Finding which of the property managers in your area is considered the best can take a significant amount of time. Reading reviews, visiting rental properties, and conversing with the most promising candidates are all essential steps in the search for a competent property manager.
To get the best property management possible, it’s essential to do some further homework. Here’s what you need to understand about your potential property management service, what responsibilities they will take on, and what you will still need to handle before signing any contracts.
Determining how much you will be charged for property management might be challenging. First, keep in mind that property management encompasses a wide range of different individual services, such as:
Most companies impose a baseline property management fee, ranging from 5 to 12 percent of the total rent. Caution should be used when considering management companies that charge in the lower range of the base cost. Unfortunately, some companies will use this lower rate to lure you in, then make up the difference by charging more for each additional service.
Management companies with base fees in the double digits may provide a better deal and cover more services under their base costs.
Determining if you will be charged for vacant homes is also essential. Because of the possibility of squatters, break-ins, or vandalism, property managers may sometimes have to take time to visit and inspect empty properties. Ideally, you won’t have to pay for property management services unless your apartments are full, but some management companies will use this fee to defray the cost of marketing available properties.
You should pay particular attention to the terminology used in these property management contracts covering maintenance and repairs. Major repairs will typically be passed on to the property owner, but routine wear and tear are frequently covered by the management fee or a set maintenance fee. Before signing a contract, consider negotiating for better terms if the first draft holds you responsible for all maintenance costs.
Along with knowing the costs associated with various services, it’s crucial to know precisely what the property management will be accountable for, regardless of fees.
In addition to the fees-related duties mentioned above, an effective property management company should also offer to maintain insurance policies and enforce leases—taking legal action when necessary. If desired, make sure these duties are clearly outlined in the property management contract.
Property management companies will likely want control over who rents your units because they make much of their money by keeping units occupied and collecting their share of the rent.
It’s also typical to see language in the contract stating that before accessing one of the owner’s buildings, the owner must obtain permission or alert the property manager. Negotiation may be necessary to relax these requirements if you have any cause to keep a physical presence on your properties.
A “hold harmless” provision is frequently included in property management agreements intending to shield the management company from most liabilities. Before agreeing, however, check that the contract still makes the management company liable for any damages that are a direct result of negligence.
There is third-party liability to consider as well. Make sure your agreement includes a “reasonable care” clause. This ensures the property manager will be held accountable for the third-party contractor’s actions if they didn’t take reasonable care when hiring the contractor.
You can do as much research as you want before hiring a property management company, but you won’t know how happy you’ll be until you work with them. You’ll want a short, flexible initial contract of no more than one year. Most property management companies will be on board with this. Until you’ve built a relationship, it pays to be a little cautious and avoid long-term contracts.
Finally, check the contract’s termination wording. The management company will want protection in case you change your mind. If you end the agreement early without cause, you may have to pay the remaining property management expenses.
To prevent this, the contract should state that you can leave without penalty if you give proper notice—usually at least 30 days and no more than 90. In exceptional instances like illegal conduct or excessive carelessness, a clause should allow you to cancel the contract without penalty.
A good property management company works with your interests and the interests of your tenants at heart.
If you need help managing your rental property in the Charlotte area, call the Henderson Properties team at 704.535.1122.