8 Insider Secrets You Must Know Before Hiring a Tampa Property Management Company
Would you like to save at least $740 a year per rental property? These eight tips will help you to find the right Property Manager and save you money. Prepare to be amazed with the overcharging and hidden fees charged by most Tampa Property Management companies.
1) Avoid National Real Estate Chains Providing Property Management.
The primary interest of these companies is to sell homes. Property management is normally a small component of their business that generates extra income for the owner/broker and develops future listings when they are ready to sell.
Since the vast majority of these companies are franchises, they typically demand a ton of fees and very high commissions in order to pay their franchise fees.
You should stick with a local company not affiliated with any larger national brand. The company should specialize in property management and not selling homes in the retail market. If your property is not their primary focus, it will sit vacant longer and maintenance repairs will skyrocket.
2) What is the Processing/Application Fee?
The right answer should be nothing. However, the majority of companies demand $300-$500 up front to put your rental property into their system. No matter what kind of Property Management software they are using, it should take about five minutes to set up your rental property in the system. For most companies this processing fee is purely profit.
3) What is the Cost of the Leasing Fee?
Many companies will charge 100% of the first month’s rent. I would recommend you pay no more than 50% of the first month’s rent to find a new tenant. There certainly are legitimate costs to finding you a qualified tenant but they do not amount to a full month’s rent. The property manager advertises the property usually by creating a listing on CraigsList, Multiple Listing Service, and various other Internet sites. Signs will also be created and posted at the site of the rental property. The property manager will then screen all of the leads for qualified tenants, show the property and do a thorough background check before receiving the deposit and signing a Lease.
Some Property Management companies will try to charge you the Leasing Fee up front before ever securing a tenant. You should only pay them upon successful completion of the job. Make sure you see in writing, that the Leasing Fee will only be charged after a qualified tenant has been found and the Lease has been signed.
4) Do You Have to Pay For an Advertising Fee?
With the exception of minor costs for signage, you should not have to pay any additional fees for advertising. Unfortunately, there are many companies that charge upwards of $750. Their claim is that the money is needed for advertising in newspapers, magazines, and other paid for advertising. You should take into consideration one significant point, newspapers ads do not give you a high amount of calls for the cost. CraigsList ads now dominate the classified/For Rent market and they are FREE. CraigsList generates up to 8 times as many leads as newspaper ads unless you are in a small, rural area.
Not to mention, real estate magazines are terrible sources for leads because they are designed to sell homes in the retail market.
5) Do they Charge You a Late fee ?
Property Management companies already charge the tenant a fee for late payment, so why should you be penalized? Part of their job is to collect the rent which is why you pay them a management fee. Avoid any company that tries to charge you for a tenant’s mistake.
6) Examine the Contract Closely to Make Sure You Know of Every Additional Fee
You will be very surprised about the various little fees some property management companies tack on in addition to the management fee. I have already mentioned some above but there are other ones. For example, they could charge you extra money if you request copies of receipts for maintenance done on the property or charging you extra money to handle the signing of certain types of leases.
The company might tack on a fee to send your money by check instead of direct deposit, or vice-a-versa. It just makes good sense to verify there are no hidden charges. After all, you need to know the true costs of property management in order to make an informed choice.
7) Can You Fire Them Without Penalty?
You should pay close attention to this one because it is rarely mentioned by the property manager and often hidden in the contract. Regardless of what you are told regarding this issue, make sure to read the contract carefully to see if this penalty exists. Most of our competitor’s contracts say you can not fire them within the first year without paying $500-$1000 in penalties.
Their reasoning goes something like this; “we spent a great deal of time and effort finding you a qualified tenant; therefore, we deserve the management fees for the entire year.” It certainly sounds plausible, but the leasing fee charged when they found the tenant covers those items. In fact, the leasing fee’s whole purpose is to cover those items. If they are unable to rent the place or maintenance costs are way too high, you must have the ability to fire them. Why should they be rewarded for doing the job you hired them to do poorly?
I have found numerous examples of management companies holding their owners hostage and threatening law suits if they fire them before the management contract is up. Be very cautious about this because you do not want to be stuck with a management company that you are not satisfied with.
8) Can you talk to the Owner of the Company?
You should always ask to speak to the owner and get your questions answered directly from them. The owner is generally the only person you can negotiate with and it is always better to hear what you are getting from the horse’s mouth.
It is good to casually ask the owner if he or she invests in rental properties. Having a property manager who owns their own properties is a very positive sign. A property manager must believe in his product enough to invest in it.
Listen closely to how you feel when the owner answers your questions. Do they convey a sense of professionalism and competence? Are they able to answer all of your questions comfortably?
Make sure you request some testimonials or references from other customers. If any excuse is made about not providing them, politely find another company.
The information detailed above should leave you well armed and help you find the right Tampa property management company or anywhere else in the country. Please feel free to call me at 813-831-7368. I would be happy to answer any further questions you might have on this topic.
Stress Free Property Management
4501 E Columbus Drive
Tampa, FL 33605