Property management advice please

[Tom V.]

So, I don't own any investment properties yet, but since I'm already very busy with my main business I'm considering using property management right from the start. The metro area I'm investing in is located in Iowa, and only has around 100,000 people, so the property management options are pretty limited.

There is one large realty company here that has a property management division. This realty company is the biggest in the area, and probably has 75% of all real estate listings for the area, both residential and commercial. I've seen their ads on Craigslist advertising properties for rent, and the ads look very professional with good photos.

I sent an initial inquiry email to the head of the division and also to his admin assistant (on Friday morning before Memorial day weekend). I got replies back from both of them within 2 hrs. The chief said he was out of the office until next week, but he would have the admin assist get me the info I requested, which she did. At this point I was very impressed with the speedy service.

Below the dotted line is the info that I received regarding how they operate. Obviously there are a lot of other more specific questions that need to be asked yet ( I have a list), but I'm looking for some feedback on whether the rates, fees, and policies seem to be in line with industry standards.

To my knowledge, it all looks pretty reasonable to me, but I'd love for some of you real estate wizards to have a look and confirm it. Thanks!!

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Thomas,

Our responses to your inquiry are below, and I have also attached a blank Residential Management Agreement for your review.

1. Rate and fee schedule / pricing model. We usually charge 10% of rents, and a one time additional 25% the first full month a new tenant is placed for all the screenings, calls, showings, etc. In addition, if the tenant signs a year lease extension, we charge a 10% fee for that. We pay the residential owners (by direct deposit is preferred) and send reports generally by the 15th of each month, provided all tenants have paid rents and there are no outstanding maintenance or utility bills. We pay all remaining residential and commercial owners at the end of the month, again, provided the tenants have paid and there are no outstanding bills. All reports are available on the Owner Portal to go back and review and print at any time.

2. Tenant screening processes. We use a screening service through our software that provides a criminal, rental/evictions and financial/collections background check. All prospective tenants are screened prior to showing property, and the applicant pays for that cost.

3. Property maintenance and repairs processes. We have a portal that tenants can report maintenance issues, or they can call us. We have someone on call 24/7 for after hours repairs, and that person gets ahold of Beau with any questions or approvals. We have a number of contractors and vendors available who provide timely repairs. We do charge a 7% upcharge for arranging and overseeing all the repairs needed and paying the vendors. Beau also does inspections two times per year so that anything not reported by the tenants can be addressed.

4. Rent collection and owner payment processes. We have online, in person, by mail, cash, money order or check payment receipts. If they bounce, they are required to pay by money order, cash or cashier’s check, not online. If they bounce more than once, they are not allowed to pay online.

5. Tenant turnover and eviction processes. We serve a 3 day notice on all tenants that are not paid by the 8th of the month. We do not accept ANY funds unless it is IN FULL and then file the FED the 8th day after if they have not paid in full. Beau goes to court on the FED hearing.