Property managers can be worth their weight in gold if they are effective and efficient. Put simply, a property manager maintains your property in almost every way possible. Property managers collect rents, keep track of payments, issue assessment letters, and do every other job that is necessary to maintain your property.
Collecting rents and keeping track of payments is a big part of property management. Although it seems simple, the collection and proper accounting of rents is a tedious task. There are certain procedures that need to be followed should a tenant miss a rent payment. You cannot simply change the lock and put a tenant’s property out in the street. Good property managers know the correct legal procedures that need to be followed and will start the process should a tenant fail to pay rent.
Maintaining the cleanliness of the property and enforcing any conditions, covenants, and restrictions (CCR) that exist on the property are also large and important parts of a property manager’s job. If CCRs exist for your investment property, you have to make sure that your tenant is complying with those CCRs. A property manager will conduct periodic inspections of the property to ensure the tenant is abiding by his/her/its agreement and by the CCRs.
Depending on the size and number of potential tenants in your property, you should look for a property management company that will be able to handle your property. This generally is not a serious issue with property management companies, but it is a consideration.
Track record and history of a property management company is vitally important. If they have great references and a good track record, you will be making a safe investment by hiring that company. However, usually the more prestigious a company is, the more you are going to have to pay it.
Property managers generally get paid in one of two ways: (1) a fixed monthly fee; or (2) a percentage of the gross rents. When negotiating with the property manager, you have to consider each possible compensation method. The more work that a property manager does, the more money that property manager is going to want. However, if the property manager has no stake in the property, he/she may not work as hard as you want.
If you agree to pay a percent of gross profits, the property manager has a vested interest in keeping the property occupied and in keeping the tenants current on their payments. Remember, if you are not receiving your rents, the property manager will not get paid. However, this method could also mean that you will be paying the property manager more than you would if you had agreed to a fixed monthly fee.
Remember, make sure the property management company can handle the size of your property. Look for a good history when searching for a property management company. Consider the ways in which a property management company can be paid and negotiate a deal that works best for everybody.