| According
to a recent study conducted by Arthur Anderson & Company,
real estate values in the United States for apartments were
over 1.5 trillion and for commercial, 2.6 trillion dollars.
The management
of these assets requires a management company with knowledgeable,
experienced, educated and qualified individuals.
This article
deals with how to select the best property management company
to meet the owner’s objectives whether it be for a
fourplex,100 unit apartment complex or shopping center,
and what the commercial broker needs to know and consider
if his client requests a referral for property management
company to manage the building they just purchased.
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What
is the reputation of the managment company in the market
place and industry?
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How
many years in rental property management business?
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What
is the longevity of the staff and turnover rate?
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What
are the specializations of the firm, (i.e., small apartment
buildings and strip centers, large shopping centers,
mobile home parks)?
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Does
the firm have a real estate license? (Many states have
a web site that allows you to quickly check license
status and violations.)
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What
type of computer system and capability of software?
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Do they have dual disk drive and battery back up on
the their computer?
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Are
they flexible in the types of reports that can be provided?
STEPS
IN THE SELECTION PROCESS
The best way
to begin the selection process for a firm is to call a prospective
rental property management company and ask if they are interested
in managing your rental property. Most management companies
will provide a free written proposal containing a sample
management agreement that will describe the services to
be provided, spending limits, reports and fees, etc. A copy
shall be sent to the client and referring broker. If the
rental management agreement seems reasonable the next step
would be to make a visit to the management company offices.
During your visit observe whether the offices are neat and
orderly, meet the property manager and accounting personnel
that will be assigned to the subject property. The management
company should provide a variety of references, which should
be checked out, as well as the company web site. Ask to
visit similar properties to yours that the firm manages.
Management
Fees
Property management
fees charged are normally based on a percentage of income
collected with a minimum monthly base fee. Larger properties
usually command a lower percentage rate (i.e., 2%) than
a single family home that may be quoted up to10%. Fees are
negotiated on a per property basis and depend on many factors
including condition, location and size of the property,
etc. Leasing and other auxiliary service fees are separate
and in addition to the management fee.
How To
Find a Referral
Check with local
IREM chapters, apartment associations, or other trade groups
such as IREM, BOMA, ICSC and their web sites. At the CCIM
web site referrals can be obtained by naming specialties
and geographical areas. Inquire about a referral fee, which
can range from a simple thank you gesture like tickets to
a sporting event to the first month management fee for your
efforts.
Summary
A good client
asks your expertise in selecting a good property management
company to increase the rents, and the asset value and to
protect the property you just sold them. Be prepared to
assist them. It’s a good idea to establish a mutual
working relationship with property management companies
that specialize in all the different areas of management.
In turn, these management companies may refer clients who
want to sell properties to a CCIM who specializes in the
local market and property type.
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