Property Management
Frontline Property Management Inc.
“Managing to Improve Your Future”
6839C Green
Office (817)-377-3190
Fax (817)-377-3482
Cell (817) 907-7347
Email pblanco@frontlineproperty.com
An Introduction to
Property Management Services
Success in owning investment real estate depends upon a variety of factors. Real estate is a dynamic investment that requires care and attention. Many investors choose to utilize professional management, at least initially, to minimize risk, learn the management process, and provide the means to own more real estate in various locations than would be possible with self-management.
Our professional staff at Frontline Property Management, Inc. (Frontline) specializes in assisting new investors as they embark into the world of real estate investment by providing to them the means to build their portfolios with minimal time and risk. Our company manages a wide range of assets ranging from individual residential properties to large apartment communities, as well as a variety of commercial properties, with our primary focus being the Dallas/Ft. Worth market. A brief description of our property management processes for small properties is included below, along with a brief history and description of our company and key staff members. Our company takes great prides on the superior quality and exceptional commitment of our team members.
Frontline has been managing residential and commercial real estate in the
In today’s world, it can prove very challenging for an investor to allocate the necessary time and resources to successfully develop and monitor a diversified portfolio and investment program. By taking advantage of Frontline’s diversified services, it is possible to meet this challenge and achieve valuable equity in real estate through long-term property ownership.
Initiating service with Frontline is designed to be as simple as possible for our clients. Upon the execution of a Management Agreement (as described below) between Frontline and the investor, we can handle the initial critical steps in property investment, as described below, along with a myriad of other services (which we can describe to you in greater detail if you have an interest in retaining Frontline).
Initial Services:
Property Review: Our staff will review the property that you are considering for purchase, including estimated marketing costs, general physical condition, and cost to prepare the property for lease and occupancy, etc. We cannot of course guarantee the performance of property and recommend that a professional inspector been utilized for a physical review of the asset.
Property Preparation for Lease: The property will be made ready for lease and occupancy using Frontline staff or approved contractors. Once the proposed costs are determined and the investor has been consulted, the work will be commenced and supervised by Frontline.
Marketing: The property will be creatively marketed, based on specific strategies and investor approval. Typical marketing strategies include the use of the Multiple Listing Service, newspaper ads, signage, Internet sites, and open houses, as well as a wide range of other techniques depending upon market conditions.
Applicant Screening: Prospects are screened with regard to credit history, criminal background, employment, and eviction history.
Lease Administration: Frontline staff prepares and executes (on behalf of the investor) a standard Tenant Lease Agreement (which is a form agreement promulgated by the Texas Association of Realtors, known as TAR). Prior to the tenant’s move-in date, Frontline will review and discuss with the tenant the various administrative documents, including the provisions of the Tenant Lease Agreement, any property rules and regulations, move-in condition acknowledgement form, and general expectations of the investor.
Rent Collections: Tenant rent is paid directly to Frontline and deposited into a bank account maintained for the benefit of the investor. If rent is not paid pursuant to the terms of the lease agreement, the tenant will be contacted and the necessary action will be commenced to collect the rent. Landlord/tenant law in
Property Expenses: The costs to the investor to operate the property (e.g., marketing, maintenance, make‑ready, loan payments, taxes, insurance, management fee, etc.) will charged the property as incurred each month. The Property Management Agreement serves as a basic guide and provides for expense approval parameters that require investor’s approval beyond a certain level of expense. In order for us to operate efficiently, it is necessary for staff to be able to routinely take action without approval within certain guidelines. As we get to know our clients, we discover their level of time and interest in knowing the operating details of the property, and strive to keep them advised.
With regard to initiating the investor’s account with Frontline, a reserve is required in order to provide for contingencies that may arise due to unexpected expenses or non-payment or late payment of rent. Since most investors prefer that Frontline be responsible for paying the debt service for the property, the reserve provides the means to assure that loan payments are made on a timely basis and are covered in the event of NSF check from a resident. The amount of the reserve is a function of the property’s size. Should a short-fall in a specific account be projected due to an expense or other condition, our staff will contact the investor to review the options and as needed request funds.
Reporting: The income/expense and general operating records for each month are closed as late in the month as possible to assure proper and complete accounting for income and expenses. By the 10th to 15th day of the following month, funds from the investor’s account and a monthly financial report are sent to the investor with the following comprehensive reports:
1. Income and Expense Statement outlining all financial activity for the month.
2. Balance Sheet reflecting cash in the bank and other pertinent assets and liabilities.
3. Transaction Register scheduling all activity in the investor’s account, item by item.
4. Rent Roll listing the name of the tenant, amount of the rent, size of the unit, and vacancy and occupancy percentages.
5. 12-Mon. Inc./Exp. Stm. with a schedule of inc./exp. during the previous 12 months.
6. Owner Statement with starting and ending cash balance and income/expense entries.
7. Delinquency report.
The above listing is abbreviated for the small properties-single family to four-plex.
Maintenance: Frontline offers a full-time maintenance staff that is ‘on call’ 24 hours a day, 7 days a week for routine and emergency maintenance. By utilizing full-time employees for maintenance, more costly contract services typically can be avoided. However, it is sometimes necessary to utilize contractors for certain categories of service, as well as during peak workload periods. The cost of repair and maintenance to the property is an investor expense.
Properties large enough to require on-site office and maintenance staff are managed within the context of an approved budget that addresses staffing and other key operating criteria. Should units become vacant, our staff will stay in contact with the investor in regard to make-ready costs, market conditions affecting the rental of the property, anticipated rents, etc.
Other Services:
Insurance: In addition to the above, Frontline reviews the insurance requirements for each property and assists the investor in obtaining the most cost effective and comprehensive coverage. Our company is not a licensed insurance agent, and this service is provided as a courtesy (at no additional cost) to our investors. The cost of insurance is an investor expense.
Property Taxes: Annually, each county in
Budgeting: Larger multi-family and commercial properties are managed through the use of an annual budget. The property manager researches market conditions, assembles historical data, and prepares a projection in the form of a budget for submission to the investor in the last quarter of each year. The budget once approved becomes the operating guide and set of goals for the property and staff for the coming year.
Summary
In summary, the primary services for managing smaller properties are as outlined above, while larger properties require similar activities but with additional tasks, depending upon the asset. Frontline’s specific management responsibilities are outlined in the Residential Leasing And Property Management Agreement (the ‘Management Agreement’) that is executed between the investor and Frontline. This is a standard form contract promulgated by the Texas Association of Realtors (TAR) that details the services, management fees, and the parties’ various obligations and rights under the contract. There also is a separate TAR agreement that can be utilized for the management of multi‑family or commercial properties. Examples of the Management Agreement and Tenant Lease Agreement are available for review upon request.
Our Approach to the Cost of Management Services
Our management services and philosophy are focused on providing investors with the opportunity to own investment real estate while expending minimal time and expense. Our services and fees are structured to support this goal. While fees are subject to negotiation and can vary based upon the type and condition of the property, its location, and the overall management requirements, the following is offered as a guideline (but, of course, is subject to change depending upon various factors):
Management Fees By Property Type
Small Individual Properties
· Single family, duplexes, and four-plexes 10% of income collected
· Multiple small properties in excess of 4 units 9% of income collected
Multi-family properties 3%-8% of income collected
Condominiums 6%-10% of income collected
Homeowner Associations $8-$14 per unit per month
Commercial Properties 4%-6% of income collected
Notes:
1. Fees for multi-family properties and groups of small properties vary based upon size, location, and on-site or area staffing, if any.
2. Condominium fees vary based upon several factors, including (a) whether or not Frontline will be managing the homeowners association, and (b) the number of investor units at the property that are to be managed by Frontline.
Lease Commissions for Rental Properties
Lease commissions typically are 50% of the first month’s rent. There is a 6-month guarantee on a lease, with the fee being refundable on a pro-rata basis. Please note that lease commissions do not apply to multi-family residential properties with on-site staff and in certain other situations. Lease commissions on commercial properties vary with the type of asset.
Additional fees charged by other management companies are not part of Frontline’s fee structure. For example, there is no account set-up fee or account termination fee, nor is there a base monthly fee if a unit is vacant (although this is common practice at many management companies). In addition, some management companies collect and retain application fees, NSF fees, and late charges. Frontline pays the costs of credit, criminal and background checks on prospective tenants, and then passes those charges through to the prospective tenant. Typically, NSF fees are credited to the investor’s account. For small ‘scattered site’ properties where travel costs and the drive time can be an issue, a portion of the late fee may be retained by Frontline for the extra effort required in the collection of rent and/or late charges. This incentive to the staff produces better results in the collection of late charges and consequently yields increased income to the investor for this type of asset.
With regard to maintenance services, some management companies mark up the cost of their service staff or charge the contractor fees in a variety of techniques that ultimately cost the investor more money. Frontline’s maintenance team is billed at the cost of maintaining the department. In addition, our maintenance team maintains an inventory of used items (including parts and equipment) that can be recycled when appropriate at little or no cost to the investor.
With regard to leasing commissions, in no event will an investor pay more than the 50% fee. Some management companies charge 50% and then will pay an additional 50% to an outside agent, if applicable, for a total of 100%. If an outside source leases one of our investor’s properties, Frontline foregoes its fee in order to hold the lease commission to 50%. Some management companies split fees with the outside agent with each party collecting one-half of the commission. It is Frontline’s practice to pay the full 50% fee to the outside agent as an incentive for them to lease the properties that Frontline manages. This is, to our knowledge, a unique practice in the industry and reflects our intent to maximize the investor’s return on investment and to help the investor achieve his/her financial goals and objectives.
Among management companies, the costs and fee structures can vary. In comparing organizations, it is important to consider the services and strengths of each company when evaluating your options. A low management fee is a poor trade-off for an organization with inadequate resources, marginal knowledge, and lack of passion for the investor’s success. The following are important considerations in selecting a company to oversee your investment (and what could amount to your financial future)!
