How to Choose a Property Management Company

Introduction

Investing in real estate can be a lucrative venture, but it often comes with a myriad of responsibilities, particularly if you're a landlord. One of the most critical decisions you'll make as a property owner is selecting a property management company. A reliable property management company can make your life as a landlord much easier, helping you maximize your investment while minimizing stress. In this guide, we'll walk you through the essential steps to help you choose the right property management company for your needs.

Assess Your Needs

Before you start your search for a property management company, it's crucial to understand your specific needs and expectations. Consider the following questions:

1. How many properties do you own?

2. What type of properties do you own (residential, commercial, etc.)?

3. Are you looking for full-service property management, or do you have specific services in mind (e.g., tenant placement, maintenance, rent collection)?

4. What is your budget for property management services?

Having a clear understanding of your requirements will help you narrow down your options and find a company that aligns with your objectives.

Research Potential Companies

Once you've identified your needs, start researching property management companies in your area. Here are some effective methods for finding potential candidates:

1. Nomad is here to help: We have diligently screened every property manager in all of the markets in which we operate. We've done the hard work, so you don't have to. Get in touch with us by entering your property address at nomadlease.com and our team will work with you to find the best solution.

2. Online Search: Use search engines, social media platforms, and online directories to discover property management companies in your region. Check their websites for information about services offered, client testimonials, and contact details.

3. Referrals: Ask for recommendations from other property owners, real estate professionals, or friends who have experience with property management companies. Word-of-mouth referrals can provide valuable insights.

4. Local Real Estate Associations: Contact local real estate associations or landlord organizations for recommendations. They often maintain lists of reputable property management companies in the area.

Check Credentials and Experience

Before making a decision, thoroughly vet the credentials and experience of the property management companies on your shortlist. Here's what to look for:

1. Licenses and Certifications: Ensure that the company is licensed to operate in your state and holds any necessary certifications. Compliance with local regulations is crucial.

2. Experience: Consider how long the company has been in business and its track record in managing properties similar to yours. A well-established company with a proven history is often a safer choice.

3. Client References: Ask for references from current or former clients. Contact them to inquire about their experiences with the company's services, including communication, responsiveness, and overall satisfaction.

4. Online Reviews: Search for online reviews and ratings of the company. While not the sole factor to consider, they can provide insights into the company's reputation.

Evaluate Services Offered

Different property management companies offer various services, so it's essential to assess whether their offerings align with your needs. Here are some common property management services to consider:

1. Tenant Screening: Does the company have a rigorous tenant screening process in place to ensure reliable and responsible renters?

2. Rent Collection: How does the company handle rent collection? Is it efficient and transparent?

3. Maintenance and Repairs: Inquire about their maintenance and repair procedures. Are they responsive to tenants' maintenance requests, and do they have a network of reliable contractors?

4. Financial Reporting: Ask about the company's financial reporting practices. Do they provide detailed monthly statements and financial reports?

5. Marketing and Vacancy Management: How does the company market vacant properties? Do they have a strategy to minimize vacancies?

6. Legal Knowledge: Ensure the company has a solid understanding of landlord-tenant laws and can handle legal matters effectively.

Understand Pricing Structure

Property management fees can vary significantly from one company to another. Common fee structures include:

1. Percentage of Rent: Many property management companies charge a percentage of the monthly rent as their fee. This fee typically ranges from 4% to 12% of the rent collected.

2. Flat Fee: Some companies charge a fixed monthly or annual fee for their services.

3. Leasing Fees: In addition to ongoing management fees, inquire about any leasing fees for finding and placing tenants.

4. Additional Charges: Be aware of any additional charges for specific services, such as maintenance or property inspections.

It's essential to understand the complete pricing structure and ensure that it aligns with your budget.

Communication and Accessibility

Effective communication is crucial in the landlord-property management relationship. During your initial interactions with potential property management companies, assess their communication skills and responsiveness. Consider the following:

1. Accessibility: How easily can you reach them in case of emergencies or questions?

2. Response Time: Do they respond promptly to emails and phone calls?

3. Communication Style: Is their communication clear and professional?

A property management company that prioritizes communication and is accessible when you need them can save you headaches down the road.

Review the Contract

Before signing any contracts, carefully review the terms and conditions. Ensure that the contract covers all agreed-upon services, fees, and responsibilities. Pay attention to the termination clause and any penalties for early termination.

It's advisable to have a legal professional review the contract to ensure that it is fair and protects your interests.

Large National PM vs. Small Local PM: Pros and Cons

When choosing a property management company, one important decision to make is whether you should go with a large national firm or opt for a smaller, local property manager. Each option has its own set of advantages and disadvantages.

Large National Property Management Company

Pros:

1. Resources and Expertise: Large national firms often have access to more resources and a deeper pool of expertise. They may have advanced software systems, extensive industry connections, and a broad range of services.

2. Brand Reputation: National companies usually have well-established brands with a reputation for professionalism and reliability. This can attract high-quality tenants and reassure property owners.

3. Consistency: With standardized processes and procedures, national firms tend to offer a consistent level of service across different locations, which can be beneficial if you own properties in multiple areas.

4. Economies of Scale: They can leverage their size to negotiate better rates with contractors, potentially reducing maintenance and repair costs.

Cons:

1. Lack of Personalization: Large firms may treat your property as just another unit in their portfolio. This could result in less personalized attention to your specific needs and preferences.

2. Higher Costs: While they may have access to more resources, large national companies often charge higher management fees and may have additional hidden costs.

3. Limited Local Knowledge: Their focus on a broader market may lead to a lack of in-depth knowledge about local real estate trends and regulations, which are essential for effective property management.

Small Local Property Manager

Pros:

1. Personalized Service: Local property managers typically offer more personalized and hands-on service. They are often more invested in the success of your property because they operate within the same community.

2. Local Expertise: They have a deep understanding of the local real estate market, including rental rates, tenant preferences, and neighborhood dynamics.

3. Accessibility: Smaller firms are usually more accessible and responsive. You're likely to have direct communication with the property manager, making it easier to address concerns quickly.

4. Relationship Building: Local property managers can focus on building strong relationships with both property owners and tenants, fostering a sense of trust and loyalty.

Cons:

1. Limited Resources: Smaller companies may not have the same level of resources as their larger counterparts. This could impact their ability to handle larger portfolios or provide advanced technological solutions.

2. Potential for Inconsistency: The quality of service can vary more from one local property manager to another. It's crucial to research and choose a reputable local manager.

3. Niche Specialization: While local managers excel in the local market, they might not offer specialized services that larger companies can provide, such as nationwide tenant placement.

Making the Choice

Ultimately, the decision between a large national property management company and a small local property manager depends on your specific needs and preferences. Consider the size of your portfolio, your desire for personalized service, your budget, and the importance of local market expertise.

For property owners with a diverse portfolio spread across different regions, a large national company might offer convenience and resources. On the other hand, if you have a single property or value a more personal touch and local knowledge, a small local property manager may be the better choice.

Source: Buildium

Conclusion

Selecting the right property management company is a crucial decision that can significantly impact your real estate investment. By assessing your needs, conducting thorough research, checking credentials, evaluating services, understanding pricing, and prioritizing communication, you can make an informed choice. Remember that a reliable property management company can provide peace of mind and help you maximize the returns on your investment.

Take your time in the selection process, ask questions, and choose a property management company that aligns with your goals and values as a property owner. In doing so, you'll be well on your way to a successful and stress-free real estate investment journey.