Real estate investors interested in building wealth by acquiring property and holding for long-term rentals will be well served to find a good property manager. But with hundreds of management companies out there, how can you find the good ones?
If you are just starting out and only have a few properties, you may want to manage them yourself, at least for a while. This is a great way to learn what potential issues can arise and how they can best be fixed. As your portfolio of properties grows and you begin investing outside of your local area, however, you will want to have a method for finding and retaining good property managers.
Finding a good property manager is not always easy. The barrier to entry is low. Everyone thinks they can be a property manager. Many people think the job is easy money. I’ve worked with a lot of property management companies over the years, and I’ve found that it is worth taking the time to find the right one. If you don’t, you’ll end up spending as much time managing your property manager as you would have spent managing your property if you’d done it yourself.
To help you find the best property manager out there, I’ve come up with a list of 20 questions to ask. Use them all or pick and choose to fit your situation.
Questions to Ask Property Management Companies
What are your fees? Do you charge a flat fee or a percent of rent?
Seven to 12 percent of rent is typical, but you may be able to negotiate a lower percentage depending on the circumstances. For example, if they will be managing multiple properties for you, they may cut you a deal.
Do you have references?
Get references of both current and former clients, and call them all. Search the internet for reviews. Ask around.
How many properties are you managing? Do you manage both short-term and long-term rentals?
These days, many property managers are involved with managing short-term rentals through sites like Airbnb and VRBO. Short-term rentals are a different business and can take up a lot of a property manager’s time. Make sure they have the time to focus on your long-term rentals.
How long have you been in business?
You want to make sure they’ve been in business long enough to have a track record and evidence they plan to stick around.
How many people work for your company, and what are their roles?
You want to know who is taking care of business behind the scenes. If your contact leaves or goes on holiday, you want to know who to contact. You also want to get a sense of the infrastructure. Are they trying to do everything themselves, or do they have a support staff?
Do you have electronic and automated systems set up?
These days, property managers should have client portals and electronic payment systems set up for convenience and record keeping. For example, is there an online portal where you can go to generate reports and see property accounts in real time (instead of waiting weeks for a monthly report)?
How often do you check in on tenants and properties? Do you do an annual walk-through?
A good property manager will check in with the property and tenants even if they haven’t heard from them. Some tenants won’t report needed repairs and damage leaving you and the property manager in the dark. You don’t want to find an unpleasant surprise when the tenant moves out.
Who keeps the damage deposits?
Don’t let the property manager keep them. While most people are honest and trustworthy, I did have a property manager steal the tenant damage deposits, which ended up costing us a lot of money to replace the deposits!
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