How to Find a Good Property Management Company: 14 Best Tips and Strategies
Want to know how to hire a property manager that will actually take care of everything for you? It’s crucial to conduct careful research and be sure not to hasten the process too much — take your time when picking the right property manager! The one you choose will affect you for years to come.
American businessman Robert Kiyosaki once said: “A great property manager is a key to success in real estate”. An excellent property manager will maintain a steady cash flow, increasing the value of your real estate. They are also responsible for screening tenants, scheduling a number of services like pest control and maintenance, collecting rent, handling difficult tenants and evictions, and conducting regular inspections. All of this must be done with professionalism, care, and efficiency. Meanwhile, a poor one will achieve just the opposite, making your life more difficult and decreasing your property’s value.
Read on for a brief guide on how to find a rental property manager for your residential, multi-home, industrial, or commercial property. This article should help you avoid common hiring pitfalls and get the best property management companies for your real estate.
SHOULD I HIRE A PROPERTY MANAGEMENT COMPANY? SIX FACTORS TO CONSIDER
When determining whether or not you should hire a property manager, you should weigh some of the following considerations:
- Geography: If you have a property that’s more than fifty miles away, it may be difficult to get to it often. If you have more than one property, and they’re not close to one another, it may be impossible to visit all of them on a regular basis.
- Number: The more units you own, the thinner your resources will be spread.
- Profit Margin: We’ve encountered many landlords that feel they cannot afford a property manager because their margins are so thin. If this is the case, have an experienced property manager do a free evaluation of your property. Many times, we can do minor upgrades or simply market the units more effectively to push rental rates. Thereby, the property is worth more, and property management services actually pay for themselves.
- Personal Time: If you work a full-time job, raise a family, or have other obligations, you may not have the time to properly manage a property.
- Vacancies: This may seem counterintuitive, but if you have a high vacancy rate, you may want to consider hiring a property manager to assist you in filling them.
- Tenant Relations: Some landlords enjoy interacting with their tenants. Others have a difficult time with face-to-face interactions.
BENEFITS OF PARTNERING WITH A PROPERTY MANAGEMENT COMPANY
- Provide an enhanced experience to your tenants with professional customer service experts. Property Management professionals use the latest technology and platforms to be responsive, always available, and keep excellent communication records.
- Peace of mind to address tenant demands in a timely and efficient manner. Property managers act as buffers between tenants and property owners at all hours. For example, you don’t want to receive emergency calls from your tenants in the middle of the night. Property management services provide 24/7 availability with an after-hours emergency system and a dedicated maintenance staff.
- Robust reporting and financial analytics provide a current and historical snapshot of the financial health of your investment.
- Receive ongoing preventative maintenance plans and bids for capital improvement projects. This is to make sure you are aware of current property conditions and projects that need attention. Most importantly, being proactive will help ensure your building’s health now and in the future.
- Professional advice and insights. Property Management companies offer access to licensed professionals who stay up-to-date on market research. This ensures you comply with housing regulations and local property laws.
- The ability to invest in long-distance properties (investing outside of Chicago). The real estate industry offers many opportunities for out-of-state investments. Finding the right investment opportunity can be a difficult task if you don’t have in-depth knowledge of the local area.
HOW TO FIND A GOOD PROPERTY MANAGEMENT COMPANY: 14 BEST TIPS AND STRATEGIES
1. ASK FOR REFERRALS
There's some truth in the cliché, “It's not what you know. It's who you know.” Asking for referrals from family, friends, and co-workers is a great way to begin finding a property manager. You can extend your search and reach out to property owners, realtors, and anyone else relevant in your network.
Everyone's dynamics are unique, so accept recommendations with caution. One person may have a pleasant experience and the other a terrible one. Be specific and ask about the strengths and weaknesses of potential candidates. And don't forget to understand the context of the person to whom you're asking.
2. DO ONLINE RESEARCH
You can vet property managers you're already considering and find new ones online. To simplify your search, try SimplifyEm or AllProperty Management — they provide lists of companies within your area. When you've narrowed down your search, review each property management company's website. You can deduce a lot from the way they present themselves online.
A company without a social media profile may not be the best at advertising, for example, whereas another with no clear mission statement may leave you with concerns about how they operate their business. Again, looking at reviews on Facebook or Google is helpful. The Better Business Bureau will also alert you to previous complaints filed against companies.
3. VISIT THE PROPERTIES
If you are still wondering how to find the property manager of a building? There's no better way to test if your online searches match reality than by visiting the real estate your potential hire manages. If the property looks shabby, it's a red flag. It's part of a property manager's job to keep the building and grounds in pristine condition, and if you observe the opposite, then they may not be doing the best job.
You can also speak to tenants to find out if they've had any negative experiences. Ask if their complaints are addressed, whether they're informed about big maintenance or property changes ahead of time, and how long it takes to resolve the repairs. This will give you a good feel for the quality of the manager they have.
4. INTERVIEW SOME MANAGERS
When you interview your selected managers, you'll want to have a strong game plan, especially if you haven't hired a property manager before. You should ask about their experience, education, fee structure, and services. Clarify their knowledge of local law, how they break down their fees, maintain the property and collect rent.
Cover all bases and be as detailed as possible when asking about the number of properties in their portfolio. A single manager with too many properties won't be able to provide the time needed unless they own a company with multiple employees. On the flip side, a large company with many clients may not offer the personalized experience you're after.
5. CHECK THEIR LICENSES AND CERTIFICATIONS
Most, but not all, states require property managers and companies to obtain real estate broker's licenses or property management licenses. You can verify if their license is active with your local Real Estate Commission.
You can also check their certifications with trade organizations like The Institute of Real Estate Management, The National Apartment Association, The National Association of Residential Property Managers, and The Community Associations Institute. Reputable managers will have the correct qualifications, but certification doesn't inevitably equal excellent service.
6. ASK ABOUT THEIR EXPERIENCE
Finding a good property manager entails asking the right questions. If you're looking to hire a company that specializes in corporate real estate, you have to assess the viability of hiring a business that's only experienced in residential property. This is why finding out about their experience on a granular level is important.
Chat with them about their challenges, areas where they haven't been successful, what they're comfortable with and where they think they could improve. You can also inquire how they would respond to case studies. As much as it's about learning their capabilities, these questions should also reveal more about their temperament.
7. FIND OUT THEIR VACANCY RATES
Vacancy rates represent the number of days a property doesn't produce an income. While it's standard for rentals to have around 5% vacancy rates, anything 2% above that is cause for concern under normal circumstances.
A high vacancy rate could be indicative of rental process inefficiencies, setting rental prices above market value, or property mismanagement. An honorable property management company will be happy to share its vacancy rate with you. Ask them what the market average vacancy rate is compared to the average for all the properties they manage.
8. IS THEIR REPUTATION GOOD?
A key tip on how to hire a property manager is to research their reputation. Read reviews and ask your network or industry contractors to get a feel for how they're perceived. Property managing is a business, and it's important to hire an individual or company that's business savvy; however, you want to avoid working with someone who is shady or cuts corners in a manner that reflects poorly on your real estate.
9. GOOD PROPERTY MANAGEMENT AND THEIR CLIENT BASE
Review your prospective manager's clients and vendors. Are the properties they manage on par or better than your real estate? Are the vendors they work with reliable and trustworthy? How many clients do they service? A property manager with a small client base and no references may not be the best choice. Managers or management companies with large, satisfied client bases mean they're well-connected to local vendors and offer the necessary experience.
10. QUALITY OF CUSTOMER SERVICE
Another tip on how to find a good property manager is to evaluate their customer service. Find out from their current client and tenants if they solve problems quickly and communicate effectively. A good property manager will listen to their tenants with purpose and empathy and be unafraid to escalate issues to the owner if necessary. And besides listening, you'll want to know if they follow up and put in extra effort to ensure tenant satisfaction.
11. CONTRACTS SHOULD BE TRANSPARENT
The contract you enter into with your chosen management company or manager should clearly outline your business relationship. Typical contracts include the types of services provided with a list of fees, including a detailed outline of their and your responsibilities. Be sure to have a specific start and end date (usually one year) and cover any breach of contract rules. If you're unfamiliar with these types of contracts, you may want to get a lawyer to read them through to clarify the fine print.
12. IS THERE INSURANCE?
Property management companies should have general liability insurance, property-casualty, and error and omissions insurance at a bare minimum. This insurance covers their business, clients, and their tenants, as well as the properties they manage.
Most property owners add their property manager as additional insured, so if something does happen to the property, they have a unified defense and coverage extending to both parties.
A solid insurance policy protects you from liability claims, legal proceedings specific to your industry, and losses caused by accidents, vandalism, or burglary.
13. MAKE A POOL OF FOUNDED COMPANIES AND COMPARE THEM
Before comparing, make sure you gather comprehensive information on the companies to paint a full and fair picture. Look at the fee structure, experience, property portfolios, company values, and overall impressions. If they measure up evenly, you'll need to decide what is important to you as a real estate owner.
One company may have less experience but higher tenant retention. They may be looking to grow, and if you're a bigger client, they would do the job well because they're eager to impress, for example. Simultaneously, don't push aside red flags and go with your gut.
14. LEARN ABOUT MANAGEMENT AGREEMENT TERMS
Management agreements come in all shapes and sizes, but they always cover services rendered, budgets and approval rights, performance benchmarks, management fees, and termination rights and responsibilities. Linking back to the earlier point about transparency, you will want to understand the scope of your management agreement terms. These contracts can be negotiated to ensure real estate owners obtain the best deal to protect and grow their investment.
There's no shortcut on how to find a good property manager or how to hire a property management company. It takes time and research. Alternatively, you can just hire us to take care of your real estate. We have extensive experience and an excellent vacancy rate, with a portfolio comprising 75% residential and 25% commercial properties throughout the Midwest. Contact us to find out more about the services 33 Realty Management provides .