With today's real estate inventory maintaining the high levels that saturated the market over a year ago and hovering around 26,000 in the greater Orlando area, many sellers are deciding to toss their hat into the ring and place their prized possession on the rental market.
For some this is a great idea but it is not the ideal situation for everyone. If the property owner is behind on their payments or about to have the bank proceed with the foreclosure process, I don't believe this to be the answer. From the realtor's perspective it is not a good idea to manage a property which is not up to date with the mortgage payments because eventually the bank will expedite matters and place the property with the legal department and foreclosure could possibly put the owner and the management company in a potential legal situation. Once a bank forecloses the tenants are removed. A lease may survive the sale of a property but it does not survive a foreclosure.
Also the owner who is looking to use the equity (if there is any) from the sale of their house to make another purchase wouldn't benefit because there is no immediate outlay of cash to help the owner purchase that other house.
But for the person who has a second house, which is usually vacant, and is considering selling but doesn't want to accept what the market is willing to offer for the property, this is a great strategy. Once the house is leased it will continuously produce a steady stream of income which will offset most of the bills that are associated with owning the property.
Most property management companies offer two types of agreements which should satisfy almost everyone. The first is called a Finder's Fee Agreement. This is the basic agreement which only gives the property management company the authority to lease the property but not the authority to manage the property or collect the rent. All calls, complaints, collections, evictions and repairs are to be handled by the landlord. The management company's only job is to screen and lease the property and then they are finished.
The second type of agreement is property management. Here is where a landlord gets their monies worth without the headache. The property management company is responsible for all aspects starting with the marketing and leasing of the property all the way up the renewal of the lease or if need be the eviction. The landlord doesn't have anything to do with the day to day operations or headaches of managing the property.
There are lots of added incentives or extras that these companies will recommend or do for the landlords such as:
•· Evaluate your property and make recommendations to prepare your property to obtain the optimal rental amounts.
•· Advertise and syndicate your house over a wide variety of websites to obtain the maximum number of inquiries.
•· Show the property by appointment 7 days a week.
•· Receive all inquiries and tenant complaints 24 hours a day, 7 days a week.
•· Screen all applicants over the age of 18, checking for credit scores, felonies, sexual arrests, evictions, job verification and income verification.
•· Video the house, in and out, so if the tenant claims that something was broken prior to the lease all the property manager has to do is go to the video.
•· Rekey all the locks every time there is a change in tenants.
•· Have the lease prepared by an attorney.
•· Arrange for, oversee and inspect all necessary repairs.
•· Timely collection and delivery of rents with a financial statement.
•· Year end accounting documents for tax purposes.
•· Make periodic surveys of the property to check for damage or violations of the lease.
•· Make a recommendation for a home warranty.
•· Tenant guarantee.
So for most of us who aren't aware of today's trends in the market place there is another viable option available to homeowners. Hopefully this will educate and even make property owners more aware that there are other options available to them so everyone isn't trying to sell their house at the same time. This might even lead to lower inventory which is the beginning to the recovery process which is what everybody is waiting for.
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