The backbone of any commercial property is strong property management. What many owners don’t realize is that the right management company will, in many cases, save the property more money than the management fees being paid. Of course, there are key factors to look for while considering hiring a property management company.
Many important factors to consider are:
- Experience of the firms’ owner(s): It is important to determine how long the property management firm being considered has been working in commercial property management, and to make sure that this is not a “quick fix” business to carry them through the recession. Thus, make sure you ask for their background, history and resume before spending too much time with a particular firm.
- Qualifications: Many firms have specific hiring requirements and standards for property managers; the proper education, training and background must be met. If an inexperienced manager is hired, it is just a matter of time before your property will suffer. Ask to meet the individual managers.
- Maintenance: In today’s tenant-driven market, it is important that tenants are not waiting days for service requests. Ask to see how each work order is handled and how the preventative maintenance is documented and managed. Meet one or more of the maintenance personnel, as these individuals are in front of the tenants on a regular basis and should look clean-cut and professional.
- Tenant relations procedures: Experienced firms have tenant relations procedures in place, such as tenant move-in and move-out policies, after-hours contact systems and emergency procedures. Ask to see what the management company provides to each tenant. Do they receive a building procedures handbook or emergency procedures manual?
- Tenant retention: In this tenant-driven economy, the tenant retention plan can be the determining factor of a building’s survival. Ask to see what plan would be in place for your building. Does the management firm have an established plan to maintain relations for the duration of the tenancy? What efforts are being made to retain tenants now and upon their lease expiration?
- Financial reporting: Are you going to be provided with monthly reports and a budget for the building? What do the reports contain and are they user friendly? Can they be set up in a different format for accounting purposes? Ask to see what can be provided.
- Management software: The right software will integrate everything from accounting to tenant information and maintenance request tracking. Make sure your management company has one of these systems in place, a sample financial report or demonstration should be readily available.
- Multiple properties under management: A management firm with just a few properties under management will not have as much strength in reducing your costs. The firm with dozens of properties under management will be more likely to achieve savings with much better and more cost effective vendors to work on your property.
- Affiliations: Many firms will affiliate with property management and/or real estate organizations. The organizations offer ongoing education, peer networking and access to better vendors. Ask what organizations the management company belongs to and what credentials and licenses the staff has.
- References: It is critical to see how other property owners feel about the services of the firm. If a firm is unwilling to provide references, keep looking.
Additionally, using a professional property management firm will help attract higher quality tenants, collect payments on time, assist with taxes to understand what deductions can be claimed, and importantly, the overall value of the investment will increase because of the processes and systems put in place.
Patty Hartley is the president and designated broker of MODE Real Estate Management Services, LLC, a boutique commercial property management company located in Scottsdale, Ariz.