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SHOW NOTES FOR EPISODE 074 – HIRING THE RIGHT PROPERTY MANAGER FOR YOUR RENTAL PROPERTY
Landlording is much easier when you have a good property manager, and we’ve provided you with all the things you’ll need to ask managers to make sure they are right for you. In this episode, Bill outlines 12 key areas to use in evaluating a potential property manager for your rental property.
I’m often asked what to look for when picking a property manager. Its a great question, and I’ll try to cover a few important points. Although they can sometimes be expensive, they can also save you from many headaches that go along with being a landlord. I’m going to ask more questions then I’ll answer, but these are questions you’ll want to keep in mind when interviewing managers.
1. Cost
Managers generally charge a monthly fee to watch and maintain your property. Those fees can range from as low as 3%, for a large apartment to 10% for a single family home. Sometimes it can even be upwards of 20%. Obviously, you should look for a company that charges less and provides more services.
2. Communication
For me, communication with a manager is of utmost importance. I need someone who regularly communicates with me via email, and for urgent matters by text and phone. I also want someone who is responsive to both my phone calls and my email. If I don’t get a response back in a timely manner, it’s time to walk. In addition, you need someone who can deal with you and your idiosyncrasies. Some of us are needier then others. You want to let companies know up front where you stand, and make sure they’re willing to be flexible for you.
3. Termination of your Agreement
In the event that your “relationship” does not work out, you want to know up front what exactly it will take to terminate your agreement. Is there a charge for breaking your contract? Penalties?
4. Repairs and Maintenance
Does the company have their own maintenance crew, or do they contract out to a handyman? How much do they bill out at? What do they add on to service calls? Can they handle all kinds of repairs? What happens if they can’t do something? Do they have other contractors that they work with?
In addition, you probably want to have a maximum that the company can spend without contacting you. Generally, I will allow my managers to do what they need to as long as it is for something under $100. I must confirm any expenses over that.
If you are a bit more of a control person, you can also request invoices/receipts for expenses.
5. Monthly Statements
Does the company send out monthly or quarterly statements. I won’t deal with anyone that does not provide monthly income/expense statements. Most PMs have online access via owner portals that allow you to generate your own reports and review expenses and income in detail online.
6. Evictions
How does the company handle evictions? What are the costs to evict?
7. Yard Work
Who does the yardwork? How much do they bill out at? Landscaping? Do they handle snow removal? Mow lawns? How much does each cost?
8. Reserves
What kind of reserve does the company require? The reserves are used in case anything comes up. Some managers will require a certain amount.
9. Accounting
Can they electronically transfer your owner pay-out or monthly profit to you? Do they mail your check to you? When are the funds sent – Beginning of the month, mid or end of the month? State laws usually dictate accounting rules for managers, but you will want to know all of this up front. Tenant Deposits: How do they handle deposits? Are they comingled, or simply put together with all other income for your account?
10. Vacancies
Do they charge to fill vacancies? Some may charge you 1/2 to a full month’s rent to fill vacancies in your property. Many don’t charge. You will need to fill your vacancies, so you will need some advertising done . . .
11. Advertising
Where do they advertise properties? Are for rent signs put on the property’s lawn? Do they advertise in the paper? Online? There are quite a few effective places to advertise properties for free, online. Do they use these? In addition, you want your property advertised effectively. Do they charge for this service. How do they respond to inquiries? You can test this by responding to one of the ads or calling the phone number posted on the property.
12. Section 8
Do they have experience dealing with section 8 properties / tenants – if this is something you would want for the property? Do they know what is entailed with such properties?
I also like to know how many properties they manage, how many managers work at the company, what specific areas they focus on, how long they have been in the business, and other questions about their experience. Do they have a BBB rating? If so, what is it? I would also look at Yelp and Google Reviews to see if they have reviews online. This should be a good start to get you going.
If there is anything else you want to know about finding a property manager, visit the Rental Property Questions & Landlording Issues Discussion Thread at BiggerPockets.com.
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