Are you thinking about using a property management company to manage your rental properties? Using a property management company is an easy, affordable way to make sure that you don't have to deal with the headaches of being a landlord -- all you need to do is collect your check at the end of every month. Still, there are some questions you might want to ask a property management company before you sign a contract.
1. Do you charge a fixed fee or percentage rate?
Depending on your situation, either might be better. For luxury properties, fixed fee rates are usually less expensive, because you're not paying a percentage of total rent. For properties closer to average rental value, percentage rates are generally more affordable, because they're only charged as a percentage of income -- when the unit is empty, you pay nothing.
2. How do you vet prospective renters?
A property management company should always do very thorough vetting, including both background checks and credit checks. The background check should also include a thorough reference check. The better the vetting, the less likely it is that you'll end up having to go through an eviction process.
3. Who is your lawyer or legal department?
If a property management company has a close relationship with a lawyer or even their own legal department, it'll make many situations that you run into much easier. They will be able to draft their own contracts and they will have an easy recourse should a situation get sticky with a tenant.
4. How do you charge incidental fees?
Incidentals will come up occasionally. Perhaps an appliance will fail or cleaning will need to be done in between tenants. Either way, you'll want to know -- will these charges be drafted from your bank account? Deducted from your rental income?
5. What services do you provide?
Will your property management company handle your landscaping, or do you need to do that on your own? Do they have a handyman on staff, or will that be up to you? The more services the company provides themselves, the better.
6. Do you provide any tenant services?
Tenant services -- such as online portals, e-payment and maintenance requests -- can be critical to draw in tenants in more competitive rental markets. The more attractive the property management company is to renters, the less time your property will spend vacant.
It's always worth it to discuss your property thoroughly with a management company before you make any decisions, as there may be some unique considerations. Most property managers will offer you a free consultation so that you can learn more.