Many KSI Realty’s clients inquire about the best property management tips out there. Since ringing in the New Year, we thought we would share some of the best resolutions and common advices we provide our clients day in and day out.
As a dependable real estate broker, we always strive to cultivate a strong working bond with our clients and customers, so in turn, we advise landlords to develop rapport with their property manager, creating a positive and lasting relationship with the person that will balance their tenants’ well-being as well as maximize their bottom end. We encourage you as a landlord to look for the following attributes:
Know that no one will do a better job than you - the owner - who has a vested financial interest in the property. Absentee owners often expect to delegate all and every task to a property manager. This is the first mistake. You must be realistic and handle certain delicate aspects of your investment yourself to ensure that your interests are best served but that your liability is minimized. Mitigate risk by:
Typically, the property manager addresses repair issues, either by doing the repairs him/herself, or more commonly, by hiring someone else to do the work. Before you sign the agreement with a property manager, take some time to evaluate the property you have and the expected maintenance. Take note of any repairs that need to happen right away, as well as ones that can be deferred. Prioritize the repairs and discuss your list with your property manager to ensure he or she has a realistic picture of the task at hand.
If your property manager is not increasing your rental income, he or she should be building customer rapport and client retention with your tenants. Satisfied tenants tend to pay on time and look after your property as theirs. Keep in mind that your tenants might be your first buyers the day it is time to sell your unit or multi-family. Most people take pride in their home and may consider buying the place they have rented and customized for years.
In addition to outlining needed repairs, you should be clear on whether the property manager needs your approval for all repairs. Or perhaps, just those repairs exceeding a certain cost that you set. Setting up a “rainy fund” or “emergency fund” is a good idea. Don’t use security deposit to handle emergencies. Instead, a good property manager should help you set aside reserves. 7% of your income is usually a good starting point. The more amenities or luxuries you offer, the more reserve you should set aside as you are dealing with more discerning customers that will have higher expectation. Remember, the owner of a Lexus will have higher expectations and needs than the owner of a Yugo.
Accounting responsibilities should also be addressed but shared.
Every State has its own laws regarding the accounting procedures that property managers need to follow. Ensures that your legal counsel assesses the risk and liability that you are exposed to. Any agreements you sign should support those laws, so make sure you are well versed on your State requirements, but over all, that your property manager is dully licensed and able.
The agreement should also specify the date by which you can expect to receive your money. The 15th of each month? The 30th? Be as specific as possible, so that everyone is on the same page from the start. This will help to limit complications later. A happy owner is one that gets paid on time systematically.
Avoid cash system and try to automate payments with direct deposits. Keeping a clear paper trail of monies ensures a clear accountability and limits risk of loss or theft. Monies should be handled by the fewest amount of hands and financials should be shared on a need-to-know basis.
Lastly, spell out responsibilities for evictions and terminations of tenancy.
Most States outline specific guidelines regarding evictions and terminations of tenancy in their landlord/tenant laws, so you will want to be sure to abide by those. Your agreement should outline, though, the extent to which the property owner wants to be notified about and/or directly involved with such matters. Have your Real Estate attorney have a master lease drafted with eviction procedures in mind and have all papers handy so the process is timely and efficient.
As usual, don’t hesitate to contact us for all your real estate needs. Come and sit down at our KSI Realty’s Manhattan Midtown office to discuss your income producing or investment property needs.
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