What to look for in a property management company

Question

Looking to hire a property management company to manage my duplex, which I have been managing since 2018. Just wondering what to look for and ask before hiring? What are reasonable prices/fees to manage a duplex?

Adam Bartomeo · Answer

I just spoke to one of my investors who is bring another 6 plex on board with us. They said that the thing that she likes most about us is that we are investors and understand how real estate works. Her conversations with her previous PM's felt like she was taking to someone who was completely uneducated in real estate investing. You see, most property managers and real estate agents do not own investment properties and could never really understand the trials and tribulations of owning investments. So, how could they ever really advise you?

Michael Smythe · Answer

@Kyle Brown

Recommend exploring as many sources as possible to get referrals AND cross-reference them to get as much accurate information as possible.

Check out NARPM.com, BP’s Property Manager Finder, etc.

Also, encourage you to learn from the mistakes of others - by reading posts here on BiggerPockets about owners not having their expectations met by their current Property Management Company.

To avoid going through the same poor experience, keep reading.

Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – so, they often select the first PMC they call or that calls them back!

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings. Why do you think purchase contracts are so long and have such small print?

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

Twannisha Jackson · Answer

I would definitely start with “do you own any investment properties?”, any fees/hidden fees- even the smallest things. read the heck out the contract or whatever & ask questions if you need clarification on something! I’m self managing but this is some things i would do.

Jay Orlauski · Answer

A lot of the questions I get from landlords vary depending on their experience. Inexperienced ( inexperienced in using PMs)  landlords mostly ask questions about what does a PM do?  what services are offered? How much does the services cost? Can I use my own handyman? Do I have to accept Sect 8 tenants? and many more similar questions.

More experienced landlords tend to ask questions like how long have you been managing properties? How many people are on your team?  How do you screen potential tenants? What are your policies regarding late rents? Do you have experience with evictions? etc.

Generally speaking - I think the most important information to know is how well they screen applicants, how maintenance is handled and how often do inspections/services take place? This is because you want to make sure that they are looking out for your interests and only placing qualified tenants. Ideally, they would have set parameters of what is acceptable and what is not, such as a minimum credit score or a 'no evictions' policy. Once a qualified tenant is placed, maintenance is the bulk of what happens when managing properties so you want to make sure that they have policies in place for taking maintenance calls, handling invoices or payments, and following up with the work. Inspections are important too - you need to get eyes on the property periodically to make sure that your investment is still holding up and is not getting trashed. Inspections can help identify a $50 problem before it becomes a $500 problem. Some companies inspect as part of their scope of work - others charge extra to do an inspection. Either way - find out their policies regarding inspections.

Ask to review their PMA so you know what to expect from them and their expectations of you.There is some other great advice on this thread about checking their reviews, making sure that someone is available to get in touch with, and finding out what they DO NOT do.

Best of luck to you - let us know how your search goes.

Tim Baldwin · Answer

A few important things I would be looking for:

1) the experience and credentials of the broker who supervises the company as well as the lead property manager

2) the services they offer and how they line up with your needs and expectations

3) the use of technology to make their job and yours easier

4) if they have a landlord-tenant attorney on retainer to help guide them on legal issues (not to mention the creation of lease agreement, landlord forms and notices, etc.)

5) their process and policy for a) listing, b) application, c) tenant selection, d) routine inspections, e) maintenance services, f) property and tenancy update reports to you, g) lease enforcement policy, and f) move-out process.

6) property owner reviews (you can't always rely on Google reviews, because they may not reflect actual quality of the company, but still)

7) beneficial programs for both owner and tenant

8) a property management agreement that would indicate they know what they're doing and have the experience to know what matters in a PMA. A lot of people prefer "simple" agreements, but truth is, there is a lot of moving parts in the property management business, and the PMA should take this into account.

9) Access for communication. I would ensure that you will always be able to get in touch with one of the staff. Some companies are very difficult to contact. Not a good thing.

What to look for in a property management company

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