A good property manager can make your life easier. You will no longer need to deal with the details of maintaining your investment properties. Instead, you can focus on other things and allow the investment you’ve made to continue bringing in a return.
It can be hard to separate the good property managers from the bad without asking questions. Let’s take a closer look at the things you should ask a property manager before hiring them.
Why it is important to do your research
A bad property manager can make your life more difficult. Instead of someone taking care of your investment, they might allow things to go downhill quickly. That might manifest in the form of unhappy tenants or maintenance issues that get worse over time.
It is clear that poor management can lead to a large loss for your bottom line. Since you are working so hard to build a solid real estate portfolio, you don’t want your effort to be negated by a bad property manager. That’s why is it absolutely critical to do your homework and ask many questions before making a final decision on a property manager.
How to start your search
Before you start to ask questions, you can narrow your search by looking at a few key features.
First, you want to see a clean copy on their rental listings and generally good reviews. Put yourself in the shoes of a potential resident. Would you jump on the apartment that had beautiful pictures and solid reviews? Or the listing with misspelled words and terrible reviews? The choice is fairly clear. You want someone that takes pride in their work.
You also want someone that is knowledgable about the area. Look at the property managers that work in the area around your investment property. If they already have several properties that they manage in the area, then they know how to successfully find tenants.
Finally, you want someone that is responsive. When you first reach out to the property manager, a quick and helpful response is ideal. You don’t want someone that takes weeks to get back to you.
What to ask a potential property manager
When you start to narrow your search, consider asking the questions below. They can help you get a better understanding of what they have to offer.
What services do they offer?
Not all property managers are created equally.
A few services that they might offer include:
- Collect rent.
- Fill vacancies.
- Screen tenants.
- Offer services, like laundry or a front desk, to the tenants.
- Maintain the property.
- Schedule repairs.
Think about the services that you want taken off of your plate. Make sure they offer exactly what you are looking for.
How many units do they already manage?
The size of the company might shed some light on the experience you will receive.
What is their experience?
If you discover that they do have other units, then consider checking out those reviews. You might find that they manage their other properties well, or the exact opposite. Either way, it is a great way to find out more about the quality of their service
How involved would you be in the process?
Find out what they will handle for you. Will they set the rent price and the tenant rules? Will they have you do your own research for the pricing of the unit? There is no right or wrong answer, just make sure you are comfortable with the arrangement.
What does the contract look like?
As with any legal agreement, it is important to understand the specifics. Consult a lawyer if you are uncomfortable with anything in the contract.
What are the fees involved?
The pricing model of the property manager is extremely important. When you hire a property manager, you will pay them for their services. In many cases, the fee will be based on a percentage of the rent. But this will vary widely based on the manager.
The fee will be considered an offsetting cost in your rental business, so you need to make sure that it can be comfortably accommodated by your cash flow.
How do you pay me the rental income?
The company may send you a check in the mail or set up a direct deposit. Make sure the solution works for your lifestyle.
What services do you offer the tenants?
Do you want your tenants to have access to a repairman around the clock? Or a front desk to hold their packages? Whatever you want for your tenants, find out if the company can accommodate that request.
How do you collect tenant rent?
Most rental companies allow tenants to pay their rent electronically. However, that is not always the case. It can be inconvenient and lead to problems if the property manager is only able to accept paper checks. Since it is your property, it is important to be comfortable with this.
How do you screen the residents?
The tenants will be living on your property, even though you aren’t onsite to manage it. With that, you may have some requirements in mind for future tenants. For example, you might prefer a higher credit score or a clean background check. Get on the same page about the screening process upfront.
How do you take a rental from vacant to filled?
Vacancies can eat into your bottom line. The sooner a vacancy can be filler, the better it is for you. Ask how long it takes to turn over the unit. If you are happy with the time frame, move onto the next question.
How much control do you have over the lease agreement?
Since the tenants will be living in your rental unit, you might have some specific rules that you would like included in the lease. In some cases, the property manager will not allow you to alter their standard lease agreement. Read over the lease and confirm that you are comfortable before moving on.
Will you check in often?
Think about how often you’d like an update on your investment property. See if it is possible to set up a regular schedule for check-ins that suit your needs.
Are they licensed and insured?
You want a company that is prepared to handle your investment property in an appropriate way. Without proper licensing and insurance, you could run into legal problems down the line.
The bottom line
A property manager can help you enjoy the benefits of a real estate portfolio with less hands-on work. If you are ready to hire a property manager, be thorough in your search. Upfront research can save you time and money in the future.