For many of us seeking financial freedom, our ultimate goal is the freedom to spend our time how we want. If you’re earning money through rental properties, one of the best ways to protect your time is to hire a property manager.
A good property manager can handle all the intricacies involved in rental property ownership without a lot of input or micromanaging from you, leaving you more time to spend how you want. How do you find the right property management company?
What Do You Need from a Property Management Company?
The first question you should be asking when you’re looking for a property management company is, “What do I need from a property manager?” Like any other type of company, each property management company may have a unique list of service offerings, and it’s important to know which services you need so you can effectively match with the right company.
Here is a list of services commonly offered by property management companies:
- Leasing and associated tasks (preparing and signing leases on behalf of a property owner, showing properties, vetting prospective tenants, etc.)
- Preparing properties and marketing to fill vacant properties
- Collecting rent and other fees from tenants
- Property inspections or walk-throughs
- Repairs and maintenance
- Serving as a point of contact for tenants
- Tracking expenses and income
- Handling eviction process if it becomes necessary
Not all companies handle all these tasks, and some companies charge extra for services like handling repairs and maintenance. Decide which of these tasks you absolutely need your management company to handle and begin looking for candidates based on your requirements.
Ask for Referrals
Not sure where to start looking for a property management company? Referrals are a great way to get pointed in the right direction. You can ask other investors who own property in your area, your real estate broker, a local landlord’s or apartment association, or another real estate professional you trust for referrals.
You can also find certified property managers in your area by using the search form on the National Association of Residential Property Managers (NARPM) website.
You wouldn’t hire someone in your practice without checking to see that the information on their resume was true, and a property manager should be no different. It’s important to check that their licenses are up to date and they possess the qualifications they say they do and are certified to be a property manager in your state. Otherwise, you leave yourself open to legal fallout if something goes wrong.
Check with the Better Business Bureau (BBB) for any complaints against potential management companies and likewise check with your state’s real estate commission.
The credentials required to manage properties vary from state to state, so it’s important that you learn which credentials are necessary where your properties are located. You can find each state’s requirements for property management here.
If you’re not comfortable making these inquiries yourself, you can obtain the services of a background screening company that specializes in background checks for property managers. They’ll know which credentials are necessary where you live and how to ensure your potential manager has them.
Talk Through Expectations
Before you hire a property management company, you need to know what you can expect from them and what they need from you to perform their duties well. An interview is a great way to sit down and talk through your expectations and theirs, plus it allows you to get a feel for your potential manager.
It’s a good idea for you to ask a potential manager about not only which services they offer, but how they carry out those services. What advertising methods do they use? Do they have maintenance contacts in your area that might result in getting problems handled promptly? This is also a great time to talk through their fee structure and potentially negotiate a contract that serves both you and the property management company well.
When you’re interviewing potential candidates, try to put yourself in a prospective tenants’ place. Do you think the candidate would inspire confidence in your tenants? Do they seem even-keeled (i.e., they won’t rub tenants the wrong way unnecessarily)? Do they seem professional and competent, like someone you could turn to if there was a problem?
Being straightforward with a property management company about what you need and what you expect from them can save you a lot of trouble in the long run.
Ask for References
It’s so important to ask for references from previous clients when you’re hiring a property manager, but you can take it a step further. Ask if you can walk through one or a few properties that they currently manage so you can get an idea of their dedication and attention to detail. If you’re not particularly handy or don’t know much about building or home maintenance, take along a maintenance-inclined friend or your real estate broker so they can help you gauge how well the manager is doing by the condition of the property.
Finding the perfect property management company can seem like a big, scary ordeal. It’s always a little terrifying to hand off responsibility for a big investment to someone else.
Some are also turned off by the thought of paying 5-10% of monthly rents to a property management.
However, since the whole point of paying a property manager is to take back your free time, I believe it’s an essential cost of doing business. Your time would be better spent taking a shift, or honestly spending time with family & loved ones.
So, figuring out how to hire well in this area is critical to keeping you on the path to financial freedom especially if your goal is to do it through direct ownership of rental properties.