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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.
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landlord, property management, income property, landlording, section 8, property advertising, managing rental property, rentals, tenants, real estate investing, real estate investor
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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 5% or so, to 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 the utmost importance. I need someone who uses email, and is responsive to both the telephone and email. If I don’t get a response back in a timely manner, it is time to walk. In addition, you need someone who can deal with you and your idiosynchricies. 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? 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/reciepts for expenses.
5 – Monthly Statements: Does the company send out monthly or quarterly statements. I wouldn’t deal with anyone that does not provide monthly income/expense statements.
6 – Evictions: How does the company handle evictions? What are the costs to evict?
7 – Yard Work: How much do they bill yard work 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. Most managers will require a certain amount.
9 – Accounting: When will the manager mail your check to you? Beginning of the month? State laws usually dictate accounting rules for managers, but you wo 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: I’ve actually interviewed companies that will charge you 1/2 a month’s rent to fill vacancies in your property. I quickly ended my interview with these people. There is no reason to pay this fee, since many managers don’t need to charge it. 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 have the basic HTML skills to add images to their for rent ads online? This makes a huge difference, trust me.
12 – Section 8: Do they have experience dealing with section 8 properties / tenants? 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. 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 Real Estate Investing Community – http://www.biggerpockets.com