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So, how much does it cost me to have my property managed?

                                    Ebook Cover by Shafin Karim at Coroflot.com

 

Right now we are going through tough times.  With Covid-19 running the nation and hurting so many, there are many unknowns as to what is in the future. This is especially true for Maine Landlords.  As for property management, we also have many unknowns and owners looking to turn to the professionals during these difficult times, often ask what fees are associated with handing their property over to managers.  Keep in mind, many of the fees incurred have to do with the level of service provided by the company you choose.  Some companies have different ways of looking at things and try to protect the owner the best they can.  There are so many possible property management fees that there was an entire book written on it. Actually 3, as the above picture shows the book is the 3rd addition. Here are some common fees and what they mean to you.

 

  1. Management fee-  This is what the company charges for service throughout the contract.  This can be anywhere from 4-18% of collected rent. Until recently, it was a percentage, but many management companies are now charging flat monthly fees in order to remove any confusion.
  2. Set up fee-  This fee is originated to set up a contract between the property management company and the owner/landlord.  This fee can run between $100-$300.
  3. Leasing fee-  This all depends on time and effort of finding quality tenants to lease your property.  This also can depend on what you want for rental agreements such as long term tenants or short term tenants. The leasing fee can range from 50% all the way to a full month’s rent.
  4. Advertising fee-  Some companies will charge a separate advertising fees and some may include that in the overall agreement.  We have found that this can differ from certain parts of the country.
  5. Renewal fee-  This type of fee can range from $150 all the way to a full month rent. This fee is charged when a tenant renews a lease agreement.
  6. Eviction fee-  This type of fee is in place as an eviction can be time consuming and costly.  Check with your company and see if they offer this service.

 

These are just some fees that you may see with property management companies.  We look forward to continuing a weekly post to help you choose the right company.  I hope we can serve you the best way possible and look forward to hearing from you.

 

Maine Landlording During the COVID-19 Pandemic

Maine Landlording During the COVID-19 Pandemic

 

We are six months into the COVID-19 pandemic, and it does not appear as though its going anywhere any time soon.

 

The pandemic has affected individuals and businesses alike, all around the country. As a landlord, you may be especially hard hit and impacted in numerous ways.

 

As property managers, we have had to adapt and change our way of doing our routine day to day business in order to ensure we are complying with the new rules, regulations and guidance and ensure the safety and health of our employees, tenants and clients. In this post, we will give you some advice on how you can do the same, as a Maine Landlord, during the COVID-19 outbreak.

Legal issues

               

Local, state, and federal regulators have and continue to take action, by setting rules, regulations and guidance, in an attempt to mitigate the health risks. Laws are being created, changed, and modified it seems almost daily. Some of these laws and regulations affect your rental property and you as a landlord. Because of this, its critical that you keep up to date on this ever changing and evolving situation. As always, we recommend you seek the advice of a qualified legal professional to ensure you are complying. Non-compliance could be costly to you. 

Hygiene

 

Strict hygiene standards will help protect you from contracting the virus and can limit the spread. If you must enter one of your tenant’s units to conduct maintenance, inspections etc. it is important to follow a strict hygiene protocol.

Below are some ways to help prevent the spread of the virus:

  • Disinfect: All types of surfaces can contain the COVID-19 virus and its important to sanitize all surfaces you have contact with after you finish the tasks. Pay special attention to doorknobs and light switches.
  • Hand washing: We have heard it time and time again. Wash those hands using proper handwashing techniques. Use warm water and soap for at least 20 seconds. Some experts have said this is the single most important step in preventing the spread of COVID-19. If you are unable to use soap and water, use an alcohol-based hand sanitizer with at least 60% alcohol.

Continued communication

 

Chances are, your tenants and prospective tenants are concerned about the spread of COVID-19. Its important to keep them updated on how you are handling things such as cleaning and sanitizing common areas and units in between tenancies.

You should also keep them informed about your process if you or a maintenance professional need to enter their unit to do repairs or maintenance. Its equally important to continue to maintain their unit and commit to a quick response if there is an emergency, just as you would before the pandemic. Tenants need assurance, for example, they need to know that they will not be left without heat in the dead of winter because no one will come to fix the issue.

 

Communication is key, now more than ever!

 

Your tenants need some reassurance that their calls, messages and emails will still be answered, and their problems addressed.

 

Keep an Open Mind

 

The COVID-19 pandemic is happening in real-time. Its constantly changing. Its fluid! It is essential that you remain flexible and are ready to change your protocols and ways of doing things as soon as new information, guidance, regulations, and rules are established.

Make long term plans but make sure that those long-term plans are easily changeable. Consider all the outcomes and possibilities of the long-term plans. If you can, it’s a good time to sock away some reserve cash and make smart decisions.

Consider Professional Management

 

Let’s face it, being a landlord was no easy task even in 2019. Now that it’s the year 2020…Well, you get the point. Being a DIY landlord now could possibly be one of the most challenging jobs, especially if its not your only job. A good Professional Property Management company has established protocols and is keeping up to date and making the necessary changes to those protocols. They should have the legal support in place and they should be constantly adapting. Now may be a good time to consider hiring a Professional Property Management partner to help you through this unprecedented time.

 

Converting Your Maine Home Into A Rental Property

Converting Your Home Into A Rental Property

When its time to move to a new home, your first thought in the process may be to sell your current house. This is usually the normal route. However, there is a possibility that you will be unable to sell, you may not be able to get what you need out of the house or you may not be able to sell as fast as you would like.

The second option is to hold on to your house and turn it into a rental property. Owning a rental property comes with many advantages, but, like with all good things, there are things to keep in mind and to consider before converting your home into a rental. It will take a lot of hard work and some prep time, but if done correctly, it could be a very wise decision! The good news is that aside from selling your current home, you can choose to rent it out.

In this article, our team here at Pine State Property Management has put our brains together and come up with an outline on how to convert your Maine home into a rental property and the advantages of doing so!

Benefits of a Having a Rental Property

• Passive Income – We use the term passive loosely. Will you have to work for it? Absolutely. Will you have to work 40+ hours/week for it? Maybe….but hopefully not. Most of the time, if done correctly, converting your home into a rental property will produce additional income.

• Market Appreciation – Real estate investors invest in real estate because the value tends to appreciate over time. In the investment world, real estate investment appreciation is usually thought of as more stable, even over stock investment. Selling your property now may not be the best move if you’re looking for gain as you might not be able to sell it at the best possible price. On the flip side, if you decide to hang on to the property and convert it into a rental property, you’ll likely be able to get a higher return on it in the future.

• Tax Benefits – Owning rental property brings with it some tax advantages. You can deduct the expenses from your taxes. These expenses include utilities, insurance, property taxes, repairs, maintenance, and renovations as well as the interest on the mortgage. Always talk to your accountant about tax benefits to ensure you are doing things accurately, but many people choose to own investment property for the tax benefits.

Now that we have covered the benefits, if you’re still thinking about converting your home into a rental property, read on for the next steps:

1. Does your home have a mortgage?

In most instances, it is required that you live in your home for at least 12 months if you have a mortgage on it. The reason for this is that when you buy a home as a primary residence, you get a better interest rate, you don’t have to make as big of a down payment etc. When agreeing to these benefits, you are also attesting that this is your primary residence. If you rent it out to someone else, it is no longer your primary residence and the lender can call the loan due. This means that they will tell you that any balance on the mortgage is immediately due. You’re left either paying the balance or they can foreclose. Additionally, and scarier is that it’s a federal crime called mortgage fraud.

For this reason, if you have a mortgage on your home that you wish to convert to a rental, talk to your lender to make sure you understand what you can and cannot do. Generally, if you have lived in the home for more than a year, you can convert it to a rental.

2. Do you qualify for 2 mortgages?

If you’re buying a new house, you will usually need to apply for another mortgage on the new property. Talk to your lender and ensure you can get multiple mortgages. Most lenders will also consider the rental income you will get from your home that you’re converting, if you have leases to show them.

3. HOA/COA

If your home is part of a Homeowner’s Association or a Condo Association, make sure you check with them because a lot of times they flat out down allow you to use your home as a rental. The ones that do, have rules and bylaws that you and your tenants must follow.

4. Insurance.

Your homeowner’s insurance policy is not enough to protect you and your property when you have tenants. When you convert your home in to a rental property, you will want landlord’s insurance to cover the rental property. Here is some of the things landlord’s insurance will cover that homeowner’s will not:

• Medical expenses if your tenant or tenant’s guests get hurt on the property
• Protection if the tenant or a guest damages the property
• Liability against tenant lawsuits

5. Learn Maine Landlord-Tenant Laws.

There are a lot of legal issues involved with owning rental property. It is always best to find a well-qualified attorney to guide you, however, it is also important to have an understanding of the Maine Landlord-Tenant laws as well as fair housing laws yourself so you don’t get yourself in hot water.

6. Property Inspection.

You need to ensure your rental property is safe for your tenants and their guests. For this reason, we recommend you have a professional home inspection done. It’s an expense you shouldn’t forego. Not only does it ensure the property is safe, but, if a tenant tries to file a claim saying the house isn’t habitable, a 3rd party, with no dog in the fight can go to bat for you to say otherwise.
If the inspector finds any issues, it is advisable to attend to them.

7. Make home rent ready.

The most important step in converting your home into a rental property is making sure its safe for your tenants. You should change the locks and make sure smoke and carbon monoxide detectors are installed and in compliance with code. A few final steps to make your home ready for your tenants:

  • Patch any holes in walls and paint.
  • Replace any worn out carpet.
  • Have the property professionally cleaned.
  • Replace burnt out lightbulbs.
  • Mow the grass, weed the flower beds, trim the shrubs.
  • Remove any of your belongings that are not going to be part of the rental.

8. Professional Management.

Let’s face it, managing a rental property is a lot of hard work. You will get calls and need to respond to emergencies at all hours of the day and night as well as show the vacant unit, screen tenants, collect rent and several other routine items. For this reason, you need to decide if you can handle the stress involved with being a landlord and if you have the time to commit to it. If you do, awesome! If you don’t, you should choose to hire a professional manager to help you out.

There are numerous advantages to converting your home into a rental property. It may or may not be the best option for you. After considering all the facts of your personal situation, if you decide to take that route, it’s a great journey, that, with the right prep work and dedication can be a rewarding adventure!