Real estate investors with the goal of growing a large enterprise will inevitably need to look into property management services.
Using a property manager allows you to focus on expanding your business and acquire new investments without worrying about minor day-to-day issues.
This article will help you find property management companies near you along with some actionable tips to consider when hiring a property manager for your real estate business.
Benefits of a Property Management Company
If you’re reading this article, you probably know that using a property management company has its benefits. However, here are a few you may have overlooked:
Time and Stress Savings
Managing a property can be a time-consuming and stressful task, especially if you have multiple properties or a full-time job.
Property management companies take on day-to-day tasks like tenant communications, maintenance, and rent collection to allow you to focus on other aspects of your life or business.
Tenant Screening
Tenant screening is a critical aspect of property management. Property managers have systems in place to thoroughly vet potential tenants. They conduct background checks, verify employment and income, and check rental histories for new tenants.
The tenant screening process helps identify reliable tenants who are most likely to pay rent on time and take good care of the property.
Marketing and Advertising
Property management companies have experience in marketing and advertising properties effectively.
They know how to advertise vacancies and showcase your property’s best features through various marketing channels so you can grow your business without spending time running marketing campaigns.
Maintenance and Repairs
Property managers have a strong network of skilled contractors and maintenance professionals. They can quickly address maintenance and repair issues so the property remains secure and in good condition.
Rent Collection
Rent collection can be a challenging aspect of property management, but property management companies excel in this area. They establish clear rent payment policies and follow up on late payments from tenants.
Drawbacks of Property Management Companies
For real estate investors looking to scale their operations, property management will be a necessity. However, it’s important to be aware of the downsides:
- Cost: Property management companies charge a fee for their services that can eat into your rental income. These fees can vary but often range from 8% to 12% of the monthly rent. While the expense can be justified by the time and hassle it saves you, it does impact your bottom line.
- Limited control: When you hire a property management company, you relinquish some control over your investment property. You may not have as much say in selecting tenants, handling maintenance issues, or making decisions about property improvements.
- Quality of service: Not all property management companies offer the same level of service. Some may not be as responsive in their responsibilities as you would like, which is why It’s crucial to research and vet potential property management companies before deciding.
- Tenant selection: Property management companies may have different criteria for selecting tenants than you would. They might prioritize filling vacancies quickly rather than thoroughly screening potential tenants.
- Communication: Miscommunication can be a common issue between property owners and management companies. You may find that you’re not always in the loop on important matters or that there are breakdowns in communication regarding property issues or financial matters.
Finding a Reputable Property Management Company
Finding a high-quality property management company near you can make or break the success of your real estate business. It’s important to balance the need for exceptional property management services with the associated expenses that come with them.
Since the more you spend on your property management company equates to lower profit margins, you’ll need to find a company that aligns with your budget and still manages your investments with prudence.
Here are some additional tips on how to find a reputable property management company near you:
Research and Gather Recommendations
Start by conducting thorough research online. Look for property management companies in your area and read reviews on platforms like Google, Yelp, or specialized review sites for property management.
Additionally, ask your network for recommendations. Friends, family, colleagues, or other real estate investors can provide valuable insights based on their experiences.
Experience Matters
Experience is a critical factor in property management. Look for companies with a solid track record and a history of successful property managers.
An established company is more likely to have encountered various challenges and developed effective strategies for addressing them. They should be well-versed in local property laws and market conditions to avoid any potential legal issues and extended vacancy periods.
Interview Multiple Companies
Don’t rush into a decision when looking at property managers. Interview at least three to five property management companies to gain a better understanding of their services and compatibility with your needs.
During your interviews, ask about their experience and inquire about their approach to important property management duties like tenant screening and rent collection.
Review Their Portfolio
Ask the property managers to provide you with a list of properties they currently manage or have managed in the past. Their portfolio can offer insights into the types of properties they specialize in.
Legal and Financial Considerations
As a real estate investor, you know the importance of managing finances effectively and abiding by local laws. Here are five legal and financial considerations when hiring a property manager:
Licensing and Certification
One of the fundamental legal considerations when hiring a property manager is their licensing and certification.
It’s crucial to verify that the property manager possesses all the necessary licenses and certifications mandated by your state and local jurisdiction. These credentials serve as evidence of their qualifications and competence in managing properties within the legal framework.
Failing to work with a licensed property manager could expose you to legal issues and fines by the state or local government in charge of housing and development.
Contract Terms
The terms outlined in the property management contract are central to the financial aspect of the partnership. It’s important to review the contract to comprehend the fee structure, termination clauses, and any additional charges that might be incurred.
These terms should align with your financial objectives and expectations. For example, if your goal is to maximize rental income, make sure the property manager’s fee structure doesn’t significantly decrease your profits.
Fee Structure
Additionally, understanding the property manager’s fee structure will help you with your financial planning. Each property manager’s fee structure may vary, so it’s essential to work with a company who’s rates are competitive within your local market.
A transparent fee structure allows you to accurately budget for property management expenses and maintain financial stability with the rest of your business.
Financial Reporting
Managing your finances is a key component of successful property management. When hiring a property manager, it’s essential to establish clear expectations regarding financial reporting.
Regular statements that detail income, expenses, and any maintenance or repair costs incurred on your property should be part of the agreement. These reports offer you visibility into the financial performance of your investment and help you make informed financial decisions.
Tenant Screening
Tenant quality directly impacts your property’s financial performance and potential risks. As part of due diligence, investors should inquire about the property manager’s tenant screening process.
A thorough screening process involving background checks, credit assessments, and rental history verification is crucial for selecting reliable and responsible tenants.
Communicating with Property Management
Once you’ve found a property manager that meets your budget and expectations, you’ll need to make sure you communicate with them effectively for the best chance at a successful working relationship. Be sure to:
- Set Realistic Goals and Timelines: Understand that property management involves processes that may take time. Be realistic about your expectations with rental income, property maintenance, and the time it takes to fill vacancies.
- Stay Informed About Local Regulations: As an investor, you should always stay informed about local real estate laws and market trends. Property managers can provide guidance, but it’s up to you to understand the legal and market landscape in your area.
- Communicate in Writing: Whenever possible, communicate important matters in writing to create a record of your correspondence and help avoid misunderstandings. Email is often a preferred method for written communication, as it can be saved and used as records in case of any disputes.
- Regularly Inspect Properties: Periodically inspect your properties to make sure they are being well-maintained by the company. Property managers handle day-to-day tasks, but you should remain involved in the overall condition of your investments.
- Address Tenant Issues Promptly: If tenant issues like complaints, disputes, or late rent payments arise, address them as soon as possible. Property managers should keep you informed, but your involvement may be necessary.
Tools and Technology
While your property manager handles the day-to-day upkeep and maintenance of your investments, there are still plenty of technology tools you can use to keep tabs on your properties, including:
- Property Management Software: Invest in property management software solutions like Buildium, AppFolio, or Propertyware. These platforms offer features for lease tracking, rent collection, maintenance requests, accounting, and reporting.
- Online Listing Platforms: Use online listing platforms like Zillow, Trulia, and Realtor.com to market rental properties effectively. These platforms can help attract potential tenants and fill vacancies quickly if your property manager doesn’t handle the marketing for your investments.
- Virtual Tours and 3D Imaging: Experiment with virtual tour technology or 3D imaging to provide prospective tenants with an immersive view of the property. This can save time by narrowing down the number of physical showings.
- Online Rent Payment Systems: Implementing online rent payment systems to facilitate convenient rent collection is another innovative solution for investors. These systems can automate recurring payments and reduce the risk of late or missed payments.
- Maintenance Management Software: Utilizing maintenance management software like UpKeep or ServiceChannel will help to track and manage things like maintenance requests and vendor contracts.
Final Thoughts
Finding a property management company near you can be challenging depending on your budget and the size of your investment portfolio.
It’s important to keep in mind that not all property managers are created equal. Be sure to do plenty of research on property management companies near you to find out whether they fit into your overall investment goals.
Related: Tips for Rental Property Maintenance