Managing your own rental properties requires your prompt attention to details, from sourcing tenants up to retaining them. It is a time-consuming job and usually you end up sacrificing your own time that could have been used for family bonding, career fulfillment or other profitable engagements. This is one of the major drawbacks when you manage it personally.
That’s why the majority of property owners don’t want to be directly involved in the day-to-day aspects of their property. They prefer to delegate those responsibilities to companies that provide the type of service they require. Finding the right person to manage your investment is a big challenge, so it is imperative to have knowledge in hiring a reliable property manager before settling into it. Acquiring their services can help you sleep well at night and leaving you to enjoy a stress-free life. A Property Manager will help you add significant value to your investment portfolio but the return on these depends on both the physical commitments as well as timely financial monitoring of the property.
Here are 10 tips to consider when finding a Property Manager:
1. A Property Manager who own a property themselves.
Ask the Property Manager if they own a property themselves. In this way, you can assess that your property will be treated as their own. In general, a Property Manager who owns a property themselves will have a better attitude towards landlords but there’s always an exception to it. However, no one can understand you better if someone is not in the same field. It is an advantage for a Property Manager who has experienced being a landlord because they will definitely know all aspects in managing your property.
2. Consider the number of properties they have under management.
Ask how many properties and area of coverage a Property Manager managed. This will help you decide if this particular Property Manager can handle your property. Generally, the ratio of Property Manager to properties managed is 1:100. However, consider also the quality of services they provide. If possible, ask for referrals or take a look at some of their currently managed properties and you will be able to see if they are still in good condition.
3. Hire a licensed Property Manager.
When looking for a Property Manager, choose the one who has a license to transact in rental management business. This is to give yourself an assurance that you are not dealing into scams and avoid the chances of lawsuits. A licensed property manager will have a state-regulated procedure in compliance with housing regulations and property laws.
4. Ask about their management fees.
The rates of management fees varies based on the level of service provided, and sometimes requires additional fees for leasing, renewals or project management. However, mostly fees range from 8 - 10% of the monthly rate. Remember to look after the people who are looking after you, so keep in mind that a reasonable management fee will make your rental manager happy and definitely will make you more money.
5. Examine the term and conditions in handling repairs and maintenance.
Be clear if they set up a maintenance reserve from your monthly rental income to cover minor expenses. For example, you give them the authority to spend up to $200 without contacting you but all expenses must be covered with acceptable receipts. Anything over that amount, you must be informed and ask approval before the repair is made.
6. Check if there is a regular schedule for property inspections.
Ask if the Property Manager has a specific schedule regarding checking your property inside and out. It is part of the process to assess the condition of the house and a quarterly inspection should be done. You should receive a copy of the inspection report after the inspection has been completed.
7. Be clear on the timeframe and procedure for accounting of funds.
Some property management companies pay landlords either weekly or monthly. It is important to know when the schedule of payments are on rental income to plan ahead in settling off your mortgages loans, family and personal expenses. This is also important to discuss earlier for you to project your cash flow and not ending up with a negative cashflow.
8. A thorough process of tenant screening.
This stage is the most important duty the Property Manager will do. This includes background checks and credit history report. Using these tools to screen the best tenant candidates should be implemented for every applicant.
9. Make sure your Property Manager is accessible.
Communication is very important especially if you are away, so it is important that the Property Manager should be available at your most convenient time. Ask about what tools communication they use if there are some important issues or problems to discuss. Alternative contact numbers or person is also helpful to get a prompt reply whenever the Property Manager is not around.
10. Review all property management contracts including termination clause.
Validate the contents of the management contract and see to it that all the above points are addressed to your satisfaction. If possible, ask someone who knows more about contracts just to make sure the company meet your requirements. Recommend a termination clause so if either party may withdraw from the contract, there will be no conflicts. Some companies have no lock-in contracts, so it is better to understand it as well. The key point is that you should be aware of problematic issues and confident the contract addresses those issues with solutions.
Consider all the points above when looking a Property Manager because their job should not limit only to collecting rent but how they can add significant value to your investments.
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