Property Management can make or break you when investing in rental properties. They are a vital piece to making sure your rental property performs and their results have direct impact to your profits. Many landlords fail to ignore how important the relationship is with their property manager (PM). Be sure to properly screen and interview all PMs before selecting who you will work with.
Here are the top 10 qualities I look for in a property management company to handle my properties: (In no specific order)
- Communication may actually very well be the most important out of these. The way your PM handles the communication with you is what you can expect how they will handle the communication with your tenants. When you call them, someone needs to answer. You don’t want to have to leave voice mails. If I send an email to contact my PM I expect a response no more then a few hours after initial contact. Even if they don’t have an answer or solution for whatever you need, it will make you feel warm and fuzzy inside when you know your PM is aware of the situation and handling it.
- The amount of years your PM has in the real estate industry specifically renting/leasing also plays a very important part. You want your PM to understand every nook and cranny about the geographical area you are investing in. This knowledge comes in handy for determining rents, rent increases, tenant base and efficiency in handling any situation that may arise. In other words, you want Yoda as your Property Manager, not a young Padawan.
3) Adequate staffing
- The amount of employees the PM has based on the amount of doors they manage should be a decent ratio. You don’t want one PM handling 100 doors. That is too many and the quality and effectiveness will show. This will only lead to disaster. Its like when you walk in a home depot and there are only 5 employees each of them with a line forming so people can ask them questions about where to find something. You don’t want that. You want the Apple store where there are plenty of employees and all offering awesome advice even for stuff that has nothing to do with Apple products.
4) Previous experience with evicting a tenant
- This one is important, if $#!+ hits the fan, then you want a PM that knows exactly what to do and in the fastest way possible. Ask them how many tenants they have had to evict? This number should not be high though, if its high then they are probably not screening tenants properly. All relevant to the amount of doors they manage of course. Ask them how long the eviction process takes and how much it will cost. That way you wont be surprised if it ever comes down to it. In other words, you want Judge Judy on your side for this one. Quick, to the point, and ruthless.
5) Good documents
- Any by documents I mean contracts people. Ask to review a copy of the actual lease agreement they use. Make sure this is detailed and covers your needs. Not just the lease agreement but also review the contract between you and the property manager. Read this over and make sure there are no surprises. If you ever need to fire your PM because they suck horribly then you dont want to have to find out you are locked in for X amount of time because of what you signed. You need to CYA on this.
6) Awesome Software
- These days, there is no reason why any company should not be using great software. There are plenty of good property management software applications out there. A good software program will allow the tenant to login, make online payments, submit repairs and/or maintenance and view history. On the flip side, the landlord/owner should be able to login to the software to view reports, history, approve repairs/maintenance and also submit inquiries. Doesn’t all that sound awesome? I love being able to log in to a PM portal and look at some cool reports that tell me how much money I’m making. In other words, its like picking the best search engine, you want to be using Google as your search engine, not AOL. AOL I don’t even think exists anymore cause they SUCK!
7) Good Fees
- Make sure they not charging an arm or a leg for their services. 10% of rent per month is about normal. Signing new tenants is usually 75% – 100% of the rent amount. Late fees should be your money, not theirs. Doing a simple re-lease should cost anywhere from a little iddy biddy bit to nothing. It doesn’t take hardly any work for a PM to do a re-lease so you should not get gouged in the eye with a fee for this. You want your everyday big chain grocery store prices here folks, not Whole Foods prices.
8) Ability to provide references
- If you are going into business with anyone it is acceptable to ask for business references. If the PM is any good, they should have no problem providing one to two references of other actual investors that are currently using them. If they don’t have any, then chances are high it’s because they SUCK! Pass!
9) Electronic payments
- Unless you were born before 1970 ;), I don’t see why anyone in the world should be using checks to collect rent or to send you your rent income. Make sure your PM does this and prefers this payment method. There are many out there that do not do this still. Life is so much easier when its electronic.
10) Awesome Tenant Screening
- Last but certainly not least is the PMs ability to do proper screening on potential tenants. Make sure to ask for what specific criteria they use. In an ideal world the PM should be doing income verification, credit check, eviction check, background check and payment history check from the previous landlord/PM. And obviously all those should be good. The goal of course is to find the perfect tenant. Which is probably impossible to find but being able to read all the outcomes of all the checks performed and properly select the best available tenant is HUGE!
Can you think of any more traits you look for in a property management company?
Read this article if you want to track your monthly rental and income your self.