How to Choose a Good Property Management Company

Investing in real estate is a great decision because this is one investment that invariably gives you positive returns in the long run. However, you need to ensure that the property is maintained well. There are numerous things involved after you buy a property. Also, maintaining the profitability of a property is a continuous process.

As a busy professional, you might not have the time to allot for maintenance. Nevertheless, ignoring it is not in the best interests of your investment. Fortunately, you have a good solution in the form of a reliable property management company. However, you need to choose the best property manager in order to ensure good returns on your investment.

Define your expectations from the manager

A property management company performs a wide range of functions. The company levies charges based on your requirements. Usually, most of the management companies offer a list of services as “general services”.

If you opt for services in addition to the ones included in the general package, you might have to pay hourly charges. So, in order to save money and get all the desired services, you first need to make a list of functions that you want the company to perform.

Scope of services: On a broad basis, property managers perform two kinds of tasks – administrative and maintenance. You can hire the manager for general management, administrative management, financial management and building management.

These functions involve preparing paperwork whenever required, keeping you updated about the condition of your property, acting as a middleman between the tenant and you, finding reliable tenants, keeping track of rental contracts and agreements, and managing finances as per your instructions. In other words, when you have a good manager, you don’t have to bother about your property other than reviewing the periodic reports that the manager sends you.

If you rent out your condominium, managing tenants can be a very cumbersome task. In such cases, the manager acts as a point of contact between tenants and you so that you are not troubled by untimely and incessant phone calls. The manager also acts on your behalf in community meetings or home owners association meetings in the region where your property is located.

Financial management: This is a very important service that includes managing deposits, if any, that need to be paid to the building association, receiving advance amounts and rents from tenants, negotiating with tenants to get you the best deal, managing taxation processes, and paying salaries to maintenance staff if required.

You can allot budget towards building maintenance and give the manager the power of attorney over that budget with a condition that the money be spent only for property related expenditure.

Different management companies offer different services, although the basic services are usually the same. Check out different companies and choose one that fits your requirements within your budgets.

Insurance, bond and license

The property management company you hire needs to be insured, bonded and licensed. In Canada, laws that govern property management differ from province to province. The manager needs to be aware of the Civil Code that governs laws in the locality where your property is located. Depending on the area, property management could be governed by English Common Law, Provincial Legislations and City by-laws.

Make sure that you understand the different aspects covered by the management company’s insurance policy. This is for your own benefit because in case the staff of the management company causes harm to your property, you should be able to receive compensation for the damage without difficulties. Being covered by insurance makes it easy for the company to offer compensation. Liability insurance is the basic cover you should expect from the company.

Always hire a property management company that is accredited by a national organization. For instance, one of the most reliable accreditations in Canada is by AMO or Accredited Management Organization. In order to be accredited by this organization, management companies need to display strong work ethics and the highest quality management practices.

Dealing with clients

Before you hire a property manager, you need to be clear about how it deals with your clients. Be certain about the company’s tenant selection criteria. Ask how the company advertises for tenants and shows your property to prospective clients. It is important to evaluate prospective tenants thoroughly by running brief background checks and verifying documents submitted as proofs.

Also, ask the manager about the company’s policies regarding rent collection, dealing with tenants who default rents, and the process followed for the rent amount to reach you. If you are satisfied with the way the firm handles tenant issues, you could shortlist the company to your final list.

Domain specific experience

Different kinds of properties need different managerial techniques. For instance, managing commercial properties is very different from handling issues related to residential properties.

Even within a category, say residential properties, managing villas requires a different set of skills as compared to managing condominiums. So, it is important that the management company be experienced in managing the kind of property you own.

Fee structure

Property management companies take around 6 percent to 12 percent of the rental money as their commissions. Depending on the expected rent for your property, calculate how much money you receive every month after the company takes its cut.

If you depend on the rental money to make important payments such as insurance or loan repayments, you should make sure that you receive adequate amount. Do not choose a management company that charges more commissions than you can afford.

Personality traits

Management companies hire several property managers and delegate each of them to certain properties. You must make sure that you are comfortable with the manager allotted to you. He or she should be friendly, easy to talk to, and sensitive to your requests regarding different aspects of your property.

Hiring a property management firm is one of the most important decisions you make about your investment. So, follow precautionary measures, check the background of the company, and make the right decision.

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