Real Estate Leasing Guide

How to Find the Right Property Management Company

Posted on February 29, 2012

Having a well-managed rental property is something that can make a big difference to whether your rental investment will be a profitable one in the long term. Self-management is always an option, but having a professional property management company is recommended for landlords without great experience in running profitable investment properties, or without enough time to do so.

The first step to choosing a good property management company is to do your research. This need not be a complicated task, if you know what you need to look for. Search online for "property management" and see which companies have the best reviews from their past and existing clients.

Make a short list of viable options that you find, and then arrange to meet them at their offices for an 'interview'. This can of course be conducted over the phone if an in-person meeting is not possible for any reason. You can also do this casual interview at the property that you want to let out. You need not interview more than a handful of the best contenders, as it can be time-consuming.

The purpose of the interview is to get a feel for the property management (or lettings) agent and to see if they will meet your requirements. Some attributes to check for, when looking for a good property management company, are the following:

  • Do they have a successful track record.
  • Are they honest, transparent and dependable.
  • Do they have a branch in your convenient location.
  • Do they have access to a comprehensive list of tenants.
  • Are they capable of effectively marketing your property.
  • Do they have operating hours that fit your requirements.
  • Do they have different flexible and comprehensive level of services.
  • Do they have qualified and highly experienced staff.
  • Do they have a passion for what they do.

Other more practical, or operational, services that they may offer are the following: Written procedures for employees and residents, tenant selection and referencing, preparation of tenancy agreements, full written and photographic inventories, arranging of check-ins and overseeing check-outs, full rent collection service, landlords paid via BACS each month, regular property inspections with a full maintenance service, serving of eviction notices, legal assistance, notifying utilities at the beginning and end of tenancy.

You may not require all of the above-mentioned services right away, but it is best to find property managers that will be able to fulfil all of your current requirements, as well as any possible future needs that you may have.

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Read Your Contracts Carefully!

Posted on February 19, 2012

Both Tenants and Landlords alike need to be very cautious and diligent when it comes to reading the tenancy agreement in order to be fully aware of any charges that might be listed. Any contract should be read carefully and if anything is unclear or questionable, then a solicitor should be engaged so as not to make any mistakes that could ultimately cost either party a great deal of money. Since there are no specific rules or regulations surrounding the charges that can be made when it comes to letting a property, both parties will want to go over the contract with a fine tooth comb.

As a landlord you need to be sure there aren't any hidden costs. There have been several cases recently that have brought forward the idea that even the most experienced agents can make mistakes that appear to be misleading their clients. It's not usually on purpose but that doesn't mean that you shouldn't be wary and cautious.

A couple of the clauses that have been found recently in landlords contracts;

"Landlord to pay 11% commission of the annual rent to the agent if the tenant stayed in the property beyond the initial term of the contract. This was even if the agent played no part in negotiating for them to stay on in the property."

"Commission of 2.5% of the property price should a tenant buy a property from the landlord and this again was even if the property agent played no part in the sale procedure."

Because of clauses such as these plus many more that are bound to be out there, it is necessary to read and understand your contract fully before signing. Especially if you're new to the letting business you could be saving a possibly costly mistake.

Of course it goes without saying that tenants should also be reading their contracts very carefully in order to avoid costly charges that you weren't aware of prior to signing. No matter whether you're at the beginning, middle or end of a tenancy or looking to extend the lease, it could be in your best interest to have a solicitor check over the contract before you sign. Make sure you take your time and don't feel pressured into signing before you feel completely comfortable you understand what it is you will be responsible for.

Signing a legally binding document of any kind makes it extremely important that you be aware of absolutely everything before you sign on the dotted line. Don't be afraid to ask questions or to get a second opinion, especially if that opinion is that of your solicitor. So make sure you Read Your Contracts Carefully!

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Death, Bankruptcy and Lease Options

Posted on February 7, 2012

There are two events that can have a major effect on a lease options deal. These are the death of the seller and if the seller goes bankrupt.

Both events can either stop a deal in its tracks or merely act as a slight hiccup in the proceedings.

The event of the death of the seller need not be the end of the lease option deal because the agreement is legally binding and is part of the estate of the vendor. The snag may come from one of two sources - the lender or the relatives of the deceased.

In most cases mortgage lenders do not insist that a mortgage is repaid at once upon the death of the owner, they give a period of time before full settlement is required - in this case giving the investor the time to exercise the option agreement. The problem arises if the lender learns of the option agreement after the death of the owner, they may try to repossess in which case the option will be compromised.

Useful tip: If the owner had life insurance that covers the mortgage in full, it leaves the option holder free to purchase the property as previously agreed.

The other snag may arise when there are relatives who were expecting to inherit the property and they suddenly find that they are not going to get it after all! They may try to convince the powers that be that their relative signed the contract under duress, or that they did not know what they were doing - did not take legal advice and so on. These people could be of the mindset that they are going to get the contract rescinded so that they can get what they want.

To avoid the hassle of problems occurring upon the death of a vendor ensure that the lender knows of the agreement at the start, make sure that your paperwork is watertight and that the vendor has visibly signed the lease option agreement willingly and not under any pressure. Check to see if they have life insurance to cover the mortgage.

Where bankruptcy becomes a problem an option agreement can be over-ruled if the court believe that the property has been sold for less than its market value.

The simplest way to avoid this rearing its head is by not investing in a property where there is a strong possibility that the owner will need to file for bankruptcy - we all know that situations can change, but by then the option may well have been exercised. Also, avoid taking on part of a portfolio of a landlord who is struggling - this spells a disaster in the making.

As always performing due diligence before signing the contract will save much money and tears in the long run.

The buying and selling of property is one of the most important transactions that keeps business turning throughout in the world. Strict lending criteria means that property markets stall.

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