Are you thinking about handing your properties over to a property management company? This can help you maintain a high occupancy rate, since potential residents will recognize high profile real estate property management names while combing through real estate listings. But, it can also backfire if you don’t choose carefully. Top property management companies are a lot like retail chains: able to exercise quality control over a certain number of outlets, but once they exceed that amount it becomes challenging to enforce that same level of quality. Some of the bigger coffee chains are good examples: what was once an excellent experience is now mediocre, in part because the company is spread too thin.
Basically, they’ll all tell you what you want to hear, so how do you select a residential property management company that’s going to deliver? Here are some basic guidelines.
Make sure the manager a/o management firm is properly licensed by the state they are operating out of.
The company really ought to be locally based (or regionally, at least), which means a better understanding of the local market (as it fluctuates, changes) and physical availability to be on site with regularity. Long distance management isn’t nearly as effective, even though you may notice some management companies with real estate listings in multiple cities.
Good property management isn’t just about preserving what you have, it’s about sustaining it and improving it to meet the needs of the market. Your ideal candidate should have a game-plan for the future.
Make sure that the property in question is well aligned with the management’s experience. Many property management groups attempt to be too many things to too many people, when really their expertise is relevant to something more specific. See if you can tell what their comfort zone is and if it aligns with your property.
This is a little tricky, because what you will find is that every management company has strengths and weaknesses. But you should still be able to get a picture from contacting a trio of either recent or current clients. If the company is slow to provide them, that should tell you something right away.
Customer service is the name of the game, but not just for your tenants — for you as well. Be sure you get a returned phone call within three business days and that you feel as if you’ve been treated with the proper amount of courtesy and respect. If they can’t muster it for you, they probably can’t for tenants and vendors either.
Are there gaps in the timetable between rent collected and disbursed to you? Is the company’s record keeping tight and efficient? What percentage of rent are they looking for, and what exactly are you getting for it? Make sure there are no “devils in the details.”
Property management is a tough business, in part because it’s intensive and requires an unusual amount of skills: skills with people, skills with numbers, moderation skills, the ability to make tough decisions about when to behave compassionately and when to draw the line, and on. It may seem like a lot of steps are in the process, but the last thing you want is your property going to pot while bad management puts a negative spin on it. A bad property management turn can have people skipping over your real estate listings for years to come.
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