Managing Investment Property In New York
Posted by Wei Min Tan on September 3, 2017
Once our foreign investor client purchases an investment apartment through us, we also manage the property for the client. This includes marketing the property to potential tenants and handling any issues that may arise.
How We Manage The Property
Our service is not property management in the traditional sense because we don’t charge owner clients a monthly management fee. Our focus is for the owner to maximize financial returns from the property. As such, we would deal with issues on a case-by-case basis and charge owners only on matters requiring our attention. This results in much lower expenses for the owner (vs being charged a monthly property management fee). If the client prefers, we can also refer a professional management company.
The Activities We Perform
The two main activities we do associated with managing the property are:
(1) Marketing the property for rent: This is the rental part of our business where we help clients market the investment property for rent, show to potential tenants, coordinate the necessary paperwork, perform tenant screening and arrange for tenant move in.
In Manhattan, the broker fee for rentals is paid by the tenant. Hence, there is no cost to the property owner. A tenant renting a condo apartment in Manhattan typically pays about 15 percent for broker fees which gets split 50/50 between the landlord’s agent and tenant’s agent. Note that the agents are representing their respective clients despite fees actually coming from the tenant.
Activities we perform to rent out the apartment to tenants include:
– having the property professionally photographed
– distributing property details to the broker system, real estate websites, social media
– present the property during tenant showings
– coordinate the application process
– review tenant credit history and financials
– coordinate submission of the board package
– coordinate tenant move-in
(2) Handling issues: Since the property is a condominium apartment, there aren’t many issues that can arise. It’s not like owning a building where the roof may leak, the boiler may break, etc. The biggest concern for the landlord is a non-paying tenant, in which case the owner would need to file eviction proceedings. This is rare because a tenant able to rent a Manhattan condominium apartment usually has high income and high credit scores. Screening the tenant is very important to mitigate risks of non payment.
If eviction is required, we would arrange for a landlord-tenant attorney to handle the process.
Most of the issues that may arise are small – broken toilet, microwave not working etc. The tenant often just calls the handyman in the building to fix the problem. The tenant would sometimes contact us for approvals on repair costs and we in turn would get approval from the owner.
We would be the point of contact for the tenant but would charge the owner on a case-by-case when there are issues requiring our involvement. Since the property is a condo apartment, it’s quite infrequent that we need to get involved. This results in the owner saving on monthly flat rate property management fees and having a higher financial yield from the property.