Top 5 Areas To Consider Before Hiring a Property Management Team
When you consider hiring a property manager, you should plan to do a fair amount of research before signing on with the first one you interview. The rapport you will come to establish with your property manager should be akin to a friendship, where you trust them to perform needed services and they do everything they can to protect your investment and make it generate income. In turn you can refer other landlords to them or give them more of your real estate portfolio to manage. Property managers in the Toronto area tend to stay busy, but should always have time to meet with a potential new customer, so don’t be afraid to setup a few meetings to figure out which manager shares your views and understands your goals with the residential property.
The areas mentioned below represent some things you should consider when doing your research before hiring a property management team.
Know the difference between busy and overworked
It is a good idea to ask two questions right off the bat:
How many properties do they manage currently?
Are they rental property owners?
The answers to these questions can paint a pretty good picture of what service level you might expect. Be sure to make notes and review them later as the message between the lines may be staring you in the face. Overworked property managers may not have the time to chase tenants for rent money, which means they are more inclined to pursue the eviction process. This can be expensive to the property owner and result in damage or neglect to the property while the process takes place. Managers that operate their own rentals will naturally tend to schedule them first for repairs and maintenance as they are trying to generate income just like their customers. Essentially you have a conflict of interest.
Understand the scope of responsibility
At some point during the meeting you will want to discuss the property manager’s fee which tends to be between 8-10% of the rent collected. Make sure you understand what they are willing to do for this fee with regard to maintenance, collections and how the wording in the contract reflects these statements. For instance, some managers will charge the monthly fee based on the rental they might have collected, no matter if they do receive the rent on not. You should avoid these types of property managers.
Discuss the management philosophy
Be sure to ask the property manager what type of automated system they use for tracking work orders, payment dates/amounts and any other tenant data that might be used to assist tenants. You may want to discuss the frequency with which the manager enters the properties they oversee. You may have an idea in your head of regular visits, when in actually the property manager may not go in more than once a year at lease signing.
How a property manager handles maintenance issues is very important to understand upfront. For instance, you should ask if there is an auto approval limit on how much the property manager will spend without consulting you on repairs. This amount should be capped at $250. Sometimes managers will also include a 10% invoicing fee that you should negotiate and you may want to ask how many service contracts with vendors they have as well, which will usually indicate they are interested in securing the best price for the work.
Trust your instincts
When you arrive at the meeting with each property manager, take a moment to note if they arrived on time, or appeared preoccupied during the meeting. A property manager that is respectful of you will respect your property. A manager that interrupts you or talks over you will behave the same way when it comes to consideration for your property in the form of tenant approval, rent collection and maintenance.
These areas of consideration will help hire a property manager will take of you, or tenants and the property to ensure it will be an income generating asset for years to come.