In addition to collecting rent and paying bills, property management companies are also responsible for leasing vacant units. A lease is an agreement by the owner of a property or piece of equipment to grant use of it to someone else in return for money. Typical components of a lease include:

• Name of the property owner
• Address of the property
• Site being leased
• Name of the tenant
• Length of the lease
• Monthly rent to be paid
• Terms of lease including the rights and responsibilities of both the tenant and the landlord
• Any additional clauses if applicable
• Date of signing the lease

As a fee for the services provided, property management companies charge a fee or commissions which typically is negotiated to a percentage of the total amount of the lease. It is strongly advised that this fee is negotiated and is settled well in advance and is documented in the contract. The fee can be anywhere from five percent to eight percent of the total rent paid by the tenant in a lease. As a rule of thumb, the commission or fee should be one month's rent for a renewal of a lease with an existing tenant and a maximum of three months rent if it is a new lease with a secondary tenant. 

The typical activities performed by the property management companies include advertising and marketing vacancies at current market rents whenever a unit is vacated or becomes available. A good property management company will perform due diligence and will be aware of the market rates for comparable properties. Sometimes, the property management company might also have to offer promotions or discounts in order to secure a tenant. Under such circumstances, it is highly recommended that the property management company co-ordinates with the owner of the property to ensure that the promotions are accepted by the owners as they directly impact the net income and the value of the property if the owner is trying to sell the property. 

The property management company is also responsible for performing credit check of a potential tenant, showing the tenant the property and addressing any of their concerns or questions. Once the tenant agrees to rent a unit, the property management company prepares the lease agreement and other documents, collects the security fee and hands over the key of the apartment to the tenant.

The property management companies are also responsible for maintaining relationship with the tenants as they are the end customers of the owners of the property. While there are examples where the tenants have reported horror stories about the manner in which their requests or complaints were treated by the property management companies, it is extremely critical that the property management company takes care of its tenants. This not only ensures a renewal of a lease but also increases the chances of existing tenants spreading good word about the property and the property management company which can help in securing new leases.

Search all the lease agreement for free here.

 

Do you own real estate articles or stories and want to share with other investors? 
You have chance to win $100 Amazon Gift Certificates. We will give away 3 prizes for top authors each month!

Email your articles or stories to:  articles@buyincomeproperties.com

 

© Copyright 2001 - 2010 by BuyIncomeProperties.com               

 

 

Visit Real Estate Forums for every real estate investing topics!  Enter Here

    

Top of Page