Finding the right property management company for your commercial property can be challenging. Many tenants and landlords wonder, \"How do I choose the right property management company for my business?\"
It is essential to find a company whose skill set matches the specific needs of your property among the many qualified property management firms in the market. How can you choose one that is right for you?
An experienced property management company will take care of all of your property's day-to-day operations and keep your cash flow running like clockwork. To help you select the right property management company for you, we've compiled this list of 5 things to consider when hiring a property management company for your office, industrial or retail property. These questions will ensure that you find a qualified, capable property manager who is also the right fit for your property.
1. How reputable and well known is the Property Management Company?
It's essential to make sure your property management company is respected and is at the forefront of the real estate management industry. Several factors should be considered to determine if a company is trustworthy, reliable, and capable of handling your property management requirements. Is the firm well-regarded by clients and other professionals in the field? Referrals and testimonials from clients and tenants can help determine whether a company delivers what it has promised.
Other ways you can determine the experience and reputation of a management company include:
- Reviews by previous clients (either online or through referrals)
- Input from leasing brokers in the market
- Reviews and relationships among vendors and contractors
2. What is the management team's experience level?
Success in property management depends on the longevity and experience of the company. Experienced businesses can anticipate your needs and adjust accordingly. Newer teams may succeed by paying close attention to detail and utilizing technology. Still, an experienced team will be able to handle the plethora of unforeseen circumstances that could affect your property.
The type of experience is just as important as the number of years of experience. Ensure the property management team has experience managing your kind of property - whether retail or industrial, or mixed-use. Different skill sets and knowledge are needed to handle different properties, as each has its challenges, tenant types, lease complexities, etc.
The size and location of the property are also important considerations. Your property management team should have a presence in the locale of your property. If you have a larger property, you should find out if the team has experience managing properties of that size and has a large group to take care of it.
3. Does The Property Management Firm Provide the Services Your Property Requires?
Property management companies wear many hats and offer a wide range of services. When selecting a property management company, ensure they can provide all the services you require for your property and adapt to your budgeting and reporting needs. Your management firm should be able to provide the services you need for your portfolio of properties.
4. Is the Property Management Firm Insured and Credentialed?
Insurance: Things don't always go as planned. You want your property management company to be insured so that when there is damage or harm, the company can continue managing your property. The property management company you choose should know about loss prevention and risk management. There are several types of insurance that property management firms typically have for those unforeseen circumstances, like a property all risk insurance (covers perils like fires, explosions, natural disasters), profit insurance, money and fidelity guarantee insurance.
5. How Are the Property Management Fees Structured?
One of the things you will want to know before hiring a property management firm is how much their services will cost. Several factors influence the pricing of management fees and the structure of these fees. Generally, management fees are categorized into a percentage of gross receipts, flat fees, and hybrid.
- Percentage of gross receipts structure is a percentage of gross revenue and other charges tenants incur in their occupation. These charges include operating expense reconciliations, bill backs for tenants with special utility needs, and any services that tenants require above the building standard. These fees typically run between 2% to 4%.
- A flat fee structure means that you will be charged a flat monthly fee the property management company determines to be sufficient to maintain the building and make a reasonable margin.
- Hybrid fee structures are used when management teams cannot accurately predict gross receipts. Hybrid fee structure charges a greater flat fee or percentage of gross receipts.
The fees that your property management company charges should correspond to the needs of your property. Many factors affect how much these fees cost. Among them are the square footage, the number of tenants, vacancy, the amount of work, and the services offered.
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