Property management companies come in all shapes and sizes. It seems that many of them are a small business or a family business. If you have a large portfolio of properties or a large multi-family income property, you can attract a variety of businesses because many are paid as a percentage of rental income. If you have a single-family home or smaller rental property, it’s just not that appealing to many businesses because they won’t make much of an income and you may not get the attention you deserve. You may find better service from a smaller property management company.
How did you find them?
Check with standard sources, such as references. You can also ask:
* Local Real Estate Agencies – They may have a local property manager that they often recommend or perhaps one of the agents also manages the property.
* Check with your local Property Management Association or apartment association for a list of local businesses
* In rural areas, the State Apartment Association can be a good resource for a nearby business.
What are you looking for in a management company?
* Valid Broker License – May states require a broker license to operate a property management company. You can check with your local department of real estate to validate it and see if it has ever been revoked or suspended.
* Management Fees – Property management fees are generally a percentage of rental income. Rates may vary from company to company and you should shop around. Expect rates of 5% or more as a percentage of rental income. If you own a single-family home or duplex that has a low rental income number, you may be quoted a flat rate.
* Maintenance personnel: Does the company have its own maintenance personnel? Are they 24 x 7 for emergencies? Will they provide you with detailed excerpts and, for bigger jobs, three separate offers? Does the company charge an additional fee to the administration fee for major updates?
* Working relationship: Are they friendly and easy to communicate with staff during normal business hours? Is the office neat and clean? Do they respond in a timely manner and can they provide references or testimonials for you to reach out to? In short, do you want to work with them?
* Reporting: All property management companies should have software that provides you with clear and professional monthly statements. Accounting: When will the manager mail you your check? Can you use direct deposit? State laws generally dictate accounting rules for managers, it’s good to have that information on hand. Online Statements – Many businesses will have detailed monthly statements online available to owners. This convenience will increase transparency and save you time. EFT: Does the management company allow tenants to pay online? This would allow bad checks to be discovered sooner and that would increase your cash flow. 1099: Will the management company provide you with an IRS-1009 and a summary income statement for tax purposes?
* Reservations: most companies will ask you to leave some funds on deposit for the small needs that your property may require. This way, they won’t have to call you every time they need to send someone to fix a small item. You should ask how many reservations the company requires. Also, set a limit on how much a business can spend on your property for maintenance or repairs without contacting you for approval. Is $ 500.00 or $ 750.00 appropriate, review your comfort level before signing
* Vacancies: Do you charge a rental fee? Often times, companies charge a percentage of the rental months for the rental service of a unit. The evaluation process should include an application, a credit report, a conversation with the previous landlord, and income verification using the Self-Employed 1040 form or pay stubs. The service should include informing you of a qualified tenant and a suitable lease. We offer a lot of information on tenant selection. Familiarize yourself with the process so that you can determine for yourself that a good job is being done. You just want good tenants, evictions are expensive. Visits: Some companies will be there to show them to groups of people interested in the unit. Other companies allow potential tenants to use the keys with a small deposit. Find out how viewers can see your property and if you are comfortable with the procedures. If management company personnel show up at the unit, ask how often they will show up, especially on weekends.
* Advertising: How will you announce the vacancy? Be clear on all the costs involved and have limits or an approval system. Do they use the web? If so, they can create virtual tours or use photos. These skills should translate into faster rentals and better cash flow for you.
* Evictions: This should require an attorney and the proper legal procedure for your area. How do you charge for this? Will attorney’s fees be billed so you can see the actual cost?
* Termination of your Agreement: We like contracts that can be terminated in thirty days with written notice and without penalties. An exit plan that you like is essential.
Howard Bell for yourpropertypath.com
