What Makes a "Good" Property Management Company?
If you are looking for a property management company, you are surely looking for a good fit. Learn what makes an effective property management partner.
Investing in real estate brings a bevy of advantages, such as cash flow, equity building, tax breaks, and a hedge against inflation, among others. However, there’s also a less appealing side to real estate investment: property management.
Property management can be incredibly time-consuming, especially if you work alone or within a small ownership group. You likely got into real estate investing because you’re an investor, not because you want to be a property manager.
If that’s your situation, you’ve likely considered offloading this burden to a good property management company so you can focus on investing. But what sets apart an effective property management company from the rest? Let’s take a look.
Why Use a Property Management Company?
The biggest reason to seek out a property management partner is so you can cut down on the stress of managing tenants and free up your schedule so you can seek out new investment opportunities.
If you haven’t taken a real vacation in years or you get several middle-of-the-night phone calls every month, it may be time to consider working with a property management company.
Property management companies advertise your property, get tenants/buyers for you, prepare any legal documents needed, maintain your property, and employ best practices to keep your property valuable.
Your business and family need to be managed as well. Getting constant calls at odd hours due to one property issue or another isn't a necessary evil of real estate investment.
What Do Property Management Companies Do?
Property management companies take over the multitude of responsibilities you currently handle yourself, including:
- Showing and leasing vacant units
- Collecting and depositing rent
- Handling maintenance requests
- Following landlord-related laws and regulations
- Acting as a local presence if you live out of town
How Much Does a Property Management Company Cost?
Property management companies typically either charge a fixed monthly fee for managing your property or they receive a percentage of the monthly rent.
It’s most common for property management companies to charge a percentage of the total monthly rental payments. This percentage can vary from company to company and can be dependent on the size of your property or properties. However, it’s common for these companies to charge anywhere from 6 to 12%.
Working with an Effective Property Management Company
The key to finding a good property management company is to look for one that is aligned with your values. If you can find a property management company that shares your vision for your property and wants to help you achieve your investment goal, that’s a great start.
There are four tenets of an effective property management company:
Prompt and Accurate Communication
Prompt and accurate communication between a property manager and property owner is crucial for the success of any rental property business. Here’s why:
It Builds and Maintains Trust: Property owners entrust their property and investment to property managers, and prompt and accurate communication helps build and maintain trust between the two parties.
It Ensures Timely Problem Resolution: Effective communication between property managers and property owners ensures that issues related to the property are identified and resolved in a timely manner. This helps prevent small problems from becoming bigger issues and ensures that tenants are satisfied with their living conditions.
It Guarantees Transparency: Clear and transparent communication helps property owners understand the state of their investment and the steps being taken to ensure its success. This includes regular reports on rental income, expenses, maintenance and repairs, and tenant issues.
It Ensures Efficient Operations: Accurate communication helps property managers make informed decisions about their property, which in turn helps them operate the property more efficiently. For example, if a tenant has reported a maintenance issue, prompt communication helps the property manager coordinate repairs quickly, preventing further damage.
It Brings Increased Revenue: Prompt and accurate communication between property managers and property owners can lead to increased rental revenue. When the property owner is aware of the state of their investment and the measures being taken to ensure its success, they are more likely to invest further in the property or recommend it to others.
They Have a Solution-Oriented Mindset
Having a solution-oriented property manager is essential for the success of your property investment for several reasons:
Efficient Problem-Solving: A solution-oriented property manager is equipped to identify and resolve issues as they arise. They have the experience and knowledge to identify the root cause of a problem and take necessary steps to resolve it quickly and effectively.
Maintenance and Upkeep: A property manager who is solution-oriented is proactive in addressing maintenance and upkeep issues. This helps ensure that the property is well-maintained, which can result in higher property values, lower vacancy rates, and increased tenant satisfaction.
Tenant Satisfaction: A solution-oriented property manager is focused on providing excellent customer service to tenants. By quickly resolving issues and addressing concerns, tenants are more likely to be satisfied with their living experience, which can lead to higher lease renewal rates and lower vacancy rates.
Cost Savings: A solution-oriented property manager is focused on finding cost-effective solutions to issues that arise. By being proactive and addressing issues before they escalate, property owners can avoid costly repairs and potential legal issues.
They Are Predictive in Nature
Being predictive in nature when managing someone else's property is important for several reasons:
Anticipating Potential Issues: By being proactive and predicting potential issues that may arise with the property, a property manager can take steps to prevent problems before they occur. This can save time and money in the long run, as it is often more costly to fix a problem after it has occurred.
Minimizing Risk: A property manager who is predictive in nature can identify potential risks and take steps to minimize them. This can include regular inspections, routine maintenance, and addressing issues as soon as they arise, which can reduce the risk of damage or liability.
Improving Efficiency: By predicting issues before they occur, a property manager can plan and schedule maintenance and repairs in advance. This can help to minimize downtime and ensure that the property is always in good condition.
Enhancing Communication: Predictive property management requires open and ongoing communication with property owners, tenants, and vendors. This helps to build trust and transparency, which can ultimately lead to a better working relationship and increased satisfaction for all parties involved.
Providing Peace of Mind: Property owners want to know that their investment is being managed effectively and efficiently. Being predictive in nature can help to provide peace of mind to property owners, as they can rest assured that potential issues are being identified and addressed before they become major problems.
They Are Experienced
It is important to be experienced when managing someone else's property for several reasons:
Knowledge of Laws and Regulations: An experienced property manager will have a thorough understanding of local, state, and federal laws and regulations that apply to property management. This ensures that the property is managed in compliance with all legal requirements.
Expertise in Property Maintenance: An experienced property manager will have a strong understanding of property maintenance and repair, including how to identify potential issues, how to address them, and how to schedule regular maintenance to prevent future problems.
Financial Management Skills: Property management involves managing financial transactions such as rent collection, security deposits, and maintenance expenses. An experienced property manager will have the necessary financial management skills to ensure that these transactions are handled accurately and efficiently.
Tenant Relations: An experienced property manager will have the skills to manage tenant relations, including screening prospective tenants, handling disputes, and addressing complaints. Good tenant relations are important for maintaining a positive reputation and attracting and retaining good tenants.
Risk Management: Property management involves a certain level of risk, including the risk of legal action, property damage, and liability claims. An experienced property manager will have the knowledge and skills to mitigate these risks, ensuring that the property is managed in a safe and responsible manner.
Choosing an Effective Property Management Company
Investing in real estate offers numerous advantages, but property management can be a time-consuming and burdensome task. For investors who prefer to focus on their investments rather than handling day-to-day property management, partnering with a good property management company can be a solution. These companies take over responsibilities such as tenant management, property maintenance, and legal compliance. They help reduce stress, free up time for investors, and ensure efficient property operations.
When selecting a property management company, it is crucial to find one that aligns with your values and investment goals. A good property management company exhibits prompt and accurate communication, which builds trust, ensures timely problem resolution, guarantees transparency, and enhances operational efficiency.
They also possess a solution-oriented mindset, enabling them to efficiently solve problems, address maintenance issues, and prioritize tenant satisfaction. Being predictive in nature, they anticipate potential issues, minimize risk, improve efficiency, enhance communication, and provide peace of mind to property owners. Finally, an experienced property management company brings knowledge of laws and regulations, expertise in property maintenance, financial management skills, tenant relations, and risk management capabilities.
By outsourcing property management to a reputable company, investors can enjoy the benefits of real estate investment while leaving the operational details in capable hands.
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