This page gives a plain language summary of our property management services in Montana. While many details can be negotiated, we may be bound by law or ethical standards to insist on some functions.
Trust Accounts: Safeguarding Your Funds
One of the most common services a property manager provides is tracking and paying expenses on the owner’s behalf. However, state regulations prohibit a manager from using the owner’s bank accounts. Nor can money belonging to the owner be held in the manager’s accounts. For Paladin to pay expenses on your behalf, Montana laws (MCA 37-51-321, ARM 24.210.426) require funds be held in a trust account.
Unlike a normal bank account, a trust account is overseen and subject to audit by the Montana Board of Realty Regulation, operating under the Montana Department of Labor and Industry.
A trust account makes it clear that the funds belong to the property owner, and the manager is only authorized to use the account for approved purposes. Since the funds belong to the property owner, federal regulations require the bank be provided with your name, address, and tax ID. We’ll ask you to fill out a W-9 form with this information for the bank’s records.
Using a trust account, a property manager may make any kind of property-related payment that the owner has approved in the Management Agreement. This may include advertising to fill vacancies, making repairs or improvements, and handling payments for utilities, property taxes, and liability insurance. Managers are also allowed to pay themselves pre-approved management fees owed to them from the trust account.
Should you desire to handle all expenses yourself, a trust account is unnecessary. But if you’d like Paladin to manage any expenses, or to accept rent payments on your behalf, a trust account is required. You will be provided with a copy of each monthly statement and an explanation for all transactions. You would have the right to request the state audit the account at any time.
Tenant and Property Supervision
Regular oversight ensures your property maintains its value and tenants follow the lease terms. Paladin can act as the tenant’s primary contact, fielding questions, concerns, and notices. We will perform full inspections of the property – inside and out – at least twice per year, and make drive-by external inspections at least monthly.We can perform any interaction with tenants you wish, including collecting rent, imposing late fees, sending notices, and enforcing lease violations. All payments will be deposited into the trust account. If desired, you wouldn’t need to directly communicate with tenants at all.
In the unfortunate circumstance that a tenant must be evicted, or sued for damages they caused your property, licensed property managers can even work with the legal system on your behalf.
Maintenance and Repairs
Paladin will ensure the property is kept in good repair and maintenance, promptly responding to issues raised by tenants or discovered during inspections.
Minor issues may be handled directly by Paladin staff at a rate of $30 /hr plus cost of materials. There will be a minimum of 1 hour charged, and thereafter rounded up to nearest quarter hour.
At Paladin’s discretion, trusted contractors may be hired to perform the work. You may suggest or require certain contractors be used, otherwise we will take diligent care to select reputable contractors, checking references and confirming they hold proper licensure and insurance.
Although Paladin may use its best judgement in selecting which issues are to be addressed and in what manner, we will first contact you and get permission to continue if any maintenance or repair expense would be above the maximum cost you specify in the Management Agreement.
Once rents and other income have been deposited and expenses paid, the remainder will be sent to you directly as income/profit. However, a minimum reserve balance will be kept in the trust account, to allow flexibility of cash flow and to ensure funds are available in case of emergency.
Should the balance drop below this reserve balance (varies by property, but generally $500), the owner will be expected to provide sufficient funding to raise the balance to that level.
Optionally, we recommend keeping 5% of the collected rents as additional funds in the trust account to save for replacements and improvements.
Leasing
Paladin will inspect and prepare vacant units, ensuring they are clean and in good repair. We will conduct market research to recommend a competitive rental rate and lease terms, and work with you to design a lease. We might suggest improvements and research their return-on-investment potential to increase your property’s earnings.
We will take photos and advertise the vacancy online (Facebook, Zillow, Craigslist) and place signs in the yard and neighborhood at no charge. If desired, we will also manage further advertising (e.g. newspaper, radio, etc.) however those additional expenses would be passed on to you.
We will handle rental inquiries, collect applications, show the property, interview applicants, and do background checks – including credit, criminal, and rental history. We will contact references, and confirm applicant employment and income. We follow all laws and regulations related to tenant screening and fair housing standards.
Our priority is to protect your property, and so we take tenant selection very seriously. We seek reliable tenants with stable income, clean rental histories, and clear background checks. The fees for these checks will be charged to the applicants.
Once a suitable applicant has been found, we’ll present their information to you for a decision. If accepted, we will sign them to a lease as your agent and coordinate the move-in.
Bookkeeping and Reporting
Paladin will track and categorize all transactions through the trust account, reconciling statements at least monthly.
You will be provided with a monthly statement and explanation of transactions, as well as a note describing any other activity related to the property during the month (events, notices, concerns, etc.). Of course, any significant events during the month will be reported to you promptly.
At year end, Paladin will provide a Profit and Loss statement summarizing all income and expenses related to the property during the year. Assuming you have all transactions related to your property going through our trust account, this will make filing your taxes much easier.
We will also file 1099-NEC forms with the IRS on your behalf for any contractors paid $600 or more during the year.
Our Fees Explained
• The standard management fee for an occupied unit is 8-10% of collected rents.
• We charge no fee for managing a vacant unit. However, you will be responsible for expenses related to basic cleaning, repairs, or extra advertising.
• Upon successful signing of a new lease, a one-time fee equal to 40% of the first month’s rent is charged. If necessary, this can be paid over the course of several months.
• Should there be extensive work on the unit beyond standard repairs and replacements (renovations or installing new amenities) and a general contractor is not used, Paladin may agree to supervise the project for a fee to be negotiated at that time.
Full Details in the Management Agreement
This page is only intended to act as a general introduction to our services. Full details can be negotiated and will be written into our Management Agreement, which is the contract we sign should you decide to hire Paladin Management LLC.
Please don’t hesitate to reach out with the slightest question or request for clarification.
(406) 692-7939
Contact@PaladinManagementLLC.com
PO Box 75
Billings, MT 59103