Owning property is a responsibility.
Tenant conflicts and maintenance issues pop up. Tenants look to you, the owner, for a resolution or a call to the plumber. If you own several large properties or have properties in different states, managing them can take more time and resources than you have to give.
You don’t have to do it on your own. Investing in a commercial real estate management service takes the day-to-day responsibility off your plate. Property management services can oversee all operations or support you as needed.
Before choosing a property management company, you should learn more about its services and experience. You want your property in the right hands.
- What’s Included in Your Property Management Services?
- Do You Manage Commercial Real Estate?
- What’s Your Company’s Experience?
- Are You Licensed & Affiliated with Professional Organizations?
- How Many Commercial Properties or Units Do You Manage?
- How Do You Collect Tenant Rent?
- What’s Your Lease Renewal Rate?
- What Is Your Property Management Fee?
- What’s Your Process for Maintenance & Repairs?
- Who Is Liable? Me or the Property Manager?
How to Learn More About A Property Management Company
What should you ask your property management company? Information about their team and policies will help you decide if you want to work with them.
Try asking this list of questions to the next property management company you consider for your investments.
1. What’s Included in Your Property Management Services?
There are more than 300,000 property management companies registered in the United States. Not all companies offer the same services. You may want a company that prides itself on tenant rent collection or has a unique system for maintenance requests.
Common Property Management Services
Most property management companies offer accounting and rent collection services (80%) and maintenance and repair help (80%). About 77% of property managers also help with leasing and advertising for multi-family properties, while 68% assist with evictions.
Maples Properties of Branson offers:
- Rent collection and payment
- Maintenance outsourcing
- Property repair
- Legal support
Always ask a property management company about the services they offer. You want to get the services you need.
2. Do You Manage Commercial Real Estate?
You need to hire a property manager with experience overseeing your property type. Commercial real estate has different regulations and expectations than residential housing.
Before you agree to work with someone, ensure they service commercial real estate. Better yet, ask how many office, retail or industrial units they cater to so you can see the extent of their client base.
3. What’s Your Company’s Experience?
A company’s reputation speaks to the quality of the service it provides. Look through Google Reviews or comments on LinkedIn and Facebook. How people respond to the business gives you insight into how they treat their clients.
There are advantages to working with an experienced property management company. Managers with more experience likely have stronger relationships with plumbers, electricians, roofers, landscapers and other specialists. Years of experience also shape how well the company tackles conflicts and operational processes.
4. Are You Licensed & Affiliated with Professional Organizations?
Do you need a license to be a property manager? Some states require it. In Missouri, all property managers must have a real estate license. If the managers you are considering don’t, you need to look elsewhere.
What professional organizations does the company belong to? Are they connected to the community? Look for property managers who are affiliated with local and national associations. Examples include the National Property Management Association and the National Association of Realtors.
5. How Many Commercial Properties or Units Do You Manage?
Balance is essential when juggling numerous properties. As the client, you want a company that makes you feel comfortable and confident.
A property management company needs to maintain enough units so you feel they can manage your property well. A solid client base reflects the company’s level of service and shows that the team has experience.
That said, you don’t want a company that has taken on too many leased properties. Your needs could be easily overlooked by a company overwhelmed by its clients.
6. How Do You Collect Tenant Rent?
Property management services make rent collection more reliable and consistent. The property managers handle collecting rent on time, and you receive a monthly payment without having to track down tenants.
If you have numerous tenants or own several multi-family properties, having a set system and someone responsible for rent collection saves you time and the hassle.
How do you want your tenants’ rent to be collected? Do you have a preference? Property management services may prefer collecting rent by check, money order or online.
Typically, online payment portals take less processing time. You can get your money faster. Tenants may prefer to pay other ways, so your property management company should have a system for processing physical payments efficiently too.
7. What’s Your Lease Renewal Rate?
Standard commercial lease agreements are for three to five years. Some agreements may have 10-year terms or longer. Lease renewals are important for commercial investors who don’t want their properties to sit vacant. Empty properties don’t pay rent.
If you own multi-family properties, your tenants may have month-to-month or annual leases. The number of apartment residents renewing leases increased from 2021 to 2022. About 57% of these renters are renewing their leases.
What to Look For
You should look for a property manager with an 80% or higher lease renewal rate. Higher renewal rates show that tenants feel satisfied working with the property manager.
Tenants may choose not to renew for various reasons, like outgrowing their space, downsizing or moving to another area. If tenants feel taken care of, they may be more likely to renew.
8. What Is Your Property Management Fee?
Property management fees are usually a percentage of the collected tenant rent. On a national scale, the average fee for commercial property management ranges from 2% to 12% of the rent collected.
A building’s size, age and number of tenants influence how much the property management service will charge.
Rent Collected or Rent Due?
Ensure you understand if the management fee is based on the percentage of rent due or collected. If it’s based on the rent due, you will pay the same fee even on vacant property. The manager will charge the same fee regardless of whether tenants pay rent or vacate.
Occasionally, a property management company will charge a flat rate. Commercial tenants should know the stipulations regarding a company’s flat rate. If your property becomes vacant, you may still be required to pay the flat rate.
Additional Service Fees
Along with your standard management fee, you may pay extra fees for services. Ask about leasing, vacancy, eviction and advertising fees.
You need to determine if you are comfortable paying additional charges, if applicable, for these services. If you aren’t, you’ll need to keep shopping for management companies.
Everything, including property management fees, is negotiable. You may be able to negotiate a lower rate for fewer services or set provisions that save you money in the end.
9. What’s Your Process for Maintenance & Repairs?
When a property is damaged, the owner is responsible for paying for the repairs. Property managers don’t cover the cost of repairs, but they answer requests and schedule maintenance calls. When you work with a property manager, they will ask for a maintenance and repair budget.
Maintenance reserves and set repair limits allow property managers to authorize day-to-day maintenance without owner approval. Once a repair is made, the property manager will send the owner an invoice or pull from a designated budget.
When a property manager can act on preventative maintenance, it keeps tenants content and protects the property from further damage. The property manager should contact the owner for more extensive repairs or structural damage.
During your time as a property owner, your property is bound to need a repair. Don’t work with a property management company until you’ve discussed maintenance. Many companies have set processes for maintenance requests, or they will rely on your preferences.
10. Who Is Liable? Me or the Property Manager?
Are property management companies liable for issues with tenants or the property? It depends on the contract. Your agreement with the commercial real estate management company will detail who is liable for what.
Property managers may be liable for the following:
- Damages from crimes committed on the property
- Environmental health hazards (mold and pests)
- Tenant injuries from something that needed a repair
- Injuries and damages from a tenant’s animal
- Ignoring tenant complaints that turn into serious offenses
Taking care of a property does not solely rest on the manager’s shoulders. As the owner, you must ensure the property is safe, clean and structurally sound. Owners are responsible for making necessary repairs within a reasonable timeframe.
Reach Out to Maple Properties of Branson
If you’ve been investing in property for years, you likely have several buildings and tenants. Property management professionals help owners run their properties’ daily operations. They communicate with tenants and use their network to take care of maintenance and provide legal support.
Commercial real estate investing is easier with a property manager on your side!
Are you looking for a property management service for your commercial real estate investments?
Contact Commercial One Brokers in Branson, MO. Our licensed brokerage team also serves as a property management team. When you work with Maples Properties of Branson, we treat your business like it’s ours.