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Hiring a property management company will be one of the most critical decisions for a real estate investor. A person you’ll be entrusting with your investments, so naturally, you’ll want the best man/woman for the job, especially if you’re an international investor or living out of state. While it’s essential to find someone experienced and educated, you must find someone you can work with. They need to be pleasant while still being firm and knowledgeable without being arrogant and organized but not obsessively.
To help you narrow down applicants, here are the essential insights and questions you should ask any prospective property management company.
Hiring a Property Manager in NYCHiring a Property Manager in NYC
So you like the idea of profiting from multiple rental properties, but the thought of unexpected tenant phone calls makes you apprehensive? Although rental investments offer an appealing opportunity for financial freedom, they often take an incredible toll on your time when repairs are needed, or tenant disputes arise.
However, by investing in a property manager, you can avoid this toll and profit from your passive rental income.
What Property Managers DoWhat Property Managers Do
Property managers are real estate professionals who are well-equipped to handle tenant situations and locally manage properties, giving you the freedom to travel, live out of state, or dedicate your time to another job. In addition, they are the point of contact for your tenants, taking you out of the equation for calls. Specifically, they will help with these time-consuming tasks:
- Collecting rent and deposits
- Handling disputes
- Organizing repairs
- Performing post-occupancy inspections
- Scheduling regular maintenance
- Processing tenant applications
- Handling evictions diplomatically
Unfortunately, completing these everyday tasks requires much work and direct contact with tenants. A property manager can be a professional contact between you and the tenant, lessening your burden. A property manager collects rent and conducts another related business as a routine transaction rather than a hassle.
A property manager is especially worth the cost when you manage more than three units. The more properties you have, the more you’ll have to deal with repairs, leases, disputes, etc. Having someone to help you with these tasks will make operations more efficient, keep tenants happy, and give you the peace of mind that everything is running smoothly.
How You Benefit from a property management companyHow You Benefit from a property management company
Whether a single-family home or condo, your investment will need a property manager to keep tenants accountable and the place in good shape. Whether you are local or have moved away from your investment property, the property will be held under the watchful eye of a regional property manager who cares.
Property managers can actively process applications and adhere to the Fair Housing Act when selecting the next qualified tenant, ensuring you are in good legal standing throughout the tenant selection process. Your property manager will also be familiar with drafting and ratifying leases and streamlining the leasing process.
Another benefit is a higher tenant retention rate. Residents like to rent well-kept properties, and a property manager ensures that broken appliances or other needs are addressed expediently and courteously.
What’s the Cost?What’s the Cost?
How much you pay for this service depends on your chosen property management company. New York City property managers receive 4-5% of the monthly rent as a management fee. You can negotiate those terms in the property management agreement if you desire a different rate. In our opinion, the standard commission is well worth the peace of mind and freedom you gain.
A property manager is a wise investment to avoid legal trouble by saving you time and inconvenience in managing your non-local properties.
Questions to Ask a Property Manager in NYC Before HiringQuestions to Ask a Property Manager in NYC Before Hiring
Are you the property manager that will be looking after my property? If not, who will be?Are you the property manager that will be looking after my property? If not, who will be?
When you first contact a property management company for an interview, they may send a business development manager to start the initial discussions. Therefore, you’ll need to know who you’ll work with before committing to an agency. In addition, this opening question can lead to others, such as:
- How long have you been with the management company?
- For how long have you worked in real estate?
- What qualifications do you have?
Establish right off the bat with whom you’re dealing. Your prospective manager should be able to demonstrate a commitment to the job and long years of experience. Property management can be a stressful job with a high turnover rate. You’ll want to be sure that you’ll still be dealing with the same person for six months.
How many properties do you personally, as well as your company, currently manage?How many properties do you personally, as well as your company, currently manage?
You’ll want to hire a company that has a stellar reputation. But you’ll also want to make sure they aren’t overworked. Every property needs individual care, and you want to be sure yours will get the attention it deserves. You’ll also want to know what type of properties they manage. The management of a townhouse is substantially different from that of a condo or other more massive complex. A company with as many as 450 properties on its rent roll should have at least 3-4 managers to handle them.
What steps will you take to market my property and attract tenants?What steps will you take to market my property and attract tenants?
Empty properties don’t make money, so you’ll want to know how your manager intends to market the property and attract the right tenants. They should have a clear marketing strategy and a set of principles they follow when showing prospective tenants your property. For instance, you don’t want a manager who will give anyone the keys and let them view the property independently. You want someone who can be available to showcase the property to every prospective tenant. Most prospective tenants work during business hours to view properties on the weekend. Ensure that your manager can be available on the weekends to do open-house inspections.
How will you handle things if my property needs urgent maintenance?How will you handle things if my property needs urgent maintenance?
The right agency will have a list of verified and proven contractors to call on when maintenance is needed. Ask how this will be conducted and coordinated. Some agencies will even pay all maintenance bills on your behalf if required. Be sure to discuss this with them extensively to see if you are comfortable with the process. You certainly don’t want to be sent a massive bill for a maintenance job you weren’t consulted on.
How do you screen tenants?How do you screen tenants?
Good tenants are a godsend, and you’ll need to be sure your manager is doing everything possible to screen for the right ones. They should have clear standards and procedures when investigating every potential tenant. Do they conduct credit checks and background checks? Do they look into their employment history and speak to their previous landlords? Ensure that your manager has a well-established system for selecting tenants. It can only take one bad tenant to harm your investment entirely.
Tell me about your fee structure, and the total cost of management will be?Tell me about your fee structure, and the total cost of management will be?
This can make or break the situation when choosing a property management company. Ask about their fee structure and how they charge for extra services like lease renewals. Most companies are paid based on a percentage of gross rental income, but additional charges may be. Ask about what every fee will include, and remember, all this is negotiable.
Do you have any references I can examine?Do you have any references I can examine?
Don’t ever hire anyone without first checking their references. Even if a prospective manager looks excellent on paper, their concerns will seal the deal with them. Then, contact each of their recommendations to ask about their experience with this agency and manager. Were there any problems that they helped solve? How good were they at finding tenants? Were there any evictions, and how did the manager handle them? Answering these questions will give you a better grasp of the agent’s capabilities.
How will you ensure the best returns on my property, and what can you do those other managers can’t?How will you ensure the best returns on my property, and what can you do those other managers can’t?
Their answer to this last crucial property management question will determine what sets them apart from other potential managers. There’s a lot more to property management than just collecting the rent. It’s a comprehensive service that requires a lot of care and attention to detail. Please find out how your manager seeks to differentiate themselves from the competition.