Real estate is a top investment choice for many. It is a lucrative business indeed, with thousands of dollars to millions at stake. Without enough knowledge and skills, you could lose so much. That is why hiring a property manager is often the best approach to ensure your success. However, choosing a property manager alone can be so challenging and many investors/landlords often commit the following mistakes:
Not Knowing Where to Search
You might be eyeing a reliable and experienced property manager you met a few years ago when you visited Florida. But if you’re investing in a property in California, that person may not be a good fit. When it comes to property management, local knowledge is very important. Apart from the fact that real estate laws may vary between states, local knowledge makes it easy for you to find the right tenants, set the right rates, find third-party companies to work with (e.g. home improvement contractors), and set the right rent at every level. Furthermore, it greatly helps the property manager to build rapport with clients. He or she can also answer most questions that people might want to know about the property’s location and give helpful recommendations.
Not Doing Their Research
You might have gotten a few names from the people you know. But how do you know if you’re choosing the right professional who will ensure that your investment is in safe hands? You need to go the extra mile and conduct your own research. Luckily, all you need is an internet connection and half an hour to have a wealth of information about the local real estate managers in your area. Do a quick Google search to find real estate websites where you can reach out to hundreds (if not thousands) of real estate agents and property managers. Be sure to check reviews from fellow investors. If you can get in-person feedback, that’s absolutely great. Word of mouth is definitely the best source of trustworthy feedback.
Not Taking Into Account the Budget for Property Management
Every landlord needs to know what their regular expenses are so they can create a budget that works for them. Maintaining an investment property comes with a cost. Good thing, you can consider personal loans online for unexpected bills, that will help you. But you don’t want to go overboard or else, your income might be compromised. When searching for a property manager, it is important to have a figure in mind that you should pay for his or her services. It’s good to have a max figure – how much, the most, you are willing to spend. Decide on your payment arrangements. For example, you can pay your property manager a fixed monthly salary (regardless of your property income) or a percentage of your income yield – which usually ranges anywhere from 8-12%. The great thing about property management companies is that you can tailor their services according to your needs and budget. For example, you can just pick certain services (say rent collection or property maintenance).
Not Asking the Right Questions
It’s good to have at least three choices, sit with each one, and know more about them by asking the right questions. First, ask them about their qualifications. This indicates the level of experience the manager has. Next, ask how many properties they have to manage. Also, ask about their best practices. This will give you an overview of how they do things, their core values, and what their strengths and weaknesses are. Lastly, ask how much they know about the local real estate market. As the landlord, you need to know what potential tenants want, such as what types of rental properties appeal to them. You will need an experienced property manager who has in-depth knowledge of the real estate industry trends in your area.
Related: 12 Questions to Ask Before Hiring a Property Management Company
Skipping Concerns on Tenant Care
One of the major responsibilities of a property manager is taking care of the tenants. Basically, they need to ensure that tenants get what they pay for by keeping the property in good condition, addressing issues (such as the need for repairs) in a timely manner, and making the necessary property improvements and upgrades to ensure the safety and security of the tenants. It is important that you discuss this topic in detail with every property manager you interview. By asking them questions about how they communicate with tenants and take care of their needs, you can easily tell who is the right person to help you in managing your investment property. Furthermore, you should also determine how much control you want to have over your tenants and how much your property manager should have. Poor management can definitely lead to tenant loss and subsequently, loss of profit. You want to make sure that you and your property manager are on the same page. During the selection process, be clear about what you want from them and what they will have to do for you.
Not Reading the Fine Print
Terms & Conditions are not fun to read. Most likely, you’ve skipped that part on so many occasions. But when it comes to property management, you should really take time reading the fine print. Take note that your rental property is a huge investment and therefore should not be taken lightly. Make sure that you are fully aware of all the terms and conditions that your new property manager comes with. Check if the small print does not force you into agreeing into things that you cannot do or provide. Beware of property management companies that offer an inescapable contract which means you cannot just cancel their services or else, you will have to pay a big amount of money.
Real estate investment is a lucrative business. Hiring a property manager is a good option if you’re looking to grow your investment. Just make sure to keep in mind these common mistakes that many investors make when selecting a property manager so you end up working with the right person.
This article has been contributed by Emily Andrews.