What to Consider When Hiring A Property Management Company
Drawbacks of Hiring a Property Management Company
Of course, outsourcing management involves risks that need to be considered. A property management company that is negligent in responsibilities could cause more headaches for their owners. The most common downsides include the following:

Cost. A property management company will charge an owner between 3%-12% of the property’s gross monthly rent to manage it, depending on the level of service. For a property with a large number of units, this can be a significant cost. Keep in mind that management fees aren’t the only fees that may be assessed by a property management company. Many companies charge additionally for creating or renewing leases, performing maintenance and advertising vacant properties.

Possibility of developing a bad reputation. The most vocal tenants in any community are those who are unhappy with management. Unfortunately, as more and more tenants flock to web sites to voice their disapproval with property managers, a property owner can can earn a bad reputation that will be displayed online indefinitely. Many rental property rating web sites have been around for nearly a decade now, which means bad reviews exist long after management has been changed or improved.

Potential for inadequate record keeping. In most cases, a property management company is solely responsible for all record keeping, including accounts payable and receivable, service records and tenant complaint records. If the management company does a poor job keeping records, the owner may be completely lost once they part ways. Inadequate record keeping can also leave an owner with no ground to stand on if a tenant files a legal complaint.

Vulnerability to lawsuits. It was mentioned before that a good property management company can help an owner avoid lawsuits. The opposite is true with a poorly run management company. A company that doesn’t keep up to date on changes in landlord/tenant law, or worse, doesn’t have a good understanding of the law in the first place, is leaving the owner open to a lawsuit. A single lawsuit could cripple a owner.

Ultimately, a property owner must determine if the benefits of hiring a property management company justify the expense. Owners who are able to outsource to effective companies and focus on growing the business would likely agree that the pros of outsourcing outweigh the costs.

Not Ready To Hire a Property Management Company?
An in-between option that exists between outsourcing and owner-management is hiring a resident manager. A resident manager is a person who lives on-site in one of the units and takes care of basic tasks related to the management of the property.

These basic tasks may include:
* Showing vacant units to prospective renters;
* Performing light maintenance and clean up; and,
* Coordinating with repair persons to fix maintenance issues.

If owners find themselves stretched thin but still not ready to hire a property management company, hiring a resident manager can be a good bridge between those two options.

Choose Wisely
Whichever route a property owner decides to take, a firm understanding of what property management entails will be essential for success. For the owners who choose self-management, they’ll need to become property management experts. For the owners who outsource their management, not knowing the industry will only lead to trouble down the road.

The lesson here is know the ins and outs of a business, no matter who manages it.

This was taken from David Allred and Jim Leonard S Blog www.making great places .com

© Making Great Places 2010 – All Rights Reserved

In spite of recession the letting agency is busy and almost all our curent properties are occupied.The prices have stabilised and rents are holding their value.We are organising the inaugeral AGM of the Citygate Management Company and paperwork for same is considerable.Now that the frost and snow has passed we are assessing the tidy up and repairs that need to be done.There is a touch of spring in the air and hope forbetter things in the new year for all.