Managing a property seems easy at first. But as time passes, you may find that you spend more time than you want to try to keep everything running.
This is a big reason people turn to property management companies. Reports show that 55% of landlords use management companies for their properties.
But with all the options available, you need to do your research when you hire a property management company. Below is a short guide that will help you get the best property management experience possible.
The right experience is a must for a property management company. There are countless tasks to handle — everything from tenant screening to rental property maintenance.
On top of that, not every management company offers the same services. Some providers will offer a full-service solution and handle all your needs. Others will only offer a limited subset of services and require you to take on some of the work.
Make sure you understand your needs for a management company before you start your search. Once you make your list, find a company with the right experience for the job.
Verify Licensing and Certifications
Working with a management company with the proper licenses is essential. Depending on the type of work a company does, it may need several licenses to operate.
These licenses will vary based on your location. But there are a few common ones to look for:
- Tenant screening license
- Home improvement licenses
- Property management licenses
It’s also wise to see if a management company has certification from professional management associations. There are several out there, so look into each one to see who the big players are.
Make sure you get proof of licenses and membership organizations to vet the qualifications of a company.
Consider Management Fees
The price you pay to a management company can vary greatly depending on who you choose. Some companies charge a flat monthly rate for services, while others will want a percentage of the monthly rent.
Make sure you check these percentages and fee structures when comparing property management costs. You want to understand the actual cost of a management company to avoid unexpected fees after you sign a contract.
This is especially important if a management company charges you for supplies for home repairs. You want to avoid companies that have a significant upcharge on supplies. Small fees and increases like this can hurt your income and make it hard to maximize ROI with property management.
You never know what will go wrong in the real estate space. A home can be fine for a long time, but then something happens out of nowhere that causes a lot of damage.
You can’t afford not to have insurance when this happens. And it isn’t just on you to have property insurance. The management company you hire also needs coverage.
Management companies need liability, property coverage, and other forms of insurance. Research the common insurance types associated with management services and verify the coverage a company has.
The last thing you want is to be on the hook for damages that aren’t your fault.
Check the Vacancy Right
One of the biggest priorities of a property management firm is keeping tenants in the property. They do this by providing excellent services and promptly responding to client needs.
But if a company doesn’t do much to maintain a property and address tenant concerns, the chances are good that you’ll see high tenant turnover. All you do is waste money on taxes and other expenses when this happens.
You need to find a company that has a low vacancy rate. See if you can get a few details about how much capacity a company has with its portfolio. They should ideally be full or close to full.
Read the Contract
It’s not uncommon for property owners to not read the contract when signing with a management company. They see all the service details on a website or hear it from a representative. Because of that, they believe they know all there is to know about a service.
But things aren’t always as they seem. Property management companies can slip bad terms into management contracts that put you in a bad position.
Ensure you read the service contract offered by a management company before signing up for the service. If possible, have a lawyer look through the terms to see if anything looks wrong and doesn’t match industry standards.
Get Client Feedback
It’s a mistake to take the word of a property management company that they offer an excellent service. While most companies will remain truthful about their abilities, others exaggerate their skills and provide poor service.
You must hear from previous clients to avoid falling into this trap. Check the internet to find reviews for property management companies wherever you can.
If you’re a member of any real estate groups or have industry contacts, contact them to get feedback. Real estate professionals will likely have recommendations for reputable management companies.
Hire a Property Management Company Today
You may be able to handle a single property on your own as a property owner. You don’t get many calls and can spend little time managing the job. But as time goes on and you grow your business, you may spend too much time on property management.
That’s why it makes sense to hire a property management company. The right management company can free up your time and help you give your tenants the service they deserve. Use the guide above to find a service that will handle the job correctly.
Are you interested in growing your real estate business? Head back to the blog to find more real estate guides that will help.