So you decided to rent out your home. That’s a great idea; let someone else pay the mortgage on it while you gain appreciation on your property. More and more people turn to real estate investing daily. Many investors and homeowners, who decide to rent out their homes turn to property managers to help them navigate this complicated process. But how do you find a property manager that will maximize your returns, make sure your investment is protected and kept up in good condition and will provide steady stream of income? Here are a few tips on what to ask when interviewing someone to manage your Denver rental.
- Company Size. Not all property management companies are created equal and you need to find the one that fits your needs the best. There are large property management companies in Denver that have a person designated for each function: a separate showing coordinator, a person who handles maintenance requests, a person that does accounting, etc. Then there are smaller guys that do mostly portfolio management, i.e. one person in charge of your account from showings to coordinating maintenance, to being the point of contact for you and your tenants. Each has its own benefits, but essentially we find that large companies may have systems in place, but when something goes wrong there’s a lot of finger pointing vs. the portfolio style management, when there’s only one person in charge of the account.
- Current Portfolio. Ask how many properties they currently manage. An average property manager can handle 40-50 single-family properties, not using an assistant. Make sure your property isn’t going to get lost in the shuffle.
- Rates. This is one of the first questions that comes up. On average the Denver area property management companies charge between 7 and 10 % of the monthly rent. Then of course, there are some guys that would do it for 5%, but before you commit to one of them, make sure you read the on line reviews. There’s a reason they don’t charge what is common. It could be that everything else is extra, or they simply provide a subpar service. The placement fee/leasing commission to place a new tenant in your property varies between 30 – 60% of one-month rent. Here too, there are guys that will do it for $300 flat fee, but think about their motivation to get your house rented quickly?
- Additional Fees. Ask about any addition fees such as renewal fee if your tenant stays, invoice fees, set up fees. Some property management companies upcharge maintenance or receive kickbacks from their vendors. Some companies negotiate with vendors and pass on the savings to you. Which would you rather have? A company that may seem to have lower monthly rates could be adding on some other fees you are not expecting. Read the contract with care and compare apples to apples.
- Property Visits. How many times does the property manager visit your property per year? Are these visits free? Do they go inside the home or just do drive by? A company that quotes a lower monthly fee, but then charges you for every house visit, ends up costing you more.
- Maintenance. How is maintenance handled, do they have an in house maintenance man? Typically using qualified contractors is a better way to go, as they are knowledgeable in their specific area and do the job right. Companies who have an inside handyman maybe be profiting from the work performed on your home.
- Screening process. What is their screening process? Do they have certain guidelines for applicant selections or do you have any word of who they put in your home?
- Evictions. How do they handle evictions and whose cost that is. Will they do certain things for eviction at no cost? What is the cost of eviction? Some management companies started offering eviction insurance. This is a great option and typically low cost.
- Communication. Call one of the listings the property management company currently has for rent and see how quickly they return your call. Try calling in the evening, or emailing on that listing and see if the turn around time is acceptable to you. Ask them if they answer their phones for non-urgent matters over the weekend, or in the evenings. Is there a 24 hour emergency hot line for tenants?
- Personal Questions. Ask if the property manager owns rentals himself/herself personally. If they do, they can relate better to what you are going through, they tend to be a lot more economical with your money and a lot more responsive as they first hand understand that this is probably your most important investment. Do they have a real estate licesense?
- On Line Reviews. Lastly, check on line reviews, BBB standing, get referrals. Each Denver property management company may have good and bad agents just like anywhere else. Make sure you get the good one.
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Evolve Real Estate and Property Management is a full service brokerage providing Denver Metro with rental property management services as well as residential sales. We represent Denver area sellers and buyers as well as rental property owners. Whether you are buying or selling a home, Evolve Real Estate and Property Management in Denver is your one stop solution. We understand that buying a home is one of if not the biggest financial decision you will ever make. We are here to alleviate as much stress as possible giving you a smooth transition into your new home that is the right fit for you.