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Choosing a Property Management Company

Choosing a Property Management Company

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Real Estate Costa Rica 101: Choosing a Property Management Company.  So you decided to buy property in Costa Rica but you can’t live here full time — yet. Now you need to manage and maintain your property and costs while you wait to make your dreams come true here.

Ideally, you can find ways for the property to “pay for itself” and be occupied. This is usually done by renting it long-term to one tenant or by allowing it to be used as a vacation rental. Both offer the advantage of your property not sitting empty for long periods of time and income to cover its costs.

A long-term property rental will provide a stable income and can continue months without a bump. Vacation rentals can make extra money from higher rental prices, but entail more frequent management tasks. Both require oversight for a smoother experience.

You will never regret reading
and understanding a property
management contract.

 

A property management company can take care of everything while you’re busy working and keeping your daily life on track elsewhere. It can provide great solutions and results, helping you to treasure and enjoy your second home in paradise with no regrets.

In Costa Rica, there are many property managers to choose from. You will have a better experience if you take the time and give serious thought to selecting the right one. Here are some actions and considerations.

Read the contract

Read it from beginning to end. If you don’t understand something in the contract, ask!

I know it can look daunting and it’s hard to focus while sipping your margarita poolside. But you will never regret reading and understanding a property management contract. It’s almost a guarantee you will regret it if you don’t.

Understand the fees

There are many ways for a property management company to make money. Most of them are legitimate and hard-earned, but there can be some that you wish you had paid attention to.

For example, be clear about these aspects of repairs, renovations and cleaning.

    • Is there a percentage mark-up on repairs and renovations?
    • Contracts should specify a limited dollar amount for repairs, maintenance, improvements or renovations that the property management company can spend without owner approval. Keep that amount low. Make sure the repairs are needed and double-check your warranty for possible cost coverage.
    • Is there a percentage mark-up on cleaning supplies and other supplies? Are these supplies being used only for your own property or for others in the rental pool of your property management company?

Online listings

A property management company will list your property on many online travel agencies (OTAs), otherwise known as booking sites, as well as real estate sites, websites, social media and more. Most contracts will address the owner giving permission to the manager to create these listings but I have rarely seen a contract that addresses who owns these listings when the relationship between owner and manager ends.

This is quite a slippery slope and it will never end in your favor. If the property manager has the username and password to the OTAs and other online listing sites, it is very difficult — if not impossible — for you to gain “ownership” of those property listings. That means if you decide to change property management companies or start doing the job yourself, any search engine optimization or page positioning advantage your property has earned is lost and you start at the bottom again. It means that if the company took professional pictures, which you no doubt paid for, you won’t have access to those pictures. It means you lose all those great reviews. I could go on but I think you are feeling the pain just thinking about this.

Make sure that there is a clause in the contract stating that you have proprietary ownership of all your property listings that aren’t on the management company’s private sites. It should stipulate that when the contract ends, or at any time, you will receive all the usernames and passwords for your listing on all internet and social media sites. Otherwise, if you decide to change directions with your property, the management company you’ve been dealing with can hold you hostage. You may never feel free to make another independent decision about your property again if you don’t own your web presence.

Ask questions

Are the owners and managers local? This is a key question.

Some property management companies are run by owners or managers who have the same dream as you do. They want to live in paradise full-time but haven’t quite figured out how to do that.

Don’t get me wrong, quite a few property management operations can and are done “remotely.” It is understandable if certain company management components are done by someone who is not local. But, there is a huge part of the business that does require a local presence and oversight.

Paying attention to the following aspects of managing your property requires local owners and managers:

    • Responding to the needs of vacation rental guests or longer-term tenants.
    • Going to the property and inspecting it when it has been vacant for a while.
    • Showing your property to prospective customers.
    • Responding to repair and maintenance needs.
    • Knowing the local service providers for bigger issues.
    • Most importantly, oversight of these activities.

These are just a few of the reasons why you want to be sure the property management company you choose has a strong local presence.

Some other questions could include:

    • What is the company’s experience in property management?
    • What is its experience here in Costa Rica with property management?
    • Is property management the main business or is it doing other things? If so, what else (is it a related business)?
    • How many properties does the company manage? Why so many? Why so few?
    • How are tenants screened?
    • What type of management software does the company use? Is there an owner portal?
    • Can it provide references?

These are just a few of the many questions you should be asking. In a condo situation where there are many rental or vacation units to choose from, how can you be sure the property management company is giving yours a fair rotation as people are booking?

See the results

One of the most important pieces of information you need in choosing a property management company is the results — current and past. Try to see for yourself firsthand, to the greatest extent possible, by asking.

    • Ask for a tour of a few properties the company manages. Assuming you will be shown the company’s best or favorite locations, you should be able to notice, in the details, how much attention or neglect the property is experiencing.
    • Ask for references. Then actually check them out with other property owners. Let them talk.
    • Ask for a list of other properties the company manages and check reviews on the internet.

Marketing

Although the care of the property and the service that guests and owners receive is important, if the property management company does not have a good marketing approach, your property will sit empty. It’s important to find out what the company does to market its properties.

    • What OTAs does it use?
    • What social media is it active on?
    • What does the company website look like? Can it build a website for just your property? Can its reservation software be connected to your individual website?
    • How does the company actively keep its marketing current and fresh?
    • Does it personally show properties to potential customers and will you get a report when there are showings?

Get a list of the company’s properties and go look at them on the internet. Do a google search. Check out those properties on booking sites. Are they just sitting there or is there activity? Check calendars to confirm occupancy claims.

If you are talking to agents who are good at sales you will know it, because they are working hard to sell you their service. If they aren’t selling you on using their service, then how can they be selling your property to a potential tenant or vacation renter?

After the contract is signed

Don’t disappear after the contract is signed. If you show that you are paying attention to your property, then the company will pay more attention too.

    • Ask to receive a report every time your property is shown, and a weekly report when it sits empty.
    • Seek out second opinions on repairs, maintenance, and renovations.
    • You can turn over all the calls you receive to the management company but then follow up with the prospect to make sure they were contacted.
    • Stay tapped into how the company is promoting your property, both passively and actively. Your attention will encourage it to pay more attention to your property.

Owning a property that you don’t live in full-time can be a daunting experience. If you choose the right management company, it can be a joy that brings you pura vida peace and tranquility for many years to come. Choose wisely.

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