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Property Management Blog

Published on Wednesday, September 7, 2011

Important Components of a Property Management Contract

Fees

The agreement should clearly state the fee the firm will charge you for offering their services. Property managers usually charge around 10 percent of the monthly rentals. In some cases, when the firm is able to generate more profits for a client than agreed upon, they charge a percentage of the exceeded profits. You should check if the service provider has any such conditions. If such condition exists, then it should be mentioned in the contract.

Length Of Agreement

The building managing firm should specify the length of the agreement in the contract. All clauses related to the termination of the contract from either of the parties should be stated. You should check the policies of the company in case of termination of the contract before the set time.

Responsibilities Of The Firm

All the responsibilities that the firm will handle on your behalf should be given in writing in the agreement. You should check that the firm should be willing to take up the following functions for you.

Tenant Management

The purpose of hiring a managing firm is to free yourself from variety of tasks like tenant management. Advertising buildings, showing buildings, negotiating rents, screening tenants, and collecting rent should be the sole responsibility of the property manager. You should make sure that the firm takes up the responsibility of tenant management and mentions the same in the realty management contract. 

Maintenance

It is the duty of the building manager to ensure the proper upkeep of your buildings. If tenants face any problem in the building, it is the responsibility of the firm to solve such matters. The firm should take the responsibility of keeping your building premises clean and undertake timely repairs. Also, it is necessary that the clauses related to the maintenance of the building by the firm should be present in the contract.

Financial Statements

The realty managing firms need to send you monthly and annual financial reports. You should never take things for granted. There should be a clause in the contract stating that the firm will provide a financial report to you every month.

Decision-Making

There is a thin line that separates the decision-making powers of the owners and the managers. Hence, it is essential that the decision-making powers of the building manager be clearly stated. Though the manager does not need to take permission from the owner for repairing leaking taps and fixing electricity fuse, but surely he or she should take permission while buying furniture or fixtures for the garden. You should check that the clause regarding this should be present in the agreement otherwise it could lead to several problems.

Once your property management contract is ready, you should read it carefully. Also, you should pay extra attention to the fine print. If you are satisfied, you should go ahead and sign it and if you feel there are some glitches make sure you clear them out first.

 


Onyx Management Group, Inc. is a full service property management company currently servicing residential and commercial properties throughout Greater Philadelphia, Bucks County and Montgomery County. With our highly detailed approach to overseeing properties of any size, we provide our clients with the benefit of ownership without the burden; dedication to our clients has been a major factor in our success. Whether you are looking to rent or lease in the Greater Philadelphia, Bucks County or Montgomery County areas, give Onyx Management Group a call. We've made the Greater Philadelphia, Bucks County or Montgomery County area home for ourselves and for the many satisfied tenants and business owners we've worked with over the years. Thanks for visiting this online residential and commercial real estate property management source.

 

 

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Landlord Knowledge Base

If you’ve ever considered investing in a few rental properties in Philadelphia or Bucks County, PA now might be a good time. Prices are still low in Philadelphia, but have been on the upswing. According to the National Association of Realtors, the median price of an existing home in a US metropolitan area grew 13.7% between July 2012 and July 2013, the latest in a 17-month streak of year-over-year price increases. 

New landlords can choose from properties that are likely to appreciate and a large pool of potential renters.Licensed realtor Pat Mueller cites a few reasons for this trend: “Many families have lost their homes to foreclosure and are entering the rentals market for the first time in years. Mortgages are also harder to get now, so fewer people are qualifying for a new one.”The more skills you bring to the table to get into Houses for Rent in Philadelphia Philadelphia or Bucks County, PA and the more time you have to devote to your properties, the faster you can make a return on your investment. 

But investing in rentals can also be disastrous (or too stressful to be worthwhile) without expertise. Here are three professionals you may consult about your new rental properties, and what you can do to mitigate how much they cost you:Handyman:  You may need to hire a specialist for some work on your rental. If you need new outlets or new pipes, for example, hire an electrician, plumber or licensed contractor. Handymen usually tackle smaller, more manageable tasks, like:

  • Painting and paint removal
  • Drywall repair
  • Minor appliance repairs (fixing a leaky toilet or faucet, among others)
  • Installing tiling or flooring, moldings, windows, doors
  • Refinishing decks, cabinets and other wood items

When You Could Skip It: You could do any (or all) of these projects yourself if you have the time and interest in learning. Of course, this only works if you live relatively close to your rentals and are flexible enough to service them on short notice. And if you’re willing to respond to the occasional 5 AM basement flooding.

Average Savings: Any base rates or costs-per-hour vary from location to location in Philadelphia or Bucks County, PA , but nationally, you can expect to spend an average of $60 to $85 per hour for repair costs. It general costs less to hire an individual handyman than a handyman employed by a company. Expect an additional charge if your job requires a trip to the store for materials.

Resident Property Manager As the owner of a handful of rental properties, you may be able to manage them yourself, but if you want help, a single resident manager would probably be more cost efficient than a property management company. Resident managers may:

  • Serve as a handyman
  • Advertise vacancies in your units
  • Show apartments to prospective tenants
  • Review rental applications
  • Collect rents

When You Could Skip It: Again, the closer you live to your properties and the more spare time you have, the less likely you are to need a manager. The obligations of being a boss will also cut into the time you save on maintenance.

Average Savings: The national median wage for residential managers is just over $25 per hour. Research the wages in your community and adjust according to how much responsibility your manager will take on. 

Real Estate Agent: Once you’ve gotten your financials in order and done your own research on the neighborhood(s) you’re considering, you might contact a realtor to show you potential properties. You can also arrange for a realtor in Philadelphia or Bucks County, PA to show rentals once they’re ready to rent.

When You Could Skip It: It depends. Even if you’re a local, or have thoroughly researched the neighborhood(s) you’re considering, a realtor is a great resource for a first-time rental buyer. Realtors have access to data and statistics not necessarily available to the general public and first-time buyers may not know all the right questions to ask. Using a realtor to fill your Houses for Rent vacancies is less of a no-brainer, depending on your other time commitments or whether you plan to hire a resident manager who could do the same thing.

Average Savings: As a buyer of rental properties, as when buying your own home, sellers typically pay most, if not all, of the buyer’s realtor fees. In this case, Mueller points out there’s little reason not to work with a realtor. For help in filling your units in Philadelphia or Bucks County, PA, the services of a realtor would set you back between 10-20% of the unit’s rent per month.  Mueller recommends interviewing with several brokers before making your final decision to invest into Houses for Rent .

The Bottom Line: As a new landlord, you can’t necessarily control the flexibility of your schedule or the amount (and cost) of unexpected repairs to your properties. Rentals are a long-term investment. However, to maximize profits from your Houses for Rent, new rentals, you can buy close to home and start small. It is best to begin with just one or two properties. This will allow you to maximize the time you spend on your properties’ needs, and minimize the amount you’ll have to pay anyone else.

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