Leasing & Property Management Services

 

 

Leasing Service or Tenant Placement Only (TPO) Service

 

In this context, “Leasing Service” refers to placing the Tenant and “Property Management Service” refers to any service provided by the Broker after the Tenant is placed.

Leasing Service includes advertising the property, showing the property, taking Applications, screening Prospective Tenants, negotiating on behalf of the Property Owner, and preparing the Lease for both parties to sign.

We will schedule showing service for your property with our REALTORS and Cooperating REALTORS.  We will negotiate on your behalf, screen Potential Tenants, and prepare a Lease for both parties to sign online.  The Tenant will bring the initial funds to our office in the form of Cashier’s Checks to start the Lease.  Our fees are taken out of the initial funds provided by the Tenant.

For a Brokerage Fee of 50% or 100% of the First Month’s Rent, Birmingham Home Leasing will list your property in the local Multiple Listing Service (MLS) which will syndicate to Zillow, Trulia, Hotpads, Realtor.com, etc. (if your property is not also listed for sale).  If another Agent brings the Rental Customer that you accept, we will pay half of whatever fee you pay us to that Agent.  Most Cooperating Agents anticipate to be paid 50% of the First Month’s Rent when they show a rental property.  The commission rate is available for the Agent to see (not the public) in the MLS Listing.  If you do not offer to pay a Cooperating Real Estate Agent 50% of the First Month’s Rent, then many will not show your property to their Customers.  For that reason, 98% of Landlords choose our 100% MLS Rental Listing Service.

There are Two Types of Property Management Service

 

At Birmingham Home Leasing, you are not required to purchase our Monthly Property Management Services, they are optional.  Many Property Owners just use our Tenant Placement Only (TPO) Services.

We provide Management Services for only $50 per month, while many of our competitors charge 10% of the Rent for their Management Service.  We also provide the Traditional type of Management Service for 10% of the Rent.

We are often asked what is the difference between the $50 per month and the 10% of Rent Management Service?  The answer is Limited Power of Attorney (LPOA) vs. Full Power of Attorney (FPOA).

 

Both Property Management Services include:

  • Collecting the Rent from the Tenant and transferring it electronically to the Owner.
  • Monthly and Annual Accounting for Rent Collection Services.
  • Issuance of IRS Form 1099.
  • Accepting Repair and Maintenance Requests from the Tenant.
  • Escrow and Return of Tenant’s Security Deposit.

 

The differences between LPOA and FPOA Service are:

  • For LPOA Service, the Broker provides quotes for the Owner to approve for repair and maintenance service and for FPOA Service, the Broker approves the quotes on behalf of the Owner without contacting the Owner.
  • For LPOA Service, the Owner makes the decision on approving the Tenant’s Application and for FPOA Service, the Broker makes the decision without contacting the Owner.
  • For LPOA Service, the Broker is only authorized to order repairs and maintenance service on behalf of the Owner that do not exceed a cost of $1,000.  On FPOA Service, the Broker is not restricted on the amount of cost that he can order for repair and maintenance service.
  • FPOA Service is only available to Owners who have five or more rental properties.

 

It is worth noting here that neither LPOA or FPOA Service is available to Owners who reside outside of the Continental United States.

The Broker is exposed to considerably more liability from his own Client, the Owner, on FPOA Service.  This is because there is an increased possibility that the Owner may disagree with a decision made by the Broker on their behalf and initiate Legal Action.  On LPOA Service, the Owner makes all the important decisions, therefore there is little liability exposure for the Broker.  Owners who contract for FPOA Service at the higher rate of 10% of the Rent are essentially paying for the Legal Fees that the Broker may need to pay in the future to defend themselves from a Legal Action taken against them by their own Client, the Property Owner.  It is ironic that FPOA Service is actually easier for the Broker to perform than LPOA Service.

Why would a Property Owner pay more for a Management Service that requires them to surrender decision-making rights?  The answer is that there are some Rental Investors who have so many properties that they cannot reasonably devote the time required to make needed Management decisions.  Therefore, they have to hire a professional to perform the task for them.

Property Owners of just one or a few properties can save considerably on Monthly Management Fees if they are willing to make important management decisions and reduce the liability exposure of the Broker.

All Managed Properties, LPOA and FPOA, must have the house and the carpet professionally cleaned before the Tenant moves in.  On a LPOA Managed Property, the Owner must supply the cleaning receipts to the Broker for the purpose of recording in the Move In Condition Report.  On a typical house, professional carpet cleaning costs between $250 and $500 and professional housecleaning costs about the same.  The Tenant will be required in the Lease to use the same vendors to perform professional housecleaning when they eventually move out.  Using this technique, the Property Owner makes an initial investment on professional house and carpet cleaning and all future Tenants will be required to reciprocate when they move out.

It is common practice to make the Tenant responsible for mowing the lawn or requiring them to hire a professional to mow the lawn, but all other lawn and landscaping responsibilities will be assigned to the Owner.  Most of these responsibilities only need to be performed as needed or once a year.  These responsibilities include but are not limited to:

  • Fertilization and weed treatment
  • Raking the lawn if the lawn is large and there are a lot of hardwood trees
  • Edging the lawn
  • Trimming the shrubs
  • Weeding the flowerbeds
  • Replenishing the flowerbeds with mulch or pine straw
  • Gutter cleaning
  • Treating for fire ants

 

Conditions Apply for Leasing or Tenant Placement Only (TPO) Service

 

We list single family detached dwellings with at least 2 bedrooms and 2 full bathrooms in our published service area.  The property also must be appraised by us to rent for at least $1,100 per month in the “High Season”.

Effective June 9, 2018, Birmingham Home Leasing is reversing its policy not to provide Leasing and Property Management Services for multi-unit properties (townhomes, condominiums, duplexes, etc.).  However, we should disclose that previous experience years ago taught us that it takes longer to find a well-qualified Tenant for multi-units than single family detached dwellings.  We believe the reason for this is because many Rental Customers who are looking at multi-units are also viewing apartments, which have much lower requirements on credit and income for Lease Application Approval.

 

Fees for LPOA & FPOA Property Management Service

 

The Management Fee for LPOA Service is determined by their age as follows:

  • $50 per month – 1 to 30 years old
  • $100 per month – 31 to 40 years old
  • $150 per month – 41 to 50 years old
  • $200 per month – 51 to 60 years old
  • $250 per month – 61 to 70 years old

The Management Fee for FPOA Service is 10% of the rent for properties 1 to 30 years old.  The Broker will consider FPOA Service for properties 31 years old and older on a case by case basis.

 

No “Add-On” Property Management Services

 

If you are a Property Owner who already has a Tenant placed or if you are advertising to place your own Tenant, you cannot contract with Birmingham Home Leasing for Monthly Management Services.  We reserve the right to “vet” every Tenant that we manage.

If you are a Property Owner who already has a Tenant being managed by another Broker, you cannot fire the other Broker and contract with Birmingham Home Leasing for Monthly Property Management Services.

There are other practical reasons why adding on Property Management Service is not a good idea and there are some rather complicated legal reasons why it cannot be done.  If you have questions about your rights as a Landlord, please consult with an Attorney.

 

8/10/2018