Entering into the world of rental properties for the first time?
Many home owners turn to professional property management to painlessly and profitably manage their properties. With a good property manager on your side you don't need to worry about accidentally breaking fair house laws and certainly don't need to be at the other end of a 2 am call from renters. I have been meeting with homeowners and clients in recent weeks who are making this decision. Here are a few insider tips on the art of choosing a property management firm and what you should be looking for from this relationship:
Fees & Percentages
A good firm is able to quickly summarize their fees and percentages charged. The management fees vary widely and often depend on the services provided and the other fees charged. For a single family home the management fee ranges between 5% - 15% of the monthly rent. Additionally, many property managers will charge a fee to lease and market your space. Leasing and marketing fees vary from firm to firm; however, it is standard for charges to range between half of the first month’s rent to one month’s full rent. Additionally, you should know: does the firm charge you a property management fee if the space is vacant? Are there other charges to ‘set up’ your property with the property management firm? Additionally, find out what the required reserves are for maintenance. $500? $1000, more?
Your property should not sit vacant, so look for property management firm that has a very clear marketing and leasing plan for your property. How long does it typically take to fill their vacancies? How do they advertise? Will they bring in a photographer for you? Can they help you stage your home to make it look appealing. What deposits do they collecting for new tenants, and what type of background and screening check to they doing on applicants.
Licencing & Legal Bits
It is very important that your property management firm has its licensing up to date and is familiar with Federal and State Fair Housing Laws. Additionally, here in Portland there is a great program with the City of Portland, the CPTED program (Crime Prevention Through Environmental Design). This program educates property managers and landlords that crime can be deterred through environmental design and maintenance of properties. Find out also if the firm familiar with safety codes for properties? (For example, do they know how many smoke detectors are needed in a home?) Be sure to ask:
- What systems are in place to properly and legally evict a tenant?
- Do they have the required client trust accounts setup?
- What will the monthly owner statements include?
House Rules and Policies
Does the property management firm have recommended house rules and do they have an established Pet Policy and Pet Rent? For example, to they define normal wear and tear verses damage? Are they documenting and monitoring for pets? How often are they doing exterior and interior inspections of your property?
Good, Clean, & Fair
I like to use the Slow Foods mantra of “Good, Clean, and Fair” when evaluating any new business or product. Is the product good, is it free from chemicals and toxins, and how does it deal with equity and wage issues. Property Management is no exception. Does the property manager provide good service? Does the firm have a commitment to working with the community and purchasing local, green, and environmentally friendly? This is your moment to advocate with your dollars and place them with a local company that is working to minimize their impact on the environment.
Finally, communication is key with any long term relationship. Make sure the property manager looks beyond investment opportunities and client portfolios. One of the basic components of the job is maintaining a good working relationship with renters, neighbors, owners, vendors, and contractors. Is the property manager’s communication style clear? Do they communicate well with you? Do they respond to email and calls promptly? Clear communications with you often is an indication of the communications style they will have with tenants and is a clear signal regarding how this relationship is going to go in the future.
I would love to hear from you regarding your experiences hiring or looking for property managers. Good, Bad, and Ugly. What are you looking for in a property manager? You can find me at: firstname.lastname@example.org or (503)358-5773.