Get to know your property management company
As an investor you should use the same due diligence in getting to know your property management company as you would in choosing an investment. When you negotiate a contract for service, it is important to:
" Ask questions that will reveal the values of the company and their ability to balance owner and tenant priorities.
" Request references. Solid property management companies will be happy to provide tenant, investor, and character references.
" Tour the property with the manager, where possible. Does the manager present in a professional manner? The way in which they present to you will be how they present to your tenants and vendors, inspectors and others.
" Listen for how the manager describes the techniques for optimizing the potential for the property, like vacancy management, curb appeal, and unit showings and rentability.
" Understand the processes the company will follow to transition management from your current company to their company. You will want this to be as professional, seamless and efficient as possible for you and your tenants.
" Fully understand what service you get for your management fees and what routine costs you can expect above the management fee. Get a price list for regular maintenance activities. Find out about the monitoring of large renovation projects. While project management usually costs additional fees, you will want to know that the company has the capacity to monitor a project, keeping your costs under control and you informed as it progresses
" Listen for how the company follows the rules. How do they work with government agencies, the municipality, and inspectors? A straightforward, honest and responsive approach to the rules by your management company will ensure that your asset is protected and you won't experience surprises. It makes sense that if the company is willing to avoid the explicit rules and regulations of the industry; they are less likely to comply with your expectations as an owner.
Read your monthly management report thoroughly
It is important that property management companies provide you a comprehensive and timely monthly report. The report should be a complete record of the activity on your properties, including rental income, professional services and management fees.
Look for consistency in the statement from month to month, getting a sense of tenant activity, security deposit collection and refunds, and vendors that are used routinely. The report should include everything you need for preparing your annual tax return.
Randomly audit financial activities
The property manager is collecting and spending your money. While it doesn't have to be onerous, you should do some random checks to make sure that this is happening appropriately. Occasionally consider the following:
" Ask the company to provide you some of the of the vendor receipts.
" Calling up a vendor to confirm that they were at your property. Ask if the bill was paid.
" Check on vacancies to ensure that the unit is really vacant. This can be done by an unexpected visit or calling a tenant in the building. Tenants usually know whether someone is living in a unit.
" Review security deposit records. Call a previous tenant to see that they got their deposit back. If deposits are kept at a government agency, call the agency to ensure that a specific deposit is on fi le. " Ask for before and after pictures of renovations done in a particular unit.
Monitor tenant activity and satisfaction
Your property management company should have solid processes for attracting and maintaining tenants. This is about much more than a 'For Rent' sign and an ad online or in the local newspaper.
Tenants in an area get to know the property management companies that treat them fairly, manage the properties well, and what properties they manage in the area. They will move to properties managed by a company they like. These are some things that you can do to ensure your tenants are looked after:
" Call the company unexpectedly to test their responsiveness. Check how long it takes them to get back to you. If the company doesn't respond quickly to the owner, it is unlikely they are responding to tenant needs in a timely way.
" Call a tenant to check that the maintenance you paid for in their unit was completed.
" Ask a new tenant to describe their unit rental and move in experience. Was the staff from the property management company professional in appearance and demeanour? Did they explain the lease, the security deposit, and how to contact the company 24 hours per day? Was the unit clean?
" Look for a balance of fairness and firmness with tenants. From time to time, good tenants get into difficult spots.
Listen for how the manager works with the tenant to give them some leeway, gets what is required - the rent or a clean unit, etc., and ensures that your income potential is optimized. Maximizing the efficiency and revenues of your properties is key. Establishing a solid relationship with your property management company and monitoring this relationship will ensure that the company is putting your assets to work for you.
By BECKY MCGEE, director of business operations at Twello Property Management.
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