Becoming a landlord is easy enough, as all you need to do is buy a property to rent. However, there is far more to it than that. After acquiring a rental property, the landlord has to manage it, including finding and screening tenants, handling maintenance and repairs, and ensuring they receive their monthly rental income.
Many landlords turn to property management companies to manage these responsibilities on their behalf, especially when they live out of state, own multiple properties, or operate rental businesses on the side and have full-time jobs. Here is what to expect after engaging property management companies’ services and sign an agreement with them:
Services and fees
When it comes to rental property management Colorado Springs landlords are spoiled for choice, with local companies like Evernest, Alliance Property Management, and Around the Block Realty operating in this area. National operators, such as BH Cos. and Pinnacle Property Management Services, are also active in Colorado Springs. Evernest has a well-established presence in the Centennial State, with offices in Colorado Springs, Denver, Fort Collins, and Boulder. It also operates in Tennessee, Georgia, and Michigan. The company’s agents are professional experts who understand the Colorado Springs rental market and make the most of it for their clients.
Property management companies offer various services, including marketing, tenant screening and selection, rent collection, repairs and maintenance management, and accounting services. However, not all provide this complete suite of options. A property management agreement will detail precisely what the company will do. It also stipulates the fee payable for its services. Most property managers charge a percentage of the rental income. More services come with higher costs.
Property owner responsibilities
Landlords also have set responsibilities in terms of a property management agreement. It stipulates what they must do and what activities they should refrain from as a property owner. An example would include opening and maintaining a reserve fund that an agent uses for day-to-day expenses, maintenance, and emergency repairs. The agreement stipulates a minimum amount that a reserve account should contain. It also specifies what insurance coverage a landlord needs.
Restrictions on a landlord may include tenant selection, meaning that only the property manager can determine which tenants get to stay in a rental house. Companies have strict guidelines on tenant selection and do not allow landlords to override them. The agreement will also prevent landlords from visiting their property on an ad hoc basis, stipulating that prior notification and approval from the agent are necessary.
Federal and state laws prohibit Colorado Springs property managers and landlords from excluding potential tenants based on race, religion, ethnicity, national origin, sex, disability, or familial status. A property management agreement should include a clause stating that a property agent will adhere to the Fair Housing Act.
However, property managers can exclude potential tenants on other grounds, including employment status, income, felony criminal record, or eviction history. Agents have strict criteria to follow when selecting tenants and must prove that discrimination on the factors mentioned above never occurs. Therefore, landlords cannot stipulate that they do not want documented immigrants renting their property or set up other unfair conditions for tenant selection.
Contract duration and termination
Most property management companies do not enter agreements that engage their services for less than a year. Therefore, landlords should be confident that they will get their money’s worth before signing any contracts.
Fortunately, property management agreements contain termination clauses so that unhappy landlords can end the contract sooner than the stipulated period. However, this will require giving notice of their intention to terminate and could involve paying an early termination fee.
Property management agreements contain liability clauses to protect the agent from financial responsibility for something going wrong unless the landlord can prove negligence. However, a contract will not cover third-party negligence, such as when a manager hires a contractor who causes property damage.
The liability section of an agreement should include a reasonable care clause to set aside third-party negligence clauses. A property manager will be accountable if they did not take reasonable care when hiring a third party, such as researching the company. If an agent did not take reasonable care when making such decisions, the property management company could be liable. However, landlords prove that this happened.