Q: Why should I use a professional property manager?
A: A successful and experienced professional property management team offers you professional business procedures and expertise so you can derive the greatest net income from your investment. The right team also minimizes the negative impact of various laws and regulations that affect the real estate’s use.
Experienced property managers take on the responsibility of dealing with tenants, vendors, contractors, neighbors, insurance adjusters, city, county, state and/or federal government officials, or anyone else who might affect the day-to-day operation of your property. An effective property management team can maximize income, minimize expenses, and help you maintain the highest property value possible while avoiding legal pitfalls. They set high standards for tenants and motivate them to meet and sometimes even exceed these standards.
Many self-managers expose their net worth by failing to inform their insurance companies that they are renting their investment properties without using a professional property manager.
Q: Besides the commission on rent generated, what other expenses will I incur as an owner?
A: We charge a one-time set-up fee, which covers our customized advice to you regarding the leasing of your property, the costs of executing the necessary agreements and paperwork we need to build your file in our computer system, and preparing the property for tenancy. The $300 set-up fee is due when the agreement is signed with us. Other expenses include ten percent (10%) of maintenance costs performed by or at the direction of the agent or Broker; occasionally some advertising; and possibly some utility costs.
Q: Can you describe, in more detail, what the set-up fee is for?
A: The set-up fee covers the cost of the initial consultation and evaluation of your property to determine rental rates and rent ability; it pays for information and advice that has been customized to your property based on our years of experience and expertise; it covers setting up your property in our network computer system, and preparing and processing the required paperwork. Many out-of-state owners need help in the coordination of preparation for rental of their property and it includes much of this work for all owners. Examples are: checking the property until it is rented, meeting neighbors to answer concerns and questions, keeping the property free of throw-away papers, any interfacing needed with suppliers, vendors, etc., if work is being done prior to rental.
Your set-up fee also includes syndication of your rental property through our professional property management software partner to a multitude of rental specific websites, enabling potential residents to “see” the property they are considering for rental.
Q: What about other companies who charge a lower set-up fee? Why is yours higher?
A: When comparing the total cost of management at other companies, you will find that it’s a “pay me now, pay me later” situation! In other words, it costs a certain amount for a property manager to do business here in Hawaii. A company that charges a lower set-up fee probably charges a higher commission on the rent. Or the company may offer fewer services in exchange for the set-up fee and bill for other services separately. And finally, in property management, like in other areas of business, you get what you pay for. At Properties International Limited, we strive to give our customers the most service for the most reasonable cost at which we can provide it.
Q: Why is the 10% overhead fee added to the cost of maintenance? Can't I get the work done cheaper?
A: The 10% overhead fee is added to the cost of maintenance to cover our costs of interviewing and contracting with licensed, bonded maintenance providers, dispatching the appropriate maintenance person to your property, overseeing the work to ensure quality, and processing the maintenance charge to your account. We charge this fee to individual owners as opposed to building it into a higher commission, since some homes require much less maintenance than others. We wouldn't want you to indirectly pay for the maintenance of homes that are not maintained as well as yours!
Finally, we survey local maintenance providers each year as to their cost, hours available, and qualifications to insure that we have contracted with the best personnel at the best prices.
Q: Will you notify me when my house requires maintenance?
A: We will obtain prior approval for maintenance items over $400, unless a delay could cause damage to the property and/or injury to the tenant.
Q: What will my advertising costs be? Does Properties International Limited, Property Management do any general advertising that benefits my property?
A: We believe in limiting any advertising costs to our owners since much of the marketing of rentals are done on the internet. As mentioned under “set-up fee”, rental properties are advertised through our professional property management software partner to a multitude of rental specific websites, enabling potential residents to “see” the property they are considering for rental.
We maintain a convenient web site on the Internet at www.pilhawaii.com, which highlight our properties available for rent.
We will bill any special advertising of your particular property (other than as described above) against rent received. We do special advertising only at your request.
Q: How does Properties International Limited. Property Management screen tenants?
A: We have an extensive list of procedures we follow in the tenant screening process, among which are the following: a subscription (at no expense to the owner) to a national tenant screening service which provides us with credit, criminal and eviction reports; verification that all information on the tenant application is valid and that all rental payments have been made as agreed; verification as to whether the tenant's security deposit will be returned in full and if not, the reason; verification of whether the current landlord would rent to the tenant again; and verification of employment and income. These and other procedures are adhered to at all times to give us the best possible advantage when selecting tenants for your property.
Q: What kind of security deposits do you collect?
A: Hawaii law permits us to collect up to one month’s rent.
Q: What is done with security deposits? May I hold the tenants' security deposit?
A: They are held in a Trust Account in a federally insured financial institution.
Hawaii Law permits the Broker from earning interest on money in a Trust Account.
We do not forward security deposits to owners. We are responsible for the
return of the security deposit to the tenant. If an owner met with his/her
untimely demise while having a security deposit in his/her possession, we may
not be able to recover it in time to return it to the tenant as provided by law.
Q: How are the rates set for my property?
A: Rates for long-term rentals are based on the rents for comparable
properties in similar locations. Since approximately fifty percent of
residential property in Hawaii is non-owner occupied, a comparison is
relatively easy to accomplish.
Rates are not set by totaling your mortgage payment, your taxes on
the property, and your expenses! While it might seem reasonable to
attempt to set your rate in this way, keep in mind that there is no
correlation between what a property costs an owner and what it will
generate in rent. There is simply too much discrepancy between the
property cost and what it will generate in rent. As a general rule,
the higher the property value, the wider the gap between cost and rent,
but this is not a hard and fast rule. It is affected by the location
and condition of the particular property. However, the rental income
certainly offsets the cost of maintaining the property. And, as time
goes by, your rent will likely catch up to, and eventually exceed, your expenses.
Keep in mind that we work on commission, so we have a vested interest
in making sure that your property generates as much income as possible!
It is our intention to fill your property quickly; therefore we are
interested in setting the rent for your property at a rate that will
attract several qualified applicants from which to choose. We are not
interested in having your property sit vacant with a price tag that is
too high. Therefore, we pay close attention to the rental market in
order to minimize the financial impact of vacancy.
Q: What if I want non-smokers in my property? What about pets?
A: We may legally advertise your property as a "non-smoking" property;
we cannot legally advertise for "non-smokers" under the state and federal
fair housing laws. You may specify no pets, although it is our philosophy
to consider pets on a case-by-case basis, since we believe there are good
tenants who take good care of their pets, and there are tenants who are
not so good and take less than good care of their pets. We only place
people whom we feel will be good tenants.
Q: When do I get paid?
A: We collect long-term rent from the 1st to the 5th of the month.
We deposit the tenants' rents in our trust account and wait until the
tenants’ checks have cleared the bank before disbursing funds (our bank
will notify us if the tenant's check is not good). This process takes
about a week.
We disburse money and a monthly statement on or about the 10th of the
month to owners of properties, which have long-term tenants. Owner
disbursements are done electronically so we don’t get owners checks
lost in the mail.
Q: Do I have any other responsibilities as the owner of the property?
A: As do all property managers, we require the owner to name our company
as an additional insured on the homeowner's insurance policy that protects
A property owner must be willing to maintain his property in a manner
suitable for rental. The rental of your property is a business.
Maintenance of the property is a business expense. If you neglect
your business, the income it produces will decline.
Q: Can you explain the type of insurance I need as the owner of a rental property?
A: You need what’s known as a “landlord’s package”, which is a policy designed
for a property owner who will be exposed to the liability of having tenants in his home.
Your insurance company must be willing to name our company as an additional insured on the policy.
This is for the owner’s protection as much as for that of the company. Under a legal
principle known as respondeat superior, the property owner is liable for harms done by
his agent while acting within the scope of the agency. The property owner must be insured
against this vicarious liability. (Vicarious liability is liability attributed to a person
who has control over or responsibility for another who negligently causes an injury or otherwise
would be liable. Whenever an agency relationship exists, the principal is responsible for the
agent's actions. The negligence of an agent acting within the scope of the employment of his
agency is attributed to the employer of that agent.) We would not want you to have to defend
yourself and us against a tenant who charges us with doing something we shouldn’t have done or
not doing something we should have done in a case of tenant injury on the property. We are
extremely safety conscious and work very hard to keep up with legal changes as they relate to
the property management industry, and it is unlikely that a problem will arise, however, you
will want to be prepared for it, just as you are in your own home. Furthermore, our company
does carry a general business liability policy, but we cannot obtain liability insurance on
your property for ourselves, since the company has no ownership interest in your property.
However, we do realize that the company can be sued along with you if a tenant is injured!
Q: How long will it take to rent my property?
A: If your property is being advertised for lease on a month-to-month
(or longer term) basis, it will probably take one to three weeks to
locate a superior, highly qualified tenant.
Q: Will my rental compete with others for rental? How are the rentals distributed among your inventory?
A: No two homes in our inventory are alike. They differ with regard to location,
number of bedrooms and baths, floor plan, style and decor, and the way they are equipped.
In the same way that homes differ, tenants' needs also differ. We will try to match the
tenants' needs to the homes available.
Q: Are there risks to renting my home?
A: Certainly no business endeavor is without risk.
However, in all our years of managing property, we have had
to evict a tenant only once. But it would be foolish to assume
that major damage or the need for eviction will never occur. Nevertheless,
with proper management, the risk in the rental business is low.
Sometimes it is difficult for a property owner to make the transition
from regarding his property as a personal residence to perceiving it as a business asset.
To be a successful owner of income property, an owner must let go of his emotional
involvement with his property. He must look at it as a resource from which he will
most certainly generate business income and which may sustain some business losses.
It is also important to remember that unless a business asset is maintained,
it will produce less and less income, so it is vital to keep the property in top
condition at all times. There will be some wear and tear, just as there is wear
and tear in your own home. For this reason, Properties International Limited
Property Management works extremely hard to assure that the properties are being
maintained in the condition that will generate the most income for the owners we represent.
Q: As I compare property management services from company to company, what questions should I ask?
Ask any property management company with whom you are considering doing business the following questions:
- How many rentals does your company manage?
- How many units does each property manager manage? (Industry averages 40-50 units per manager)
- What are your procedures on inquiries for your rentals?
- When does advertising begin on rentals that are vacant and rentals that are going to be vacant?
- What classes of renters are protected under the State and Federal Fair Housing Laws (they should know!)?
- What steps have you taken to insure that your office and the property owners you represent will not be the target of a discrimination suit?
- Do you write leases or month-to-month agreements for long-term tenants? What are the pros and cons of each?
- What steps does your company take to insure that the property owner is receiving market rents for his property?
Q: How do I get started with the rental of my home?
A: First, call our office with any questions that we have not answered here.
We want you to have an opportunity to have all your questions answered before
committing your property to our management! We will schedule an appointment
to see your property and to facilitate its placement into our inventory in order
to get it rented as soon as possible. At the appointment, we will assess your
property, discuss marketing plans, and review our management agreement. We do
require, at this time, the signed management agreement, all paperwork completed,
and, as mentioned earlier, the $300 start-up fee for full-time management.