Handling Cash Rents

Handling Cash Rents

Property managers are now increasingly finding that a few renters do not have a bank account or actually, would rather pay their rent without involving the banking system. According to studies, more than 8% of the adult population in the United States is unbanked or does not use or maintain a bank account, and this could be due to many factors, including the economy and undesirability of engaging in banking transactions. Hence, modern property managers have had to implement an effective cash payment option to collecting some rents.

A Basic Reasoning

Property owners can lose many renters if they insist on bank transactions or having a banking account. Around 50% of all ethnic groups and some young people below 34 years do not have a bank account and prefer dealing in cash. Additionally people with low to medium incomes are unable to save enough in the present economic situation and therefore do not find it worthwhile to have an account where they have to pay fees if they do not have a minimum balance. Considering all these aspects it is now vital to have some system, to make it easier for renters to pay cash.

When there is no office on the property, where tenants can come and pay their rents, then accepting money orders or cashier checks from services such as Western Union and MoneyGram, are viable alternatives for the property manager. However, the management will also have to implement an efficient system for depositing these checks and issuing receipts. Tenants will also have to put up with the delay from the time they issue the money order or cashier check, and receiving a receipt.

Another better option would be implementing cash payments at convenience store/s through PayNearMe or similar services. Such a cash transaction is very convenient for the tenant, and he or she immediately receives a receipt for the payment. The property manager on the other hand also receives immediate notification of the rent payment, and the money is directly deposited in the bank account of the property.

Risks Involved

A manual receipt of cash by the property manager or staff is not a sterling option, since it can be expensive. First, the property manager or a particular designated member of the staff has to be at hand to accept cash from the tenants. Then there is the work of manually recording the transaction, issuing a receipt and keeping the money safely until it is deposited in the bank account. All this would result in longer office hours, designating one staff member with this task, and having enough security for all the collected cash. This is neither economical nor convenient method for collecting cash rent in property management.

Property management will have to evaluate various methods for receiving rent in cash, based on certain aspects:

Saving of Time: Consider each method based on the time and staff requirements for completing the transaction, and evaluate it my simulating the full process

Convenience: When you have made the system convenient for the tenant, you will have much less instances of late payments and tenants will be a happier lot.

Issue of Receipt: There should be immediate issuance of receipt to the tenant on receiving the money

Security: The process should have minimum risks of fraud or theft of the money

Leasing Essentials in Property Management

Leasing Essentials in Property Management

One of the most important jobs in property management is to draft an effective lease agreement. This document has to cover all the critical points of a tenancy agreement; otherwise, it can lead to strained relationships with the tenants, unnecessary legal disputes, and costly lawsuits. Before presenting the lease document, make sure you have covered everything that is important. Here are some of the essential aspects that should be included in any lease agreement.  

Rent

The lease agreement should obviously have a detailed portion on rent. This may appear quite straightforward, but it is important to spell out everything in detail. The usual rental terms will include the amount of rent, the due date each month for making the payment, and penalties for late payments. If the owner has an accommodating policy, a certain grace period can also be included after the due date.

Permission to Enter

It is very necessary for the tenant to specify when entry into the residential unit is permissible by the owner or property management. Under this clause, you could also mention if a notice is required for the entry, and what circumstances would supersede any restrictions. It is obvious that at times of emergency, permission will not be necessary, but it is better to spell out these exceptions. It is important to be clear on when you can enter the unit, so that the tenant is not annoyed and there are no legal complications.

Repairs and Maintenance Responsibilities

In most residency complexes, maintenance responsibilities are shared by the owner and tenants. The lease agreement should clearly define what maintenance responsibilities the owner is willing to undertake and what is going to be left to the tenants. For instance, if the owner is responsible for all structural maintenance and the tenant is responsible for the lawn, then it should be clearly stated.

If the costs of certain repairs are to be shared, then these repairs should be clearly enumerated along with the ratio of sharing. If the owner does not want the tenant to do any major changes in the unit, such as the installation of ceiling fan and so on, then it should be clearly stated in the lease agreement.

Deposits

It is better to have a separate section for covering the different deposits; you are going to take from the tenant. These deposits could be for keeping pets, as a security, or for having the apartment cleaned. Clearly mention if such deposits can be used for paying the last rent. For each deposit, mention clearly, if the amount is refundable and under what conditions.

Illegal Activity

Even though you are going to screen your future tenants thoroughly, before committing to a lease agreement, it is necessary to have clauses that cover consequences of any illegal activity on the premises. There are many instances where the tenant is involved in illegal activities like distribution or manufacture of drugs, and uses the premises for engaging in these activities. Make things quite clear as to what actions you are going to take if the tenant is caught doing any illegal activity. They should know that these actions will not be tolerated and if the tenant pursues them, they will have a witness against them in any court of law.

This is why you should have a police officer who lives in the complex (offer them lower rent to attract an officer) who can squash these matters before they germinate.

Retaining Residents in Property Management

Retaining Residents in Property Management

One of the most challenging tasks in property management is retaining loyal and reliable tenants. It is also less costly to maintain a current resident than to locate and approve a new tenant. Even though renting is usually transient activity for most people, since they may be looking for a place to buy, it still makes sense to retain fantastic tenants for as long as possible.

One of the points acting in favor of the property manager is that tenants also do not like the idea of moving frequently. However, unless the tenant is kept happy there is always a good chance of losing the tenant. Therefore, the property manager should provide good reasons to the tenants for staying where they are, and this can be accomplished by considering the following points.

Maintaining the Quality and Aesthetic Appeal of the Property

One of the major tasks of property management is to maintain the looks of the property, and this can become a major issue with many tenants. The usual complaint of most tenants is that the property went “downhill”, meaning it does not look as good as it looked before. The property can lose its appeal due to many reasons. It could be poor ways of disposing trash, neglecting the landscaping, not painting the structures on time, or selecting some bad tenants.

All tenants consider the rented property their home and nobody would like to enter premises where there is trash scattered around, the walls have peeling paint, or the neighbors are a suspicious lot. Hence, the property manager has to ensure the property is kept aesthetically pleasing and there are no evil or malicious tenants.

Being Responsive

Property managers can become quite unresponsive to tenant requests and complaints, when they have to handle this task on a daily basis. However, this is one of the major reasons for tenant dissatisfaction, which eventually leads to the decision of leaving.

The property manager and support staff should respond promptly to requests from tenants, resolve maintenance and repair issues, professionally and quickly. If it is not possible to attend to a tenant’s request, the manager should take time to explain to the tenant why the task could not be performed, instead of simply ignoring the tenant.

Keeping Tenants Involved and Informed

A property can be managed more effectively when it is taken to be a community. Hence, a property manager should promote community activities and make sure all tenants participate in these events. Holding monthly or bi-monthly parties, yard sales or sports events are great ways to bring the community together, where all tenants attain the opportunity to interact with each other. It is also a salient idea to publish a newsletter through which tenants are kept informed about the various activities taking place on the property. The newspaper can also serve as a platform for providing information about new rules and regulations.  

Avoiding Changes in Staff

Tenants usually are attached to staff members, and do not like to see a new face frequently. Hence, it is important to maintain the same staff as long as possible, and reduce staff turnover.

Inspection Checklist for Property Management

Inspection Checklist for Property Management

The task of inspecting the property is crucial for preventive maintenance, and for making sure, everything on the property is in accordance with property regulations and housing laws. Regular inspections help to address problems immediately before they escalate into major issues. In property management, the requirements for inspection will vary depending on the size of the property, the number of structures, and the landscaping. However, here is a general checklist that will make the inspection job easy.

Inspecting the Grounds

Property grounds will include all common areas, parking spaces, swimming pool/s, gymnasium, tennis lawn, and the landscaped areas. Landscaped areas and small gardens are usually given to outside contractors to be looked after, and the property manager has to inspect these areas to make sure the contractor is doing the job well. Unkempt lawns and untidy garden areas offer a shabby and pitiful look to the property, which can undermine rental rates.

Swimming pools have to be inspected to see if the water and surrounding area is clean and free of debris and fallen leaves. It is best to fix dates during the year for the draining of the pool and other maintenance tasks of the surrounding fencing. Parking lots have to be checked for cleanliness and to see if the individual spaces are properly marked. Lastly, all the signs posted across the property have to be checked for deterioration and a date has to be set for having them freshly painted annually.  

Inspecting Structures

Regular inspection of all structures on the property is an important task in property management. The manager will have to keep a look out for cracks, peeling paint, growth of mildew on the walls, and loose shingles and shutters. The gutter channels running from the roof have to be checked for debris, and blocks. Inspection of structures will involve a close view as well as a view from a certain distance to observe any defects that are visible on the upper levels of structure’s sides.

Apart from the structure itself, the electrical and phone cables running from the structure have to be checked for damage. If the property has security devices like alarms and video cameras, they too have to be inspected for any problems.

Inspecting Interiors

The common areas inside the building need to be inspected for structural and other defects. It is best to begin from the lowest level in the building, which may be housing the laundry room, pump room, boilers, or heaters. These areas will be exposed to more humidity and warmth, and hence check for fungi and mildew growth on the walls.

Also, inspect the ventilation shafts and channels to check their level of functionality and efficiency. In the laundry room check to see if, all machines are functioning properly. Keep an ear open to detect unusual noises when the machines are in operation. A lot of money can be saved if problems are detected early in these machines. At each floor, check electrical fixtures and also the doors and windows. Check for water damage and keep a look out for any leakages in the plumbing.   

Skills Required in Property Management

Skills Required in Property Management

Property management is not easy, as there are many responsibilities and the property manager has to deal with different types of people. There are certain skills required for doing this job efficiently, and here is a list of the most important ones.

Organizational Skills

Property managers have to not only organize their own work but also need to organize the working of various staff members. Organizational skills are required in all aspects of this job and any weakness in this skill can have disastrous results. The manager has to organize his or her daily schedule to attain the required office work done for the day, which will include filing applications, maintaining files and records, and other related duties. The manager will also have to organize various staff teams that are involved in maintenance, repairs, and accounts.

Time Management

Property management is an extremely busy job, and the manager has to manage various tasks within limited time. The manager will have to shuffle various task efficiently, and even multi task to get the maximum results. It is not a question of doing things quickly, but allocating time efficiently for the completion of various tasks, and switching between tasks whenever required to make maximum use of the available time.

Negotiating Skills

The property manager has to negotiate with almost everybody to get the job done. Whether it is with city officials, tenants, or staff members, the manager has to negotiate matters skillfully to reach the best outcome. Negotiating with city officials, the manager has to get the plans passed and see if the property is keeping to the laws and codes. If there are any issues the matter has to be negotiated well to avoid fines and other penalties. Negotiating skills also come in handy while resolving disputes between tenants and staff members. While procuring new tenants, the manager will have to negotiate the best rentals and term, to optimize returns.

Financial and Business Skills

Property management is mainly concerned with maximizing returns for the property owner. This involves maximizing profits and minimizing various costs. The manager will have to take quick decisions on rentals, review financial documents, estimate costs of maintenance and repairs, assess the rental worth of the property according to prevailing market situations, and solve issues resulting from financial crunches. All these tasks require outstanding knowledge of finance and sharp business acumen.

Overall Technical Knowledge

There is an abundance of maintenance and repair work involved in managing any property. There will be routine issues involving plumbing, electrical, carpentry, and masonry. The property manager does not have to be an expert in all these fields, but must have some basic knowledge to oversee the work in these departments. Having some technical knowledge, the manager will be able to supervise the service staff in a much better way, and will be able to get the work properly organized and executed. If the property is need of repairs, a manager having technical knowledge will be able to hire the services at a lesser cost and to reduce the repair charges.  

Property Management Task List

Property Management Task List

Property management requires a fair amount of planning and timely execution of various tasks. There are many important routine tasks, and it is prudent to keep a task list handy. Here are some important items that you should consider including in your task list.

Schedules for Inspections

It is very important to conduct inspection of the individual units as well as the common areas of the property at regular intervals. An inspection of signage also has to be performed at least once a year, to verify that the required signage is posted properly on the property. Inspection tasks are often forgotten because they are to be done once or twice in a year. Hence, prepare a schedule for the respective inspections and include them in your task lists for particular months.

File Management

Filing can be one of the most time consuming and challenging tasks if not handled properly. Keep a reminder for regular filing work that has to be done on a daily basis, but most important is to set the date for doing jobs such as archiving and disposal of unwanted files. For archiving, you will want to place files of the prior year in storage boxes or separate cabinets, so that they are not mixed up with the files of the current year. Older files that are dated past two years can be moved to long-term storage.  

Property management involves lot of documentation and paper work and you need to form a policy about the retention of documents. You can update this policy depending on legal changes and things you might have learnt during the past year. However, review your documents at regular intervals and either archive or dispose files that are not needed. If you are disposing papers and files, make sure they are destroyed, instead of merely throwing them in the trashcan. If the required equipment for proper disposal is not available on the property, it is advisable to hire document disposal service, which will handle the job professionally.

Policies and Annual Forms

Distribution of various forms to staff members and tenants is an important task each year. These forms are needed for legal compliance of various issues, such as W-4 for taxation and so on. If new laws have come about, you will have to formulate new policies to accommodate these laws and inform the concerned parties. Acknowledging ongoing policies annually is also fantastic and prudent practice, as that will remind staff members and tenants what they need to follow.

Meetings

If you are holding tenant or staff meetings then they have to be planned and the agenda and invitations should be sent much in advance. Although these tasks seem simple, they can pile up if you are not vigilant, and you might not have the time to complete them.

Education Compliance

First, determine what type of continuing education is required for staff members and then plan for the whole year. For instance, you might need to hold legally required courses for meeting licensing requirements, or for fair housing, and so on.

Making Property Management Easy

Making Property Management Easy

When you have invested heavily in a property, you will be looking for good returns; however, property management can be a difficult task. Here are a few points that can make this job easy, and help you to avoid any legal hassles.

Selecting the Right Tenants

This is one of the most important aspects of property management, which has an overall impact on profitability and avoidance of legal issues. Picking the right tenants is a skill, and involves some investigation. Firstly, you need to know whether the potential tenant really loves your property, as you want someone who will stay for a long term. You can make this out by the person’s interest in your property. If they want to visit other properties before making a decision, then they are still not sure.

You also need to have a system in place, for checking various aspects of the potential tenant. You need to run a check to see if the person is financially sound, and the reason he or she is looking for a new place to stay. Getting feedback from their previous landlord is very good, but this may not be always possible. Select tenants who are employed and have a reasonably good financial background. Check to see if there are any criminal records against the person, and whether there have been any incidents reported in the past.

Drafting the Lease or Rental Agreement

This is the most valuable documentation and it has to be drafted carefully by an experienced attorney. It should include all the points regarding the rent, rental duration, and other terms. Everything should be spelt out clearly so that the tenant is aware of his or her rights and responsibilities, and what services they can expect from you. This is a legal agreement, and you could be sued if you do not adhere to the terms and conditions that you have agreed to in this document. Covering all possible points in the agreement will reduce the chances of legal issues and costly lawsuits in future.

Payment of Rent

You should decide the mode of rental payment; whether you want it by check, auto debit, or cash. It is better to have a payment mode that leaves a trail, so that it can be proved whether the payment was made or not. In cash transaction the tenant can claim that payment was made, when it actually was not so. Even if you issue a receipt, the tenant can claim, you had forgotten to give a receipt.

However, make sure you select a mode that is convenient for the tenant like direct bank deposit, if the tenant does not have a checking account. In the rental agreement also clearly state, the grace period allowed for rent payment, and the penalties for late payment. Also, have a strict policy against partial payments, as it can be very difficult to maintain records and track outstanding amounts when you have many tenants.

Security Deposit

This should be held for compensating any damages done to your property, and should never be allowed for compensating a missed rent payment.

Functions of a Professional Property Management Company

Functions of a Professional Property Management Company

A property owner should hire a professional property management company to maximize ROI and avoid getting into legal trouble. The property manager will act as an agent of the owner, discharge the duties honestly, and will have full understanding of the expectations and goals of the owner. Here are some important functions that a property management company performs.

Occupancy Maximization

The occupancy level of a property directly relates to income generation, and when there are vacancies, it implies financial losses for the owner. Hence, the primary goal of a property management company would be to maximize the occupancy rate on the property. The strategies used to improve occupancy will vary between properties, as the cost of procuring new tenants has to be carefully calculated against the potential income of the property. It is usually a two-pronged approach, where the manager will try to retain existing tenants and find new ones. The property manager will evaluate rents prevailing in the current market conditions and work out the cost of various advertising strategies, including newspaper advertising, online ad campaigns, and posting banner ads in the area.

Legal Compliance

There are many rules, regulations and laws pertaining to operating and managing properties, and non-compliance of these laws can lead to serious legal complications, expensive litigations, and fines. Secondly, the property manager will have to deal with lease negotiations, eviction notices, landlord-tenant agreements, and other legal matters concerning the property and its maintenance.

Maintenance

Protecting and maintaining a property is a major task that takes a lot of time and effort. A property that is carefully maintained keeps tenants happy, and preserves the appeal of the property. The manager will have to implement a maintenance strategy, which is not only cost effective, but will also keep all aspects of the property in outstanding and in full functioning order. The amount of preventive maintenance, cosmetic repairs, and corrective emergency repairs possible will ultimately depend on available cash flow, ROI, and the need for maintaining the reputation of the property.

Communicating with the Owner

 

Property owners want their managers to keep them updated on all matters regarding their property. However, the detail and frequency of these communications will vary depending on the requirements of each owner. A dependable and experienced property management company will have an effective system in place that will report important matters concerning the property at regular intervals to the owner. Some companies maintain efficient online portals accessible to the owners where all the current information regarding the property is available.
 

Financial Reporting

This is another key function of a property manager, as all owners want to know where they stand monetarily with regard to the properties they own. Financial reports will have to be prepared according to specific accounting requirements of the owner. The manager will also have to prepare certain accounting statements that are legally required to be submitted to the authorities. The types of financial reports will also vary depending on the supervisory requirements, and ownership structure. Most property management firms now use sophisticated software to maintain an efficient and poignant financial reporting system.

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