Handing over your income property to a property management company is a risky decision, because it may result in great profits, but it also can drive you to bankruptcy. At Bay Management Group, we understand how difficult it can be to find a trustworthy property manager, so we came up with this guide to help you place your property in the right hands.
Always meet in person
Nowadays, you can easily process any paperwork over the internet. This is convenient, but it also creates plenty of opportunities for fraud. That’s why, at least the first time you meet with your property manager, it should be in person and preferably in their office. You don’t want to hand your rental to someone who works from home or from a friend’s basement.
Ask a lot of questions
It’s your property and your income, so don’t feel bad about taking up too much of property manager’s time. Ask as many questions as you want until you have a clear understanding of the company and its property management process. Here are some of the points to clarify:
- Experience: ask how many years the company is in business and how many of them in your market. Which would you choose: a Baltimore property management company with 10 years of experience in the Baltimore area or a Pennsylvania company with the same experience that just extended the service area to include Baltimore? You should find someone knowledgeable in local property market, as well as local laws.
- The properties/employees ratio: ask how many total properties the company is managing and how many per account manager. You want the company to have a decent portfolio, but you also want a great deal of time dedicated to the management of your own property. So, if a company claims to manage 400 properties with 3 employees, they are either lying, posses super powers or do a poor job – either way, stay away.
- Income property ownership: ask if the owner has his own income property in the same market. If he or she does, it means they can better understand your needs, but it also means they are your direct competition and a biased party when it comes to prioritizing whose property gets rented out first.
- Specialization: different companies might specialize in different types of properties: residential, commercial, vacation, multi-family, etc. Be sure to select the one that would fit your needs.
- The process: ask about the exact services the company does/doesn’t provide, specifically:
– Tenant screening and its criteria
– Rent collection procedures
– Property’s condition monitoring through routine inspections
– Handling of maintenance issues
– Actions in case of a broken lease agreement
– Reasons for and process of eviction
– Charge for the services: rate, conditions, fees
– Frequency and format of reports and financial statements
Make sure everything that was told to you is accurately reflected in the contract. Read and understand it before you sign. Look for any hidden fees and make sure you’ll be charged the percentage of the rents that ARE (not COULD BE) collected if you property is rented. The last thing you want is to pay when you are not making any profit.