Five Risk For Property Management in PA


Many individuals have entered the field of rental property management as a way to shore up their income. Here are 5 Common Mistakes.

1. Not having a written property management agreement. Even if you’re just helping out a friend and managing the property for free, you’re walking on thin ice if something comes up—like the need to evict the tenant or an occupant injury

In Pennsylvania it is not legal to manage a property unless you have ownership in the property or you are a real estate broker.

2. Using a makeshift lease agreement. These agreements are easy to find on the Internet—maybe too easy. If the agreement isn’t thorough, or if it doesn’t include sections that are required by your state law, you’re leaving yourself exposed.

Residential leases in Pennsylvania must be approved by the Pennsylvania Attorney General as "Plain English Leases". If a residential lease is not "Plain English" and approved, the lease is voidable by the tenant.

3. Not depositing the security deposit in a proper escrow account. The proper place for the money isn’t with the owner. In most states, the trust account money must be in a separate property management trust account and not in the broker’s general sales trust account.

In Pennsylvania, co-mingling personal or brokerage funds with security deposits is a NO-NO!

4. Not having the tenant sign a move-in and move-out form. This form would include a property condition disclosure. Without it, you have little recourse if a unit is damaged beyond the usual wear and tear.

In addition to forms, I recommend taking photographs of the leased space before and after occupancy. 

5. Trying to incorporate a lease-purchase arrangement into the lease agreement. There’s nothing wrong with doing this, but it’s complicated, and if it’s not done properly, you could invite trouble. For instance, you could have a difficult time evicting the tenant for nonpayment of rent if the court looks at the arrangement as a purchase agreement.

The buyers mortgage companies will have specific rules regarding lease purchases. Speak to the  buyers lender before structuring anything.
 

For additional information regarding leasing property in Philadelphia please visit  Landlord Essentials

 

Here's a very useful article about managing your properties from MrLandlord.com:

24 Things I Have Learned Over 3 Decades of Landlording:

1. I like to think that I am a good judge of character but I've been fooled before. Always verify your applicant’s credit, employment and rental history.

2. Look at the applicant’s car and know that your property will be cared for in much the same manner.

3. An applicant who claims to have been a victim of unfair circumstances will often make you a victim of unfair circumstances.

4. Do not rent to friends or friends of friends

5. Pets cause problems more often than not. If you’re going to accept them you need to be compensated for the extra wear tear and risks that you will be taking on. A no pets policy is the best policy.

6. Replace water heaters every 10 years whether they need it or not.

7. Keep the gutters clean and the moss on the roof at bay.

8. Do not provide or loan lawn mowers, string trimmers or power tools of any line. You’ll get them back broken and if someone gets hurt you might get sued.

9. Don’t let tenants do their own painting. They often botch the job.

10. Don’t hand over a signed contract until you have a completed inspection report filled out and returned to you. It’s best to be present when the tenant inspects.

11. Take lots of pictures and video before each tenancy. Include the front page of that day’s newspaper to verify the date.

12. It does no good to prohibit anything in your lease unless you have you have effective and immediate remedies included in your agreement or available by statute.

13. Require tenants to carry renters insurance for their protection and yours.

14. Include wording in your lease that limits your liability during periods where the unit is rendered inhabitable (through no fault of the landlord) to abatement of rent during that period.

15. Do not conduct “Open Houses”. Show units by appointment only to parties that you have prequalified in a phone interview.

16. Include a modest rent escalation clause in your lease (I use 2.9% per year). It gets them used to the idea and prevents you from agonizing about when, whether and how much to increase the rent.

17. Avoid roommate situations if possible. They are inherently unstable.

18. Get a Lowes credit card and you’ll get an automatic 5% discount on your purchases

19. Get a Home Depot card and ask them to match the Lowes discount.

20. If you are ex-military disregard 18 & 19 and ask for a 10% discount at Lowes and Home Depot.

21. I have had bad experiences with Section 8 situations and recommend that you avoid them.

22. Give your number to the neighbors and ask them to let you know if there are any problems or concerns.

23. I offer well maintained units that are very competitively priced but I insist on well qualified tenants. I also ask for 2 year+ leases whenever possible. Those who rent from me know they are getting a good deal and are usually willing to commit to a longer lease.

24. Make sure that tenants understand that if they cause stoppage of the drains, they will get the bill. Feminine hygiene products, wet wipes, foreign objects or even large wads of toilet paper should not be flushed down the toilet.

25. Place battery operated water leak alarms under the sinks Best $10 you can spend.