Rentec Direct - Property Management Software

Starting a new property management venture?  There's numerous methods property managers calculate their fees, some more popular than others.  Working with thousands of property managers, I've accumulated the most popular with their upsides and downsides.  Pick your poison or maybe (if regulation allows) create your own.

#1 Flat Rate Fees - Regardless the rental amount being charged or collected, the management fee to handle the property is the same every month.

• Pro:  Easy for everyone to understand
• Pro:  Any software or manual method of accounting can do this easily
• Pro:  Easy to budget for the manager and owner
• Con: May not account for time the property manager spends on non rent related tasks
• Con: Does not automatically re-calculate when/if rent increases or decreases

#2 Percentage of Rent Charged - Depending on the property manager and area, this ranges from 4-15% and often have a minimum and maximum amount specified.  Meaning, if the monthly rent charged is $1000, the management fee is $50 - $150.  This fee may vary based on the number of properties being managed, the number of units in each property, the location and condition of the property, and most importantly, what services are included in the fee.

• Pro:  Also easy for the property manager and owner to understand
• Pro:  The charge typically occurs on the 1st, which is the same day the rent is charged
• Pro:  Generally nets the property manager the most income
• Con: Not allowed in all states, check local guidelines
• Con: Does not account for time the property manager spends on non rent related tasks
• Con: Can cost the owner funds if part or all of a tenant's amount due becomes uncollectable

#3 Percentage of Payments Received - This method may appear similar to #2 at face value; however, differs in that the charge is calculated at the time when rent is received vs when the rent is charged.  Typically this makes little difference to either the property manager or the home owner unless some tenant rent becomes uncollectable.  At the property manager's option this can also include other income such as late fee income, or tenant responsible repair income.

• Pro:  Covers all potential time expenses for the property manager, including unforseen repairs, or poor tenants
• Pro:  Can include other income such as late fees, or repairs which otherwise are not included in #1 or #2
• Con: The most complicated to understand and budget for for both parties
• Con: The fees are generated throughout the month, so it's not one nice clean fee per month.

Perhaps most important when considering your free is to know the going rate for your locale.  Don't over or underprice yourself out of the market.  Check around and see what the other property managers in your area, and surrounding areas, are charging.

There are numerous other fees involved in property management including setup fees, vacancy fees, leasing fees, advertising fees, eviction fees, etc which are not covered above but all generally are in addition to the standard monthly fee discussed here.

 ---
Nathan is a member of Rentec Direct who provides property management software, cc & ach payment processing, and tenant screening for property managers and landlords nationwide.

As a software distributor catering to the property management industry, we're often asked:  "What documents do we need to keep?".  This varies state to state of course; however, I've begun compiling a list of documents that landlords and property managers absolutely must keep; not just for the term of the tenancy, but beyond.

The basics.

• Lease Agreements - Perhaps the most important document within your collection, this document defines the landlord / tenant relationship and is an absolute requirement to retain.
• Management Agreements - If your a property manager and have agreements to maintain properties on behalf of owners, these agreements are gold.
• Move-In Inspections - Whether this be a document with written down defects in the property, or a video or pictures of the condition of the property prior to tenant placement, this information is critical to keep safe for review when the tenant does move out.
• Applications - Generally your application provides you proof to run tenant screening on your prospective tenant.  Retaining this permissions slip is important if there is ever a dispute.  The application also serves various other uses including proof of non-descrimination, important information for collection efforts, and basic contact information on the tenant.

Other important documents.  This list, while less common to store can become extremely valuable if you as a manager or landlord end up in litigation and need to prove your case.

• Any written documentation with the owner or tenant.  This includes letters and emails.  Be sure to either backup your emails or use the IMAP protocol (so the server is a backup) if you regularly use email for corrospondance.
• Fax communication.  Using an online fax service like efax has a two-fold benefit.  First, it's electronic so your not wasting a lot of paper and the faxes arrive electronically by email.  Second, those electronic emails can easily be backed up for reference any time later.  If you have a paper fax machine the best option to archive those is to scan the faxes and store them in PDF in a secure location.
• Voicemails - Most voicemails can be easily archived.  If your already using a service like google voice, you already recognize how easy it is to save and transcribe voicemails forever.
• Phone calls -  This varies from state to state; however, Oregon for instance allows one-sided recordings of phone calls.  This generally requires a phone system equipped to record inbound/outbound calls as most mobile devices do not contain support for recording live calls.

As a legitimate business there are *tons* of other documents to retain; however, I'm focusing specifically on the landlord/property management set of documents that first time landlords and property managers should be aware of.

Finally, while it's good to keep these records, it's even better to make positively sure they are backed up and secure.  Storing them on your workstation computer alone is insufficient because workstations die frequently.  The average lifespan of most computers is 4-5 years, and many components (especially hard drives which store the actual data) die even faster.  It's important to backup this data offsite.  Some property management applications provide this as a built-in service, and other options include online backup services (just google "online backup") or programs like dropbox.

Community Quiz: What documents did I miss that are important to keep?

---
Nathan is a member of Rentec Direct who provides property management software, ach payment processing, tenant screening, and online secure file storage for property managers and landlords nationwide.