Real estate investors know that acquiring a property is really only half the battle. Even after using next-gen real estate lead generation software to find a killer deal, you need more. If you want to hold the property as a long term investment, you’ll need to choose a property management company that’s going to keep it profitable and help you avoid headaches that take the “passive” out of passive income.
We’re going to go through the biggest considerations you need to take into account when you’re choosing a property management company.
#1: Vet The Company’s Experience & Qualifications
There are three things to keep in mind when you’re vetting a property management company;
1. Certifications & Licenses:
A property manager who has the right professional certifications and licenses has the skills and knowledge to manage your property well. These certifications and licenses show that the property manager has gone through a lot of training and met the industry's standards.
Some relevant certifications include;
- Certified Property Manager Specialist (CPS)
- Certified Apartment Association Manager (CAAM)
- Certified Professional Manager (CPM)
- Certified Residential Manager (CRM)
- Certified Property Management Associate (CPM Associate)
2. Management Experience
You want to find a property manager with experience. A property manager with a lot of experience knows the market and the process well, which helps them deal with problems and make good decisions.
This also means they have great contacts for any repairs, and that they know how to handle tenant relationships.
Just like in real estate investing - reputation matters. You can see a property management company’s track record by searching for reviews from past clients, awards and recognition in the industry, or a history of successfully managing properties.
#2: Compare Their Service Offerings and Fees
The property management field is highly competitive, which means you’ll have plenty of options to pick from. Keep these in mind when you’re choosing a property management company;
1. Comprehensive Service Offerings
A full property management service gives you all the tools, processes, and knowledge you need to run your property well. Look for a company that offers a full range of services, such as project planning and scheduling, budget management, risk management, and performance monitoring, to make sure that all parts of your property are well managed.
The last thing you need is to run into a problem, and for your property management company to outsource a solution.
2. Transparent And Competitive Fee Structure
Compare the prices of different companies and make sure you know what their prices cover. A fee structure that is competitive will help you stick to your budget and make sure you are getting the most for your money.
Also - when you’re looking at how to choose a property management company, you never want to opt for the cheapest. You don’t want a management company that cuts corners - you want a sustainable property management company that charges fair prices and pays fair wages.
3. Flexible Service Offerings
Every property is different, and the market is ever-changing. You want to find a property management company that can adapt to changing market conditions (influx of wealthier tenants that want better amenities) and handle future properties you may invest in.
#3: Gauge Their Communication and Responsiveness
Communication is key in every relationship, right? When looking at how to pick a property management company, make sure their communication is top notch.
1. Response Time To Tenants
How quickly do they respond to tenants? How easy to they make it for tenants to reach them?
Look for a company that is easy to reach and quick to respond to your questions and concerns. If the tenants are unhappy with how the property is managed, you’ll see high turnover and deal with far more headaches than needed.
2. Technology Use To Streamline Tasks
Technology has changed how we talk to each other and get things done. Look for a property management company that uses technology to make tasks like task management and communication easier.
Ask them what technology they use, and look into these products to see whether it’s a well-reviewed product.
3. Record-Keeping And Reporting Processes
Positive cash flow is what’s going to keep your property profitable. Record-keeping and reporting are crucial to making sure that your project is on track and that you have the information you need to make good decisions.
Look for a property management company that keeps good records and reports, so you can get accurate and up-to-date information about your project.
Ask them to send you a sample report of the financials they send clients to see what you’ll be getting in the future.
#4: Investigate Their Rent Collection and Financial Management
1. Rent Collection Methods
To make sure tenants pay on time and for the right amount, you need rent collection methods that are both efficient and safe. Look for a property management company that collects rent using modern, safe methods, like online payment systems and automatic rent reminders.
2. Timely Financial Reporting
It's important to get accurate and timely financial reports so you have all the information you need to make good decisions about your project. Look for a project management company that gives accurate and up-to-date financial reports on a regular basis.
3. Knowledge Of Relevant Laws & Regulations
To make sure that your property is managed in accordance with the law, you need to know about the laws and rules that apply. Look for a property management company that knows a lot about relevant laws and regulations, like fair housing laws and tax laws, to make sure that your property is managed in a legal and responsible way.
#5: Review Their Tenant Screening and Retention Process
1. Thorough Tenant Screening Process
To make sure you rent to reliable and trustworthy tenants, you need a thorough tenant screening process. Choose a property management company that has a thorough tenant screening process that includes credit and criminal background checks, income and employment verification, and references from previous landlords.
2. High Tenant Retention
High tenant retention rates show that the tenants are happy and that the cash flow is stable. Look for a property management company that has ways to keep tenants happy, such as regular maintenance and repairs, responding quickly to tenant requests, and communicating well with tenants.
3. Dispute Resolution Capabilities
A property’s success depends on how well it handles relationships with tenants and how well it handles conflicts. When you go to choose a project management company, make sure they’ve worked with tenants before and know how to handle problems in a fair and professional way.
It never hurts to ask property management companies how they dealt with previous issues when they came up, much like an employer would ask a potential employee to detail this.
How To Choose A Property Management Company: Asking The Right Questions
Picking the right property management company is all about asking the right questions. Ensuring that properties are well taken care of and generate consistent revenue is challenging, and who you pick to manage your property can make or break it as a healthy investment.
So whether you’re an expert investor or just learning how to start investing in real estate - it’s never too early to start thinking about building your team and making your investment grow.