Questions to Ask a Property Management Company

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

out_of_lease-300x189Their 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!

Myths About Hiring Property Management Companies

Posted by Teresa on October 5, 2009 under Landlord Tips | icon: commentBe the First to Comment

shaking hands on tenant screening blogSome landlords get into the rental property business as a way to earn passive income. That is, money that somehow makes itself with little or no effort on their part. In reality, running an income property business is like any other—it takes work and effort to make money.

Whether or not to hire a property management company is a decision most landlords must make at some point—especially if the number of units owned increases to more than you can handle yourself. However, there are a few myths around what it means to hire a property management company:

Hiring a PM company means I won’t have to do anything but count money. Not true. You need to be involved if you want to maintain good tenants and a positive cash flow. The PM company might be managing your properties, but you need to manage the property manager.

Hiring a PM company means all my problems become someone else’s. You own the property, so you need to stay on top of your business, even if you have a manager. Following up on vacancies, repairs, and lease enforcement can take as much of your time as managing property yourself.

Property management companies are all the same. False. Educate yourself and interview property managers to find the one that is the best fit for you. It’s important they know the local market, local laws, and what you how you want your properties run.

Property management companies are good at evictions. Not all of them are! We’ve heard stories about weak managers who did not start eviction proceedings as quickly as they should have—and made costly mistakes, too.

Property management companies will care about my properties as much as I do. That’s possible, but not likely. If you are a landlord who needs a property management company, do your research, take your time, and state your expectations clearly. Ask questions and interview several companies before you hire one.