How do I choose a property management company?
May 15, 2011 12:21 PM Subscribe
I'm looking at needing to rent out the house that I own (because of a move and the quiet housing market). What should I know before choosing a property management company? Any red flags to look for?
I'll be 1500 miles away after moving and will need a management company to handle the property.
The house is a standard 1 story, 3 bed, 1.5 bath home in a college town (in a desirable, but not undergrad friendly, location). Bonus points if you can recommend a property manager in Eugene, OR.
The house is a standard 1 story, 3 bed, 1.5 bath home in a college town (in a desirable, but not undergrad friendly, location). Bonus points if you can recommend a property manager in Eugene, OR.
yes, there's a national association of property managers that can help you start looking.
www.narpm.org/
Also, get references - current long term clients - in your circumstances - and ask them how they feel about the service they are getting. Be sure you understand what they do when your property is empty. (does your insurance cover the property when it is vacant s or only if the property is inspected weekly, etc.)
do you have contacts in the old neighborhood who can check up on things for you as a doublecheck while you get to know the property manager?
posted by egk at 1:51 PM on May 15, 2011
www.narpm.org/
Also, get references - current long term clients - in your circumstances - and ask them how they feel about the service they are getting. Be sure you understand what they do when your property is empty. (does your insurance cover the property when it is vacant s or only if the property is inspected weekly, etc.)
do you have contacts in the old neighborhood who can check up on things for you as a doublecheck while you get to know the property manager?
posted by egk at 1:51 PM on May 15, 2011
What should I know before choosing a property management company?
Make sure you and the property manager have a good understanding about how emergency maintenance situations will be handled. If there's a burst pipe and you're not reachable, for example, you probably just want the thing fixed ASAP to minimize damage to the rest of the property (not to mention inconvenience to your tenants).
Good luck!
posted by scatter gather at 1:54 PM on May 15, 2011
- Your mortgage payment and property taxes have no bearing on the rent you can demand.
- Depending on the condition of your property, there may be some up-front costs involved to make it desirable/legal for rental. You should expect to pay for changing the locks, at least (might depend on your local laws).
- A property manager will typically take a percentage of each month's rent (7-10%? May be different in your area). And they'll take a much larger percentage of the first month's rent of each lease.
- You should detach yourself emotionally from the property.
- You will probably need to maintain a deposit (a few hundred dollars) with the management company to cover incidental expenses and repairs.
- Many property managers are angling to be your realtor when you decide to sell the property - not necessarily a bad thing, but something to keep in mind.
- You may need a different insurance policy for the property.
Make sure you and the property manager have a good understanding about how emergency maintenance situations will be handled. If there's a burst pipe and you're not reachable, for example, you probably just want the thing fixed ASAP to minimize damage to the rest of the property (not to mention inconvenience to your tenants).
Good luck!
posted by scatter gather at 1:54 PM on May 15, 2011
Arrange to review prospective tenants' details before agreeing to the lease (I've had management companies that let the house to deadbeats, then told me about it -- I got very little rent out of that deal, as they took their fee out of the tenants' deposit).
Don't rent to students - they always trash the place and they ignore any clauses in the lease about not redecorating (if that's what you call painting 3/4 of a wall before they ran out of paint), don't clean out the house and leave unpaid utility bills that the deposit won't cover. My preference is a professional couple with no kids - they look after the place and normally won't expect you to replace every $10 thing that gets broken.
Pet owners expect to have difficulty renting so they are normally happy to pay extra deposit money. Most are responsible people who will go to great lengths not to leave a mess behind. Pets aren't a big deal if you get a larger deposit to cover for any unexpected damage. Kids are way more trouble and messy, plus you can't charge an additional deposit for them ... :-)
Don't leave any furniture in the house that you care about. No matter how careful people are, stuff happens. Get stuff on Craigslist to fill in gaps. Unfurnished is often better for professionals, because they have their own stuff.
Have a clause written in that the tenants have to remove all garbage and mess and they have to have the house professionally cleaned when they move out (or pay for you to do this - get a quote and include the amount in the lease). Most will just clean up themselves, but at least you aren't left with an unsanitary mess to clean up.
Have written into the lease that tenants have to deal with replacing anything under $50.
Budget for maintenance and make sure that you understand what the management company's expectations are about appliance upkeep and replacement. I dealt with one company that expected me to buy new or used appliances through their subsidiary (with a big markup), and then charged a HUGE haul-away fee. You must expect to pay for their time in replacing stuff, but you can negotiate everything in their "regular" contract - just make sure that you understand how upkeep and maintenance are going to be managed (and budget for at least one major appliance each year in your calculations (rent - management fee - maintenance) = mortgage payments.
Expect the management company to take their fee out of the first two months' rent - this is usual. So you'll need enough cash to survive for two months until the rent starts coming in. The tenants' deposit is ringfenced - this goes into a savings account and you can't touch it. So don't expect to be able to use it if things get tough.
Finally, don't accept a management company contract with a binding arbitration clause - get them to cross out and initial removal of the clause, as this is giving up your right to sue them if they mess up.
posted by Susurration at 2:05 PM on May 15, 2011
Don't rent to students - they always trash the place and they ignore any clauses in the lease about not redecorating (if that's what you call painting 3/4 of a wall before they ran out of paint), don't clean out the house and leave unpaid utility bills that the deposit won't cover. My preference is a professional couple with no kids - they look after the place and normally won't expect you to replace every $10 thing that gets broken.
Pet owners expect to have difficulty renting so they are normally happy to pay extra deposit money. Most are responsible people who will go to great lengths not to leave a mess behind. Pets aren't a big deal if you get a larger deposit to cover for any unexpected damage. Kids are way more trouble and messy, plus you can't charge an additional deposit for them ... :-)
Don't leave any furniture in the house that you care about. No matter how careful people are, stuff happens. Get stuff on Craigslist to fill in gaps. Unfurnished is often better for professionals, because they have their own stuff.
Have a clause written in that the tenants have to remove all garbage and mess and they have to have the house professionally cleaned when they move out (or pay for you to do this - get a quote and include the amount in the lease). Most will just clean up themselves, but at least you aren't left with an unsanitary mess to clean up.
Have written into the lease that tenants have to deal with replacing anything under $50.
Budget for maintenance and make sure that you understand what the management company's expectations are about appliance upkeep and replacement. I dealt with one company that expected me to buy new or used appliances through their subsidiary (with a big markup), and then charged a HUGE haul-away fee. You must expect to pay for their time in replacing stuff, but you can negotiate everything in their "regular" contract - just make sure that you understand how upkeep and maintenance are going to be managed (and budget for at least one major appliance each year in your calculations (rent - management fee - maintenance) = mortgage payments.
Expect the management company to take their fee out of the first two months' rent - this is usual. So you'll need enough cash to survive for two months until the rent starts coming in. The tenants' deposit is ringfenced - this goes into a savings account and you can't touch it. So don't expect to be able to use it if things get tough.
Finally, don't accept a management company contract with a binding arbitration clause - get them to cross out and initial removal of the clause, as this is giving up your right to sue them if they mess up.
posted by Susurration at 2:05 PM on May 15, 2011
Response by poster: Thanks for the helpful responses. Please keep any extra info coming- it's much appreciated!
posted by jz at 2:29 PM on May 15, 2011
posted by jz at 2:29 PM on May 15, 2011
Questions I used, collected from the internet:
About your company:
How many properties does your company manage? Mostly single-family homes, or...? (They should have experience handling similar properties to mine, but not so many that mine might not get whatever time it needs.)
How long has this company been in this business?
How many managers work at the co.? Who would handle my property -- one person, or a few? What's their experience/training? If "my" manager leaves, what determines who gets my account? Do I get to vet them?
Cost:
What fees (re-leasing, showing, etc.) are there? Do you bill me, or are fees deducted from my account directly? Monthly or quarterly?
Do you provide monthly income/expense statements?
Communication:
Who takes weekend/holiday calls?
Renting:
Do you "rent unseen," vs always meet them in person first?
Rent collection is due when? When do you consider rent "late"? How do you handle "late" rent -- 1st written notice + phone notice?
Are you present for the move-in and move-out? Do you take photos/video (& if yes, is there a fee)?
Who do you do credit checks with?
References from landlords -- only from the last landlord, or from 2nd/3rd last landlords? (Last landlord might give glowing refs hoping to get rid of the tenant.)
If tenants break the lease, how do you handle this?
How do you handle evictions? How many have you handled?
Repairs/maintenance:
Does your co. have its own maintenance crew, or do you contract out?
Maximum dollar amount the company can spend without contacting me? (I must confirm any expenses over that)
posted by cybercoitus interruptus at 3:03 PM on May 15, 2011
About your company:
How many properties does your company manage? Mostly single-family homes, or...? (They should have experience handling similar properties to mine, but not so many that mine might not get whatever time it needs.)
How long has this company been in this business?
How many managers work at the co.? Who would handle my property -- one person, or a few? What's their experience/training? If "my" manager leaves, what determines who gets my account? Do I get to vet them?
Cost:
What fees (re-leasing, showing, etc.) are there? Do you bill me, or are fees deducted from my account directly? Monthly or quarterly?
Do you provide monthly income/expense statements?
Communication:
Who takes weekend/holiday calls?
Renting:
Do you "rent unseen," vs always meet them in person first?
Rent collection is due when? When do you consider rent "late"? How do you handle "late" rent -- 1st written notice + phone notice?
Are you present for the move-in and move-out? Do you take photos/video (& if yes, is there a fee)?
Who do you do credit checks with?
References from landlords -- only from the last landlord, or from 2nd/3rd last landlords? (Last landlord might give glowing refs hoping to get rid of the tenant.)
If tenants break the lease, how do you handle this?
How do you handle evictions? How many have you handled?
Repairs/maintenance:
Does your co. have its own maintenance crew, or do you contract out?
Maximum dollar amount the company can spend without contacting me? (I must confirm any expenses over that)
posted by cybercoitus interruptus at 3:03 PM on May 15, 2011
This thread is closed to new comments.
posted by allelopath at 12:24 PM on May 15, 2011