Nia Reczek is a realtor in North Carolina who is knowledgeable about all aspects of the rental market. As the owner of Clearview Property Management, she works with many homeowners to help them find and place tenants into their properties. In this article, she explains the basics of how accounting works for homeowners and investors who hire a property management company to manage their rentals.
For the most part, we will really handle all aspects of the rental of a home for the homeowner, beginning at the point when the owners hand over their keys and ask us to find them a tenant. We will collect the rent, we will collect and manage the security deposit, and we will send the owner his money each month. It is that simple.
Using this type of system and hiring a property management company really is a huge benefit to the homeowner, because he doesn’t need to be an expert in real estate laws or financial management just to rent out his house as would have to be to rent it out himself. Just basic things like knowing the laws behind what to do with a security deposit, for example, can be tricky for a novice landlord.
Of course there are times when trouble can arise, and we can’t pay the homeowner if we don’t receive the money from the tenant. But we do have a policy where if our tenants’ rent is due on the first of the month, then it is late after the fifth of the month. So if the property owner has not received payment by the sixth, then we start sending notices and calling. We will tell the homeowner by the 10th of the month if his tenant has not paid. We will tell him, “We are still waiting for a response, but we just want to let you know that you may not have rent this month.”
If we can’t get reach the tenant by the 10th of the month, then we will start the eviction process. We will have him evicted by the end of the month, and hopefully have the home re-rented by the next month.
Additionally, at the end of every month, the property owner will get a management statement showing what we have collected from his tenant and if we have taken any money out for repairs from that amount. We don’t do any repairs without the homeowner’s knowledge unless it is an emergency. And even in an emergency situation, we will still try to contact the property owner. But we will also try to get the problem fixed right away at the same time. Because if say, water is spewing in a home, we have to get that fixed. We can’t wait until we hear back from the homeowner to make sure that it is ok.
So we let them know, then, what has been taken out of their money for repairs. And we send that management statement to them.
At the end of the year, the homeowner will receive a 1099 form to show him what he has made on the property that year. We can send him an itemized list of what we have taken out, but hopefully he will keep his monthly statements along with his receipts because we send him a copy of the bill along with a copy of the check for any repairs that have to be done on their home. And we do that to show him that we actually did pay for that repair.
So as you can see, there is little that a homeowner needs to worry about once he hands over his keys to us, since we really do handle the renting of a home from start to finish.
