Getting help to manage your property

He rented out his apartment in a prime location in Chennai and moved to his native town. He found himself having to make multiple trips to the city for various issues.

So he took the help of a property management service.

For a fee, these companies act on your behalf in handling various demands that come with property ownership.

Services offered

Property maintenance providers offer both year-round services for tasks such as routine maintenance, as well as one-time work, such as finding a new tenant. “We keep track of annual maintenance contracts for the amenities in the property,” says K Chandrasekar, Founder and Managing Director of Rajam Property Management, a Chennai-based service provider.

Even when rendering one-time services such as finding new tenants, companies go beyond the services provided by a broker.

“We have coordinated wood work and electrical fitting completion for empty flats and made them ready to be rented out,” says Anu, the Founder of Bangalore-based Trust Property Management Service.

These service providers also conduct background checks on prospective tenants and draft the rental agreement.

Once rented out, they deal with issues reported by the tenant; they also inspect the premises periodically to ensure it is well maintained.

When a tenant vacates, the house is checked to ensure that the inventory of items listed in the rental agreement, such as fittings, are in proper condition and there are no payments due for services such as cable.

Additionally, these companies maintain a financial record of receipts and payments related to the property.

If you own a plot of land, the property management firm would undertake regular visits to ensure there is no encroachment and update you on any developments in the locality.

Charges

Homeowners must enter into an annual agreement with the property management firm. The fee charged by the company for routine management, which includes paying taxes and other dues, regular upkeep and tenant services, ranges from 4-12 per cent of the income from the property. Alternatively, a flat fee is charged, in case of land or if the property does not generate income. Locked up property is charged on a square foot basis and taking into account notional rent. You can negotiate a lower fee if you use the company’s service for multiple properties.

There are additional charges for services such as finding a tenant, which are not considered part of routine management. This fee can be 50 per cent of the first month’s rent or as high as 10 per cent of the lease amount, notes Gaurav Yadav, Director, Uday Homz, a Gurgaon-based property and real estate consultant firm. Repair and routine maintenance work, such as painting, are billed at actual. The company gives you a quotation of the costs and gets your approval before starting the work.

Evaluating providers

As costs can quickly add up, it may be tempting to choose a company that charges the lowest fee. But be sure to consider a host of other factors.

First, get an idea of the provider’s experience in that locality. You must also ensure that the company has handled properties similar to yours. For instance, high-end villas require a different skill set than mid-priced apartments.

Second, assure yourself of the provider’s service quality. Visit a few properties maintained by the company and talk to the tenants to know how responsive the provider was to issues. Ask the company what the typical charges are for plumbing issues such as fixing a leaky tap, to evaluate if it is reasonable.

Third, spell out clearly what services are covered under the contract. For example, will the company make note of housing society rule changes? Get the fee terms in black and white instead of assuming it is included in the routine service price.

Fourth, know the contract termination terms. Find out if there are any fees in the event of your cancelling the contract ahead of its term.

Last, but most importantly, ensure that the service provider is trustworthy, says TL Sankarnarayan, who is one among the many customers using property management services.