If you come to the point in your real estate investment journey that you can no longer manage all your properties yourself, it's time to shop around for an effective property manager.
Property management companies take the brunt of the work and the stress of cultivating an asset off your shoulders. This can have exceptional benefits for your revenues and your asset values.
But not just any property management company will do. These managers will act as a proxy of yourself and will have a direct role in the success of your investment property. You have to be able to trust them fully with your asset.
Every real estate investor must keep in mind a few prominent factors when in the market for a property management company. Here's what you should know.
The role of a property manager
Before you explore all the possibilities, it helps to first be aware of all the things property managers can and cannot do. While different companies will offer different services and benefits, there are a few categorical responsibilities that every property management company takes part in. These are:
Finding, screening, leasing, and communicating with all tenants.
Managing the cash flow of the property in the form of collecting rents, setting a budget, and making repairs.
Conducting maintenance in and around the property to maintain the properties value and rentability.
All these factors and more represent vast amounts of time and finances that a real estate investor would normally put in themselves. For just a marginal fee, this massive workload can be passed on to a responsible party. Under the right circumstances, they will maximize the value of your asset.
But not every property management company is created equal. Some make use of modern technology more than others in order to provide exceptional tenant experiences, seamless rent payment systems, and maintenance request interfaces.
When it comes to knowing what to look for, there are a few qualifying factors that will make a difference in your ultimate decision.
Choosing the right Property Management
Depending on your unique portfolio and situation, various factors might be more important to you than others. While no property or investor is the same, the following are questions you can ask yourself to best align a property management company with your own goals:
1. Who comes recommended?
Perhaps the first and best step you can make towards finding the right property management company is to get the advice of others both within and outside of the industry. Other real estate investors with substantial portfolios will be able to share with you their own experiences and recommendations for exceptional property management companies.
Additionally, client and tenant reviews can inform a property management company’s expertise and ability to do the job effectively. Do your research, and explore all your options to find high- caliber, trusted property managers.
2. What management processes do I want for my properties?
Every property management company has their own methods of conducting business. While the nature of that business remains largely the same, there are innumerable ways to go about dealing with property owners and tenants to create a mutually beneficial experience.
In the search for a property management company that align with your own values, you want to look at how they manage factors like:
Communication with both property owners and tenants
Maintenance protocols
Emergency communication processes
Communication standards and routines
Transparency and trustworthiness
These factors more than marginal day-to-day processes can inform the effectiveness of a property management company. A commitment to quality communication and transparency, for example, can mean everything for both property owners and tenants as they navigate their own lives and financial situations.
3. How much do I want to spend?
Property management fees are typically quite minimal. The average property management company will only charge around 5% of the gross income gained from managing your properties. While fee structures can vary depending on the company, a flat rate can be a helpful clarifier in exactly how much you will end up paying every month.
Additionally, many property management companies charge additional fees for various forms of maintenance and communication as well as insurance. It is your job to make an itemized budget and compare market values to determine the best fit for your own finances and for your properties.
4. What kind of experience am I looking for?
Modern property management companies bring with them the power of modern technology. This means cloud-based portals for rent payment, property finances, maintenance status, and so much more. Technology can bridge individuals across thousands of miles to offer real time information regarding your properties. This means active insights into every aspect of your asset so that you retain complete control.
Real estate investors should determine if such a streamlined experience is something they prefer over the oftentimes clumsy emails and intermittent reports of the past. At the same time, effective use of technology can play a key role in ensuring tenant satisfaction.
5. What values do I want from a property management company?
The oftentimes intangible elements of coordinating with another individual or business can end up defining the experience. This includes everything from the friendliness and approachability of the staff to the levels of organization and ambition they show in managing properties.
These elements can be difficult to discover through simple browsing of web pages and advertisements. It helps to go off referrals and speak directly with clients, former clients, and the property managers themselves. This can give real estate investors a better idea of who they're working with and what matters most to them.
Bottom line
In short, hiring a property manager is an immensely important decision. The consequences of making a mistake can mean thousands of dollars in lost revenue and missed opportunities to grow the value of your real estate assets. Consider these questions and more in your own search for the right property management fit.
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