Hiring the Right Property Management Company
Once you’ve decided that you require a property management for your real estate operations, it’s essential to pick the right one. Selecting the right property management company to work with can have a substantial impact on the success of your rental property business. With that said, we’ve compiled an assortment of tips to ensure you find the best company.
This first step is to ensure that they are a legitimate operation.
You will want to ask about the licensing, qualifications and registration of the company and those who it employs. Many times, individuals or groups of individuals with the handy skills required will pass themselves off as a property management group. Not to say that these people can’t handle the job, but it’s to your benefit to work with a licensed company. In the case that anything goes wrong, you can save yourself a huge headache by only employing a legitimate company. This will make more sense once we get to discussing liability coverage.
Next you will want to consider the company’s experience and reputation.
Don’t be afraid to ask questions like how long they have been in business, or how many properties they manage. These are important questions for you to ask since being in business for a number of years is always a good sign of reliability. Also consider the number and types of properties they manage when determining whether they are the right fit for you. The more familiar the company is with the type of rental property you own the better.
Ask about communication channels and who will be in charge of your property.
It’s essential that this is clear from the start since the company will be responsible for renting and maintaining your property. In case that you need to contact them, it’s always good to know who you should contact and that you’ll be able to reach them. Typically, large companies will assign a property manager to your unit so this will usually be your main contact. However, you should also ask how they assign a specific manager to your unit. Of course, you want someone who is most familiar with your particular type of rental unit. This will ensure that things run smoother and less is left up to guessing.
You will want to know what services are included, as well as how they are handled by the company.
Once you understand all of the services included by the company, it’s important to understand how they approach each task. This will help to give you a better understanding of whether this company is going to be effective in helping you achieve your goals. The ideal property manager will be able to market the property effectively, retain tenants and be very responsive to situations that require attention. To get a better idea, you should ask about the following services:
Screening of tenants
Marketing of the property
Setting and collecting rental rates
Tenant difficulties (i.e., bounced checks and eviction)
Property maintenance and inspections
Handling of all funds
There may be other services that the company includes, so be sure to ask about those too.
Now is the time to ask about the financial, legal and technical details of their services.
Now that the services offered by the company are covered, it’s time for the fine details that will make or break the deal––the deal being whether you will hire this particular property management company. Some other things to consider include:
Fee schedule. Typically, these companies charge 5 to 10% of the property’s gross monthly income and may charge additional fees that you should look into.
Operational contracts. Often property management companies require you to lock-in a contract for a minimum number of years. If you violate this term, then you could be subject to early termination fees.
Liability policy. This is an extremely important aspect to ask about which is why we left it for last. Ensure that the company is insured and has liability coverage to better protect your end of the deal. It’d be a shame if they caused some sort of damage to the property or the tenants but couldn’t be held liable because of an oversight on your end. Make sure this doesn’t happen.
One final note is that it’s never a bad idea to ask for references. This way you can hear from previous real estate investors about their experiences with a particular company, and ultimately, whether they would recommend them.
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