Should you need to hire a professional property management company then the profitability of your property boils down to whether you hire a good or bad company.
If you pick a good property management company, your rental home will make you a good amount of money. If you pick a bad company, you could lose thousands of dollars a year on your rental home.
A big mistake owners make is that they just randomly pick a property management company from the phone book without doing research on the company first.
Stay clear of those big national real estate corporations that have both a property management division and a home sales division. Many of these corporations use property management as simply a tool to get their foot in the door with you so that they can try and convince you that you need to sell your home. That is where these companies make their money. Many of them will operate their property management divisions at a loss just so they can hit you with their advertisements on selling your home. There have been many a unhappy owner who has accused these huge corporations of purposely letting their home sit vacant so that they can try and get you to just sell your home. Whether or not these accusations are true, you want a property management company that specializes exclusively in property management in your local markets.
Check references, particularly the management companys other clients. Make a few phone calls to check references. Do not sign any agreement with the property management company until you know they have a good track record. Now here's where owners blow it. They contact a property management company on their high up pedastool and they demand to see a list of all the property management's clients so they can call them for a reference. Don't do that. Humble yourself. Your home will only make about $50 a month for the property management company. If you are a pain, they will simply tell you to take your business elsewhere. The property management company will not release a list of "all" their clients. Not to you. Not to anyone. That is confidential and internal information. Think about it. Anyone could get a list of clients and then contact those clients and offer a slightly lower management fee and take all their business away. You would be hard pressed to find any business that would be willing to give you a list of "all" their clients. Just chill out. Ask for three references that you can call. Call the references and ask if they work for the property management company or know someone who does. Ask the references how long they have had their properties managed by this company, and just go from there.
Use the Internet to make sure the property management company and its employees have the necessary licenses and that they are in good standing. Most states require property managers to have a real estate license and/or a property manager's license. For example, the state of California requires property managers to have a real estate license.
Ask about the company's insurance. They need to be insured. The firm should have professional liability insurance and general liability insurance on its employees. Also, the firm should have a bond on the employee in case of employee theft, after all, you have a right to know this because it is the employees who will be handling your deposit and monthly rent money and if they commit fraud, you want full reimbursement.
Make sure you ask the prospective property management company the right questions.
Consider asking the following questions:
1 - Can you show me a list of what management services you provide?
2 - Do you sell homes?
3 - Can you tell me exactly what the monthly operating reports you send me will contain and when I will receive a monthly income check?
4 - How do you market properties?
5 - How do you handle maintenance requests from tenants?
6 - Who will actually manage my property? What are her qualifications? Is she licensed? How many properties does she currently manage?
7 - I would like 3 clients of yours that I can call. I would like the references to be from people who have homes that are managed by the same person who will be managing my home.
8 - Do you have a maintenance division? If so, do you only charge the actual cost of labor and materials without any markups?
9 - Are you able to get discounts with vendors and if so, do you pass on those savings to me?
10 - Who gets to keep the late charges? Also, if I keep the late charges, are you charging me a higher monthly management fee? If you keep the late charges, are you charging me a lower monthly management fee?
11 - Do you have general liability insurance and Errors and Omissions insurance on your employees? If so, is your general liability insurance for at least $2M and your Errors and Omissions insurance for at least $500K?
12 - Do you have at least a $500,000 bond and a forgery and alterations insurance policy of $25,000 or more for all your employees?
13 - Do you meet all DRE standards for what is considered acceptable and not acceptable regarding the co-mingling of owners' funds? How do you keep my rental income separate from John Doe's rental income? If money is not in my account to pay for a repair, do you contact me and ask that I send you the money or is the money taken from another owner to pay for my repairs until I can pay you. (The answer you want to hear is that the repair is not made until the money is in your account to pay for the repair).
Related posts:
- Property Management 911 – How Do I Evict A Non-Paying Tenant? The first stage in the eviction process is to serve...
- Diabetic Dog Diets And Diabetes Management Diabetes mellitus is a disease that can be potentially fatal...
- Buying Foreclosed Real Estate One man's trash is another man's treasure. While home foreclosure...
- Benefits You Can Have With Pest Control Do insects think your home is a great place to...
Comments on this entry are closed.