What services are provided by management companies

A management company is usually a real estate agency that also performs management services. When we were looking for a management company, we learned that it’s a very local business, meaning that a management company usually takes care of properties that are located within a 10 km-distance from their office, not farther.

So, the first step in your search is to spot all the real estate agencies in the town in which your property is located and find out what management services they provide and the prices. In France, notary’s offices also happen to provide such services, so make sure you contact them too.

The basic services any management company is supposed to provide are: advertising the property to find a renter, showing the property to potential renters, making sure that the potential renter has sufficient income to pay for the rent, signing the rental contract on your behalf, making the inventory, collecting the rent, hiring the services of professionals when needed (for instance a plumber if the renter calls for a leak problem), providing information and help for including rental income and expenses in the tax return, etc.

Some companies also provide insurance coverage and legal protection for any problem related to your relationship with the renter (for instance if the renter caused damages to the property and refuses to pay, if they don’t pay the rent, if they refuse to leave when they are supposed to…). This is very important although I must admit I didn’t think it was before we had problems with the dishonest renter.

I usually don’t trust insurance companies because they give me the feeling that they always try to exclude your problems from the coverage and you kind of end up paying for nothing. But in that case, I expect insurance companies to actually do their job because they give their approval to any potential renter moving in into your property. If they deem the person has not sufficient income or the warrantor is not reliable, they don’t give their approval in the first place and you know ahead of time they wouldn’t cover for any problems arising with this renter. If you pay for insurance coverage, the management company only rents out your property to people that the insurance company approved.

Another service that some management companies provide is vacancy coverage. It means they pay you the amount of the rent even when your property is not being rented (when a renter has moved out and they are still looking for a new renter). I am not sure this coverage is absolutely necessary, I imagine it depends on the amount of your loan payment: if your monthly loan payment is low, you would have to do the math but it’s probably not worth it. Also, based on what we were told in France, a property must have been rented for several years in a row without any vacancy in order to be eligible for vacancy coverage. The period of time depends on the insurance company but it makes it hard for a property to qualify anyway.

As a landlord who is renting out his/her property, it’s recommended that you take insurance coverage for natural disaster, fires, etc. Maybe some management companies include this type of coverage but we didn’t find any in our town in Northern France so this is something we take out on our own. At that point you might wonder why not take out a comprehensive coverage at the same insurance company (natural disasters, unpaid rents, legal protection related to the rental relationship, etc.). As we are still beginners, I can’t really tell what is best, experience will tell. What I think so far is that it’s a good thing to do as many things as possible with the management company so that they take care of all the paperwork and hassle in case of problem.