As you expand your rental business or side gig, the work you’ll have to put in to manage those properties will grow exponentially. Even more importantly, you’re more likely to run into the complicated laws and red tape that is a constant in the landlord-tenant relationship. While some will opt to continue to manage their properties themselves, especially if they already have experience in the field, the vast majority will want to start looking into property management companies and property managers. Of course, as with all things, not all property managers are created equal. Here are the top 5 tips for finding the right property manager and taking your rental property business to the next level.
1: Understand Your Contract
Part of hiring any property management company is signing a contract with them. This contract will have a multitude of information about exactly what you are hiring the company to manage, what kind of compensation you will owe them, and what will allow you to terminate the contract. It is essential that you understand the details of the contract before you sign it. The last thing you want is a nasty surprise when you find out that something you thought your property management company would handle ends up falling on your lap. In addition, some property management companies are predatory and will try to create contract terms that will make it incredibly difficult for you to get out of the contract. If you are uncertain or confused about any part of your potential contract, contact a lawyer who can help you understand the fine print.
2: Understand the Fee Structure
The first thing about a property management contract that you should take pains to understand is the company’s fee structure. According to RPM Evolve, a Phoenix property management company, “there are several ways that a management company can choose to charge for their services, the most common of which is a percentage of rental income on top of a nominal flat fee.” This percentage of rental income is commonly between 8% and 10% of the total rental income – if the percentage is significantly higher or lower, that may be a red flag for an untrustworthy property management company. Some property management companies will charge fees for finding tenants, signing leases, or resigning leases after they expire. Make sure to do the math to see how much you will actually be spending when all the charges have been added up.
3: Do Your Background Research
There are a number of online sources that can help you determine if the property management company you are considering is as above-board as they appear to be. The first place to check is the Better Business Bureau. You’ll be able to see if the company’s registration is up to date and how they resolved any complaints brought against them. There are also a great number of review sites that can help you find out what that company’s strengths and weaknesses are. If a property management company has little to no online presence, that is a sign that they are either incredibly new and untested or are hiding something – potentially something that your properties could get tangled up in if you choose them.
4: Meet Face-to-Face
Once you’ve done your research and determined that the contract is to your liking, the next step is to meet with a representative face-to-face. Meeting in person is preferable to email, phone, or video calling because of how invaluable body language and on-the-spot instincts can be to deciding whether you trust someone and therefore the company they represent. This meeting is for you to ask questions – What is the scope of your business? How do you handle leases and evictions? What are your vacancy rates? This will not only provide you with invaluable information, it will also allow you to get an idea of how invested the company is in managing their properties.
5: Keep Open Communication
Hiring a property management company isn’t the end of the story, of course. It is important that you maintain an open line of communication between yourself and your property manager. Making sure that they contact you personally will make it easier when issues do pop up, since you will already have a steady flow of communication and a foundation of trust that will allow you to more easily deal with any issues that may arise.