You have never Hired a Property Management Company Before

Scott Nachatilo here again.

I assume you are reading this because you are considering leasing out your property.

Before you do anything hasty, take a deep breath.

Being a landlord is not for everybody.

Let me explain.

The Basics

What you need to know before You Sign with a Property Management Company

What is property management?

It is a way for you to collect rental income from a property without all the headaches of managing the property.

In other words, you hire OKC Home Realty Services to handle all those hassles for you.

OKC Home Realty Services can take all the headaches off your plate.

It’s absolutely critical that you get all the facts about property management company and the services they promise to provide before you sign the property management agreement.

What’s Your Goal?

Deciding if it makes sense or not to have your property managed depends on a number of factors, but it starts with two questions:

#1 – Does it make sense for you to own this property as a rental?  

#2 – Should you own this property for an investment?

Buying and holding rental properties is one of the best long-term strategies you have for accumulating wealth, especially in the Oklahoma City metro area.  Why?

  1. Rental income.  Rental income is very nice because it is predictable.  If you have a loan against the property, it can help pay off that loan.  If your property is free and clear, it make for an excellent source of monthly income.
  2. Appreciation.  Over the years that you own your rental property, it continues to go up in value (for the most part – values can also decline).  I’ve owned rental properties since 1996.  I still do.  And wow!  Have the values of those rental properties ever gone through the roof!
  3. Leverage.  The banks allow you to borrow against the value of your real estate if you qualify for financing.  That means that you can simply place a down payment to buy the property instead of having to invest 100% of the cash needed to buy a property.
  4. Tax Benefits.  There are income tax benefits that go along with owning your rental property, such as depreciation.  Essentially, the government gives landlords a financial incentive to own rental properties.

Collectively, these benefits can make owning rental property very profitable.  It does require that you are willing to own the properties for years.  If you aren’t willing to own them for at least five to ten years, it may not be a wise investment.  The reason I say that is that every time you sell a property, you are going to have closing cost and likely a sales commission to pay.

Here are some questions you should be asking yourself if you are considering owning a rental property:

  1. If your property stays rented 90% of the time, will it at least break even?  Remember, you are going to have more expenses than just your mortgage payment.  You’ll have these:
    1. Property Insurance.  Oklahoma has high insurance rates because of our frequent storm damage events.  A landlord policy should run no more than 10% of the income.
    2. Property Taxes.  Property taxes are going to run you about 10% of the income.
    3. Maintenance.  You will have periodic maintenance costs.  Figure an 10% of the income for maintenance.  Generally, the older a property the higher this figure will run unless it’s an older property that has been renovated (plumbing, electrical, and heat and air are new).
    4. Vacancy.  It does take some time between tenants to complete the make ready, advertise the unit, show it, screen the application, and get them moved in.  That’s another 10% to take into account.
    5. Property Management.  Don’t forget this cost.  Figure in 10% for the cost of property management.
  2. Do you plan to have a property reserve built up in case of vacancy?  When your property goes vacant, you get hit with the cost of the make ready and the cost of having your property sit vacant at the same time.  There is a security deposit to cover damages from tenants, but it doesn’t always cover all the damages.  You may want to have 2 months of house payment and $1,000 in savings for this.  In addition, you might run into a big whammy, such as a heat and air unit that needs to be replaced.  Just be ready for some surprises.
  3. How emotionally attached to the property are you?  If you can’t bear the thought of tenants damaging your property, you may want to consider selling the property instead of renting it out.  Your tenant will never, ever treat your property with the same amount of respect as you do.

Frequently Asked Questions

How much does property management cost?

Our company does charge a management fee and a leasing fee.  Those rates depend upon a few factors.  If you will call, we can quote you exact pricing.

What is the upfront cost?

You will have not one dime of upfront cost for our property management service.  We deduct management fees and leasing fees from the first rents paid by the tenant.

How much will the property lease for?

Most of the time, we have to visit your property to give you an accurate estimate of the amount a property will lease for.  OKC Home Realty Services, LLC is happy to schedule a time to meet with you at your property.  Please call our office to schedule a time.

How long will it take to lease the property?

It is always best to NOT show your property until it is 100% ready to show.  That means all work is complete, and your property has been cleaned.

With that being said, we will start to advertise the property 2-3 weeks before it becomes vacant if we think there isn’t going to be too much work that needs to be done on your property.

But if it’s a case of the tenant being in your property for five years, we know there is going to be some items we’ll need to take care of.  In that case, we usually don’t do prior advertising.

Exactly how long will it take to lease once that is done?  It depends on a number of factors.

For the average property, 30 days is a good average time to lease a property.

What we can tell you is that we have a proven track record of leasing properties quickly.  For more information on what we do to lease properties quickly, click here.

How much do we charge for maintenance and make ready work?

We do have maintenance personnel on staff.  Our capabilities are diverse, and consist of such things as plumbing, heat and air, and electrical.

We charge for maintenance on a hourly basis.

The charges depend upon what we have to do.

I can tell you that our hourly rate is about half of what well-know local property management charges.

Our rates if you have a specific task you are asking about.

Sometimes, we hire outside contractors, particularly if it’s going to be a big job.

In that case, we’ll likely obtain multiple bids on your behalf.

How long does it take to complete make readies?

OKC Home Realty Services, LLC completes make readies just as soon as we possibly can.

Sometimes there is just a little bit of work to do.  Sometimes we have a huge list of things.

We have a 5-step process for completing make readies.

You can read more about that by clicking here.  

When to do we pay our clients the rents that come in?

We prepare your monthly statements at the beginning of each month.

The itemized monthly statement consists of any income from your rental property and also any expenses for properties over the last 30 days.

We target sending out your statement between the 10th and 13th of the month, depending upon where the weekend falls.

You can read more about how we prepare our monthly statements by clicking here.  

What about responsiveness?

When you call, we answer the phone.  We also make sure to answer the phone to address tenants issues.

If there is an issue, we want both to feel confident that we are on top of it.

We do our best to call back the same day.

However, we will definitely return calls and/or respond in some what within 24 hours.

For that very reason we have a weekend emergency maintenance number.  After all, a tenant doesn’t want to have to wait several days to a get problem resolved that can’t wait, such as not having AC in the summer, or having a clogged toilet on a Saturday.