It used to be that you picked a property management company, they offered one management plan, and that was it. At Progressive Property Management, we offer a few Owner Programs designed to give our clients additional choices to provide more financial security for their rental properties. Here is an overview of these programs:
OWNER PROTECTION PROGRAM – “EVICTION ASSISTANCE”
Many of our owners wish to avoid the cost of an eviction. Between filing fees, attorney fees and our eviction assistance fee, it may cost you $1,500 to regain possession of your property. Unfortunately, we cannot charge you a fee to pay for the cost of an eviction; the Department of Real Estate considers it an “unearned” fee. But we can charge your tenant. If directed to by you, we will charge your tenant $15 a month for the Owner Eviction Protection. For this fee we will waive our Eviction Assistance Fee ($300) and pay for the costs of the eviction up to $1,000. We explain to your tenant this fee is attached to the property and we would not be leasing this property to them if we thought you intended to violate the terms of our contract.
RENEWAL OPTION PROGRAM – “TENANT RENEWAL GUARANTEE”
As you may be aware, tenant groups are clamoring for rent control and just cause eviction, that is, a limit to any increase in rent and the ability to stay in your property for as long as they want. This program gives them these rights but on our terms, not that state’s. For a monthly fee of $15 charged to the tenant, they will have an automatic right to stay in your property for another year as long as they abide by the contract and meet our rental standards (no late payments, no more than one HOA violation, no serious damage to your rental discovered at the annual inspection). You also agree to increase their rent no more than 2% over the Consumer Price Index (this year, 4.1%). You may opt out of this program every year. Your tenant has peace of mind and the confidence to stay where they are. You have tenant who must meet our high standards to qualify for program and an automatic annual rent increase.
PREFERRED TENANT PROGRAM – “SECURITY DEPOSIT GUARANTEE”
California law allows us to collect a maximum of 2 month’s rent for an unfurnished unit and 3 month’s rent for a furnished one. If your investment property is worth $500,000 or $1,000,000, shouldn’t you collect more than one month’s rent to protect this valuable asset? It is our company policy to collect two month’s rent as your security deposit, but some tenants are unable or unwilling to pay that amount, so if you participate in this program, rather than keeping up to two months of the tenant’s rent in our trust account, some, or all of their security deposit may be waived. Here are your security deposit choices:
- Require a tenant to pay the full 2 month’s security deposit at move-in. Although optimum, many potential tenants will struggle to produce this much money. Remember, if a tenant is moving on the first of the month, and the monthly rent is $2,000, they would have to give us $6,000 at move-in. Having two 2 month’s rent in hand may be preferable, it just isn’t practical.
- Allow the tenant to pay 1 month’s rent as the security deposit. We recommend no less than one month’s rent as the deposit, but you should be advised, financial damages caused by a tenant (loss of rent, damage to your property beyond normal wear and tear, legal fees, etc.) may often exceed this amount.
- Require the tenant to pay 1 month’s rent as the security deposit and allow them to participate in our “Preferred Tenant Program”. We allow them to waive the second month’s deposit, and we guarantee this amount in damages to you at move-out. They pay the following as a “Security Deposit Waiver Fee”:
- For tenants with a TransUnion (“credit”) score of 700+, they will pay 1% of the monthly rent as the “Security Deposit Waiver Fee” (if 650 to 600, 5% and 2% if 600 to 649). We will retain these funds and use them as needed for any damages (up to one month’s rent) you incur from the tenant.
- We also allow the tenant to pay nothing as a security deposit and charge more per month to waive one month’s and even more to waive two entire months with an additional fee to you.
Why should you consider participating in this program?
- You have more security deposit or a guarantee to protect your financial asset.
- No fighting over the tenant security deposit at move out.
- We pay for damages to your property (if any) up to the guarantee.
- More tenants will be able to apply to rent your property.
- Tenants will stay longer since this program is not currently offered by other companies.
PRIORITY OWNER PROGRAM – “PAYMENT GUARANTEE”
Some of our owners depend on the rent proceeds to pay their mortgage or other expenses. But in the typical month, if your tenant pays on the 5th of the month, with bank delays (taking 2 to 3 days to clear the funds) and the time it takes for us to process the rent, you may not receive your monthly rent proceeds until the 10th to the 15th of the month. For $30 a month, we will send your monthly proceeds (less our management fee and any bills currently due) to you on the first of the month. When the tenant pays, we will be reimbursed. To qualify, your tenant must provide two month’s rent as a security deposit (or participate in our “Preferred Tenant Program”), pay for our Complete Resident Benefits Package and agree to release their security deposit to you. But with our Priority Program, there is no guessing when your rent will be in your bank: it will be there the first business day of the month; guaranteed.
PREFERRED OWNER PROGRAM – “RENT GUARANTEE”
Would you like to have 100% of your rent guaranteed? Would you like to pay one management fee and not worry about the cost of tenant acquisition, eviction expenses and loss of rent? This program may be for you. For 6% more than our base management fee, you can expect 100% of your rent every month. Here is how the program works:
- We pay for any loss of rent (up to a maximum of 1 month’s rent) and damage to your property (up to 1 month’s rent). We must collect 2 month’s security deposit or you must allow the tenant to participate in the “Preferred Tenant Program”.
- We pay for all eviction costs up to $1,000. The tenant must participate in the “Eviction Protection Program”.
- You don’t pay for any tenant acquisition or tenant placement fees.
Let’s provide a common occurrence. You have a rental that brings in $2,000 a month. A good tenant of yours gives notice and moves out on March 1. The cost to make your unit rent ready is $500. It takes 3 weeks to secure a new tenant and that costs you $1,500 in lost rent. You pay us (or another management company) 35% of the rent, or $700, as a tenant acquisition fee. Your total cost is $2,700. With our “Preferred Owner Program”, you would have received a check by March 15th of $1,780 (the $2,000 rent less our management fees) and not paid the tenant acquisition fee saving you $2,200. Yes, this program costs you more monthly, but you can now depend on receiving your full rent every month.
PREFERRED PROPERTY PROGRAM – “PROPERTY GUARANTEE”
Many of our owners either pay for a home warranty or like the idea of all repairs being covered by a third party. We have found home warranty companies and their vendors to be slow, inefficient, and difficult to work with, so we think this program is a better option for you. For an additional 3%per month, or $60, whichever is higher, we take care of maintenance costs, plumbing issues, broken water heaters and air conditioners that die during heat waves. You pay a low $50 deductible for every repair like any other home warranty company, and we take care of all repairs. There are exclusions and limitations, and we don’t cover pre-existing conditions or make improvements to your property, but we do guarantee a better experience as an investment property owner. If you are interested, we can send you more information on program details.
ALL INCLUSIVE PROGRAM – “INCOME GUARANTEE”
Would you like to have 100% of your rental income guaranteed? If you combine our Preferred Property Program with our Preferred Owner Program and pay an additional 9% per month, we guarantee your monthly rental income. No loss of rent (up to one month’s rent), no repair costs, no tenant acquisition, evictions (up to $1,000) or repairs after move-out (up to one month’s rent). Would you like to pay one management fee and not worry about unexpected expenses? This program may be for you.
These programs are voluntary and optional. If you have additional questions about proposed contract or these programs, feel free to contact your Property Manager. We look forward to providing professional property management services to you and strive to achieve our company slogan “We Manage Happiness.”
Scott P. Brady
Progressive Property Management, Inc.