A property manager is a group or person that you hire to handle the day-to-day operations of rental real estate, such as single family homes, apartments, or commercial real estate assets. Typically, a property manager will find and fill a property with tenants, collect monthly rent, oversee the legal paperwork, and facilitate repairs.
A property manager is likely to bill you anywhere between eight and ten percent of the gross monthly rent you charge your tenants. For many, this is a worthwhile cost (especially if you manage property out of state).
Still, upwards of ten percent is no small chunk. So you’ll want to make sure their service is every bit as valuable as they say it is.
Below, let’s explore seven pro tips that will help you hire the most efficient property management firm.
1. What Services Do They Offer?
Managing property is not a one-size-fits-all deal. For example, some property managers are great at staging and listing properties.
Others run thorough credit and background checks or draft detailed, comprehensive leases.
Others excel at handling maintenance problems and getting repairs done for a great price. Others might prove to be valuable by being skillful at handling late rent payments or troublesome evictions.
If you’re able to handle any of these processes on your own, then you won’t need to grill the potential company about their history of handling these issues.
But, if you’re looking to hire a property manager to handle all of the day-to-day requirements of your property, then you will want to clearly understand the range of services that they offer and their experience to date.
2. How Many Properties Do They Manage?
Some real estate investors acquire a portfolio of properties, either single family homes or multi-family apartment complexes.
Other people simply move into a new home and rent their old condo or townhouse as an income property instead of selling it.
Which category do you fit into?
If you choose a property manager with a lot of experience and a huge portfolio of properties, that’s great. But, will they be able to manage your small condo downtown? Finding the right fit is important.
Occasionally, you’ll come across firms that can manage both large and small ventures. Regardless, you will want to know how many properties your prospective property manager manages and if they will be able to make you a priority.
3. How Do They Screen Tenants?
A critical task that is completed by most property managers is to find you a long term tenant. Once you execute a lease with a tenant, you are typically committed to a one to two year relationship with them. Given this, it’s essential to know how your property manager handles tenant screening.
Do their pull credit scores and criminal history reports?
Do they confirm employment status, and if so, how? Does that process involve requesting paystubs or do they also speak to management or human resources at the company listed as the tenant’s place of employment?
How many past landlord references do they call?
All of these are important questions to answer so you can feel confident in the people or person who will be renting your home.
4. How Do They Handle Maintenance Issues?
This is one of the most valuable actions completed by a property management firm, especially if you live out of state. Have an in-depth conversation to clearly understand out how they handle maintenance issues.
For example, if you opt for a property manager that oversees a multitude of properties, they may have their own maintenance team that will get deployed when needed repairs come up. In some cases, this may also save you money, since you’ll benefit from their pre-negotiated pricing.
If, however, you select a smaller firm for that personal touch, make sure you understand the maintenance process when tenants call in to report a new problem. For example, do they outsource the work? If so, how much quotes do they collect? How fast can they get repairs handled?
Price, timelines, and quality are all important considerations when it comes to executing property repairs, because your tenants deserve to live in a safe, well maintained property with working appliances.
5. How Do They Communicate with Tenants?
Managing property (and people, to some extent) requires open, active, and prompt communication.
Consider whether the property management company you are considering has a systemized process to handle all of this communication.
Do they have an online portal where they house important paperwork like leases and upcoming events? Is there a streamlined process for tenants to reach out with inquiries? If so, can you monitor that, as well?
In today’s ever-increasing technological sphere, you want to make sure that you hire a property manager who can offer clear, prompt, and efficient communication.
And, in case you end up in a legal situation or have an unhappy tenant, you’ll want to know whether you can readily access their communication with your tenant—and step in to fix things if a particular situation requires it.
6. How Do They Set Rental Pricing?
In my experience, many property managers aren’t as familiar with the ins and outs of each neighborhood that they manage.
This is because it can be quite tricky to be an expert on multiple markets, all of which are continuously changing and evolving.
Therefore, it’s a good idea to check to see if your property manager is competitively pricing the other properties that they manage near you. If they aren’t, then you might want to look elsewhere—or at the very least, tell them the pricing at which you’d like your listing to be set.
7. How Do They Handle Renewals?
A good tenant is worth their weight in gold. This is because they are reliable and will take great care of the home that you’re renting to them. With the average U.S. home now worth over $500,000, it’s critical to work in collaboration with your tenants to keep your home in tip top condition!
A good tenant will promptly report any needed repairs, so that you can prevent larger issues that could stem from unreported issues, such as water leaks. A good tenant will also give you peace of mind by paying rent in a timely manner.
Once you’ve found a tenant who meets these criteria, your goal should be to keep them for the long term.
Given this, it’s important to understand how the property manager you’re assessing handles tenant renewals. Do they offer simple one or two page lease addendum that will make lease renewal easy? Do they offer reasonable year over year price adjustments? How much lead time to they give tenants to decide?
All of these questions matter, because the longer you can keep an excellent tenant, the better!
The Best Property Manager for You
The best property manager for you is out there. The key is to do your due diligence before hiring a property manager.
In particular, it’s helpful to have a phone or in person conversation to get a feel for how they do business. You’ll also want to ask to speak with other landlords who are currently using their services.
For more tips and tricks on investing in real estate, explore the Real Estate section of this blog.
What other questions do you have about getting started with real estate? Ask them in comments below.