Regardless if you have one single-family rental property or a large portfolio, you can enlist the services of a property manager. While it may be easy enough to find a property manager, it is much more difficult to find one that is the right fit for your company. However, once you do, a good property manager will make owning rental properties that much easier. The return on investment is absolutely critical for those looking for truly passive income. Conversely, hiring the wrong person can have the reverse effect and actually make your housing problems worse. Before you commit to any company or individual, you need to do some research. Hopefully this will help you find the right property management company.
The best place to find a property manager is through your local network. Like anyone else that you use, it is usually better to work with someone you know or is referred to you from a reliable source. Networking meetings and investment clubs are a good source, in addition to talking to contractors and handymen you have worked with in the past. You should also reach out to your local realtor and even fellow investors to see if they have a company they feel comfortable with. The more options available, the better chance you can find someone that fits for you. After you round up some potential candidates, your work is far from over.
You should ask your property manager as many questions as possible. You need to find out if they know the area and the market. They may have a grasp of the national scene, but that isn’t nearly as important as what is going on in your neighborhood. Ask them about what other properties they manage and what they think of your property. You also need to discuss expectations and job requirements. They should be doing the bulk of the talking while you just listen. You don’t need to work with the most experienced manager, but they should have an idea of what is expected from them and what they will do for you. A property manager should relieve many of the everyday burdens that come with owning a rental property and free up time for you to focus on other areas. If they are incompetent or you get the feeling they are going to call about every problem, you should look elsewhere.
In addition to knowing what they will do for you, the obvious follow up is how much it will cost. Property managers can do a multitude of different services, each of which may come at a different cost. Before you enter in an agreement with anyone, you need to know exactly what you are getting out of it. A property manager can charge a flat fee or a percentage of the monthly rent. This isn’t necessarily an area where you want to nickel and dime yourself. If a better manager that will take care of a broad range of items comes in at a slightly higher price, you shouldn’t balk at the cost. Saving money is always nice, but the difference between 10% and 8% of the rents received doesn’t equal a large amount of money. If you make the commitment to seek out a property manager in the first place, you should know the costs and accept them. This is one less headache you will have to worry about in your investing business.
Over time, you will build a relationship with your property manager and put more on their plate. It is also OK to ask and seek their input on your property. If they are getting a percentage of rents received, it would benefit them to think of ways to increase the rent. If this means adding on a deck or some other costly feature, you can kindly say no thank you. However, there are plenty of simple items that can add to the bottom line. Having open lines of communication is important, but you need to remember that you are the owner and the buck should stop with you. If you give up too much control and allow your property manager to conduct tenant interviews and dictate the rent amount, you have nobody to blame but yourself if things go badly. Let your property manager work without you being in the way, but realize that you still the final decision maker with your property.
It is easy to go with the first property manager you talk to or the first tenant that shows interest in your property. In both cases, they may not be what they appear at first glance. Take your time and do your due diligence before you hire anyone. Go online and read as many reviews as you can. If the property manager was a referral, you still need to do your homework and find out as much as you can about them. Talk to your tenants after you they have started working on your property and get some feedback from them. A property manager is supposed to make your life easier, not the other way around.
You can probably save money doing everything on your rental property yourself, but at what cost to you? Talk to a few different property managers before you decide on one to work with. If you do find the right one, it can free up time that will help change your business.