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A rental pool describes a situation whereby owners in a community, like a condominium or townhouse development, agree to a sharing arrangement which makes their units available for rent.
They have some similarities with timeshare.
All landlords will be able to split the agent fees, while having more certainty with rental income.
This means that even if one member’s unit remains vacant, he would still obtain a share of rental income generated by other units that are rented out.
While a whole portfolio of homes to rent out, the agent should also have the hindsight to make shrewd business decisions like renting out less desirable units first, or renting out two units instead of one when tenants can afford to.
The special part about rental pool arrangements is that all owners will have an equal share of the revenue and expenses, or have a pre-determined allocation of how these sales and costs will be split.
When the share is not split evenly among member taking part, the allocation is usually based on either:
- Property value
- Rental value
- Rental per square feet
- Floor area
Before going into such agreements, property owners should first check if there are any legal and tax requirements for such deals to take place.