to discuss management fees and gather any other information you need.
Ultimately, hiring a property management company is a big decision, and taking the time to select the right one can make or break your success. A good management company will be open, share references, and make you feel at ease. Checking their references and doing a little research beforehand will ensure you are prepared to ask the right questions and see the big picture.
