It is one thing to invest in a commercial or residential property but quite a different thing to manage it. Some investors who have experience in managing properties may be able to manage their building, but a lot of investors are first time investors or have been investing in very small properties that are easy to manage.
However, when it comes to a commercial building or a large residential building with many tenants it becomes an onerous task and a daunting one.
Some investors like to purchase a property and let a third party management company do the daily grind and manage their property
So how do you select the right Property manager for your property?
The first thing to note that commercial properties and residential properties require different types of management styles and generally residential properties are more tedious to manage. Also both require some general skill sets and some special skill sets.
- Define the scope of work
Property managers will normally set out the scope of work that they will do for you. This is a bit like a menu where you choose the tasks you want them to perform. They can take up 100% of the property management or you can pick and choose. For example, you may want them just to collect the rent and service charges and manage the rest yourself. Some investors will require maintenance and repairs or leases and tenancy agreements etc. So according to the need and the involvement the investor requires the correct tasks should be chosen. However, if the investors wishes they may delegate tasks which they were originally involved in to the property manager, but of course, there will be an increment in the fees.
- Track Record
This is one of the most critical attributes of choosing the right management company: what’s their track record of success? You will pay roughly the same amount for the services of a top performer as you will a total loser. So how can you tell if they are really good? Ask for references and then call them and see what they say. You may want to see one of their properties that they manage and also you should interview them. Get a referral from their clients so that you are sure about their track record.
- Ability to cancel
A cancellation provision is an important part of any management contract. History has proven that the best managers are not concerned about you having the right to cancel, while a bad manager will not want this included. All management contracts should certainly contain the ability to cancel as you can never guess the future and that great management company might lose their star performers (maybe they go out on their own) and the performance declines significantly. You may also sell the property in the future and the new owner may not want to continue with that same company.
- Verification
Even after you have selected a management company, you should always make sure that you are “ in the loop “ of their performance. Remember the old Ronald Reagan saying “trust but verify” – essentially you should make sure that everything is going smoothly. How can you do that? Regular meeting with the management company is useful. Also initially ask them to allow you to approve their actions. Once you have more trust in their performance you may be able to release decision making to them.
It is always better to appoint a third party property management company to manage your property. Besides the daily hassles and stress, property management companies because of their experience will be able to manage your building better that you do it yourself.
