Maybe it was a traumatic event that pushed you over the edge, like a 2 AM emergency call about a burst pipe. Or maybe you work a full-time job outside of real estate and trying to manage your properties in your spare time has just become overwhelming.
Either way, you’ve realized that it’s time to outsource management.
Like any real estate investor, you play the game for a couple of very simple reasons: cash flow and appreciation. And while real estate can have huge upside potential, it isn’t nearly as hands-off as picking out a couple of stocks. If you’re a seasoned investor, you already know that managing a property is a lot of work. And if you’re just starting out with investing, you need to be prepared. From lease-up, to inspections, to screening, to maintenance, property management is no easy feat. That’s why so many investors turn to property managers and free themselves of these tasks.
Not All Property Management Companies are Created Equal
After you’ve spent so much time choosing a neighborhood, securing financing, and closing your deal, you owe it to yourself to ensure that your property is placed in the best possible management hands. In any city, there will be a range of management companies to choose from. Windsor is no different, and you’ll want to do your research before making the choice. If you have friends who also invest, check with them to see if they can provide you with a management company referral. If you’re going it alone, look online to find the top management companies in your area.
Start with the Contract
When evaluating a property management company, ask to see their standard management contract. This will help you to quickly get a sense of what it would be like to work with them. There are several critically important things you’ll need to look for:
- What is their management fee, and what is included? What is considered an “extra”, and not included in their base fee?
- Do they handle leasing, and, if so, how will they charge for it?
- Does this management company have an integrated maintenance staff? Or do they outsource? In-house maintenance allows for quicker response times, easier ability to deal with preventative maintenance, and more consistent payments.
- What are their income requirements for new tenants.? Do you feel comfortable that these income requirements provide adequate security for your investment?
- How are potential tenants screened? Does this management company outsource screening to a reputable third-party background check company?
- Is the company based in Windsor, or are they a local arm of a larger company? You want a manager that has their ear to the ground, who can get to know your tenants and help to gain insight into the community that forms at your rental property.
You Get What You Pay For
When it comes time to hire a property manager, you get what you pay for. Management can get expensive, with some companies charging up to 12% of gross rents. Of course, real estate investors are financially savvy and don’t want to overpay. But, go for the bottom-of-the-barrel option, and you risk poor compliance with rent collection, unsatisfactory maintenance, disgruntled tenants, poor online reviews, and possibly even legal trouble.
You’ll also want to take some time to research this company’s approach to marketing. Marketing is key to keep your occupancy numbers high, so you’ll want to make sure that whichever company you choose has a solid track record of marketing units strategically and filling them quickly. Are you expected to pay for marketing separately, or is it included in your management fee?
Get to Know Each Other
When you begin shopping around for a property manager, take some time to get to know the person you’ll be working with. Whether it’s a small company where you work directly with the owner or a larger company that assigns a manager to your property, you’ll spend a fair amount of time working together. You’ll want to make sure this is someone you naturally get along with. If they’re open to it, maybe even take them to coffee (being sure to take the necessary COVID precautions, of course). Forget, for a second, all of the numbers and finer points of management — you want to get a base-level sense of this person’s honesty and integrity. Your investment is likely the single most important thing you own, and if you can’t trust this person to do right by you, all bets are off.
Technology is Critical
You don’t want to get caught paying for the time inefficiencies of someone who is still using Excel in 2020. There is a wide variety of property management-specific software out there, so you want to make sure you’re working with a company who takes the time to research their options and pick the best one. On the flip side, if you are a simple investor with just a few units, don’t get into a situation where you’re footing the bill for unnecessarily robust software that is designed for 50+ unit properties!
It’s important to understand how a management company’s technology systems will integrate with your own. Do they have standard software they use across their properties? Does their software integrate with your own accounting systems, allowing you to seamlessly track performance?
You’ll also want to be sure that you find a company that has integrated online payments. Like it or not, cheques are a thing of the past, and having a rent drop box is a headache for tenants AND management. Online payments are the way of the future.
We Can Help
If you own rental property in Windsor, and you’re looking for someone to manage it on your behalf, MARDA Management would love to help. Give us a call today, and let’s get to know each other.