As a condo owner or board member, creating a rental pool is a strategic decision that should be carefully considered. There are both benefits and drawbacks that must be contemplated before a decision is agreed upon.
With that being said, the value of having a single point of contact between owners and renters, in addition to being in greater control of rules and regulations, is an opportunity that’s hard to pass up.
What is a Condominium Rental Pool?
The Alberta Real Estate Association defines rental pools in the following way: “A rental pool is formed by a group of investor owners who agree to pool (combine) rental income from all their units and share the expenses of all units. The investors will also share any profit or loss from the rental pool. A rental pool may have its own Board of Directors and a property manager to collect rent, maintain the units and pay expenses. The Board of Directors and property manager for the rental pool differ from the condominium Board of Directors and property manager (although a single property management company may manage both the condominium and the rental pool).”
There are several monthly fixed costs that the rental pool pays. These expenses include the owners’ condo fees, resident manager salary, and the management contract. However, there are some subsidiary expenses too, which include painting, unit repairs, and appliance repair or replacement. It’s also important to note that the rental pool does not pay property taxes, insurance premiums, or the mortgage.
Braden Equities Inc. offers a full-service rental pool management program. This program means that you can give all the daily tasks that come with being a landlord to us, and take more time to focus on others things you want to accomplish.
Benefits of Condo Rental Pools
There are a few benefits of being involved with a rental pool. First, the management costs are usually 1-4 percent cheaper than single unit management. Regular management fees can start at 10 percent of collected rent. Since all units of the rental pool are in the same building, there are shared sets of accounting records which make it easier to manage and reference, and the savings are passed on to condominium owner. Other returns include shared administration charges, shared banking fees, and the advertising of your property for rent to possible tenants. Tasks and expenses you would have to take care of yourself can now be shared among a group of people, decreasing your costs and increasing your support network.
Rental Pool Agreements
Like any other agreement, an agreement between rental pool members must be explicit and clear. The following list is an example of how a written rental pool agreement may look. These are merely suggestions; rental pool agreement terms may vary based on the circumstances of a situation.
- The property management company will maintain one or more bank accounts for the purpose of collecting and disbursing funds under the rental pool.
- The agreement is between a property management company and the owner of a condominium unit that forms part of a rental investment pool.
- The owner agrees to abide by the rental bookings made by the property management company.
- The use and rental of the unit will comply with applicable legislation governing hotel accommodation rentals.
- The property management company is responsible for collecting rents, paying expenses, and managing the revenues generated from rentals of the unit.
- The property management company will prepare or have prepared audited annual financial statements.
- The property management company will pay related costs and expenses from rental funds collected, such as maintenance, utilities, valet, laundry services, etc.
- Net revenues are paid to the owners on a monthly basis.
Rentals pools can be a good investment source for condominium owners. In a rental pool, both revenue and expenses are shared between the number of individuals that create the pool. As a property management company, Braden Equities Inc. can help your rental pool operate efficiently. Consider all the options to determine if a rental pool is right for you.