Property Management: The MAKE or BREAK Factor

Not all property managers are created equal. Some take care of headaches, while others create headaches. They really can make all the difference between a profitable real estate investment and one you end up wanting to sell.

There are a few things you can do in advance of hiring a property manager to see if they are going to be the right choice. First, you can do some internet research, and then you can do some phone interviews. Find out as much as you can about them. It is ideal for them to be close to your property; it will be easier for them to show and keep an eye on. Determine how long they have been in business. A good number is at least five years. Find out how many properties they manage and how many leasing agents they have.

To make any money, they have to be managing about 100 properties unless they are part of a larger real estate company. Ask for client references. Make sure you understand their fees and how long it takes to process your payment. If rent is due on the first and late on the 5th, you should have your money no later than the 10th.

The strongest trait of a good property manager is their accessibility and how soon they return your calls. There is nothing more frustrating than feeling left in the dark when you have a question or concern about your property at a distance. If they are very slow or don’t return your call, it’s time to look for a new one. If your money arrives later and later each month, it’s time to look for a new one.

Property managers are human, have good and bad days, and maybe overworked at times. If you treat them courteously, they will usually treat you likewise. Try not to take your frustrations out on them. Some respond better to concisely worded emails than to phone calls. Try not to micromanage your property manager, either. Keep your communications to a minimum, just enough to get your concerns addressed.

During a vacancy is really when you can measure the effectiveness of your property manager. First, they have to determine the condition of the property and get the necessary painter, carpet cleaner, and cleaning crew out. Secondly, they need to look at the rent and see if they are at market value. If not, they need to run a proper CMA (comparative market analysis) to raise rent the right amount. If your property manager raised the rent too high, you run the risk of a more prolonged vacancy. Next, they have to advertise it and show it to prospective tenants. They must also run credit and eviction checks. If they are not well organized, it can seriously delay getting it re-rented.

A weekly call to monitor progress is HIGHLY recommended during this time. Make sure it gets shown on multiple listing sites for maximum exposure. Most properties will get re-rented in 60 days or less. If it goes more than 90 days, there is a problem. (It is usually the property manager that’s the issue if it takes that long).

November, December, and January are the slowest months to rent a house. I find it helpful to remember your property manager with a Christmas card at the holidays to let them know they are appreciated. Your property manager is your babysitter, looking after your child while you are away at work. If you maintain a good relationship with them, you are going to get better treatment, plain and simple.

You may also choose to send your tenant a holiday greeting. If you prefer not to have them know how to contact you, leave off your return address, or send it through your property manager. Little things like that can make a big difference! A tenant is much more likely to renew their lease if they feel their repair requests have been handled in a timely fashion.

It is key for your property manager to respond quickly to their requests for service. If you find repair requests coming in too frequently, it could be a sign more people are living there than are on the lease. If repairs seem to be consistently too high, you might consider buying a home warranty, which limits your liability to $75.00 per call. Ideally, your property manager should be doing a monthly drive by to determine exterior condition and an interior walk-through about every four months. This is usually difficult to get them to do. The best program I’ve seen is where they had service go out and change the air filter every three months. This was an extra cost service, but the installer took a quick look around while he was there and reported back general interior condition. You don’t want to come to the end of your lease and find that the tenant trashed your property.

Your property manager must enforce the late fee and eviction clauses of the lease. If rent is due on the 1st and late on the 5th, they must collect the late fee after the 5th and start eviction on the 10th. This may sound heartless, but tenants will continue to pay later and later in the month if allowed. If you can manage your property manager by following these lessons, you are likely to do very well as a rental property owner.