Property Manager

Property management companies come in all sizes, capabilities and expertise. Make sure these "years in the business" are related to property management and not sales only. Property Management Only or Sales also - Some investors will only hire companies that deal strictly in property management when it comes time to managing their rentals.

A company that offers both sales and property management can be very useful if you plan on buying multiple properties and want to work exclusively with one company for buying and managing all these properties. Real Estate or Brokers License - In order to practice business as a property manager some states require they process a Real estate or Broker's license.

Type of properties you manage - Some property management companies manage all types of properties while others specialize in one type, such as residential.

If you have a single-family house that needs managing, a company with 90% of its properties being commercial property may not be a good fit. Typically commercial and community association management is the most profitable for a property management company.

Some popular associations are "National Association of Realtors®" (NAR), "National Association of Residential Property Managers®" (NARPM®), "Institute of Real Estate Management®" (IREM®), "Community Associations Institute" (CAI), "Building Owners and Managers Association" (BOMA) and the "National Apartment Association" (NAA).

All property management companies generally charge this fee.
Lease-Up or Setup Fee
This fee is charged to the owner to compensate the property manager for their initial time invested and resources used in setting up an owners account; showing property and/or other activities resulting in tenant placement. Once a tenant has been placed and first rent income comes in, the property manager will deduct this fee from the rent proceeds. Some property managers have been known to require this fee upfront prior to tenant procurement.

Usually this fee is non-refundable once the property manager has started the process of tenant procurement or any legwork has been initiated with the property.

Lease Renewal Fee
This fee is charged to the owner when a property manager renews a current tenants lease and covers the costs of initiating paperwork or communication involved in implementing the new lease document. A property manager may also justify this fee if they perform a year end inspection of property. Advertising Costs
Depending upon the property management company's contract, either they will pay the advertising costs or the owner or they could split the costs.

Maintenance Mark-up Charges
Early Cancellation Fee
To be fair, some managers legitimately deserve this fee especially if they have pocketed advertising costs, incurred lots of legwork and time invested in your property.
Your property is vacant, but we still will charge our monthly commission or a small flat fee.
"A For-Rent Yard Sign Fee". "Preventive Maintenance Fee". If your property manager will not negotiate, there are other property management companies that are eager to earn your business.

Typically, property managers charge anywhere from 4-15% of the rental income to manage your properties. Just like with the selection of a property to buy, or the selection of a real estate agent to work with, or the selection of a tradesman to work on your properties, it is somewhat of a numbers game. I bought a property with tenants in it and by extension I got saddled with the agent who had originally rented it to them. As it was my very first investment property, I didn't want to have an agent manage the property for me, I wanted to manage it myself.

The same applies to agents.
You can lose your tenants and your rent very quickly if the property manager does not respond quickly to repairs or complaints from tenants. I had some tenants move into one of my properties and they had signed a lease agreement and paid a month's rent in advance as well as a security deposit.

The management company kept promising to send the roofer.
In the end, I lost my tenants, I lost money, and the management company lost me as a client.
Here are some additional facts that could be deal-breakers for a landlord in selecting a property manager.
One of the most frequent expenses a landlord can have with his property is plumbing. So if you get a property manager who seems reasonable, try to check out the tradesmen that he has on his books. As nice as the property manager may be, it's his tradesmen who can ruin your reputation as a landlord.
Now you are faced with an equally monumental task of checking out the capabilities of a prospective property manager.

The laws of a country change frequently and you, as well as your property manager, should keep on top of those changes. There are complex tax issues, laws governing those taxes, laws concerning tenant rights, landlord rights, evictions and contracts. You need to be prepared to spend a great deal of time and energy as a property investor. It's not a question of just finding a wonderful property. A property manager may not know that the building is developing dry rot.

So while you can always get yourself a property manager to handle the day-to-day operations, you cannot really afford to be an absentee property owner.