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Investors in commercial real estate often hire property managers

It is not a bad time to be an investor in apartment buildings. The Seattle Post Intelligencer recently reported that "Seattle's hot job scene continues to push up apartment rents." Nearly three-quarters of Seattle area landlords who were surveyed said that they planned to raise rents by another 4 percent next March. The drop in the gross vacancy rate indicates that demand for rental units is still outpacing supply. The newspaper noted that Seattle's booming economy takes the credit for providing investors in residential apartments with a thriving rental market.

Oftentimes, those who invest in commercial realty have neither the time nor the inclination to personally manage and oversee their properties. Consequently, many commercial property owners enter into a property management agreement with a professional property manager. According to NuWire Investor, choosing a property manager is one of the most critical decisions a real estate investor will make. On the one hand, a good property manager will increase investment returns and make the investor's life a lot easier. On the other hand, a bad property manager can alienate tenants, allow the property to deteriorate and "turn a good investment into a bad one."

Business Insider advises that, during your search for a good property manager, keep in mind that good managers will have the following characteristics:

  • Aggressive advertising of vacancies since you do not want units vacant for too long.
  • Success in obtaining high quality tenants.
  • Careful screening of tenants in order to find any negative histories.
  • Aggressive but prudent collection of past-due rents.
  • Careful controlling of maintenance and repair costs.
  • Good handling of after-hours emergencies and tenant repairs.

It is also highly important to make sure that the management company has adequate liability insurance in order to protect you from potential lawsuits. Finally, NuWire Investors strongly advises that you check the management company's history and references before signing a contract with one.

Maintaining oversight

The Money Crashers website notes that there are many responsibilities that come with being a landlord that many people choose not to deal with. For example, you may not want to hear from tenants every time the dishwasher breaks nor do you desire early-morning phone calls about broken and non-functioning commodes. Maintenance and repair chores are one reason why many people hire property managers rather than oversee the property themselves. However, at the end of the day, you need to realize that the property is still your property and does not belong to the property manager. Moreover, the tenants are yours and not the tenants of the property manager and you want to make sure they are well-treated.

In the words of Money Crashers, "nobody else will ever care about this property as much as you do." Therefore, even after a person or company has been selected to manage the property, it will pay you to keep a very close eye on how the property is being managed rather than simply assume everything is going to be fine and that the property manager knows what he is doing. If you fail to do so, you might end up being highly dissatisfied with how your customers and property are being treated.

Seek legal assistance

Those who have invested in commercial realty obviously desire to have the property managed properly. Before you enter into a property management agreement, you should consult with a Washington attorney experienced in handling real estate transactions. The attorney can review or even draft a management agreement in order to make sure your rights are protected.