10 Tips to Successfully Manage Your Property Managers

A property manager can take the hassle out of managing your investments.

When you successfully manage your property manager, you’re saving time, minimizing stress, maximizing profits, and giving yourself the opportunities to grow as a real estate investor. If you fail to hire a good property manager or establish clear expectations, your investment can quickly become stressful and costly.

Whether you’re a newbie, a seasoned investor, or are considering hiring or switching property managers, we’re here to share our insights on managing a property management company. In this post, we’ll explore the pros and cons of this $114.9 billion industry, share ten tips for managing property managers, and help you determine if hiring a property management company is right for you.

What is a Property Management Company?

Property management companies oversee your property’s day-to-day operations on your behalf. They’re in charge of all things tenants, handling maintenance requests and regular inspections, and providing you with monthly statements.

Managing tenants

Property managers are responsible for handling all tenant interactions, including:

• Finding prospective tenants
• Tenant screening
• Tenant retention
• Getting leases signed
• Collecting security deposits
• Ensuring tenants have renters insurance
• Collecting rent

They use their working knowledge to keep tenants happy by responding to maintenance requests promptly and keeping communication lines open. They’re also in charge of dealing with defaulters who breach their lease agreement.

Maintenance and inspections

Running a rental property business requires you to comply with local, state, and federal regulations. Property managers can help you remain compliant by conducting regular inspections and maintaining a maintenance schedule. While the costs of upkeep fall on the property owner, these expenses can be minimized by catching small maintenance issues before they become disastrous problems.

Bookkeeping

Unless you were an accountant in your past life and love obsessing over spreadsheets, you probably don’t enjoy bookkeeping. Luckily, you’re property management company does that for you! They’re in charge of providing you with monthly earning statements, expense reports, timetables and schedules, and keeping track of other reports that’ll help you stay informed about the ongoing of your rental property.

10 Tips on How to Manage a Property Management Company

Here’s how to optimize your chances of hiring a good property manager.

1. Do your research

Do your research when selecting a property management business. Check reviews, references, and the Better Business Bureau for potential red flags. You can find property managers using BiggerPockets’ property management search function to get started.

2. Ask questions

After you’ve narrowed your list of prospective property managers, it’s time to channel your inner journalist and interview them. Here are a few questions you should keep in your back pocket:

• How long have you been in the property management industry?
• Does your company meet the necessary licensing requirements?
• How many rental properties do you currently manage?
• Where are you located?
• How does your tenant screening process work?
• How often do you perform routine inspections of the properties you manage?
• What services do you provide?
• What monthly tracking reports do you provide?
• How much do you charge, and what does that include?

Consider asking additional questions about their policies and procedures for dealing with maintenance requests, late rent payments, and evictions. Don’t be afraid to ask for clarification on their responses or follow-up questions.

3. Establish good communication

Good communication should be the cornerstone of any business plan, whether you’re a property owner, a freelancer, or the CEO of a limited liability corporation (LLC). You need to communicate what your expectations are. You must also listen to your property manager when they have opinions, questions, or concerns because they oversee your property’s daily operations.

That said, your property manager should be a good communicator as well.

4. Get monthly tracking reports

Maximize the value of your investment by requesting monthly tracking reports from your property manager. At a minimum, you should be getting the following:

• Rent collection: A spreadsheet shows the rents collected and owed for each property or unit. How else will you know if your property manager collects rent timely or evicts non-paying tenants?
• Profit and loss statement: A summary of the monthly revenues, costs, and expenses incurred shows where your money went. It should also match how much your property manager has sent you for the month.
• Accounts payable: A report that marks all debts owed on your property but has yet to be paid. This is important because it indicates what is due and when. 

5. Request additional “special” tracking reports

You should request additional information when your investment property requires special work—from a repair to a capital improvement. 

Even if your project manager is handling the situation independently, every month, you need to see the following:

• Timetables and schedules: These include anticipated completion dates of each process step so you know when to expect to see a profit again. If the date has changed, this report should explain why.
• Cost tracking: The anticipated costs of the project and what your funds have been spent on.

6. Follow up on the reports

As a property owner, it is crucial to review the monthly tracking reports provided by your property manager in detail. Inspect any unpaid rent, unexpected expenses, and changes to the projected timetables and cash flow. Don’t hesitate to ask your property manager for an explanation for any issues that arise.

A good property manager will be able to tell you:

• Why has each tenant not paid
• What their reasons are
• Why are these reasons acceptable
• When the tenant intends to pay, and how much

They’ll also be able to explain why each expense and adjustment of the timetables and cash flow projections occurred.

Not everything always goes as planned. Tenants have medical emergencies, get fired from their jobs, or suddenly find themselves in a global pandemic. Some things are unavoidable. What’s important here is that your property manager is on top of these issues. If they’re not, they’re likely to be missing details on other important issues as well.

Furthermore, following up on the reports lets you stay connected by hearing the kinds of stories your property manager is willing to accept from tenants, contractors, and suppliers. You shouldn’t hesitate to tell them if you consider those stories less acceptable than they do. That’s the only way to be certain that your property manager is operating from the same basic set of assumptions that you are, which will almost certainly reflect how you want your investment to be run.

7. Keep your receipts

It’s one thing to look at numbers on a report; it’s another to make sure those numbers are correct. Property managers should be able to provide you copies of rent checks and expense receipts to back up the numbers on their reports. At the very least, you should request these supporting documents every quarter or once a year when you do your tax returns.

Here’s what receipts you should be looking for and why:

• Copies of tenant payments: These should support the funds you received from your property manager.
• Utility payments: Check for late fees. You shouldn’t have to pay for them if you’re not at fault.
• Lawn/snow charges: These should verify that these charges are reasonable, when and how often lawns were cut, and snow was cleared.
• Maintenance expenses: Are the charges reasonable? Have you been double-billed for the same issue? Were you charged again for something not done right the first time?
• Management fees: Were the right amounts charged as per your contract?

Once you receive this information, compare them to the reports you’ve received. If you don’t already have a software solution for this, your property manager should be able to provide you scanned copies of all these so you don’t have to wade through piles of paper.

8. Request quarterly inspections

Property management companies should conduct regular inspections. Neglecting to do this may result in losing your insurance coverage and, if something goes wrong, a barrage of angry phone calls from unhappy tenants.

Here are a few more reasons why quarterly inspections are a must:

• Improved tenant retention
• The property remains well-maintained, boosting its value
• Repairs and maintenance are identified early, which can minimize paperwork and save you money
• Ensures no illegal activities are taking place on the property

9. Plan for natural disasters

Do you have a contingency plan in place in the event of a hurricane, tornado, and other common types of disasters in your area? Sit down with your property manager and develop a plan for each type of disaster. They need to understand what needs to be done in the worst-case scenario, just in case.

For each kind of disaster, your plan should include the following:

• How to recognize a disaster or potential disaster, and when to start alerting others
• How to keep the tenant safe (always the priority!)
• How to minimize damage to the structure
• How to minimize damage to the tenant’s stuff
• A list of the most important people to call immediately upon recognizing the danger
• A list of the most important people to call after the danger has passed
• A plan of how to get back into rentable condition as quickly as possible after it’s all over
• A list of all of the things that need to be documented during and after the whole event

Obviously, these items will take different forms for each kind of disaster—tenant safety is very different during a flash flood than during a wildfire—but those eight steps are consistent.

You don’t have to come to the table with all the information. One sign that you’re working with a successful property manager is when they already come with a long list of contractors, tradesmen, disaster cleanup crews, disaster recovery experts, water and mold damage remediators, and so on. The important thing here is that when the planning is done, both of you hold copies of the same plan, and you agree that it’s the right plan.

10. Stay positive

Having a positive attitude can be infectious. Property management can be stressful, especially if the company you choose has a large portfolio or has taken on a lot of new clients. By remaining friendly and keeping a good rapport with your property manager, they’ll be more likely to prioritize your rental properties when things need to get done.

The Pros of Hiring a Property Manager

Property management companies ultimately make your role as a property owner less stressful. Let’s dive deeper into why you should hire one.

More free time

Hiring a property manager can free up your time as a property owner. With someone else managing your properties, you can focus on other things in your life or even expand your business. By employing property managers, you can delegate all aspects of rental property management and absolve yourself of all direct tenant responsibilities. Not only does this give you peace of mind, but it also frees up your nights, weekends, and any time you may spend looking to expand your business.

Find good tenants

Property managers screen tenants on your behalf to determine if they’ll be reliable tenants who will pay rent on time and treat your rental respectfully. Often, these companies use property management software and their expertise to identify a tenant’s suitability. The property management software is also for the tenant’s benefit because it makes it easier to submit maintenance requests, pay rent, and communicate with the property manager.

Fewer vacancy periods

Novice rental property owners may assume that most heavy lifting is over once a tenant signs a lease agreement. As any expert will tell you, that’s not the case. Tenants almost always eventually move out, and if you’re not fast to find a replacement, you risk losing rental income. Successful property managers and adept at marketing your home to your next tenant, reducing your vacancy period.

Reduced maintenance costs

If you have a full-time job or live across town from the property you manage, making emergency repairs can prove difficult. Some fixes might be beyond your skill set, even if you’re right around the corner.

Property managers are there to handle maintenance issues when they come up. Many can make basic fixes and be at your rental property quickly. If there’s an issue in one of your rental properties that your property manager can’t solve, odds are they have access to a network of other experts they can refer to you. Often, these inside referrals are trusted companies your property manager has worked with and can quote you a fair (if not discounted) price.

Access to broader markets

You’re limited to the local market if you’re your own property manager. By hiring a property manager, you can open more doors and make more money by branching out into markets with high yields. Also, when your property is out of state or across the country, you won’t be tempted to drive there to perform regular maintenance.

Property managers have industry experience

Successful property managers have been doing this for a living for years. They know the business, the legal stuff, which review sites to be on, which property management tools work best, and, unlike most new rental property owners, have more than just a basic understanding of what the job requires.

If you’re hiring an accountant to do your books and investor-friendly real estate agents to find you advantageous rental homes, then you should hire a property management business to do what they do best.

The Cons of Hiring a Property Manager

No major business decision is without a little risk. Here are a few reasons why you might not want to work with a property management company:

Property managers cost money

When working with property managers, you may save time and stress, but it comes at an expense—typically around 8-12% of your rental income. The amount you’ll have to pay depends on several factors, including:

• Property location
• Property size
• Type of property
• Condition
• Neighborhood
• Real estate market
• Types of services offered

Some property managers charge you a flat monthly fee, while others charge a set percentage. They may also charge a la carte management fees, like advertising, leasing, and vacancy fees.

Loss of control

You’re putting all your faith in the property manager you hire when you invest in rental properties you can’t easily visit. If you need to completely control your business, entrusting this amount of responsibility to someone else can be maddening. You won’t have a say in the staff they hire or the tenants they screen and select. You might not even have a say in the minor modifications they’ll make during major renovation projects. Instead, you’ll have to have faith in your checks and balances (more on this in the tips section) and that the property manager you hired has your best interest at heart.

You could hire an unethical company

Some rental owners may compare hiring a property management business to manage their property to hiring a fox to guard the henhouse. After all, the manager is looking to profit from their work; you’re leaving them to deal with most of the finances surrounding your investment. Taking advantage of that can be tempting.

There’s also the concern that the property manager you hire isn’t fully up to the task. If you end up hiring someone who isn’t a good property manager or fails to meet your area’s licensing requirements, you risk losing new business and buckets of money.

However, the property management industry wouldn’t be booming today if most of them were unreliable.

Is a Property Management Company Right For Me?

Not everyone in the real estate industry needs to work with a property management company. Hiring a property manager might not make sense if you’re a handyperson who only owns one rental unit, and it’s right down the street. 

However, you should consider hiring one if you:

• Don’t live near your property
• Own a portfolio of rental properties
• Have a full-time job already
• Have a ton of other responsibilities
• Want to be more hands-off
• Can afford the added cost

Be SMARTER About Managing Your Property Managers

At BiggerPockets, we aim to help ordinary people like you build wealth through real estate. With the SMARTER Real Estate Investing System, this includes helping you find the best property managers in your area.

We’ll work alongside you to make sure you know what to ask when hiring one and provide you with the right tools once you do. Also, if you need more property management tips, don’t hesitate to consult the BiggerPockets forums, where you have the world’s largest community of real estate investors.