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