How to Choose your Rental Manager?
Rental management is one of the most complex real estate professions, particularly due to the rigor required in accounting. The manager will have to find you a tenant, take care of the administrative tasks, be present to manage any contingencies but his work does not stop there. He must do what is necessary to ensure the best long-term profitability of your investment while ensuring the quality of your apartment is maintained.
Are you looking for someone to manage the rental of your apartment? It is therefore essential to ensure that your manager respects a few points. As an owner, and in the absence of vigilance, certain omissions could have serious consequences:
Payment of suppliers
Your local manager is responsible for paying suppliers. An oversight or a simple delay can have bad consequences and it is not uncommon to see some omissions on the part of managers. For example, the condominium/building charges are paid by the tenant, from provisions subject to annual adjustment. If the debts accumulate and the tenant moves before they are settled, it is ultimately the landlord who will have to compensate any missing funds.
In some cases of acquiring new properties to manage, we have noticed discrepancies in the payment of income taxes, which has led us to adjustments, not without cost.
Do not hesitate to ask your manager for proof of payment of property tax.
The Statement of Rental Charges
A tenant pays monthly rent and a provision for charges.
At the end of the accounting period of the condominium, and / or at the end of the rental contract, there must be an adjustment. In other words, if the amount of the provisions paid by the tenant exceeds the charges actually paid, the difference must be returned to them and otherwise they must pay the difference. In many management cases that we have unfortunately observed, this service was not often provided. We have recovered debts from suppliers that we had to square away, at the expense of the property owner, and we failed to be able to provide a clear accounting situation of the tenant accounts. The tenant is paying provisions for these charges, so it is legitimate and fair that they are credited back the sums that were overpaid.
For the sake of fairness, we advise you to ensure that the annual regularization of co-ownership charges is properly carried out.
A Risk of Loss of Earnings
Our management software makes it possible to accurately assess the provisions for charges that will be claimed from the future tenant.
In the majority of cases, the amount requested from tenants is improperly assessed and is overvalued.
By evaluating an amount closer to reality, the provisions for these charges decrease, which makes it possible to increase the rent even more. In other words, a tenant will rent an apartment based on their monthly budget.
For a budget of 1000 € for example, the distribution between rent and charges could be 800 € and 200 € respectively, or 900 € and 100 €.
And if the provisional charges turn out to be overvalued at the end of the year (in this hypothesis of € 100 per month), it is an equivalent shortfall for the owner (€ 1,200 / year).
Proper management of charge provisions can therefore improve your income and the profitability of your investment. Ensure consistency between Rent / Provisional charges.
Maintenance and Compliance with Rental Rules
It is necessary to control charges while preserving the good condition of movable and immovable property, to rent more easily, increase the chances of keeping tenants in place, and value the property in the event of resale.
It is easier and less expensive to regularly maintain an apartment in good condition than to do a renovation once the property has deteriorated too much.
When we take management, we make a complete inventory. Unfortunately, we have noticed, for apartments under management for several years, a constant deterioration of equipment (leaking tap, broken glass, malfunction of locks or kitchen equipment ...)
Some of these problems can be avoided by regular small maintenance work; most (broken faucet, defective toilet flush, etc.) are caused by misuse or neglect by tenants.
We have noted that very often the security deposits held by the agents are returned to the outgoing tenants without the costs corresponding to essential repairs being retained.
And it is often after the fact that costs are incurred, unfortunately borne by the owners to allow re-rental in good conditions.
At the end of the lease, do not hesitate to ask your manager to be vigilant during the inventory (or even to attend), and to retain from the security deposit any amount to cover the costs of legitimate repairs.
Dual Currency Management
In Hungary, the currency is the Forint.
Many agencies can offer to rent your apartment in euros. A rent that is paid in euros will require management in double currency because the charges will have to be paid in Forint (electricity, taxes, etc.). This management choice is very delicate because it involves many management risks (see our article on dual currency management). However, it is necessary to differentiate between the currencies used to manage your apartment and the currency with which you wish to be paid. Our services offer rental management entirely in the local currency and we send your rent in the currency and the account of your choice. In addition, during the establishment of the summary report regularly sent to each owner, each balance sheet item is converted into Euros, according to the current currency rate.
For the sake of clarity, ask that you receive from your agent, at least once a year, a detailed assessment of the profitability of your investment, in double currency.