Why would you want to trust an asset such a property to a company that you know very little about? It may sound like a no-brainer question, yet there are plenty of investors who do not perform due diligence when it comes to the property management firms they choose to use. They simply think that because the firm has been in business for some time, has other clients, and claims to be knowledgeable, that’s all that is needed to suffice their needs.
Why it’s important
There are so many reasons why it’s crucial for you as an investor to thoroughly research the property management you are considering, including:
- Your face to the world. That management company is going to be representing you to tenants, prospects, vendors, other investors, and the industry. Don’t you want to make sure it says what you want it to?
- All in a day. A management company is responsible for handling the daily activities necessary for effectively manage the property. It’s reasonable to assume an investor would want to know how the management company handles itself in this regard to ensure best practices are used and approaches are aligned.
- Reputation goes a long way. Having a good reputation goes a long way in this industry, accomplishing everything from getting the best vendors and grounds management firms to garnering the best deals on services from suppliers.
- All about the tenants. And then, of course, there are the tenants. The whole point of making a rental property investment is obtaining the profit that is generated from the tenants that reside there. Ensuring a property management company has the approach necessary and track record to prove that it can attract and keep tenants is crucial.
How It’s Done
Validating your prospective property management firms is quite easy and is obviously worth the investment. Some simple ways to go about this include:
- The BBB. The Better Business Bureau can tell you a lot. While most people don’t bother to report good news, you can be sure that anything negative will most likely make it to a property management company’s online profile.
- Online ratings. People love to talk about their experiences and have their voices heard. A general Google search for companies by name will likely turn up quite a bit if anything has been posted. Just be careful. In the rental world, there is a great likelihood of finding either disgruntled former employees or evicted tenants making false claims online because they know the damage it does. Try your best to read between the lines.
- Property evaluation. One of the best things you can do for yourself as an investor is taking a trip to a property currently under management by the firm you’re considering to get a “feel” for it. Nothing will tell you about the job the company can do for you like the testimony you will see in a property already under its management.