When it comes to finding a great property management company, there are significant differences between best-of-breed and those that are barely keeping their doors open. As an investor, you need to ensure that the firm you hire will take care of your property, maintain its value, deliver a solid financial return, and minimize your risk.
- Interview, Interview, Interview – Selecting a property management company is just as, if not more important than screening and renting to the right tenant, finding the right investment, or choosing how much to charge for rent. A great property management company will enhance your returns, free up your time, allow you to choose how involved you wish to be in the management of your investment, find and place qualified tenants, manage maintenance and intelligently prioritize capex – all with the end goal of increasing the value of your investment over time while safeguarding the cashflow you need to cover your expenses and generate a return on your investment.
- Do the principals of the firm own any rental properties themselves? If so, how many?
- Do they have comprehensive house rules/policies?
- Do they have other properties in the same genera location?
- Does your property fit their portfolio/focus?
- How many units do they manage and how long have they been in business?
- What is their philosophy on investing?
- What is their current vacancy rate?
- What are your first impressions? Are they well-spoken? Do they seem competent? What professional achievement have they obtained?
- Imagine you are a renter looking to find an apartment. Would you want to rent from this person? Are they friendly? Are they responsive? Do they treat you with respect?
- What resources/tools do they have for owners? Is there an online platform?
- What resources/tools do they have for tenants? Can tenants pay online?
- How do they handle advertising and vacancies?
- What is their tenant screening process?
- Reply to one of their ads for a vacant unit and see how quickly they respond to your request. Shorter is better. You want a company that aggressively fills units to qualified prospects.
- Do they allow unsupervised showings from a lock box? In most cases this should be a red flag. Prospective tenants often have lots of questions and having an in-person showing allows the manger to more successfully sell/show the unit.
- Ask them to describe their move-in and move-out inspections.
- Do they perform preventative inspections? At what cadence (semi-annually, quarterly etc.)? Is there an extra cost for this?
- What kind of tenant retention programs do they have in place?
- What is their fee structure? How much do they charge for placing a new tenant?
- Do they markup repairs?
- What do they define as the “tenant’s responsibilities” in their standard lease agreement or does it depend on the property? How do they break it down?
- What limits do they set for property owners to approve expenditures? Some firms want autonomy to make simple repairs less than $250 without owner approval – but this should be customized for any owner. It’s about how involved you as the owner want to be.
- Are they fully insured?
- How do they collect and triage maintenance issues?
- Are their contractors licensed and insured?
- What does their monthly report look like? Ask what reports are available?
- Talk with at least 3 different companies before deciding.
- Get referrals and review online sites
- Ask other owners in the area who they use and whether they are happy with the firm.
- Look at the Better Business Bureau, Yelp, and Google Reviews
- Review their work product
- Find out how they advertise vacancies and view their ads
- Do the pictures accurately capture the unit they are advertising? Did they open the blinds in the windows or leave them closed (e.g. more natural light is better). Has the unit been cleaned or is there trash on the floor? Is the description warm and inviting? Is it professionally written and free of discriminatory statements?
- Make unscheduled visits to the properties they manage. Do they look clean and well-cared for?
- Find out how they advertise vacancies and view their ads
