ARROWPOINT REALTY INC

Question 2: How is much is the commission and how is it computed?
A: The Commission would equal the monthly rent x number of months x commission rate. Our commission rates are 10% on long-term / unfurnished leases and 15% on short term furnished vacation rentals. So, if we leased an unfurnished property at $1000 per month x 12 month term at 10% commission rate, the commission would be $1000 x 12 x 10% = $1200.

Question 3: Are there additional charges for advertising, sign or lockbox installation?
A: No. Our commission fee tyically includes promotion of the property -- including listing on the MLS, as well as a professionally installed sign and an ARMLS electronic lockbox when appropriate.

Question 4: Do you receive renewal commissions?
A: Roughly one half of our tenants renew or extend their leases, and much as your insurance agent receives a renewal commission each year on your home or auto insurance policy, we also receive a renewal commission. The renewal commission rate is the same as the original lease-up rate of 10% for unfurnished and 15% for short term furnished rentals.  On occasions where the tenant may remain on a month-to-month basis, the commissions may be charged periodically on past additonal months.

On renewals of long term leases, we typically interview both the landlord and tenant to see what their plans are, research comparable rental rates on similar properties, update the tenants' contact/work information, inspect the property for condition and necessary repairs, and execute a new lease agreement or Memo of Lease extension, as appropriate*.

(*In 2008, the Arizona Association of REALTORS lease agreement, which is the industry standard, was completely re-written and reformatted as an 8-page document. Since Arrowpoint uses the AAR lease form, we are currently drafting entirely new lease documents as we process renewals on properties currently under lease with the older AAR version.)

Question 5: Do you pay a co-broke commission or referral fee to outside agents and firms who bring a qualified prospective tenant? 
A: The Multiple Listing Service exposes a property to over 30,000 local REALTORS, and many of our properties are leased through cooperation with outside firms. As an incentive to bring us a tenant, we offer a 4% referral fee or co-broke commission, although many firms pay a much lower percentage rate, and others pay a low flat fee. Obviously, the higher the co-broke fee, the more attention your property is going to attract from from outside agents, and the more likely and faster it is likely to be leased.

Question 6: Does the owner pay an additional fee to cover the cost of a commission paid to an outside firm?
A: Although some firms charge the owner for an additional amount to cover a co-broke commission to an outside firm, Arrowpoint does not. When we pay a co-broke or referral fee, expense comes out of our commission -- it is not an additional expense to the owner.

Question 7: How much is your monthly management fee? 
A: Our monthly fee of $45, about $1.50 per day, covers rent collections, servicing your account and oversight of the property, as well as providing the tenant with a 24/7 emergency contact. We take unlimited inquiries when you have questions, and we generate additional statements or reports as you need them.

Question 8, Do I get a break if I have more than one property under contract with your firm?
A: Yes, we charge a discounted rate of $25 per month for each additional property managed for the same owner. So, for one property, the monthly fee is $45, but for 2 it is a total of $70, for 3 it is $95, and so on.

Question 9: Are there any additional monthly fees? 
A: Our monthly management fee covers all regular bookkeeping management oversight functions. There are no additional monthly charges for statements or other reports.

Question 10: Do you have an annual Year End Fee and how much is it, and what is it for?
A: The $75 annual year end fee is covers a complete year-to-date owner ledger and 12-month operating spreadsheet, as well as preparation of an IRS 1099-MISC form for tax reporting purposes.

It also covers the costs of 1099-MISC forms to vendors and maintenance people.  IRS regulations require us to provide a 1099 to any individual to whom we write checks in excess of $600 per year. When comparing fees and services, make certain any firm you interview issues these required 1099 forms.

Question 11: Is the annual fee charged on a per owner or per property basis?
A: Our annual $75 year-end fee is per-client, regardless of how many properties we manage for you.
 
Question 12: Do you charge a fee to serve as my statutory agent?
A: Arizona Law requires that if the rental property owner's primary residence is out of state, he or she must designate an in-state statutory agent for purposes of receiving notices, summons, etc. We have heard of attorneys and property management companies charging as much as $250 per year to serve as a statutory agent. When required, we will serve as your statutory agent at no additional cost, for as long as we are managing your property.

(You may discover some management companies are not aware of the rental property registration law, or the need for a statutory agent. Look elsewhere on our site for more information about these requirements.)

Question 13: Do you charge any sort of document preparation fee?
A: Arrowpoint does not charge any separate or additional fee for writing a lease or creating other sorts of documents relating to leasing or managing your property. As a matter of fact, in general such fees are illegal. The Arizona Constitution gives real estate licensees authority to draft legal agreements only as they are incidental to a real estate transaction, however, if a real estate agent charges a fee specifically for drafting a legal document, he or she may be guilty of practicing law without a license.

Question 14: Do you charge any fees for notices sent to the tenant?
In some instances, we are required by the Arizona Landlord and Tenant Act to send violation and other types of notices to tenants by certified mail, in order for such notices to be effective. Processing of these certified mailings takes considerable time and postage, so owners are charged a flat fee of $10 to cover postage and handling. In most instances, the tenant is re-billed $10 for reimbursement to the owner for this expense.

Question 15: Who keeps the late or NSF fees charged to the tenant?
A: Arrowpoint Realty keeps the late fees, but only as they are collected. Our bank charges us for checks with non-sufficient funds we deposit, and when a tenant pays late or gives us a bad check, it creates a substantial amount of bookkeeping and collection work for us.  Actually, in many instances we waive or substantialllyreduce the amount of late harges to a tenant, and our position is that late fees serve as a management tool for the property management company, not a revenue source for the client.  

Question 16: Are there any other regular management fees I will be charged?
A: We have listed every type of regularly-occuring fee we can anticipate, however, there could be an additional charge for something out of the norm. For example, we had a client who wanted his monthly distribution check sent to him immediately via overnight mail. Our cost for overnight mail at that time was about $15, and that cost was passed on to the client.

Question 17: Are there any reserve requirements on my trust account balance? 
A: This is not actually an expense or a charge by Arrowpoint Realty, however, our current requirements are that each property maintain a regular operating reserve of $500 for condominiums, or $750 for single family homes.  This is to insure we have funds available in case of an emergency, a major repair, or to maintain services, such as water or electric, during times of vacancy. 

We may reduce the required amount for owners with multiple properties, or increase it temporarily or pemanently on a case by case basis, if required by the property profile or for anticpated increased operating costs.  If the owner's trust funds drop below the required reserve account, that amount if replinished from future rent receipts.  Note: Arrowpoint does earn a small interest income from our bank based upon owner funds or tenant security deposits held in our trust account.

And 2 bonus questions:

Bonus Question 1: What do you charge to manage a property if I already have a tenant in place?
A:  Our fee in this instance would be $75 per month, because our primary profit is from our leasing and renewal commissions. We could never survive on our $45 per month management fees.

Our management services and the normal $45 per month fee are sort of a loss leader which enable us to compete for lease listings with the giant real estate companies which will typically lease your property, but don't want to provide on-going property mangement because they don't want the responsibility or the hassle of mainting a trust account subject to regular audits by the Department of Real Estate.

Also, when we inherit management of a lease someone else has written, it is much more work for us to administer. 

Bonus Question 2: What do you charge to lease my property if I intend to mange it myself? 
A: The simple answer is that we would charge our normal leasing commission rate of 10% for a long term unfurnished rental, or 15% for a short-term furnished vacation type lease.  There would be no other fees.  

BUT . . . we really hate the question and we recall the old adage about lawyers: "He who serves as his own attorney has a fool for a client." There are some owners who live locally and are well-versed in Arizona laws and procedures, but for out-of-state owners, they usually end up calling us after the fact and asking us to provide assistance which is part and parcel of our management programs and fees. 

We often hear people say "I have a home warranty the tenants can call if there are any needed repairs, and I'll give them a stack of deposit slips from my bank so they can just direct deposit the rent each month."

Ok, . . .  what could go wrong with that program?

Like when an owner phones us later because there is now a maintenance issue that isn't covered by the home warranty program and the owner doesn't know who to send to do the repair, or because the tenant hasn't deposited a rent payment into the owner's account for two months and isn't returning any of the owner's calls. 

If you don't have a strong local presence -- either you personally or a management company, that simply means that your tenant is also your property manager. Not meaning to insult the majority of honest and responsible tenants, but in some instances that is like having the inmates running the asylum.

Some rental property owners may have a local friend or relative who will act as property manager. That is fine until that person is away on vacation, or when the tenant calls with an emergency like a broken water pipe at 3am, or the friend or relative simply gets tired of having the responsibility.  Friendships and relationships only go so far when the person begins to feel presumed upon.

People without a real estate license, even friends and relatives, legally cannot be paid for managing property owned by someone else. Besides, asking a friend or relative to manage your rental property is a good way to lose a friend or create an estrangement with a family member, not to mention the substantial liability you may be creating for them. Ever consider that an irate tenant could sue them as the property manager? That is why Arrowpoint Realty carries E&O insurance.

When you have an investment hundreds or thousands of miles away, you need someone watching the store. Property management is a profession and a full-time job. If you want us to only lease up your property, we will do our best to qualify a potential tenant and we will write our standard lease agreement with the appropriate addendums, however, once all the move-in monies are collected and the tenant is in the property, our job is done. 

If you read through all of this, and refer to the handy little chart above as you shop property management companies, you will be a far more knowledgeable consumer. And you'll understand what we said at the beginning, that there is a lot more to selecting a management company than just asking "How much do you charge?")