How To Hire a Property Manager
Hiring a property management company can quickly become one of the greatest business decisions you make. However, you must understand precisely what to look for in a property management company so you can ensure you choose the best team for the job.
These professionals are responsible for making critical decisions on your behalf, making it incredibly important for you to thoroughly research your chosen property management solution before agreeing to work with them.
If you’re seeking a property management company to assist with your day-to-day, read this article first so you know what you need to look for during your search!
What To Look For in a Property Management Company
There are several things to look for when hiring the right property management company for your property, including:
· Fees: Property management companies have many different fees. These include management fees, vacancy fees, setup fees, leasing fees, advertising fees, lease renewal fees, reserve fund fees, maintenance fees, eviction fees, bill payment fees, unpaid invoice fees, and sales commission if the property is sold. Carefully review all fees before settling on a company.
· Trust: Owners must trust their property managers to handle rental income, reserve funds, security deposits, and write checks on the owner’s behalf. This means you must have total trust in your property management company and its ability to remain transparent and accountable in all matters regarding your property.
· Rent: A knowledgeable property manager should be able to help owners set their rental rates so they can be as profitable as possible. Property management companies should also help collect and manage rental payments from tenants.
· Maintenance: When selecting the right property management company, it’s important to review how they handle maintenance requests from tenants. Be sure you understand the processes involved in handling such requests, as well as after-hours maintenance and emergency services. Ask your property management company if they have their own maintenance crew or work with contractors so you know who is responsible for repairs and maintenance.
· Inspections: The property management company you select should provide move-in inspections as well as periodic property inspections to ensure tenants are not abusing the living space. Be sure you understand the inspection schedule, including interior and exterior inspections, so you know when to anticipate inspection reports in the future.
· Advertising: Your property manager will be responsible for marketing and advertising available rental units. It’s important that you know where your property management company will advertise on your behalf. Review the listings they currently have to see if they are compelling enough to attract new leases and to compare their current vacancy rates.
· Screening: Owners must carefully vet the tenants who will be living in their properties. A property management company should be able to do this on your behalf. Make sure you understand how your property management firm screens new tenants and whether they offer to “hold” properties for tenants who have not yet signed a lease. Talk to your property management company about the specific qualifications they look for in new tenants to ensure you are aligned on what’s most important.
· Qualifications: Like all hiring endeavors, it’s important that you select knowledgeable, honest professionals who can satisfy your needs and the needs of your tenants. Make sure you know how long the company has been in business, whether they’ve been doing property management that entire time, and what special licenses and certifications they have — if any. Review their portfolio of properties they manage, including any section 8 properties.
What To Look For in a Property Management Contract
Most contracts range between three and 10 pages; however, five to six pages is considered average for a property management contract. There are three main parts to a property management contract that you should be able to easily locate: responsibilities and representations, contract termination, and indemnification and boilerplate items.
Responsibilities & Representations
This portion of the contract covers the authority and powers, extra duties, legal compliance, advances, owners’ representation, owners’ responsibilities/duties, and insurance involved in your agreement. Each section should elaborate on each of the responsibilities and services your property management company will provide.
Some contracts may contain information regarding duties considered “work exceeding normal management duties” (extra duties). If there is such a clause in your contract, be sure you understand what these services are and what the billing rates are. In some cases, the contract may state that the billing rate shall be agreed upon before the work begins. Make sure you reach out to understand before signing the agreement, so you don’t suffer sticker shock in the future!
Many property management contracts require a one- to two-year contract period. Property management companies very rarely offer services on a month-to-month basis.
Two types of termination clauses should be in your contract: owner termination and agent termination. Each of these dictates the specific terms under which either party may terminate the agreement before the outlined contract term. Ideally, you should seek a contract that offers termination without cause with 30 days’ notice. If the company enforces early termination fees to retain their clients, it could be a sign they don’t have faith in their abilities to satisfy your needs.
You should also seek a contract that allows you to exit the agreement without penalty if the company cannot secure a tenant within an extended period. Usually, this is between three and four months. While not all contracts contain an agent termination clause, you must pay attention to the ones that do: These clauses can have serious implications for your bottom line depending on the circumstances that allow the company to terminate and with how much notice.
Indemnification & Boilerplate Items
One of the most important aspects of any contract is its liability clause. This details the specific things a property management company can be held liable for, either financially or legally. For instance, a liability and indemnification clause might state that the company is not liable for any negligent acts committed by those hired to work on their behalf.
While it wouldn’t be fair for them to take responsibility for all the actions of a third party, the company should at least be held accountable if they hire someone with a history of poor performance.
Adding a reasonable care clause can fix this problem, as it holds the company liable if they either knew or should have known about the third party’s behavior.
Choose Tidewater for All Your Property Management Needs!
At Tidewater Property Management, our team has over 30 years of experience providing property owners throughout Maryland and Virginia with the superior property management services they deserve. We are committed to helping your community succeed, doing everything in our power to keep you and your tenants as happy as possible.
Allow our team to help manage your property’s operational needs by requesting a property management proposal from Tidewater today!