Hiring a property management company comes with many advantages. The company you hire is responsible for supporting your property and making decisions on your behalf. That being said, it's critical that you have all the necessary tools and information when choosing a property management company.
1- Understanding Property Management Fees.
- As you begin interviewing different property management companies, take note of the types of services each firm offers.
- Compare the prices offered by each firm, but don't hire a firm solely based on their low price points. A lower price may suggest a lack of quality in their services.
- Make sure the services offered by the property management company meet your needs.
- To better understand the cost given to you by a prospective firm, ask them to break down the fees.
- Management fees have a typical range of 4-12% from rent every month. The management fee depends on the number of properties or units they will be managing. Additionally, the location of your property or properties is likely to dictate the cost.
- Vacancy fees are uncommon, but some property management companies may charge a monthly fee for a vacant unit. These charges cover expenses related to finding a new tenant for your property.
- A start-up fee is an additional cost for setting up a new account with the firm.
- The property management company may charge you for leasing fees. These costs cover the time and effort related to finding a new tenant. Inquire about the cost of the leasing fee and the conditions of these fees.
- There are several other fees to look out for when choosing a property management company. Make sure you are aware of the fees that make up the total cost. You can also negotiate with the firm to get a better rate.
2 - Handling Property Finances.
- Property management companies are responsible for managing rental income, maintenance fees, reserve funds, and more.
- The firm you hire will be making many decisions about your property's finances on your behalf. That being said, you need to trust the company you choose to hire.
- There are several details to discuss with the property management companies that you interview. For instance, how they handle monthly payments and their method of paying property owners.
- Property management companies are responsible for sending reports that provide details about collected rent, property management fees, maintenance, and more.
- Ask the firm to see a sample report to better understand what to expect every month.
- Discuss any other payments the firm will process, such as security deposits and maintenance fees.
3 - Determining Rental Rates.
- A good property management company will have a thorough understanding of setting rental rates.
- Determining the cost of rent requires a proper understanding of the local market and the average rates of other similar properties.
- The rental rate you choose can also affect the value of your property.
- Discuss with each firm how often they perform rental rate surveys. Typically, these surveys are conducted annually. If your property is often vacant or undergoing many lease renewals, it's likely time to revisit the rental rate of your property.
- In terms of dealing with tenants and issues regarding payments, it's important to find a company that can reason with the tenant and remain adamant about receiving rent payments.
- Discuss the company's policies around collecting rent payments from tenants and determine if it's the right fit for you.
4 - Maintaining Your Property.
- Property maintenance is critical, especially for increasing its value over time.
- Maintenance of your property requires the cooperation of tenants as well since any repairs should be dealt with promptly.
- Property management companies have different systems in place to allow you to track maintenance requests and repair costs.
- Discuss additional details surrounding repairs. For instance, some firms may have a maintenance team responsible for repairing the properties they manage.
- Finally, determine if the firm offers any recurring maintenance such as shovelling the snow or mowing the lawn. While these services may carry additional costs, they are beneficial for the overall maintenance of your property.
5 - Finding the Right Tenant.
- The most valuable service a property management company can offer is attracting tenants.
- Determine how each firm your interviewing advertises their rental listings. Go a step further and locate some of their current ads to see if they catch your eye.
- Discuss how long it takes on average to find tenants and fill vacancies. This should not take longer than one month.
- Presentation of your property is extremely important when it comes to showings. Find out how the property management company prepares for showings, as this is often when potential tenants decide if they want to go ahead and begin renting.
- Enticing tenants to rent for long periods of time should be a priority for the property management company.
- There are many measures put in place by companies that prioritize tenant retention. Such efforts include fast responses to tenant needs and regularly asking for their feedback.
- In terms of finding the right tenant, many companies have screening processes to ensure they choose the best tenant possible.
- Ask the firms you're interviewing about their tenant screening process and what they are searching for in an ideal tenant.
6 - Get to know the company before making a final decision.
- Ask each firm for a bit of background information, such as how long they have been operating. It's best to hire a property management company that has many years of experience.
- Discuss the types of properties they have been managing. If a firm focuses only on condominiums and you're looking to rent houses, you may want to find a firm with more experience in house rentals.
- Finally, get to know the property manager that will be managing your property. Determine how long they've been working with the firm and ask about their prior experience managing properties.
Selecting a property management company should not be rushed. Avoid making a quick decision without genuinely getting to know the company you're planning to hire. It's important to find a firm that is a good fit for both yourself and your property.