The Tenant-In-Common entities are each named on the deed, as well as the Tenant-In-Common entities percentage of individual ownership. A signed agreement between Tenant-In-Common owners details respective rights and responsibilities.
One owner is designated the manager. This can be a paid or unpaid position, which can be passed among owners. This manager is responsible for contracting with a professional property management company, to handle the day-to-day operations, as decided and directed by the group. The managing member serves as the conduit through which information, news, and correspondence, can flow between the individual owners, the property management company, and in some/many cases Realty Yield. The managing member is responsible for insuring all members receive their monthly income and expense reports from the management company. The managing member will typically visit the property at least twice each year and encourages all other members to join him or her.
Each year the managing member of the investment group revisits the management strategy, with both the property management company and Realty Yield. After consultation with the group and reviewing reports, the property’s annual operating budget is discussed and prepared by the property management company.
In the event that one or more owners wants to buy or sell their percentage of ownership before the entire property is sold, the managing member works to insure the activities of the Tenants-In-Common conform to the procedures spelled out in the operating agreement.
The property management contract is typically for a period of one year and can usually be cancelled with 30 days notice. Contracts typically require the management company to get approval for all non-recurring expenses over $1,000.
Additionally, all services the owners, as a group, contract for, should have separate contracts, with payments based on specific services rendered. For example real estate commissions earned from buying and selling a specific piece of real estate, professional property management fees, legal and accounting fees and fees associated with refinancing of existing debt. The group may contract for specific products or services from an individual member of the group if that member is affiliated with a business that can offer value to the group. The contract needs to stand on its own merits and be open for review and separate from the ownership agreement.
Some of this may sound complicated but it’s not. The idea is that we’re all in this together. Realty Yield often partakes in the chosen investment. Each owner is paid a return that is directly correlated to their percentage ownership in the property. No owner will be paid a return in any way other than as a percentage of their ownership in the property.