A professional property manager is vital to the growth of your real estate investment.  The process by which you assess services by different providers is therefore crucial to what kind of returns you will see on your property.  Here are six key aspects to pay attention to when hiring a property manager.

1. How many properties is the candidate managing?

Clearly the more experience the more effective a manager is going to be, but there are diminishing returns if someone is trying to handle more units than humanly possible. In addition to knowing how many units they are managing, it is important to know how many employees the property manager has to help them.  Having a staff to help schedule meetings, arrange services and handle correspondence can free up a property manager’s time to focus on improving the returns on your property. Under a manager, a trained employee with the right tools and proven processes can manage between 50 and 60 units.  So, if you are qualifying a candidate, they have no employees, and are currently managing 47 units, how good do you think their service to your portfolio will be if you hand them 7 more?

2. What kind of systems do they use?

In today’s world of property management a professional service will use software to track the details of every property and provide regular reporting and access to real time information to the property owner. There are comprehensive software packages that provide information on payments, lease terms, move-in move-out dates, maintenance requests and scheduling. The best practice versions of these provide a portal for the property owner to access information about their own properties.

3. How does the candidate feel about inspections?

A critical component in managing both properties and tenants is visiting occupied properties on a routine basis.  As part of your discussions with prospective managers, you want to get a commitment from them stating how often they will conduct formal inspections of your properties.  In some cases, managers will be very accommodating. In most, however, they will balk at this requirement or use it as a way to increase the fee they will be charging.  Many property managers believe that conducting routine property inspections is something that is not part of their normal package of services.  Candidates with this mindset should be avoided.

4. How much is the candidate charging to manage your property?

Most property managers charge between 7% and 10% of the rent for managing your properties.  Be sure that you know what that percentage is based on.  Some managers will require that you pay them the agreed percentage on the total rent that could be collected whether they are collected or not. This means that they are not incentivized to find quick replacements for open units.   

5. How will the candidate address maintenance issues?

Be sure that you know how a property manager will address maintenance issues.  There are a variety of ways you as a property owner will pay for getting maintenance issues resolved.  You can expect that the property manager will want to make maintenance decisions (spend your cash-flow) up to a certain dollar value amount before they have to obtain your permission.  Also, many property managers will add a 10% fee on top of the invoice, and while it is often times hard to find a manager who doesn’t make this a non-negotiable requirement. At times, the markup for maintenance services is not made clear to the property owner when discounts negotiated by management companies are not passed on to owners. .

6. What kind of commitment are they willing to make?

Finally, make sure that the candidate will commit to provide reports to you no later than the 6th or 7th day of each month.  The portion of each rent should be paid to you at this time as well.  If rents are not received by the date agreed upon, immediate action should be taken.