Author: Jennifer Stalford
Source: ezinearticles.com
A property manager’s incentive is to maximize an investor’s return on their property because they want to maintain their client.
Hence, the term “ROI” … make them money while saving their time and headache.
Here are the “When, How, Who, What and Where” to selecting a great property manager!
1. When do I hire a residential property manager?
There are an array of reasons an investor or homeowner decides to not to become a reluctant landlord. These are covered in detail in an article I wrote called “Do-It-Yourself Landlord Pro’s & Con’s”.
Certainly as soon as the home is habitable, it should be viewed. Therefore, choose a property manager immediately to insure paperwork and such is completed by the time the home is move-in-ready.
2. How are they found?
A great source is the National Association of Residential Property Managers where you can select from their quality list at .
Ask other investors who they use.
For smaller towns, or to acquire additional choices, contact your local Chamber of Commerce.
In the same token, contact your local Better Business Bureau to verify the companies you are considering have not had any negative claims reported.
3. Who is the individual property manager?
Inquire to how long they have been a property manager and for their references. A clear majority of real estate investors do not recommend hiring a real estate agent that does property management on the side.
Ask what their qualifications and specialty certifications include, such as those that can be acquired through Institute of Real Estate Management (IREM).This helps assure the property manager is well qualified and up-to-date on current laws and practices. Note: Not every state requires a property manager obtain a property management license when dealing with single-family dwellings, so check with your state.
Ask what type of properties they focus upon. If “single-family detached properties” is not their first answer, find another property manager.
Obtain proof of their company insurance, state license, and fidelity bond.
Ask how long they have been in business to hopefully prevent choosing an unstable company that could go out of business. This is especially important in today’s economy.
Depending on the firm’s size, there could one or dozens of property managers employed. Having a property manager is a long-term commitment so meet the individual that will handle the rental property. Aside from learning their fees and services, if you don’t like their personality, chances are the potential tenants will not like it either.
4. What are the fees and services?
Many items are included in the contract between the property manager and the property owner. These usually include the same elements however, the service fees range. Just because the contract says they charge a flat rate of 5% of the monthly rent, does not mean it is better than a company that charges 8%. Sometimes when a rate is low it is because they are charging for services in the back-end. If any of the items listed below are not included in the flat rate, add these costs to establish the true cost of that property manager.
If any, what is the cost if you break the contract?
Who pays the legal fees and handles tenant evictions?
When a rent payment is late, is the property owner charged a late fee or just the tenant?
How is the property marketed, for how long and if it’s not included in the flat rate, how much is the cost?
When repairs are needed, what is the process? Do they first provide an estimate and then have it performed or do they have it performed no matter how petty and then send you a bill? Do they work with licensed contractors so the repairs are performed to code with quality? Do they belong to a network to obtain better repair rates?
Are they available 24/7 for tenant complaints and problems? How quickly does the contract state they will respond with action to the tenant?
Does it include providing comparison rates to back up rent rate recommendations?
Do they provide feedback with numbers to determine if an home upgrade or modification is worthwhile? For example, adding a hot-tub is a great fun perk to tease a tenant, however the maintenance and insurance rate increase could negate the value. Risk management is another responsibility of the property manager.
Do they provide legal contracts, forms and documents or does an outside firm need to be hired?
How do they make sure they have the best tenant ? Do they perform background check, credit check, etc., and are the fees included in the flat rate?
Do they provide balance sheets; keep meticulous records tax purposes and legal reasons?
When in doubt, have a lawyer review and explain the contract(s) so an educated decision is made. The hourly rate of a lawyer is far less than getting into a costly lawsuit.
5. Where are they located?
Depending on the size of the firm, their coverage area can range from one town, a state, a region, or even nationwide. It is important that they have a presence near the rental property so it is monitored first-hand by the property manager, so they understand the market conditions, and have a working relationship with contractors.
The property owner must perform their own due diligence when hiring a property manager. The relationship should be a team effort so both parties profit. Contact the property manager with specific documented examples when a contract is not being fulfilled by the property manager or by the tenant. It is much easier and more cost effective for them to maintain a relationship versus finding and establishing a new one. As a result, the property manager will want to rectify the situation. If an issue cannot be resolved, acquire legal counsel in the state where the rental property is located because laws vary from state to state.
Jennifer Stalford is the co-founder of YourRealtyPortal.com that is designed for Real Estate Professionals in the United States and Canada. We believe in self-empowerment through education and collaboration. The website contains a large Free Toolkit, vendors in the Real Estate Marketplace, resumes and career openings in the Career section, has a forum for professionals to interact, Event Calendars and more.
To obtain the links for items referenced throughout the article, please visit YRP’s Real Estate Blog at http://www.yourrealtyportal.com/blog/
Jennifer’s background includes accounting, marketing, nonprofit administration, real estate investments and grant writing. She actively serves on nonprofit boards and committees, coaches youth soccer teams, volunteers throughout the local community and church, and is married with four children.
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Tags: property management, real estate rental, rental property
