Hiring Property Management – Frequently Asked Questions
Hiring the right Property Management Company can be one of the most important decisions you make with your investment property. The property management company will have a huge effect on your property’s performance and your piece of mind. The right company will maximize your property’s potential and give you the freedom to focus on growing your business, not working in it.
There are several frequently asked questions that you should consider when hiring a property management company. Here are some of the more common questions and answers for your consideration.
How much will it cost?
Fees can vary across the nation, property type, size and class. Generally property management fees range from 4% to 12% of income collected. Make sure you know up front how much it will cost and that all fees are included in the contract up front. Some companies will offer complete packages while some will charge al-la-cart for their services.
What does the property management fee include?
It can depend on each company. Prior to making a final decision, be sure you know exactly they are offering and make sure you compare “apples to apples” when comparing different companies to make sure they meet your needs. Full-service companies will provide accounting and financial reporting, repairs and maintenance, advertising and marketing, maintain legal and tax compliance, rent collection and more.
Who will handle the property?
Property management companies will pair their property managers with different properties. Make sure you meet the specific person who will be managing your property and that you are comfortable with them. The on-site property manager can make or break your property if left alone and without constant monitoring from the property management company.
What property management experience do they have?
Has the property management company managed similar properties to yours. If they have managed single family homes they may not be appropriate on larger commercial properties and vice versa. Make sure you ask about their experience with your type of investment property.
Are their hidden costs?
Some companies will charge an extra fee for items such as showings, maintenance or evictions. Ask about this upfront to avoid any surprises down the road.
What is the process for fee collection?
Find out how you will be billed for their property management services. Property Management Company’s can bill monthly, quarterly, or yearly.
What do they do for advertising and marketing?
Advertising and marketing is essential to presenting your property in the best possible light and attractive quality tenants. How does their current advertising look? What is their strategy and plan for promoting your business and what are the fees associated with it? Some property management companies can even provide websites for your property.
What are the estimates for preparing units?
A property management company should be able to provide you with typical expenses for cleaning, unit repairs, painting, flooring, and getting a unit ready to lease again. Make sure you understand these costs up front and budget accordingly.
What procedures will require owner approval?
Each owner is different. Make sure you are on the same page with your property management company on how much they are allowed to spend on repairs or other items before requiring a separate approval from ownership.
What kind of reporting do they do?
Keeping owners informed and up to date on the performance of the property is essential to good decision making and financial controls. Make sure your property management company can provide detailed and complete reporting on a monthly, quarterly, and annual basis.
What are their hours of operation?
Find out what their business hours are on weekdays, weekends, and holidays. If no one is in the office, how would you or a tenant get a hold of them?
What type of accounting/property management system do they use?
Inquire as to what reports they’ll send, how often and by what means. Make sure their software programs are compatible with yours, if they’ll be sending them electronically. It’s imperative to have impeccable systems for financial tracking, equity growth, and cash flow.
Do they manage other properties?
Many property management professionals handle multiple properties for various landlords/owners at the same time. If this is the case, ensure that the buildings they manage are similar to yours. Ask how they plan to split the time between properties.
What size and type of properties do they manage?
Not all property management companies are comfortable and effective at managing all sizes and types of investment properties. Each size and type of property has unique challenges so be sure you are comfortable with your property management companies plan for managing your specific property. If it isn’t being managed effectively be sure to make changes quickly to right the ship before you have a major problem.