Re: Choosing a Property Management Company - Posted by Beachbum
Posted by Beachbum on September 27, 2011 at 12:01:44:
As a full time licensed Property Manager, I am
frequently frustrated by comments regarding bad
experiences by investors.
Property Management is, like most businesses, very
specialized. Unfortunately, many people do not view it
that way, and feel that any “Realtor” and many
unlicensed “Property Managers” can effectively manage
their investment properties. This is simply NOT the
case.
First of all, NEVER hire a property manager whose
primary business is SALES. Sales is all about earning a
commission, usually in the near term. Property
management is about increasing the value of an asset
and minimizing expenses over the long term (assuming
you have a buy and hold long term strategy). Sales
oriented “managers” rarely look at the long term value
of an expense vs. today’s out of pocket cost.
For this reason, they often do not screen and place
tenants with the long term view. Their concern is to
get cash in hand today.
For this reason, they often seek out the cheapest
materials, the cheapest repair bids, and generally, the
“quick fix”, so the monthly statements look good.
Find a company whose primary business is management of
properties similar to yours- commercial, industrial,
residential. NOT just some agent that is always
hustling sales, and manages property as a convenience
for a few clients.
Look for CCIM designations, NARPM members, and investor
oriented specialty real estate agencies.
Meet face to face, and ask about their systems and
strategies. More importantly, ask about their RESULTS.
What is their actual vacancy rate? What is their annual
tenant turnover rate? How many court evictions have
they had? At what cost to the client? What are typical
costs for routine repairs? How many Notice of Violation
have they received from government agencies? (Fire
Dept, Code Enforcement, EPA, etc.)
What is their procedure for handling repair requests
from tenants? How often do they inspect inside?
Outside? How are these results reported to you? How do
they select vendors for repairs? How long have they
been using current vendors?
How, and how often, will they be communicating with
you? What, exactly, do the monthly reports look like,
and what do they mean?
Ideally, you will be able to meet the PM at your
property and walk through with them PRIOR to signing a
management agreement. Ask questions- what do THEY see?
What do they recommend?
You need to ensure that there are safeguards to protect
you and make you comfortable with the financial
arrangements, but you also cannot expect to tie the
hands of the PM. It must be a relationship of mutual
trust and respect. YOU have responsibilities, as do
they. YOU must be responsive, and you must realize they
are in business to make a FAIR profit. It is a two-way
street.
There are a lot of dedicated, quality PMS out there,
but you must do your homework.
Good luck!