When it comes to any investment, the general rule is that they perform better when left under the care of professionals. Right? Real estate investments are no different, and that is why hiring the right property management company is so important.
Real estate investments are usually high-value, capital-intensive investments worth lakhs or even crores of rupees. Therefore, it makes perfect sense to be very careful when hiring a team to look after such an asset.
Here’s a quick look at the various points you need to consider before handing over the keys of your property to a management company.
How Do You Know If You Can Trust Your Property Management Company?
Here’s a quick look at some of the factors you need to consider before choosing a company to manage your property
1. Does the company have the right to sublet your property? If a management company’s model is to sublet your property, then they can place tenants without your approval, giving them much more control than what is necessary.
2. How much deposit do they plan on taking from the tenant? A good management company knows that the security deposit should cover damages and rent arrears. This could amount to about six months of rent. If the company takes a deposit worth only 2 or 3 months’ rent, you need to be careful because this amount will not be enough in case the tenant causes damage to your property.
3. Who controls the deposit money? If the property management company wants to keep a significant share of the deposit, then you need to be careful. Make sure that you talk to them and retain a majority share of the deposit, to have more control over proceedings.
4. Does the company allow you to take part in the tenant selection process? If the company refuses to have the tenants approved by you, then that gives you very little control over your property. Make sure that you have enough power to veto tenants that you feel can be tough to handle.
5. Does the company share tenant information with you? Even if you allow the management company to find tenants for you, you need to ensure that you have their contact details. In case things go south with the company, you should still be able to communicate with your tenant, and smooth out any issues they may have.
6. Does the company run all the expenses by you? In case the company spends money on the property without your approval and does not send the records over to you, you need to be wary. A good property management firm will always run the financial records by you and get your approval.
Some companies will promise to get you a guaranteed rent every month. However, it would help if you accounted for the fact that in certain circumstances, that might not be possible. For instance, the COVID-19 has brought out so much uncertainty, the best way to protect yourself is to minimize risk and maximize control over your property.
The purpose of this guideline is to safeguard your interests and help you understand how you can keep your property safe as well. We recommend you go through these guidelines before choosing a property management company and reduce the chances of issues cropping up.