Commercial real estate investment properties are an excellent way of diversifying your investment portfolio while maintaining a steady positive cash flow.
At the same time, unless the property is a triple net lease property, as owner you will be responsible for managing it effectively, ensuring that rent collection, maintenance, and other tasks are performed effectively.
And while many commercial investors hire a management company to oversee their properties, finding the right commercial management property is critical to the success of your investment.
In order to ensure you find the that fits your needs, here is a list of questions to ask when interviewing prospects.
What Services Are Included In Your Monthly Fee?
Most property management services charge a month fee that ranges anywhere from 5% to 20%. While you obviously want to find a company that charges the least amount of money for services provided, you should also be wary of companies that charge a low monthly fee, while charging high fees for those services not included in the monthly fee.
How Do You Handle Repairs And Maintenance?
Here you’d like to know if the company has their own crew, or if they contract to outsiders. If they use an outside contractors, find out if they receive a bonus for referrals: you don’t want to pay for unnecessary tasks simply because the company has extra incentive to use a particular contractor.
It’s a good idea to give the company a maximum amount of money that can be spent without contacting you: while you don’t want an important repair to go unfixed because you were incommunicado, it’s also a wise to suggest they consult you before beginning expensive repairs.Don’t forget to ask about yard work, landscaping, and snow removal as well.
How Do You Advertise And Fill Vacancies?
You’ll want to check that the prospect doesn’t charge extra for filling vacancies; although some charge as much as a half month’s rent, there’s no need for this fee, since it’s one of the main responsibilities of a property management company.
In addition, it’s useful to find out exactly how they plan on advertising vacancies. You want a company that does more than put up a “for rent” sign. There are several places to advertise vacancies online, for free. Will they take pictures of the vacant apartment or property? Do they have the technical skills to add the pictures to online listing sites?
How Do You Handle Accounting Tasks Like Tenant Deposits And My Monthly Payments?
- How will they send your check?
- When will it be sent?
Find out how rental income from tenants is handled.
- Is it deposited with all the other income in your business account?
- Or do they keep it separate?
Although there are state laws that define how this should be done, it’s worth it to make sure everyone is on the same page about how things should be done.
It’s Really Not So Hard To Find A Good PROPERTY MANAGEMENT COMPANY
Finding the right property management company can be a bit of process, but it is possible to find a good one. Ask for recommendations from friends or commercial real estate forum members, and google the companies name along with the words “scam” or similar words.
Most important of all, don’t hire the company and disappear for the next few months. Frequent communication, especially in the beginning, is the best way to prevent disaster, as well as develop a good working relationship.
Noticed any tactics to watch out for from unscrupulous property managers? Or, found a great property management company that goes above and beyond the call of duty? Join the conversation over at Google +.