Selecting a Property Management Company
Selecting the right property management company can be challenging.
Even seasoned real estate veterans have a difficult time choosing a
property management company. A property management company typically
focuses their efforts on one or two specific real estate areas. In
addition, the services provided by the property management company can
vary. In order to make the right choice, it is vital that you have a
clear understanding of the different real estate categories and
services available in this competitive market.
A real estate property management company can range in size from a one-person shop to a large conglomerate. There are pluses and minuses that should be considered for each scenario. A small property management company may be more customer oriented and work harder for your business. However, a larger property management firm will usually offer a wider array of services. Regardless, the purpose of a property management company is to ease the burden of owning real estate. To be more specific, the organization will be responsible for growing the value of the property by increasing occupancy levels. In addition, the property management company will improve net operating income. They accomplishes this by increasing rents and decreasing expenses. Finally, property values will be protected through maintenance, insurance, and regular inspections.
Obviously, you are concerned about earning a profit on your investment. The reality is that most owners are unable or unwilling to pour in the copious amounts of time required for real estate property management. Property management companies provide the basic services needed to effectively run rental real estate. Some of the more obvious items offered by property management companies include, collecting rent, handling delinquencies, paying utility and vendor bills, correcting maintenance issues, along with enhancing tenant relationships. However, the property management company will also provide financial reports on a monthly and yearly basis. The accounting side encompasses everything from maintaining check registers to updating rent rolls. In addition, the property management company will determine an appropriate rental rate, when rent increases are warranted, as well as the best way to negotiate leases and renewals. More importantly, a rental property manager will hire, fire, supervise, and pay all of the staff required. For smaller real estate owners, this can mean the difference between hiring your own workforce or using the property management company's employees.
Typically, the larger a property management company is, the more supplementary services they will provide. Most property management firms charge more for these extra perks, but it is well worth the expense to some owners. These items can include everything from refinancing a building to real estate tax appeals and overseeing large capital improvements. Some of the larger property management organizations have licensed real estate brokers that can assist with commercial leasing and selling. The type of services you want will play a major part in determining the right property management company to handle your needs.
A property management company usually focuses on certain aspects of real estate. Some organizations may provide their services for commercial buildings, while others may focus on residential property management. These different areas require an in-depth knowledge of the specific requirements for each scenario. For instance, a property management company that specializes in office buildings would not be equipped to deal with the daily requirements of an apartment complex.
Regardless of the type of building you own, there are some things you can ask and look for to ensure you are selecting the right property management company. Some obvious items are: how long the company has been in business, and what type of reputation do they have? Staff turnover can be a sign of potential problems within the property management company, so research how long employees have worked with the firm. Of course, you will want to know what types of real estate they manage, and how long have they specialized in that area of property management. If you are interested in a property management company that offers leasing services, ask if they have individuals on their staff with the proper licensing. One aspect of property management that should not be overlooked is sufficient insurance and bonding. Failure to do so could cost you money and heartache later. Don't be afraid to ask for references and a list of affiliations. There are organizations, such as the Institute of Real Estate Management that certify companies, as well as rental property managers based on their expertise. A certified property manager has proven their knowledge, but more importantly their talents on the job. A great place to find property management references is through local trade organizations or associations. Finally, when negotiating property management fees keep in mind that smaller buildings like a residence will be charged more than a large complex, because the scale is based on income.
Although the size of a property management company may be small, the services and attention they provide may be the perfect fit for your building. A large property management company is able to provide a broader array of benefits, so don't count out the big guns, when you do your shopping. Now that you have these tools for success, selecting the right property management company to fit your needs will be much easier.