Finding A Great Property Manager
Property managers can make or break your return on investment potential. You shouldn’t have just anyone looking over one of your greatest assets. Hiring a bad property manager can be damaging to your income potential. An average property manager will get the job done alright, but they might not have the ability to take your investments to the next level. That is why you need to find a great property manager.
In order to find a great property manager you need to know what kind of characteristics they have, what the benefits they provide, and how much they cost. The key to figure these things out is to know the right kind of questions to ask. This article will help you decipher between just another property manager and a great property manager.
What is a Property Manager?
A property manager is someone who works on behalf of a property owner to manage their rental property.
Property managers can work in a variety of different places. Sometimes they are an individual who conducts all of their own work. They can also work within a property management firm or real estate brokerage.
What Do Property Managers Do?
The tasks that a property manager performs will be dependent on the contract that is signed between them and the property owner. They can even vary between different clients that a property manager works with. The duties they perform would be dependent on the needs of the property owner.
A property manager typically performs tasks such as
- Advertising vacant rental properties
- Conducting showings of advertised properties
- Vetting potential renters
- Creating and negotiating leases
- Performing property inspections
- Collecting rent and going after late rent
- Overseeing property maintenance
- Carrying out evictions when needed
- Communicating with tenants
What is the Difference Between a Property Manager and a Landlord?
These terms tend to get swapped for one another, however they don’t mean the same thing.
A landlord is someone who owns a rental property.
As stated before, a property manager takes care of a rental property. They manage the rental property on behalf of the person who owns the property; aka the landlord.
A landlord would hire a property manager to oversee their rental property.
Do I Need a Property Manager for My Rental Property?
This answer will depend on what your goals and strategy are with real estate investing.
If you are looking for real estate investing to be a bit more passive and hands off, hiring a property manager might be the right direction for you.
However, if you want to be more hands on and in control, you may not want to hire a property manager.
This could also depend on your proximity to your rental property. If you live far away, it could be advantageous to hire a property manager to oversee the affairs of the house. Whereas, if you are close in proximity to your rental property you could be the one to oversee the affairs of the house.
What are the Benefits to Hiring a Property Manager?
Hiring a property manager can be very beneficial to your investment strategy.
It is a property manager’s job to oversee the rental property on behalf of the landlord. With great property managers, you can rest assured knowing that your property is being well taken care of. Which allows you to be as hands off as you want.
When something happens in the middle of the night, the property manager will be the one to take the phone call. When tenants aren’t able to pay rent on time and they call in with lots of excuses you won’t have to listen to them.
Property managers typically have connections with people or companies who can take care of problems when they arise. They usually know great contractors, lawn care specialists, cleaners, etc.
A property manager’s lease is usually put together by a real estate lawyer. That lawyer may work in house or closely with them. That way the property manager can consult them when legal issues come up, which can be a benefit to you.
How Much Does a Property Manager Cost?
Property managers usually charge their clients in one of two ways.
- Percentage of the rent (usually between 7-10% of one month)
- Flat fee based (a set monthly amount)
Before hiring a property manager, be sure you understand their fee structures. Some companies may charge a flat fee for minimal services and upcharge for add ons. Read through their Management Agreement or ask them directly to disclose all of their fees.
How Do I Find a Great Property Manager?
If you plan to hire a property manager you need to decide whether or not you would like to hire an individual or a company to oversee your rental property. Some property management companies will even oversee large complexes and HOAs.
Determine what you are looking for in a property manager when it comes to the duties they perform. To find a property manager, start by asking around to see if you can find any that come highly recommended by trusted colleagues.
If you can’t find any that way, do a thorough online search. Most companies will have a website where you can contact them directly. You can also read through client reviews online to get a well rounded view of that property manager.
What are the Characteristics of a Great Property Manager?
It takes a certain type of person to make a great property manager. Not just anyone can take on the job and do it successfully.
A good property manager will be:
Property management requires a lot of attention to detail. Especially when managing numerous properties for different landlords. A property manager keeps detailed records of what is going on at every unit that they manage.
This includes maintenance, leases, rental rates, and important notes about the tenants and the landlord. For example, if a property owner lives overseas, they understand that the best way to communicate with them may be via email or scheduled phone calls.
A great property manager knows how to effectively communicate to landlords as well as tenants. The conversations they have with a landlord are very different from the ones that they have with a tenant. So, knowing how to effectively communicate with both is important.
Communication also includes their response time when it comes to problems with a rental property. A property manager makes sure to handle problems quickly and efficiently.
A great deal of issues can come up at a rental property so it is important that a property manager is proactive when it comes to foreseeing problems and handling them in advance. They take the steps necessary in order to prevent further issues down the road.
Great property managers also let landlords know what they can do to increase the rental value of their property and how to make it more desirable for their tenants.
What to Look for in a Property Manager
There are 7 main areas to assess when searching for a great property manager.
1) Property Manager Background
Find out how long they have been in property management. Have they been in the industry long enough to understand the rental trends?
Make sure they are licensed if it is a requirement in your state. And check out their reviews from other clients.
2) Fee Structure and Management Contract
Figure out what their fee structure is like and how much you will really be paying them. Have a full understanding of what it will cost to hire them before signing a management contract.
Do they have a flat fee or is it percentage based?
Do they mark up their maintenance?
Also find out the terms of the management contract. How long is it? Are there any fees for breaking the contract by taking your rental property somewhere else? Some property managers will even charge their monthly fee while the property is vacant.
3) Legal History and Prevention
A great property manager usually works very closely with a real estate attorney or has one in house. A real estate attorney will understand how to draft up solid leases that help to protect you as a landlord.
You may also want to find out their history with evictions? Do they have experience with them? What sort of preventative measures are they taking? Meaning, how are they working to prevent problems from going to court?
4) Property Manager and Home Owner Communication
Aforementioned, one characteristic of a great property manager is communication. Ask the property manager how they communicate with landlords.
How often will they update you as a property is being leased?
When will you find out about maintenance problems at your rental property?
What is the best way to communicate with them: email, text, calls?
5) Leases and Tenant Screening
The lifeblood of rental property investing is finding great tenants. How is the property manager working to find the best tenants for your rental?
What is their screening process like?
What qualifies a tenant to live in a rental property?
How long are the lease terms?
A property manager should be running a background and credit check on potential tenants. These tenant screenings cost money. Find out who pays that fee; is it the landlord, the prospective tenants, or the property manager?
6) Property Marketing
What is the property manager doing to advertise your property? They should be working diligently to market your rental property to successfully find great tenants.
Where do they market the rental property?
Do they put a sign in the yard?
How long is their average vacancy?
7) Property Maintenance and Tenant Relations
How a property manager handles maintenance at a house is crucial.
How quickly do they handle maintenance issues when they arise?
Do they have in house handymen, or do they hire contractors?
How do tenants report maintenance problems?
Also, when it comes to maintenance, at what point do they notify you of a problem? Is there a certain dollar amount that they are allowed to freely operate under, or do they need your permission to do any kind of maintenance?
It is extremely beneficial when tenants stay longer in properties. The biggest expense in rental property investing is typically vacancy. If a tenant decides to live in the property longer it benefits you and the property manager. So what is the property manager doing to keep the tenants in your rental longer?
Questions to Ask a Property Manager
Use the 7 categories above to help determine what kind of questions you would like to ask your property manager. You can also use other tools like this property manager question guide as you search for the right person to look over your rental.
A property manager can make or break your return on investment. That is why it is crucial to find a great property manager to handle your rental. Take your time interviewing and researching great property managers in your area.
Make sure you feel confident that the property manager will oversee your property well.
Helpful Information From Real Estate Professionals
Sooner or later, most real estate investors question whether to hire property management to make their rental income truly passive. I did, and I decided that for me professional management was almost as important as the investment property I purchased. But at what point should your hire a property manager.
By self-managing a property the owner can save money that they would otherwise pay in monthly management fees, save on tenant placement fees and be allowed to shop around for the best prices from contractors. On the other hand a property manager may be able to make you more money out of your investment by treating it exactly as it is which is a business.
The end of a lease is an important event for landlords and tenants alike. It can also be a time of conflicting expectations. Both tenant and landlord need to understand the difference between normal wear and tear versus damage.
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About The Author
Katie Jones is the Founder of Agape Investing where she writes on topics surrounding real estate, entrepreneurship, and finances all from a faith-based perspective. Katie worked as a leasing agent in property management firm for 4 years where she learned the fundamentals of rental property investing. In 2018, she started investing in real estate with her husband, and they currently own 4 units. Katie graduated from Colorado Christian University, where she built up a passion for implementing her faith into her work. She enjoys teaching others how they can do the same in their own career fields. You can find her on Facebook, Instagram and Pinterest.
This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.