The Importance of Managing Your Property Management Company
Tuesday, January 18th, 2011Tony, an income property owner we know, recently shared a story about his property management company. “I was surprised to receive a bill for a property inspection that I had no knowledge of,” he said. “And when I called the PM company, they claimed I was supposed to let them know if I didn’t want the inspection, not if I wanted the inspection.”
Tony learned the hard way that some property management companies will spend your money without your authorization. The best way to prevent this from happening to you is to establish limits up front. How much should you authorize your PM company to spend on your behalf? It depends. For some rental property owners, anything over $200 requires their authorization. For others, one dollar is too much for a property manager to spend without notification. Decide what limit makes you comfortable, and be sure it’s included in the contract.
Property management companies sometimes get a bad rap for tricks like:
- Taking kickbacks from favored contractors
- Marking up supplies used in maintenance
- Inventing services you have to pay for
- Sending bills for bogus inspections
Relationships succeed based on understanding and communication. If you’re researching property management companies, pay attention to the time it takes to receive a return call or email, compare services provided and fees charged, and ask a lot of questions.
Once you’ve chosen a property management company, your work doesn’t end. You must still manage the relationship, just as if they were an employee. The PM company works for you. So, you decide how much they get to spend without your authorization, how often you want to receive reports, and whether or not their advertising efforts will work for you.
As in any agreement, before you sign on with a property management company, read the contract carefully, including the fine print and question all terms and conditions that you do not fully understand. Better yet, run it by your lawyer first. It could save you a bundle in the long run.