Running the day-to-day property management operations of a single, or portfolio of, commercial real estate assets is not an option (or desire) for every owner. For those who prefer, and have the budget, to hire property management it’s important to ensure you take your time and do extensive research before just letting anyone take care of your investments. After all, hiring property management is a very important and critical step to protecting the value of your commercial real estate investment.
Property Managers do more than just collect rent; a quality property management firm can keep your property at high occupancy, maintain its long-term and immediate value and keep operating costs low without sacrificing quality. In order to choose the right property management company, and avoid losing money by hiring the wrong one, we’ve outlined our top 5 best tips. Follow these and you will make the best decision for your property…and bottom-line.
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Your first tip in finding property management is to ask around. See an asset that is maintained well and always full of tenants? Inquire who manages the property. Know other property owners in your area? Ask them who they use, and if they are happy with them. Have a commercial real estate broker, or know a few? Ask them what property management firms they’ve had a good experience with.
In property management you need proof of quality, beyond what you can read on a website or in an RFP. By asking for referrals you are getting firsthand, “it happened because I was there”, insight into how a property management firm actually functions and handles issues. Make sure to collect referrals from a few different sources, as you don’t want to get caught up in too much bias. Though, the old saying is true, where there is smoke there is fire. If you keep hearing the same thing about a property management firm, chances are it’s true.
Look For Proper Licensure
This may seem like a no brainer, but when hiring property management you must always ensure that they have the proper state-issued licensure. When a property manager is licensed it means they have taken several hours of property management courses and education, and have passed a state-licensing exam.
What does all this ensure? It ensures that your property management will follow the most current, and proper, state-regulated procedures from accepting rental income and security deposits to tenant improvement projects and evictions.
Don’t Hire Based on Price
You get what you pay for, and in property management it’s no different. Knowing how important it is that your commercial investment is maintained property, hiring property management is no time to be cheap.
While you should always look for the best value and try to score the best deal, pricing should never be your determining factor; experience and quality should. To give you an idea of cost, most property management firms will charge 7% to 10% of collected rents per property, this percentage varies by market.
If you find a property manager you like, but maybe they are on the higher end of the pricing spectrum, there are a couple ways to negotiate price. First is getting a lower rate by having them manage multiple properties. The second is negotiating a lower percentage to start, set to increase later in the contract if the property manager meets occupancy and quality standards.
Ask Some Questions, Then Ask Some More
The interview process is one of the most important parts of choosing a property management firm. During this process you will want to make sure that when you walk away you know everything there is to know about how they will handle property issues, tenant issues and maintain your asset(s).
Be sure to ask specifics, like:
- Will the property be inspected on a regular basis? What does that look like? Walk me through the process for internal and external property checks.
- How are repairs and maintenance issues handled? What is the typical turnaround time for small repairs? Larger repairs? How are the requests, and subsequent repairs, communicated to the tenants? Do you use any sort of work order software?
- What type of reporting do you offer? What sort of property management platforms/software do you use to collect/maintain property data?
Basically our advice is to ask questions…then ask some more. Information is power, and you don’t want to be blindsided by any negative issues once you sign a contract.
Visit Managed Properties
You’ve heard the saying; the proof is in the pudding. In order to get a 100% understanding of how well a potential property manager will perform on your asset, you need to go visit assets they currently manage. Be sure to ask a potential hire for a few samples of their managed properties.
When you go check out these properties you will get a lot of great information. Is the asset clean and well maintained? Would you want to be a tenant in this property?
Speaking of tenants, while visiting make sure to talk to a few of them. Property management is all about keeping tenants happy, so ask, are they? Do they get quick and comprehensive response to their issues/complaints? How long does a typical repair or maintenance request take? Will they be renewing their lease?
Searching for Property Management in Charlotte?
With over 50 years in the Charlotte commercial real estate market, we’ve seen a lot of successful property managers, and a lot of awful ones. Knowing that property management is an essential function to maintaining a successful income-producing asset, take your time when choosing one. The property management team at Percival Partners has vast experience and knowledge and is more than capable to ensure your asset continues to perform for years to come. Contact us at 704.632.1000 to learn more.
Percival Partners is one of Charlotte’s most recognized and respected commercial real estate firms with more than 50 years experience in the region. Our professional and experienced real estate Advisors are in the business of listening, understanding, and adding value. No matter the commercial property type you own or seek, you can count on the Percival Partners team to maximize your return and peace of mind. To reach us, you can call us at 704.632.1000 or follow us at @SVNPercival, LinkedIn or Facebook.