Investing in rental property can be a big decision, or you might already be a seasoned pro. Either way, there are many factors to consider: location, price, condition, etc.
One of the biggest decisions, however, can be selecting a property management company. There are many situations owners will encounter and challenges they will face in regard to their rental property, and the right property manager will be there to assist all throughout.
So how do you know what company is the right company for you, and for your investment? Some key questions will help you make the right choice. If you’re in the market, give us a call at 816-343-4520.
When choosing a management company, start off with a little bit of basic background information.
How long has your company been in business? How many staff members do you have and what are their job functions? What professional organizations do you belong to or participate in? How many units do you manage, and where?
An established company will know what they’re doing and how to run their business effectively. They will also have a good support staff who specialize in the wide range of responsibilities required of such a company, and the business or individual employees might belong to professional organizations.
If they already manage a diverse portfolio of properties, you can find out if any of them are in similar neighborhoods to your own. They will likely have some properties that would rent for a similar price as yours, and you can ask what factors are accounted for in setting that price.
Feel free to ask about other industry- or company-specific rules, regulations or policies. You can also ask for references if you want to gain perspective from other clients versus the company itself.
PROPERTY MANAGEMENT FEES
There will, of course, be costs as associated with managing your rental. Find out how those will affect your profit margin.
What are your leasing fees and do they include any marketing costs? What are the management fees when the property is being rented? Are there any miscellaneous fees I could be charged for the management of my property?
Learn the final cost of doing business. The company will have to account for compensating the leasing agents who show your properties, the managers who sign your leases and the crews who maintain the homes, and you will want to account for those costs in setting your rent prices.
PROPERTY MANAGEMENT SERVICES
Not all property management companies will offer every service you or your tenants require during your tenure as a rental owner. Your portion of the job will be easier if you seek out a company that handles as much as possible in house.
What are the various services that you offer to your clients? Do you offer direct deposit for your owners? How do you collect rent from tenants? Do you conduct property inspections and, if you do, what charge is associated with them? What steps do you take to market properties?
You want to make sure that you find a property management company that can market, lease, manage, and sell your property. It is also important to make sure they can provide top-notch maintenance, conduct inspections, and administer in-depth background checks. You’re in an even better spot if they provide services to you as an owner, including statements, renter guarantees, etc
KEY SUCCESS STATISTICS
The numbers don’t lie! Asking for a few company stats can give you a good summary of multiple areas involved in management.
What percentage of your rentals are usually vacant? How long are your properties typically vacant? What percentage of tenants renew their leases? What percentage of tenants do you need to evict? What percentage of the billed rent is paid to owners by the last day of the month? What percentage of the security deposit is usually refunded to tenants?
These statistics can help assure you that the property management company you select is thoroughly marketing your property and appropriately screening tenants. The vacancy rate should never be above 4 or 5 percent, and the vacancy length should not be overly long. You should also look for low eviction rates and a lease renewal rate above 80 percent. Rents collected on time and in full mean fewer evictions, less vacancy and better tenants. Tenants who renew are steady cash flow for you, and those who receive back the largest portion of their deposits when they do move on took good care of your home.
In case all the questions you have up front aren’t enough, you’ll certainly have questions once you sign on with a property manager. Find out how you, the management company, and tenants will interact once the ink dries.
How many property managers will I interact with and how often? How do your tenants contact you? How quick is your average response time to owners and tenants?
Determine the type of interactions you will have with a property manager on a regular basis and what kind of information they will send to you monthly, quarterly, annually, etc. Managers should be communicating effectively with both their owners and tenants. Tenants will have questions and concerns too, and as the owner, you will want to be sure those issues are handled in a timely manner.
Investing in rental property is quite literally inviting a stranger into YOUR home. Be sure your management company is placing good tenants and handling appropriately handling any issues that might come up in regard to them.
What are your income requirements for tenants? Is there a grace period for tenants to pay their rent? What control do I have over the tenant lease agreement? Do you require tenants to have renter’s insurance?
Successful property managers make sure prospective tenants make enough income to pay the rent, for the good of both the tenant and the owner. They will also keep rental collection timelines tight and ensure that tenants adhere to the clauses of their leases. You should have some input in this lease agreement but also feel confident that the company’s standard lease would cover you well.
If it ain’t broke, don’t fix it … But what if it does break? Know before an emergency how maintenance issues will be addressed.
Is there a maintenance reserve requirement? How are maintenance requests handled? How do you go about notifying me if there is a cost for maintenance?
Having a reserve maintenance fund helps property managers tackle issues for tenants that need to be addressed immediately, but you shouldn’t need to put so much in reserve that you wouldn’t have to provide approval if the costs start piling up. You wouldn’t want to receive large maintenance bills without a conversation first. Make sure maintenance policies keep you in the loop while also taking care of your tenants.
A good property management company will have its finger on the pulse of the industry and their market, which can help you make the best of your investment going forward.
How much advice can you give me to help with growing my property portfolio? What market updates and education can you offer?
Property investments can be very lucrative, and it is helpful to have a property manager who will help you grow. A good management company can help you with anything from buying your first property to finding additional ones in up-and-coming neighborhoods.
Because there’s no such thing as a stupid question … especially when it comes to business. Some additional questions you may want to consider:
-What software do you use to help you manage properties effectively?
-What steps do you take to be “available” to your owners?
-In your opinion, what should a property look like when it is ready for tenants?
-Should we put a rental property on the market before it is ready for tenants?
-Do you employ bilingual or multilingual employees?
For more complete answers to these and other questions, please visit http://firstname.lastname@example.org&utm_source=Investor+Network&utm_campaign=00e6168af0-83_Questions_to_Ask_Before_Hiring_a_Manager&utm_medium=email&utm_term=0_9a73d40f82-00e6168af0-399273417 to read this post in full.