|
|
|
PROPERTY MANAGEMENT Utilizing a property management service gives you most of the benefits of Real Estate ownership without the day to day responsibilities. It is similar to owning stock in a public company which pays dividends and is being managed by the executive team. The first year of management can be expensive, but as time passes and rents increase, you have a profitable and reasonably trouble free Real Estate investment. HOW A PROPERTY MANAGEMENT COMPANY WORKS Initially, you are charged a one time set up fee, then an ongoing monthly charge of between 5% and 6% of scheduled rent. Scheduled rent is defined as income that is scheduled to be received, regardless of whether the building is fully rented or not. For this the management company handles all the day to day operations of the property, including preparing the units, advertising to fill vacancies, screening possible tenants, collecting rents, handling maintenance calls, and last but not least, evictions. You receive monthly statements, cash disbursements, and a year end tax summary. You also benefit from a yearly review and rent study to make sure you are receiving market rents. 2 DRAWBACKS OF PROFESSIONAL MANAGEMENT 1. You will not receive the maximum depreciation allowance available to you (should you make under $125,000 per year). The maximum depreciation allowance can be up to $25,000 per year should you operate the property yourself or with a minimal management contract. 2. Your income from the building will be reduced by the management fee and will probably not be maximized as it would should you choose to operate the building yourself. *You will still benefit from appreciation, amortization, monthly income and some tax shelter. 310-493-1999 Staff@SafariRealtors.com
|