7 KEYS YOU MUST ABSOLUTELY KNOW BEFORE HIRING A PROPERTY MANAGEMENT COMPANY
(Will Your Property Be In Good Hands?) Published By: Queen City Property Solutions www.qcpropertysolutions.com
Disclaimer: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.
Introduction: The first thing you will need to determine is whether you even need or want a property management company to manage your properties. So how exactly do you determine if you need one? ………. Ask yourself the following questions: • • • • • • • • • •
Are you tired of chasing down tenants for their rents? Is it a hassle to manage your properties because of the distance? Do you hate dealing with tenant complaints? Do you find yourself not having enough time to properly manage your property? Do you hate cleaning empty units and getting them rent ready? Do you dislike handling maintenance and repair problems? Do you have better things to do with your time than managing day to day issues? Do you hate dealing with tenant evictions and courts? Do you hate dealing with unreliable and unprofessional contractors? Are you dissatisfied with the services of your current property manager?
The above examples represent a majority of the key complaints many property owners have concerning the management of their rental properties. If you answered “yes” to one or more of the above questions, then keep on reading and let’s continue to get you the right information that you will need in order to be able to make an educated decision.
Ok I want you to imagine for a moment you wake up from a peaceful night’s sleep. You get out of bed, and look out the window where you see the birds are chirping and the sun is shining and not a cloud is in the sky. You open up the front door and reach into your mailbox and find waiting for you is your monthly rental check and statement for your investment properties. As you begin to think about how great life is suddenly a loud ringing abruptly wakes you, and you quickly sit up in your bed…………
Unfortunately, that ringing sound is one of your tenants calling you at five in the morning to tell you that the toilet is backed up again and you better get over there quick because the water is almost up to their ankles.
For many property owners, this is the nightmare that they live. When you think about movie stars or sports entertainers, they donâ€™t manage their own careers. They hire a management company to do that for them so that they can focus on what they do best...making money! Many successful businesses also outsource key aspects of their business in an effort to save time and money so that they can focus on their core business objective, and you can do the same thing. The same concept is true with real estate investors. Think about it, did you get into real estate to make money or to have to deal with the day to day headaches of managing the property?
If you have come to the conclusion that it might be a good idea to let someone else deal with all the headaches of managing your property, then you are going to want to ask these key questions below when you do find yourself shopping for a reliable and responsible company to manage your rentals.
Key Question #1: What types of properties do they manage? Of course you are going to want to make sure that your potential property management company at least manages other properties which are similar to the type of property you own. For example, if you own all single family houses and duplexes, then you are probably going to want to think twice about hiring a company that only manages condominiums and commercial properties. If the company is only used to managing upscale properties and dealing with white collar tenants, how reliable are they going to be if most of the properties you may own just happen to be located in less than desirable neighborhoods?
Key Question #2: What areas do they manage? Different areas of town tend to attract different types of tenants. Also different areas must be treated differently when it comes to marketing, pricing and management styles. Your potential property management company should at least be familiar with the area that your properties are located in. As a real estate investor you most likely have a target area that you primarily invest in. You are also probably pretty familiar with the prices in that area as well as the market trends. Well the same is true for property management companies who manage other rental properties in the same area where your properties are located.
Key Question #3: How will your property be managed? Here is the million dollar question. This question encompasses a few things such as: • • •
How will tenants be screened and selected? How is maintenance and repairs handled? How are evictions and problem tenants handled?
Remember, you will be entrusting the management of your investment to this company so you want to make sure that it is going to be handled professionally.
Key Question #4: How will the property be marketed? There are a number of ways in which a management company may market your property. Here are just a few: • For rent signs • Internet • MLS (Multiple Listing Services) • Referrals or word of mouth • Newspaper
Also don’t forget, how your property is marketed will also affect your bottom line due to the fact that certain forms of advertisement are more costly than others and this is a big concern especially if you are the one footing the bill for all of the advertising.
Key Question #5: What’s included in their fee? Different companies charge different fees and you want to make sure you fully understand exactly what you are getting for that fee. Some companies may charge what appears to be a “low” fee and when all is said and done you may end up paying additional charges for services not included in the fee. Remember the old saying: “You get what you pay for”. I remember quite a while ago signing up with a satellite television provider, and I can remember how proud I felt that I was able to get such a “great” deal. You see this company (which will remain nameless to protect the not so innocent) bragged about how much cheaper they were than all of their competitors and I fell for it hook, line, and sinker.
Next thing you know I found myself switching over to them and not too long after, that’s when the other shoe dropped. I found that every time it rained my picture would go out, which only seemed to happen when my favorite shows were on. The service was lousy and when something did go wrong (which was very often) I could never seem to be able to get through to a human being to voice my pain and suffering. Needless to say, me and that company ended up parting ways and I went back to my original provider and have been with them ever since even though their prices were a little higher. While price can be important, don’t make the mistake of running only to the cheapest price or in this case the cheapest fees and in return sacrificing quality, good service, and dependability.
Key Question #6: What type of guarantee do they offer? Why do companies offer guarantees to their customers or clients? Well, it’s so they can reduce the risk that the potential client feels they will be incurring if they were to take advantage of a particular product or service. The majority of property management companies do not offer their clients a money back guarantee, however you may find a few that may offer a 30 day trial period which will allow you to be able to see how the business relationship will be before you commit to a longer term. (If only we could get the same type of guarantees in our personal relationships)
Key Question #7: How do they handle your payments and statements? Ok. I know I said #3 was the million dollar question so with that being said then this must be the billion dollar question. Why? Because it deals with your money! And that’s the whole reason you started investing in the first place, right? You need to know first of all WHEN you will be getting your money. What specific date every month should you be expecting your check to arrive. Hey, most Americans, when they go to their mailbox are usually greeted with a bill of some sort. You on the other hand will be one of the fortunate few who actually have a check to look forward to and it sure would be nice to know it’s actually going to be there when promised. When you open up that envelope there should also be a detailed statement inside breaking down all of the expenses that you incurred for that period as well as all of the income you brought in. This is not only useful for your own knowledge but also for tax purposes. Uncle Sam won’t just take your word for it, now will he?
Conclusion: Remember, a professional property management company’s primary objective should be to maximize your income while protecting your investment. They should be able to offer you a solution to your property management problems and as a result, save you time, work and stress. Good luck on your search and I wish you all the success in the world on your current and future investments.
Bonus Section •
Here are some additional bonus key questions you need to answer before you decide to jump on board and sign up with a property management company.
o What property management services are you looking for? Prior to contacting a property management company, make a list of all of the services you are looking for that company to perform. Do you just need them to collect the rent for you and perform simple maintenance on the property or do you need them to handle every aspect of the property management leaving you with the freedom to just have to go to your mailbox and collect a monthly check without lifting a finger towards managing the property? o How long have they been managing properties? In other words, do they have any experience? While it’s not necessary that they be in business for 20 years, you also don’t want a company that just started managing their first property a few weeks ago either. o What does the company expect of you? In other words you need to find out what the company needs from you so that your relationship with them can run as smoothly as possible. The first key to any successful relationship (personal or business) is good communication. Be sure to communicate your needs, wants, and expectations clearly to your potential property management company.
Regardless of what type of property you have, be sure to have a written agreement which identifies the parties involved, specifies the length of the agreement, lists the responsibilities of both the owner and the manager, and states the fees that will be charged.
Below you will find some key reasons why people fail in real estate. Just make sure that you don’t end up in one of these categories: o o o o o o o o
Wrong plan or worse…no plan Wrong advice from others Wrong neighborhood Wrong property Wrong price Wrong tenants Wrong attorney, real estate agent, or insurance broker Wrong management
Published by Queen City Property Solutions / 1-888-284-3576 / http://www.qcpropertysolutions.com Buffalo Property Management Buffalo Property Manager Property Manager Buffalo Property Management Buffalo