This is part 2 of a 4 part series where we have outlined important questions to ask a property management company before hiring them.
Series 1 Companies Credentials
Series 2 Property Management Services
Series 3 Property Management Fees
Series 4 Tenant Screening Process
Property management companies come in all sizes, capabilities and expertise. Just because one works for one investor does not necessarily mean they will work for you. Below we have outlined some important questions to ask a company during your initial interview process regarding services they provide. Their answers to these questions will give insight into their business capabilities and can provide you with an understanding of the type of services they offer which are important to you.
Series 2 Property Management Services
Properties they manage Property management companies are as different as car dealerships are to each other. For example, a Mercedes dealership will have the best inventory and the most knowledge of the latest selection of new Mercedes. You could visit the Toyota dealership in your neighborhood, but chances are you will not find what you are looking for. Of course, they would love your business and will try and talk you into why a Toyota is a better fit for you than a Mercedes.
Same with a property manager, they are not created equal when it comes down to their property portfolios. You need to ask what types of property they manage and make sure your type of property is one they manage. If you own a single family home, a company that manages mostly large apartment buildings or commercial property would not be a good match. In this case, your best match would be a company that has a minimum 50 or greater of single family homes in their rental pool.
Some companies manage all types of investment properties...single family homes, apartments, commercial and community associations, but chances are they hold a specialty in one or two areas.
Inspections A thorough property inspection should never be overlooked by a property management company. A property inspection needs to be conducted upon tenant move in and at move out. A property inspection can range from drive bys, a walk through or a video inspection. If disagreements arise between tenant and manager as to items missing or damaged, actual documentation from the move in inspection and pictures of before and after hold validity versus a verbal agreement.
A video inspection of the interior as well as the exterior of property is the best option. Still pictures are good, but sometimes do not capture all areas of property. The video will not only capture all areas, but is easily interpreted and validated as the subject property. A signed checklist at move in from tenant validates that tenant concurs with the inspection findings.
Maintenance When it comes time to performing maintenance or repair work to their rental properties some property management companies have their own in house maintenance personnel. These are usually employees of the company and are paid a salary through the company. The costs or hourly rate of any maintenance or repair work that is required will be dictated by the management company itself.
On the other hand, the management company may decide to outsource all or some maintenance work to outside vendors. These vendors could range from a handyman, specialized tradesman such as a plumber or a large facility that performs all types of maintenance work.
There are pros and cons to both and I do not advocate one over the other but will outline a few points of interest:
In house Maintenance
Pros:
More readily available, since they work within the management company
Direct communication with management company and their policies
More intimate with property...they are the one contact and know the history of your property
Cons:
May be more of a jack of all trades versus being specialized in a certain field and having the appropriate licenses
May not be as determined to perform or finish maintenance work in a timely manner as he/she is not being paid based on the job. Whether he/she finishes in 2 hours or 8 hours, its all the same.
If in house maintenance crew is not available, either the repair work waits or the company will need to search for a outside vendor on short notice
Outsourcing Maintenance
Pros:
This allows the property management company the luxury of competitive bidding among vendors, which could equate to lower costs
Vendors will be eager to sign contracts with a property management company that can bring stable business to them, and as a result will most likely perform quality work in a timely manner
Most vendors will be specialized tradesman carrying all required licenses, insurance and being bonded
Cons:
Some property management companies will add a surcharge or mark up above the actual cost of any repair work to cover their time in acquiring these bids.
If work was not completed properly, it may be difficult to get the vendor back on the job.
Another option is coordinating all maintenance work yourself. This may work for you if you have reliable contractors you have work with and are dependable. You can probably save yourself some money but this will involve a bit of your time on your part.
Accounting Most full service property management company will offer as a customary service some type of accounting procedure. This usually comes in the form of a monthly paper statement itemizing all income and expenses funneled through the management company on your property for that particular month. It will show rental income and any expenses such as management fees, repair costs, lawn care service, advertising charges, lease renewal fees and possibly utility charges. The monies owed the owner also referred to as the net amount should be clearly spelled out on this statement. The monthly statements are usually mailed every month to the owner along with a deposit check for the net amount. You should also be provided with a end year statement along with a 1099 for tax purposes.
With the advancement of online technology many management companies are now offering their owners the ability to view and print their monthly statements via the companys website or online portal. These portals have the ability to store other documents such as the management contract, vendor invoices, pictures of property, inspection reports etc...all at your fingertips.
Another great advantage of working with a savvy property management company is their ability to setup automatic deposit of your monthly checks. No more waiting for the postal service, your deposit checks can be deposited directly into your bank account. Chances are they will also have the ability to setup automatic debit of tenants rent from either a checking account or credit card.
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