are paid by the seller!
can pay most of, or all
of your monthly
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chapter is of vital importance if you want to avoid an unpleasant
home ownership experience. Management companies can make
your life wonderful or miserable. Rest assured that there are
many income producing holiday homeowners purchasing
additional properties because of the excellent, hassle-free
return on investment they
realize, as well as the great personal enjoyment they experience.
Conversely, there are also the unfortunate families who regret
the day they ever considered buying.
This polarity of experiences exists with practically every investment
opportunity. So is it luck or wisdom that determines the future
for each purchaser? Luck certainly does not hurt, but knowledge
is the "not so secret ingredient" of wisdom.
it is no secret, let's list some of the things we know about management
companies, and those things of which a buyer should beware. Don't
let this list scare you. If I listed the things to be aware of
before getting a drivers license, no one who read it would be
on the highway!
companies have no state or federal regulatory bodies. Be certain
you do your homework thoroughly before contracting home management.
are many program choices from dozens of management companies.
Each program has associated charges and fees. Shop for the best
Although management companies take care of the details for their
clients, ultimately, the homeowner is responsible for everything.
Be sure that the taxes
are paid and that the necessary permitting is maintained.
the items written into a signed management contract are legally
enforceable. Make sure that the company's responsibilities and
associated fees are clearly spelled out.
order to avoid liability, most Realtors, agents, and developers
remain neutral about recommending, or commenting on, a specific
management company. They will usually offer a list of several
companies for you to research. Compare them in order to find
the best fit for you.
There are companies that offer enticing management programs
in order to reap their true objective: the up-front sales commission
profit. Research their reputation if a deal sounds almost too
good to be true.
There are constantly evolving laws that require specific signage,
such as safety warnings, to be posted on a short-term rental
property. Although your management company will probably be
on top of it, you are responsible for your business. Periodically
ask your management company, or check with the state, to see
if there are any new requirements. Confirm that every notice
required is posted.
Because there are no regulations governing management companies,
there are people who offer management services who should not
be in the business. Time will undoubtedly show them the way to
another vocation; however, their inept efforts will leave a wake
of holiday homeowners proclaiming that the industry is a rip-off.
Those homeowners who selected poor management companies will usually
not take responsibility for their lack of wisdom, content to blame
someone else for their misfortune. In some cases, they did do
their homework and thoroughly checked out the company. Their bad
experience could have been an unfortunate event. But, more often
than not, a buyer's naivety or excitement about the purchase
overrode their usual caution and common sense. When there are
no regulations, you can be sure that there are predator types
that will exploit a buyer.
Here are some tips regarding the investigation of a management
with the Better Business Bureau to make sure that the management
company is a member. Confirm that they do not have a list of
the company for several clients you can interview. Naturally,
they will only give you names of satisfied owners, but the point
of this request is to make sure they at least have some of those.
If they have none, move on to another company.
Ask the company for a complete list of all expenses (start-up
and monthly). They should also be able to provide an example
of income versus expenses, projected over a year.
out how the company will verify to you, in a timely fashion,
the payment of state taxes
and the procurement of all necessary licenses / permits. You
may prefer to select a management company that will allow you
to send those payments yourself.
Ask what signs and notifications are required to be posted in
the home and then verify the information with the state regulatory
agency (the Florida Division of Hotels and Motels is a good
place to start).
You should also talk to people who already live in the communities.
Ask them to tell you what they know about management companies.
They are the ones that have the experience and know what has been
happening. Homeowners will give you an unbiased opinion. However,
you may not necessarily want to act on the information you get
unless you hear it from more than one individual. Also, communicate
with other homeowners who solicit bookings on the web to get their
investigate companies offering a "guaranteed income"
management program. Some of those companies may be able to continually
honor their agreement to pay, but others may miscalculate their
home rental marketing abilities and fail to honor their commitment.
Almost every management contract has an "out clause"
that provides a 30 to 90 day notice of cancellation for both the
client and the management company. That means that any management
contract is only good for the stated length of time (30 to 90
days) once cancellation notice is given. Management companies
are not going to place themselves in the position to take a loss.
The contract is only as good as the company that wrote it. The
nice part about the cancellation clause is that it also gives
you an out.
cautious with the companies that require the use of their real
estate services in order to have the privilege of being enrolled
in their management program. Once they collect the up-front real
estate commission, some may not provide the quality service
you had expected. Certainly there are good, and even great, management
companies. Most of the good ones that have attractive programs
will also wisely ask you to use their realty services. After all,
they want as much business as they can get. Just stay smart, do
your homework and find out which companies are first-rate. And
always use your common sense.
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