Property Management for Investors New York & Miami 

It depends on the market and the city. 

In New York, it had been the custom where the tenant would pay a fee equal to up to 15% of the first year annual rent. Recently, however, the market has shifted in favor of the tenant and we are seeing more and more deals where the owner will pay the commission, which is 1 month rent (roughly half of the 15% the tenant used to pay). In NYC, there is no commission paid on renewals only on the original lease year. 

In Florida, it is usual for the property owner to pay the commission. The usual amount is 10% of the annual rent for the first year and each renewal year.

Comprehensively and very carefully. We run a credit and criminal check on the tenant, require an employment letter detailing length of employment and salary, and review bank statements to ensure they have suitable funds. We also request personal and professional references as well as references from current and previous landlords. 

In addition, we expect annual income to be between 40 times the monthly rent. This minimizes any risk of being unable to pay rent.

Our full property management partner, RD LLC. They set up an escrow account for each landlord, collect rents and other payments, and pay all the landlord's expenses, including real estate taxes,  common charges and mortgage payments. They also provide landlords with monthly and quarterly financial statements.

They will also coordinate with your CPA to assist with annual tax returns if needed. For emergencies, all expenditure or repairs and replacement are paid without approval, if below an agreed amount. If the amount is larger than the pre-approved amount, then we will obtain landlord approvals.

Because of our strict tenant screening process, our landlords experience very few late payments. If a tenant does fail to pay, they would receive a reminder letter within a few days, then a formal notice, and then an eventual eviction notice.

We try to work with the tenant to get them current or to get them to exit the apartment before their lease expires. Time is of the essence, so we move fast. We can always find a new tenant quickly in NYC. But, again, we emphasize that with our system, such things are extremely rare.

They are part of a process. Before a tenant moves in we inspect the property and take a video to show everything is in good condition.

We walk the new tenant through the property, so they can confirm all is as it should be.

Tenants are not responsible for "fair wear and tear," so if they contact us to say something is damaged or broken, we have a base against which we can check that correcting the problem is the tenant or landlord's responsibility.

If work is needed, we will organize the work. Contractors must be suitably qualified and licensed and meet the high level of insurance required by each building. In Florida, for example, someone with a "handyman's license" cannot do plumbing or electrical work. In NYC, no one can get in the building unless they have appropriate level of insurance. 

If the cost is the landlord's responsibility we will approve a charge if below an agreed amount and simply deduct it from the month's yield. If the cost is higher than agreed, we contact the landlord for approval.

We know when a lease will end, so we check with the tenant 60-90 days before the least expires to see if the tenant wants to renew. If not, we look for a new tenant. We listing the apartment for rent on our broker system and all the portals and we physically show the property to prospective tenants. 

Prior to the end of lease, we do a walk-through inspection and compare it with the pre-occupancy inspection to check all is in order. Anything missing or damaged is taken out of the tenant's security deposit, and fully accounted for. After the tenant has moved out we do another walk-through to make sure nothing was damaged or taken by mistake during the move. If everything is as it should be, we refund the tenant's security deposit.

We then repeat details covered in Questions 5 and 8.

Related Resources:

"Selling Your Home"

"Home Buying Process"

As for sourcing tenants, depending upon competition in a particular building that you buy, often the tenant will pay our broker commission. However, if there is competition in the building for rentals which are listed as No Fee (which means the tenant is not charged a brokerage commission), then the owner will pay the brokerage commission. The commission paid by the owner will not be more than 1 month rent. 

Generally, we don't charge separate "Light" property management fees if we are engaged to source the tenant. We want to work with our clients for the long term — sourcing properties for our buyers, sourcing tenants annually for the apartment rental, and at the end of ownership, listing for sale and selling such property. As an inducement to accepting this arrangements, we offer "Property Management Light” at no charge. Here is how it works:

• If the tenant has an issue, they first call the superintendent of the building who figures out the real issue.

• If it is something they can fix and it is building related, his staff will fix it (usually at no charge).

• If it is not building related, he will advise us what he thinks the issue is. We will source vendors (sometimes with his help) to handle the problem.

• We will obtain your approval before anything is done to correct the issue and you will pay the vendor directly.

Generally, we don't handle cash. Rather, we manage the process to fix the problem. We also don't collect rents or pay bills on the owner's behalf, as this is usually done through electronic banking, which you as the owner will have to stay on top of.

If you desire to hire a property management company to handle cash collection and disbursement, RD LLC will handle this. Fees for the "Full" property management option runs 5-7% of the annual rent.  

Related Resources:

"Don't Chase Yield When Buying Investment Properties"

"An Analysis of the Best Cities to Invest in Rental Properties in 2019"