As a property owner or real estate investor, it can be overwhelming to manage your properties, especially if you have multiple units or properties in different locations. That’s where a property management company can come to the rescue. A property management company can handle everything from finding and screening tenants for you to collecting rent and handling maintenance and repairs.
But with so many property management companies out there, how do you know which is the best fit for you and your investments? Read on for the best tips and practices when it comes to hiring your first property management company.
Determine Your Needs
The first step is to determine your needs. It involves assessing what you need and want from a property management company to effectively manage your properties. Review the number and location of your properties, the type of properties you have (such as residential or commercial), and your goals for your properties (such as maximizing profitability or reducing turnover).
Different property management companies specialize in running different types of properties and entities. By understanding your needs, you can narrow down your options and choose a property management company that best meets your needs.
Research Potential Companies
After determining your needs, the next step in hiring a property management company is researching potential companies. Here’s how to thoroughly research any property management company you’re considering.
First, you should look for companies with experience managing similar properties. Their management experience should be comparable to yours in size, location, and type (e.g., residential or commercial). Checking that they have experience with similar properties or situations will ensure they have the knowledge and expertise to manage your properties effectively.
Another way to research potential companies is to ask for references from other property owners who have used their services. This gives you an idea of the caliber of service and type of results you can expect, as well as prices, management style, business strategy, and fit.
With the rise of review sites like Yelp, Expertise.com, and even google reviews, you have plenty of information right at your fingertips to make the best decision for your situation. Look for reviews from other property owners and any ratings or accreditations from industry organizations. Be sure to look at various review sites for an accurate, comprehensive idea of the company you want to hire, as reviews can be biased on different platforms.
Once you’ve decided on a company (or narrowed it down to a few), you must ensure the property management company you are considering is licensed and certified to operate in your area. This will ensure that they are working legally and meeting any necessary standards.
Meet with Potential Companies
Once you have narrowed your options and researched potential property management companies, it’s time to meet with them, preferably in person. In this meeting, you can ask questions and get a feel for the company’s management style.
Usually, companies will be more than happy to set up a consultation, and usually, it will be no-cost. You can set up a call to talk through video chat, on the phone, or meet them in person at one of your offices. If you want to be even more thorough, you can schedule a tour of their office. Seeing the property management company’s office and meeting more of their team can give you a good idea of their professionalism and organizational skills.
No matter where you have your meeting, you’ll need to ask about their experience and qualifications. Specific questions about how the properties they’ve managed in the past are similar to yours and how they’ve dealt with problems in the past when they’ve arisen. Ask about their communication style, handling conflicts and emergencies, and maintenance and repair requests. Make sure you know what services are included in the price, and ask about any additional costs that may apply. You’ll want to ensure you understand your contract’s ins and outs thoroughly.
At the end of the meeting, you can also ask them directly for references from other property owners and follow up on them to get a sense of the company’s level of service.
Meeting with potential property management companies can better understand the company and help you make an informed decision.
Consider the Fees
The next thing you should do is consider the fees they will charge. Property management fees vary widely, so understand precisely the services you’ll pay for and how much. For example, some companies charge a flat price, while others charge a percentage of the monthly rent.
Companies usually don’t have prices and fees advertised on their website, meaning you’ll have to ask about them in the initial call. Don’t be intimidated though! They do this all the time and will be happy to share their pricing with you.
Here are some questions you should make sure you get the answers to before you even think about signing any contracts:
- What services are included? What type of property management and upkeep services are included in the fee? Tenant screening, rent collection, maintenance and repairs, and financial reporting?
- How are the fees calculated? Is it a flat rate or a percentage of the rent?
- Are there any additional fees? Do they charge for additional services, or vacated properties? Some property management companies may charge additional fees for advertising and leasing vacant units, so be sure to ask.
- Can the fees be negotiated? The property management company may be willing to negotiate the prices, and the worst that can happen is that they say no, so be sure to ask if there is room for negotiation before they decide on a price for you.
Learning the fees inside and out will help you make an informed decision, and choose a property management company that fits your budget and situation.
While it’s important to consider the cost, choose a company that provides high-quality services and will effectively manage your properties as well. That brings us to our next point: Meet with your top picks.
Review the Contract
Before signing on with a property management company, review the contract carefully to ensure you understand all of the terms and that you’re comfortable with the level of service offered. Here are some things to consider when reviewing the contract:
- Legal review: Have a lawyer review the contract and legal documents to ensure that it’s in your best interest and that all necessary legal protections are in place. It’s always a great idea to do this, but it’s especially important when you are dealing with expensive, long-term contracts with property management companies.
- Termination clauses: Understand the terms for terminating the contract, including any notice requirements and fees.
- Services included: Ensure you understand precisely what services are included in the contract, such as tenant screening, rent collection, maintenance and repairs, and financial reporting.
- Fees: Review the fee structure and ensure you understand how the costs are calculated and what they cover.
- Insurance and liability: Ensure the property management company has adequate insurance coverage and understands what is covered in the event of a loss or damage to the property.
- Dispute resolution: Review the dispute resolution process, such as mediation or arbitration.
By carefully reviewing the contract, you can ensure you’re comfortable with the terms and that the property management company will meet all of your needs.
Hiring a property management company is an excellent way to take the stress out of managing your properties, especially if you have multiple units or properties in different locations. When hiring a property management company, determine your needs, research potential companies, consider the fees, meet with likely companies, and review the contract. By following these steps, you can find a property management company that fits your needs and will effectively manage your properties.
