When do you distribute rents?
CB Properties initiates an ACH deposit into your checking account on the 5th of the following month. We pay in arrears to have funds to carry your maintenance cost without having to ask for a contribution on expenses less than your rent.
What licenses do you carry?
To be a Property Manager in Arkansas and Tennessee, you must hold a Brokers license, which we do.
What is the purpose of the property management agreement?
The property management agreement is a contract between the Property Manager and Property Owner. It lays out the services we will provide and the charges for those services. along with our expectation from the owner.
Why are there so many different fees?
We would agree on the surface, it looks like there is a lot of fees within the property management agreement. Being a well-organized, efficient property management company requires staff members dedicated to individual roles that are providing a service tied back to a fee. Running a lean company by having each team member serve multiple roles will fail as there are simply to many moving parts within day-to-day operations of a Property Manager. Our fee structure charges for the services actually performed that allow us to scale our business operations cost to the amount of overhead of each individual service we offer. Your biggest expense in the 8% Management fee, which is why we keep that one below local market standards. An investor once came to us saying another property manager outside of the markets we operate only charges 8% and no other fees, however, the average rent of his 4 properties is $1,900 a month, where ours is around $1,000. While we would love to have that simplicity in our fee structure, the rents in our market are not high enough. Our goal is run a Property Management company that provides high level of customer service to our investors and tenants while charging fees proportion to the work we do.
Can you break out the purpose of each fee?
Sure. Transparency is a core value for us. Feel free to ask us anything. Afterall, building trust is important part of relationship building.
- 8% Monthly Management: Collect and process rents. Covers overhead related to office expenses such as Portfolio Managers salary, Software systems, office overhead, health insurance, E &O insurance, various business insurance, local and state taxes, certifications, continuing education and training just to name a few
- 80% Lease Up Fee: Covers expense related to leasing activities. These costs include signage, self-showing platforms, SEO, 3rd party marketing websites, Leasing Manager salary, leasing agent commissions, field employees who check on vacant homes, VA support for phone services and budget tracking.
- 15% Maintenance Markup: This is probably the biggest push back we get, but also the largest expense we carry. When we perform maintenance, we essentially become a maintenance company, which comes with large expenses. This fee is to pay for Project Managers, fleet of vehicles, auto insurance, workers compensation and general liability insurance, construction software and office Maintenance Managers, A/R and A/P. The maintenance fee is our stamp that we stand by the work, thus if there is any issue and the vendor does not take accountability or is no longer a vendor of ours, we will resolve the issue at our cost. Property Management that advertises no maintenance markup because they have in-house maintenance is misleading as they are profiting from the markup of their labor and operating expenses. To fix a leaking faucet may cost them $75 in overhead, but they charge out $115, whereas if we outsource something and that bill is $100, you will see the original bill and 15% markup on your Rental Owner Statement—which we feel is complete transparency.
- Lease Renewal: A portion of this is going to the individual obtaining the lease renewal as an incentive to keep the tenant in place. You would be amazed how often a tenant can be talked into staying. What is left over goes towards general overhead.
- Late Fees: these are retained. When a tenant does not pay, we basically turn into a full-time collection agency, which could mean after hour calls, home visits to put notes on door (which is more field personal overhead), going to court if we have to file for eviction
Was is the threshold of an expense before you need an owner approval?
At an amount of less than $400, we can’t provide exceptional service to our residents and it could drive up the cost of your maintenance. A scenario of where it would drive up your cost would be if we have to send a maintenance technician such as a plumber, HVAC tech or electrician and they have the proper materials to make the repair while at the house, but do not get approval, then they are going to leave, thus costing you an unnecessary trip charge. From the residents position they do not care of the why something does not get done, they just want it done. Not making the repairs as quick as possible opens up the scenario of a resident getting emotional where they feel they can call code enforcement, which is something you certainly do not want as a simple repair could turn into a much larger repair if they find something they can pick apart. Also, keep in mind that certain items are considered essential services by the Uniform Residential Landlord Act and must be acted upon ASAP.
Do you all utilize in-house maintenance or outsource it?
CB Properties outsources all work with the exception of a portion of the rent ready. We use negotiated pricing with our vendors to ensure wholesale pricing.
What is the average turn cost of a property?
For a typical turn over, the cost is roughly $2.25 a square foot. This would cover paint, carpet cleaning, yard cutting or leaf removal, utility bills and various other minor details.
What is your average occupancy rate and average tenant stay?
Occupancy ranges from 95% to 97% consistently. Average resident stay is 40 months.
What is your lease structure?
We only accept a 24-month lease. Year 2 will have a rental increase on average of 5%. For example, if a resident signs a lease with us on January 1, 2022 for $1,000. Year 1 of the lease would be $1,000. Beginning on January 1, 2023, the lease amount would be $1,050. This is excellent towards reducing vacancy while capturing an increase to cover any operational cost increases that may occur such as taxes or insurance, along with adding to your bottom line.