Choosing Between a Property Manager & Property Management Company<\/h3>\n
As you master how to hire a property manager, you should also determine whether you\u2019re interested in hiring an individual property manager or a property management company. The decision often depends on the size and complexity of your real estate portfolio, specific needs, and financial resources.<\/p>\n
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- Those with a single property and wanting a more personal touch may find an individual property manager more suitable.<\/strong> Property managers can build a closer, one-on-one relationship with property owners and tenants, fostering better communication and trust. Additionally, property managers often charge lower fees, making them a cost-effective choice for owners with a single property. Their direct involvement and familiarity with the property can lead to quicker issue resolution.<\/li>\n
- Property owners with multiple properties or those needing comprehensive services typically opt for property management companies. <\/strong>Property management companies excel in managing more extensive portfolios, providing a more comprehensive array of services and maintaining established relationships with contractors and suppliers. These offer convenience and scalability for property owners with multiple units.<\/li>\n<\/ul>\n
Step 2: Evaluate Your Budget<\/h2>\n
You want to ensure you\u2019re charging enough rent to cover all the property\u2019s expenses, including property management fees. Evaluate your budget and be realistic about the costs of hiring a property manager or management company, considering their fees and any additional expenses that may arise. Property management fees can range from 4% to 12% of the gross monthly rent, depending on location and property type. There may also be additional fees for things like leasing and maintenance.<\/p>\n
If you know in advance the most you can afford to pay, you\u2019ll be better prepared when you discuss fees with the property manager. It\u2019s essential to strike a balance between your budget constraints and the quality of services you expect, as choosing a property manager solely based on cost may not always result in the best outcome for your property.<\/p>\n
Step 3: Research & Interview<\/h2>\n
Research local companies or individuals\u2014and don\u2019t hesitate to ask fellow property owners for recommendations and interview several candidates. During these interviews, ask about their experience, credentials, and references to find the right fit for your property.<\/p>\n
To find prospective property managers, start by contacting other investors, real estate agents, and landlords with firsthand experience. If you need further research, perform an online search with the keyword \u201cproperty managers near me\u201d (or your property). Read online reviews, check their social profiles, and evaluate their website.<\/p>\n
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Results from a local search for a property manager (Source: Google)<\/em><\/figcaption><\/figure>\n<\/div>\n You\u2019ll also want to speak with them in a formal interview. Prepare questions for your interview based on your needs. These can include things like pricing and fees, communication, tenant screening, and their references. Here are a few questions to help you brainstorm:<\/p>\n
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- How long have you been in business?<\/li>\n
- How many properties are you currently managing?<\/li>\n
- Do you have a team or work alone?<\/li>\n
- What is your fee structure? Can you provide a list of all fees?<\/li>\n
- How often will you keep me updated?<\/li>\n
- Can I tour a few of your properties and speak to some landlords and tenants you manage?<\/li>\n
- What technology will you use?<\/li>\n
- Which vendors and subcontractors will you use to handle maintenance? What is the turnaround time for repairs?<\/li>\n<\/ul>\n
Step 4: Check Qualifications<\/h2>\n
Before finalizing your choice, ensure the property manager meets all local licensing requirements and holds the necessary insurance coverage. It\u2019s also crucial to do background research to confirm their track record and reputation in the industry. These steps will help you find a trustworthy, qualified professional to manage your property effectively.<\/p>\n
Licensing and qualifications vary by state, but here are a few items to verify with the manager:<\/p>\n
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- Most states require a property manager to have a real estate license and be at least 18 years of age (this requires specified education and passing an exam).<\/li>\n
- Proper documentation of insurance coverage.<\/li>\n
- Though not required, find someone with experience to reduce potential risks to your investment.<\/li>\n
- Certifications are not generally required, but there are many national property management organizations that provide education, training, and certifications, making it a bonus.<\/li>\n<\/ul>\n
Step 5: Discuss Duties & Fees<\/h2>\n
When evaluating a property manager, talk to them about their duties and responsibilities at your properties, and how much they will be compensated for said duties and general job position. As discussed in step one, depending on your needs, talk about their processes for tenant selection, maintenance and repairs, emergencies, expenses and budgeting, and inspection procedures, as these are all crucial to your success.<\/p>\n
Before finalizing your agreement with a property manager, and in accordance with their duties, it\u2019s crucial to grasp the fee structure. This includes management fees, leasing fees, and any markups on maintenance. See to it that you inquire about any hidden costs or unexpected charges to avoid surprises. Property management fees typically fall within 8% to 12% of the property\u2019s gross revenue, but confirming the specifics will help you budget accurately for your property management needs.<\/p>\n
\n<\/span>\n<\/div>\n\nPro tip: <\/strong>Besides their duties and fees, ensure your communication styles mesh to guarantee a good working relationship. Establish clear communication from the outset to set the right expectations and maintain a smooth working relationship with your property manager. Discuss the methods and frequency of updates on property performance and financial reports. This upfront clarity ensures you stay well-informed about your property\u2019s status and financial matters throughout your partnership with the property manager.<\/p>\n<\/div>\n<\/div>\n
Step 6: Visit Their Properties<\/h2>\n
Whenever feasible, consider visiting properties currently under the management of your candidate property manager. This allows you to assess firsthand their approach to maintenance and tenant relations.<\/p>\n
Additionally, don\u2019t forget to obtain and thoroughly check references. Reach out to the references provided by the property manager to gather valuable feedback from fellow property owners who have had direct experience working with them.<\/p>\n
Step 7: Review Contracts<\/h2>\n
Take the time to thoroughly review the property management contract, focusing on fees, responsibilities, and terms to ensure they match your expectations and legal standards. It\u2019s wise to consult an attorney before signing the contract to safeguard your interests. Additionally, inquire about their exit strategy, understanding how they plan to handle the management relationship should it need to end for any reason.<\/p>\n
\nSample property management agreement (Source: American Apartment Owners Association)<\/em><\/figcaption><\/figure>\n<\/div>\n Step 8: Monitor Performance<\/h2>\n
Maintaining ongoing monitoring of your property manager\u2019s performance is important to ensure they consistently meet your expectations and adhere to the terms outlined in the contract. Regular evaluation helps see to it that your property is well-managed and that issues or concerns can be promptly addressed to maintain the property\u2019s value and tenant satisfaction.<\/p>\n
While you don\u2019t want to micromanage your property manager, you do want to ensure that they\u2019re collecting rent, paying the bills, keeping units rented, and maintaining the building in good repair. Ultimately, your weekly, monthly, quarterly, and yearly reports will indicate if the property manager continues to perform well or has dropped the ball.<\/p>\n
Qualities of a Great Property Manager & Red Flags to Avoid<\/h2>\n
While considering when you should hire a property manager, it\u2019s crucial to begin by identifying the key qualities you seek, recognizing that an effective one should possess a diverse set of essential skills.<\/p>\n
\n\n
- Property owners with multiple properties or those needing comprehensive services typically opt for property management companies. <\/strong>Property management companies excel in managing more extensive portfolios, providing a more comprehensive array of services and maintaining established relationships with contractors and suppliers. These offer convenience and scalability for property owners with multiple units.<\/li>\n<\/ul>\n
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