UGH. Here we go with the "every Property Manager is a lying thief" rants again.
Here's how life works. You own a rental property and start looking for a Tenant. Do you take the first person that expresses interest in it? No! You want to know who they are, how they take care of a property, if they are financially responsible, etc. So you screen them to find out as much as you can and make an informed choice. Does screening guarantee you'll get a perfect tenant every time? No! Sometimes they lie or your screening misses something or you make a mistake or the tenant loses his job through no fault of his own or his wife of 14 years leaves him for his best friend.
You decide to hire a Property Manager. Do you take the first person that pops up on a Google search? No! You want to know who they are, how they take care of your property, how they screen applications, how they deal with lease violations and unpaid rent and evictions and maintenance. So you screen them to find out as much as you can. Does screening guarantee you'll get a perfect Property Manager? No! Sometimes they lie or you ask the wrong questions or the Property Manager they lose their best employee or they hire a new employee that screws up.
People whine about the evil Property Managers just like novice investors whine about bad tenants. If you keep getting bad tenants, it's YOUR fault. If you keep getting a bad Property Manager, it's YOUR fault. Learn what a good one looks like, learn how to screen for a good one, learn how to supervise them. There are a ton of professionals out there that will take care of your property in a professional, honest manner and they can put more money in your pocket over the long run.
A good Property Manager can screen better than the average Landlord because they are far more experienced and have more resources. They have stronger leases, policies, and procedures. They have systems in place to handle problems quickly before they snowball and run up the costs. They have responsive, reliable, affordable maintenance crews or vendors. They know the laws and uphold them to protect you from lawsuits. However, no system is perfect and the PM can't be expected to have 100% success and protect you from any/all losses. If they are negligent, they should be own up to that and eat the cost.
Remember: cheaper management doesn't mean you'll make more money.
You can start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. Regardless of how you find them, try to interview at least three managers.
1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.
3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!
4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.
5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.
6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.
7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?
This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!
