Management companies: who are they and are they worth the money?
Many owners dream of having a second home for holidays but the reality is not quite so simple. It’s both difficult and potentially expensive to maintain an entire property for the sole purpose of spending a few months there a year, leaving owners with a sticky issue to resolve (and often in a foreign language): they have to find the best way to make sure everything runs smoothly despite their absence. Naturally, living a few thousand kilometres away is not going to make that easy and because it’s not next door, helpful parents will not be of much use. That leaves owners with little choice either, improvise or bring in the professionals. While patient neighbours are a bonus, the truth is that a good management company is worth its weight in gold.
Who offers property management services?
There are three main types of companies that manage property: standalone service providers, developers and real estate agencies.
Real estate agencies often offer this service in popular locations for holiday homes, often in resort towns along a beach on the Mediterranean for example. It saves the time and effort of finding a management company and the agreement can be ready as soon as the sale goes through.
Developers often have management companies for the property they are selling. They are onsite and have the service ready. They know the building, contracts and guarantees on all the major equipment so it can be easier and faster to get things fixed. However, not all developers have the best reputation and their services may not reach the professional standards expected of a management company and its staff.
Property management companies are everywhere and particularly useful if you are buying real estate in a city or a destination less frequented by tourists. This is their main service so they should already be very familiar with the laws and procedures, making the process easy and efficient for both the owner and tenants. Nevertheless, these companies often focus on the local market so the staff may not speak a foreign language.
In any case, it’s important to shop around to know the market rate and ask a few questions. “The first thing to find out is how many clients the company already works with and how long they have been doing this. If they have been in the business for years, they have lower expenses, a steady flow of clients and the right infrastructure (IT, lawyers, accountants, good networks with insurance providers, etc.). So generally, your property lease is more likely to be profitable, as these companies are focused on it and they know what they are doing” says George Kachmazov, managing partner at Tranio.
What do they do?
Management companies offer a wide range of services that should meet most of your needs.
|Construction & renovation|
How much does it cost?
A management company usually charges
In Germany they offer bundled services (opening an account, managing operational expenses and paying the revenue to the owner) for about €50 per month. The whole package, which includes additional services (enabling utilities, setting up agreements with tenants, insurance, arranging repairs), costs about €100 per month.
Management companies in Bulgaria, Spain and Montenegro charge
What the experts say
Good companies have lots of experience, loyal clients and a good reputation. Here is some key advice from Tranio experts before choosing with a management company.
— Review the agreement before signing.
“Before you sign any agreement with a management company and tenants, read all the clauses carefully and add your own if necessary. Ask for all the payment confirmations to be sent to you and the schedule for
short-termrentals. It is crucial to ask for clarification from the company’s lawyers if there is a clause you don’t understand. You can also notarise the agreement.”
— Make sure everything is official to simplify claims if something does go wrong.
“It is advisable to charge the security deposit via wire transfer. The agreement should include the lease provisions and legal obligations of all parties as well as account details. This will make it easier if there are any claims in the future.”
— Research the company before making an agreement.
“A management company cannot sell your property without you knowing, but if they are not honest, they might rent it out for the whole summer only to tell you later that the season was bad and it was leased for one month instead of three. This is why it’s important to do some research before signing any contracts and ask local experts you trust for advice.”
Yulia Kozhevnikova, Tranio