With increased technology and globalization, cities are becoming more and more transient. When a landlord decides to up and move to a new city, one of the big decisions they face is what they are going to do with their home. Homeowners typically have two choices; they can either sell the property, or rent it out. If the homeowner decides to rent their property out, they can either manage the property themselves, or hire a property management company. With new laws and regulations coming out almost yearly, many homeowners are turning to property management companies to help assist them in the process.
In this article, we are going to focus on how to find a REPUTABLE property management company in Baltimore, Maryland. To start, Maryland is one of only five states that does not require property management companies to have a broker’s license. This means anyone in the state of Maryland can decide they want to become a property manager, and start managing other people’s homes with no experience or background in the industry. Due to this lax regulation, there are a plethora of property management companies in Baltimore to choose from.
How to Choose a Property Management Company
So, how do you decide which company to choose with all the different options available? First and foremost, our suggestion would be to never choose a company that does not have a broker’s license. In order to obtain a broker’s license, an individual has to first get their real estate salesman’s license and pass a state exam. After holding the license for the minimum three-year requirement, they can then sit for the broker’s license, and if they pass, a background and credit check will be completed. So again, when interviewing property management companies, the first thing to make sure of is that the company has an active broker’s license. This will help rule out many “fly by night” type companies.
Next, it’s important to make sure “property management” is the company’s primary business. Many real estate brokerage companies whose primary business is buying and selling houses for their clients, do property management on the side for them as well. If a company’s primary business is not property management, this should be a red flag. Companies like Long and Foster, Coldwell Banker, Keller Williams, etc. are prime examples of doing property management on the side.
You will also want to make sure the company you choose has been in business for at least five years and has at least 500 units under management. Our analysis shows most property management companies have between 50-200 units under management. The problem with this is that many of these companies tend to be very understaffed, and lack the infrastructure needed to make sure your property is in compliance with all of the rules and regulations required when you rent it out. These companies also tend to lack good policies and procedures because they are fairly new to the business, and in property management, having a company that is organized, is paramount.
What is the Real Difference in Fees Between Property Management Companies?
So, what is the real difference in fees between property management companies? They can vary drastically. However, below are some that you will want to take note of:
Leasing fees- Almost every property management company will charge leasing fees. The amount for a leasing fee will vary from company to company. We have found that one month’s rent to lease a vacant unit is very standard in the industry. If a company is only charging, let’s say $500, to lease out your vacant property, you may want to inquire more about how the company is able to charge that fee. For example, at Bay Property Management Group, they charge one month’s rent to lease a vacant unit. Their leasing agents get paid between $750-$850 for each unit they lease, so there is no vested interest to lease high or low dollar properties. It also puts the leasing agent on a commission-based salary, so they are very motivated to lease each and every unit.
Management fees- All property management companies will charge a percentage of the rent collected each month to manage the property. They can range anywhere from 5-10%. Most good and reputable companies will not charge lower than $80-$100 per unit, per month. Again, there are sure to be companies that are willing to offer $50 per month to manage a house. However, with this type of fee structure it is very hard to have good quality service, and enough staff in place to make sure your property is getting the attention it needs.
Other fees- There are a myriad of other fees a property management company can charge from lease renewal fees, to start up fees, termination fees, yearly fees, etc.
Any individual that is considering hiring a property management company should think less about the yearly fees, and more about the following:
- Which company is going to put good quality tenants in the property
- Which will provide good customer service
- Which will protect the value of the asset year over year
Why Bay Property Management Group?
Time and time again Bay Property Management Group will take over a property from another management company, and find that the previous group had put the wrong tenants in place. For example, they’ve found everything from HVAC filters that haven’t been changed in five years, and gutters that haven’t been cleaned, to minor maintenance issues that had manifested into much larger issues (leaking basement, leaking roof, etc.).
With a good property management company your home will be leased out quicker, a higher rent will be obtained each month, there will be higher lease renewal rates, better pricing with vendors for maintenance work, they will ensure the owner is compliant with all city and state regulations, and much more. Being penny wise and dollar foolish in picking a property management company can have devastating effects. A home is typically the most valuable asset an individual will own in their lifetime, so paying an extra $30 or $40 more per month should be a no brainer. Our advice is to go with a trusted and reputable group like Bay Property Management Group. You may pay a small amount more each year, but it will save you 10-fold in the long run.