It’s tough finding a good property manager. They all sound great on the phone. You will hear a lot of promises, guarantees, and benefits. But how do you know if they will deliver?
Here is our strategy for finding a great property manager:
- First, find candidates to interview. Start with NARPM, the National Association of Residential Property Managers, search Yelp, join Facebook Word of Mouth groups.
- Second, conduct an interview. Ask each potential company the same questions.
- Call at least three references.
- Pretend to be a tenant and call them. Check how fast they respond and what is the process that you will go through to see an available rental.
Create a List with Potential Candidates to Interview
Start your search at NARPM, the National Association of Residential Property Managers.
- The main reason to start there is that the members are committed to educating themselves and subscribe to specific standards of conduct. Can you find a good manager if they are not part of NARPM? Yes, you can, but this association is a good starting point.
- Why is education important? Any licensed broker can be a property manager; however, the classes and exams to become a real estate broker, offer minimal training on how to manage a property for someone else.
- NARPM continually educates its members on how to manage their clients’ properties, on crucial pending legislation, etc.
Another place to look for is Yelp.
Read the three-star and one-star comments, also look at the comments that are hidden from view and focus on feedback from landlords, not tenants.
Many property managers have learned how to game and increase their online reputation, but they can’t hide negative reviews. Mind you; some threaten tenants and landlords with lawsuits and have language in their agreements that forbid clients to review their business online.
Word of Mouth Facebook Groups
People are starting to distrust online reviews, and they have a good reason for it. Many Words of Mouth groups were created on Facebook to help find excellent pros. Joining one of those groups is a great idea not only to find a property manager but also to discover other professionals like handymen, AC companies, etc.
Look into our directory as well; we only list companies we have personally used or were recommended by another landlord. While the list is still very small, we hope to develop this into a useful resource for investors.
Interview Property Management Companies
After compiling a list of potential candidates, call them, and ask each company the same questions, write down the answers.
Here are some potential questions that you may ask:
What is your property management company structure: portfolio or task?
With a portfolio style management, one manager is responsible for a certain number of properties, and they oversee the entire process, from leasing, management, maintenance, etc. This means that ideally, as a landlord, you will speak to one property manager, instead of being transferred to different departments as it may happen with task style management.
The portfolio style has a negative side as well as positive. Your property manager may quit, and this happens often.
How many properties do you currently manage?
If this is a task- style property management company, you may want to find out how big the company is? Bigger is not better.
How many properties do you assign to one portfolio manager?
Each manager should not handle more than 50-60 rentals. If they do, communication will suffer.
Who does the accounting?
Is the owner’s wife handling the books, or do they have a professional accountant or bookkeeper doing that? Super important!
Ask them to describe the process for rerenting a property.
The answer to this question will tell you if they have systems in place to handle rerenting.
Vacancies are the most significant expenses for landlords. The property management company should have a system in place to minimize this loss.
I know companies that will not show the property until it’s cleaned and ready. Most of the time, this is done because it’s just not convenient for them to arrange viewings with the current tenants. While in some instances that’s justified (tenants are not very clean), this should not be a rule.
Ask them how they proceed if tenants is late with rent payment.
Does the company have a system for dealing with late payments? Does it apply this rule consistently to all late-paying tenants?
Do you charge the vendors you use any fees in any shape or form? Do you mark up repairs?
Property management companies can be sneaky in how they call this markup. Some are upfront, and this is mentioned in the property management agreement. But some show you an invoice and then charge the vendors separately. Of course, vendors will mark up their initial invoices — either way, you need to know if this is happening.
What fees do you charge the tenants?
Move-in fees, application fees, late fees? Who receives these fees? Some property managers discovered a different way to make money – if they can’t charge landlords, they will charge tenants. What you need to know is what these extra charges are and who keeps the fees, you, or the company.
What is your management fee and leasing fee?
This question is necessary but is not the most important one. An incompetent property manager can costs you a lot of money, even if the management fee is low.
Are there any other fees like lease renewal fees, etc.?
How do you pay landlords, and when should I expect payment if the tenant pays on time?
What is your repair limit?
Usually, property managers will have a repair limit in the property management agreement. If the repair is below this amount, they will not call the landlord for permission. The standard amount is $200-$300. Emergency repairs usually do not require permission. You will need to know what they consider emergency repair.
Would you provide me with three landlords I can call for references?
The property manager should be willing to give the names of at least three landlords you can call or email.
After you narrow down your list, call the references they gave you. Talking to these landlords is just one piece of the puzzle. Keep in mind that these are their best clients.
Pretend to be a Tenant
Finally, for the last test, call on some of the properties that the property management company has currently listed.
Pretend to be a tenant. What you need to know is how fast the company responds to rental inquiries.
Sometimes the properties may be already rented, so you need to call on more than one rental. Good property companies have this process automated to a certain degree; tenants should be able to see the property 24/7. Many tenants may be in town for one day only. If your property manager is busy or not responding, your property will stay on the market longer.