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Owners with many properties but little time to manage them will often hire a company to take on this workload. Maybe you own assets in California, but live in New York (or even China) – own a large building with dozens of units and find yourself overwhelmed with the number of management tasks.
There are many reasons to hire a property management company, but there’s no reason to end up with a company that doesn’t meet your standards. And trust me, they’re out there, and if you don’t stay frosty – aware of the difference between good and bad – it’s going to get ugly for you and your business fast. This Questions who you hire, because managing a property is about more than identifying the right tenants and collecting rent.
You will meet many good candidates, but only a few will be great. How to find them to protect and maintain your investment.
Search as a tenant
Put yourself in the shoes of the people who will pay to live in your property. Are you convinced by the marketing methods and content that a potential property management company employs for the properties they manage? Do these places look attractive and well maintained? Does marketing speak to you in a meaningful way?
The bottom line is: would you consider renting one of their properties? If not, what discourages you in their strategies? These are the first questions you need to answer, because future tenants will do the same when they decide to rent from you or from the neighbor.
Related: Third-party property management isn’t as easy as it sounds
Like any industry, real estate rental and leasing comes with a full range of laws, restrictions, and protocols that can derail your business if not in compliance. The right management company will have knowledge and expertise of all the laws and other aspects governing the housing industry.
Also keep in mind that residential and commercial properties are very different; some companies specialize in one rather than the other, and you should choose one that has experience handling the types you have. Also, ask about each candidate’s background. Does it handle only certain types of properties or multiple types? (A specialized approach is often better than a jack-of-all-trades.)
Good relations with tenants
Empty rental properties don’t generate revenue: tenants do, and you want to make sure they stay for the long haul. You’d be surprised how easily an inexperienced property management company can get in the way of that goal.
A healthy working relationship between the management company and the tenants is a great way to generate maximum and regular income. Therefore, it is mandatory that you speak to some of the tenants who live/work in properties managed by your potential business. You want honest and comprehensive answers about the level of work performed, and tenants will usually give you that unequivocally (especially disgruntled ones). If you like what you hear, you can be sure the candidate will bring a similar level of care and expertise to your property.
Related: Getting your feet wet in the rental real estate sector
An eye on tomorrow
The companies you consider may all have great track records, great reviews, and enthusiastic tenants and landlords extolling their virtues, but which remain stuck in the past, as opposed to the efficiency of 21sttechnology of the century? The simplest of these innovations, of course, is the ability to pay rent online. Gone are the days of checks (or cashier’s checks) when cashing on the first of the month.
There are many good property management software options on the market, so be sure to ask which candidates prefer. Their answers can go a long way in ensuring a healthy and lucrative working relationship.
That something special
Ultimately, most applicants will provide a similar menu of services. If you’ve done your due diligence, the finalists will be reliable, dedicated and experienced, so how do you elevate one above the other? The answer is simple: what other can a candidate propose? Is a business providing a service or handling a task that others don’t or can’t — is it able to take on as many tasks as possible while providing a superior level of service?
Related: The real estate game is changing rapidly. Are you ready to win?
One last thought
Once you have decided on the company you want to hire, carefully review the agreement it presents. Make sure it covers all critical points in full, with a detailed description outlining the services provided, the fees and costs associated with those services, the length of the contract, and your responsibilities.
It’s this last factor that trips up a lot of owners, especially first-timers. This is where the rift between manager and owner lies, and more often than not, important things slip through – details that go unnoticed and end up hurting you and your business. So, delineate in detail the tasks and responsibilities that the management company is supposed to perform and those that fall to you as the owner of the property. Check these clauses to make sure you are not supposed to undertake any unwanted tasks. Essentially, apply the same level of due diligence on the deal that you did to find the leadership contestant.