Managing a rental property can be a challenge. There are many moving parts that need to be addressed. Furthermore, some people might not live in the local area relative to the property itself. Therefore, many people consider enlisting the help of a management service for the rental property. People need to take their time and find the right company to manage the rental property. There are a few key factors to consider.
The Process of Collecting Rent
If someone is looking for a property management service, they need to be able to collect rent from the tenants in a timely manner. Hopefully, this process will take care of itself when the rental property service screens the tenants. It is important to look at the track record of the people who rent from the building. They should have a strong credit history that shows they are capable of making their payments on time. Tenant screening and rent collection go hand in hand.
The Issue of Maintenance and Repairs
Next, the rental property management service needs to be able to address maintenance and repairs cost-effectively and efficiently. For example, repairs are going to come up from time to time—this is inevitable. In the process, the rental property service company should have connections throughout the industry that can help the owner get these issues fixed quickly and efficiently. If the rental property service is skilled at handling repairs, this is a major plus.
Property Inspections Are Important
Finally, property inspections are also going to be a major key. Property inspections can be complicated and stressful for people to deal with. An experienced rental property company will be able to carry out these inspections quickly and efficiently, removing a lot of stress from the shoulders of the property owner. If the rental property company does its job well, this should be a major help to the property owner.
What a Property Management Company Actually Does
- Tenant Screening: Background checks and verification of the credibility of tenants.
- Rent Collection: Collection of rents and processing late payments.
- Maintenance and Repairs: Control maintenance activities and address repair requests to ensure properties are in good condition.
- Property Marketing: Advertise the property, answer all inquiries, and show the property to prospective tenants.
- Legal Compliance: Staying on top of local landlord-tenant laws, lease agreements, and any other documentation that must be legal.
- Evictions: Managing the eviction process if that occurs.
Every management company can vary a bit or offer more services, so you want to clearly understand their role up front.
Understand Your Requirements and Objectives
Every owner has varied needs and expectations. Some want to be completely passive, while others still want to be involved in the decision-making process. Before starting your search, take time to clearly define what you are looking for:
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- Type of Property: Are you managing a single-family home, apartment building, or commercial property? Some companies specialize in certain types of real estate.
- Level of Involvement: Do you want to be informed about every decision, or would you prefer the company to handle everything independently?
- Budget Considerations: How much are you willing to spend on property management services?
Research and Ask for Recommendations
Start by asking the property owners or real estate agents themselves or even the tenants nearby. Reviews online can be very resourceful, too, but dig deeper into all of the good and bad comments. Therefore, if a review claims that a property is good, that may very well be, but if lots of complaints are also found from other sources, then take that as the word. Use these media in research:
- Google Reviews
- Real Estate Forums
- Social Media Groups
A personal recommendation is sometimes the best advocacy, but do not discount your research. Every property and owner will have unique needs; what worked for one person may not work for you.
Check Licenses and Certifications
Not all states license property managers, so at least you know someone has the proper credentials to work with. A licensed property management company proves professionalism and observance of industry standards. Find out if the company or its staff members are members of professional organizations like:
- National Association of Residential Property Managers (NARPM)
- Institute of Real Estate Management (IREM)
- National Apartment Association (NAA)
Ask About Fees and Terms of the Contract
Before signing up, it is always a good idea to know how much the company charges. Fees differ by market and by service but usually fall within three ranges:
- Management Fee: Typically, it is a percentage of the monthly rent paid, usually 7-10%.
- Leasing Fee: This fee is collected every time the property manager lets out a new property or finds new tenants. It usually equals one month’s rent.
- Maintenance Fees: Some have in-house maintenance teams, while others have had to outsource it. Clarify how maintenance fees are handled.
- Eviction Fee: Some service companies will charge extra eviction fees to process the entire eviction process.
Carefully check that the fee structure is transparent and free of hidden charges buried within the contract. Read it thoroughly, paying particular attention to termination clauses and guarantees about vacancy periods, tenant evictions, or other unexpected property issues.
Review Their Marketing Strategy
A property management company’s principal responsibility must be to find a tenant for your property. To obtain high occupancy rates for your property, it needs to be marketed effectively. Ask them about
- Online Listings: Which websites do they use? Are their listings professional, and do they include good-quality photos?
- Turnaround Time to Vacate: How long does it take them, on average, to find the tenant?
- Tenant Communication: Are they responsive regarding inquiries and requests from prospective tenants?
A good marketing program is a very good indicator that the company is proactive and wants to keep the occupancy at a high level.
Review the Fine Print
Once you have narrowed down your selection to a potential property management company, read the contract over very carefully. Avoid companies that have long lock-in periods, that are vague about the scope of work, or whose fee structures are unclear. A reputable company will be able to provide you with a clear, detailed contract outlining their responsibilities, fees, and procedures.
Be sure you understand:
- Termination Clauses: How easy is it to terminate your contract if you are not pleased with the service?
- Responsibility for Repairs: Who decides when to fix it, and what is it going to cost?
- Insurance: Do they have liability insurance? What is included?
Never be afraid to ask for clarification or to negotiate on terms. Your investment is too valuable to be left open to interpretation.
Find the Right Rental Property Company
These are a few of the most important factors that people need to consider when they are looking for a company that can handle rental property services. When someone finds the right management company to handle a rental property, this can remove a lot of stress. Take the time to speak with the rental property company beforehand to see if the fit is right.