Tips for Screening a Property Manager
Owning an investment property is certainly one of the leading ways to produce residual income, build a financial portfolio and enhance overall assets. One of the initial decisions that you should face is to decide whether or not you should manage your rental property on your very own, or go with a property management firm. Before you finally decide, it is important to consider the following pros and cons of the decision.
Hiring a property manager isn’t all flowers and roses. Their is definitely the bold disadvantage of its effects on the individual’s profite margin. The typical firm generally requires the initial month of rent as its initial payment and then eight to ten percent of each month’s rent afterwards. This initial month’s payment requirement tends to cover the expenses of advertising, showing your property, processing an applicant, any credit administrative expenses, and all other general expenses which come along with setting up a fresh new account. If your ultimate goal is to have your tenant pay the mortgage with the rent, then you’ll have to factor these into the costs of your management company in order to properly determine feasibility.
Furthermore, it is important to keep in mind that property managers are not always reliable. The fact of the matter is that there have been many reported cases of property managers who have taken advantage of their client’s property for their own benefits. Some property managers may also try to take a certain percentage of your profits to their own pockets, without your knowledge. It is extremely important to keep a close eye on property managers. Unfortunately, you can’t trust anybody as much as you can trust yourself, which is why the DIY option is the most reliable one out there.
Screening a Potential Property Manager
When choosing a property manage, it is important to verify the following factors in your screening process:
– Years in the business: This may equate to their overall stability and experience within a particular company. Generally, this is a positive indicator of a specific company within a solid foundation. It is important to ensure that their years in the business are actually related to the field of property management and not just sales. Only because they possess thirty years running their real estate sales department doesn’t really make them qualified in the field of property management.
– Business under other names: You should perform your due diligence and get in contact with the Better Business Bureau or any other relevant service in order to assess if the firm you’re interested in has a positive track record or any other consumer complaints that have been filed. The grade provided by the BBB represent the rate of confidence in the business is operating in a trustworthy fashion and will ensure a good faith effort in resolving any client concerns. If the firm you’re currently interested in has performed business under any other name you should check that business entity’s track record as well.
Brokers of Real Estate License: In order to officially practice as a property manager, certain states demand that they process a broker’s or real estate license. In order to receive this license one must go through an education process and pass the state’s individual licensing exam.
Types of properties managed: Certain property management firms manage all kinds of properties, while other firms specialize in a specific kind, such as the residential property field. If you possess a single-family residential property that requires managing, then a firm with 90 percent of its properties being commercial will probably not be a smart option or fit.
Associations/Affiliates: There are numerous national and local association that are specifically tailored for the property management community. Such associations are full of highly valuable info, and are a good way of network amongst others in the industry.
Credit: It is crucial to be aware of any past credit reports that you may have to keep in mind. If there’s a negative or bad reporting on the property manager, then it would be better to rethink idea of going ahead with your negotiation process.
When hiring a property manager, it is important to perform the required research in order to minimize the risks of hiring the wrong person. Checking additional factors such as driving record, references, etc. is extremely important during this process. At the end of the day, no property manager will be as reliable as performing the property management task yourself. However, if you do decide to hire somebody, make sure to do it right!