Hiring the right property manager is important for protecting your investment and achieving reduced vacancy time and maximized income. A good property manager will bring high quality tenants to your single-family rental investment properties. They will have a strong screening process and stay on top of maintenance issues. He or she will generally make your life easier by using technology to run an efficient operation and reach a large audience of potential tenants.
How does a real estate investor go about finding a good property manager?
To answer this question, we talked with Leslie Evanoff, Client Relations Manager at Homestar LLC, a nationwide property management and field services firm that contracts with local managers to manage properties on behalf of investors.
Here are Evanoff’s tips:
- Your property manager should be within close proximity to your properties. “They’ll need to be able to conduct inspections and address maintenance issues or emergency situations,” Evanoff said. “We suggest that that the property manager be located within 10 miles of the property.” For investors with multiple properties in an area, Homestar recommends using a management company that has multiple offices in the region.
- Your property manager should inspect the property monthly. If the property is occupied, this would involve an exterior inspection to ensure that the property is well maintained and does not have any visible exterior issues. Is the grass mowed? Does the house look to be in good condition from the outside? The manager will look for property code violations that could affect the investor/owner. A vacant property would include an interior inspection and possibly preservation services to ensure that the property is well maintained and secure.
- Use a certified property manager. This ensures that the manager knows the applicable laws and regulations regarding your properties and is well-trained in the finer points of property management. The Institute of Real Estate Management provides the Certified Property Management (CPM) designation.
- Pick a manager who uses technology designed for the profession. Evanoff recommends four property management software applications as the best in the industry: Appfolio, Yardi, PropertyWare, or Rentmanager. The management firm should also have a strong web presence with good search engine optimization, so when tenants are searching for properties online the postings by your property manager will show up first.
- Ask how many properties they are already managing and make sure you are comfortable they won’t be overloaded. “You want to be sure they can handle the workload,” Evanoff said.
- Inquire about fees and make sure you set clear expectations for how fees are set and managed. Be sure to set aside 1-2 months’ rent each year to allow for ongoing routine maintenance and make-ready costs when a tenant moves out.
- Find out how they screen tenant applicants. If you want a particular protocol followed, make sure the property manager you are hiring is willing and able to adjust the screening process for you. “A lot of property managers are flexible and will customize the screening process for the investor,” Evanoff said. You may want to inquire about the turnover in the properties they manage and how often they have evictions. Rigorous screening helps to ensure that you are recruiting more qualified, reliable tenants.
- Do your due diligence before hiring a property manager and interview more than one company.
“You want a full-service property manager who is experienced in handling it all: from advertising and marketing to tenant relations, collecting rent, leasing and maintenance,” Evanoff said. “You want them to be able to handle the full scope of work that needs to be done.”