Wednesday, July 14, 2010

Finding a Good Property Management Company

Finding a good property management company the most important decision when it comes to your commercial real estate. The right management company will make your operations run smoothly--and a bad one will make your life miserable at the very least, and potentially cause significent financial hardship! Property Management should not be a decision based on cost, but rather one based on customer service and experience. We have outlined a process below for finding the best property management company for you:

1) Outline your goals.

What is it that you want? Would you like a full service property management company, or one that just focuses on finding tenants?

The full service companies such as Kuester will advertise your property, help to place tenants, maintain the property, including major repairs, collect the rent, and send reports and a check each month.

A company that finds tenants will just advertise your property and place tenants. Depending on what your level of involvement is, you may choose one or the other options.

2) Set realistic goals.

Depending on what you bought your property for, and what your mortgage is AND what the average rental cost is AND how many tenants you are able to get, AND a near endless series of other factors - you may or may not make a profit on your property! Run through all the factors with your accountant and be conservative. Consider asking other property owners what surprise expenses they have had and make these part of your calculations.

3) Do your research.

Reputable property manangement companies will have a website outlining their services, philosophies and available properties. After narrowing it down, ask for referrals. Also, look for signs from the company posted around town and take notice of their advertising. Do you like what you see?

4) Always get references.

Ask for at least 2 references from current or recent clients. Most property management companies will give this information with zero hesitation, and if they refuse do you really want them managing your investments?

5) Never sign before you read.

Property Management contracts are legally binding contracts and can be negotiated. But sometimes they include details that were not previously discussed! Not only should you read before you sign, but you should also have your attorney review the contract as well. There may be language in the contract about additional costs that you will have to pay (i.e. major repairs), and reasons that either you or the property management company could cancel the agreement. So know before you make anything permanent.

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