What To Look For In A Property Management Company
It’s unlikely that anybody goes into real estate investing simply for the fun of it. Though the process can certainly be enjoyable, investing in real estate is basically a tool for generating cash flow and building wealth.
Money is the name of the game, which means profitability becomes your number-one concern. Admittedly, every real estate investing situation is different, but you can almost always make a case for the wisdom of hiring a property management company.
The challenge is figuring out which one to partner with.
Why Work With a Property Management Company?
Property management companies aren’t free, but they nearly always can generate a positive ROI for savvy investors. Here’s why:
- Saves time. If you’ve been in the real estate investing game for any length of time, you know just how time-consuming it can be. You might not have any issues for months at a time, but you’re only one phone call away from having to play the handyman. When you have a property management company at hand, however, you don’t have to plunge toilets and tackle leaks yourself. Your partner handles everything for you, which may save you hours of valuable time every month.
- Better tenants. Property management companies have proven tenant-screening strategies that ensure they accept only the best renters who are the most likely to pay on time and respect your property. (Remember, property managers have a stake in the health of the property. They don’t want to deal with bad tenants either!)
- Insulation from tenants. It can be awkward to have to listen to sob stories from late-paying tenants. And who wants to pick up the phone to address a noise disturbance at 11 p.m. on a Saturday night? When a property management company is committed to respond to such matters, you don’t have to worry about handling any of this.
- Better results. In most cases, a better quality of tenant and streamlined processes result in lower turnover and fewer vacancies. This reduces your expenses and improves cash flow.
- Fewer legal issues. A property management company stays on top of all fair-housing laws and regulations that relate to landlord-tenant relationships. Their team can help you avoid making costly legal mistakes.
Four Tips for Finding the Right Property Manager
When there are so many different property management companies to choose from, it’s up to you to do the necessary research to identify the right one for your investment portfolio. Here are four essential tips to help you do this.
Ask for Referrals
In this industry, it pays to obtain referrals. If you have friends in the real-estate investing world – or even an agent, broker, or lender – that person should be able to direct you toward a few options.
When you ask for referrals, keep an eye out for any names that repeatedly show up. If the same company gets referred to you multiple times, there’s probably a good reason for it.
Do Online Research
In addition to eliciting referrals from your various professional networks, you should do your own Internet sleuthing. Online research will give you access to such sources as reviews, ratings, and certifications.
The stronger a company’s online presence, the more it’s likely to care about its image. (And the more likely this firm will prioritize you as a client.)
Any property management company can design a flashy website and assure you that it will take care of you, but it’s crucial for you to know what the company really does when the proverbial rubber meets the road. One way to secure a clear sense of the difference between casual marketing and solid promises is to explore the guarantees the prospective candidate includes in its contracts.
Green Residential, an Austin, Texas-based property management company, is a fine example. It offers three distinct guarantees as part of its agreements: (1) tenant placement guarantee, (2) rental income guarantee, and (3) satisfaction guarantee.
If you choose to work with Green Residential, or a company that’s like them, you’ll know that your best interests will be prioritized.
Not every property management company will be able to ensure competitive guarantees like these, but it’s worth exploring your local market to see what the various firms in your service area have to offer.
Review The Terms
In addition to guarantees, you should review the terms in the other critical language with regard to regard legal issues, liability, who is responsible for specific expenses, compliance with fair housing laws, and so on. Don’t gloss over the fine print, because it matters!
Adding It All Up
The more time you dedicate to finding the most suitable property management company to take care of your properties, the higher the odds that your investment properties will generate consistent cash flow in the years to come. Be thorough and wait patiently for the perfectt fit!