Questions to Ask a Property Management Company

Posted by Teresa on February 25, 2010 under Landlord Tips | Be the First to Comment

Their reasons for hiring a property management company are different for each property owner. In general, a property management company’s job is to keep your rental business trouble-free. That means they need to be knowledgeable about federal, state and local housing laws, how to best collect your rents, maintain your properties in proper working order, and ensure your tenants are keeping their end of the lease agreement.

Property management companies will also work to fill your vacancies, advertising the rental unit, interviewing and screening prospective tenants, and keeping up with all of the new tenant paperwork.

Property management companies are not free. And their fees and services can vary widely. Many landlords we know interview several companies to determine which is the best fit for their needs.

Here are some questions you might ask when interviewing property management firms:

• What does your standard service agreement include?
• What are your costs?
• How do you conduct repairs and maintenance? If the company has their own maintenance and landscaping staff, you can check out their quality before you sign anything. If they hire outsiders, inconsistencies could occur.
• What reporting can I expect? At minimum, a monthly report should be included. Some PM companies have online accounting systems that you can log into on your own to see what’s going on—just like online banking.
• What is your fee for filling a vacant unit? It’s usually either a flat fee or a percentage of the rent.
• How do you collect rent? You might prefer a company that does everything through electronic funds transfer—or you might need a service that can handle cash, money orders, or checks.
• When will I receive my money? Most PM companies will have your check or a direct deposit to you by the 10th of the month.
• Do you mark up subcontractors, materials, and supplies? You don’t want to be surprised by a bill that includes a $6.00 roll of paper towels—after you’ve already signed the contract.
• How do you handle emergencies? You might want an agreement that allows your PM company to spend up to $500 without needing your approval.
• How often will I hear from you? If you’re the type of landlord who only wants to hear from the property manager if the building is on fire, then you won’t want one who calls three times a week with questions and problems.
• What about evictions? Find out ahead of time if they offer eviction services and how much they charge.

Get a client list and call for references. Ask other landlords about unexpected expenses, unnecessary or unauthorized repair work performed, and mark ups on maintenance parts and services.

Meet the staff you’ll be dealing with to get a feel for communication styles and professional behavior.

Finally, check out the company’s insurance coverage and bonding status.

If you do hire a property management company, be absolutely sure before you sign any agreements–because you will probably be required to pay a few months of fees if you decide to cancel!

Choosing a Property Management Company

Posted by Teresa on March 26, 2009 under Landlord Tips | Be the First to Comment

If you’ve decided that property management is not for you, you’re not alone. There are thousands of successful property management companies because there is a real demand for their services. They have the expertise and experience to manage your property, plus they’re knowledgeable about all the laws affecting rental housing. They’ll handle all the bookkeeping, rent collection, and emergency issues, while dealing with tenants fairly and objectively.

There are certain disadvantages to using a professional service. First—they’re not free. If your margin between income and expenses is slim, it might not be cost-effective for you to hire a management company. Also, they might not care for your property as well as you, or be as aggressive in filling your vacancies as you would be.

Check out several property management firms before you decide on one. Have a checklist handy and ask at least these basic questions to narrow your choice:

• How will you prepare the rental unit for leasing?

• How will you advertise and show the unit? 

• Do you prescreen tenants for credit and criminal records?

• What is the rent collection procedure? What about delinquent rent?

• What do you charge? Are there additional charges?

• Will I receive monthly reports? What do they include?

• How do you handle maintenance? What about emergencies?

• Do you mark up materials and supplies?

• How do you handle tenant complaints?

• How firmly will you enforce my rules and procedures?

• Can you give me an example of your attention to detail?

Always ask for references and follow through with talking to them. A complete client list is even better; specifically check with owners of properties in your size category. Visit the property management company’s office and meet the staff. Don’t sign the contract until you are sure the company has a sound track record. Know that some management companies charge lower fees and make up the difference in repairs, by marking up supplies and labor, or by performing unnecessary repairs. 

Finally, make sure the company has adequate insurance. They should also be bonded to protect you, since they will be handling and collecting your money. 

Finding the right property manager will make a big difference in your cash flow because they take care of all the issues that affect it.  They fill the vacancies, find good, solid tenants, and perform all maintenance and accounting. Make sure you choose a property management company that is squarely on your side.