Questions to Identify the Perfect Property Management Company
If you’re a landlord or an investor, then you know that finding and hiring a property management company is no simple task. There are dozens of companies out there promising the world, but how do you know which one is the right fit for you?
Before deciding, it’s important to ask some key questions to get a better idea of what they can offer you. Keep reading for the four questions to ask yourself, so you can find the perfect one that can meet your landlording needs.
1. Is your management company licensed?
Before anything else, you need to check if the property management company is legitimate. After all, hiring an unlicensed company will only haunt you when legal matters arise, making your life harder. Thankfully, many professional organizations provide certification classes to property management companies, so you can ask to see the following:
- Government-Issues Real Estate Licenses and REALTOR Membership
- Certified Manager of Community Associations (CMCA)
- Residential Management Professional (RMP)
- Certified Property Manager (CPM)
- Certified Apartment Manager (CAM)
This question is to help you check if they have the right certifications and anything additional to back up their promises. Steer clear from companies that lack state licenses and certifications—no matter how enticing their offer is.
Plus, a property management company shouldn’t have any issues providing references that prove its legitimacy. You should also be able to ask for references and speak to their past clients, past real estate agents, past contractors, and even past attorneys and mortgage brokers to see their credibility.
2. What services does your management company offer?
Not all property management companies offer the same services–or even more importantly, execute them the same way. Pick the one that provides the specific services that’ll meet your needs. If you’re not sure where to begin, here are the things you’ll want to have from a property management company:
- Rental marketing
- Tenant screening
- Rent collection
- Tracked property maintenance
- Financial reporting
- Consistent property inspections
- Picture and video validation documentation
- Aggressive evictions and payment plans
- Legal guidance on LLC, licenses, insurance, etc.
- Thorough and timely evaluations, repairs, and renovations
Plus, see if the rental property management company will be available to serve you around the clock. You’ll want to have them within reach at all times, so you won’t have to hop in and deal with any emergency tenant requests or repairs that defeat the purpose of hiring third-party help.
Check if the property management company will outsource any of their duties to other people. This isn’t an ideal practice, as it can lead to a long chain of people that’ll be difficult to supervise, possibly leading to fraud and inconsistent results.
3. What experience does the management company have?
You want to work with a property management company with a solid track record of spectacular performance. The more experienced they are, the better they’ll be at handling your portfolio and dealing with different situations. So work with established companies, and avoid risking your high-value assets.
Here are the things you want to check:
- How many rental properties and portfolios do they have on their plate?
- What kind of rental properties have they handled before?
- How will they allot enough time and resources to manage your portfolio?
In essence, you want to see if they have the experience to handle your portfolio. For example, you wouldn’t want to hire a property management company that only handles single-family homes if most of your portfolio includes apartment complexes and townhomes.
4. What are your management company fees?
Last, you want to check how the property management company will charge you. In most cases, the company will have a commission-based payment structure that’ll take a portion of your monthly rental income. However, there are also some cases where the property management company will charge a monthly fee based on the services they offer, regardless of your monthly cash flow.
Here’s a quick chart to help you evaluate if the management company will charge fairly:
Either way, the property management company should clearly outline the fee structure in the contract. Be cautious of unusually low fees, as this may result in lower-quality services. After all, the best company services don’t come cheap—but you’ll get what you pay for. Average fees may sound enticing, but you’ll likely miss out on some services.
Moreover, ensure that there are no hidden fees that can easily eat up your rental income. Each service and additional charges should be outlined clearly in the agreement, and we recommend you clarify every item before signing on the dotted line.
Ask the Right Questions, Find the Right Partner
And that’s it! Ask these questions, and you’ll be well on your way to identifying the best property management company to handle your rental property investment portfolio. We suggest you follow up with as many questions as possible to get a better grasp of their services as well.
At the end of the day, the more questions you ask, the clearer the winner will be.
Our team of expert property managers have been serving the Metro Detroit area for more than two decades. We know what it takes to be an excellent partner to landlords and investors, and will stop at nothing to help rental investors like you succeed in the market. Start working with us today!