Many buy and hold real estate investors decide early on that managing their own rental properties simply isn’t worth the time and effort. This is especially true for investors that own properties outside of their immediate geographic area. While there are pros and cons to managing your own properties, ultimately it comes down to personal preference and capacity. Some people would rather be more hands on and save a few bucks while others gladly shell out a small percentage of their income to let somebody else manage the property.
For those investors that opt to outsource the management to a property management company, knowing what questions to ask and what charges to expect is an important part of making a good hiring decision. In almost any market, you’ll find numerous property managers of all shapes, sizes and colors. For those investors less familiar with how property management companies work, here is a basic checklist to help get you started:
Leasing:
How much does the property management company charge to place a new tenant in the property? I’ve found that anywhere from half a months rent up to a full months rent is fairly standard. Be sure to find out how the property manager advertises for a tenant. A property manager with a lower leasing fee may not spend as much on advertising or may not offer a co-op for other agents representing potential renters. Saving a few dollars on leasing may actually cost you more in vacancy if it takes longer for the property manager to place a tenant in the property. Also, it’s important to understand how the property manager screens applicants. At a minimum a property manager should:
- Verify Income
- Obtain credit report (look for prior …read more