You've searched, analyzed and negotiated your way into an investment property, hello cash-flow and hello Mr. freedom! Okay now what? Well not so fast, for many the real work starts after your purchase; to get the property to perform it needs to be managed properly. Do you manage it yourself? Count on a friend to help you? or Hire an amazing G3 property manager?
Property management can be accomplished by self-managed Landlords but, ask any one... it takes time, can get complicated, be very fast-paced and if done incorrectly may turn your investment asset into an investment liability; wait... no margaritas?
It takes a unique skill set and attention to detail in order to manage an investment property successfully. Some enjoy it, yet many see their freedom and time thrown right out the window. Hiring the right property manager can be daunting but, this article will help you tell the amateurs from the pros
Regardless if you are a self-manager or hire a property manager some of the skills and traits needed to be successful are:
Communicative: Being able to clearly communicate expectations while not being aggressive.
Responsive: A good property manager must act. For Tenants, understanding that their concerns are taken care of leads to increased occupancy.
Organized: Property management is very detail-oriented and requires a high level of organization the ability to retrieve Tenant, applicant and property data is crucial.
Calm: Not to be confused with apathetic - which of course is bad. A property manager needs to have the ability to calmly negotiate emergencies and last minute issues.
Basics of Marketing: It does no good to have the best rental on the market but, no ones know about it. Marketing is crucial in today's environment.
Committed to Learning: Laws, rent rates, ordinances, Tenants and strategies all change. A good property manager is constantly seeking to remain updated.
Passionate: Let's face it, we've all done things we don't like to do. But a good property manager is embedded, hands-on and passionate about real estate and investing.
Of course there are many other traits property managers need to posses in order to successfully manage a property but, the reality is that most property managers lack even these basic skills and traits. The result is, mediocre service and a dwindling real estate investment.
Top 14 Questions to Ask a Property Manager
We have picked our top 14 questions to ask a property manager. Whether you're thinking of self-managing or thinking of hiring a property manager, the right questions can ensure you get the right person to manage your investments. Lets go!
1) What are the various services that you offer to your clients and tenants?
Services is where it's at! After all the point of hiring a property manager is to ensure that your property is well taken care of while still performing. A good property management company should be able to market, lease, manage, sell and even help you analyze and invest into your next property. It is also important to take note what guarantees the company can offer, this not only ensures you'll get quality management but, that they have a vested interest in taking care of your property.
2) What experience does your company owner have in managing rentals?
Some 'property managers' and even real estate professionals have never managed a property. If a company has never managed a property, what are the chances that they will manage your rental properly? It is important to ask how long the manager has managed properties and if they will receive oversight.
3) Under what conditions can I cancel my management contract?
Most property management companies are renown for locking clients into contracts they have a hard time getting out of. Never get locked down into a contract without knowing how you can cancel it! Contracts are good and help protect you as well as the management company and some of the best companies out there allow client's to easily cancel if they want. However, if a company is trying to lock you down into an escape proof contract, it's time to run the other way.
4) How do you determine the rent amount?
Price it too high and tumbleweeds, too low and you leave money on the table. A property manager should have the ability to complete a market analysis of the going rent rates for your property in order to get highest possible rent while getting it rented quickly. Not only should they be able to provide it but, to also show you all the similar properties in your area used for the analysis. They should also have the expertise and experience to help you analyse your projected cash-flow after all expenses including their management services based on their rent analysis and help you look at your rental through investment googles - no they don't actually sell those.
5) Are you currently an active real estate investor in my market?
Do they practice what they preach? A management company which promotes investment properties should be investing in real estate themselves. Period! If they are not investors all you really have is a task manager blindly driving your investment.
6) What are the management fees and other pricing options?
Tiered pricing, flat rates, lease only pricing, etc., etc., etc. Different management companies have different pricing structures of all shapes and sizes. It becomes difficult to compare apples to apples and determine which will work best for you.
The more pricing options a company is able to provide the more options you have at tailoring the pricing to your needs. Generally speaking however, you're better off looking at a percentage based on rents collected. In this structure a manager only gets paid on the amount of rents collected and incentives them to decrease vacancy and get the highest possible rent of your rental. Although it is deemed the better pricing structure it is still important to take note on what, if any, guarantees the company offers, how fast they place tenants and their tenant selection to ensure they aren't just filing in your rental with problem tenants.
"The longer your property sits vacant the higher your costs are in utilities and the less cash-flow you receive."
7) Are there fees when the properties have no Tenants?
If a company is charging you full management fees when there are no tenants what incentive do they have at making sure it gets filled? Unless you're placing your own tenant and allowing the management company to take over management after the fact, you're better off looking at a plan that only charges management fees on the rents that are collected and ensuring those fees are reduced when there are no tenants.
8) Do you offer direct deposit to owners and an owner portal?
No only should a property manager have the ability to directly deposit your monthly payments directly into your account every month but, you should have access to reports, maintenance request and check on the status of your property whenever you want. Look we live in a fast-paced world and it's only getting faster - being able to receive payments directly into your account and logging into your online owner's portal to check up on your property, run reports and see whether it is vacant or occupied will only save you precious time and hassle in the long run.
9) Do you offer tenant placement protection (also known as a tenant guarantee)
Some companies such as ourselves will offer a tenant guarantee; some charge an additional fee for it, some don't. This gives you major coverage should your property management company place a tenant in your rental that doesn't perform and is well worth taking a closer look at.
10) How do you market my rental?
Are they whipping out the old stapler and posting your listing on a few telephone poles or does the company have the ability to bring your listing into the modern world? Your property manager should be able to advertise your property through multiple marketing channels and websites. Do they take pictures? Do they make videos? If they are still posting it next to the 'best deals' column in the newspaper it may be time to look elsewhere.
11) How long will it take for you to find a Tenant?
The longer your property sits vacant the higher your costs are in utilities and the less cash-flow you receive. Place just anyone in there and you have issues down the road. A good management company will be able to find a tenant within 2-4 weeks and some of the best offer a guarantee to limit how long your unit will sit vacant before they find you a tenant.
12) Do you conduct property inspections and, if you do, how often and what fees are associated with them?
If your property manager never steps foot in your rental, that's a bad sign. Reputable property management companies conduct property inspections some charge for them, some don't. Regardless, this is an important question to ask to ensure your property remains protected and that the lease is enforced.
13) Do you offer any assistance or protection during an eviction?
It's all good when it's good but, sometimes it's not. Evictions happen but, how your property management company handles them and what assistance they provide to you is crucial in protecting your property and your fees associated with an eviction. Some of the best companies offer some type of eviction protection which help cover most, if not all, of your costs associated with an eviction.
14) How often will I get updates on my portfolio?
You should be able to get updates on your portfolio whenever and how often you need them. Your rental is an investment and a business and just like any of the two you need access to determine its performance. An owner portal here will go a long way to ensuring you are able to quickly check the status of your property and help you make future decisions regarding your investment.
About Ricardo Reis
Ricardo is a member of G3 Management & Investments and a real estate professional. He has been a successful property manager and real estate investor for over 10 years.