Having an experienced property management can make the difference between a great investment and a poor one. It is essential to your success. Before you interview potential management companies, it is highly recommended that you ask the following folks for their recommendation.
Property managers will be your best source of initial information in finding potential property managers. Many times, one or two names will come up over and over – even in larger markets. This can help narrow your search to firms like RPM Indy Metro managers. Before you hire a property, you should ask then the following top five questions to ask when hiring a property manager.
1. Property Management Fees
Of course, as investors, our first question is how much will their services cost. Property Management Fees can range from 5% to 10% and even more. Be sure to have a clear understanding of what their fee includes. For example, are there any extra bookkeeping or accounting fees above the base cost?
2. Property Management Agreement
How long will the initial contract for services last? Is there any cost associated with moving to a different property management company, and if so, how much? How much notice is needed to cancel their service? Is there a grace period in the beginning where you could change property managers without incurring a penalty? It is always a nice idea to have your attorney do a once-over on the contract before you sign. If there is something in question, don’t be afraid to ask.
3. Reporting and Accounting
How often will reports be sent to you? In what format – email, mail, fax? How often will they send you a check for the difference in profits? Do they have reserve account requirements for repairs?
4. Maintenance Expenses
Do they have their maintenance folks on staff, or are they sub-contracted out? What are their rates for different services? Make sure you also have a clause in your contract that the property manager must get approval for any repairs above a set amount. Of course, based on your individual property and circumstances, this amount will vary. But it is a good idea to get approval for larger repairs first.
5. Resident Screening
What does their rental application look like? What does the lease look like? What are the rental requirements? Do they accept Section 8 or other forms of government assistance for their residents? What is their eviction process, if needed, and how long does that take. What does that process cost?
The reason for hiring a property manager is to free up your time and make your rental a successful investment. But, hiring a poor one is worse than hiring no one. You can end up spending more money and time to rescue your property.