Real estate investors who are a choosing property manager should always keep in mind that a good property manager can ensure their monthly cash-flow while a poor one will almost drive them to bankruptcy. So, they should pay only to those property managers who are ready, willing and able to act to the benefit of the property owner to resolve any issues without the client having to guide their actions or demand specific actions be taken. So, assuming there were at least a few decent property managers in this country, how would you, a real estate investor, find them and what criteria should you use to select them? The obvious way to find those few property managers that really will take care of your portfolio is to find them based on the experience of others. If you have been attending your local real estate investment association meetings, you could get recommendations from other investors. Another way consuming less time is go online and search websites that help people find great local businesses based on user reviews. One of the most popular of such websites is Yelp having monthly average of 83 million unique visitors who visited Yelp via their mobile device in Q2 2015 and more than 80 million reviews by the end of Q2 2015. You can find our company profile there as well. Assuming you got some prospects for seemingly good property managers and you now have to go through the selection process. What should you be looking for? Below are several tips about hiring the best property manager for your real estate portfolio which would help every real investor to be successful as a landlord.
1. Property Management Company
The first thing you always want to know is how many properties or units are they managing. This is followed up with how many employees are managing these units. Usually, a trained employee with the right tools and proven processes can manage between 30 and 40 units (assuming the accounting function is not included). For instance, if you are qualifying a property manager and they have no employees and are currently managing 32 units and you want to hand them 5 more, how good do you think their service to your portfolio will be?
2. Property Inspections
A critical component in managing both properties and tenants is getting into those properties on a routine basis. As part of your discussions with prospective managers, you want to get a commitment from them how often they will conduct formal inspections of your properties. In some cases, managers will be very accommodating. In most, however, they will balk at this requirement or use it as a way to increase the fee they will be charging. You should not be impressed with property managers who believe that conducting routine property inspections is an extra – not part of their normal package of services.
3. Making Clients Happy
During the discussions if you find that the property manager is constantly cutting you off, or trying to finish your sentences for you, you will be in trouble if you hire them. Any time you have an issue or question about your investment you will get the same treatment. The best managers are those who know who their clients are and are constantly looking for way to make sure those clients are happy.
4. Management Tools
The number of automated tenant management systems on the market can be overwhelming. The good news is there are just a handful of them that really matter. You want to make sure that the property manager you select is using a quality property/tenant management tool and that they can provide samples of output reports from this system during the interview. If they don’t use software to improve efficiency or hesitate to share reports with you, your experience may be less then profitable.
Make the property manager commit to providing reports to you no later then a specific day of each month and that your portion of the rents are paid to you at that time as well. if you don’t receive those rents from the manager by that date, go camp out on their doorstep.
6. Management Fees
Most property managers charge between 7% and 10% of the rents for managing your properties. Be sure that you know what that percentage is based on. Some managers will require that you pay them the agreed percentage on the total rents that could be collected whether they are collected or not. Would you like it?
7. Maintenance Issues
Make sure that you know how a property manager will address maintenance issues. There are a variety of ways you, as a property owner, will pay for getting maintenance issues resolved. You can expect that the property manage will want to make maintenance decisions (spend your cash-flow) up to a certain dollar value amount before they have to obtain your permission. You may wish to put the limit on that amount. Also, many property managers will add a 10% fee on top of the invoice, and while it is often times hard to find a manager who doesn’t make this a non-negotiable requirement, you may still try to negotiate to get that item waived.