Property managers are real estate professionals that you can hire as a property owner to handle most of the administrative tasks relating to rental properties. Put simply, a property manager deals with all of the necessary operations and maintenance responsibilities that accompany owning a rental property. With so many different property managers out there nowadays, finding the best one can seem like an impossible task. To help you, if you are looking to rent out your property, check out the three simple steps below on how to choose a property manager for your needs.
How to choose a property manager: Know your budget
When looking for a property manager, it is important to have a price in mind for their services. Monthly charges for property managers normally involve a fixed fee. Alternatively, some property management companies take a percentage of your rental yield, usually in the region of 8-12 percent of your total monthly revenue.
From there, the service you receive can be tailored to your unique specifications. This means that you can add or remove additional property management services to ensure that you are only paying for the necessary coverage. Remember to learn about the services that you need and compare a few companies to ensure that you are getting the most value for your money.
Needless to say, property management costs can vary dramatically, and the price you first see might not be the price you finally end up paying. For instance, some companies bury hidden charges into a contract. These charges can include property vacancy fees, tenant finder fees, and any emergency call-outs.
Therefore, it is important to stay on top of any extra fees and be aware of any other charges that might arise in the future. That way you can avoid any potentially expensive surprises further down the line.
Moreover, property management costs can vary depending on the type of property. For example, if you are going to be renting an apartment, then a specialized apartment rental management company might be able to offer you a better deal than a generic property management company.
Ask about tenant screening practices
Another important factor to consider when comparing property managers is to look into how they screen potential tenants. Understandably, finding tenants can take a lot of time.
Advertising the vacancy, carrying out viewings, and even referencing and establishing whether a prospective tenant has the legal right to rent are complex processes that should not be taken lightly. Consequently, your property manager ought to have a number of checks in place to ensure that your potential new tenants will be able to meet their monthly rent payments.
As part of the screening process, property managers can conduct checks for credit eligibility and employment status. They can also demand references from previous landlords, so do not be afraid to ask for more information about these important tests.
Ideally, the best tenant for your property is capable of paying their rent on time and must promise to remain committed to keeping the property in good condition. In addition, they should also want to stay for a medium- to long-term time period. Finding the perfect tenant ensures that you can receive a constant cash flow, with low maintenance bills, and no voids, so before they accept a tenant your property manager should try to create a comprehensive overview about anyone who might be moving into your property.
If your property manager fails to screen your tenants adequately, then you might end up with a bad tenant. In a worst-case scenario, there is even the possibility that you could get into legal trouble if it comes to light that your tenant has been living in the country illegally.
Always read the small print
Before signing a deal with your property manager, it is vital that you read through all the terms and conditions of your agreement. It can be very tempting to accept the terms and conditions without actually figuring out what they mean, but when it comes to property management, your real estate investment is not something to take lightly.
Property is one of the biggest investments that you could possibly make, so you need to know that your rental property is in safe hands. One caveat to be aware of is that if you choose to sell your rental property, some property management companies can put restrictions in place to limit your options.
Of course, if you have been satisfied with the service provided by your property manager, then these restrictions are unlikely to cause any problems, but it is still crucial to be aware of your contractual obligations. With this in mind, if you are happy for your property manager to maintain almost total control over your property without having too much say in any decisions, there are companies out there that are willing to take on this level of responsibility.
Alternatively, if you would prefer to be more involved, there are plenty of less binding contracts and options if you do not want to feel trapped. Do not be afraid to shop around to find the best possible property management company for your circumstances.
Takeaway on how to choose a property manager
Ultimately, by doing plenty of research, you can find a property manager that meets your needs. That way, you can reap the rewards of owning a rental property without needing to worry too much about the administrative side of your investment. Above all, outsourcing your responsibilities to a property manager can be the perfect solution to balancing the needs of your tenants with your busy life.
Are you in the process of building a rental property portfolio? For more real estate inspiration, take a look at this guide to female home buyer trends for 2020.