“Ask Kari” is a monthly, Question & Answer feature from Kari Negri. Kari has two decades of property management experience, is a featured speaker at many industry trade shows, such as AAGLA’s annual trade show, and is the CEO of SKY Properties, Inc. in Los Angeles.
Hiring a Property Management Company
This month’s question comes from Daniel in Los Angeles: “Hi Kari, what are your tips for hiring a property management company?”
Hi Daniel! What a great question! The right property management company is an essential decision for the health and financial well being of your property. Here are some tips to keep in mind:
Tip 1: Hire a company with long-term, local property management experience.
This may seem obvious, but we see owners sometimes turning to real estate agents who do property management on the side. The reason an established property management company, with property management being their primary business, is important is because property management is a constantly evolving industry. There are layers of regulation from the local, city, county, state AND federal levels. Very costly mistakes can take place starting with how the rental vacancy ad is written! Even more when showing a property to a prospective tenant, further in processing an application, and of course, in collecting rents, responding to maintenance, plumbing, mold, etc. With potential legal errors at every turn, it makes no sense to finance the learning curve of an inexperienced property manager with your building’s revenues. This dovetails into my next tip: make inquiries.
Tip 2: Who are your fellow property owner colleagues trusting for their property management?
Ask your friends and colleagues for referrals. What is the health of their financials, year-over-year, with their management company? Are they happy with management or are they stuck in a long-term contract? This leads me to my next tip:
Tip 3: Get a month-to-month management contract.
I have met so many owners dissatisfied with their property management company, but stuck in a long-term contract, unable to change companies or do anything about it. As a result, I changed my company policy to offer month-to-month management contracts. I prefer to earn my customer’s business every month, and it makes property owners happy that they have options if any hiccups occur.
Tip 4: Meet or call and speak with the property supervisor who will be handling your building.
The property supervisor is your point-person in the field. They are the on-site manager’s supervisor; they source, schedule and oversee all maintenance, and approve new tenants (among many other important duties). As this is an extremely important person in the management of your property, the one with whom you will have the most interaction, it’s a great idea to meet them.
Tip 5: Look for testimonials and references from their current clients.
Often, a property management company will list testimonials on their website. See if you can contact some of the owners via LinkedIn or a publicly listed contact number.
Tip 6: What accounting software is the company using?
Speak to the person who will be handling your monthly reports to discuss how you want your monthly financials organized. Otherwise, get a sample copy of financials to see how their general reports are arranged. How easy is it to read and understand what is going on at a building? There are many accounting software solutions available, but you want to see that they are using one tailored specifically to property management.
Tip 7: Review all fees and management contract details.
Make sure to have a clear understanding of the management contract and fees. If you have followed tip 6, you will see how the management fee is allocated. Also, inquire if they mark-up outside, third-party vendors. Make sure fees are fully disclosed and not generalized. Also, it’s certainly important for your attorney to review the contract before signing.
Tip 8: Make sure the company shares your vision for your property.
This is the final and most important tip. It’s best to have a long-term plan for your property. Ask what the management company’s vision is to see that it aligns with yours. In this final tip, you will discover if their approach and vision makes them a suitable partner in creating a positive sense of community at your building. The bottom line is that the company should take better care of the building than you can by yourself.
As always, please remember, I am not an attorney. Seek clarification through your attorney. All articles are simply an opinion. Stay in touch at www.GetSky.net
Do you need professional property management from Kari Negri and SKY Properties, Inc.? visit our contact page to get started.