Property Management in the city of Dreams

Mumbai, similar to Bangalore, has a significant number of NRI investments. These increased drastically as the city expanded. With properties belonging to absentee owners, arose the need for professional property management, and a few players sprung up. Besides PropertyAngel, the others to note who are serving this market are PropertyProctor, Azuro, Simplelease among others. 

Here is a lowdown on the way most management companies in  the city operate:

Service List:
Some management companies, like us - PropertyAngel - provide pure management services. We do not do sales or other commission based services. However, several companies in the city provide regular brokerage services alongside. Understanding this difference will help you gauge the level of professionalism in management, as well as focus that you can expect. 

Scope of Property Management: 
The general scope of property management includes:

• Inventory management, which includes ensuring that the state of the property is completely accounted for when taking the property on from the owner, handing over to any tenant, exiting a tenant, or handing back to the owner. The property should be maintained in the same state, and the responsibility of this rests with the property manager.  
• Tenant management: This includes finding a tenant, verifying their background, negotiating, managing their move-in, renewals, exits, and ensure they keep the property secure and well maintained. 
• Accounting management - This includes deposit, rent collection, payments to vendors, associations, etc, creating a statement of account for every property and ensuring that all receipts and payments are documented. 

Some of the companies provide the entire gamut of services, where as several others provide primarily tenant placement services. It is important to understand what scope of services the company will provide before you shortlist one, and ensure that it matches with your expectations. 

Charges: 
Most property management companies charge a management fee which is usually 30 days of rent per year, with the following difference

• Schedule of Payment: Some charge it as an EMI and ONLY when rent is received. This way the owner has no upfront cost and pays the charges on an ongoing basis only when the service is delivered. However, there are others who charge this as soon as the tenant is placed. The disadvantage is that you have paid the fee upfront even before most services can be delivered, but the advantage is that the rent will have no deductions. 
• Amount of charges: Most companies will charge 30 days of rent, which is equal to 9% on a monthly basis. Some charge 30 days only for placing the tenant, and an additional management fee of 15 days of rent, which is equal to about 4.5% on a monthly basis. 

 
Responsibility & Ownership: 
You should be able to gauge the level of responsibility when understanding the charges. If the company charges primarily for tenant placement, then they act as brokers and the level of professional management you will get will be less compared to a focused provider. However, if the company charges for an ongoing management, and you are looking for more than just a tenant, then this might be your best bet. For example, a good question to ask is who is responsible for collecting rent? If the company collects the rent, then they undertake the additional responsibility of following up with the tenant to ensure payment of the same. However, if they simply collect rent cheques and deposit the same in the owner's account, then who takes responsibility in case of a bounce?  These are important questions to ask upfront.

Who is the customer? 
You would think and expect that for a property management service, the owner is the primary customer. In this case, a good question to ask is whether the company charges the tenant? If they do, then there is a conflict of interest. You want to work with a company that will protect your interest against all odds.