Principles 2: Level 9
Bookkeeping Strategies
The number and type of bookkeeping records needed will depend on the size and type of property. The property management broker is responsible for the accounting of trust fund records. As such, it's a good idea for the broker to retain an outside accountant to periodically review the accounting system to make sure everything is on the up-and-up.
Handling Funds
The property management agreement will likely stipulate that the manager is required to maintain a separate bank account for the owner's funds. There should also be a provision in the contract requiring that any employees of the property manager who handle funds must be covered by a fidelity bond.
Financial Reports
The property manager is responsible for reporting on a variety of elements related to the financial health of the property. Having detailed accounts of all money going into and out of the operation is a crucial piece of communication between the manager and the owner.
Renting
A property manager can always use the services of a rental agency to obtain prospective tenants or collect rents. However, a rental agency does not take full responsibility for the maintenance or management of a property.
The Length of the Lease
Much like getting a house ready to sell, think about all of the things that have to go into preparing an apartment to be rented out to a new person: cleaning, refurbishing, advertising, qualifying applicants... Whew! That's a lot of time, energy, and money. It is more beneficial to secure longer leases rather than shorter ones.
Multi-Family Residences
Multi-family residences (also referred to as multi-unit properties) are things like duplexes, condominiums, and apartment buildings. These can either be investment properties or primary residences for owner-occupants. Multi-family residential properties are often rented units, so they are a popular category amongst residential property managers — particularly large apartment complexes that are owned by investment firms.
Scope of Authority
The agreement should clearly list the manager's authority with regard to things like leasing the property, collecting rent, setting rental rates, authorizing repairs and maintenance, hiring and firing employees, evicting tenants, and the ability to pursue legal action for the recovery of unpaid rent.
Identification of the Parties
The name of the owner, exactly as it appears on the title or deed to the property (if it is owned by a partnership, each partner's name should be represented in the contract; if owned by a corporation, the corporate name should appear) The name of the property manager or management company
REO Properties
(Short for "Real Estate Owned") Refers to bank-owned properties that have been through the foreclosure process. After the housing market crash, there was a significant increase in foreclosures, and since lenders aren't typically in the business of owning homes, they often use property management companies to oversee the maintenance of their REO properties.
Operating Budget
A budget created from taking anticipated revenues and expenses and then planning for the long-term goals of the property owner. The purpose of the operating budget is to track the property's financial performance in the future. That means a property manager needs to first allocate money for things like: Employees' salaries Real estate taxes Property taxes Insurance premiums
Cash Reserve
A cash reserve fund is for things like repairs, supplies, and decorating. To figure out how much to set aside for the reserve funds, a property manager can reference the yearly costs of the variable expenses in previous years.
Fidelity Bond
A fidelity bond is a form of insurance that protects the policyholder by covering any losses they might incur as a result of theft or fraud by specified individuals (in this case, the manager's employees).
Co-working Spaces
A growing number of workers in creative and tech industries are finding themselves in positions where the work they do does not lend itself to a traditional office structure. Co-working spaces are offices where individuals can rent a desk or cubicle and enjoy all of the accommodations of a traditional office. Since these workers are all independent of one another (and all paying their own rent), this type of property must be managed in a manner a little differently than a traditional office building.
Accounting Responsibilities
A property manager must be proficient in accounting procedures and cost accounting. The property management broker needs to maintain complex trust account records and make regular detailed reports to the owner. Because of the fiduciary relationship between the property manager and the property owner, it is necessary that the manager maintains an adequate trust fund accounting system. The manager must keep an accurate record of all trust funds passing through the broker's hands (rent, security deposits, expenditures, etc.). And don't forget that they must also comply with all laws and regulations concerning trust accounts and records
Rental Rates
A rental rate is established by thinking about a few key things: Income from the rentable space Fixed charges and operating expenses Return on investment This means that the income gained from the rental unit has to be enough to cover the operating expenses andhas to yield a positive return on the investment.
Operating Statement
A report that accounts for a property's income and operating expenses. A property manager needs to periodically report the net operating income for a property. They do so via an operating statement, typically generated monthly, quarterly, and annually.
Residential Lease Applications
A residential lease application does a few key things: Grabs important information regarding the applicant's history and income Gets permission from the tenant for the landlord to verify the information provided found on the application (including rental history and court and criminal records) Lists any special requirements needed Tells if the applicant is in a financially sound position for renting. Prospects will need to provide some kind of identification, their rental history, current financial status, and plenty of good references.
Personnel
The agreement should also grant the manager the power to make hiring and firing decisions for maintenance and office personnel for the property. The specifics of the manager's control over personnel will vary from property to property, based on the owner's wishes.
Capital Expenditures
Capital expenditures are funds used by a company to acquire or upgrade physical assets like property, industrial buildings, or equipment.
Commercial Property
Commercial properties are those that typically provide "public accommodations" (goods, services, or facilities) to the public. All commercial property involves income-producing business. The two broad categories of commercial real estate are retail property, from which goods are sold, and office property, where the occupants provide services to the public.
Operating Expenses
Considered "outgoing cash," which simply means that this is money that is not profit. It's the cost of doing business to operate the property. This includes things like: Utilities Insurance Taxes Repairs Maintenance needs Employee salaries Marketing and advertising costs Office expenses (supplies, phone, internet, etc.) Landscaping and pool cleaning Garbage pickup These are all expenditures that affect the owner's profits
FACTA and Property Management
Consumer access to credit reports. Since consumers are able to obtain one free credit report per year from the three major credit reporting bureaus, prospective tenants are able to check their credit reports for accuracy prior to filling out rental applications. Protection of consumer report privacy. Thanks to a disposal rule in FACTA, managers, landlords, lenders, and anyone with access to consumer reports are required to take reasonable measures to safeguard against unauthorized access to consumer information during disposal of these records. Proper disposal involves destroying the files completely, whether paper or electronic.
Increasing Rent
Conversely, the owner can also lose money on longer leases, unless the lease has a clause built in that covers expense increases. Rent increases are to be somewhat expected from time to time, especially in heavily coveted areas and cities.
Corrective Maintenance
Corrective maintenance involves the repair of equipment after it has broken.
Screening Process
During the screening process, landlords and property managers may ask for an applicant for citizenship or immigration status documentation. This is not a violation of the Fair Housing Act. However, they can only do this for the purpose of determining lawful entry or work status in the United States. A conversation might go like this: Step 1. To all applicants: Are you a U.S. citizen? (If yes, the conversation ends. If no, see Step 2.) Step 2. To all non-citizen applicants: Are you allowed to remain in the country for the duration of the lease? (This question must be asked of all non-citizen applicants; the landlord or property manager cannot pick and choose).
Lease Application
Everyone who is interested in being a tenant, no matter if it is for a residential, industrial, or commercial property, needs to fill out a written lease application. Save the forms! Even if you never hear from the prospective tenant again, keeping the application on file is good evidence that the manager did not practice illegal discrimination toward anyone. The lease application should follow the Three C's: It should be clear, concise, and consistent.
Fair and Accurate Credit Transactions Act (FACTA)
FACTA is an amendment to the Fair Credit Reporting Act. It adds provisions designed to improve the accuracy of consumers' credit-related records and gives consumers the right to one free credit report per year from the credit reporting agencies. FACTA also gives consumers the right to purchase, for a reasonable fee, a credit score along with information about how the credit score is calculated. The Act also requires the provision of "risk-based-pricing" notices and credit scores to consumers in connection with denials or less favorable offers of credit. The Act adds provisions designed to prevent and mitigate identity theft, including a section that enables consumers to place fraud alerts in their credit files, as well as other enhancements to the Fair Credit Reporting Act.
Federal Trade Commission Privacy Rule
FTC regulations require financial institutions to provide particular notices and to comply with certain limitations on disclosure of nonpublic personal information. A financial institution must provide a notice of its privacy policies and practices with respect to both affiliated and non-affiliated third parties, and allow the consumer to opt out of the disclosure of the consumer's nonpublic personal information to a non-affiliated third party if the disclosure is outside of the exceptions.
Basic Duties of Property Managers
Financial & marketing Tenant & occupancy Facility management Administration & risk management
Vacancy Rates
Finding the vacancy rate is a simple one-step problem. Just divide the number of vacant units by the number of total units.
Rent for Free
First of all, the concession of free rent, while major, is temporary. It is only used to balance the needs of the tenant with the current market conditions. Let's say that vacancy rates are high. A property manager would be freaking out, right? That manager then might offer a prospect a couple of months' free rent as an incentive to sign the lease. I mean, it sounds like a good deal to me! This type of concession is relatively common at the back end of a lease, meaning free rent for the last few months rather than the first. This is because offering it at the front of a lease runs the risk of someone moving in and then trying to continue living in the unit for free. And that would not be good for anyone.
Duties of the Property Manager
First on the list of things a great property manager must do is protect the interests of the property owner. Physical condition and environment of the property: A property manager maintains, monitors, and improves the state of the property to ensure the best possible environment. Rental rates: A property manager adjusts and evaluates rates for the rental properties in order to keep the total income high. Expenditures: A property manager manages expenditures to make sure that all costs are kept as low as possible so that everything that must be done gets done efficiently.
The Tenant Process
First, you have to qualify them. Ask pre-screening questions: Why are you moving? When are you looking to move in? What is your monthly income? Look out for red flags! Visitor Registration Form: When a prospective tenant walks in the door, a manager could ask them to fill out a visitor registration form, or a form that can later be used to track leads. It may also serve as documentation that shows all prospects were treated equally. Once a property manager has found someone they believe will be a good fit, it's time for that person to fill out a lease application.
High Vacancy Rates
If a high vacancy rate is found in a group of rental properties, it's important to figure out what might be out of whack. High levels of vacancy don't always mean rents are too high, but a serious closer look needs to be taken with management on property defects. Often the issue isn't lowering rent, but instead making the necessary changes and fixes to make the property better and more desirable. When and if occupancy levels reach 95%, it's time to reevaluate potential rent raises as well as reassessing the comparable neighborhood. It's important to know where the market and submarket are in this reassessment - study the comps!
Credit Report Required
If a property manager asks for a credit report from one applicant, they must also ask for one from every applicant. The credit report will give the owner or manager insight into how that person has paid their bills in the past. The manager must first obtain legal consent from the applicant. It is not uncommon for some managers to charge a nonrefundable application fee to help pay for obtaining the credit report.Financial Reliability
What You DO Want to Do
If faced with the bad-market situation described above, you should probably rent the space month-to-month at a low rate, or just get it rented for the highest rate possible. After all, you need to consider the opportunity cost! It's better to rent a unit out at a low rate than to allow it to be vacant for months. Keep regular monthly payments coming in so you can collect the money needed to run the property!
Does a Property Manager Have to Be Licensed?
If manager duties include showing or leasing a property for an owner, and if the property manager gets paid to do so, a Texas real estate license is required. A license is also required for any person who controls the acceptance or deposit of rent from a resident of a single-family residential real property unit. An exception to the licensing requirement exists for an on-site apartment manager, an owner leasing their own real estate, or an owner's employee (who is NOT an agent) leasing the owner's real estate.
Bonuses & Commissions
In addition to the management fees, the contract should also specify which bonuses or commissions the owner will pay the manager, if any.
Statement of Owner's Purpose
In addition to the owner's responsibilities, there should be language in the management agreement that clearly defines the owner's purpose. The property manager should always seek to carry out the lawful objectives of the owner.
Concessions
In leasing, concessions are made when a property owner agrees to less than their original terms in order to influence that prospect to become a tenant. Sometimes a concession is worthwhile because it alleviates a specific pressure felt by the prospect. But concessions, no matter how big or small, cost the owner money. And from the owner's perspective, they also change the total economic value of the lease itself. Concessions should not be a normal part of every transaction, however.
Industrial Property
Industrial property includes the facilities that manufacture products or materials. This also includes distribution facilities and warehouses.
Who Hires Property Managers?
Investment properties are not usually owner-occupied. They tend to be owned by either individual investors (who do not reside within the property) or by investment groups. And since investors aren't typically in the habit of managing their own properties (especially with large scale residential buildings and commercial buildings), they hire property managers to make sure operations run smoothly and their investment is protected.
Fair Credit Reporting Act
It is a federal act administered by the Consumer Financial Protection Bureau, or CFPB. The Fair Credit Reporting Act promotes accuracy, fairness, and privacy of information in the files of consumer reporting agencies.
Delinquent Account Report
It is important to ensure the manager and owner maintain an awareness of any of the business' accounts that have fallen into delinquency. This report may also include any ongoing legal proceedings (lawsuits, for example) that affect the financial status of the project.
Rent Collection
It's a property manager's duty to implement a collection plan for tenants who fail to pay rent in a timely manner. Past due accounts with a tenant could potentially be indicative of future rental collection problems. And since the property manager's first duty is to generate income for the owner, any issues with tenant payment must be quickly corrected through the use of collection plans.
Property Description
It's common practice to use a standard street address here, but it's not a bad idea to include the full legal description of the property.
Human Resource Firms
It's not uncommon for larger property management companies to hire a third party to handle all human resource needs for the property. This can include processing payroll, ensuring compliance with state and federal labor laws, and advising on employer-employee relations.
Maintenance Reports
Maintenance is simply a part of life for property managers in order to keep a property functioning and their tenants happy. By generating periodic maintenance reports, the manager helps to give the owner a sense of an appropriate budget for the maintenance needs of a property. Maintenance generally falls into three categories: Routine maintenance Corrective maintenance Preventative maintenance
Owner's Responsibilities
Management agreements don't just outline the manager's responsibilities, but the owner's as well! For example, who is supposed to maintain property insurance for the property — the manager or the owner? What about the mortgage payments? Property taxes? Any items owners wish to maintain responsibility for should be outlined in the contract. In addition, the contract should also address the owner's responsibility for miscellaneous management expenses.
Manufactured Homes
Manufactured homes (formerly known as "mobile homes") are built-in factories to adhere to the Manufactured Home Construction and Safety Standards of the U.S. Department of Housing and Urban Development (HUD). Manufactured-home parks are often professionally managed.
NOI
Net operating income is the measurement of revenue from the property minus all necessary operating expenses. To determine the net operating income of a property, you simply need to subtract the operating expenses of the property from the effective gross income. Here's what that formula looks like: Effective gross income - Operating expenses = Net operating income
Fiduciary Duties: OLD CAR
Obedience Loyalty Disclosure Confidentiality Accounting Reasonable care
Percentage Fee vs. Flat Fee
Percentage Fee: A fee paid to the manager based on the effective gross income (EGI) of the building. This includes income from rent plus additional revenue streams. Flat Fee: Also known as a base fee, this is a fixed fee paid per unit, not based on a percentage of the income.
Office Property
Physicians Attorneys Insurance companies Real estate brokerages Accountants and other financial service companies Corporate offices for a variety of businesses, including retail
Three Ways to Measure Income
Potential Gross Income (PGI) Effective Gross Income (EGI) Net Operating Income (NOI)
PGI vs. EGI
Potential gross income is the revenue that a property could generate if 100% of the units in the building are leased at market rate. This means that all units are occupied by tenants, and there are no vacancies. Effective gross income is the amount of money a property generates after taking into account other factors such as vacancy losses and additional revenue from sources other than rent.
Special-Purpose Property
Properties that fall under the category of special-purpose accommodate a specific purpose for a particular business. For example: Theaters and entertainment venues Sports arenas Hotels Resorts Schools and universities Places of worship Nursing homes/elderly care facilities
Property Manager
Property managers are licensed real estate professionals who manage all types of property — from homes and duplexes to even larger projects such as office and industrial complexes, shopping centers, apartment buildings, and condominiums. Their function is to oversee all operations of the property on behalf of the owner and to realize the highest return possible on the owner's investment.
Cost Allocation
Property managers are responsible for overseeing a variety of expenditures, including maintenance, personnel, services, advertising,* and so on. The contract should provide a section for the allocation of costs, which is the amount of costs and expenditures the manager may incur without consulting the owner. The agreement should also call for the owner to provide the manager with a schedule of payments for things like insurance premiums, taxes, special assessments, or other services that require periodic payment. The manager will need this schedule of payments in order to allocate the appropriate costs in the budget at the appropriate times.
Things to Think About Rental Rates
Rental rates are calculated differently for different types of spaces. The base standard for office spaces varies depending on a number of things, including: Location of the unit (is it a corner office space?) The floor the property is on (is it on a lower floor that receives noise from the street? Or the quiet higher floor?) The view (do you see mountains or a beautiful skyline? Or do you get a view of the dumpsters behind a neighboring building?)
Types of Property to Manage
Residential Commercial Industrial Special-purpose
Residential Property
Residential property can include single-family residences, vacation properties, multi-family residences, townhouses, condominiums, apartment buildings, and manufactured homes.
Routine Maintenance
Routine maintenance includes simple cleaning and housekeeping tasks associated with the regular general upkeep of a property.
Single-Family Homes
Single-family residences that are used as rental properties may require professional property management, particularly if the owner has many other single-family residences used as rental properties, or if they live far away from their investment property and cannot tend to it efficiently.
What You DON'T Want to Do
So what happens if the market isn't in great shape and a property manager has a space that needs tenancy? DON'T leave the space vacant for as long as it takes to find a tenant who will pay your ideal rental rate. You don't want to miss out on monthly rental income because you're holding out for a higher rate. You still need to cover operating expenses, etc.
Sensitive Personal Information
Someone's first name or initial and last name cannot be used in combination with the following things: Social Security number Another kind of government-issued identification number Driver's license number Mother's maiden name Any financial information Biometric data Information about that person's physical or mental health Information that is publicly available, like an address or phone number, is not considered a confidential identifier.
Rental Risk: Commercial Stability and Growth
Stability is especially important when it comes to commercial or industrial spaces and tenants. A property manager should look into the prospective tenant's business plan and objectives to see if future plans might involve physical expansion of the space.
Retail Property
Stores (grocery, clothing, electronics — you name it!) Shopping centers Malls and outlets Restaurants Gas stations
Identity Theft Enforcement and Protection Act
The Identity Theft Enforcement and Protection Act protects an individual's sensitive personal information. It went into law in 2007 and said that if someone's identifying information is used by an unauthorized party, that person then becomes a victim with certain rights and relief. However, insurance companies and certain financial institutions are excluded from these rights and relief. The Act also says that a business has to implement and maintain procedures to protect and safeguard from unlawful use or disclosure of any sensitive personal information in its possession.
Red Flags Under FACTA
The Red Flags Rule requires many businesses and organizations to implement a written Identity Theft Prevention Program designed to detect the warning signs - or red flags - of identity theft in their day-to-day operations.
Applicant Rejection
The applicant must be given the name of the credit reporting agency and instructed that they have the right to obtain a copy of the credit report. Additionally, said applicant needs to know that it was not the credit agency who made the decision to reject the applicant. The Dodd-Frank Act says that if the rejection was indeed based on the applicant's credit score, information about that score, along with other things that negatively affected the credit score, needs to be included in the rejection notice. If an applicant is rejected because of something other than their credit report or score, the owner needs to either disclose the reason or direct the applicant to where they may submit a request for disclosure of the reason for rejection.
Insurance
The contract should specify the insurance that the owner will carry for liability and workers' compensation. Insurance is typically purchased at the owner's expense. The contract may also include a stipulation that the manager can purchase insurance on behalf of the owner with the owner's funds. Additionally, owners typically depend on their property managers to work with insurance agencies to handle any claims related to the property that may arise.
Financial Reliability
The credit bureau sends the owner or manager a report on the financial reliability of the applicant. This statement includes: An itemization of the status of the prospect's past and current accounts Any bankruptcies, collections, charge-off accounts, and current obligations Quantity and dates of all payments and an indication of their regularity Type of account (open, revolving, installment) and payment pattern
Industrial and Commercial Lease Concessions
The larger the tenant and longer the lease, the more open most people are to accept the rent concessions. Then, any owner's costs for preparing and making changes to the space for that new commercial or industrial tenant will be factored into the rental rate. Three major things can help a manager decide what to do in these situations. A property manager should ask themselves: What is the property owner's financial and strategic position? (And more so, what are their long-range goals and urgency to lease?) What is the competition like in the area market right now? How urgent is the prospect's need to move?
Management Fees
The management fee is the price that the owner pays the manager (or management company) for their services. The management fees must be clearly expressed in the management agreement!
Disbursements
The manager will also be responsible for disbursing* money to various parties (trash services, cleaning services, etc.) on behalf of the owner for the ongoing monthly operations of the property. The names of these recipients and the amounts they receive should be listed in the contract as well.It's also important to include a provision in the management agreement to address what will happen in the event there is a month in which the property's account does not have enough money to cover the necessary disbursements.
Reporting Requirements
The manager will be required to send detailed reports to the owner periodically. The management agreement will outline exactly which reports the owner expects to see and how frequently (monthly, quarterly, annually, etc.). These can include things like: Maintenance reports Rent rolls Delinquent account reports Operating statements Other reports as required by the owner
Management's Responsibilities
The manager's duties should be detailed in the written agreement. Typically, the manager will be expected to create periodic reports (usually monthly) informing the owner of all pertinent information regarding the property.
Keep Terms Confidential to Avoid Price Fixing
The terms should be kept confidential between the two parties negotiating the contract. Fees should not be discussed between competing property managers or management companies.
Common Concessions
There are a few different ways to make concessions. The most common are the adjustment of rental schedules, rebates, the length of the lease period, and tenant alterations.
Searching Public Records
There are plenty of companies that specialize in going through public records on behalf of owners or property managers. What can one expect to find in a search like this? Oh, just things like: Past rental performance history Nationwide credit reports Outstanding (pending) bad check reports Criminal history reports Information about evictions, past-due balances, noise complaints, insufficient checks, and damages
Termination
There should be language within the agreement outlining under what circumstances the agreement may be terminated. It should identify how much notice is required. The agreement should also describe the penalties (fees) to be incurred if the owner wishes to terminate the agreement early and, if applicable, what circumstances are acceptable for early termination of the agreement by either party.
Vacation Properties
They're investment properties too, and almost never owner-occupied. If you're an investor who lives in Texas and you own some condos on the beach in Maui, you might hire a property manager to oversee those income-producing properties for you. In cases like this, it is important that the absentee owner be able to trust a property manager so far away.
Preventative Maintenance
This includes conducting periodic inspections to catch minor issues before they become major failures. The goal is to spend a little time and money to detect a problem ahead of time so as to prevent the issue from becoming much more costly later down the road. The property manager will be responsible for determining a preventative maintenance schedule in order to plan ahead and budget for the associated costs. Here are a few things that should always be on your preventative maintenance list: HVAC system inspection (annually) Inspect pipes (annually, before winter months) Inspect the roof for leaks (semi-annually) Change air conditioning filters (monthly) Inspect lawn sprinklers (weekly)
Property Management: Financial & Marketing
This includes having the ability to read and prepare financial reports that communicate profit/loss, revenue and expenditures, and tax data. Providing reports on these financials on a regular basis to the property owner is expected. An understanding of the local rental market — rental rates, occupancy rates, competitor property amenities, and incentives, etc. — is also needed to execute an effective marketing plan and to assess how available marketing funds can be best utilized.
Rent Roll
This is a report that lists the number of units in a property, identities of tenants, the lease terms (meaning the start and end date of each lease), the monthly rental income from each unit, and any outstanding balances owed by those tenants.
Property Management Agreement
This is an employment contract between the property manager and the owner. It details all of the responsibilities and obligations owed by both parties. The first step in establishing a property management relationship is to present the owner with a management agreement. The Texas Association of REALTORS® (TAR) provides standard property management agreements for residential and commercial property and makes them available to all its members.
Rental Rate
This is perhaps the most important and complicated issue to negotiate. Obviously, moving away from the basic rental schedule is not an appealing idea for the property manager and owner, but sometimes, in an especially competitive market, it may be a necessity. There are pros and cons to changing the rental rate, all depending on the individual situation. After all, not every tenant is going to want the same thing. Sometimes making a concession to one tenant may cause other tenants to want in on the deal. It will be important to maintain as much regularity throughout the property as possible. This will help keep the peace among all tenants!
Negotiating
This process consists of combining true professionalism with trying to bring the prospective tenant to an agreement with the owner on lease terms that work for everybody. Usually, this process takes several rounds of compromises. In the end, the goal is a beautiful, beneficial signed lease.
Liability Concerns
This provision should clearly outline the owner's obligation to pay any fees, damages, settlements, judgments, or any other costs arising from claims that may arise from legal disputes with employees or violations of labor laws.
Supply, Demand, and Decisions
To decide on an appropriate rental rate, the first step is a detailed survey of the competitive space available in the neighborhood. Someone would need to assess prices and any differences between comparable properties. For apartments, rental rates are given in monthly amounts and depend on the unit itself. For office and commercial spaces, there is typically an annual or monthly rate per square foot of space.
Consistent Policies with Non-Citizens
Under the Fair Housing Act, a landlord cannot refuse to rent to someone based on their national origin. Landlords must accept applications from people with foreign nationality and process them just as they would any other applicant. Everyone is protected under the Fair Housing Act, regardless of the person's immigration status. It is always illegal to coerce, intimidate, threaten, or interfere with a person exercising or enjoying their fair housing rights. Some landlords have threatened to report a person to the police or U.S. Immigrations and Customs Enforcement (ICE) for filing a fair housing complaint. This is illegal and discriminatory behavior.
Additional Revenue Streams
Vending machines Coin-operated laundry machines Parking fees Janitorial services Landscaping services Appliance and furniture rental Concierge services
Contract Period
What is the beginning date of the contract? What is the duration of the agreement? Are there any provisions for early termination of the contract?
Rental History
When a unit is rented out, most times the people in charge of the property want to feel secure in knowing whoever is moving in plans to be there for a while. A constantly changing pool of tenants is expensive. Life happens, so sometimes a family or company will indeed have legitimate reasons for needing to move around. But typically, moving frequently is a sign of a rental risk.
Rental Risk: Erratic Rent Payment
When looking through the application, a property owner or manager will want to double-check the applicant's financial references. If an applicant shows a history of delinquent payments, odds are they aren't a good fit at all.
Selecting a Tenant
While brokers can sell a property and no longer have to deal with the purchaser, property managers' successes truly depend on maintaining trusted relationships with honest and open communication.
Fiduciary Relationship
While the property manager has a dual responsibility to both the property owner and the tenants, the property manager's first duty is to the owner.
Occupancy, Management, & Risks
While the property manager has little control over things like the location of the property, they do have a large say in the policies and practices that directly affect how tenants feel about living there. Facility management responsibility means ensuring that repairs and maintenance occur on an ongoing and timely basis. Ensuring compliance with federal, state, and local government rules and regulations is a large part of a property manager's administrative and risk management duties. Record-keeping for accounting purposes and tax reporting is critical, and tenant communication and interaction need to be documented and held for specific periods of time.
Online Warehouses
With the rise of online mega-retailers like Amazon, the need for warehousing space has exploded. Online retailers are leasing warehouse space faster than ever before, driving vacancy rates down to the low single digits in some major cities.