Property management FAQs
If you have multiple properties or are often away from your properties, you may benefit from hiring a property manager or management company. A property management company will often charge you roughly five to ten percent of the rent collected. They will manage routine tasks, such as screening tenants, scheduling maintenance, and collecting rent. If you can charge enough rent to cover the costs, it may be well worth the expense to hire a professional to manage your properties.
Many tenants enjoy the convenience of being able to pay their rent online or using an app. Using a service, your tenants can pay rent by credit or debit card. They can set up rent to be paid automatically and some platforms even allow tenants to pay by phone. Tenants are more likely to pay rent on time if it is convenient. A service will generally collect a small fee per transaction. It may be a flat-fee or a percent of the rent. You can choose to cover the cost or pass the cost along to your tenants.
The main advantage of collecting rent in person is that it gives you the opportunity to routinely see your property. It may not be convenient, but during your monthly visits, you can survey property damage, peruse the parking lot and landscape, spot disallowed pets, and more. It also gives your tenants time to discuss issues with you in person. If you have numerous tenants and properties to manage, it may not be practical to visit every month. In that case, you may prefer to hire a property manager or set up online payment services instead.
You need a reliable property manager that you can trust to manage your properties well. A bad property manager could cause you some serious problems. Hiring the right manager is critical. There are many steps to finding the right manager for your properties, but at the minimum, you'll want to:
If you are hiring an individual, such as a relative or one of your trusted tenants, you might consider using an Employment Application to screen prospective hires, and you'll want to formally outline the details of the role in a Property Manager Agreement. As with any other job interview, you should consider putting together a comprehensive list of questions you want to ask them before hiring.
There are many advantages to incorporating as a landlord regardless of how many properties you own. The first advantage to forming a business entity such as an LLC is that it protects your personal assets. If you should be sued, in most cases, your personal assets, such as your home, are protected. Some landlords even choose to form an entity per property, so that lawsuits may be isolated to the property in question. Other advantages include that it's easier to keep personal and business funds separated and the owners of the business can more easily be anonymous. There may or may not be tax advantages for you. If you are considering incorporating, talk to a lawyer about what option is right for you.
Generally, you cannot use deposit funds for what might be considered standard "wear and tear" damage, such as worn carpet, faded paint, or sun faded window coverings. If you do make repairs that you want to claim as valid deposit deductions make sure to keep all receipts in case you need to settle in court. You may also want to document damages with pictures (images from when the tenants moved in and after they move out if possible).
You can usually deduct for extensive damage or hygiene issues, such as:
Filth and neglect. Excessively dirty bathrooms and kitchens, mold growth from neglect, moldy refrigerators or rotten food, and flea infestations.
Damage. Damage might include broken doors or windows, large holes in the walls, or broken tiles.
Broken inclusions. Broken appliances from misuse, oily parking spots, damaged storage units, or damage to included furniture.