So You Need a Property Manager?
For a majority of investors, using a third-party management company to operate your property is the best way to scale your investment business. Property managers are one of the most important members of your team. Their team helps protect the value of your real estate investment.
Property Managers do more than just collect rent; a quality property management firm can keep your property at high occupancy, maintain its long-term and immediate value and keep operating costs low without sacrificing quality. In order to choose the best property management company, and avoid losing money by hiring the wrong company, I’ve outlined my top 5 tips.
1 – Get Referrals
Know other property owners, investors and brokers in your area? Ask them who they use, and if they are happy with them. Know a commercial real estate broker? A broker will have knowledge gleaned from current clients, can pull a list of top managers, and can match managers and property performance.
In property management, you need proof of quality. You have to look beyond what you can read on a website or in a RFP. By asking for referrals you are getting firsthand, “It happened because I was there”, insight into how a property management firm actually functions and handles issues. Make sure to collect referrals from a few different sources. This gives a broad view and helps eliminate what could be personal bias. If you keep hearing the same thing about a property management firm, chances are it’s true.
You should come away from this process with a list of five top property managers.
Now, it’s time to assess these options?
2 – The Interview Process
The interview process is one of the most important parts of choosing a property management firm. After the interview, you want to make sure you are clear about how they handle property issues, tenant issues, what their reports look like, and how they will maintain your asset(s).
Be sure to ask specifics:
Walk me through the process for internal and external property checks. Will the property be inspected on a regular basis? What does that look like?
How are repairs and maintenance issues handled? What is the typical turnaround time for small repairs? Large repairs? How are requests, and subsequent repairs, communicated to tenants? Do they use any sort of work order software?
What type of reporting do you offer? What sort of property management platforms/software do you use to collect and maintain property data?
Information is power, and you don’t want to be blindsided by any issues once you sign a contract.
3 – Visit Managed Properties
Be sure to ask a potential hire for a few samples of their managed properties. In order to get the best understanding of how a property manager will perform, you need to visit assets they currently manage.
When you go check out these properties you will get a lot of great information. Some great questions to ask when you visit an asset:
Is it clean and well maintained?
Would you want to be a tenant here?
Property management is all about keeping tenants happy, so ask, are they?
Do they get quick and comprehensive response to their issues/complaints?
How long does a typical repair or maintenance request take?
Will they be renewing their lease?
4 – Don’t Hire Based on Price
You get what you pay for, and in property management it’s no different. While you should always look for the best value and try to score the best deal, pricing should never be your determining factor; experience and quality should.
To give you an idea of cost for multifamily management, most property management firms will charge 3% to 5% of collected rents per property, this percentage varies by market and property size.
If you find a property manager you like, however they are on the higher end of the pricing spectrum, there are a couple ways to try getting a better price:
Getting a lower rate by having them manage multiple properties.
Negotiating a lower percentage to start, with an increase later in the contract if the property manager meets occupancy and quality standards
5 – Relationship
At the end of the day, your property manager is really a partner or team member. How well do you get along with the leadership? Are they going above and beyond to win your business? Are they honest or dishonest? Are they arguing with you? People do business with those they know, like and trust!
If you’re searching for a property manager in any market, please reach out and we can refer you to those companies with a strong reputation and that fit your property type and location.
