Hiring a property management company often makes the lives of property owners easier. Having a skilled and experienced professional property manager handling day-to-day minutiae keeps properties operating efficiently and frees owners to look at the big picture. Hiring the right property manager, however, can be a harrowing task indeed.
It’s crucial for the continued success of your property that you hire the right commercial property manager. The market is rife with qualified firms, but not every one of them will be a good fit for the specific needs of your property. This selection process doesn’t have to be like pulling teeth, though – if you keep these questions in mind while hiring property managers, you’re likely to make an appropriate choice.
What Are Other People Saying About the Property Manager?
Reputation speaks volumes in any industry. You should evaluate any potential commercial property managers in several ways to ensure that any given management company can be relied upon to serve the management needs of your property.
Core methods for evaluating reputation involve reviewing references and testimonials from clients and tenants. You can also peruse rankings in relevant local business journals, ask input from the market’s leasing brokers, and ensure that vendors and contractors relevant to property management have good working relationships with the property manager.
How Experienced is the Property Management Team?
The property management industry rewards high-performing management teams with longevity commensurate with their success. The more experienced a property management team is, the more likely they are to have developed winning strategies to remain relevant and effective in the longer term.
This isn’t to say that newer businesses can’t be successful. Less experienced property managers that leverage their resources properly and prioritize attention to detail often succeed and gain that experience in time, after all. But experience is a teacher that provides detailed instruction on how to respond to circumstances that a more inexperienced company may not be prepared for.
Can the Property Manager Handle the Needs of Your Specific Property?
Every property has unique needs, and this requires the property manager of your choice to be capable of handling those specific needs effectively. This makes it a priority to select a property management firm that has the capabilities to provide the services your property portfolio requires.
The capability requirement goes beyond just what the physical property requires for proper upkeep and maintenance, though. You must also ensure that your chosen property manager has the right mix of tools and experience to integrate the budgeting and reporting methods you need. Back-office organization, accessibility, and standardization are all part of the equation.
Does the Property Manager Have All the Necessary Insurance Coverage?
Businesses need to have high levels of familiarity with loss prevention and risk management processes to be effective. Property management firms are no different. In this case, it’s helpful to know that your property manager of choice is appropriately insured against risk to help mitigate the impact of unforeseen issues. General liability insurance is a good baseline, as it protects companies from losses associated with damage or injuries caused by negligence, but there are other types as well.
Insurance products that are beneficial for a property manager to maintain include fidelity bonds, which protect the management company against loss due to fraudulent or dishonest employee actions. Depositor’s forgery-and-alterations insurance provides protection against altered or forged payments, and errors and omissions insurance protects companies in the event they provide clients or customers with deficient or negligent professional advice.
Does the Property Manager Have Appropriate Credentials?
Like insurance coverage, credentials also showcase a property management company’s dedication to validating their expertise in their chosen field. There are several different accreditation organizations in the industry, any of which indicate high levels of professionalism. One is the National Association of Realtors’ Certified Property Manager (CPM) accreditation, which requires a minimum of three years of experience to even apply.
Other relevant certifying bodies include the Building Owners and Managers institute, which issues the Real Property Administrator certification. This accreditation assures that the certified management company has experience with operational standards and practices. This too requires a minimum of three years of experience to apply and involves the applicant to complete several courses.
How Does the Property Manager Structure Its Fees?
Hiring property managers are investments in the future success of your commercial property. The return on your investment of the fees paid to the management company are realized when the property, thanks to the company’s activities, becomes more profitable. However, it’s important to not just know how you will be paying for a management company’s expertise but also what type of fee structure they use, as this can influence pricing dramatically.
There are three general fee agreements that property management companies use. These include flat fee structures, gross receipt percentage structures, and hybrid approaches. The differences between these structures are the following:
- Gross receipt percentage: this fee structure is a percentage of gross revenue and includes other charges tenants occur as well. The industry average is usually between 2 percent and 4 percent.
- Flat fee: this fee structure involves the property manager charging a flat monthly fee that the company determines to not just maintain the property but to also remain a profitable business in its own right.
- Hybrid fee: these options are employed whenever a property manager cannot predict gross receipts accurately. These structures reserve the right to charge either a flat fee or a gross percentage, usually whichever is higher.
The Last Word on Choosing a Property Manager
The half a dozen questions outlined above may not be the perfect list, but they do represent a solid start to help you along on the process of choosing the right property manager for your needs. It’s recommended to adapt these questions to the specific requirements of your commercial property and to always ask additional questions whenever appropriate.