6 Questions You Should Ask When Evaluating Property Management Rates

When you receive a proposal for property management services you’re probably thinking two things:

How do I know if these rates are fair? And will these services benefit my property?

It’s understandable that you feel the urge to dig below the surface. Property management rates and services often lack transparency. What seems like a great rate upfront can easily snowball into a much larger expense when the additional fees are considered.

So how can you evaluate companies and their rates to ensure they’re a good match for you and your business?

Before signing on the dotted line ask these questions about their business practices and fees.

How do you market my property?

Marketing brings awareness of your property to potential renters. How a property management company markets their units will clue you into the urgency (or lack of urgency) at which it occupies vacant property.

For example, some companies will leave listings off of MLS to avoid sales competition even if listing it could rent your property sooner. Instead they use their own sites, Zillow, or Craigslist to keep the sale in-house. This is a sign that a property management company doesn’t have your best interest in mind.

How do you screen tenants?

Tenants should be chosen with care. You must trust that they’ll pay you on time and maintain your property. The thoroughness of the initial application screening will help you avoid the future headaches of difficult residents.

You should feel comfortable with the process your property management company utilizes to screen potential applications. Ask what systems they use for background and credit checks and the criteria for acceptances and declines.

How close is your office to my property?

Doing business with a company that has an office near your property will give you peace of mind. You need a manager that will respond to your needs without delay. If your location isn’t in close proximity to their office, your manager may be less responsive – especially at 4:30 p.m. on a Friday afternoon. Ensure you find someone that’s willing to check in on issues even when it’s inconvenient.

Do you up-charge on repairs?

Starting rates advertised by property management companies may look enticing, but you should be weary. A closer look through additional fees will give you an entire picture of the management expense.

Charges for repairs is one specific area that deserves your attention. Find out a company’s fee for coordinating repairs at your property. Do they up-charge a flat fee for repairs? Or do they take a percentage of the cost of each repair?

Do you charge me when the property is vacant?

Ask whether the property management company charges you a fee if your property is vacant or when the tenant isn’t paying rent. If managers are still collecting your fee even when your property isn’t generating income, they may be less inclined to be aggressive with marketing or eviction efforts.

Are there any other charges besides leasing, renewal, and management?

When in doubt, don’t beat around the bush. Ask property managers to go through their entire fee structure with you before you make a decision. Be sure you’ve located all hidden fees before making an agreement. Never feel pressured to sign a contract unless you understand the terms.

Originally published on the LEAP Property Management blog.