For many real estate investors, the thought of having to use a property manager is like having to take a trip to visit the doctor. Scouting and vetting property management companies are not anyone’s idea of fun, yet hiring the right property management company can ensure your monthly cash-flow and keep you from bankruptcy.
The most obvious way to find property managers who will expertly take care of your portfolio is to find them based on the referrals of others. You can seek recommendations from other investors if you attend your local real estate investment association meetings. Property Owners Associations are prevalent in larger communities that are landlord specific associations. This is a group of property owners who likely have very strong opinions and combined experience to know who the good property managers are. There will probably be members of the association who are also currently providing property management services as well.
The first thing you always want to ask is how many properties or units are they currently managing? This should be followed up with how many employees are managing these units. A trained employee with the right tools and training can manage between 30 and 40 units. Think about it: if they have no employees and are currently managing 30 units, then you want to give them 10 more, how well do you think their service will be?
This can be a deal breaker! While it may seem like a good idea for a manager to own properties since they may be able to better relate to what an investor experiences, that’s not always the case. Your own properties and current tenants are in constant competition with the other managers and their properties. If the manager you are considering has a vacancy at the same time that you do, how do you know that your property will be filled first? Chances are, it won’t.
You’ll want to make sure the property manager that you are considering is using a quality property/tenant management software. Ask if they can provide samples of output reports from this system during the interview.
You’ll want to make sure that you know how a property manager will address maintenance issues. There are a variety of ways for getting maintenance issues resolved, but no matter what they are, you have to pay for them all. A property manager will need to make maintenance decisions up to a certain dollar amount before they have to obtain your permission. In addition, many property managers add a 10% fee on top of the invoice, and it’s important to know ahead of time if this is negotiable.