You’ve done all of the hard legwork needed to purchase your income-producing apartment property, so naturally, you’re committed to its long-term success. Unfortunately, one of the quickest ways for your real estate ownership dream to die a quick death is to hire the wrong property management company to oversee your property for you.
On the flip side, the right apartment management companies will help you to retain tenants, optimize operations, and thus add to your bottom line, not detract from it.
In light of the above, here’s a rundown on property management best practices to look for when you’re on the prowl for the top management companies in your area.
A Well-Oiled, Service-Oriented System in Place
One of the most important pieces of information you need to gather from a prospective company is the quantity of properties or units they are currently managing. In addition, be sure to ask them how many people they have overseeing the units. One of the most essential practices you should see from the best apartment management companies is having an adequate number of employees available to service all clients’ portfolios at a high level.
The reality is, an employee who is properly trained and equipped to manage properties can easily manage 30-40 units at one time. Of course, this doesn’t include the accounting function. So, let’s say you come across a property manager who has no staff and is already managing 40 units. Handing your 20 units over to that real estate property management company may not be in your best interest.
Clear Focus on Managing Properties, Not Owning Them
As you’re screening the property management company options in your area, consider whether the owner of the company has rental properties himself or herself.
Your first inclination may be to think that the best apartment management company is one whose owner is involved in apartment investing, too, which means he or she has rental properties as well. However, the truth is that, even though the property manager may relate to you on an investing level, he or she may also be in competition with you.
For instance, if both you and the property manager end up having vacancies at your individual properties, are you sure that yours will end up being filled first? There’s no way of guaranteeing that your best interests will be placed ahead of your property manager’s.
Use of Automation
As you interview apartment management companies, be sure to ask them if they’re using any of the automated systems for tenant management that are available today. Then, ask each to provide for you a sample of an output report from the system they’re using.
If they aren’t using software to boost their efficiency, or if they’re hesitant about giving you reports, you may end up not having very profitable experiences with them.
A Willingness to Perform Property Inspections
One of the most important property management best practices is completing inspections of clients’ properties. That’s because the best apartment management companies can get into their clients’ properties routinely.
In light of this, ask prospective managers how frequently they are willing to inspect your investment property. In many situations, a property manager will have no problem accommodating your request. However, in some cases, they will look down on this requirement. In fact, he or she might even use this as an excuse to boost the property management fee you’re charged.
The reality is, your chosen property management company should not view conducting formal inspections as an extra perk you should pay for. It should be part of the company’s normal service package for you.
A Fair Property Management Fee
As a general rule of thumb, look for apartment management companies that charge a fee of anywhere from 3% to 10% of your rents for overseeing your property, charging a lower fee as the number of units managed increases.
Also, find out for certain what determines the percentage you’re given. Sometimes property managers will make you pay that 7%, for example, on the full amount of rent that you could collect, even if this total is not actually collected. Instead, look for management companies that will charge you based only on the rents you actually collect.
Additionally, determine what services are included in their fee and what services require extra payment. For example, they may charge lease-up fees or construction management fees.
A Strong Maintenance Approach
Another essential question to ask a prospective property manager is how he or she will handle maintenance issues. A couple of options exist in this area.
First, your property manager could make all maintenance decisions on your behalf. In this situation, you could have the manager spend no more than a previously specified amount of your rental property cash flow before having to get your permission to make a repair. For instance, you could make $250 your limit.
Note that many apartment management companies will also add a fee of 10% on top of any invoice. Management companies often make this a requirement that cannot be negotiated, but it’s still worth trying to talk them into waiving this fee, if you can.
Timeliness When It Comes to Paying You
Finally, be sure that your chosen company gives you reports on your property in a timely fashion. Ideally, you shouldn’t get these reports no later than the sixth day of the month.
Likewise, the percentage of the rental amounts due to you each month should be in your coffers by the sixth of the month. If your target management company cannot guarantee this, look for one that can.
Start Hiring One of the Best Apartment Management Companies Today!
Now that you’ve acquired a money-generating apartment property, you need to take your\y management company search seriously. After all, the quality of your chosen company will either make or break your real estate business.
Understanding the top property management best practices is critical for helping you to make a wise decision when it comes to partnering with a property management company. Get in touch with me to find out more about how to select the best apartment management companies and watch your profits grow like never before in the months ahead.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.