Although owning rental property is rewarding, it is not devoid of challenges. It involves handling tenant issues, maintaining the property, ensuring compliance with legal requirements as well as marketing and advertising the property. No wonder experienced property owners prefer handing over the responsibilities to qualified property management companies. These companies, however, differ in experience, structure, size, as well as the area of operation.
Therefore, if you want to hire the right property manager for your property, you must consider several important factors. Looking at the following criteria will provide crucial leads to your quest.
1. Background of the Property Management Company
Before hiring an agent, first, conduct comprehensive research about the firm. Find out for how long the company has been operating in your city, and whether it has experience in handling your type of property. Longer operating companies are conversant with the local rental market issues such as rental rates, regulations and property marketing strategies. Furthermore, firms experienced in managing your type of property guarantee you a more focused and specialized service.
2. Property Manager’s Experience
Take the time to talk with the property manager to verify how competent he or she is. The contractor should readily provide prompt, concise and reliable answers to your questions and not dance around the issues. Find out if the agent has property management license and certification. All licensed professionals subject to the guidelines and ethics of the governing authorities.
3. Engagement with the Management Company
Find out how the interaction between you and the Littleton property management company will be. For starters, who will be the contact person or PM of your property, the location of the firm, is it near or far from your property, and what are the company’s working hours. Consider enlisting a contractor with office operations near your property. Similarly, the company should be easily accessible and one that responds to tenants or your calls in quickly.
4. The Manager’s Fees
Different property management company charge different fees for their services depending on a variety of factors. While the cheapest company might seem an appealing choice, picking the said company solely from low pricing might prove disastrous. Low prices can be indicative of the quality of service or it might be an unethical effort to undercut the competition. When it comes to pricing, make an apple-to-apple comparison of what other companies in the industry charge, as well as the scope and quality of those services. Additionally, you need to identify all potential fees likely to result from the property management agreement. Such costs include management, vacancy, leasing, set-up, advertising, maintenance, eviction and lease renewal fees.
5. Rental Income Issues
As a property investor, the rental income is undoubtedly your primary concern. Therefore, you must consider how the property manager intends to handle your rental income. Find out how the property manager determines the rental rates for the property. Does he or she use current local market data, or does the manager employ the 1% rule where one percent of the total property value becomes the monthly rent? Also find out how often the agent raises the rent, (is it annually, during vacancies or lease renewals) and if the rental agreement includes contractual escalators.
Examine how the agent collects the rent, how he or she handles bounced checks, late payments, delinquent payments, as well as tenant evictions. You must also ascertain what day of the month the manager ought to send you payment, in what form, is it a check or through a direct bank deposit. The rental property management company should also furnish you with information on how the accounting is recorded.
6. Handling of Property Repairs
The appearance and condition of your property determines its attractiveness and market value. Find out how the management company addresses the issues related to repairs and maintenance. For instance, do they have in place a system for tenants to report damages, how long does it take for the repairs to take place, and who handles the maintenance and repairs? Is it the management company, their contracted agents or the tenant? Furthermore, find out if the company provides itemized statements and receipts for the repairs and maintenance work, to boost transparency. Lastly, see if the property manager has put in place preventative maintenance measures or rules regarding contractors entering the property.
7. Property Marketing and Advertising
One of the hallmarks of successful property management is the ability to attract and retain quality tenants. Determine how good they are by finding out the following;
- Where the firm advertises its rental listings,
- Their vacancy rate
- How long do they take to fill a vacancy
- How fast they respond to inquiries from potential tenants
- How they prepare the property for showings,
- What kind of tenant screening and retention programs the firm has in place.