Questions to Ask A Management Company
Acquiring an asset takes a lot of time and money. Managing the asset to ensure that it continues to bring more money to your bank account is not easy especially if you have other business engagements. Therefore hiring a management company to manage your property can be a safe option. However, getting a management company with the best credentials to manage your asset can be a challenging exercise.
With that in mind, we have highlighted below some of the critical questions to ask a management company before signing the contract:
How much do you charge as management cost?
Asking this question will help you determine if the management costs are reasonable in view of the amount of money expected to be generated from the property. The question will also help to establish the general terms of payment. Some property management companies will charge a commission based on the total amount of money generated from the property rented out. While other companies might charge a fixed rate management fee which is payable even if there is no full occupancy. Negotiating for an efficient payment matrix will ensure that you earn your money in time while ensuring that the management company is happy with the compensation for work done.
What is your policy on rent payment?
The policy on rent payment will determine the date the property owner is likely to get his rental income. For instance, if the policy states that tenants are expected to pay rent by 10th of every month, then the property owner will most likely expect his dues a day or two after that. Sometimes the rent policy might also cover the procedure for collecting the delayed rent payments and the measures taken to ensure that rent is always paid in time. The more comprehensive the rent policy is, the better the deal from the management company.
How do you screen the tenants?
This question will give you an insight into how rigorous the process of vetting new tenants is. Dealing with non-law abiding citizens can be frustrating. Property owners will do anything to keep off people who might prove to be a headache to handle. Therefore, due diligence on the part of the property management company is what to look for in a serious contender. The tougher the screening process, the higher the chances that your house will not be used by criminals.
What are your strategies for ensuring full occupancy?
Your property being occupied all year around assures you of a continuous flow of income. It is therefore in your interest that the houses are occupied all the time. A good management company should be able to outline key steps that they will take to ensure that the houses are always fully occupied. A management company without a plan for attracting and retaining tenants is not worth the gamble.
Who are your other clients?
Having an overview of the other clients the management company is dealing with might be good especially as for referral purposes. Getting first hand information from a current client might help you understand how your prospective management company will be managing your property. On the flip side, having data regarding the size of clientele might help you in knowing how efficient they will be responding to your needs. Many times, management companies with a big clientele are known to offer very poor service due to their overstretched workforce.
How often do you conduct property inspections?
This question will help you establish the frequency with which maintenance on your property will be implemented. Properties are known to wear out after some time of active use. So a detailed report on the condition of each property is crucial. Regular inspection of the property is very useful because it ensures that your property is always in good condition and the tenants are happy to occupy them.
The questions to ask a management company as highlighted above may not be the most comprehensive but they will guide you greatly in choosing the best service provider. As long as the management company you intend to work with has some good track record, all you will be required to do is to consult your attorney for a contract agreement that will guide your engagement. A watertight agreement ensures that everyone plays his/her role without conflict.