Everybody who is entertaining the idea of hiring someone to manage their Seattle-area property knows that they have to pay for property management. But just what is covered in your property management fee? If you have a good property management company, you actually get a lot for what you pay. In this post we’ll look at some of the things that are commonly covered when you hire someone to manage your property. We’ll follow up in a later post.
Evaluate property to determine a realistic rental rate: A good property management company will take a close look at your property, noting interior and exterior conditions and make recommendations for improvements. Then based (among other factors) on what other properties in the area of similar character are generating, your management company will help you set a realistic rental price.
Market the property: It’s one thing to have a property that’s available for rent. It’s another thing altogether to get potential renters in to look and to get them to sign a lease. Your management company should help you get the property ready for viewing (inside and out), and initiate marketing activities (website listings, print listings, mailings, fliers, signs, contact with realtors, etc.) that will bring renters to the property.
Screen and Select Tenants: One of the biggest benefits of using a property management company is that you don’t have to screen all the prospective tenants. Experienced management companies no how to quickly eliminate poor candidates and perform background checks to verify identity, income, credit history, and rental history.
Oversee Tenant Move In: Your management company will provide the leasing agreement, confirm your tenant’s move-in date, and ensure that the tenant has signed all the legal paperwork covering the terms of the rental. They will also do a thorough walk-through with the tenant and get them to sign off on the condition of the property. They’ll also collect the initial payment and security deposit.
In Part 2 of this post, we’ll look at some of the other important things that should be covered by your property management fee—including some of those “uncomfortable” items that landlords sometimes face.
If you have residential or commercial property in the Seattle area you’ve probably come to the realization that it doesn’t take care of itself. Somebody has to make sure that the property is maintained if it’s going to retain its value and generate some income. Unfortunately, there are some common mistakes that many owners make when it comes to managing their properties. Here’s a look at four of the most common missteps.
1. DIY Nightmares: It’s tempting to try to save money by doing repairs and maintenance yourself. It’s particularly tempting if you have some of the skills you need to make the repairs. Some of the work may be well outside your area of expertise and you may not get the results you want. In some cases you may not pass required inspections. But even if you’re highly skilled, do you have the time? Unless maintenance is your main job, when will you find the time to make the necessary repairs? And if you’re preparing a vacant property for someone to move in, bear in mind that the longer it takes you to get the property ready, the longer you’re going without income. Sometimes trying to save money actually costs you money.
2. Hiring the wrong help: Sometimes property owners try to save some money by hiring laborers at a lower rate. That doesn’t always work out so well. Skill needs to be factored in as well. And often skill, knowledge, and speed go hand in hand.
Hiring a $15-an-hour laborer who takes 10 hours to complete a job will cost you $150. But if you hire an expert for $50 an hour to do that same job and he completes it in only 2 hours, your cost is only $100. And there’s a good chance that you’re getting better quality work. That means the problem won’t have to be fixed again in the future—and that saves you more money down the road.
3. Allowing your tenants repair things themselves: Sometimes property owners try to avoid dealing with repairs and maintenance by giving tenants a break on their rent or lease if they agree to take care of repairs themselves. There are a couple of dangers in taking this approach. First of all, you may end up with repairs that are not up to code or will actually reduce the value of your property. And some repairs—if not done properly—can result in safety hazards. Beyond that, if one of your tenants is injured while performing maintenance on your property, you could be liable for their medical bills, rehabilitation, and loss of income. That’s a huge risk.
4. Skimping on inspections and maintenance: Make no mistake, staying on top of regular inspections and maintenance takes time and effort. Many a property owner has put off inspections due to the inconvenience, only to be surprised by significant damage once the tenant moves out—damage that could have been avoided had the property been inspected regularly and minor repairs done earlier. Skimping on maintenance is no bargain either. Yes, maintenance costs money, but regular maintenance (on an HVAC system, for instance) is still much cheaper than having to replace the entire system. And well-maintained properties command a higher rental rate. So what you spend up front to keep your property in good working order pays off on the back end.
It’s interesting that many of the missteps property owners make center around attempts to save money. But those hoped-for savings end up costing them more in the long run. What are your biggest concerns about hiring a property management company as opposed to maintaining the property yourself?
If you own commercial or residential property in the Seattle area you may have toyed with the idea of employing a property management company. But like most things in life, property management isn’t free. Why would you want to hire someone to take care of something you own? Of course, if you own commercial or rental property, you know there’s more to it than just holding the deed. Here are five signs that you might want to hire a management company for your property.
1. You're not a “hands-on” manager. Some landlords enjoy the challenge of finding good tenants and maintaining a safe and attractive property. But if you’re in it strictly as an investment and the thought of day-to-day management of your properties leaves you cold (or makes you queasy), you may want to hire some outside help.
2. You don't want to be an absentee landlord. If you live a long distance from your rental property, hiring a property management company dealing with some issues can really be frustrating. Sometimes there’s just no substitute for being on site. Having “eyes on the scene” can be a huge help.
3. You believe that time is money. Even owners that enjoy hands-on management sometimes just don’t have the time required to give to managing properties. That’s especially true if you have other irons in the fire. Handling day-to-day property management issues simply may not be the best use of your time.
4. You have multiple properties and/or rental units. The problems and issues associated with rental properties are like rabbits: They seem to multiply. And the properties you own, the more issues you’ll have to deal with. And if this isn’t your forte, you may want to hand this off to someone who does this every day.
5. Being an employer is not your idea of a good time. Chances are, you’re not going to be “on property” full time. But as soon as you hire a resident manager or maintenance person—you’re an employer. That means you’re responsible for payroll and insurance and a host of legal requirements. Because a property management company is an independent contractor (and they are responsible for the people who work for them) you avoid the whole employer hassle.
What’s your sign?
If you own a commercial or residential property in the Seattle area you may be wondering if it makes sense to take care of it yourself—or hire a property management company to do that for you. What are the pros and cons of property management? Here are just a few.
+ Compliance: Property managers stay current on the state and federal regulations regarding tenant/landlord agreements. What you don’t know can hurt you if you’re not in compliance.
+ Tenant Communication: Property mangers handle all communication with tenants. Some owners may think they want to be a bit more “hands-on” with their tenants, but remember: Tenants don’t usually contact landlords unless there’s a problem. And they do it at their convenience—not yours.
+ Maintaining Occupancy: Part of a property manager’s responsibility to ensure that you have tenants—and that they are the right kind of tenant. Screening tenants is a time-consuming proposition. On top of that, a good property manager gets pretty good at “sniffing out” unsuitable tenants—something you may not have learned yet.
+ Connections: Professional property managers have connections with related professionals in the same field who can take care of maintenance agreements, cleaning contracts, and landscaping. Unless you’re well connected, finding the right people to maintain your property can be extremely time-consuming.
+ Market Knowledge: Lease and rental markets are in a constant state of flux. A good property management company will help you get the right rate for your property. It doesn’t help to set your price too high if you can’t find a tenant. And you don’t want to settle for too little, either. These folks have their fingers on the market’s pulse.
- Cost: The biggest downside to enlisting a property management company is that it will cost you something. Actual prices vary from company to company, but it’s not uncommon for management companies to require the first month’s rent for the initial payment. This covers advertising expenses, showing of the property, and administration expenses associated with bringing in a new tenant. Then the company takes between 5 to 10 percent of the monthly rent from then on out.
We think the pros significantly outweigh the cons. Are we missing anything that you think might tip the scales?
Deciding that you want to enlist the services of a property management company for you Seattle-area property can take a big load off your mind. And as important as that decision is, it’s just the first decision you have to make. Deciding which company you want looking after your residential or commercial property is critical. Hiring the right company will free you from the daily worries of property management. But hiring the wrong company can cost you in aggravation, reputation, and money. How do you know if you’re even talking to the right people?
Here are five telltale signs that you’re dealing with a company that you should avoid.
- First Impressions: If the property manager you interview isn’t polite, courteous and confident when you talk to him, how will he handle himself with tenants? If this person doesn’t treat you with respect and professionalism there’s not much chance he’ll treat tenants any better.
- No references: If the company you’re considering isn’t eager to provide you with current references, there’s probably a reason. People who take pride in their work and are committed to good service are eager to have others tell you about the quality of their work.
- Bad experience: Just because someone has been in business for a long time doesn’t necessarily mean they’re good (although time does have a way of weeding out some of the bad apples). It’s also important to make sure the management company has the kind of experience you’re looking for. It’s one thing to “manage” an empty warehouse. It’s something else to deal with tenants on a regular basis.
- Not enough knowledge: This is similar to the previous concern, but is focused on things like systems for collecting payment and performing regular maintenance. And if your property manager isn’t abreast of current regulations, you could be the one held responsible.
- Lack of conflict resolution skills: It’s not enough to know how to fix a leaky pipe or to make sure the lights stay on. Property management involves people—and that means being able to resolve conflicts to everyone’s satisfaction. If someone tells you he has never had conflicts, he probably hasn’t had to deal with people much. The real question to ask him is how he dealt with conflicts.
There are other signs that you might be talking to the wrong property management company, but if any of these show up—it’s probably a sign for you to look elsewhere!
If you’re considering retaining the services of a property management service for your Seattle area home or business, there is some essential information you need before deciding who to hire. After all, it’s not just a piece of property that needs to be looked at—it’s your property. And it’s your investment. That’s not something you want to gamble with. You’ll want to engage the services of someone who will treat it like you would. Here are six critical questions to ask potential property managements services.
How long have you been in business? It’s tough to gauge a company’s track record if they haven’t been around for long. You’ll want to find a service that can provide you with references from multiple clients—and has several years of good experience to back up their promises.
What’s your tenant qualification process? You wouldn’t rent your home or business to just anyone. What process does the service have in place to check backgrounds? What else do they do to screen potential tenants?
How many properties do your manage—and how many staff do you employ? Does the company you’re talking to have the resources to really manage the properties, or are they spread too thin? On the other hand, a service with too few properties may not have the experience or the reliability you’re after.
What’s your marketing plan for vacant properties? It’s not enough to simply have a list of available properties. Ask your prospective service for specifics on how they plan to put the right people in your property. Have them tell you—or show you—what they’ve done for other clients.
How do you handle maintenance and repairs? Will your management service be doing the work themselves or outsourcing it? If they hire it out, can they provide information about whom they use?
Who can I talk to? This one may seem obvious, but you’ll want references from at least 3-4 previous clients. And don’t settle for a list. Make sure you call several of the references provided.
What else would
you want to know before hiring a
property management service?
The Farrington Home
The Farrington home was originally built in the 1940’s and was remodeled in the 1990’s. The home was function, but not designed for the family to live in. There was no eating area for family dinners and the laundry room that was also used as a mudroom, was located just off
the kitchen – very inconvenient! In addition to the laundry, there was more unused space. An extra bedroom behind a fireplace was never used and interrupted the flow of the home.
The family wanted to create a space where they could spend time as a family. They requested an eating area and a patio door to the backyard, better office and kitchen space, and to recapture the space from the unused bedroom. There was so much area to work with, but we needed to figure out a way to make everything flow smoothly.
Our goal is always to turn a house into a useable, home that is customized to the family’s needs. We were able to do that with the Farrington’s home by looking at the space in a whole new way. We figured out that we would be able to take out the wall behind the fireplace and reface the fireplace to create a family playroom from the bedroom.
Creating an eating space for the family required relocating the existing furnace to the garage and raising the floor in the mudroom. Off of the eating area we added a patio door so that the eating space can flow to the patio. Extra storage was built into a bench that can be used for family meals.
To see more of the transformation, please join us for an open house to display the new home. November 19th from 3 to 5. Please call (206) 824 – 8001 for the address.
If you have a vacant property in the Seattle area—whether it’s residential or commercial—you may be wondering how to maintain that property while you’re not in it. And you may be wondering how to go about finding the right tenant to occupy that space—either temporarily or for the long haul. Should you take that task on yourself, or should you hire a professional property management service?
Doing nothing simply isn’t an option. A property that isn’t constantly maintained can quickly lose value. So should you do it yourself, or hire a professional service? Here are a few questions to consider.
Do you have the time to devote to property maintenance? It’s easy to underestimate the amount of time required to keep up a property. While many of us maintain our own homes, it’s hard to maintain two homes (assuming you’ve moved). And if you’ve moved out of the area, it can be extremely time-consuming—or even impossible.
Do you have the necessary skills to maintain the property? Residential properties may be a little easier to maintain than commercial properties. But some maintenance (even for a residential property) may require skills you simply don’t have. And if you’re responsible for a commercial property there are separate laws and industry standards you’ll have to adhere to.
What about finding, screening, and selecting tenants? Do you have the expertise and the time to market your property? Do you have the ability to do background checks and screen potential tenants? Are you equipped with the legal forms and knowledge you’ll need to set up a lease that protects you and your property?
Are you prepared for the on-going duties of being a landlord? If you’re maintaining a commercial property, are you prepared to deal with city and government agencies on issues such as fire suppression system testing, backflow testing, elevator inspections and other certifications that are required to keep your building in compliance with local codes? And even if you’re dealing with a residential property, are you prepared to handle repairs, complaints, and requests for improvements? And how will you deal with making sure your tenant pays the lease on time?
If none of these things trouble you, there’s a good chance that you’re a good candidate to manage your own property. But if any of them make you nervous (or tired just thinking about them!) you may want to consider having a professional management service handle this for you.
If you have additional questions about the services a
professional property management service provides, we’d love to try to answer them.
Shoot us a note and we’ll be happy to answer any questions you have.