In this article, we’re going to discuss some tips to avoid a bad property manager BEFORE you hire them.
Tip #1 is to Ask Good Questions! Here are some questions (and responses) we would suggest.
Are they licensed?
This seems obvious but you’d be surprised. Simply put, if they say no or can’t prove it; cross them off your list.
How long have they been managing real estate for?
You’ll want to hire a property manager who has a minimum of 3-5 years of management experience.
What certifications do they have?
There are trade organizations within property management that offer continued education. However, having one of these certifications doesn’t necessarily define a good property manager. It does show they invest in themselves, take their profession seriously, and is a student of the industry. The most common organizations to see certifications from are CAI, NARPM, IREM, NAA, and BOMI.
What is their current vacancy rate?
Whatever their current vacancy rate is, is what you can probably expect for the future. A good idea is to compare a few company's vacancy rates as market conditions will cause the averages to fluctuate. You will want to have an idea of what the current market is doing.
Do they have their own maintenance crew?
This is extremely beneficial to you if they do and their rates are reasonable. When comparing their rates, compare them with other legitimate licensed and insured maintenance vendors. Comparing them to “Chuck In A Truck” who is not licensed or insured is not a reasonable comparison.
What kinds of property do they manage?
The fewer types of properties they manage, the better. You’ll also want to ensure the experience they have is specific to the real estate you’re invested in. For example; hiring a property management company to manage your single-family or multi-family home who focuses on commercial real estate will not suit you well. Although they’re both real estate, they are two separate animals when it comes to management.
Do they provide brokerage services or do they only manage properties?
There are very competent firms who do both and do it well. However, there are also real estate agents who try to manage properties on the side without fully committing to doing the job well. Again, you want to hire a company that specializes in managing property.
When are owner statements and deposits sent out?
Anything less than once per month is unacceptable, however, there are two common time frames. The first is between the 10th and 15th of the month for the current month's rent. The second is the 1st-5th of the month for the previous month's rent. Either one of these timeframes is acceptable.
How often do they need to evict tenants?
All property managers deal with evictions; even the good ones. The frequency at which they deal with them is an indicator of how well they screen their tenants on the front end. A good property manager will spend the time screening tenants well to avoid dealing with an eviction later.
What are their fees?
The main figure that people focus on is the management fee but there are other fees involved as well. Because every company charges different fees in different ways, comparing fees between property management companies can be tricky. Make sure to ask about each company's fees that will be charged. Most reputable property management companies are competitive with their pricing. If you compare fees over a 1-2 year period vs a month-to-month period, typically it's a close tie race.
How long is their management contract and can you terminate it?
You should review any contract you’re going to sign with a fine tooth comb so you understand the details. Make sure to understand if you’re locked into a contract for a certain period of time or if you have the option to cancel with a 30 or 60-day notice.
Tip #2 Watch Out For These Things!
Now that we’ve covered a few common questions to ask, here are some common things to look out for.
Unprofessionalism: Someone who treats you unprofessionally during the sales process is likely to treat you and your tenants unprofessionally during the management period. There are a lot of great property managers out there, you don’t need to deal with a jerk.
Unresponsive: You’ll want a property manager who responds to you in a timely manner. Although property management is a 24/7/365 profession, timely doesn’t mean you call your property manager on their cell phone at 8:00 P.M. expecting them to drop everything they’re doing with their family to answer your question. This simply means that if you send an email or call their office you get a response within a reasonable timeframe (that same business day or the next). This also means if your tenant calls their after-hours emergency line, the 24/7/365 kicks in, and their emergency is immediately dealt with.
Lack of Reputation: Word travels quickly. Hiring a property manager who doesn’t have a good reputation or no reputation is a recipe for disaster. With technology its easy to find a company’s digital footprint. Don’t just look at their Google Review score but read some of the good and bad reviews. See what both owners and tenants are saying about them. Although with the internet this is a little antiquated you can ask them for references of current or past clients.
When deciding which property management company to hire the two most important things are to interview at least two to three property management companies and to hire a company that provides the value you’re seeking. If you hire for value over price it will serve you well and cost you less in the long run.
If you’re interested in hiring Envy Property Management, we specialize in managing residential real estate, specifically single-family and small multi-family homes. You can find us here or give us a call at 801-337-4337.
