Property management services are crucial for property owners who want to generate income from their real estate investments without the day-to-day responsibilities of managing tenants. The property manager serves as the middleman between you and your tenants, handling tasks like advertising vacancies, collecting rent, responding to maintenance requests, and enforcing lease terms. With so much depending on their capabilities, choosing the right property manager is an important decision.
To help you choose the right property management service, this article explores nine key factors you should consider before hiring a property management service.
Experience and Reputation of the Company
When evaluating potential property management companies, one of the most important factors to consider is their experience level in the industry. An established company that has been operating for several years will have extensive knowledge about local rental markets, pricing strategies, and compliance issues. They will have time-tested systems and processes for all aspects of property management.
Reviews from current clients can give you a good idea of their reputation for customer service and responsiveness. You can also ask for referrals from other real estate investors in your network. Choosing a reputable company with a proven track record will provide you with greater confidence in their ability to handle day-to-day operations.
Range of Services Offered
Find a full-service property management company that can handle all your needs rather than trying to hire providers for individual tasks.
For example, Nomadic Real State is an all-in-one management company that ensures your peace of mind. Their expertise includes helping owners determine optimal rental rates, preparing leases, conducting property inspections, handling security deposits, and providing 24/7 emergency assistance. Consolidating all these services under one provider simplifies your property management and saves you time.
Tenant Screening Process
Ask potential property managers to explain their process for screening rental applicants before approving new tenants. Thorough screening is crucial to avoid problem tenants that could jeopardize your investment. At a minimum, tenants should be screened for credit, eviction history, criminal background, income verification, and rental history.
The most qualified company will have a stringent screening protocol to ensure you are getting responsible, reliable tenants. This helps prevent issues with late rent payments and property damage down the road.
Maintenance and Repair Protocols
A property management company should have clear, efficient systems for both routine maintenance and any repairs that arise. Ask how they conduct property inspections, handle landscaping and seasonal maintenance, coordinate with contractors for repairs, and respond to after-hours emergency calls about issues like plumbing leaks or HVAC problems.
Look for a company that utilizes technology to track and monitor maintenance needs. They should also have established networks of licensed, insured contractors they can call upon 24/7 for on-demand repairs and service. Ongoing property maintenance is essential for preserving your asset’s value and keeping tenants satisfied.
Typical fees for property management services range from 8-12% of the monthly rent collected, though it can vary. Some charge a flat monthly rate instead. The fee should be clearly disclosed upfront so you can accurately calculate your net income from the property.
Be sure to ask about any additional fees that may be charged for tasks like preparing leases, conducting inspections, handling repairs, overseeing major renovations, and evicting tenants. You want to have a complete understanding of what is covered in the base fee versus what will incur extra fees.
Look for a service that leverages tech features that simplify processes for both owners and tenants. For owners, an online owner portal can provide 24/7 access to statements, maintenance reports, lease documents, and communication with your property manager.
For tenants, features like online rent payment, digital maintenance request submissions, and lease document signing make processes more convenient. Back-end technologies like accounting software, tenant screening services, and automated rent collection also maximize efficiency for the property management company and provide better service.
Legal Knowledge and Compliance
Property managers must have extensive knowledge of landlord-tenant laws, fair housing regulations, safety and habitability requirements, allowable reasons for evictions, and other legal issues. They keep up-to-date on any changes to local, state, and federal laws that impact rental properties.
A company with expertise in legal compliance can help owners avoid costly missteps like lease violations or discrimination claims. Look for indications that the company prioritizes strict legal compliance and formal training for employees on important legislation and legal precedents. Their rigorous attention to the law protects your interests as an owner.
Contract Terms and Termination
Before contracting with a property management company, pay close attention to the details of the agreement. Look at the length of the contract and make sure either party can terminate the arrangement given sufficient notice, such as 30 days. Understand your responsibilities and liabilities as well as those of the property manager.
Look for specifics on the company’s obligations, processes, and communication commitments. Clearly defined expectations and termination provisions provide important safeguards in case you become dissatisfied with their services. Don’t gloss over the fine print or assume any aspects of the contract.
Insurance and Liability Coverage
Reputable property management companies will have both liability insurance and omissions insurance to protect you from liability claims. Liability insurance covers injuries at your property. Errors and omissions insurance protects against potential mistakes like failing to enforce a lease provision or mishandling funds.
Make sure the company can provide proper proof of coverage. You may also want to verify that contractors used for maintenance and repairs carry adequate general liability insurance. Proper coverage provides you with peace of mind and financial protection that is well worth the investment.
Choosing a property management service with the right mix of experience, services, responsiveness, fees, and other attributes is essential for protecting your investment and generating optimal returns. Avoid choosing based on cost alone—the cheapest option may end up being problematic and costing you in the long run. Do your research to find the company that best fits your needs. Put in place a clear contract with provisions to ensure satisfactory service delivery. With the right property manager as your partner, you can sit back and enjoy the benefits of leasing your property without all the day-to-day headaches.