Hiring a property management company which has a local office in the area of your property will save you a lot of time and money.
There are many property management firms in the market, and hiring the right one can be confusing. Investigate the company by conducting research and verifying its credentials. Check if the service has a qualified manager with a real estate or broker's license. It is going to act as a liaison between you and your tenants. Hence, you would be required to hire a firm with the necessary experience and capabilities. A good company will not only understand your requirement, but will also give suggestions from time to time for providing you better assistance in managing your property. It will design plans, strategies, and implement them within the stipulated budget. Once you recruit an agency to look after your property, meet the manager in person to make him understand your expectations. Here are some factors that will help find a good property management company.
Reputation and Reviews
Do some research about various companies by looking up for them in professional directories or on the Internet. Apart from getting first-hand information about a property from your colleagues, friends, and family, there are other sources from where you can get genuine reviews. The first source which you should check for is the firm's own website. You may be able to read testimonials from satisfied customers. However, you may not find any genuine negative reviews there. Therefore, it is advisable that you visit websites of your local apartment association or BBB for getting customer reviews and referrals. In fact, BBB is one of the most credible sources as it grades the services from A to F on the basis of public opinion and complaints registered against them. You can also tap other resources, like Yelp, Google Places, Yahoo! Local Listings, etc., for getting authentic information.
Recommendations and References
Every property management company will try to paint a rosy picture about their offerings until you sign the contract. It may so happen that the service might not be as good as what was promised to you initially. As you will be entrusting them with your property, it is important that you do not make a mistake while hiring the right company for the job, and by falling prey to their smart marketing strategy. Hence, it is advisable that you speak to the existing clients of the company to verify that they walk their talk. Ask them to provide names of at least 5 customers. Call them up personally, and you will understand the pros and cons of hiring the firm right from the horse's mouth. Inquire if the managers visit the property on a frequent basis, carry out inspection, and always have a proactive approach.
Once you shortlist a few companies, call their representatives for an interview. Clear all your doubts, and try to gain maximum information from them. Understand about the number of properties they are managing currently, their experience, types of insurance they offer, criteria for selecting a tenant, etc. Inquire how they plan to manage the property throughout the year. Know about the reports that they will be sending you and their frequency. Inquire about the fee structure and charges so that you will not regret hiring an expensive agency. Choose the firm which will have answers to all your questions. It is advisable that you list out all your questions before you call them over.
Experience and Knowledge
It is important that the company which you choose has considerable years of experience in this field. Understand how long they have been into this business. You should inquire if they have experience in dealing with a number of properties. You should also check in which areas most of these properties are located in. Try to hire an established firm for your work as it is bound to perform efficiently and have better networking. It is also important that the company is well-versed with the local real estate market so that it can cater to your requirements in a better way. For example, if you need a new tenant, they will advertise for the same and ensure that the gap between letting go of the old tenant and finding a new one is minimized.
While interviewing the agency, ensure that you ask them questions about the services they offer. You must hire a company who has its own maintenance staff and does not outsource this activity. This will mean that you will not have to shell out extra for undertaking maintenance and repair work through the firm. Also, as the responsibility for this will lie solely with the company, they will provide better supervision and regular inspection of the facility. Also, ask them about the other services like managing property, eviction of tenant, leasing of property, etc., which will be a part of their contract. Hire an agency that will be affordable and offer a wide spectrum of services.
Prompt Customer Service
Ensure that the company has a prompt and supportive customer service before hiring them. Communication from their end should happen from time to time. Inquire if they will be sending you income and expenditure statements along with maintenance reports (with before and after photos, dates, duration, etc.) on a monthly or quarterly basis. The property manager should be available for you on the phone whenever you need him and should also respond to your emails immediately. The last thing you would want is to visit the property and be alarmed at the mess. Also, the responsiveness and response time of the company matter a lot. If a tenant complains about a leakage, it has to be dealt with immediately to minimize losses to the property. The staff should understand the gravity of the situation and resort to damage control initiatives immediately.
Needless to say, as you will trust them with your rent money, the company has to be reliable. It has been observed that many companies collect rent from the tenants on the first of every month, and do not transfer it to the homeowners' accounts until eight or fifteenth. They retain the money in their accounts for a long duration to reap benefits of the interest. However, as an owner, you lose out on a lot of money due to this. Hence, put the money transfer clause clearly in your agreement. Also, add points about collecting and transferring money a day prior, if the first day of a month is a public holiday or Sunday. Find an agency which values your money and is trustworthy.
An expensive property management contract does not ensure an effective work. Hence, do not hire a company that will give you an exorbitant bill and zero output. Usually, the fees range between 5 to 15% of your total rental income. Some companies may just have too many hidden fees and charges which will blow your bill out of budget. After you interview several companies, make a comparison. Draw three columns: in the first one, add your expectations; secondly, put the services offered by the companies; and in the third one, put their estimates. This way, you will be able to understand which company fares better in terms of cost, services, and benefits. However, don't let the cost factor alone dictate your choice.
Accounting and Taxation
Hire a company that offers accounting services to keep a tab on the income and expenditure of the property. You should not spend extra on hiring a CPA for the same. Also, you will have to pay the necessary taxes at the end of the year, and you will require the mandatory financial records. For this purpose, it is important that you hire a property management company that will understand and fulfill your accounting and taxation requirements.
When you will be forging an agreement with the company, it will be a two-way process. Both the parties will have their own clauses. You should be aware of the penalties in the agreement, in case you are not satisfied with the company and want to terminate them before completion of the term. Also, you must be clear about the powers you have given to the company to act on your behalf. For example, re-letting the property if it has become vacant, approval of new tenants, or eviction of a defaulting one. Also, you must decide if it is necessary for the manager to take your permission before placing an ad for a new tenant. You will also have to put the payment clause in the agreement. Also, the firm should be flexible enough to understand and accommodate your requirements.
Apart from this, ensure that the staff of the company will have cordial relations with the tenants. Try to seek an agency that has a professional approach and is proactive in managing your property. Also, issues need to be solved without wasting much time and money. Find a company that is honest, has expertise, is dedicated, and knows its work. While finding such a company is relatively easier, retaining it is not. Hence, try to be in affable terms with the agency so that you will be able to get your work done easily without any conflicts. You may also enjoy the benefits of customer loyalty after renewing the contract a few times.