Investing in the Philadelphia rental property market can feel overwhelming as Philadelphia has an incredibly diversity of neighborhoods and rental markets. Each Philadelphia neighborhood has its own real estate market value price and these can range from the multi-million dollar property values down to tens of thousands.
But that is Philadelphia’s greatest strength in the rental property investment market place and its why investors, on a local, national and foreign level have always relied upon the stability and strength of our rental investment marketplace.
And, if you are like many Philadelphia rental property investors, that realize and understand the importance of getting assistance from a qualified property management company, make sure you stick to these landlord tested tips for finding a reliable and reputed company.
Selecting a property manager is an investment, on top of the investment you already made in your rental property, and it can have a impact on your future real estate investing power and rent income for a long time to come. A good property manager will earn you far more than they can possibly ever cost you in rent additional rent than you can get otherwise; and they will also protect your bottomline in saved expenses like when your property needs home repairs. Philadelphia also has bad property managers, even illegally run companies, and these companies will make you wish you never purchased your rental property. You can be a landlord that enjoys the passive income you read about in real estate investing books; or you can wish you never heard the word “landlord”
Research Local Philadelphia Companies: first of all, you should start by searching for the Philadelphia area companies who provide property management assistance. Start with online reviews and weed out those property managers that are clearly poor choices and select your short list of the top reviewed property management companies. Seek out the reviews that start showing the more complete story. While the absolute worst reviews are often inaccurate and unreasonable, like from rejected potential tenants, these are worth looking at to see how the property management responded. It’s understandable that a company would be upset over an unfair review; but petty, angry response from the company does give you some insights to who they are.
Then reach out by email and request information to determine if they are a good fit so far. They should automatically send you out easy to understand information, including pricing, without you having to ask. An offer to talk on the phone with you in courtesy. Refusing to give you information and pricing, unless it’s by phone, is not. Look over the information and get a sense if there might be hidden fees. Gauge how responsive and professional they are. How they deal with you, a landlord and a possible client, is how they will deal with potential tenants that contact them looking to rent your property.
At some point you will need to talk to them on the phone. Avoid any hard sells, or assertive sales techniques. Property management companies with aggressive sales people make very poor property managers. Landlords don’t want to be bullied. Nor do tenants. A professional, credible company will provide you with the information you request. They will get back to you promptly and they will not feel the need to press you into business with them. Nor does a good company ever have to. Property owners know the good companies and so will you after a few moments on the phone.
The conversation should demonstrate that the property manager has complete knowledge of Philadelphia, the renting process in the city, lease related documentation, tenant laws etc. moreover, they should have an experience of managing the repairs and maintenance of many properties. Keep in mind a good property manager will also be asking you questions about the property and getting a sense of who you are as a landlord property owner. Many top property management companies won’t take a bad property owner. While reading over any information the company provides and when talking to the manager on the phone, ask yourself “how will this person be with my rental property tenants and with contractors that work on it?” Is the manager professional, reasonable, fair, and confident? Is this manager knowledgeable? These are the traits you need when hiring someone to maximize your rental property investment. Do they talk down about tenants? Are they negative about your property or its neighborhood? Are they proud about court battles and legal struggles they’ve had? A good property manager isn’t interested in expensive conflict and they navigate property around it, so it never comes up in the first place. Proper tenant screening, managing tenants and future pacing them and keeping a property legal with federal, state and Philadelphia regulations is just a good investment. Some property managers invite battles and when its on your dime and your property you have a problem.
Word Of Mouth: another way to find a top Philadelphia property management company is to look for the companies which are known for their word of mouth. You can ask your friends and family, social media, neighborhood association pages, real estate agents you might know and respect and ask everyone to suggest names of the companies they have dealt with in the past. While it’s true that referrals are often bias and people often over sell those people they are currently doing business with; doing this would not only save your time but will also might lead you to a property manager company which can be trusted for its services.
Perhaps most valuable from finding a property management company by word of mouth is if you find out an address, or more, of a property they manage. Drive down that block. Dies the house look like a rental or like it’s somebody’s home? You can drive through Philadelphia and pick out the homes that poor property management companies manage and neglect. Remember, this property is your investment. You want high rents; but also decreased expenses and increased equity. The latter two tend to only come from cared properties that see regular preventative maintenance. A neglectful property manager will ruin your investment. If you are feeling bold, try speaking to the tenants. They will tell you everything you need to know. “How long does it take for them to respond”.
Ask Clear, Precise Questions: when you have a few names to consider on managing your rental property management, you should be clear and very active with asking questions and queries. It’s important that share your property management requirements and specifics - everything, from tenant screening to what Philadelphia neighborhood the rental property is located, this helps the property manager quickly answer your questions. It’s important for the property management company to have the property address. Most managers will research the property in Philadelphia public records and google maps so they can more readily give you an accurate idea of what they can do and what you can expect from them, as they manage your rental property. Expect the property manager’s professional opinion. If he is any good, it should be worth listening to.
Property Management Associations
This too is a great starting place to find a great property management company. Many associations have strict criteria of quality for membership. Some required accreditation and many also check state licensing. Vetting a property manager through an industry association can serve to have much of the background checking done for you. The top property management associations are NARPM ( National Association of Property Managers) and IREM (Institute of Real Estate Management). There are lesser reliable associations like the BBB (Better Business Bureau) that are also worth checking. By far, the strictest association, and most reliable would be NARPM. They offer certifications, perform thorough screening for membership and require members to a standard that is often much higher than even federal and state requirements. Property managers often wear these associations proudly like badges on their information and websites, so it’s not hard to find.
Compare Property Management Services: The next logical step is to compare the services of the top few different companies. Each property management company will have very different fees, for different tasks, that involve your rental management. You should compare the online reviews, years of service, understand the experience they have with your specific Philadelphia neighborhood, and very importantly their know-how, and insistence to follow the fair housing laws, fairness in credit reporting laws and all the other ways to avoid the mildred of problems a Philadelphia landlord can fall into.
Consider Fees: last but not least, you must make sure that you get a clear estimate of the cost associated with the management business. You should ask about the fees as well as the services that would be delivered for the price to find a choice which can really work for you. A rule is that a good property manager will make you far more money than you pay them. After all you are hiring them to maximize your investment. In that respect, look for quality over discount or you will be cheating yourself out of the profit a good property management company can produce.
The Property Management Agreement
Once you have made your choice, you still need to see the Property Management Agreement. Once signed, you have made your choice. While it’s good to begin maximizing your rental investment, you still need to make this final step and will need to look over and understand the agreement carefully. Fortunately the law frowns on ambiguity, and state law regulates property managers as it does all state licensing activities. So the agreement should be fairly straight forward; but here are some tips:
Services and Fees
First the property management agreement will outline what the services are and what the fees for that service will be. If the property manager has told you certain fee amounts, or has left out additional fees, you will see the actuals here. It’s not uncommon for many property management companies to have additional fees, on top of the base monthly fee. Hopefully the company was straight forward about those fees before this point. It’s important for you to understand these fees and how the service is broken down.
Common Fees Are:
The Management Fee. Certainly the most common charge. A company that doesn’t charge other hidden fees might have a larger management fee.
Leasing Fee. Like with the Management Fee, most management companies will charge a Leasing Fee. This is a charge for placing a tenant. This can offset any commission the manager must pay out, and the costs for marketing the vacant property, such as photos and advertising.
Vacancy Fee. This is a charge some property managers charge when your property is vacant. The reason might be, because vacant properties cost property managers money. A vacant property will often still have software and accountant fees and it will need to be checked upon regularly. If a furnace dies in the middle of winter and a water pipe freezes, then bursts, that would be a big problem. So many property managers charge a fee if a property is vacant.
Maintenance Fee. Some companies charge a landlord to over see any repairs or improvements to the property. This might be a set amount or it might be a percentage of the overall cost of the work. Overseeing repairs can cost a manager a lot of time and some pass the expense to the owner.
Some Companies Charge
Whatever the fees are, the agreement should completely outline what each fee is for, what is the specific service it provides, how it is paid and if it is a percentage or a flat fee. You will also need to be aware of any services that are excluded. It’s not uncommon for property managers to refuse, or charge a fee, to work with Home Warranty Companies due to their bad reputations and failings at doing proper repairs.
Responsibilities of the Property Owner
Next in the agreement will spell out your responsibilities as the landlord property owner. It will define what you must do and what you are prohibited from doing.
Example of Common Responsibilities:
Reserve Fund. Many companies will require you to keep a certain amount of monies in reserve with them to cover any emergency repairs or expenses.
Insurance. Most companies will require you to maintain property insurance and also name the company as protected in the policy. The agreement will detail the minimum amount you must maintain in coverage.
Examples of Common Restrictions
Tenant Placement. Many property management companies won’t allow the property owner to place their own tenants, unless one is already placed. Few companies will take the risks of possible Fair Housing Law infractions, and the risk of a poorly screened tenant and the management hurdle that presents.
Minimum Notice. Most agreements won’t allow a property owner to access the property without giving the tenant the minimum legal notice. In Philadelphia and PA that is 24 hours.
Equal Opportunity Housing:
There will likely be a section that defines and agrees with Equal Opportunity Housing and Fair Housing Laws. Especially, if the property management company is using the form created by the Pennsylvania State Board of Realtors.
This section details the liability responsibilities regarding the property. Generally speaking this limits the manager’s responsibility to only what is specifically his fault or due to his negligence. The property manager wouldn’t be responsible for the negligence of a third party, even if they hired them. An example is that a property manager isn’t responsible if a contractor they hired causes harm or damage. Refer back to the earlier section on the owner’s responsibility to maintain insurance.
Duration of Agreement
State created property management agreements typically default to a year and few companies will agree otherwise due to the expense on onboarding a new property and landlord. In this section also will define the cancellation clause and detail if the agreement can be terminated early and by what terms. If early termination is allowed, there is often a flat fee or a percentage.
You will also want to know the terms that will allow the property management company to terminate if they decide.
So, if you are planning to hire a reliable and trustworthy property management company in Philadelphia, make sure you stick by the above keys to get the best results.