Hiring a property management company to manage your commercial property or portfolio of holdings can be one of the most important ownership decisions you can make.
Knowing what to ask and what to look for when interviewing potential property management companies goes a long way toward making the best choice for your unique circumstances.
Here are some areas to explore and consider when evaluating property management firms:
How many units do they have in their portfolio?
You need to understand how many units the property management firm handles to determine if they are the right fit for your assets. If you own a few properties, and the firm you are interviewing typically manages 500-unit buildings, they might not provide the level of attentiveness you need because your holdings might be too small for the firm. They may take you on but not render the services you need. Moreover, even if the management firm handles holdings of similar size to yours, dig a little deeper to find out what individual would handle your account. It’s entirely possible the firm might look like the right fit, but you’re getting handed off to a property manager that’s inundated with units already.
In short, make sure the firm is the right fit for you and understand the assigned manager’s current workload before signing on.
What services do they provide?
Every property has unique needs. You need to select a property management firm with a service offering that makes sense for your operation. You don’t want to pay for things you’ll never use or need; conversely, you don’t want to get shortchanged on services that are important to you.
Take a look at the firm’s scope of services. Understand what is and is not included in the contract you’re signing. Are certain services add-ons to your recurring fee? How often will the property management representative be onsite? What maintenance is done in-house and what is outsourced and to whom? Are they knowledgeable about legal risks? There’s a host of things to investigate. Again, do your research and ask tough questions.
What is the firm’s reporting process?
The strongest property management companies will have regular, robust reporting processes to keep you apprised of financials and work performed. Ask the firm what their reporting process is and how they will communicate with you on a regular basis. If they don’t have an answer, or they seem vague, you should move on. The best property management firms today utilize enterprise software and technology to produce your reports and provide you with 24-hour portal access to look at your property data.
What do their current and ex-clients have to say?
Referrals, testimonials, and online reviews are important as they provide third-party validation for what the firm claims makes them special. Strong ratings on Yelp or other online rating sites could be an indication of high performance; a slew of negative reviews could be a red flag.
Ask the firm you’re interviewing to provide references and then reach out to them. See what emerges from the conversation. In many cases, the property management firm will give you names of happy customers, so it might take a little digging or reading between the lines to uncover any areas of dissatisfaction or concern.
What does it say in the contract fine print?
When you’ve winnowed down your list of property management firms to a few, do a deep dive into their contract. Get a sense of their insurance coverage, what their fee includes and doesn’t include and understand their termination policy. If a firm comes in with a very low per unit rate, attempt to understand why their price point is so much lower. Is it because they have economies of scale, which are more efficient or deftly use technology? Or do they have a host of hidden up-charges that will cause that low unit rate to skyrocket, once they start their work?
How do they handle formal commercial property inspections?
You need to find out how the management company conducts formal property inspections and how often. Gauge this reaction carefully. Does it seem property inspections are part of their normal process? Are these formal property inspections included in the fee, and if so, how many are included? Regular, formal inspections of your commercial properties will be standard operating procedure for a reputable company and should not be positioned as an “extra.”
Ask these key questions, and you’ll be able to weed out the bad matches and narrow your candidates down to the best of the best.
Being diligent and thorough, during the property management hiring process, is essential to the long-term financial health of your assets.