6 Key Points To Consider When Hiring Investment Property Managers

Posted on: May 26, 2011

Categories: Property Management, Things To Consider

Author: lbuen

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Image by Ben Zvan via Flickr

Entrusting Real Estate To Investment Property Managers

With your investment property acquired and ready for occupancy, all you need is a company to manage it so that your little cash machine can start streaming money into your bank account in your absence. However, entrusting your investment to another company is not easy. The choice of a property manager can mean your profit or your loss. With the numerous investment property managers available, the selection process is not made any easier. For this reason, it is important that you set certain criteria based on what you need.

Criteria for Choosing Investment Property Managers

Marketing Flair and Knowledge of the Local Market. One of the primary responsibilities of your property manager is marketing your property to prospective tenants. The company can do this more effectively if they know what the market needs. They can recommend clever but cost effective ways on how to make the property more attractive to would-be tenants, allowing you to raise rental fees, and minimize vacancies, hence, boosting ROI. In contrast, a lack of knowledge can lead to vacancies. If this goes for a long time, it will negatively affect your returns.

Accounting Proficiency. As an investor, figures are important to you. Of course you would want a property management company that knows how to properly compute the revenues and expenses of your property so that they can take care of the books for you. It would be great if they can make reports and other documents, such as ledgers and invoice copies, readily accessible online at anytime without the need to ask the property manager. So that when tax filing time comes, you have your income and cash flows handy.

Number of Properties Under Their Care. This is a gauge of how experienced these investment property managers are. The more properties that they have managed, the more expertise they have. You can tell how effective they are at their tasks through the number of properties that they handle and the number of years that these properties have been under their wing. Dissatisfied investors would move on to another property manager.

Property Management Specialization. The scope of property management is extensive. This includes property maintenance, market knowledge, laws on housing, accounting, etc. Property managers must have established relationships with vendors and must have people ready to respond to queries and emergencies. That is why, it is important that they specialize in this business. Otherwise, if it is just a secondary endeavor to a company’s main business, then their expertise, resources and concentration may just not suffice.

Capability To Accept Electronic Payment. A capability to accept electronic payments can lure tenants with impressive credit ratings. The payment process is simplified for both tenant and property management, hence, encouraging on time payments.

Capability to Pay Investor Through Direct Deposit. A capability to pay you through direct deposit ensures that you get to use or keep your money in your bank account instead of in the property management company’s account. Beware of property managers who attempt at retaining revenues in their account for as long as they can to earn the interest. Be aware that the process of collecting and preparing the monthly statements for your property would only take eight days or less. A direct deposit of the revenues also ensures lesser errors than when it goes through the paper system.

Licensed Real Estate Agent. In most states, the property manager you hire should be a licensed real estate broker for the company to be operating legally.  The trust accounts and files of licensed real estate agents are typically audited by the states respective Real Estate Commission.

Street Tip: Managing your Investment Property Manager. Entrusting the hard work you put into developing your rental property asset(s) to an outside company should not be taken lightly.  Always check references and develop a way for your tenants to give you feedback on your property manager’s performance.  I learned this the hard way when a quiet tenant of three years that had never missed a payment, all of a sudden didn’t want to renew the lease on her nice home.  She told me that dealing with my property management company was a nightmare when it came to timely repairs being completed right the first time around. I convinced her to stay by offering to have some free improvements made to her property.  6 months later the property management company went out of business for stealing money – should have known.  The bottom line is to make sure you have a system in place for your tenants to report poor performance by your property manager to you, the owner.

Turning over your real estate to investment property managers means that you entrust the profitability of your investments to them. Hence, make sure that you hire one which has the track record, knowledge and expertise of the different aspects in property management, including the use of technology to make performance of tasks more efficient.

 6 Key Points To Consider When Hiring Investment Property Managers
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