Feel free to contact me if you don't find your answer here.
Q: When is the best time to market my property in Carlisle, PA? A: The market is the most active from May to August. That being said, many Army War College students receive their orders in February and March so if you know you'll be vacant in the summer, February is the time to get listed on the military rental sites! You'll want to advertise at least one month before your rental will be available. You won't want your property vacant from September through April as the market falls off significantly when law school students, Army War College folks, and Dickinsonians are situated.
Q: Where will my property be listed? A: Each owner can pick and choose where their rental will be listed. The most common sites are listed here. I also advertise on the Dickinson Law School housing list as well as the most popular military housing websites that Army War College attendees use. Owners are responsible for any fees associated with advertising listings.
Q: How can I get the lowest possible management fee? A: The largest factor you can control is the condition of your house. Management fees go up if managers feel a property is going to create a lot of headaches. If there are lots of issues or looming upgrades / renovations, a manager can expect more maintenance calls and contractor coordination which will bump up the minimum fee. On the other hand, if a property is in great shape and requires little to no noticeable work, an agent will manage for less money. Other ways to lower the management fee might be out of your control such as property age, number of units being managed, and proximity to manager's home base.
Q: What's the difference between a leasing fee and a management fee? A: Simply put, a "leasing fee" pays for the front end tasks: finding, vetting, and signing tenants to lease your rental. "Management fees" are charges for the day to day tasks associated with managing your rental like tenant inquiries, maintenance requests, contractor coordination, emergency availability, inspections, rent collection, and overseeing renovations. Make sure to check your contract as included services may vary by manager and property.
Q: Why am I being charged yearly for a leasing fee (aka finder's fee) even if my agent isn't finding a new tenant? A: It is dubious if your management company gets paid more per year when your unit is turned over than if it's rented for multiple years with the same tenant. The #1 loss of income for landlords is vacancy, so turnover is bad for owners. Management companies that only require one up-front leasing fee, no matter how long the tenant stays, have an incentive counter to your own: to get your property back on the market as soon as possible. This is even more troublesome if they also manage your property since then it's possible for your manager to create a bad experience for the tenant they've already received a leasing fee on, encouraging them to leave sooner than they otherwise might so the manager can get another leasing fee from a new tenant. Even if there is no vacancy between tenants, properties that are turned over more often usually have more wear and tear and increased risk.
This guaranteed yearly leasing fee is your investment in making sure a good, long-term tenant is leased from the start so you don't have to go through the re-renting process more frequently than you'd like. As a landlord with a long-term tenant, there is no gap whatsoever in rental income when tenants renew. For your manager, this structure provides inherent motivation to find the best, most qualified tenant to live at your property from the very beginning. The longer your initial tenant stays, the more profit both owner and manager make. The owner has no loss of income, repair / renovation costs, uncertainty of new tenants, utility bills during vacancy, etc. The agent has the highest motivation from day one on to get a great tenant who stays as long as possible.
Still not seeing the benefit of a lease based leasing fee (aka finder's fee)? Let's put it in numbers. Let's say you're choosing between two property managers: Agent A charges 8.33% Finder's Fee yearly based on gross rent collected, which seems more expensive. Agent B charges 8.33% Finder's Fee only on years when Agent B must find a new tenant, which seems like a better deal.
Both agents charge 10% Property Management Fee when the property is occupied.
Now consider the following scenario: Agent A leases your property and keeps the first tenant for 5 years. This is an ideal scenario for both agent and landlord. Agent B leases your property, but each year the tenant leaves and Agent B finds a new one. He does an excellent job, and there's an average of only 2 weeks vacancy at the property each year.
Here's the breakdown of what each party will make in this scenario:
Agent B makes slightly less than Agent A over 5 years while Landlord B makes a good bit less than Landlord A. In the above scenario, Agent B is doing an excellent job of filling vacancies but not retaining tenants. That turnover is bad for the owner. Let's say Agent B does a perfect job for the owner and keeps the same tenant for five years. Instead of gaining money for doing a better job, Agent B just lost $4,000 and is now grossing only $1,791.50 over the course of 5 years. Agent B's incentive is for more turnover.
The agents only lose $100 per vacant month. Agent B loses $1,000 per year if he doesn't list the property. It would take 10 months of vacancy in between tenants for Agent B to find it more advantageous to retain the current tenant. Meanwhile, Agent A is always trying to keep the best tenants because Agent A always loses out any time the property is vacant. This doesn't even broach the landlord's drawbacks of vacancy. Just two weeks per year of vacancy, after 5 years, has likely pushed your move-in date out of the ideal range thereby decreasing the potential tenant pool. There's additional risk and costs to the landlord associated with tenant turnover.
Structuring commissions on a lease-based finder's fee aligns agent and landlord goals. For this reason, we don't accept listing contracts that do not continue to pay leasing fees throughout the duration of any tenant's lease term, including renewals and extensions.
Q: What should I list my Property Management Broker as additionally insured? A: It's a risk management strategy for you and the Broker as it provides a unified defense against any litigation. The Brokerage takes on risk when acting on your behalf to help lease and manage your property. While we carry our own insurance, it often doesn’t extend to the actual house or issues surrounding it. Without being additionally insured on your policy, legal situations can be quite murky and time consuming. As most insurance companies consider adding a Property Management Brokerage as additionally insured in their client's best interest, there is typically no additional cost. Contact your manager for a referral to agents who can set you up with insurance specifically catered to rentals. Find a more in depth analysis here.