Rental properties offer an excellent addition to an investment portfolio. But the return on these investments depends on both the physical upkeep and financial monitoring of the property.
While it’s possible to manage your own properties, the time and effort involved in just screening potential tenants can be substantial. Add in all the other fundamentals of managing a property, and it can be daunting.
Many owners don’t want to be directly involved in any aspect of property management. They prefer to delegate those responsibilities to a professional and seek assistance from companies that provide the type of services they require. Finding the right property management company for your rental property can be a challenge. Asking the right questions during an interview helps.
Here are 10 tips to consider in selecting a property management company for your rental property:
Hire a licensed property manager. Licensing means the person has taken an approved property management course and passed the state-required real estate exam.
Ask for references. Is there a list of properties you can drive by and look at? Are there phone numbers available for telephone queries about past work?
Management fees. Is there a set fee for specific services? Do the fees seem reasonable and fit the service? The general rule of fee schedules for the Grand Valley area seem to run at between 6 percent to 10 percent of gross rents.
Inspections. Will the property be inspected on a regular basis? Will there be an inspection report completed, ready for viewing and kept on file? An arrangement for this duty should be agreed upon by both parties. A reasonable schedule might be interior inspections twice annually and exterior inspections two to four times annually.
Tenant screening. This important duty should include a background check and credit history report. Property managers use these tools to screen for the best tenant candidates. Is this done for every applicant? Are the results reviewed and used in the process of selecting tenants?
Advertising and showings. What advertising avenues are used to present your property to prospective tenants? Are there different types of media that might work better than others? Can you select from a package of available advertising materials? Make sure you’re aware of and agree to all the tools used by your management company. Is staff readily available to show vacant properties at any time that might be requested by prospective tenants? Is the showing agent versed on all aspects of the possible lease terms so they convey information in a professional manner?
Maintenance and repairs. Does the management company have in-house repair personnel or subcontract repair services? Be sure you understand and agree to how these things are handled. Give a work order ceiling amount for those smaller jobs that won’t necessarily need your approval. Require the company to contact you for more costly repairs for your personal approval.
Accounting. What kind of financial reporting will you require for your records? Management companies offer many different reporting packages. Find out what your cost will be for the services you require. Verify that all parties understand and agree to the requirements involved.
Collecting past due rent and evictions. Review procedures for rent collections and evictions. Do you agree with them? Make sure all parties agree on how to handle these uncomfortable situations with a professional touch to insure tenant retention as well as rental income.
Review all property management contract terms. Verify all the above points are addressed to your satisfaction. Make sure you’re aware of problematic issues and confident the contract addresses those issues with solutions. Does the company meet your requirements? Recommend a termination clause so if your working relationship goes sideways, either party may withdraw from the contract with no repercussions.
If you’ve met with the property manager and staff members that deliver the services included in the contract and agree to the policies and procedures that will be adhered to, then you should feel comfortable with your choice for managing your rental property.