Rental Property Management: Ask These Before You Hire
Whether you own commercial or residential properties, real estate investment is a huge responsibility. Does this mean you have to hire a rental property management? Yes, because doing it all by yourself is the surest way to make your real estate investment experience a bitter one. You also have more time to find the next deal when there is someone taking care of the details for you.
Hire a good property manager, but first ask the following questions:
- How much is the fee?
Fees vary around the country from as low as 4% of gross rents for larger buildings, to as high as 12% for single family homes. Be sure the fee is clearly stated and understood.
- What other properties do they manage?
It is best if they handle rental properties that are similar to yours. It is also helpful to drive by their other properties to see how they are maintained.
- Who will actually handle your property?
It is best if one person handles your building all the time. They should also have some experience. Get their name. What costs extra? Is it extra for showings? Do evictions cost extra (beyond the legal fees)? Any other extras?
- How is the fee collected and when? Will you be billed, or will it be deducted from your account directly? Monthly? Quarterly?
Property managers collect fees for services to keep your property occupied by a reliable tenant and to handle the dirty work, like late night phone calls, maintenance management, hunting down rent payments, or dealing with an eviction process. Owners can decide to work with a property management company just for leasing which usually cost 75-100% of the first month’s rent and are sometimes referred to as placement fees or for regular monthly management, or both.
- What type of advertising? How do they advertise the units and what does it typically cost you?
Your property management company should have a system that includes a proactive marketing strategy. Its marketing should be much more than a “for rent” sign on the street corner. They should incorporate a mix of print, broadcast, internet and word-of-mouth promotions to keep your properties rented and generating cash.
- Cost and time to prepare units? What is the typical cleaning fee on a vacancy, and how long will it normally be before it’s rented out again?
Cleaning is especially important if you are doing an apartment turnover, which means there was a previous tenant living in the unit. Your property manager will want to make sure the unit is thoroughly cleaned before it is rented out again.
- Hours of operation? What are their business hours, and who takes weekend calls?
Answering phone calls from tenants is part of the job of property managers. Although property management isn’t a nine-to-five job, no one should also expect it to work 24/7. Managers should be clear with residents regarding discretion on what is urgent and what can wait. In a real emergency situation, every tenant should be able to reach a management team member.
- Accounting? What reports do they send? How often? How are accounts set up?
A good property management company should be able to provide property owners with regular updates on finances, rental rates, marketing and maintenance of the property. Property owners should expect to receive this information on a monthly or quarterly basis to properly protect their investment.
There are probably other questions you’ll have as well, based on your particular needs and the particular property. Ask everything up front, and you’ll have fewer misunderstandings. With good rental property management, real estate investing is a lot less stressful.
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