Choosing a Property Management Company

Make the right choice

Real estate property management is a specialized business. Making the right choice is critical for you to protect your investment. To assist you in your decision, we’ve laid out six key questions. To be able to manage your investment successfully, a property management company must be able to answer ‘yes, absolutely!’ to them all:

1. Do they personally invest in residential real estate? If the people you are putting your trust in don’t know every aspect of residential real estate investing from personal experience, how can they effectively manage your property? Don’t let somebody test their theories with your money and your future. This has to be the first question you ask any potential property manager. If they aren’t in the game themselves, they can’t possibly understand your needs and concerns.

2. Will they market your property effectively?  While the promise of ‘free’ or ‘cut-rate’ marketing may sound inviting, it should be a red flag for the serious investor. If the free marketing is a one-line ad in the Sunday paper, expect to get what you paid for. It could easily cost you a mortgage payment or two while your home sits empty. Great marketing creates more phone calls… more phone calls lead to more prospective tenants and better choices… which produces the best possible tenants in the shortest possible time. That’s real property management.

3. Does the company have individual experts accountable for your property? Do you know everything about the Valley? The Phoenix Valley is just too big for one person to be the expert. Make sure the property management company you choose has regional experts who know the communities and neighborhoods where your investments are located. When combined with effective marketing, this local knowledge is a powerful one-two sales punch to get your property leased.

4. Will they be able to coach you with your real estate investment strategy? Every thriving real estate investor has learned from someone who is succeeding in real estate investment at a high level. Having the right real estate investment mentor makes all the difference. Buying the right home in the right neighborhood at the right time could double or triple your investment returns; choose a property management company that also has investor mentors with the personal expertise that can help you make those decisions.

5. Do they use an action-based fee model? Some property management services like to use a “community pool” fee model in which everyone pays for everything on a Flat Rate. That means the people who make poor investment choices end up not having to pay for all the messes their property creates. While those who make wise investment choices pay even though their properties run well and are easy to manage. With an action-based model, you pay only for the resources required to manage your property and the company can focus on quality properties with better returns.

6. Do they use battle-tested contracts and agreements? Many property management companies still use the standard MLS agreements and contracts. As a serious investor, your main concern must be to protect your assets and cash flow. Standard MLS agreements are designed to protect agents and brokers, not investors. Make sure your management company uses contracts that are specific to investors and have a long track record of standing up in court.

Couldn’t I do it myself?
In a perfect world you wouldn't need to hire a property management company. But the world of real estate investing is far from perfect. Problems and pitfalls are everywhere; there are expensive mistakes to be made.  How much does two weeks with your property standing empty cost you? How about an eviction? What if your contracts aren’t enforceable? Poor or inexperienced property management can literally cost you thousands of dollars a year. Quality, professional and accountable property management doesn't cost...it pays!

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