When you’re searching for a great property manager, you’re looking for someone who cares as much about your investment as you do. They’ll be your eyes, hands, and ears when managing tenants, leases, maintenance, and daily operations.
Finding a qualified local property manager with these qualities might seem like a tall order, but the professional insights we’ll highlight below can help you pinpoint the best property manager to take care of your investment.
Table of Contents
The Importance of Experience
Experience managing investment properties similar to yours is a vital quality to look for in property managers. Everyone has to start somewhere, but when it comes to taking care of your investment, you want someone who’s already learned the ropes with years of hands-on experience. A manager who’s weathered every type of property management storm gains indispensable insight that helps them manage their investment property successfully, no matter what issues come up.
Dealing with late rent, handling regular maintenance, responding to late-night emergencies, and finding great tenants — these are all ways that an experienced property manager gives you a built-in advantage in running your investment smoothly. Look for someone who’s seasoned in managing properties like yours for the best fit.
Andrew Helling, owner of Helling Homebuyers and a former property manager, says, “Property managers make decisions every day that directly affect your bottom line, and without experience, they won’t have a baseline for the right and wrong ways to spend your money. You want to find a manager that’s both sympathetic to tenants and careful to not be wasteful. It’s a balancing act, but I think that asking specific questions about how they’d handle common situations will quickly weed out the managers who put thought into their decisions from those that will process all service orders.”
Local Market Knowledge
As important as experience is, it can’t replace a working knowledge and understanding of your local real estate market, relevant state and local laws, and tenant rights. Property managers need to stay informed on rental market trends, fluctuating rent rates, tenant demand trends, and the best marketing channels to use to find potential tenants and quickly fill vacancies.
A manager who knows the local market inside and out will help your property stay competitive and profitable, but they’ll also help keep you out of legal trouble should issues with tenants arise.
The day-to-day operations of managing an investment property require a special set of skills and the ability to work efficiently. Good property managers know how to handle daily duties (responding to maintenance requests, collecting rent and deposits, lawn care, etc.), but great property managers have existing systems in place to manage it all efficiently and keep clear records. Many use property management software to track and oversee daily, weekly, monthly, and annual management and proactive maintenance processes.
Skilled property managers will have working relationships with cost-effective local contractors to handle big maintenance and repairs. That’s what you want: Someone with a clear view of daily operations and the local connections they need to take care of problems along the way.
Caring for your investment property means taking on a major financial responsibility — you want your investment to work for you, not against you. That’s one reason why being selective in your search for a property manager is so important. Set your sights on a manager with the financial acumen and record-keeping ability to run your property successfully, from hiring cost-effective contractors and tracking operational expenses to timely rent and security deposit collection.
A property manager who diligently tracks the financial performance of your property over time will help you stay informed, boost your cash flow, and stay competitive in the local market.
Communication: The Key to a Good Relationship
Experience, local market knowledge, operational skills, and financial management abilities are all qualities of a great property manager, but without good communication, those traits can be fruitless. A property management company with great communication skills is the key to building a good relationship with you, your tenants, applicants, and contractors.
From settling tenant disputes to keeping you in the loop on property updates and reports, finding a manager who prioritizes communication plays a major role in running a profitable property. You’ll see less turnover and better cash flow when your property manager is building good relationships with tenants and communicates clearly.
Verifying Their Track Record
On paper, a property manager might present themselves as having an impressive background and years of experience. But don’t take their word for it — verify their track record! Ask for client references and call each one. Ask about how the candidate handled past tenant issues, their responsiveness, tenant retention rates, and how they handled property upkeep. If you’re not getting clear answers, you might need to check with another reference or ask your property manager candidate directly.
Search online to find reviews and ratings for your potential property manager, taking tenant complaints and praises, property owner reviews, and the candidate’s responses to these ratings into account. Are they professional and courteous? Do they take responsibility for issues and mistakes? These can help you determine how good a fit this candidate could be for your investment property.
Understanding the Contract
Once you’ve found a great property manager to help oversee and manage your property, you’ll enter into a legally binding contract with them. Both parties need a clear understanding of the terms of the agreement, from services provided and fees/payment structure to contract termination terms. If you’re unsure about the terms, you might hire an attorney to review the contract with you and get clarification.
Here’s a look at what property management contracts typically include:
- Cost: Usually ranges from $0 to $500
- Property managers may charge this one-time fee to cover the cost of adding your property to their portfolio
- Cost: 50% to 100% of one month’s rent on average
- Fee charged by property managers to locate and place a new tenant; for lower occupancy properties, the rate is usually higher
Lease Renewal Fee:
- Cost: Ranges from $200 to $500, or 10% to 50% of one month’s rent
- Covers the property manager’s renegotiation of lease terms or lease renewal for current tenants
Maintenance Mark-Up Fees:
- Percentage: Usually a 10% to 20% mark-up of the final repair cost
- Property managers add this fee to cover their arrangement and coordination of maintenance and repair work with contractors
- Cost: About one month’s rent or a fixed monthly fee while the property is vacant
- Property managers pay this agreed-upon fee during periods when the property is vacant, ensuring your cash flow doesn’t suffer and keeping the manager incentivized to fill vacancies
- Cost: Varies from a few hundred dollars to $1,000+, excluding legal fees incurred in the eviction process
- Fee charged by property managers to cover their involvement and coordination of the eviction process, which may include serving eviction notices, making court appearances, and filing paperwork
Early Termination Fee:
- Cost: Varies from a fixed, one-time fee to fees equivalent to the remainder of the management contract
- Fee paid to property managers if you decide to terminate the contract before the agreed-upon date
- Cost: Typically $50 to $100 per inspection
- Fee paid to property managers to perform special or in-depth property inspections beyond the scope of regular duties
This isn’t an exhaustive list of the fees and payments that might be outlined in your property management agreement, but it should give you a clear idea of the types of fees and payment structures to expect when you review the contract. Fees and terms will vary by location, property size, occupancy rates, and management duties.
If something is unclear in your agreement, don’t make assumptions. Confirm the terms and consider reviewing them with an attorney to ensure you’re well-versed on the services, duties, and costs of working with your new property manager. You can always negotiate terms if needed. Ensuring you and your new property manager are on the same page will foster a successful working relationship.
Questions to Screen Potential Property Managers
You might see a lot of interest when you start looking for a property manager but remember: All that glitters is not gold. You need to screen your candidates to separate the wheat from the chaff! Asking the right, pointed questions will tell you a lot about each candidate’s skill set, experience, and communication style so you can select the best candidate for your property.
These are some of the best screening questions for property management candidates I’ve collected over the years:
Experience and Background:
- How long have you worked in property management?
- Can you share some examples of similar properties that you currently manage or have managed in the past?
Local Market Knowledge:
- How do you stay up to date on local rental market trends?
- How do you ensure compliance with changing property laws and regulations?
- How do you screen and select reliable tenants?
- How do you respond to maintenance requests and emergencies?
- How do you manage property expense budgets?
- What’s your rent collection process?
Communication and Reporting:
- How often do you share updates with property owners?
- How do you handle tenant complaints and disputes?
Track Record and References:
- Can you provide me with a few references from property owners you’re working with or have worked with in the past?
- How do you respond to negative feedback or reviews posted online?
- If my home has vinyl windows and the tenant calls to report mold on the window sills, what would you do? (Getting pictures from the tenant and then asking them to wipe the windows themselves is the right answer, as this is a common problem when moisture meets dust in window sills. Sending a tech to inspect is the wrong answer).
- Assume the tenant gives notice to move in September. What steps would you take after receiving notice? (The right answer is to ask why they are moving, and if it’s not because of buying a house or a job transfer, do whatever possible to get them to sign a 6 or 18-month lease to stay through spring. After all, it’s much easier to rent a house in most markets in the spring than it is in the winter).
Find Your Property Manager Today!
Hiring a property manager to care for your investment property requires research, careful consideration, and due diligence in checking references and understanding agreement terms. It may seem overwhelming at the outset, but with tips from a seasoned property manager in mind, you’ll be able to confidently select a great candidate with all the right qualities.
Look for someone who brings a wealth of experience, has a good understanding of the local rental market, has demonstrable communication skills, has proven processes for daily operations, and has the financial acumen to manage your rental property successfully.
By adding a great (and vetted) property manager to your team, you’ll be able to elevate your property’s competitiveness in the local market and free up your time to focus on other ventures. It’s every investor’s dream!
Find Out What Your Home is Worth (takes 15 seconds)
Need A Real Estate Agent in Your City? We Can Refer a Great Agent!
Chris Highland, Associate Broker eXp Realty Maryland
We Can Help with Real Estate Investment
Whether you’re a seasoned investor or just starting, partnering with a knowledgeable real estate agent can enhance your investment journey. From identifying lucrative properties to navigating complex transactions, we specialize in helping investors make informed decisions. Reach out to us today to explore how we can assist you in achieving your real estate investment goals.