Professional Property Management Company

Photo Credit: John PickenUnlike buying a stock of company “XYZ” or bonds, when an investor acquires Residential Income Property he is also acquiring the rights to control a property and thus, be pro-actively involved in every decision regarding its daily management. Managing a Residential Income Property is not as complex as it sounds, but for various reasons, some owners may not be able to actively look after the necessary details or may not be interested to do so. That is when a professional management company assumes responsibility. The goal here is to educate property owners on the benefits of a Professional Property Management company and how to go about finding the right fit for your property.

A Professional Property Management Company is company charged with operating a real estate property for a fee. Their paramount responsibility is to the owner/landlord first and than to the tenant last. It is important, for many reasons, that the property owner develops a good working relationship with the property management company. In many regards, they function like owner’s silent partners by maximizing the return on investment through competent and proficient management practices. The property owner and the property management personnel should have an open line of communication with each other on a constant and permanent basis. They should set quarterly meetings to examine the current financial data, performance, review the existing challenges and plan for future problems. Since management companies’ time schedule is always full, it is important to remember to be well prepared prior to these meetings to not waste their valuable time.

Property owners should require four imperative fundamentals of property management company:

  1. Units rented at market rents or above.
  2. Minimum vacancy.
  3. Overhead and fiscal responsibility.
  4. Quality of on-site management.

The elementary tasks and responsibilities of a property management company are:

  • Acquiring new tenants
  • Negotiating leases
  • Collecting rents
  • Serving eviction notices
  • Paying mortgage payments and other bills
  • Accounting and records
  • Sending monthly owner statement
  • Building and grounds maintenance, servicing and general improvements

An effective and congruent relationship between an owner and property management company ultimately means, a profitable income producing property. By asking the “right” questions and establishing a solid contract prior to management taking over is a key to this kind of harmonious alliance. Interviewing various members of the property management company and visiting their offices to see if their answers line up is a good way to start the process. A poorly managed property can result in high tenant turn-over, unnecessary added expenses, potential law suits, liabilities and an overall low return on the investment. On the other hand, a professionally and properly managed property with trusting relationship between owner and property manager can mean high occupancy rates, a favorable reputation, good cash flow, and thus a growing steady investment.

Here are some pertinent questions to ask:

  • Are they a CPM (Certified Property Manager)?
  • Are they licensed, bonded and insured?
  • Is property management their full time business?
  • What are their business hours?
  • Do they use automatic contract renewal?
  • Does the contract expire when the building is sold?
  • What is their management fee?
  • How do they set rental rates?
  • How do they seek for new tenants?
  • What is their general turnaround time for getting vacant units ready for new tenants?
  • What kind of reports they issue to property owners and when they are mailed?
  • Do they handle all leases, evictions, and improvements?
  • Are there any fees for going to court or for evictions?
  • A list of all extra charges?
  • Typical is the cost of cleaning, repairing and upgrading a vacant unit?
  • What is their response time to repairs and maintenance?
  • What is their late rental payment or nonpayment policy?
  • What dollar amount of expense needs owner approval?
  • What is their record keeping policy (ask to see some files).

As an investor you have the choice of being active or inactive in the management of your real estate investments. For clients who choose not to be active we provide a highly reputable and qualified professional property management firm with state-of-the-art technology to serve our clients for maximum earnings and minimum hassle.

Photo Credit: John Picken

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