So you’ve decided that you will hire a property manager. You have weighed the upside and the downside of doing so and have decided that it is in the best interest of your business to forge ahead. In business, we have to make a lot of choices, some small and some big. Hiring a property manager and trusting them with your portfolio is a big decision! If you haven’t decided yet whether you should hire a property manager please read our article on “Should I Use a Property Manager or Not?” on our legalwiz.com website to help you make a solid choice.
There are a lot of things to take into consideration when choosing a property manager. There are a lot of questions to ask. We’ll go into detail on considerations for choosing a property manager and the questions one needs to ask to make sure that both you and the management company are a good fit.
Type of Property Management Company
One of the first things you need to consider is the type of management company you will need. For example, do you own single-family homes, small multifamily, apartment houses, or commercial properties such as strip malls or office buildings? Some management companies specialize in one type of property and others are multi-faceted. Whatever company you choose it’s important that they can handle all your needs. In some cases, if your portfolio holds a lot of various types of properties you may have to choose more than one.
Check Them Out
It’s really important that you choose a property management company that not only provides the type of management that you need but also provides the various services that you need or want. One of the first steps in choosing the right property management company is checking out the company. We would suggest starting with an online search starting with the company’s website. We would also Google the company to see what comments have been posted by past and present clients. Understand that even the best of companies can’t possibly satisfy 100% of their clients but if there are numerous complaints and there seems to be some sort of a pattern- that could be an indication that you may want to look elsewhere or at least check out that company more in-depth.
When checking out a potential property management company we would request a list of current and past clients and get permission to contact them. We would ask questions of these folks such as what services were they provided, what their satisfaction level is/was with the company, have they had any problems in the past, and what items they would change about the company. For past clients we would ask why they currently aren’t working with that company and if they had issues that caused them to not continue to use them.
Interview More Than One Company
If you are hiring a new employee or screening a tenant for one of your rental properties, it is likely that you would interview more than one. As a matter of fact, you would probably interview several and pick the best. Choosing a property management company is no different.
Here a list of items to consider when interviewing a potential property management company:
As you can see there are a lot of questions asked and a lot of considerations to keep in mind. You also have to weigh the cost /benefit of using a property manager as you will spend anywhere from 2% to 10% of your gross rents (depending on your type of portfolio and how many properties you have with a particular company) with the property management company. There can also be additional costs for bringing in new tenants, repairs, maintenance and more. It’s important for you to get a thorough understanding of what specific services are provided and what they cost. Read the property management contract thoroughly before you sign on the bottom line. A review of this contract by your real estate attorney or qualified mentor is a good idea.
There is something to be said about learning the ropes of property management by managing a few single-family or small multifamily homes yourself but you will soon find as your portfolio grows, your time is better spent in managing your company, acquiring new properties and moving your business ahead.
As always, here’s to your success!
President and founder of the Colorado Landlords Association, best-selling real estate author and attorney, landlord and real estate investor with 28 years' experience.