- Why do I need to add First Rate Property Management to my hazard insurance policy as an additional insured?
- 25 Questions and Hints on Selecting the Right Property Manager for you.
- Can you help us with a lease/purchase or lease/option to buy?
- How much do you charge?
- Do you charge a set-up fee?
- Can I use my own contractors for repairs?
- What is your advertising and tenant lead generation procedure?
- Who pays for advertising?
- Do you have a website and can tenants apply on-line?
- Do you have virtual tours?
- How long does it take to rent out a house?
- What is your tenant criteria?
- Can I find my own tenant?
- What is a quality tenant?
- Can I get out of the management agreement?
- Can I get out of the lease with the tenant?
- I want to make changes to your management agreement.
- When do I get paid? Why do I not get paid until after the 10th?
- Who keeps the late fees?
- Will you inspect my property?
- Can I inspect the property?
- What if the tenant stops paying?
- How much does an eviction cost?
- What is Eviction Protection?
- What do you do if the tenants ruin my property?
- Why can't I hold the security deposit?
- Why don't you have your own maintenance company? Wouldn't it save me money?
- Why can't I clean the house myself?
- Should I accept pets?
- Do I need to provide a refrigerator?
- Do I need to provide a washer and dryer?
- Why isn't it a good idea to leave my personal property at my own home?
- Can I rent it furnished?
- Do I need to finish repairs before you start showing it?
- How long of a lease should we sign?
- Should I consider a short-term lease?
- How do you handle leasing commissions?
- Why would I want a sign and flyer box?
- What is the importance of flyers?
- Why does each property seem to have their own phone number?
- I don't want a sign because I don't want the existing tenants/neighbors to know the home is for rent.
- Why is there a lockbox on my property?
- Should I provide a gardener/yard care provider?
- Why should I provide the pool guy?
- Will you pay my mortgage, HOA dues, hazard insurance, property taxes, or other related property bills?
- First Rate Property Management is a large company and I want personal service.
- Do you sell homes too?
- I want a property manager who specializes in property management, not sales.
- Home Ownership Program
- Why shouldn't I manage the property myself?
- Why do you hold the security deposit?
- Can I do the repairs myself?
- Do you offer rent concessions and incentives?
- What happens if my tenant wants to break their lease?
- Why should I give you reserve money?
- What kind of software do you use?
- What is the importance of virtual tours?
- How do you market on-line?
- Who is my main contact or property manager?
- How do you use social media?
- How do you use technology?
- How do you prove your advertising is working?
- How do I get my owners reports/statements?
- How do I get paid?
- Can a tenant stop paying rent if I don't make my mortgage payments?
- Why can't I choose the type of tenant?
- Why do I want a landlords insurance policy?
- Can I sell my rental while the tenants still occupy the property?
- The current rent does not cover my mortgage and/or other expenses.
- I already have an existing tenant. Will you manage the property?
- I want to change management companies, can I hire you?
- Why can't the tenant do their own repairs?
- Why can't you dip into the tenants security deposit to pay rent? I have a mortgage to pay.
- What is Renters Legal Liability
- Who does Renters Legal Liability Cover
- What does it mean to indemnify First Rate Property Management and the property owner?
- Does Renters Legal Liability™ cover my tenants personal property?
- How is traditional renter's insurance different?
- Owner Statement Log On Tutorial
Why isn't listing First Rate Property Management as additional/insurable interest enough?
By adding First Rate Property Management as an additional insured, you provide you and your insurance company additional liability coverage, which is explained after the following story:
A neighbor kid entered the backyard of a rental home, stepped in a hole, and broke his leg. The parents of the boy sued the tenant, the property owner, and the property manager. The property manager was not listed as an additional insured and had the standard indemnification clause in their management agreement. This indemnification clause was similar to the one that First Rate Property Management has in its management agreement as well as every other property manager's agreement. Because the property manager was not listed, the homeowner's insurance would not cover the property manager. Since the property manager was being sued and not covered by the owner's policy, the property manager had to hire an attorney to defend them, just like the attorney for the insurance company was defending the property owner. So both the homeowner's insurance company and the property manager were paying for an attorney to defend them. In both cases the attorneys pointed the blame everywhere but their client. So the homeowner's insurance is showing blame with the property manager and/or tenant. The property manager's attorney is showing blame with the property owner and/or tenant.
In this case, the homeowner was found guilty of negligence and the homeowner's insurance company paid the claim. However, the property manager had accumulated nearly $10,000 in attorney fees in its defense. The property manager, like First Rate Property Management, had professional and liability insurance, but neither policy would cover the property manager's legal expenses. Because of the property manager's indemnification clause, which is a common clause in all property management agreements, the home owner was held liable for the $10,000 in attorney fees to defend the property manager.
If the homeowner had listed the property manager as an additional insured, the insurance company would have equally defended the property manager as well as the homeowner and there would not have been any additional costs incurred by the home owner.
I encourage you to talk to your insurance agent about the above scenario and be sure to list First Rate Property Management, Inc. as an additional insured for your rental property. Your agent may try to talk you into listing First Rate Property Management as an insurable interest or as an additional interest, but this is not the same thing. Have them explain the difference and the risk that is assumed by you, the home owner. Some companies may refuse to list your property manager as an additional insured. My recommendation is that you send them a copy of your management agreement and express your concern for your liability. They'll probably agree to add the property manager. They may require that you pay a fee to do so, but the fees I have seen are very little and worth the peace of mind. We list a number of companies as additional insured on our policy and we pay the small fee to do so. If you have any questions or concerns, feel free to contact me.
1) Ask the property manager if they own rentals as well?
Generally that indicates more of an "owner's mentality." An Owner's Mentality is cautious about costs and is always analyzing return on investment.
2) What professional affiliations do you belong to?
Idaho does not require our property managers to be licensed nor is there any regulating body? So unfortunately, most property managers have very little training or guidance. Select a property manager that is licensed, is affiliated with a professional organization, and who has been professionally educated in property management.
3) What type of property do you specialize in?
Some companies specialize in single-family homes and other companies specialize in large complexes. Pick a property manager that specializes in your type of rental. First Rate Property Management does not specialize in large apartment complexes. Our portfolio consists of 50% single-family homes, and 50% multi-family, such as duplexes, triplexes, and four-plexes.
4) How long have you been in business?
Experience and track record is important. First Rate Property Management has been in business since 1994 and Tony has been managing properties since 1990. Combined, FRPM staff has over 50 years of property management experience.
5) How did you become a property manager?
First Rate Property Management came about because our owner, Tony Drost, MPM®, RMP® was purchasing his own rentals and saw a need for professional management.
6) Request a list of three current clients who you can contact about their property management services?
Click here for a list of our references
7) Request a list of three past clients who you may contact about their property management services?
8) How many people are in your company/office and what are there duties?
The average employee to property ratio is 1 employee for every 100 properties. The lower this ratio, the more care you can expect. First Rate Property Management's current ratio is 1 employee to every 65 properties.
9) How many properties do you currently manage?
In general, the larger the company the less the personal service you can expect. However a lot of this has to do with how sudden and recent the growth was. Over the past 5 years, First Rate Property Management has kept its growth less than 5% per year. Recent and rapid growth can be a red flag.
10) What areas (if any) are you limited to?
Markets vary from area to area and it is important to find someone that specializes in the area in which your rental resides. First Rate Property Management specializes in the Boise, Meridian, and Eagle areas. However, if you have a property outside of our area, we can provide you with a referral to another professional company.
11) What is your advertising and tenant lead generation procedure? Who pays for advertising? Do you have a website and can tenants apply on-line? Do you have virtual tours?
Often Owner's think that advertising is paid by the management company, when in actuality it is most likely charged to the Owner. You will want to know what a full month's worth of advertising will cost you and what different areas does the manager use. For example, First Rate Property Management posts our listings onto our website and over forty other websites. Our GOOGLE and YAHOO search engine placement is very high. Additionally, we advertise in local rental magazines, as well as the classified section of the local paper.
12) What is your tenant screening procedure?
Some property managers in Idaho do little screening. Many owners are very tempted to go with these companies, because they also boast higher rents. Unfortunately that tends to be a short term gain, as the damages, eviction costs, and re-rent costs are much greater. It is advisable that you select a PM that checks, that utilizes a professional screening company to verify: credit, criminal background, landlord references, social security ID check, and employment.
13) What is your tenant move-in procedure?
First Rate Property Management conducts a thorough move-in inspection with the tenant and annotates damages and tenant concerns in writing and by photos. Additionally, our lease and other forms protect our owners.
14) What is your maintenance and repair policy? If you have internal maintenance, what is the hourly rate?
Request a copy of their liability and workers compensation insurance policies as well as a copy of the contractor registration. First Rate Property Management utilizes a state-of-the-art work order system that tracks all maintenance requests. Our owners receive copies of each work order via email. We have an on-line system making it easy for our tenants to trouble shoot problems and request repairs.
15) What is your move-out procedure?
First Rate Property Management conducts a thorough move-out inspection with the tenant. We compare move-in to move-out inspections and photos. Proof of any damages and the collection of funds are rarely challenged due to our impeccable documentation.
16) What is your management termination procedure?
First Rate Property Management requires a 30-day written notice after an initial one year term.
17) What is your policy on returning phone calls from tenants and owners?
Call and leave a message and see how long it takes for the call to be returned. Most of our correspondence with both the tenant and owners are via email. This allows for written documentation.
18) Request a copy of the property management agreement?
Read these and be sure to understand all fees and termination clauses. Click here to view our management agreement.
19) Request a copy of proof of insurances.
These copies should come from the carrier directly, not the property manager.
20) What kind of software do you use?
Generally speaking, property management software will help organize and develop systems for the property manager, which will improve performance. QuickBooks is not a good solution.
21) Begin searching for your property manager as soon as possible.
If you are buying a property, don't wait until the property closes to select your property manager. If you are looking at changing property managers, do so before you have a vacancy. Give yourself plenty of time to pick the right company.
22) Don't select a 'yes man' look for honesty and quality of the responses to your question.
Every property manager knows that the owner wants high rents, low maintenance, and immediate attention. Select a property manager that can provide data that supports their rent recommendation.
23) Request a copy of their lease.
Does it address all of your concerns? Does it look professional? Does it protect you the Owner? Click here to view our Lease Agreement. To date, this lease has not lost in court yet.
24) Request for a copy of a typical owner statement.
Is it professional, easy to read, and address everything you want it to?
Our Owner's access their statements on-line and our notices come to you in a form of an email. If you are not a computer, internet, or email kind of person, our system is probably not for you.
25) Request a list of vacant units.
Call and schedule appointments to see them. Was the person showing you the property professional? How did the unit show?
First Rate Property Management has assisted and consulted with a number of Landlords/Sellers in a lease/purchase or a Lease with option to buy. However, we advise that you consult with an attorney and a real estate broker before considering a either of these. First Rate Property Management's owner, Tony A Drost, is an Associate Broker with Swope Investment Properties and would be happy to advise and assist for the real estate and property management contract side once you have spoken to your attorney.
A Lease/Purchase. Typically two documents are executed prior to the tenant/buyer taking occupancy. One is a lease agreement stating a specific rent amount, deposit amount, and lease term, in additional to the standard lease conditions. The other is a Purchase and Sale Agreement which specifies a specific price, sale date, earnest money, and the standard other terms and conditions. The point is that these specific items are known and certain before anything is executed.
A Lease/Option is a lease with an option to buy. The tenant has an option to buy or not. Typically Landlords/Seller uses this terminology, but prefers the Lease/Purchase over the Lease/Option as the Lease/Purchase requires a commitment from the buyer and the lease/option gives the tenant the total flexibility.
Rent: Typically the tenant/buyer wants a portion of the rent to go towards the purchase of the home. In fact, many times the seller simply increases the rent to cover this amount and buyer is perfectly fine with that. However, this is something that First Rate Property Management strongly encourages you to discuss specifically with your attorney. Let's say that the tenant/buyer fails to maintain the home are starts dong things in direct violation of the rental agreement and you the Landlord/Seller want to evict them. There is case law that shows that the courts denied the eviction of the tenants as they were able to come to court and prove that they have equitable interest in the property. So now you have tenants destroying your property that you can't evict. My guess is that once they are done destroying it, they probably won't want to buy it either. So this is just one example of where your attorney can advise you on the pros and cons of a lease purchase.
Sale: First Rate Property Management has seen very few lease/purchases or lease with options to buy actual succeed. One of the main reasons is that the terms of the sale must be determined now, not later. So what happens when the sales market improves drastically and value increases 10-15%? Generally the seller will find any reason to get out of the contract. What happens if property values decline? Well, the tenant/buyer now wants to find any reason to get out of the contract as they can go find something else for less. The only time both buyer and seller are happy is when the market remained unchanged and that is simply very uncommon and an unlikely event.
First Rate Property Management is happy to oblige. Tenants love lease/purchases and options to buy because it makes them feel like they aren't throwing their money away each month and that they are actually creating equity or an investment. So they can be a great marketing vehicle. Like anything, you just need to weigh the pros and the cons and decide what is best for you.
First Rate Property Management's fee schedule can be found at Management Fees.
Below are some links that will give you the opportunity to learn more about our company and our services.
|Our Guarantee||Leasing Services||Maintenance Support|
|Accounting||Real Estate Services||Blog|
|References||Questions to Ask Your Property Manager||Management Agreement|
First Rate Property Management doesn't just add your property to our list of properties managed -- we devote about 30 hours into the setup of your property.
We could list about 100 things we do during the set up, but let's just list some of the major things that actually create value and can save the property owner money. For one, we immediately conduct an interior and exterior inspection of the property and produce a written report. Additionally, we set up Landlord Service Agreements with all the utility companies that save our owners money upon turnovers. We also take interior and exterior photos as slide-shows for future marketing campaigns.
Yes and No. Over the past decades, we have put just about every contractor to the test. Cost is always important, but as you know, sometimes you get what you pay for. So the contractors we use now, have proven to provide low costs and quality workmanship.
Most of our contractors are small companies with little overhead. We believe that this is how we can keep costs down as well as ensure quality of workmanship. Also, we give them a lot of work, so we typically get better pricing than anyone else. For example, we have 3 main flooring contractors. We do more flooring than most builders, so we get better pricing than about anyone.
With that said, we are always willing to try someone new to put them through the test. However, we do require that they have all appropriate licenses and registrations, complete a W-9, have worker's compensation insurance, and have a general liability insurance policy.
If we and the property owner agree to test out their contractor, the instructions need to come through our office. We have a work order system and if we do anything outside of the system, things can go wrong.
Please take a look at our marketing campaigns on our website.
Often, Owners think that advertising is paid by the management company, when in actuality it is most likely charged to the Owner. First Rate Property Management posts our listings onto our website and hundreds of other sites. Our GOOGLE and YAHOO search engine placement is very high. Additionally, we advertise in local rental magazines, as well as the classified section of the local paper.
The owner is responsible for all advertising costs. The management agreement allows up to $25 per week in advertising costs, which we are always able to be below.
First Rate Property Management is one of the few Boise area property managers that do have virtual tours. Additionally, we create these tours at no additional cost.
Renting a property depends on price, condition, location, and the market. Our goal is to select a qualified tenant as soon as possible, but no later than 30-days. Since we have access to valuable rental statistics, it’s our job to advise you on price, condition, location, and market conditions so that we can achieve this goal.
Our rental policies are posted on our website. We hire a 3rd-party company who checks credit, criminal background to include sex offender records, landlord references, prior rental history, eviction, bankruptcy, lawsuits, judgements, liens, collections, fraud, bad checks, FICO score, social security ID check, Patriot Act records, name verification, address verification, identity validations, and employment and income verification.
Some Idaho property managers do very little screening. Many owners are very tempted to go with these companies, because they also boast higher rents and shorter rent-up periods. Unfortunately, that tends to be a short term gain, as the damages, eviction costs, and re-rent costs are much greater.
First Rate Property Management is confident that any lower rents or any longer rent-up periods caused by our strict screening process actually improves our property owner's bottom line.
Of course you can, but First Rate Property Management will require that the tenant complete an application, pay the application fee, and be submitted to our screening company. All of this screening isn't just there to find you a quality tenant, but it is also there to reduce risk to both the property manager and you as the property owner. With all of the identity theft and lawsuits arising from landlord/tenant relationships, thorough tenant screening is becoming more and more the norm. It is also the reason why so many property owners are hiring professional property managers to manage their rentals.
First Rate Property Management demands that our staff provide you and your tenants with prompt and satisfactory service. If you ever have a question or concern, you can contact any of us, to include the President, at any time. If after talking to the President, and you still are not 100% satisfied with our service, First Rate Property Management will agree to allow you out of your contract, free of penalties and fees. Find another management company that will do that!
The lease we use is a legal binding document, but we can try and negotiate on your behalf. If both parties mutually agree, the lease can be terminated. This process however, does require up front and honest communications with First Rate Property Management. The owner is not to contact the tenant directly for any reason.
First Rate Property Management has never had a dispute with a property owner that required a judge to decide. Our management agreement is designed to protect First Rate Property Management and the property owner. We do not allow any changes or omissions from the management agreement because once executed; it is filed away and never looked at again. Our systems are built around that management agreement and we won’t know that your agreement is different than anyone else’s.
First Rate Property Management exerts all of its energy the first week of each month on collecting rents. Adhering to trust accounting requirements, we must let rent checks season before dispersing funds to the owner. Therefore FRPM holds off on completing owner statements and depositing funds directly into our property owner’s accounts until after the 10th of each month. Additionally, if FRPM pays any bills on your behalf, we generally do these between the 1st and 10th of the month, as we need the rent money to make those payments.
Collecting late rent is a very difficult job. We could actually get away with less staff if all tenants paid their rent on time. And if tenants would just communicate when they don’t pay their rent on time, it would be a lot easier. But as it is, our leasing agents have to turn into debt collectors and begin a very aggressive regiment to collect money on behalf of our property owners. So, First Rate Property Management retains all late fees to help pay for this extra and unpleasant labor.
Inspecting your rental property is just something that needs to be done. At the same time, we also want the tenant to feel like the rental is their home. We want to minimize any interference with their peaceful enjoyment of the home. We have learned over the years that the more we leave the tenants alone, the longer they tend to stay.
With that said, there are times that an inspection is needed. First, let us explain all that we do to make sure that your home is well taken care of, and then explain the process for additional inspections. When we take the property on, we conduct an initial inspection which generally includes a written report and photos. Next we conduct move-in inspections and move-out inspections with all tenants. The property owner receives a written report with photos after each and every move-out inspection.
Additionally, we conduct drive-by inspections at least once a month. If a drive-by inspection suggests any reason to be concerned, we will give notice to enter and inspect. Also, if the tenant fails to pay rent and fails to communicate to the office, we give notice and inspect.
And lastly, all of our vendors are trained and required to report any cleaning or damages to the property when they provide service. With all that said, if the property owner wants an inspection, we will do it at no additional cost to the owner. But this needs to be within reason. Like we said above, we don't want to constantly bother the tenant if they are fulfilling all terms of the rental agreement.
As mentioned above, inspections are important and need to be done. The tenants do have legal rights to the property and there are laws and rules that we must follow. Therefore, we require that all inspections be scheduled through our offices. Additionally, for the protection of everyone, an FRPM employee will accompany the property owner or their designee on any inspections.
Rents are due on the 1st day of each month, but not penalized until after the 5th day of the month if the rent has not been received by close-of-business on the 5th.
On the 6th day of each month, our leasing agents put on their debt collector hats and start calling. Soon after, we deliver 3-day notices to the tenants to pay rent and late-fee amounts due, or vacate, for all tenants who failed to communicate and/or make arrangements to pay rent and late fees. If we still don't hear from the tenant after the 3 days, our owners will be notified and we give the tenant notice to enter and inspect.
About mid-month, our General Manager will be contacting you and giving you a full report of what actions have been taken, as well as making recommendations on how to proceed.
Costs can vary, but the typical eviction is $595 for attorney fees and $120 to serve the tenants. Both the eviction costs and the service to the tenants are a cost that is passed onto the tenant. Sometimes they have enough deposit to cover the costs, other times we have to get a judgement against them and begin collections.
For years investors have asked us, "Why don't you offer eviction protection like your competitors"? Our response has always been, 1) First Rate Property Management's annual eviction rate has never exceeded a tenth of 1%. 2) In our opinion, the risk is low enough that it doesn't make sense to pay a fee for eviction protection. But our new clients demanded this service, so we added it. They want peace-of-mind and the ability to budget an annual flat amount rather than take the risk of an expensive eviction. Let's face it, regardless of how well tenants are screened, a very small percentage do get evicted. A change in circumstance, like a divorce, loss of employment, or health, can have a drastic change on good people's lives and their ability to pay rent. If this is something you are interested in, just opt in for the service when signing or renewing your rental management agreement.
Because First Rate Property Management's tenant screening is so thorough, tenant damages are limited. However, even with the strictest of criteria, things happen.
The hope is that the tenant's security deposit will cover the damages, but unfortunately the market has caused security deposit amounts to drop and in many cases there won't be enough to pay for the damages. In that event, we get a judgement and collect the funds in small amounts over a period of years.
Basically, this concern is why our acceptance criteria is as strict as it is. It can take months of rent to cover the costs of one bad tenant. This is also why more and more property owners are turning to professional property managers to manage their rentals.
The property management company is a neutral third party. It's one of the reasons that tenants come to a property manager. In today's economic environment, tenants want to make sure they know that their security deposit is safe.
First Rate Property Management wants to focus on managing your rental. That is our expertise. Moreover, we found that by hiring contractors that specialize in that specific trade, the quality is much better. And because we give them so much work, we are able to negotiate better prices. Additionally, we have a minimum of three contractors per trade, so their ability to respond immediately is much better.
Ever heard the saying, "He's a Jack of all trades, master of none"? Far too often we see unlicensed guys in a truck fixing things they have no business fixing. Our way gets it done right the first time and at a reasonable cost.
Trust us; you don't want to do that. These professional cleaning companies have the experience, tools and chemicals to get the job done quicker and better. Additionally, cleaning a vacant unit is just way different than cleaning an occupied and furnished home. What could take you days, or even a week to clean, can take one of our crews just a matter of hours. The sooner we have your rental property looking good and ready for a new tenant, the sooner we can get it rented. Trust us, you are money and time ahead by allowing the professionals to take care of it.
If your rental property is a 4 plex or larger, we typically advise you only accept small pets because generally the common grounds are small. If your rental property is a single family home or duplex, then we advise that you consider all types and sizes of pets.
If the property owner should decide to allow pets, we have a very strict pet policy that includes an increased security deposit and additional pet rent that goes to the property owner.
Some owners have strong allergies to certain kinds of pets while others just won’t be able to sleep at night knowing they have a 75 pound Labrador in their home. No problem, we completely understand and we will find good tenants who do not have pets and we will ensure that they comply to that rule.
Tenants expect rentals to include refrigerators. It's becoming even more and more common for home owners who sell their house to also include the refrigerator. Because of this expectation we require that your rental be equipped with a refrigerator that is comparable in style and quality of the home. You don't want to put a $500 white refrigerator in a $300,000 home with stainless appliances. Additionally, rentals with refrigerators will rent quicker.
You do not need to provide a washer/dryer. It makes more sense not to have washer/dryers for single family homes as most house renters have their own set.
On the other hand having w/d sets available for apartment dwellers is usually a good idea. We have a good inventory of multi-family housing with and without w/d sets.
Because you supplied the washer and dryer, you become responsible for the maintenance and upkeep of the appliances. Any water damaged caused by failed parts will be solely the property owners. Although there are far more tenants who don’t own their own washer and dryer, there are renters who do. If they own their own, they will want to use them. What do you do with the provided washer and dryer in this case?
There just isn't a good way to protect your personal property nor is there a good way to prove whether the tenant damaged it or not. In most cases the tenants would prefer not to have your personal property at the house as it takes away room to store their own property. Additionally, the tenants don't want to be responsible for the property owner's personal property nor do they want to be concerned that the property owner will someday come to the house without notice to check or collect their personal property.
We’re sorry, but First Rate Property Management does not have the expertise in managing furnished homes. We’d be happy to refer you to a property manager in the area that does.
We’ll start showing the property as soon as we have the property under contract. But you know the old saying, “first impressions are lasting impressions”. The better the property looks, the better the chances of it renting out. We’ll do our best to help them imagine what it will look like once completed, but the truth is, you’ll want to get the repairs done as soon as possible and not be disappointed if no one does an application until the work is complete.
The term of the lease can depend on the property owners own needs. But if the rental is an investment property, the property owner is typically going to want a 6-12 month lease. However, the time of the year does play a factor. For example, if First Rate Property Management fills the vacancy in November, a 12-month lease would end in December and if the tenants decide not to renew the lease, the property owner is looking at filling a vacancy in the worse month possible. So FRPM encourages leases to expire in any months outside of September, October, November, December, and January.
Depending on the property owner's needs and the current market conditions a short-term lease may be a good alternative. Sometimes the property owner is looking for a long-term lease and then along comes a tenant wanting a short-term lease because they are having a home built or they just moved into the area and want to rent for awhile before they buy. If that is the case, First Rate Property Management may actually recommend that the property owner sign a short-term lease.
A person building a home is an ideal tenant. They have good income, good credit, and because they only plan on living in the house a few months, they typically don't hang any pictures or anything. Also, these type of tenants generally know how to care for a home. Additionally, it has been our experience that they actually end up staying longer. Because the renters sign a short-term lease, we keep the property listed and typically can find a long-term tenant to take possession immediately after the current tenants vacate. Lastly, FRPM requires a rent increase of a minimum of 5% of the market rent.
Unlike most states, Idaho does not require property managers to be licensed real estate agents. Because of that, rentals are not listed on the MLS and leasing commissions are not offered. That’s unfortunate because if leasing commissions were offered on the MLS, you would not only have First Rate Property Management trying to rent your property out, but you would have over 2,000 other real estate agents in the area trying to do the same thing.
First Rate Property Management tracks our lease sources. Signs are often the number one cause for a lease. You want people driving by to know this is the house for rent. Tenants often will want to drive by the rental before actually making an appointment to see it. If there is no sign, many assume that it has been rented. Additionally, your neighbors can tell their friends and family members about it. Also, the sign holds our sign riders and flyer box.
Flyers allow us to give a description of the property so that people who are walking or driving by can grab a flyer. It’s an easy way for them to pull information, not forget about it, and be able to pass it along.
First Rate Property Management has hundreds of phone numbers and we assign each property with its own phone number. When prospective tenants call after hours or when all leasing agents are on the phone assisting others, they can hear a brief description of the property. Additionally, we can track the calls this way too. So we know who is calling and when. It helps us with follow up, plus if we see very few calls, we know there is a problem and can address it.
We will happily oblige, but our marketing is way too powerful and they're going to find out anyway. So, the property owner might as well take advantage of a great lead generator right off the bat.
First Rate Property Management installs lockboxes on all of our vacant properties. That way, if we get a call from an interested party, our leasing agent who is showing a property down the street can just drive over, access the lockbox and show the property. Otherwise, we would have to delay the showing until the leasing agent had time to return to the office to get a key and drive back out to the property. Additionally, all of our contractors utilize the lock box to access the rental property to perform the necessary turnover.
Because you want to make sure that the person doing the work is a professional and that the work is done to your standards. Pool equipment is very expensive. If it breaks you’re going to say it was the tenant’s fault. They’re going to say that the equipment was faulty. It’s a no win situation.
First Rate Property Management will gladly pay your mortgage, your HOA dues, hazard insurance, and even your property taxes at no extra charge. You don’t want these bills paid late, and we can’t always rely on the rent to be paid on the first, so we will require these funds in advance and will hold your reserves to an amount equal to the cost of these expenses.
FRPM has grown to be a large company because our reputation and because our clients are always referring our services. Regardless of the number of properties FRPM manages, our employee to property ratio is probably the smallest in town. We average 65 units to one employee, whereas most companies devote a minimum of 100 units to one employee. There are even companies out there with up to 200 units per employee. So we are actually in a better position to provide that personal service that most investors look for. Additionally, FRPM became a large company because of our reputation and because our clients are always referring our services.
Tony Drost MPM®, RMP® is a licensed broker with Swope Investment Properties. Tony specializes in investment properties with a majority of his sales being smaller multi-family properties. To learn more about Tony, please visit his website at www.BoiseInvestmentProperties.net or contact him at Tony@FRPMrentals.com.
First Rate Property Management’s only business is residential property management. No sales are conducted. Our owner, Tony Drost MPM®, RMP® is a licensed broker and does assist many of our clients with their investment needs. Being as knowledgeable as he is in property management becomes very valuable as investors try to determine location, what true market rents are, and what to expect for income and expenses. The relationship with most sales agents ends upon the sale. Tony’s relationship continues throughout the duration of the investment. Knowing that, Tony is going to only recommend properties that he feels confident that will perform as you expect it to.
I see that Tony offers a program to First Rate Property Management tenant’s that assists them in buying homes. I feel that this is a conflict of interest. I don’t want my tenant buying a home, I want them renting from me forever.
The above statement is very common and without fully understanding the program, it is certainly warranted. Let me explain:
First, when a tenant decides to buy a home, they are going to do it. By being enrolled in Tony’s Home Ownership Program, we can control the circumstances so that the property owner isn’t hurt. For example, Tony will not allow them to break the lease, unless the property owner agrees.
Second, all tenants hope to someday purchase a home. It’s the American dream. So many tenants believe that paying rent is throwing money out the window. FRPM is able to turn that around and say, by renting from us, you aren’t throwing money out; you are investing in a future. At no cost to the tenant or the owner, FRPM offers a significant credit towards the purchase of a home by just signing the lease. Initially, they receive additional credits for each month in which they pay their rent on time and have no lease violations. Since FRPM is the only company that offers this program in all of Idaho, tenants actually seek us out. And the tenants that do seek us out, tend to be better qualified tenants. So our property owners benefit by having better tenants
Third, because the tenant only receives credit the months they pay their rent on time, our program encourages on time payment. On time payments are good for the property owner.
Fourth, the renters only get credit if they have no lease violations. Again, this is to the property owner’s benefit. This program encourages tenants to comply with the lease terms and properly care for the property owner’s rental property.
Fifth, the tenant loses any and all credits should they decide to leave. So this program encourages tenants to continually renew their lease. Knowing this, First Rate Property Management begins sending tenants renewal notices 3 months prior to the end of their lease. Within our renewal notices, we remind them of their Home Ownership Program credit and remind them that if they should choose to vacate, they lose that credit. In tenant’s eyes, they see that vacating could cost them thousands of dollars. So, they tend to renew.
The landlord business has drastically changed in recent years. Within these FAQs, we have described our screening process. Because of new credit reporting laws, property owners do not have access to these resources and if they did, the cost would be prohibitive. FRPM screens over 1,500 tenants a year and because of that volume, we pay reasonable fees. Additionally, new credit reporting laws put huge responsibilities and penalties on all landlords regarding the safe keeping of renter's personal information. Identity theft is a huge problem and because landlord applications include all of the information needed to steal one's identity, they are required to follow certain rules to secure it. If a tenant of yours has his or her identity stolen -- and you cannot prove that you followed the rules in safeguarding that information -- you could be held liable for the damages to the tenant, which could be thousands upon thousands of dollars.
Risk. Certainly the credit information above puts the landlord at risk, but there are many more. There is HUD, which enforces the Fair Housing laws. But there are also Fair Housing Advocates who receive Federal funds to test landlords to ensure that they are following Fair Housing laws. I honestly believe that most landlords out there don't purposely discriminate, but because they are not aware of the laws, they often get nailed for violating fair housing regulations. There are dozens of common mistakes made by landlords unaware of Fair Housing Laws, but a common one is denying an applicant who has a dog, or maybe a cat, because you do not accept pets for your property. If the renter's dog or cat is a support or companion animal, you cannot just flat out deny them. Additionally, you cannot charge any additional fees or collect extra deposits. A local Fair Housing Advocate seeks out $30,000 in damages per complaint. Is it worth the risk to self manage?
There are plenty of other risks involved. The fact is that First Rate Property Management is a professional company. We have been doing this since 1990 and undergo hundreds of hours of education each and every year to stay on top of it. That much training is far too costly for an individual home owner to endure.
Lastly, many owners simply look at the monthly management fees and look at a way to remove that expense. This is short sighted. In the long run, professional management should add to your bottom line, not deduct from it.
As a professional property manager, we are required to account for all funds as well as abide by all state laws regarding the holding and refunding of the tenant’s security money.
Yes and No. 99% of our owners direct First Rate Property Management to handle all repairs because of our volume, we get discounted rates and we have a long list of professionals who can jump right on the job and get it done. Because of this, we have developed systems so that these repairs are done timely, cost effective, and with professional workmanship. So when an owner requests to do work, it’s outside of our systems and the opportunity for error is greater.
In the current market, First Rate Property Management has some standard incentives. One is that we offer to credit the tenant’s application fee back to them, if they submit their application within the same day of the showing. The credit is posted towards their first month’s rent, only if their application is approved and they execute a lease with us. What this does is encourages the prospective tenants to apply right then and there, because if they don’t, that provides more opportunity to find something cheaper, maybe something with a move-in special, etc. This trick has doubled our lease conversion rate upon showing over the past few years.
Another one of our standard practices is to offer lease renewal incentives. Unfortunately, as a tenant’s lease comes close to the end, they like to take a look at listings to see how rents are. Often times they’ll come across a property with perhaps lower rent or worse yet, a large move-in incentive. Their short sightedness tempts them to take advantage of these offers, thinking it will save them money. They forget that if they move, they have to pay another deposit, rent a moving van, pay utility transfers, and all the other costs associated to moving. So three months prior to the term of their lease, we offer an incentive to renew. The amount of the incentive changes as market conditions change. But in all cases, the amount of the incentive is a fraction of the cost of a turnover and the possibility of any lost rents between tenants. It is a very successful program.
First Rate Property Management has the property owner’s best interests in mind. We know the Boise area market very well. We run weekly statistical reports and evaluate trends of our own inventory on a weekly basis. Additionally, we are involved in surveys that report average rents and vacancy by category. We are proactive, not reactive and that is how we keep our vacancy rate as low as we do.
The lease is a legal and binding contract. If they communicate to First Rate Property Management their desire to break their lease, we will first attempt to talk them out of it, due to the expense. Furthermore we will work with them to find replacement tenants so that there is no lost rent between tenants, which saves the outgoing tenants money and ultimately the property owner.
However, a small percentage of tenants do break their lease. In this case, FRPM will get the property in rent condition and find a replacement tenant. The outgoing tenants will be billed for all past due rents, any advertising costs, utility costs, and any other fees or damages caused by their breach of contract.
First Rate Property Management will turn their account over to an accredited collection company, who will eventually get a judgment and garnish wages. The property owners will eventually, and probably slowly, get their money.
First Rate Property Management requires reserves for each of the properties managed. The reserve funds are there so that repairs and bills can be paid after rents have been dispersed. As stated above, FRPM is happy to pay mortgages, HOA dues, property taxes, hazard insurance premiums, and any property related bills at no additional costs to the property owner. However, we do require reserves equal to these funds so that the bills can be paid on time. A full accounting of reserve funds are provided on each statement each and every month.
First Rate Property Management utilizes state-of-the-art property management specific software. It is impossible to list all of the bells and whistles, but here are just a few: on-line owner and tenant statements, direct deposit for rents and owner distributions, work order module, asset tracking, and integration with our website.
A recent National Association of Realtors survey stated that more than 94% of respondents want full-motion video. Additionally, most leasing leads are generated by internet listings and since First Rate Property Management is one of the few Boise area property management companies that offer virtual tours, our lead generation is much greater. Also, our owner’s don’t pay for the virtual tours. This is a free service provided by our company because it not only helps our property owner, but it also helps us, as it helps us show your property 24 hours a day, 7 days a week, 365 days a year.
First Rate Property Management feeds to hundreds of rental internet listings sites to include Craigslist. Additionally, our own website ranks very high on the search engines. It is impossible to search for a rental in Boise, Meridian, or Eagle on the internet and not come across our listings.
Our company is departmentalized, which means we have employees who are assigned certain tasks. Similar to an assembly line, this creates efficiency and higher quality. We have employees whose sole responsibility is to show properties. That's their expertise. We have an accounting department that specializes in accounting, and so on. The end result is experts focusing on their one role and doing it better and faster than anyone else.
This is in contrast to how many property managers handle their accounts. Most hire independent contractors to manage a portfolio of properties. That sole person is responsible for all showings, coordinating maintenance, paying bills, creating statements, screening their tenants, and many other duties. Since no one person can be available all day, every day, we allocate our resources so that as a company, we can be available all day, every day.
First Rate Property Management uses social media, such as Facebook, Twitter and Google , to stay in front of our target market. Our target market and their generation have chosen to use social media as their mode of communication. Communication is key, so we adapt as trends change.
Technology has been a huge factor in the property management industry. Our property management software alone provides the structure and process to keep us very organized and able to find necessary information very quickly. We can access our data anywhere there is an internet connection. Our move-in and move-out inspections are computerized. We utilize automated emails to communicate to owners and tenants when important events happen, such as a lease renewal. Our software integrates with our website, which is basic in appearance, but very advanced in function. Our tenants and owners can access their account 24/7 from any location in the world. Tenants can pay their rent online or set up auto debit. Owners receive on-line statements with all bills scanned and attached, as well as an automatic deposit of the monthly proceeds. Also, our website automatically feeds hundreds of other websites to include Craigslist. We have blogs that provide useful information for both the tenant and the property owner.
First Rate Property Management does a number of things to track the sources of our leads as well as the source that creates a signed lease. Our rental application asks the tenants how they found out about the property and that information is tracked. Additionally, each available rental property is assigned its own phone number. Our phone system tracks the number of calls, as well as who made those calls, so that we can always follow up if needed. Also, our website and several of the other sites that we advertise on, track the number of clicks and views. Our system also tracks the number of showings and the number of applications received. So we can tell what advertising is working as well as any trends. For example, if we see that any one property is receiving a lot of calls, a lot of website views, and a lot of showings, but no applications, we know there is a problem. It is our job to identify that problem. Is it price or is it the junkyard across the street? It could be a number of things, but we utilize the data to determine what it is and what we can do to improve the lead-to-lease conversion.
Our property owners can login from anywhere that there is an internet connection at anytime to view their statement. Additionally, an email is sent once your most recent statement is uploaded to the website to include a link to our blog so that you can be updated to the current market trends and any changes we've made.
Once you receive the email indicating that your statement is ready, you can then check your checking account to see the funds automatically deposited. Depending on your bank, this may take up to 24-hours from the time we initiated the automatic deposit.
Legally, the tenant is obligated to pay the rent through the term of the rental agreement. Additionally, while our management agreement is still in effect, it is our responsibility to continue to pursue that rent on the property owner's behalf. However, it is possible that a tenant will falsely believe that because the mortgage is not being paid, they are no longer required to pay rent. Therefore we do have a foreclosure clause in both our management agreement and our rental agreement so that all parties understand their responsibilities and how First Rate Property Management will handle the issue. Although we are completely prepared for such an event, we sincerely hope that never becomes an issue. If it does, please be sure to contact us so that we can explore some of your options.
Fair Housing Laws and their enforcement and subsequent penalties for not abiding them can be very tricky. We have taken over many properties that were self managed, because after being fined for violating Fair Housing Laws, they came to us to manage. When you listen to their stories, we get the impression that they did not set out to intentionally discriminate, but because their selection process was not consistent and left room for interpretation, they were found guilty. We are trained in Fair Housing Laws. We offer an application to each and every person who makes an inquiry. We process every application. And we accept or deny applicants based on our acceptance criteria.
If you have a friend or a relative that you want to place in the property and you make that known before we begin marketing it to the public, that is your prerogative. We do however still require an application along with the credit and criminal background checks.
Be sure to communicate with your insurance agent that the property is a non-owner occupied rental property. There are additional riders and coverages that do not cost much that provide you with added coverage. The most important is the ability to recover lost rents. A common example is a severe water loss or fire, which requires the tenants to vacate in order to make the necessary repairs. With the proper coverage, your insurance company will cover the damages plus the lost rents, as well as the tenant's temporary housing costs.
If the property is a multi-family building, then you definitely want to sell it fully occupied. Investment properties’ value is directly related to its potential income. If you decide to sell, please alert us before you commit as there are a number of things that we can do on our side to make it successful.
If the property is a single family home, you can sell it while the tenants are occupying the property, but depending on when the tenant’s lease expires, there are some things to consider. The best thing to do is get the property manager involved during the decision process so that your efforts are not wasted. If the tenants are on a long term lease, both the seller and the buyer need to understand that lease is a legal binding agreement which would have to be honored by the buyer. We can help. Also, if the tenant is on a long term lease, they most likely will not want to accommodate showing after showing and they certainly are not going to want to allow a lockbox. Again, we have ways of working these things out. There are many other items that need to be discussed and worked out, so please call us ahead of time and not do what most do, which is not call us at all and we find out after an angry tenant calls refusing to pay rent until the FOR SALE sign is removed.
Unfortunately, the property owner’s mortgage or other expenses are completely unrelated to what the rental market will bear. As described above, First Rate Property Management has access to the necessary tools to accurately assess market rent for your property. If the current market conditions don’t allow you to cover all expenses, you need to decide if you should sell, or prepare to cover the difference until the market improves. We are willing to attempt a higher than market rent, but only if the property owner agrees to lower rent if we are unable to fill the vacancy at the higher rate.
This is a common request. We are happy to describe our services and how we operate and if there appears to be a good match, we can go to the next step. Also, maybe you can describe the issues you are having and perhaps we can provide some information to help you resolve those differences. But if your mind is already made up to make a change, there are a few matters you have to consider and take care of. Review your current management agreement. Has it expired, automatically renewed, is there a termination fee, etc. Then you will want to contact your current property manager and discuss your issues and perhaps express your desire to change management companies. If they view the relationship as you do, they very well may require no notice and mutually agree to terminate. However, there are many companies, who will hold you to the strict terms of the contract. So you need to iron these things out. Once a date is determined, then you and First Rate Property Management can finalize our agreements to manage your property.
We allow and actually require tenants to perform some troubleshooting and very minor repairs, such as unjamming a garbage disposal, unclogging a toilet, and replacing the furnace filters. We provide some guidelines and even some videos on our maintenance FAQs. However, neither the property owner nor First Rate Property Management wants our tenants taking the risk of hurting themselves. We want repairs completed by a properly licensed and fully insured professional who will do the job right, as well as warranty their work. We've seen plenty of unauthorized tenant repairs and they are no Bob Villa.
Idaho Laws and the Code of Ethics and Standards of Professionalism that First Rate Property Management follows do not allow us to do so. The security deposit is there to cover cleaning or damages to the property. However, upon move-out, we can apply their deposit towards past due fees to include rents.
Renters Legal Liability™ is a communitybased property damage liability program. The Renters Legal Liability program enables renters who rent from First Rate Property Management to acquire $100,000* of property damage liability protection.
Renters Legal Liability is an innovative risk management tool designed to fulfill tenants’ contractual obligations specified in their lease agreement. The covered property liability is the tenant’s indemnification obligation under the lease between the tenant and First Rate Property Management (property manager). Tenants agree to indemnify and hold First Rate Property Management and the rental propety owner harmless for damages or losses originated through their actions.
Renters Legal Liability™ is a unique program that provides protection for financial responsibility if a resident originates and causes damages/losses to the community/building.
The program covers five ‘perils’ for accidental residentgenerated loss. They are: fire, smoke, explosion, water discharge, and resident induced sewer backup. These five perils account for over 95% of residentgenerated losses. Coverage for a single occurrence is up to $100,000*. Under the program, damages are paid in priority – to the owner/manager of the home, duplex, or apartment for damage to the building, to nonresponsible, impacted residents up to $10,000 for their damage/loss, and finally to the tenant responsible for the damage, up to $10,000 if other damages do not exceed the peroccurrence limit.
Indemnification is a term that means if a loss occurs, a party who sustains the loss (First Rate Property Management and the property owner) should be restored to a financial position approximately the same as if the loss did not occur – no better or no worse – by the renter/tenant who originated and caused the loss/damage.
Renters Legal Liability™ covers your personal property if the following occur:
First – the claim submitted by the property manager was originated by a resident who is covered under the Renters Legal Liability program
Second – the individual claim is less than the $100,000* Renters Legal Liability program limit, and provided that the program limit has not been exhausted first by the rental property owner/manager, and then by the nonresponsible, impacted renters/tenants. If the limit has not been exhausted, the personal property contents of the responsible tenant may be covered up to a maximum of $10,000.
The insurance commonly referred to as an HO4 policy, or renter's insurance, is coverage purchased by the resident, in his/her name. The policy typically covers the renter's personal belongings, and liability coverage. HO4 policies can be customized to cover various perils, or "risks," and broadened to include damages that were not caused by the renter. For each level of coverage needed, insurers set rates. Total premiums depend upon coverage selections and the loss history of the tenant/renter.