Archive for November, 2009
Property Management Fees Explained
When you hire a property management company to serve as the liaison between yourself and your tenants you want to be sure you’re getting the best possible property management services for the money. The services a property management company provides can range from ala carte to an allinone inclusive package. Along with that comes an array of fees for each. There is no set in stone fee structure we can provide you. But we can educate you on what common fees to expect and what each is commonly for. In the end it will be up to you to compare company fee structures and choose the best one that fits within your budget. Below are some of the most common fees and what service they provide.
Commission
This is an ongoing monthly fee charged to the owner to compensate the property manager for the responsibilities of overseeing the management of their property. This fee can vary from as little as 3 to over 15 of the monthly gross rent. In place of a percentage some managers may charge a flat monthly amount which again can vary from 50 to over 200 per month. All property management companies generally charge this fee.
LeaseUp or Setup Fee
This fee is charged to the owner to compensate the property manager for their initial time invested and resources used in setting up an owner’s account; showing property and/or other activities resulting in tenant placement. I guess you could look at it as a “finder’s fee” for placing a tenant in your property. Once a tenant has been placed and first rent income comes in the property manager will deduct this fee from the rent proceeds. Some property managers have been known to require this fee upfront prior to tenant procurement. Usually this fee is nonrefundable once the property manager has started the process of tenant procurement or any legwork has been initiated with the property. This fee can vary from none to as much as the first months rent and usually is a onetime fee per tenant.
Lease Renewal Fee
This fee is charged to the owner when a property manager renews a current tenant’s lease and covers the costs of initiating paperwork or communication involved in implementing the new lease document. A property manager may also justify this fee if they perform a year end inspection of property. This fee can vary from none to 200 or higher and may be charged every time a lease renewal is implemented.
Advertising Costs
Depending upon the property management company’s contract either they will pay the advertising costs or the owner or they could split the costs. If the manager is willing to cover this cost most likely they will charge the leaseup or setup fee as outline above. If the management company covers this cost make sure to find out what type advertising or marketing of your property is included. If it’s placing your listing on their own web site and other free online classified sites you may not be getting your monies worth. They are many good rental or tenant resource online web sites that bring in qualified tenants for a reasonable fee and you will want to consider these. And don’t forget about print media yard signs listing on the MLS or even an open house. Nothing is worst than having your property vacant bringing in no money only because you or your property manager skimped on advertising.
Maintenance Markup Charges
This is one of those costs you may never really of known about or had it disclosed to you. A “Markup” is a charge over and beyond the final bill on maintenance and/or repair work done to your property initiated by your property management company when using their vendors or inhouse maintenance staff. This should be disclosed in your Manager/Owner contract which usually will state the markup as a percentage above the final invoice from vendor. For example your manager had to call a plumber to replace the dishwasher in your rental property. Total charges for completing the job: 400. If your property manager contract states you will incur a 10 markup on all maintenance work the actual cost to you will be 440. Just one of those things to be aware of as these all eat into your profits.
Early Cancellation Fee
The dreaded “3 months and no tenant”. Your property manager insist he or she’s doing everything they can to find you a tenant. But here it is 3 months and still no tenant; what do you do. Well look at your Manager/Owner contract and that might be your deciding factor. I am not a fan of this fee and believe it to be an unnecessary fee and for you manager out there this could be the deal breaker. I’ll tell you why; if a property manager is doing their due diligence and keeping the owners in the loop as far as decision making market conditions and communication lines open an owner will not be second guessing his property managers abilities. The odds of this scenario happening is unlikely but you must be prepared for it. A cancellation fee can range from none to over 500. To be fair some managers legitimately deserve this fee especially if they have pocketed advertising costs incurred lots of legwork and time invested in your property.
“You’ve Got To Be Kidding Me” Fees
These are one’s I have personally had the pleasure of running into.
* Your property is vacant but we still will charge our monthly commission or a small flat fee.
* “A ForRent Yard Sign Fee”. I believe this was 25/mo.
* “Preventive Maintenance Fee”. This was to cover the “just in case” and changing out A/C filters. If “just in case” never happens they still pocket the money. I believe this was 20/mo and I still was charged for filters.
In Summary
Read your Manager/Owner contract understand what you are signing ask lots of questions and know what the fees will buy you in services. A good real estate lawyer can help in negotiating the terms in a contract that suit both parties. These contracts are not set in stone. If your property manager will not negotiate there are other property management companies that are eager to earn your business.
About the writer:nbsp;nbsp;Bill J. WhiteOwner: of www.keepingitrealestate.com
Private Money In Real Estate Investment Prospecting 101
Anyone who invests in real estate needs money to do so. Most private individuals go to a bank or lender and take out a mortgage when they want to buy property. However when you are in the business of real estate investment finding sources of capital to use for your deals can sometimes become a major undertaking. Because of this an integral part of any real estate investment companys business plan should be the continual process of prospecting for private money sources.
As you know private money is just that money from private individuals. So the secret to finding private money real estate investors is to find those people who have money they are willing to loan at a rate which is advantageous for them. Think about those people you come into contact with in your daily life like your dentist doctor accountant etc… Now think about their options for investing their funds for the future. Many of these options top out at about 6 in interest. Imagine their response to you being able to give them 12 on their money and your being able to do so with the guaranteed backing of collateral property. It is a winwin situation for them to work with you and invest their money with you.
Finding private money for real estate investment requires that you do some prospecting. The way many people start the prospecting process is to approach people they already know well and lay out a potential deal in front of them for their consideration. Suppose for a moment that you have a friend or relative who is saving for retirement and is only getting a rate of 6 on her CDs. Now suppose you have a property where you can return this same person 12 interest if she loans you the money currently in her CDs and will do so for the next three years. And just as the bank is insuring her CDs through the FDIC you can insure her money by securing it to the property as collateral. Who could say no to this scenario?
If you do not have any friends or relatives with investment capital or you prefer to only do business with strangers you can place an ad in your local newspaper looking for real estate investors and talk to those people who choose to call you. You can approach any of your local areas investment groups and realtor groups as well. In addition you can purchase a list of people in your area who own CDs or other investments from a reputable list broker and do a mass mailing to each of these people looking for investment capital.
The ways in which you can prospect for investors is limited only to your own imagination and creativity. However the most important thing is that you need to prospect for money on a regular basis and you need to keep the private money flowing in your pipeline for when the deals arise. You cant take advantage of great real estate investment deals if you do not have the money available for you to do so.
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Planning Vacations – Tips To Locate Ideal Vacation Places
Having any plans to buy a holiday home? Is there any place you would like to go for a holiday? Most of the people get themselves a home where they can go to on a vacation or on weekends just to go away from the hectic city life the noise and all the work just to spend some peaceful time alone or with the family. The place can be a little far maybe on a hill resort or maybe within driving distance on a beach. For people who would like to take frequent vacations the latter would be a better option.
Most of the people would like to buy vacation homes down south where it is sunny. If the person wants to use the property only a couple of throughout the year then it would be better to buy a home on timeshare. This way the individual can use the property whenever he or she is on a vacation. This avoids maintenance throughout the year. In this case the person has to pay only when on a vacation. This has become very popular among the people buying a home for vacation.
The people who do not like a sunny weather prefer to go on a vacation during the winter when it cold and cozy. These are people who love to ski snowboard and snowmobile and get themselves involved in outdoor winter activities. A timeshare can work well for these people too. As the individual is likely to visit these places once or twice throughout the year it would be a total waste keeping it vacant for the rest of the year.
An individual’s hobbies and interests will mainly decide their vacation pick. If the person is enjoys waterskiing fishing swimming and boating they are liable to prefer a vacation home closer to the waterfront. This will offer access to a dock and obviously the water. And what type of vacation home the person chooses will depend entirely on the time he would be spending here.
One has to choose a place that suits him and his family the best. The real estate promotes options for holiday abodes such as condos cottages and timeshares. And what type of vacation home the person chooses will depend entirely on the time he would be spending here. As the individual is likely to visit these places once or twice throughout the year it would be a total waste keeping it vacant for the rest of the year.
Looking for Ideal Places For A Vacation? If the person wants to use the property only a couple of throughout the year then it would be better to buy a timeshare. If you are an individual who saves their holiday energy for 2 weeks through the summer or winter a timeshare is doubtlessly a better choice for you. Any type of holiday home you want there are real estate mediators ready to assist you find the ideal spot for your family and for yourself. Finding an agent is as simple as flipping through the yellow pages in the local phonebook or logging onto the Internet.
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