As a real estate investor with multiple properties, you may be acting as a landlord managing your properties and keeping up with the day-to-day activities. It can become overwhelming as you acquire additional properties and your task list grows. To offset some of these burdensome tasks, you may consider hiring a property management company to manage and take some of the everyday landlord responsibilities off your shoulders. But, you may be asking yourself, where do I begin? Here are a few tips that can help you make an educated decision about hiring the right property management company.
Tip 1. Ask Yourself If You Need a Property Management Company
Begin by weighing out your options and determining whether hiring a property management company is an ideal situation for you. If you are looking to relieve the duty of being a landlord and managing your properties so you can focus on other things, then hiring a property management company may be right for you. Be sure to weigh the pros and cons, including costs versus time saved, etc. so you feel comfortable with your decision.
Tip 2. Do Your Homework
Do your research when it comes down to selecting a reputable property management company. Consider asking friends and colleagues for referrals. You can search online for real estate property management websites and read comments and reviews left by other individuals that have worked with the company. Two reliable sites to consider are the Institute of Real Estate Management (IREM) and the National Association of Residential Property Managers (NARPM) Both sites provide a wealth of resources to help you make a smart decision.
Once you narrow it down to two or three property management companies, consider setting up interviews with them over the phone or in person to ensure you feel comfortable with their services, fees, and their ability to properly manage your real estate portfolio.
Related reading: How to Avoid Underinsuring Your Investment Properties
Tip 3. Don’t Shy Away from Asking the Property Management Company About Their Operation Methods
You are the client in this situation and you should be able to ask anything you want when it comes to operations. Ask important questions, such as:
How are rental rates determined for each property?
Is there a maintenance repair tracking system in place so all maintenance requests are answered promptly?
How often do they inspect each property?
How thorough is their tenant screening process?
Am I assigned one Property Manager to manage all my properties?
Will I receive progress reports on my properties being managed?
These are just a few questions to start conversations with the company you select. Don’t be afraid to be upfront with your selected property management company because after all, you’re paying a fee for their services and you want to know that your properties will be managed efficiently.
Tip 4. Review Your Contract Before You Sign
When you decide on a property management company, be sure to review the fine print within your contract thoroughly and:
Pay close attention to the duration of the contract. Most are one- or two-year terms.
Review the duties the property management company will perform and get clarity on what they won't do.
Review the guidelines for yourself and the property management company to terminate the contract if necessary and what you can expect if this occurs.
It’s important to understand your contract and the expectations set forth by the property management company. Ask questions and be sure you understand that you’re signing a legally binding contract.
We hope these tips are helpful for finding a property management company that fits your needs and beneficial when making your decision. For additional information on the rental industry, check out our rental trends report.