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Posted about 9 years ago

Property Management- What To Look For and What To Ask!

Since opening my own Property Management company I have met a lot of amazing people and learned MANY things. Among the things I have learned have been all the reasons why NOT to use a management company. I have heard it all from embezzlement, to sloppy work being done just to get paid, etc. While I will not deny these things happen, It is ultimately up to you ( the client/property owner) to do your homework on the potential management company. You wouldn't rent to just anyone without first pulling their credit and criminal history, calling their previous landlords and employers, and figuring out their debt to income ratio would you? Hiring a property management company is no different. Heck, it might even be a good idea to run a credit and criminal history report on the management company. If the management company is opposed to this then that is probably a major indicator that they are not the right fit for you and your business. My goal with this blog and future ones is to provide education on the topic of property management while providing useful information to use when interviewing a property management company. 

First off, why do investors use management companies? There are many reasons and the common ones I have seen are:

1.) Want less involvement so they can enjoy time with family and friends. Maybe they really want to do some traveling but can't because, as we all know, being a landlord is a full time job

2.) Wanting to grow their current portfolio but cant without some help

3.) Many property owners work full time jobs on top of being a landlord. This is the situation with many of my clients. While at work they are unable to handle emergency calls, tenant complaints, etc., and they want someone there they can count on

4.) The landlord lives far away and cannot easily travel to their property to handle the necessary duties. 

5.) People who feel they have bit off more than they can chew.Sometimes new investors just dive right in (Admirable for sure) but without the proper plan, connections with contractors, and knowledge of general laws they will probably be looking for some help

All of these situation may lead you to the need to hire a management company. I cannot stress enough how important it is to find a management company who shares the same goals and ethics as you. You do not want your management company to steal tenants from you, or place the qualified applicants in their buildings and make yours a lower priority. This is an unethical way of doing business. If you have found the right management company this will not be a concern.If the management company is good at what they do then they will be attracting many qualified tenants and there will be plenty tenants to go around. I will try to keep my blogs short and sweet so hopefully as much info is absorbed as possible. I know the longer the blog the less people retain so I will leave you with this until next time. The first thing to determine when hiring a property manager is weather or not they have YOUR best interest in mind. If they share the same goals, ethical practices, and initially work with you to develop a plan of attack to improve the performance of your investment then they are probably a company you should consider. If there fee is 8-10% of the rent you maybe thinking "Whoa...thats a lot." But if they are doing their job, and developing a plan that will boost your NOI by $2000 in a years time, at a market CAP of 10% that is a $20,000 INCREASE in property value. If a management company is good at what they do, the above example is just one of the many ways they make up for their costs! 

Thanks for reading...until next time! 


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