One major concern for those owning a rental property is being unable to monitor what is going on at their property. This is especially difficult if you own multiple rental properties, live out of town, or simply are too busy. Some tenants may take advantage if you are not able to effectively monitor your rental property. To avoid this problem, you can choose to hire a property management company. Being able to hire a professional property manager also makes it possible for investors to have passive income investments in real estate.
What does a property management company do? A management company will oversee the current conditions and operations of your rental property. They will be in charge of functions such as screening of tenants, rent collection, and handling tenant issues. However, not all property management companies are the same. If you do decide to hire a property management company, you first have to interview them. Even if you get a referral from other real estate investors, you still have to do your due diligence to see if they will be a good fit.
Here are 12 essential questions to ask before hiring a property management company.
1. Is your property management company licensed?
Ensure that the property management company that you hire has the right certifications. Hiring an unlicensed management company can come back and haunt you in case of any legal matters. Beware of property managers who lack any sort of state licenses or certifications allowing them to be in the business. There are many professional organizations that offer certification classes and tests in property management and your company/manager of choice should have gone through them.
2. What services do you offer to your clients?
Property management companies are usually different. Not all offer the same services. Ensure that the property management company you want to hire offers a full suite of services that will meet your needs. A good management company should be able to market, rent out, conduct inspections, maintain, and even sell your rental property when the time comes.
3. How long have you been in the business of managing rentals?
Using a property management company with a long track record is key. The more experienced the management company is, the better they will be at handling different situations. If the company has yet to manage any property, what is the chance that it will effectively manage yours? Hiring a company that is not established is risking your high-value asset.
4. Will you outsource your duties?
There are some management companies that outsource their duties to other people. This can lead to a long chain of people that makes it difficult for you to supervise. Outsourcing duties can also result in fraud. It is important for real estate investors to state in their property management agreement whether they allow subcontracting or outsourcing of any duties or not.
5. Are you available full time or part time?
If you want a rental property management company that will be available around the clock, a full-time applicant will be the best for the job. You need to know the amount of time that your rental property will require before you hire a management company.
6. How many rental properties do you currently manage?
Property managers usually have to manage many activities. The number of rental properties a company manages will help you to gauge its size and expertise. However, ensure that the company isn’t overwhelmed depending on the size of their staff. If the company manages numerous investment properties, will it be able to dedicate enough time to your property? If a firm is managing very few rental units, it may mean that they are inexperienced. They may have also lost clients due to poor service.
7. Which types of rental properties do you manage?
Ensure you find a management company that is within your market niche. It should be able to comfortably manage the types of rental properties you own or consider acquiring. For instance, not all management companies have experience and skill in managing commercial or multi-family buildings. Some only manage single-family rentals.
8. What are your property management fees?
When it comes to choosing a management company, property management company fees are very critical. In most cases, rental property management fees will depend on the rental income. However, there may be some other charges depending on services offered. The property manager should clearly outline your fee structure. However, be cautious of unusually low fees. Provision of quality property management isn’t usually cheap. Some companies charge less than average fees but strip down their service offerings. Also, make sure that there are no hidden fees that could eat into your rental income!
9. How do you screen potential tenants?
Finding tenants for your rental properties is critical. Even though it is impossible to find perfect tenants, there are steps that can be taken to secure good tenants. Ask the management company if they have solid criteria for screening tenants before approving them. This may include a background check, a credit check, eviction report, employment history, and previous history of rent payments.
10. How do you market the rental properties you manage?
Marketing a rental property will greatly influence its success. A good property manager should be advertising properties using several different channels. Avoid a property management company that is just placing adverts on one channel and hoping for the best.
11. Can you provide any references?
A property management company should have no issues in providing a real estate investor with references before striking an agreement. You should be able to speak to other people who the management company has worked with. They could be previous clients, real estate agents, business professionals, attorneys, mortgage brokers, contractors, etc. Ensure you follow up on all references provided and ask them both the good and bad sides of working with the company.
12. What property management technology do you use?
You should inquire about the different property management technologies they are using. Use of property management technology helps to make the tenant experience easier. A good example is the use of online payment systems. A good property management company is always learning and applying new technology.
For a first-time landlord, hiring a good management company can greatly influence your success. The company will help you manage the day-to-day obligations of your rental properties and give you peace of mind. However, to choose the right property management company for your rental portfolio, you will have to do a thorough interview. You need to know the right questions to ask a property management company before hiring. This will help you weed out the firms that lack the necessary qualifications, skills, and experience.
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