How to Hire a Property Manager
Selecting a property management firm that suits your needs seems like it should be a simple task. But if you think about all the time, energy and money you’ve invested into your rental property, you’re going to want the best group available. But which company do you go with? There’s a lot to consider, so leave it to us and we’ll walk you through how to hire a property manager — the right way.
Finding a Property Manager
Because even good property management groups differ one to the next, it’s key to do your homework before selecting one. After you’ve got a few targets in sight, drill into each group and learn about how they operate to verify if they’re a good fit. Here are a few tips to consider when finding a property manager:
Define your goals for property management. When hiring a professional property management group, you should first make a list of services you expect the group to take on for you. For instance, if you’re looking to outsource maintenance and landscaping, but not collecting rent, you’ll need to filter through your list of candidate firms that can provide those services individually.
Get online. A simple internet search for reviews of local groups offering the services you’re seeking will give you an idea of who to consider. And more importantly the reviews will usually tell you why they won such high praise. Websites like Yelp and Angie’s List (for a fee) will offer great feedback that allows you some perspective on their overall performance and reliability.
Inquire with local landlords. Another great way to get a first-hand perspective when searching for property management companies is to check in with nearby rental property owners. If they’ve been in the business for a while, they’re likely to have important feedback that can help you narrow down your list of candidates.
Vet Your Target Property Management Groups
It’s best for your selection process to include a few business-savvy steps like checking the credit report and the financial health of the firm you’re considering. Remember to interview references to help round-out your inquiry.
Do the due diligence. Digging into the details of your target property management groups can help prevent you from making a costly mistake. Much the same process as you would undertake to select an optimal prospective tenant, you'll need to gather information before making a decision.
Pay for a credit check. The group’s business credit report should carry a lot of weight when it comes time to make your decision and you definitely don’t want to skip this step. If they’re rated well, with years of positive credit history, you may have found a good resource.
Ask for references. Like employers seeking feedback from the field about a prospective employer, you’re going to want up-to-date performance reviews as well. Ask references questions related to your business needs. Have that list of goals you compiled handy and ask the reference if the group’s qualified to manage your rental business accordingly.
Important Questions to Ask Property Managers
As you narrow down your list of candidate groups, it’s time to get down to the details about how they operate on a day to day basis. Here are several important questions to ask property managers before making a decision:
What’s their rate? Understand how they intend to bill you and be sure that suits your business needs. If they’re charging a flat fee and you’ve got a newer unit, you may want to consider a per-incident arrangement. Usually, property management groups charge anywhere from 8-12 percent of the unit’s monthly rental rate, plus expenses for flat fee agreements.
How do they vet prospective tenants? Our partnership with TransUnion’s SmartMove helps to take the guesswork out of selecting a tenant. Will this group utilize extensive criminal, credit and tenant history reports during the tenant selection process?
What are their move-out notice requirements? Navigating the exit of one tenant and the arrival of the next mindfully can help to reduce rental unit vacancies. Their answers should match your expectations.
What’s their process for dealing with maintenance issues? When a tenant makes a maintenance request, what protocol do they follow, and how are issues triaged? These answers will help you understand their plan when dealing with varying types of issues and emergencies.
How do they advertise? Learn about their marketing strategies. If you’re seeking a property manager to fill up vacant units with qualified tenants, you’ll want to know how, when and where they intend to market your rental.
How many units are managed? Consider scalability now. If you plan on adding to your real estate rental portfolio in the near future, you’ll want to be sure the group you select will be able to scale up and meet your needs. Are they at or near capacity? Do they plan on adding more staffers as their workload increases? These are important questions to get answered before you sign.
How does the group handle late rent payments? Getting a feel for the way they deal with difficult or problem tenants is very important. You’ll want to be sure they’ve got a plan for managing fines and late payments. Are they're working according to state housing laws and local codes that mandate the way these issues are to be handled?
How does the group deal with evictions? Be sure the firm documents all encounters with tenants, and has a process in place to manage evictions. Inquire about this with the references as well, and get their feel for how the property manager performed under pressure.
Fine-tune Your Property Management Contract
When entering into a professional relationship with a property management group, define the terms that are cause for termination of the contract. Be sure that your agreement is carefully worded to meet your needs, and have your real estate lawyer approve that language, and the whole agreement, before you sign.
It’s important that you respond to tenant maintenance issues quickly, so set time-to-resolution limits on maintenance and repairs issues. Require that the property manager informs you in a timely manner when critical concerns arise.
You’re also smart to require 30 days’ notice, should the management group decide to terminate your contract. That way, you’ll have time to find a suitable replacement. With a carefully worded agreement you’ll have legal recourse to exit the contract as well, if they fail to perform their duties.
Request an Insurance Review
Lastly, after you’ve got a plan in place to manage your properties, set some time aside and get on your American Family Insurance agent’s calendar for an insurance review. As your business shifts and becomes leaner, you’ll want to know that you’ve done all you can to keep your costs down. Your agent can help you save money by bundling your insurance products and show you ways to qualify for discounts on your property investments.