Hello @Robert Flores,
Having to look for a property manager 4 or 5 times myself, I developed a process (I was an engineer so can’t help it) to ensure that I will always land with a good one. Below is the process that I followed.
Finding a good property manager starts with knowing what you need.
List Your Requirements
Make a list of the capabilities and services the property manager must have. For example, suppose you plan to buy residential properties on the southwest side of the city. You can eliminate all property managers that focus on commercial or do not cover the southwest.
Find Candidates
Search Engine
If you Google something like "Las Vegas Nevada property management companies," you may get too many hits to be practical. With Google, ranking is more of a popularity/marketing contest than any measure of the quality of service. In a smaller city, a search engine might be a great starting point. All you can do is try and see what you get.
Yelp Reviews
Yelp and similar sites only post reviews by tenants. The tenant is not the property manager's client; the property owner is the client. Therefore, a glowing review by a tenant could be a negative review in the eyes of a property owner. Read reviews through the eyes of an owner, not the tenant.
Networking
Read message boards on Biggerpockets or other real estate investment sites. Connect with people who already have properties under management in the area.
Important: just because someone tells you that XXX is a great management company does not mean they will be a great management company for you. Do your own due diligence.
Narrowing the Candidate List
Once you have a list of property manager candidates, check out their websites. If their website states they focus on commercial and you are planning to buy residential, eliminate them. A few minutes spent on each candidate's website before you start interviewing can save you a lot of time.
Select the best 5 or 10 property managers for interviews.
Interview Questions
Before starting, have your questions written down (no more than 10). Use one page for each property manager. Write their responses to each question. You will learn a lot by comparing responses.
Below are sample questions:
- How long have you been exclusively managing properties? (No part-timers)
- How many properties are you currently managing?
- What is your mix of properties (single-family, condos, commercial, etc.)?
- What geographical area do you service?
- Do you have a staff? Please tell me about them. How many are full-time?
- What is your average tenant stay for properties similar to [your property].
- What is your process for screening tenants?
- What are your most important tenant selection criteria?
- How do you keep owners informed? (monthly statements, website, etc.)
- Do you have a startup fee?
- What percentage of collected rent do you charge?
- Is there an annual fee?
- Do you charge a lease renewal fee?
- Are there other fees?
- Do you have an in-house maintenance staff? (If yes, end the call. You cannot afford an in-house maintenance staff. Maintenance is where property managers with an in-house repair staff make the most money, not rent collection.)
- Do you markup repair costs? (I am OK with a fixed fee, like $20/repair. I will NOT work with a property manager who marks up a percentage of the total repair cost. I do not want the property manager to have any financial incentive to increase my maintenance costs.)
- Do I receive a copy of the original bill from the contractor who performed the work?
- Under what conditions do you contact me for prior approval before authorizing the repair? (Usually based on the estimated cost. For example, for repairs costing less than $300, the property manager will proceed with the work. Above $300, they will contact you for prior approval.)
- How do you collect the rent?
- How do you deliver the rent to me? (direct deposit)
- On what day of the month do you send rent to owners?
- Tell me about the eviction process.
- How long does the entire process take?
- How much does an eviction cost?
- Do you have to go to court often? Is there an additional charge if you have to go to court?
- How many evictions have you had to initiate in the last 12 months?
Additional Considerations
- Selecting the lowest-cost property manager can be your most expensive option. One non-performing tenant will cost you more than several years of the incremental costs of a skilled property manager. Focus on the value delivered, not the lowest cost.
- I prefer medium-sized property managers. The big property managers don’t have time for individual owners. Mid-sized property managers have all the needed software and processes but will still have time to work with individuals.
- The most important skill of a property manager is the ability to select a reliable tenant. Understand their process for screening prospective tenants. Some property managers choose tenants based on FICO scores. A FICO score tells you nothing about how long they are likely to stay and if they take care of the property. Also, a high FICO score can mean they will be buying a home soon and will leave your property after only a short stay. The property manager should use one of the tenant screening services.
- Do not expect investment advice from a property manager. I've worked with many, and none knew how to analyze a property. The best source of such analysis is an investment realtor (NOT an "investor friendly" realtor).
Robert, if you have questions, let me know.
