If you are reading this blog, chances are that you are an NRI or an absentee home owner (owner who does stay near the property) who is concerned about rent, safety and upkeep of the property. You are looking to hire the right property management company and this article seeks to help you.
Your Take-Home from this article:
In the next 5 minutes, you will have a rough idea of the problems home owners frequently face while renting their property, pros and cons of popular renting models, assessing the suitability and risk associated with each model, evaluating a company’s service, things to check before you sign a contract/ agreement with that company.
Before you even talk to few property management companies, read about How to find Quality Tenants for your apartment. Your property manager should take these into consideration for sure. But, unfortunately, most of them, do not.
Problems frequently faced by absentee owners in renting out their apartment
- Loss of rent due to vacancy
- Lack of proper documentation and book keeping
- Unverified tenants
- Delayed or no repair due to lack of expertise or time
- Getting complaints from neighbours or association
- Damage to equipment and materials due to carelessness or lack of knowledge
- Loss of keys
- Toxic relationship with tenants
- No backup on an emergency situation
- Losses due to improper settlements
Different models have cropped up, of late, to cater to the problems faced by absentee owners. Since there are varieties of properties, so are owners and so are tenants. And so are models. Some of the popular ones are as follows.
Rental Property Management Models
Per Bed Model:
Its a variation of the PG model but without food, electricity, internet, water included in the rent.
Rental return (if occupied): above market avg
Move in-out: Easy
Churn Rate: Medium to High
Typical Tenant profile: Medium earning bachelors (who cant afford a full house)
Risk: Medium to High risk as security deposit is low and no control on tenant type.
Vacancy levels: vacancy will be high if priced high. For Bangalore, Rents > Rs 8000/bed/month typically lead to sub-optimal rental returns.
Typical Tenant profile: Medium earning bachelors (who cant afford to pay 5/6 months of security deposit.
Location type: Locations not too far away from offices. For Bangalore, up to 5 kms from big IT parks.
Building types: Full buildings built only for rental purpose. We have seen this model implemented in couple of high demand gated communities. Rents are high considering the risk and cost of management in this model. This high rent results in vacancies, some time partial, for long time leading to substantial loss of rent.
Time tested Long term Rental Model
Rental return: Medium or above the market rate.
Move in-out: Not very easy in Bangalore where security deposit is around 5 months.
Churn rate: Low
Typical tenant: well earning families, bachelors who understand that are responsible for the up keep of the house.
Risk: Lower risk as there is security deposit and control on tenant type.
Location types: No specific location type. But generally not far away from large offices.
Property Types: Typically, gated communities or apartments with multiple flats preferred by families, independent houses.
Now that we know more about the models, lets little more deep in to this topic. How to evaluate a particular model.
Questions to ask the Property Management company:
- What is their model and why does it work for your property?
- Do they offer personalised service?
- Do they give you control over tenant type?
- What are their plans incase the property/ bed remains vacant?
- Do they buy back any furniture you bought?
- What are their repair and maintenance standards?
- Whom do they market their brand to, to the owners or to the tenants?
- How transparent are the charges, exit plans and documentation?
- What is their complaint redressal mechanism?
- How much time their professionals have for your property?
- What expertise do their service level executives have?
- Do they give you a dedicated property manager whom you can talk to?
If you need more help in choosing the right model for you, please get in touch.
Before you finalyse, you should satisfy yourself of some critical factors that effect your experience.
Check these before finalising the right property management company:
Short list a model and talk to a few companies
It is a good idea to compare few options and take an educated decision. Do not completely rely on reviews because most of them are fake.
Check whether it is its core business or whether its directors run other non aligned businesses
Directors trying to run multiple non aligned businesses may not be immediately available to the team. We have seen many cases of such failing teams.
Check the service touch points and which team handles what.
Too much of hierarchy in property management will lead to poor communication and execution. You should not have more than 2 levels of implementation hierarchy.
Check their employee retention
Poor work culture is toxic and seeps into shoddy service at most of the touch points. Such organisations do not retain talent and good intent. So, if you can, ask few employees privately.
Check whether they are passionate and love what they do
It may sound off topic, but is fundamental to delivering quality work. If there is no passion at work, there is no quality.
Check whether they have true professionals in their team
A professional is someone who has wide industry experience, ability to see trends, ability to gain the confidence of stake holders, a non negotiable discipline to follow core processes and knows how to bring results. Know the people who implement the service for your property and spot at least one professional to fall back on. A Professional will perfectly know how to tenant your property faster, negotiate the best rent, trends, ability to offer solutions etc.
Check how they find tenants and rent your property
A good marketing plan should include worst case scenarios. What if nots. It should also include getting better rental quotes, finding quality tenants etc. After all placing a tenant is also deal setting.
- Check if the teams Understand Everything about Tenanting Your Property in Bangalore in 2019
Check their Tenanting and Repair services checklist
Any company working to deliver good customer experience should have checklists for different phases of service. Check the checklists and see whether it misses out on important things. Also they should have inspection services that include preventive maintenance so that your property is safe and sound for the long term. –
Finally read the Agreements carefully and ask for special examples.
Most agreements are crafted to hide inconvenient aspects of a service and hence you should not assume what some terms sound like. Always ask for a special example.
Finally it is your property, your priorities and your decision to choose the one you think is the best. If you need some help, say hello to us. We promise to not spam you back.