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Property management companies can be lifesaving for busy real estate investors who cannot always be available to their renters. These businesses can assist you with tenant selection, maintenance, and repairs, rent collection, and evictions. They can also be a source of frustration for investors unprepared for hidden costs, upselling services, or untrustworthy behavior.
Make sure you complete your homework before entrusting your business to a property management company. Follow the below guidelines to discover the ideal tenant for your property.
Inquire about it.
A referral from a happy customer is the best approach to find a fantastic service provider. Find out which companies other real estate investors in your region use by tapping into your network.
Start with search engines if you do not know any real estate investors in your neighborhood. To learn more (and possibly find a colleague!), contact references.
Questions to ask fellow investors include:
- How long have you worked with that specific company?
- What is your favorite and least favorite aspects of their service?
- Why do you keep entrusting your business to this firm?
- How much do they charge (if they are prepared to share)?
Reduce your alternatives to a few top contenders. If you hear the same name a lot, it’s probably a company worth looking into.
Dive into the internet.
Make sure to study the firm online thoroughly, whether you found it online or through a friend. Check out what others are commenting about a company, search for “company name + reviews” or “company name + complaints.” Check with the Better Business Bureau to find out if they are accredited and what their rating is. You would be shocked how much information you can glean from a simple Google search.
Property management firms must meet different standards in each province, such as obtaining real estate licenses. Take some time to learn about the regulations in your province while you are doing your study.
Inquire about the company
Once you have identified your top prospects, call them to express your interest and start building a relationship. Do not be scared to question them; you will be entrusting your business and your renters to them! The following are some questions you should ask a potential management firm:
What type(s) of real estate do you manage?
They might not be experts in your area or have experience with the kind of property you own. Do they specialize in apartment buildings or strata management? You might feel better at ease working with a business that specializes in your type of property.
What parts of the city do they operate in?
It is possible that the company does not cover your property, or some of it is, and some aren’t. Before you delve into the procedure, you will want to know.
Do they provide any other services except property management?
You want them to say no and only be property managers, so this is a trick question. Because they have an incentive to sell you a service if they also perform maintenance, you may not obtain accurate reports on any faults that require attention. If they also do real estate, their attention may be diverted from you, your tenants, and your property.
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What are their fees?
Costs should be open and transparent. Cost should be considered while choosing whether or not to pursue a firm, but it need not always be the most critical aspect. Both the dollar amount and what you get for it can vary greatly—more on that below.
Are they able to provide references?
Clients may be listed on a company’s website. If you have any questions, please do not hesitate to inquire. Businesses should maintain a list of trustworthy clients they may approach for references from.
Recognize their expenses.
Property management companies have different pricing systems; you may pay a portion of your monthly rent plus fixed costs for various services. Consider the following when asking firms about their prices:
What portion of the leasing cost do you cover?
The amount you pay the property management company will be based on this. It is a fantastic starting point for comparing firms and provides you a sense of how reasonable or pricey each one is.
Do they charge additional costs for services such as tenant placement?
Some companies charge a flat fee for tenant placement, while others charge one month’s rent. Check out to see if there are any fees and what they cover.
What are the costs for?
Do you have to pay for marketing your ad if you are paying for tenant placement? Know what your property manager will handle for you and what you will be responsible for.
Do you have to pay even if the property is unoccupied?
You may not want to pay property management in the interim if no one is renting your property. If the company is paid whether or not the home is rented, they may be less motivated to fill it. When a renter moves out, inquire about your financial obligations.
If you decide to work with the company, do not sign anything until you have thoroughly read your contract. Make sure you understand all fees and, if necessary, ask clarifying questions. If you work with a lawyer frequently, have them do a quick assessment and identify anything unusual or potentially problematic for you.
References should be consulted
There is a reason this piece of advice keeps reappearing: it’s the best indicator of a trustworthy business. Request the addresses of the properties that the company handles and drive by them to determine if they are in excellent shape. Make sure to follow up on any requests for contact information from other clients that you made during your initial meeting. Call those customers and ask them the same questions you asked your coworkers.
Having guidance is essential for a successful real estate investor for years or just getting started. You may not always handle your property as carefully as you would like because your life is unpredictable and changeable. Even if you are not ready to hire a property manager just yet, keep these pointers in mind and keep an eye out for the top management businesses in your region. You never know when they will come in handy!