Becoming familiar property management terms is crucial to getting the most out of your real estate investment. How many of the following 15 do you know? (The list is in alphabetical order, not by priority or importance.)
Eviction: Perhaps the most dreaded word in property management, eviction is when a landlord removes a tenant from a property due to lease violations. This process must follow local, state, and federal laws. Common reasons for eviction are nonpayment of rent, property damage, and illegal activities.
Fair Housing Act: Enacted in April 1968, the Fair Housing Act prohibits housing discrimination based on race or color, religion, sex, national origin, familial status, or disability.
Investment Property: An investment property has the purpose of making a profit or a return on investment. A residential rental is a common investment property.
Landlord Insurance: Landlord insurance protects landlords against the financial risks of renting properties and provides personal liability coverage. For example, most landlord insurance policies cover the entire rental property and everything inside it. Landlord insurance is not the same as renters insurance.
Lease Agreement: A lease agreement is the contract between tenants and landlords or property managers. A lease covers the terms, conditions, and expectations of renting a property. It’s a key component of a rental. Be sure to read yours carefully.
Multi-family Housing: A multi-family rental is a residential property that has several rental units, such as an apartment building, condominiums, or townhouses.
Multiple Listing Service: The Multiple Listing Service, aka MLS, serves as a platform for brokers and real estate agents to find properties. According to the National Association of Realtors®, “an MLS is a private offer of cooperation and compensation by listing brokers to other real estate brokers.” They are used to target geographical areas. When a property is listed for sale, the listing agent adds it to the MLS.
Property Management Team: The property management team ensures all aspects of a rental property business are taken care of. Property managers are agents of landlords, acting on their behalf and responsible for tasks such as collecting rent, marketing properties, and screening tenants, just to name a few.
Security Deposit: Tenants pay a security deposit before moving into a rental as an insurance that any damage to the property by the tenant will be covered. Security deposits are separate from cleaning or pet deposits.
Short-Term Rentals: Typically, a short-term rental refers to a few-days or weeks at a time rental. Think VRBO, Airbnb, or vacation home. A long-term rental refers to a 1-year lease minimum.
Single-Family Rental: Like it sounds, a single-family rental is for one family on a stand-alone property. Single-family dwellings are the hallmark of suburbia.
Tenant Screening: References, proof of income, creditworthiness, eviction history … these are some of the standard factors a property management company researches when screening prospective tenants. Diligent tenant screening is the foundation to a successful Landlord-Tenant relationship.
Squatters Rights: A squatter = an unlawful tenant not paying rent. Squatters have rights that vary state by state. A basic one being they may continue living on a property if they don’t receive a formal eviction notice.
Termination Letter: If a landlord doesn’t want to renew an expiring lease or needs to evict a tenant, they need to send a termination letter, which is formal letter listing reason for termination, end date of the lease, and details on moving out. Termination letters are legally sticky and best left to professionals.
Vacancy Rate: A vacancy rate is a ratio illustrating the number of empty rental units to the total number of units. If a landlord owns 8 units and 2 of them are empty, the ratio is 2:8.
How did you do? Let us know if you scored 100%. Any other definitions you’d like to know? We can help. Call Place Tenants at 800-886-1193 or email [email protected].
