Utilizing a professional property manager to handle day-to-day administration, maintenance, marketing and operations is often necessary to build a successful business. However, not all property management companies are created equal. It is critical to evaluate options thoroughly before entering into any long-term contracts to ensure goals and responsibilities will be properly addressed at a reasonable cost.
There are several key questions you should ask potential property managers to determine if they are the right choice for your business and investment portfolio. How will they minimize vacancies and maximize rents? What is their process for evaluating rental applications, showings properties and approving new tenants?
Do they conduct rental or credit checks? Reference checks? Background checks? Drug testing? How quickly are they able to show available properties and get approved tenants moved into vacant units? Responsiveness and effectiveness in keeping units rented should be top priorities.
How will they handle maintenance and repairs? What mechanisms do they have in place to prevent small issues from becoming big problems? Do they get multiple bids for work over a certain dollar amount? How promptly do they address maintenance requests or issues reported by tenants? Preventing damage through proactive management and quick resolution of issues is important.
How will they handle evictions or tenant issues? Do they have experience navigating the eviction process for both lawful and unlawful detainers? What is their strategy for dealing with irrational, irresponsible tenants causing issues? Experience mitigating disputes and removing bad tenants properly is valuable.
What is included within their standard management fee? Itemize fees for everything outside of the base management fee like showings, application fees, repair/maintenance administration fees, lease negotiation/ drafting fees, etc. Lower upfront and additional fees are more attractive.
How will they keep budgets on track and me minimize costs? Look for managers with experience controlling operating expenses, maintaining reasonable costs as a percentage of revenue and securing volume discounts through size and purchasing power. Budget conscious managers realize savings benefiting both ownership and tenants over time.
What level of reporting will they provide? Regular reports including current financials, key metrics, operational/management updates, issues to be aware of, etc. should be standard. Transparency builds trust and ensures objectives are being met properly with no surprises.
What prior experience do members of their management team hold? Experience in property management, construction management, marketing, leasing, accounting and operations provide valuable perspective to manage risk and run a profitable business. Well-rounded experience supports success.
Are references available from other real estate investors and property owners? References provide real evidence of performance, ethics, professionalism and suitability for your specific business needs and portfolio. Look for managers with an extensive network of loyal references willing to vouch for their services.
Choosing the right professional property manager is essential to ensuring success, controlling liability and generating strong returns through your real estate business and investment properties. By evaluating options based on their methodology, experience, services provided, management approach, fees, financial management, reporting and available references, you find a partner focused on achieving goals and responsibilities aligning perfectly with your own objectives. High quality managers recognize that any stakeholder’s success also leads to their success in the long run. Careful evaluation of potential partners based on concrete facts surrounding their business model, process and proven results leads to long-term prosperity and productivity. While finding good help may seem like an additional expense, the benefits to time saved, risks mitigated, quality improved and returns expanded ultimately make it well worth any costs. Professional management provides stability allowing ownership to focus on growth. With practice, evaluating options becomes second nature, enabling faster selection of suitable partners and better performance throughout the business. Strong partnerships built on mutual benefit support success for years to come.