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Property owners with many properties but little time to manage them will often hire a company to take on that workload. Maybe you’re an owner with assets in California, but live in New York (or even China) — own a large building with dozens of units and find yourself overwhelmed by the sheer number of management tasks.
There are many reasons for hiring a property management company, but there’s no reason to be saddled with one that fails to live up to your standards. And believe me, they’re out there, and if you’re not staying frosty — mindful of the difference between the good and the bad — it’s going to get ugly for you and your business quickly. It matters who you hire, because there is more to managing a property than identifying good tenants and collecting rent.
You will come across many good candidates, but only a few will be great. How to find them in order to protect and nurture your investment.
Research like a tenant
Put yourself in the shoes of the people who will be paying money to live in your property. Are you persuaded by the marketing methods and content that a potential property management company is employing for the properties they handle? Do these places look appealing and well maintained? Does the marketing speak to you in any meaningful way?
The bottom line is: Would you consider renting one of their properties? If not, what’s turning you off about their strategies? These are the first questions you need to answer, because future tenants will be doing the same when deciding whether to rent from you or the guy next door.
Related: Third-Party Property Management Isn’t as Simple as It Seems
Like any industry, real estate rental and leasing comes with a full range of laws, restrictions and protocols that can derail your business in the event of non-compliance. The right management company will have knowledge of and expertise in all laws and other aspects governing the housing industry.
Also keep in mind that residential and commercial properties are very different; some companies specialize in one over the other, and you need to choose one that has experience managing the types you own. Additionally, inquire as to each candidate’s track record. Does it only manage certain types of properties or many types? (A specialty approach is often better than a jack of all trades.)
Good tenant relations
Empty rental properties don’t generate revenue: tenants do, and you want to make sure they stick around for the long term. You’d be surprised how easily an inexperienced property management company can stand in the way of that goal.
A healthy working relationship between management company and tenants is a great way of producing maximum and steady revenue. Therefore, it’s mandatory that you speak to some of the tenants who live/work in properties that your prospective company manages. You want honest and complete answers as to the level of the work being performed, and tenants will usually give them to you in no uncertain terms (especially the unhappy ones). If you like what you’re hearing, you can be confident that the candidate will bring a similar level of care and expertise to your property.
Related: Getting Your Feet Wet in the Rental Property Business
An eye on tomorrow
The companies you consider may all have excellent backgrounds, great reviews and enthusiastic tenants and owners extolling their virtues, but which ones remain stuck in the past, versus welcoming the efficiencies of 21st-century technology? The simplest of these innovations, of course, is the ability to pay rent online. Gone are the days of checks (or cashier’s checks) when collecting at the first of the month.
There are many good property management software options on the market, so make a point of asking which ones candidates prefer. Their answers may go a long way towards assuring a healthy and lucrative working relationship.
That something special
At the end of the day, most candidates will provide a similar menu of services. If you’ve done your due diligence, the finalists will be dependable, dedicated and experienced, so how do you elevate one over the others? The answer is simple: what else can one candidate offer? Does one company offer a service or manage a task that the others do not, or cannot — is able to take over as many duties as possible while providing a higher level of service?
Related: The Real-Estate Game Is Changing Fast. Are You Ready to Win?
One last thought
Once you’ve decided on the company you want to hire, take a careful look at the agreement they present. Make sure it covers every critical point in full, with a detailed description outlining services provides, fees and costs associated with those services, the duration of the contract and your responsibilities.
It’s that last factor that trips up a lot of owners, particularly first-timers. This is where the gap lies between manager and owner, and more often than not important things fall through it — details that get missed and ultimately hurt you and your business. So, delineate in full which tasks and responsibilities the management company is expected to handle and those that fall to you as the owner of the property. Double check these clauses to make sure you are not expected to take on any unwanted tasks. Essentially, apply the same level of due diligence on the agreement that you did finding the management candidate.