Finding the Right Property Manager

As I mentioned in an earlier post, hiring a real estate manager can be quite beneficial to securing your investment and keeping the day-to-day tasks out of your hands. While it is possible to manage your own rental properties by yourself, hiring someone else to do it for you is something to consider. As many of my readers noted, it is especially important for someone who does not have the skills to maintain a house.

Finding the right property manager can be a difficult task. If you are just getting into real estate investments or considering it for the first time, you may not know by which criteria you should judge the different management firms. Knowing the right questions is half of the battle. While I can’t tell you which manager you should use, I can help suggest items that you will want to cover when interviewing different companies.

Finding a Property Manager That Fits Your Needs

There are a number of different types of property management companies. It is extremely important to find a property manager that specializes in your area of investments. If you are looking to invest in residential properties, make sure to look for firms that specialize in this area. A company who normally manages commercial properties may not be equipped to deal with issues that come up with residential properties. They may not have a system in place to deal with situations that arise from regular tenants.

Another important qualification to consider, which may sound obvious, is to determine whether a property firm actually manages properties. If you are looking in local directories or the phone book, you may find some firms that are primarily interested in selling properties. You may not be able to determine the services that they offer from their name or short description, so it would be important to call and ask prior to setting up an appointment.

How to Choose the Right Property Manager

It is important to consider multiple real estate management firms when making your decision. If you go with the first one that you find, you may regret it later. Once you cover the basics and determine which companies you would like to meet with as potential managers, it is important to cover all your bases.

The best way to accomplish this is to come in with a list of things that you want this property manager to offer. You don’t have to show the list to each firm, but having a checklist to make sure your investments are secure is a great way to start. You want to be able to determine which firm will provide you with the best services for the least amount of commission. There are a number of services that you want to make sure to include in your checklist. Here are some of the important ones for me:

  • How they advertise vacancies: A great management firm will be aggressive in their advertisements. You don’t want your property staying vacant for too long. Remember that you have to bear the burden of any vacancies, not the management firm.
  • How they show properties: The process they use to show properties can not only describe the precautions they use, but also whether it will be successful in obtaining quality tenants. For example, if they only show properties Monday-Friday 9am-5pm, this will decrease your odds of getting a tenant with a regular job.
  • How they screen tenants: This is really important. Make sure that they are using background checks. A simple background check can find any negative history and keep you from huge losses. All it takes is one bad tenant to turn you off to rental properties.
  • How they go about collecting past-due rents: Any legitimate firm will have a process in place. Make sure that it sounds like a good one.
  • How they control maintenance costs: You always want to make sure that they will keep up with regular maintenance and to find out before hand of their processes.
  • How to deal with after hour emergencies: If they don’t have a system in place for these types of emergencies, why would you pay them money in the first place?
  • What type of accounting they offer owners (you): It is always good to find out what kind of accounting services they offer. Remember that great accounting means less work for you when taxes season comes.
  • What’s their fee structure: Finding a property manager for an appropriate fee shouldn’t be too difficult. From surveying the market that I live in, these typically run 6-12% of the rent, but various firms may have different fee structures.
  • What type of liability insurance they have to protect you from lawsuits: This one is really important. You always want to be covered in this business.

Final Tips to Make the Decision

If you find yourself trying to make a difficult decision between two companies, you want to make sure to read the fine print on the contract. Another thing to consider is whether this company will help you build your real estate business beyond the properties that you already own. Finding a property at wholesale can go a long way to making it a profitable venture. Establishing a great relationship with a property management company is an important step in real estate investing and something that should be done with care.

What things do you consider when you selecting the right property manager?

*featured image provided by: James.thompson via flickr

18 Responses to Finding the Right Property Manager

  1. Thanks for the awesome tip list. We don’t own any rental property yet but it is definitely something we have on our list and hiring a rental manager is something we want to do.

    • Corey says:

      Thanks Miss T. Agreed. It is in my 5 year plan (maybe even 2-3 years) and I plan on using a property manager (if you can’t tell by my focus).

  2. MoneyCone says:

    And always check references, past and current. The internet can be a valuable tool for doing background checks.

  3. How they screen tenants is a big deal. I know that is one of the most difficult things to do, finding a suitable tenant.

  4. Suba says:

    We don’t own a rental house yet. When we do we will def. be hiring a property manager. Asking their previous clients is a good idea too. My manager is going through a rough time with his property management company (he has I think 5 rental properties). They were good initially but now after the one person he was dealing with he is getting all kind of problems. It would be good to check who exactly you will be dealing with as well I guess.

  5. Great post Cory. We don’t have a rental but are looking into the possibility. I would consider a property manager if the fee is reasonable. Keep up the good work – you are almost at 100k!

  6. If you can get a recommendation from someone you know, that would be best. It’s not easy to find a good property management and even a good firm can go down hill. I had to fire mine earlier this year because they were so unresponsive.

    • Corey says:

      Thanks for the advice retireby40. I will definitely keep that in mind when it comes to selecting the right property management firm.

  7. We do not own any rental property yet but that list sure will come in handy to anyone looking outsource his management. I would need it since I am not a handy man!

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  9. eemusings says:

    Property managers only showing rentals M-F, 9-5 irk the hell out of me. Which is most of them in New Zealand. (That, and the 1 week rent plus GST letting fee). Private landlords are much more flexible and don’t charge the nonrefundable fee.

    I’ve never understood it. I understand that rentals aren’t as lucrative as sales, but surely a little effort wouldn’t go amiss? Viewings for sale listings are ALWAYS on weekends.

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  11. I would like to comment about the real estate business whether its buying and selling homes fixing them up what have you. I do not have anything against real estate investing. But lets be clear this is a business just like if I own a used car lot a health food store a convenient store any variety of businesses. Each type of business has its own little little quirks of sorts real estate is no different. To many folks look upon real estate as an investment and that is why they fail to succeed in the real estate business’ when in fact it is clearly a business thats how one should look upon real estate. A good example of this is commercial real estate. When ever I drive around I see many almost empty or completely empty stripe shopping stripes. I don’t mean big box stores that are empty. I talking about a small commercial buildings that might house ten or at most fifthteen small mom and pop businesses along a major thoroughfare. I have seen dozens and dozens of partially or completly vacant stripe shopping stripes and I don’t live in detroit. I live in the suburbs of chicago and this is not something recent. I have seen this five ten fifthteen years ago so what does that tell you about investing in commercial real estate. Their must be many problems with these type of properties.

  12. I do not own rental property (yet at least), but I just feel like property management really takes the wind of your sails when it comes to net profit.

    Yes, if the property is completely paid off you have the margins, but I think sometimes people get the idea they can just buy them and have someone else do everything and net a 25% ROI.

    Regardless, good article.

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