As a rental property owner, you have made a lot of important decisions. You purchased the right rental property, made strategic decisions on how to best manage it, interviewed property managers, and hired the right property management team to manage daily operations of your property.
The next item on your list is making sure the property management team you chose understands your expectations. It is equally important that you, the investor, understand the expectations of your property manager or property management team. Before you officially hand the baton to the team, use this list of important topics to ensure expectations are clear on both sides of the table.
Although pricing was likely discussed during the interview process, it is now time to dive deeper to understand what you should expect to pay based on your needs. Each property management team sets their own rates, although most charge no more than 12% of gross property income per month. The standard monthly fee falls between 7-10% of rental income. For a $1,200 property, for example, you can expect to pay a property team $120 per month to manage the property.
However, rates will be inclusive of some features while charging extra for others. For example, some property managers expect an additional bonus for each lease-up (meaning each filled unit). The most important agreement to reach is a mutual understanding of what fees are included, what services are considered an additional charge, and what payment schedule to expect for each of you.
Now that pricing and payment are settled, you will want to be clear on what those agreed-upon services look like. It is not enough to know that the contract will simply include maintenance services. Who will perform repairs and maintenance? Does the team have their own crew, or do they have a list of qualified and affordable professionals they contract out to?
To be a successful rental property owner and leader of a property management team, you need to understand the high-level details of what to expect from the services in your fee agreement. Move-in services, bill payment, landscaping, and tenant evictions are just a few other services you may want to discuss with your property management team.
The future is looking bright! You now understand and agree to the services and pricing laid out in your property management contract. It is now crucial to make your communication expectations clear to your property management team. How often should they expect you to visit or call? Would you prefer they call you daily, weekly, or monthly for updates? Or do you prefer to communicate via email?
These questions may seem basic but setting these expectations now will ensure you both are always on the same page. Over communication can become annoying, and lack of communication can cause larger issues in the future. Set the tone now to get your partnership started off on the right foot.
The main reason you want to set these clear expectations is to make sure your future tenants are happy. Property management teams are responsible for setting realistic expectations in the minds of your tenants. Discuss those expectations with your property management team and understand how they plan to communicate those clearly to prospective tenants. The more information tenants understand from the beginning, the more likely for you both to have a smooth and happy relationship. Tenants should be clear on when rent is due, how to treat your property, and what to expect if guidelines are not met (like eviction… yikes!).
You may be thinking, “Wait! Didn’t I hire a property management team to take care of this for me?”
Absolutely. Your property management team will handle the daily operations of your rental property and become a buffer between you and your tenants. However, keep in mind that hiring a property manager means entrusting someone to make important decisions daily on your behalf. Setting clear expectations at the beginning of your partnership is the best way to make sure your property manager is making decisions you can trust.
Regardless of how involved you plan to be with your property and management team, setting clear expectations in the beginning can save you a lot of time and stress in the future. Coming to an agreement now gives you peace of mind to relax and trust your property management team to bring your property success.
Next up? Making sure your property management contract reflects the services you and your property manager discussed.