This week, I’ve covered the responsibilities of a property manager and the skills they should possess. As I mentioned when we began, there are two paths to take with property management. With the first, you take charge yourself and adopt the responsibility of overseeing your buildings. The other route is to pay a property management company to handle all the nitty-gritty for you.
Today, I’ll cover the questions to ask when hiring a commercial property manager. This is a huge decision and should be approached slowly, with a plan in mind. The company you hire will either help your business grow or be a roadblock to your success.
Questions to Ask:
Are They Licensed?
When hiring a commercial property manager, set the bar at least high enough that a broker must be licensed for you to consider them. This generally means they have taken a property management course and passed a state licensing exam. This is important because licensed brokers have a state regulated system to handle your rental income and security deposits.
How Many Properties Do They Manage?
Find out how many properties they are managing now. If their staff is small, but they’re handling a large number of buildings, you’re probably not going to get the best service. Secondly, visit a few of the properties under their watch. Are they in good shape? Is this a place you would want to live? Put yourself in a tenant’s shoes.
How Much Do They Charge?
Of course, you’ll want to know how much they are charging you to manage your properties. While there is no such thing as a standard management fee, most firms will charge you between 5 – 10% of the monthly rental income. Make sure to specify with them whether this is the expected monthly rent or the amount of rent actually collected (in case of tenant vacancies.)
How Often Do They Perform Routine Property Inspections?
Ask them how often they check on the properties. Buildings you own should be inspected on the inside at least once a year and on the outside every few months. This is an important way to catch small issues before they become big issues. If your management firm is lazy with their inspections necessary improvements can slip through the cracks.
How Often Do They File For Eviction?
This important question gives you insight into the quality of their screening methods. If they’re evicting a large number of tenants, they’re not doing a quality job of interviewing and background checks. With a wild, rotating roster of tenants, you’ll never have the stable, reliable income on your property that you need to grow your investments.
Do You Get Along With Them?
While this is may seem less important when compared to the other items listed, it’s vital that you get along well with your property manager. It’s easier to solve disagreements with someone you respect and can work easily with. These are the people effectively running your properties for you, you’ll want to maintain a healthy relationship.
If you have lots of free time on your hands, and you want to keep a close eye on your investments, then being your own property manager is probably the way for you to go.
However, if you have many rental properties, live far from them, and don’t enjoy micromanaging, it’s well worth the money hiring a commercial property manager to relieve you of the stress.