Last Updated: January 2024
Selecting a property management company is a crucial decision for property owners and investors, as it directly impacts the performance, maintenance, and value of their real estate assets. Below, we will take a look at how to choose a rental property management company that meets your needs, ensuring the long-term success and profitability of your real estate investments.
10 Steps to Choosing a Property Management Company
Once you’ve decided to hire a property manager instead of self managing, you should familiarize yourself with the steps to choose the right one. A competent property management company can make the difference between a well-functioning, profitable investment and a poorly managed, underperforming property. It is vital to carefully evaluate potential property management companies and select one that aligns with your investment goals, property type, and desired level of involvement.
1. Assess Experience and Reputation
Look for a property management company with a solid track record and a positive reputation in the industry. Research their years of experience, portfolio of managed properties, and client testimonials to gauge their expertise and reliability.
Questions to Ask About Experience and Reputation:
- How long has your company been managing rental properties?
- How many rental properties do you currently manage?
2. Understand Services Offered
Identify the range of property management services the company provides, such as tenant screening, rent collection, property maintenance, and lease negotiation. Ensure that their offerings align with your property management needs and expectations.
Questions to Ask About Services Offered:
- What services does your company offer?
- What services does your company NOT offer?
- Full Service vs Partial Service vs A La Carte?
3. Evaluate Communication and Responsiveness
Effective communication is key in property management. Select a company that demonstrates a commitment to timely and transparent communication, ensuring that you stay informed about your property’s performance and any issues that arise.
Questions to Ask About Communication:
- Do you have a 24 hour hotline for tenant emergencies?
- Do you provide any regular reports for landlords? (e.g. Quarterly, Monthly)
4. Inquire About Fees and Contract Terms
Request a detailed breakdown of the property management fees and contract terms, such as management fees, leasing fees, and any additional charges for services like property maintenance or tenant turnover. Compare these costs with other companies to ensure you are getting a fair and competitive rate.
Questions to About Fees and Contract Terms:
- What are the fee structures for your services?
- What is the term? (Most companies require 1-year minimum)
- Are there any setup fees and additional fees in addition to the ongoing rate?
- Request to see the contract beforehand if they are willing to provide.
5. Check for Industry Certifications
Look for property management companies with industry certifications, such as a brokers license, the Certified Property Manager (CPM) designation from the Institute of Real Estate Management (IREM) or the Residential Management Professional (RMP) designation from the National Association of Residential Property Managers (NARPM). These licenses and certifications demonstrate a commitment to professional development and adherence to industry standards.
Questions to Ask About Licenses & Certifications:
- Is there a designated broker’s license for the company?
- Are there any disciplinary actions on file the broker of record?
6. Gauge Compatibility with Your Property Type
Ensure that the company has experience managing properties similar to yours in terms of size, location, and tenant profile. This will help guarantee that they have the necessary expertise and resources to effectively manage your specific rental property type.
Questions to Ask About Property Types:
- What is your experience managing my property type? (e.g. Multifamily, Commercial)
- Do you currently manage any other of my property type? If so, how many.
7. Check Online Reputation
A quick google search for the company’s online presence can help shine some light on their business. This can include a website, social media presences, and reviews on platforms such as Google or Yelp.
Questions to Ask About Online Reputation:
- How do you address negative reviews or feedback that appears online about your services?
- Can you provide references or testimonials from satisfied clients who posted positive online reviews?
8. Request References
Ask for references from current and former clients to gain insights into the company’s performance, professionalism, and client satisfaction. Take the time to contact these references and ask about their experiences working with the company.
Questions to Ask About References:
- Can you provide a list of past and current clients who can vouch for your services?
- Have you ever lost a client due to dissatisfaction with your services, and if so, can you explain the circumstances?
9. Check Existing Properties Managed
If possible to find existing properties managed by the company, try to drive by them to see how they are being managed. This can give you an idea of the types of properties they manage as well as how they will likely manage yours.
Questions to Ask About Checking Exisiting Properties Managed:
- Can you provide examples or case studies of properties you currently manage or have managed in the past?
- How do you handle maintenance and emergency situations at the properties you currently manage?
10. Interview Potential Companies
Arrange interviews with your top candidates to assess their professionalism, communication style, and overall fit with your needs and expectations. Prepare a list of questions to address any concerns or clarify details about their services, fees, and contract terms.
Where To Find Local Property Management Companies?
Finding a good local property management company can sometimes be easier than it sounds. Thankfully there are several offline and online solutions to help your search. First, it is important to understand that property management is a very local business. Try asking for referrals from other local real estate investors, lenders, and real estate agents who do business in your area. If word of mouth recommendations don’t yield any results, you can always try an online search using Google and then apply the 10 steps above interview potential companies. Below are a few of our suggested places to start your online search:
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Choosing a Property Management Company FAQ
What Should I Look for in a Property Management Contract?
Keep in mind that this contract will lock-in any agreements between you and company for the duration it (usually 1-year). It is very important to ensure that the contract clearly outlines the scope of services provided you need, agreed upon fee structure, acceptable duration of the agreement, responsibilities of each party, and terms of termination. Clauses related to liability, dispute resolution, and any additional fees should be thoroughly reviewed. If unsure, consider having a legal professional review the contract.
How Do I Fire a Property Management Company?
Sometimes things don’t work out with your property management company. Terminating the contract usually depends on the terms of the contract. Most require a 1-year contract minimum, so it’s best to do so promptly if you are approaching that point. Other companies may charge a termination fee or off-boarding fee. Open communication is often the best approach in difficult situations like this. Keep it cordial and ensure that the termination transition ends amicably.
How Much Do Property Management Companies Charge?
The average property management fee for a rental property in the United States is approximately 9% and falls between 6% – 12%. These charges can vary based on factors such as the scope of service, the type of property, location, size, and the range of services required. Some companies may include all services for one monthly payment, while others may bill each service separately.