Most homeowners ask what the management fee is and maybe the leasing fee and pick a company based on that and how they feel about the person they met with. There are many other things you should be considering.
1. Ask about additional fees
What do they charge tenants and what do they charge you? Do they keep late fees? Do they charge tenants for renewing their lease? Who keeps the late fees? Make sure you ask these questions and make sure it’s stated in the contract who gets what so there’s no misunderstanding later.
Some homeowners don’t care about fees that are charged to tenants, but the more fees that tenants are responsible for may turn off prospective tenants from applying and make the property harder to rent causing it to be vacant longer losing out on rental income.
2. Find out how maintenance works with them
Do they use their own or will they use yours? If you have a home warranty in place, will they work with it? How much is an average charge for a toilet or water heater replacement? If one company’s vendor charges $1200 for a new water heater and another is $2200, then you may not be saving money by going with the management company that may have a lower management fee but has vendors who charge twice as much.
3. How long typically are their rental properties vacant
This is tough to evaluate since the type of property and time of year can all affect the number of days rentals are in the market. In general, if one company has properties on the market for 30 days and another company for 60 days, then you could be losing an entire month of rent by going with the company that has properties sit longer.
The properties may be on the market longer for different reasons that may or may not be entirely the management company’s fault. Reasons like being priced too high, not showing well, strict tenant screening criteria, not easy to show or schedule showings, or the landlord or management company not being flexible on terms like the length of the lease or whether pets are allowed.
Regardless, a good property management company should be taking these factors into account when choosing what rent price to start marketing it at and minimizing the vacancy period.
Very rarely do properties get more for rent the longer they sit in the market and often tenants will start trying to negotiate the rent since they can see it’s been listed for a long time causing the home to rent for less than what it was listed for.
You want a management company that will look out for your best interest and not always do what you tell them to. Property management companies have policies for a reason and have more experience with the rental market and tenants than most homeowners. If there is a policy or clause in the management agreement that you’re not clear about, don’t hesitate to ask questions and the property manager should be happy to explain why.