Here are a few things to remember when choosing a leasing and property management company:
1) Experience matters : Experience matters when choosing a leasing and property management company. Property management, while it may seem easy and straight forward is actually a pretty difficult industry. Many circumstances and problems occur with different properties that only an experienced manager can catch and or deal with. There are many legal ramifications also involved and a good property manager must be familiar with legalities issues and knowledgeable in handling any issues that arise
2) Location served; are they in my area?: Many management companies are constantly advertising and looking for perspective clients in areas they do not typically serve. A company that specializes in the area in which a property is located is most likely going to be the best bet because that manager is familiar with the local market, but more importantly, have relationships with local vendors and should be able to get better pricing on repairs and maintenance. Proximity to the property is also important so that a manager can keep a good watch on the property.
3) When and how are owner distributions made?: This is a very important factor that is often overlooked when choosing a management company. Typically rent is collected during the first 5 days of each month and owner disbursements should be made soon their after. Most property owners are using rental income to fund mortgage and tax payments so prompt payment is a necessity. It is good to know exactly when owner distributions are made. Will the management company be sending this by “snail mail” or do they offer a direct deposit solution? Any good management company should offer a direct deposit option, often times for a small fee. For a property owner this means that payment should be expected the same day or within 24 hours after the transaction is made.
4) In house maintenance vs. independent contractors?: Another important question to ask is, “who handles and performs maintenance on the properties you manage?”. There is not one right or wrong answer here but it is important to know what to expect. In house maintenance staff are typically paid as a salaried employee and this means that they are being paid full time no matter if they are working on a specific property or not. For a property owner this could lead to excessive maintenance or repairs during slow months to “fill” employee time. However most companies that hire in house maintenance personnel can have work performed much cheaper than an independent contractor. Independent contractors are paid per job and thus cost is typically higher. However, when a company uses independent contractors you can be sure that each issue that comes up is handled by a specialist. For example, if your a/c goes out, the property management company should be calling an HVAC certified company rather than a “handy man”.
5) Up charge on maintenance: Property owners should be careful and weary of any company that “up charges” maintenance or repairs. In a situation like this the management company is being incentivized to perform maintenance and repairs and thus a conflict of interest is presented. Most property management companies do charge for this, however I strongly encourage any property owner to work with a company that does not. If a company “up charges” maintenance and repairs, what is the monthly management fee for? Property owners should also be aware of any charges associated with in house personnel performing maintenance, repairs, or any additional services beyond the normal scope of a property management contract. Sneaky property management companies will hit property owners with additional fees if one is not careful.
The above mentioned tips will help any property owner effectively choose the right property management company. Knowing what to expect and the questions to ask will allow any owner to make an educated decision that will maximize their return on investment.