I’m considering using a property management company for my multi-family properties. How do I choose the right company?
You may want to start your search by talking with your fellow landlords who currently use property management companies. Are they willing to recommend their management company? How satisfied is the landlord with the company’s performance? Are the landlord’s tenants satisfied with the customer service and maintenance responses from the management company?
You will need to research property management companies in your area and prepare a list of potential companies to interview.
Before proceeding to interview each candidate management company, you should verify that the company is properly licensed and whether any complaints have been filed or disciplinary actions have been taken against the company. For each management company interview you should ask questions specific to these qualifying issues.
- Property Type Qualified – Is the company qualified to manage the type of property you have? How many units do they manage? Although the number of units is one preliminary indication of the firm’s qualifications, the number of units managed is usually not more important than the firm managing properties of a type similar to yours.
- Services Offerings – Consider each kind of service you want the company to perform for you. This will usually include: finding, screening, and selecting tenants; executing leases; holding and accounting for deposits; collecting rents; handling tenant complaints; performing property inspections; handling evictions; attending to tenant and property emergencies; supervising routine maintenance and repair; and providing financial accounting and reporting.
- Staffing – Are the property managers licensed? Highly experienced? How many accounts are assigned to each manager? Will the company have adequate qualified staff if your properties are added to their current management load?
- Management Contract – What are their management contract terms and conditions? Are the terms and conditions legal? How willing are they to negotiate? What are the costs of essential services? What other services are available; at what cost? What is the termination procedure? Can you delete a clause that gives them a listing if you decide to sell the property, as this is considered an unacceptable clause by many, perhaps most owners of rental properties?
- Screening & Selection Procedures – How does the management company handle tenant screening? Will they make the tenant selection? How will they incorporate your business requirements for tenants into their practices?
- Documentation – Legal and adequate documentation is extremely important for minimizing management problems and dealing with problems. You will want to obtain copies of all documentation used by a candidate manager and ensure they are legally compliant and in accord with your business policies.
- Management issues – Does the company have adequate operational and management procedures in place? Does the company employ technology that results in efficient and cost-effective management and that provides adequate reporting? How will they work with you for your best business interests?
- Tenant Services – How is maintenance and repair handled by the management company? How is tenant customer service handled regarding questions, concerns, and complaints? Is tenant service provided 24/7 or during business hours only? Does the management company use an online tenant portal for rents, deposits, fees collection, and general tenant services?
Keep in mind that the use of a property management company does not eliminate owner liabilities related to business ownership and operation. The property management company becomes the owner’s legal agent who essentially controls the rental investment through the management’s representation with tenants and governmental agencies, enforcement of rental policies, and handling of rents and deposits. The owner is liable for all acts performed by the owner’s agent in exercise of the authority given the agent by the owner.