Some of our first clients recently came back to us looking for help because they are having tenant issues. The problem is these clients are currently paying property managers for a service. Their property managers should be able to resolve any issues for the property owner but are not doing enough. This may be based on the contract or simply poor communication prior to using their service.
Unless you have experience managing rental properties, or at a minimum have the motivation to do so, hiring a property manager before you acquire a property is crucial.
It’s very important to know that nobody else will have as much concern about your properties monthly cash-flow or maintenance than you because it is your investment. This means, if you have to hire a property manager, invest as much time screening them as you would do with a prospective tenant.
– If you are a member of the Apartment Owners Association or other local investor groups, get recommendations from other investors who may be members of a Property Owners Association.
– How many properties are they managing? Once this is disclosed, how many employees are managing these units?
An experienced team member for the manager with the proper tools and successfully tested processes may oversee 30 to 40 units. This does not include accounting tasks.
– Do they own any rental properties themselves? If yes, is it directly competing with your properties? If that answer is also a yes, that is a problem as your property is likely to not be rented before theirs.
– Do they have experience with only a certain class of properties such as Class A, B, C or D properties. It may be best to utilize a manager who regularly rents your class of property. You may not want a manager who markets multifamily properties in class “C” areas of Long Beach when your apartment building is in a nicer area of West Los Angeles.
– Ask if the walk-through inspections of the unit are part of the service, or is it a separate fee. This can really add-up if you own several 16 or more unit buildings.
– The majority of property managers charge you a fee ranging from 7 to 10-percent of the rents to manage your properties. Make sure the contract you sign clarifies the fee condition. Is their fee is based on rents collected or will it include the rent they did not collect?
– Most managers will have you deposit a specific amount for maintenance calls for your units. It is good practice to never let the property manager pay more than $250 for maintenance prior to contacting you.
– Do you have easy access to contact their team?
Having the ability to connect with a team member of the manager who can resolve issues rapidly and make decisions is a must. Look for a manager who utilizes property management software, that provides quick and efficient direct communication with their team, as opposed to decades old types of communication.