Rental Management is an end-to-end property solution clubbing together various services such as finding a tenant, rent collection, rental agreement drafting assistance, tenant vacation inspection etc. In the past, renting a house was considered a simple task and the risk involved was also low. However, in recent times, this supposedly simple task has become complex and the risks involved with becoming a landlord has escalated. One question that may arise is what is so difficult in managing rentals? The answer to this question is simple ? The time and effort invested in managing the property yourself would be any day much greater than the cost of hiring a professional, especially if you reside outside the city or country where your tenant lives.
A professional rental manager is well versed with the rules and regulations relevant to the real estate business especially laws related to renting out a property. The responsibilities of a rental manager include:
1. Advertising the rental property
Prior to the internet revolution, advertising a place on rent meant placing an ad in newspaper classifieds, putting up a ‘To-Let’ board or sticking pamphlets all over the neighbourhood. But now, with the penetration of internet, properties are extensively marketed on real state portals with more information reaching a wider audience.
2. Screening for good and reliable tenants
Getting a troublesome tenant is every landlord’s nightmare. With proper screening the chances of getting a good tenant increases. A background check is important to see the financial condition of the applicant or whether the applicant has been evicted from prior rentals. A professional property manager will typically check for four things when screening an applicant for potential tenants:
a. Check the applicant’s credit report for late payments or bankruptcies
b. At times the applicant’s employer is contacted to verify income stability and the previous landlord is contacted to verify rental history
The above checklist does not guarantee a perfect tenant but at least reduces the chances of getting a troublesome one.
3. Preparation of Rental Documents
After finding a tenant, the necessary rental documents must be prepared and executed. In case of owners living far away, a specific PoA may need to be executed. Today, rental agreements are custom drafted to reflect specific state statutes and local ordinances. Rules regarding associations and maintenance are also laid down in these documents. They may even include personal notes from the homeowner relating to pets, smoking, pool use, etc.
Further, a move-in inspection is completed and reviewed by the tenant before execution of the rental agreement.
4. Rent Collection
Getting the rent on time is very important for homeowners. Although landlords set a fixed date by which they expect the rent, there can be situations under which the tenant fails to pay the rent on time such as loss of job, financial instability, etc. When the tenant is unable or unwilling to pay rent, the property manager has to move forward with the collection process, or if that fails, terminate the rental agreement and locate a new tenant as soon as possible. It is the responsibility of the rental manager to remit the monthly rental to the landlord’s account after collecting it.
5. Monthly and Annual accounting
The rental manager will provide a monthly and yearly statement showing all income and expenses associated with the rental property for the landlord to review and plan future budgets accordingly.
6. Coordination of maintenance and repairs
There have been times when tenants have called the landlord in the middle of night to complain about problems such as leaking and flooding in the house. Such are the times when having a professional rental manager really helps. Most rental managers maintain a twenty-four hour system for receiving emergency repair calls and have skilled tradesmen capable of handling any emergency. For non-emergency repairs or preventive maintenance, the landlord is contacted in advance to discuss the work and the costs involved are intimated accordingly.
7. Periodic property inspections
Has the tenant kept an unauthorized pet or has roommates not listed in the rental agreement? Have they kept the property in a good condition? These are few of the problems the landlords can face and a physical inspection can help putting an end to it. Typically, rental managers should have a representative inspect the property in accordance with the rental agreement. Inspections may be conducted either after scheduling an appointment with the tenant or while repairs and scheduled maintenance tasks are performed.
8. Disbursal of security deposits
After the tenant evicts the house, the condition of the property should be thoroughly checked and damages charged against the security deposit. However, this does not include “normal wear and tear”. Instances like staining the carpet or drilling numerous holes in walls are addressed by the rental manager on a regular basis or while briefing the tenants about the rental agreement.
9. Eviction for breach of the rental agreement
Evicting a tenant who has failed to meet the obligations as per the rental agreement is considered to be the most difficult part in the entire renting cycle. There can be various reasons to evict a tenant like untimely rent payments, breach of certain terms within the contract, etc. Rental managers can handle the eviction process efficiently, while making the process far less cumbersome for the owner.
After analyzing the professional rental management service scenario, we can conclude that using such a service is definitely cost effective. If the rental management company diligently does their work, the risk to the rental property reduces and increases the homeowner’s returns.