Evaluating Property Management Companies
Just wondering how to screen a property management co. to run out of state properties. What can I expect from the company (all the services they provide), what kind of fee ( a % of the rents?), how do you get charged for repairs (broken toilets...). Do you offer them an incentive to keep the vacancy rate low? I would like to look into contracting with a company such as this. Thanks! Mary
In the past the only thing I found that you could even negotiate is the percentage that they keep every month. The normal fee is 10% of gross, but I have seen it negotiated down to 8%. The fixing of things is where they make there real money as they will mark up the prices at which they bought it.
As far as the vacancy rate goes, you should still advertise above and beyond whatever they say they will do to bring people in. There is no incentive that I am aware of other than putting it in the contract that they will be fined or drop percentage points if they arent at least XX% filled. You could make it so they get 10% fully filled, 9.5% at 95% occupancy, 9% at 90% filled etc etc.
Good Luck,
Kyle
I call around and ask the vacancy rates for the different PMs for one thing. They will generally charge different percentages of rent depending how much you want them to do. My PMs have some kind of agreement with their subs. When a repair is needed, the sub will do the work and then they will get paid sometime over the next 30 days after the rents are collected. I just have a deduction from my rental income with a notation of what the charge was for.