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The Ten Questions of Managing a Rental Property

One of the first ways to become disillusioned with the rental property market is by trying to manage a rental property without the correct skills and resources that are required to manage such a property. The appointment of a suitably qualified property manager becomes necessary to guide and partner you through this process, as they will not only free up a lot of your valuable time, but add value to your investment portfolio too. There are however a number of questions that you should ask prior to appointing such a property manager, to ensure that you are entering into a suitable partnership in terms of your property management needs.

• 1. Management Fees? Structure, frequency and amount of fees charged by the property manager.

The fees for property management can vary significantly dependent upon location and use of the property. Commercial properties and residential properties are managed in a significantly different way. The percentage or fixed fee must be established and understood upfront, as well as in relation to the services that are being rendered for this fee.

• 2. Property Portfolio. Other clients and other properties.

What other properties the manager looks after, as well as his clientele will largely determine the suitability of that manager for your property. Usually if a manager has similar properties to your rental property then they will be more than capable of addressing your property needs and requirements.

• 3. Additional Costs and / or fees?

A clear understanding, and discussion, must be formed of any potential extra costs, and when they become applicable, in other words in which situations. This might include an additional fee for an eviction or something similar. Investigate and discuss all potentialities and case studies so that you may be aware in the case of an unexpected trun of events.

• 4. Responsible Individual?

Who is the actual person involved in managing your property, put a face with the name, if possible and attempt to build a relationship as this person will be acting in your interests with regards to your investment. Ensure that you encourage an open channel of communication so that if any issue does arise that it can be discussed freely and openly without it elevating into an irresolvable issue.

• 5. Timing, cleaning and preparation of rental units?

Does the manager get involved with the preparation and supervision of the cleaning and preparing of the apartment prior to the new tenants taking occupation? Establish whether or not there is a time lapse between old tenants moving out and new tenants moving in, as well as any additional costs that may arise at this point.

• 6. Management fee due?

At what point in time does the fee become payable, and how is it collected from the owner of the rental unit. The norm is that it is collected via the predetermined amount from the rental collected. Also inquire as to the periods of fee payment, is it weekly, monthly, annually or are there flexible options.

• 7. Marketing of the Rental Unit?

How does the manager market and advertise the unit, and does this represent an additional expense that must be addressed?

• 8. Reporting and Reconciliation of Accounts

Does the manager provide an accounting or reporting item that one can reconcile all expenses incurred against the income received? If so, establish how often this is done and to what extent, meaning how in depth does the report go in terms of the income and expenditure of the rental unit.

• 9. Decision making

To what extent can the manager make on behalf of the owner, before the owner needs to be notified. This is important to establish a threshold in terms of a spending limit with respect to repairs and so on. This will allow the manager the authority to address the niggling issues that you do not need to be bugged with. The set limit will also prevent any nasty surprises later on down the road.

• 10. Office Hours

When are the employees or property managers available in terms of normal business hours? Can they be contacted on their mobile phones and so forth?

The above represent a good framework prior to establishing a relationship with a property manager and serves to give you piece of mind in terms of the fact that your property is in good and capable hands, as well as that the unit is being run effectively as a business entity. There will naturally be many more questions that must be formulated upon the unique merits of each property and a professional, well qualified property manager will be able to address these upon request.

The appointment of a property manager will ease a large amount of stress and time worries, whilst allowing one to accept that the property will be well looked after by a professional who has your interests at heart.