In every major city and most small cities and towns across the country, there are Property Management firms offering a variety of services to clients who need to have someone look after their home, their apartment or their rental property. You can have an excellent service or end up with a nightmare if you are not careful.
Hopefully, some of the things we talk about in this web site will help you in your selection of a residential property management company for your home while you are away or for a rental property that you own.
This web site is focused on property management for urban consumers who are either renting a home out to a 3rd party and want someone to look after the rental and the management of their home, the rental contract, etc or are leaving their home vacant for a long period and need someone to look after their home while they are away.
This latter group comprises snowbirds who are spending the winter in the south, business people who are away traveling or people who have been transferred to other locales. Property managers also look after rentals in the same city that you live in as well as properties that are located in other cities from where you live.
What Should You Look For in Property Management Company
There are numerous items to consider and we have tried to list some of the more important things in this post. If we miss any that you feel are important, please leave us a comment so that we can update this post to alert our readers.
- A contract that states the services they will provide to you
- Rental philosophy that matches with you and the type of person you want to rent to
- Regular reports that clearly show revenue and expenses
- The final annual report you can use for tax purposes
- Emergency number to call for your renter and yourself
- The designated contact for you to call
- Process for collecting rents, payment of bills and deposit of rents to your account
- Reasonable property management fees
- Advertising costs are prorated across all rental units they manage
- Emergency repair process
- Repair approval process
- Handymen at reasonable rates for standard repairs
- References from other property owners
- Monthly, quarterly reports that meet your needs
These are just a few of the areas you want to consider. We will discuss some of them in more detail to give you a flavor for what we are considering in these items.
Rental Philosophy
At one time we had a property manager who believed that having a low vacancy rate was the right way to manage a property. Yes, the property was always rented, however, the people we rented to were not some of the best people to have in our units.
All of the bad things that you can imagine occurred. They skipped town, they had a lot of damage in the unit, they missed rental payments and on and on.
It is very difficult in some jurisdictions to collect from these delinquents and it costs more money to collect from them for missed rent and money to cover damages. We came to the conclusion it was better to have a unit sit vacant for a month while we found a better class of tenant who had great references and was not going to wreck the place! The cash flow was usually better even though the unit sat vacant for a month.
Property Management Reports
- Look for regular reports that meet your needs. They should include:
- Monthly cash flow for your unit
- Quarterly cash flow for your rental unit
- Comparison to forecast so that you can see how you are doing
- Annual statement for tax purposes
- A managers report in narrative summarizing activity concerning your property
This seems like a lot, but it is necessary to ensure that there are no surprises. Some people will not hear anything regarding their property for an entire year and then get a big surprise when they find they have to pay more money for major repairs or that cash flow is not what they expected.
Property Management Contacts
This applies equally to your renter as well as yourself. The renter needs to have someone they can contact in case of an emergency to solve his or her problems. If there is a water leak on a long weekend, you want it fixed that day and not after everyone comes back to work.
Also if you the owner have a question, who do you call to get answers to your queries about information given to you on the property management reports. Remember to not be a pest either. Be professional and business-like in your dealing with the property manager.
References for Property Managers
Always get references, although sometimes that may be suspect. Spend an hour talking to other owners to compare notes. There are two fundamental things to look for:
- Does the owner you are speaking with have the same business approach as you do
- If so, are they satisfied with the service they get from the property management firm?
There is really no sense in speaking with someone who never talks to the
property manager, does not want reports and only wants to be called if there is a problem. Of course, they will be happy with a property manager who never calls them and gives them the annual report they need for their taxes. I am exaggerating a bit here, but hopefully, you get the point.
If you both want monthly results with an accounting report and a narrative report and the person you are speaking with finds the reports meet their needs, then there is a better chance that you will also be satisfied with the firm you are considering.
As we said earlier, if there are major thoughts missing in this post about property managers, please feel free to leave a comment.
For more posts about a variety of property management topics, click here.