Property Leadership Frequently Asked Questions
Are any costs involved outside of the 10% fee?
The service fee is 10% of the rental income that we receive. In addition to this, you pay a one time $100 set up fee. This fee is not paid up front but rather withheld from your proceeds after the first month’s rent is paid. It is paid only once per property, no matter how many times 256 Realty leases the home. We also deduct $50 per year from your account to pay for accounting expenses related to producing your monthly statements and end-of-the-year 1099 for your tax return.
Most companies charge a fee or a percentage of the rent each time they lease the home to a new tenant or re-lease to a current tenant. Do you charge anything like this?
No, the $100 setup fee is paid once and only once. We do not accept any payment for re-leasing a property or finding a new tenant.
Do you do routine inspections?
We do inspections twice in 365 days. We do not go overboard with inspections unless we have reason to. It can easily become a burden on the tenants if we keep interrupting their daily lives for no reason. It can also become a major reason they don’t renew the lease and lease renewals are in most cases very beneficial to you as the owner.
Can I do inspections with you?
I suggest that you let us handle inspections with the renter. If you get involved the tenant may see that as an opportunity to ask for special accommodations with rent, lease terms, upgrades to the house, etc. They can also see it as a chance to get your contact info and go to you directly for requests. I have seen many instances where this scenario leads to the owner getting calls and requests, which is what you are paying us to do.
Can I handle repairs and maintenance in the house or choose my own vendors?
First, let me issue the same warning as the previous answer. However, if you have the skills and wish to save some labor expenses, you are welcome to make your own repairs. I suggest that you do not disclose to the tenant that you are the owner. Simply refer to yourself as the maintenance person. We will certainly use vendors of your choosing if you have someone you prefer. Just make sure to get us the names and contact information. We also work with Home Warranty companies. Be sure to provide us with your home warranty information (company and policy number) so we have it on hand when an issue arises.
How do you screen applicants?
We have a thorough screening process that includes review of the applicant’s credit report, rental or homeownership history and employment/income verification. We run additional checks if necessary to make a final decision.
Can I be involved with the screening process?
First, there is a potential violation of fair housing laws if you deny an application if it is for a reason that discriminates based on any of the 7 protected classes (race, color, religion, sex, familial status, national origin, disability and age). I often hear owners say they “don’t want a certain type of renter” or “don’t want a family with kids.” These are dangerous statements to make and we could face potential fines and further punishment from the US Department of Housing and Urban Development if found guilty of discrimination. We are familiar with fair housing laws and understand that you may not be, which is a good reason to let us handle approving and denying applications. Also, you are paying us to handle this so why would you want to spend your limited time trying to learn something that is included in our service fee? We trust our evaluation process much more than we trust your opinion of whether an application looks credible or not.
How much of the rental process do you handle?
Every bit of it. Once you sign a leadership agreement and turn the keys over to us, we take pictures and place the place the home on the market. From there we set up showing, lease the property, collect and disburse rent to you, handle inspections, take care of maintenance issues and everything else that can possibly be involved. We complete the move-out process as well once the tenant vacates at the end of the lease. You literally do not have to do anything with the rental process.
Can I offer my house for sale and for lease at the same time?
We routinely list homes for sale and rent simultaneously. If the property leases you need to remove it from the sales market. After all, who is going to rent the home knowing it will stay up for sale. We do recommend only going one of the two routes if possible to alleviate concerns of the buyer/renter. Perhaps try to sell the home for 2-3 months and then search for a renter in the event the house does not sell.
Can you recommend vendors for the work I need to do in order to make the house presentable?
Yes, due to our relationships with preferred vendors, we can usually have them take care of cleaning, painting, landscaping and maintenance issues for your home. Theses are all dependable vendors that have proven themselves and their work to 256 Realty. You will need to sign the leadership agreement and provide the proper funds to us so we can pay the vendors once the work is completed. The expenses will be reflected on your monthly statement.
Do I have to re-key the locks in between tenants?
We always re-key locks between renters. We have a preferred locksmith that can get to it quickly. They will not change locks but rather re-key the existing locks. The cost is normally $65-$80 depending on the number of locks. Yes, this is necessary. Would you feel safe knowing that a stranger may have a key to your house?
Can other agents (not associated with 256 Realty) show my house?
Your rental property will be listed on the MLS so other agents can show their clients. If that agent brings an applicant to us that we approve, the agent is due a $100 referral fee. You are responsible for paying this. This is fairly common and is a small expense to find a qualified tenant.
When do I disconnect utilities from my name?
Never! We require the renter to provide verification that they have taken over the utilities before we give them the keys. You do not have to do a thing.
Do you ever have to do evictions?
We have a tremendous success rate with getting qualified tenants to pay rent on time each month. 90% of the evictions we've had to do are for properties that were transferred to us by a self-managing owner or another company that already had the tenant in place. Our success rate is very high with tenants we put in place. But, as long as death, divorce and loss of employment exist, there is always a chance for a tenant to default on rent. These things are never planned but do happen and can happen anytime. We are prepared to take the necessary steps to collect rent and remove the tenant if it comes to that.
Will I have to go to court to get possession of my house in the event of eviction?
No, we handle all court proceedings on your behalf. We have an attorney to direct these efforts.
Are security deposit and first month’s rent required to be paid in certified funds?
Yes, certified funds are required for both. Beginning with the second month, tenants are allowed to pay with personal check. Cash is never accepted for payment of rent.
Who is entitled to receive late fees for rent paid past the due date?
Just like regular rent payments, delinquent charges are passed along to the owner, with 256 Realty collecting the standard 10%.
How soon do you expect to respond to emergency and non-emergency repairs?
We respond to emergencies immediately. One of us is always on call to take after-hours or weekend maintenance requests. Non-emergency requests are scheduled timely, depending on the urgency of the issue.
Do renters have to obtain liability insurance?
Yes, we do require that they show us proof of insurance before they receive the keys.
The lease says a tenant can be responsible for minor service calls up to $80. Is this per repair and what are typical expenses that the renter has to pay?
The $80 is an aggregate sum for a single service call. The typical instance is when a tenant causes damage directly, such as for drainage issues (renter leaves food on dishes and clogs drain line or stops commode by flushing paper towels). Similar issues can arise due to renter negligence. Remember, a lot of people rent because they are not very handy and cannot fix maintenance issues. Do not get overly excited about the $80 clause in our lease. It can, and often is, used to keep tenants honest but you should not expect for tenants to be billed for every single fix that is under $80.
What if I supply a refrigerator but a tenant wants to bring their own?
Many renters have their own refrigerators and want to use them. In these cases we normally move the unit to the garage or storage area and leave it stored there for the duration of the lease.
Can I ask for a “no smoking policy” in the lease?
Paying for damages related to smoking is covered under Lessee Obligations section in the lease. There is no need to add more wording to the lease.
Can we strictly say “no pets” in the advertisement for the rental?
We can clarify “no pets” in advertising. You can be as strict as you want with pets.
What are the typical expenses associated with evictions?
Expenses for evictions cover court costs and attorney fees, which will be around $700. These are court and attorney fees. We do not collect fees for evictions. This service is included with our 10% service fee (if we are not collecting rent, we do not get paid).
Can we limit the size of pets to no more than 25-35 pounds?
Yes, you can limit the weight for animals. The terms for pets are completely up to you. You can limit to certain breeds, ages, weights, etc. However, you cannot rule out pets that are “service animals” for the renter. If the renter provides written acknowledgement from a doctor that the pet is a service animal then you cannot reject the pet. You also cannot charge a fee for the pet. This rejection violates the Americans with Disabilities Act and/or the protected class of disability under the Fair Housing Act.
Pet Agreement: Where do the fees for the pets go?
Pet fees are passed along to the owner after the 10% service fee to 256 Realty. A $300 pet fee will result in $270 distributed directly to the owner.
What are your methods for advertising rentals?
First and foremost, we put all rentals on valleymls.com. This is the North Alabama multiple listing service that all licensed agents and consumers use to search available properties. Active listings syndicate from this site to other popular consumer search sites such as zillow, trulia, homes.com, etc. The ad will be removed once the property leases. We also put the property on our company website.
Can I receive rent by direct deposit?
Yes, you will receive all deposits directly to your bank account. You can find the form under the “Forms” section under “Property Leadership.” Every owner must complete and sign the direct deposit form and attach a copy of a voided check from the bank account you wish to use.
Will I receive a monthly statement?
Yes, you will receive a statement around the 10th of each month by email. This is on or about the same day you receive your rental proceeds.
When will I receive the rental payments?
Payments are disbursed to your bank account on or around the 10th day each month. Rent is due on the 1st and late after the 5th.
Do you serve properties in all areas of Madison County?
We handle homes in just about every area of Madison, Huntsville and Athens. Our average rental home leases for over $1,000. However, we are willing to take properties slightly under this amount based on several factors such as marketability, turnover frequency and characteristics of the home. We do have the right to turn down leadership of any property for any reason.
I hope this answers most of your questions. Please understand that even though our lease attempts to protect owners and we do everything we can to provide quality service and peace of mind, there is always a risk with owning rental property. Anything can happen. Tenants with an excellent prior rental history, great credit and a well-paying job can change course without notice due to health issues, divorce or other relationship problems, changes with employment, death, etc. If you have read through these questions and still have tons of “what if” questions, then owning rental property may not be the best solution for you. It isn’t for everyone. You must be okay with accepting a certain level of risk and trusting in me and the rest of the property leadership team with your home.
If you are comfortable after going through these questions, then please contact us about going forward.