Self-Management versus Property Management
Before you look for a property manager, you need to decide if you actually need a property manager. While the basic formula of your income minus your expenses equals your profits, it’s a little too basic when deciding if you need a property management company. While it might seem black and white that the less expenses you have the more profit you’ll have, there’s other things to consider. As a property owner, there’s landlord duties you would be expected to perform that may not require a monetary expense but will always require your time.
Routine and emergency maintenance needs to be performed, especially seeing as how renters are notorious for being rough on rental properties. When there are vacancies, you will be responsible for finding a new tenant. Prospective tenants will need to make property visits for prospective showings, which means the property needs to be in its best shape, rental applications will need to be collected, tenant screenings performed and approve future tenants.
Tenant screenings can cause problems if you don’t know what you’re doing. You want to make sure you have good tenants to reduce the risk you take on. As part of the process, you should take a look at credit report, criminal history, eviction history, income verification and call references and past landlords.
There’s also rent collection to consider. What will you do if the check doesn’t come?
If this sounds like something you can handle on your own, you might not need to invest in a property management company. However, if it sounds like more of a time investment than you are able to make, you might want to consider finding a property manager.
When looking for a property management company, there’s a few things you should look for.
The best way to find a property management company is through referrals. Whoever sold you your property might have a list of good property managers that will be willing to help. When going through the list of property managers, you can check the Real Estate Commission to make sure they are licensed and the Better Business Bureau to make sure there are no complaints against them.
Having a property manager that can market your listing, lease it out, manage and interact with tenants is just as important as having a property manager that can provide high-quality maintenance, conduct important inspections and administer in-depth background checks. A property manager who can also sell your property, if you ever decide to sell, might be beneficial as well.
But, be wary of property managers who ask you to sign a contract that forces you to sell your property through them. A quality brokerage would never require you to sell with them, but would rather offer their services.
Fees and Pricing Options
Some companies offer a flat rate while others offer a rate based off rent. Some others will offer different pricing tiers. You’ll have to figure out what pricing structure will work best for you, your area and your goals.
There’s lot of different ways to collect rent now: mailing checks, online portals, bringing a check straight to the leasing office. But, it can be a red flag if your property manager doesn’t have tenants paying their rent online. For one, it can slow down how fast you get paid. Secondly, it can make it easier for tenants to miss paying the rent. Online portals allow tenants to automate their payments without the need for a checkbook.
Look at the potential property managers current rental ads, see if they are professional, compelling and free from discriminatory statements. Also look where they’re advertising. Are they advertising on a variety of platforms or are their ads limited to free sources such as Craigslist?
Drive by the properties they manage and see if the properties are clean and well cared for. If possible, speak to their tenants and find out their thoughts on the property manager. Because property management is about keeping tenants happy, it’s important to take into account the tenants opinions as well.