How to avoid the Money Trap when hiring a Property Manager
Remember, property management companies are trying to attract business. They may lure Investors with low monthly fees or low percentage of rent. In the retail world, this advertising approach might compare to a “loss leader” strategy. The property management business wants you to “bite” on the illusion of a low fee so that they can get your business. Make sure you don’t choose based on the low monthly fee as your only criteria. Ask questions and comparison shop.
Property management companies offering a low monthly fee are making up for lost income somewhere else. There will be some kind of “price” for a low monthly management fee. Usually in the form add on fees in other areas that off set the monthly fees such as higher maintenance fees, after hours fees, minimum spends, advertising, credit checks, fees for filing documents etc.
You don’t want to hire a property management company solely based on their monthly management fee. Make sure you understand the annual cost of management services. That is the most comprehensive number to use for comparison.
Your investment property is a business. What services make the right business sense for you?