Property owners can earn a good income from their property provided they have the right property manager looking out for their best interest. One of the biggest and most common mistakes that property owners make is hiring a property management company in haste. In their desire to earn from their investment as soon as possible, they fail to realize that entrusting their investment to the wrong property management company can turn their asset into a liability in a matter of months.
Protect your investment; choose your property management company wisely. Here are a few red flags to watch out for:
1. The company has a real estate “side business”
The company’s primary business may be property management but they have a side business: selling real estate. Why is this a red flag? First off, property owners think that a property management company that also sells real estate is the perfect entity to oversee their property because they have a deeper understanding of the business, both from the perspective of the owner and the seller. Unfortunately, it’s not as black and white as it appears.
Usually, property management companies like this offer to manage your property so they can have first dibs on it if you decide to put it on the market. So really, their interest is more on getting their hands on your property solely to earn from it, both as the property manager and broker. It’s a win-win for them, not so much for you.
2. They don’t have a *good* network of vendors and suppliers
When your property gets damaged by the renters or it needs emergency repairs, who do they turn to? If they only know one or two vendors, suppliers, and contractors to do maintenance jobs, you could be looking at long delays caused by emergency repairs. Also, you have to wonder why they don’t have a good network of contractors ready and willing to take on jobs at a drop of a hat. Could it be a lack in business ethics? Or perhaps they also try to get a commission for every commissioned job? There could be a number of reasons but one thing’s for sure: your property could end up more damaged than managed if you hire this type of property management company.
3. Frequency of tenant eviction
This red flag isn’t something that property owners even consider asking about, but not doing so could mean having long periods of vacancy on your property, which means potential income lost. In a word, a property management company that seems to be in the habit of evicting tenants mean only one thing: they do not screen applicants thoroughly.
Take your time choosing your property management company. A little bit of effort could save you future stresses and headaches.