Investing in a rental property can be a lucrative venture, but if you manage it yourself it can become a part-time job. Maintaining the property, attracting and screening tenants, and handling the collection of rent are all responsibilities that can’t be ignored and require time.
The time involved in managing a rental property is a reason some owners choose to hire a property manager to do it for them. But not all of them are created equal, and a property management evaluation guide for rental owners can be a handy tool. Here are some tips for choosing the right property manager for your rental.
Thoroughly Understand the Fee Structure
One of the reasons rental owners avoid hiring professional management services is because they come with a cost. A typical San Jose property manager will charge between 4 percent and 10 percent of a unit’s gross monthly rent, with single-family homes usually commanding a higher rate than multi-family housing.
However, that monthly portion of the rent doesn’t always cover everything. A rental owner choosing a property manager should understand the entire contract and fee structure, including possible vacancy fees, advertising fees, tenant-placement fees, and more. You usually get what you pay for, so it’s a must to understand everything you’ll pay for.
How are Tenant Communications Handled?
No owner of a rental property wants to be awoken in the middle of the tight by a phone call from a tenant, whether it be an emergency or a complaint. Another hassle for property owners is chasing down late rent. When picking the property manager that’s right for you, it’s important to know how tenant communication is handled.
Who gets the midnight call when a toilet is clogged? Who calls, and when, if the rent is past due? What events trigger written notices to tenants? Who handles setting up maintenance appointments and inspections? All of these are questions to ask a prospective property manager.
What are the Tenant Attraction and Screening Processes?
One of the most critical factors in a successful rental property investment is finding and keeping good tenants. Vacancies, damage to the property, and the non-payment of rent are the things that cost property owners the most and drive down their returns on investment. Good long-term tenants can be worth their weight in gold.
So before hiring just any management company, it’s imperative that you understand their process for advertising for tenants, showing homes, screening tenant applications, and retaining good tenants. A property manager with a large portfolio of units under maintenance likely has a good track record when it comes to tenant attraction and retention.
The reason is simple: The property managers who don’t handle advertising, screening, and retention well aren’t themselves retained very long by rental owners.
Do They Provide Financial Reports?
A real estate investment requires on-going work for keeping the books. Bills need to be paid, and various expenses need to be recorded. While this seems like an added cost, using a property manager that provides monthly financial reports and annual tax statements can save a property owner a lot of time and money.
How Local is the Company?
It’s difficult to manage a property that’s far away. That’s why out-of-town rental owners hire management where their properties are located. No matter how far you live from your rental property, however, hiring local property management has its advantages.
A San Jose property manager with years of experience will know the local city, county and state codes and ordinances. They will understand the local rental market – how much to charge in rent and where to advertise to generate the most rental applications. They are likely to have a network of reliable contractors, home inspectors, etc. They will be better equipped to perform “drive-by” evaluations of properties and will be able to handle emergencies more quickly.
Remember, the farther away you are from a property, the more difficult it is to manage. A property management company with deep local ties can be a valuable resource for a rental owner.
Work With an Experienced Property Manager
Valley Management Group has over 40 years of experience and knowledge managing rental properties in San Jose and throughout Santa Clara Valley. Let us remove the stress and worry out of managing your rental properties. Contact us for a free quote and get one month of free property management services when you sign up for services.