Property management encompasses all aspects of running an income property. From finding and screening tenants, to maintaining the property, collecting rent, and handling any issues that might arise.
While some professional property managers specialize in certain types of services, most are prepared to take full responsibility for your property, unless you’d prefer to handle certain things yourself.
Professional property management can make owning (and profiting from) rental properties a hassle-free experience.
For most, the decision to use a professional property management is a simple cost/benefit equation. Professional property managers are experts at handling properties and tenants and they generally take only a small percentage of your property’s monthly rent in exchange for their services. When you consider what you get in return—a hassle-free, essentially passive income stream—the decision to employ a professional property management is a no-brainer for the majority of rental property owners.
After all, our job is to manage the property manager and the asset while looking for our next deal.
Things to Consider When Interviewing Property Managers
1 – Cost: Managers generally charge a monthly fee to watch and maintain your property. Those fees can range from as low as 4% or so, to upwards of 10%. Obviously, you should look for a company that charges less and provides more services.
2 – Communication: For me, communication with a manager is of the utmost importance. I need someone who uses email, and is responsive to both the telephone and email. If I don’t get a response back in a timely manner, it is time to walk. In addition, you need someone who can deal with you and your idiosyncrasies. Some of us are needier then others. You want to let companies know up front where you stand, and make sure they’re willing to be flexible for you.
3 – Termination of your Agreement: In the event that your “relationship” does not work out, you want to know up front what exactly it will take to terminate your agreement. Is there a charge for breaking your contract? Penalties?
4 – Repairs and Maintenance: Does the company have their own maintenance crew, or do they contract out to a handyman? How much do they bill out at? Can they handle all kinds of repairs? What happens if they can’t do something? Do they have other contractors that they work with? In addition, you probably want to have a maximum that the company can spend without contacting you. Generally, I will allow my managers to do what they need to as long as it is for something under $200. I must confirm any expenses over that. If you are a bit more of a control person, you can also request invoices/receipts for expenses.
5 – Monthly Statements: Does the company send out monthly or quarterly statements. I wouldn’t deal with anyone that does not provide monthly income/expense statements.
6 – Evictions: How does the company handle evictions? What are the costs to evict?
7 – Yard Work: How much do they bill yard work out at? Landscaping? Do they handle snow removal? Mow lawns? How much does each cost?
8 – Reserves: What kind of reserve does the company require? The reserves are used in case anything comes up. Most managers will require a certain amount.
9 – Accounting: When will the manager mail your check to you? Beginning of the month? State laws usually dictate accounting rules for managers, but you would want to know all of this up front. Tenant Deposits: How do they handle deposits? Are they commingled, or simply put together with all other income for your account?
10 – Vacancies: I’ve actually interviewed companies that will charge you 1/2 a month’s rent to fill vacancies in your property. This is typically up for negotiation and will vary depending on types of properties and sizes. You will need to fill your vacancies, so you will need some advertising done.
11 – Advertising: Where do they advertise properties? Are for rent signs put on the property’s lawn? Do they advertise in the paper? Online? There are quite a few effective places to advertise properties for free, online. Do they use these? In addition, you want your property advertised effectively. Do they have the basic HTML skills to add images to their for rent ads online? This makes a huge difference, trust me. IF THEY DON’T USE CRAIGSLIST DON’T HIRE them!
12 – Section 8: Do they have experience dealing with section 8 properties / tenants? Do they know what is entailed with such properties?
13 – Properties They Manage – I also like to know how many properties they manage, how many managers work at the company, what specific areas they focus on, how long they have been in the business, and other questions about their experience. This should be a good start to get you going. I like to always tour the manager’s current properties without them knowing to get a good feel for them.
14 – Tenant Retention – Ask what they do to retain tenant’s i.e. special incentives, customer service policy, etc.