how to find a reputable property management company

Question

Kim Meredith Hampton · Answer

@Alex Mosqueda here is a copy of a blog that I wrote on hiring a PM

Hiring a property manager is an important decision, and can be an asset for a property investor, but can also be a detriment if not chosen carefully and without some due diligence. Here are 10 tips on hiring a professional property manager:
1. Make sure that your property manager is a licensed Realtor or Broker, look them up on DBPR, the department of business & professional regulation.

2. Make sure their office is relatively close to your rental property. The farther it is, the harder it is to manage, show, find tenants, get vendors and inspect
3. Look at the experience of the Property Manager. They may not know the Fair Housing laws, take too long to fill the vacancy, have licensed vendors. How many units do they manage, or are they just doing this “on the side” for extra income.

4. What is their policy for dealing with evictions?
5. Are you willing to give up control? Most Professional Property Managers do everything; collect rent, schedule maintenance, pay taxes, pay mortgages & HOA dues, process security deposit claims, marketing , leasing , on call 24/7, handle landlord-tenant conflict. Its exhausting.....
6. Examine their management agreement, check to see if there is an out clause if you are dissatisfied, make sure it spells out the responsibilities of the owner and the property manager 7. What type of fees do they charge? Most companies will charge a management fee, leasing or placement fee and renewal fee. Ask if there are any any additional fees for maintenance, advertising, evictions, etc... and make sure they are outlined in the agreement. Do your homework, don't be fooled by low or flat management fees.
8. When and how will you receive your money each month? Will I receive a monthly statement? 9. Do they perform property inspections? What kind and how often?
10. How do they handle maintenance complaints or emergencies from tenants?

Property managers are great as a third party buffer or middle man, this is a business to us, it's not personal. Tenants understand they are dealing with a professional.

Marc Cunningham · Answer

Beyond the 'normal' questions I would add:

1. Ask what their lease renewal rate is. Depending on your area, the industry average is around 60%, so you want them higher then that. The biggest expense you can face as an investor is turnover, so you want a Property Management company that does a good job retaining their tenants. (most companies won't even be able to tell you what their percentage is).

2. What is your eviction rate. This will tell you how good of a job they do qualifying applicants. (The lower rate the better).

3. What is the most challenging situation you have ever encountered and how did you solve it. (This will give you and idea on how they deal with problems).

4. How long have you been in business. (You can't fake it for very long in this industry).

I would skip the asking for references. Any company can find two customers to say something nice about them. Instead check out their BBB and google reviews. That will give you independent info.

We have a free downloadable doc on our company web site '20 questions to ask a PM', that may be useful for you.

Good luck!

Nicholas Cook · Answer

@Alex Mosqueda Great question. I would consider the following:

1. What type of relationship do you want to have with your PM. I would then tailor my questions to see if that provider can meet your expectations. For example, so owners want to be hands off and others want to be more involved. Once you know what you want you are better able to assess fit.

2. I would read online reviews. These days both owners and residents look at reviews when deciding to work with/rent from a PM company. Now it is important to keep in mind that management companies will have negative reviews from time to time because they charged someone a late fee or a resident didn't get their deposit back. For this reason you want to look for a trend. Do a lot of people say they don't call back or that they have poor maintenance?

3. You want to work with someone who is part of a professional association as this is a signal that they are interested in building and following best practices. Some organizations are the Institute of Real Real Estate Management (IREM) or the National Association of Residential Property Managers (NARPM).

4. Personality and communication style are big. You are going to be working with this person for usually a year if not much longer. It is important you feel like you can have a good relationship with them.

5. I would ask how they handle security deposit accounting and what methods they use to ensure they can charge a tenant properly for damages at move-out.

6. I would ask about the leasing process and how many days a week they show property as well as where they advertise?

7. I would ask them to describe their differentiating factors. Why choose them?

I hope this helps!

Ryan Murdock · Answer

@Alex Mosqueda Great advice offered by @Kim Meredith Hampton .

The only thing I would add is to ask for references and speak with other property owners who use that PM - see what they have to say.

And not all states require PM's to be licensed real estate agents although many of them are anyways.

Alex Craig · Answer

@Alex Mosqueda I have shared this post a few times tonight as it is relevant in sever forums tonight. My post in other forums is posted below.  There is some other great advice on this forum, but if the PM is good at the 3 things below, then they will likely be good at other aspects within their biz.

"I own a PM company and can say this is a very easy business to grow, mostly because most PM's are not customer serviced (tenants and owners) and are not good business owners. If you manage for out of state, follow these 3 rules and you will not lose clients and will pick up a bunch if you are good at marketing.

1) Over Communicate -- do not leave your office until you answer your investors emails and return their calls

2) Transparency in everything you do, especially maintenance. If there is an maintenance issue, take before and after pictures. Be transparent on your billing and let your investors know immediately when an maintenance issues is submitted. On your billing, break out materials and labor. Most PM's get greedy here and over charge. PM profits are volume in #'s under mgmt. Not over charging and gouging.

3) Treat every property as if it was your own."

Hope this helps with your PM search!

Chad Hale · Answer

@Alex Mosqueda  In addition to Kim and Ryan's input, here are several BP blogs that should be helpful.

3 part series Questions to ask a property manager

http://www.biggerpockets.com/renewsblog//2008/11/28/some-questions-to-ask-a-property-manager/

http://www.biggerpockets.com/renewsblog/2008/12/06/more-questions-for-a-property-manager-and-some-answers/

http://www.biggerpockets.com/renewsblog/2008/12/27/son-questions-property-manager/

Landlords:  8 Tips for hiring the best property manager

http://www.biggerpockets.com/renewsblog/2011/02/25/hiring-best-property-managers/

http://www.biggerpockets.com/renewsblog/2005/10/07/things-to-consider-when-interviewing-property-management-companies/

If you are still interested in reading:

http://www.biggerpockets.com/renewsblog/2011/12/22/how-to-train-a-property-management-company/

http://www.biggerpockets.com/renewsblog/2010/10/13/hire-manage-property-management-rental-property/

Landlord how to deal with a negligent property manager

http://www.biggerpockets.com/renewsblog/2011/10/20/property-managers-negligent-landlords/

http://www.biggerpockets.com/renewsblog/2011/07/26/property-management-expectations/

~Chad

how to find a reputable property management company

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