Last Updated on November 8, 2021 by Kelvin Nielsen
Hiring a property management company can be good for your rental business. For one, it may mean a chunkier rental income due to reduced vacancies and a lower tenant turnover. Also, you may be able to earn your dollars passively while concentrating on other activities. The list of pros is endless.
However, while it’s not exactly rocket science, finding a good property management firm isn’t easy as pie. The industry is saturated with many of them and each claims to be a maestro. So, how do you tell that a company is worth the while?
Luckily for you, you don’t need to use trial and error. Here are the things to look for in a property management company.
1. Their Area of Specialization
You want to hire a property manager that has skills and experience managing your type of property. The last thing you want is to hire someone that will be looking to use your property to gain experience.
Generally speaking, property managers will be honest with you when it comes to their niche. However, be wary of real estate agents who manage properties part-time. What you want is a full-time manager who is serious about what they do.
2. Level of Expertise
You want your property managed by an experienced company. This is so because managing a property well calls for a significant amount of experience. A company that has been in business for some time has encountered several problems and mastered how to solve them.
For instance, a well-established company has probably handled an eviction before. They understand the legal processes to follow, costs involved, and anything regarding an eviction. Whereas they will have an easier time doing it, a novice manager will struggle to navigate through.
Evictions aside, an experienced management company understands the fluctuations of the industry. They know the times of the year to hike the rent and by what amount. Also, if need be, they’ll lower the rent to keep your property at par with the prevailing market conditions.
The pros of a veteran manager don’t end there. Since they have been doing this for years, they will also know the kind of tenant to attract and how to go about the process.
3. Their Rates and Fees
You don’t want a property management firm that charges an arm and a leg for their services. While great services come at a price, a reasonable rate falls between 8-12% of the gross rental income. Anything beyond this could be extortion.
Also, familiarize yourself with several types of fees property managers charge such as:
- Initial setup fee
- Monthly management fee
- Tenant placement fee
- Vacancy fee
- Maintenance fee
- Eviction fee
Before signing the contract, ask the firm how they arrived at the amount they are charging. Let them lay out the services they offer and the exact charges for each service.
4. Their Background Check Process
Good tenants are right at the top of every landlord’s wishlist. While they exist, their troublesome counterparts also do and it takes a thorough screening to sieve them out. Owing to this, let the company explain how they go about their background check before you contract them.
Broadly speaking, a good screening procedure should vet the tenant’s credit report, income details, criminal record, and renting history. Also, the property management company should tell you how they treat the information they uncover in the background check.
For instance, do they turn away tenants who have been involved in petty crimes? Is there leeway for tenants who have been priorly evicted? These are things you need to establish beforehand.
5. Their Reputation and Reviews
The kind of reputation surrounding a property management firm is a reflection of their services. If your friends and fellow investors are advising against it, there must be a good reason. It could be that the company is overcharging clients for the services they are offering. Or, it may be possible that the company has a lackluster tenant screening process.
You can also know whether a company is reputable by checking their reviews online. Yelp and Google Reviews can come in handy. If a person had a good experience with a company, they’ll leave a positive review. And they’ll leave a bad one if otherwise.
Now, if the company has bad reviews, do they make an effort to respond to them? If they do, it could be an indication that they value their clients.
6. Their Website
A good property management company should have a detailed website. This is because it’s a digital era and you probably want to find out everything about the company online. You want to see things like their management services, fees, available properties, and a contact page. In addition, they should have an educational section such as a blog or FAQ page. If these things lack, then the company could be a starter.
Also, check whether their property listings are detailed enough. A detailed listing should feature clear photos and a video tour. Besides, it should have a good description of the features and amenities of the property.
What you also want to pay attention to is where the company lists properties. Ideally, they should advertise their properties on popular sites such as Zillow and Craigslist. You can establish where they list by simply searching the apartment’s address on Google. If it pops up on a popular site, the better. Remember, if you contract them, this is where they’ll list your property, too.
Also, be on the lookout for the company’s bio and a list of team members. This is important because you need to know the people you’ll be working with beforehand.
7. Involvement with Property Manager Associations
Membership with a property manager association helps a firm become more professional and adept. An association you should be on the lookout for in particular is the National Association of Residential Property Managers (NARPM). Apart from real estate news, NARPM keeps property managers in the loop with laws regarding property management. Also, it designates property managers the title of Residential Property Manager (RPM) or Master Property Manager (MPM).
Aside from associations, you want a property manager that’s licensed. A real estate license not only signifies industry knowledge but also grants them access to the Multiple Listing Service (MLS). MLS lets property managers see multiple home listings to get a clearer picture of the market. This way, they will set the right rental prices and make adjustments accordingly.
There are several factors to consider before hiring a property management company. Do they specialize in your line of work? What are their fees? Are they experienced? Do they have a license? These are some of the things you need to establish before contracting a property manager.
Hi, I’m Kelvin Nielsen, an experienced landlord and accomplished real estate lawyer. My focus is on answering your questions about renting in the hopes of making your life as a renter or a landlord a bit easier.