Keys to Finding a Good Property Manager

2010-2011 brings hope and promise for every investor who follows Warren Buffet’s famous quote:

“Be greedy when others are fearful.”

The more I study the fundamentals today, one fact is very clear:

Now is the time…..now is the time……….now is the time!!

Buy low now. Sell high later. The patient “buy and hold” real estate investor who is active today is creating great wealth for tomorrow. However in order to take advantage of this niche you need to not only buy the right type of home in the right area but you need to have good property management.

If you are not going to manage your own property, than you need to hire a good property manager. With this said, a lot of investors have been contacting me and asking the big question “How do you find a good property manager?”

I am going to give you 7 golden questions to ask your potential property manager that will increase you odds in finding the right company for the job. Believe me, a good property manager is harder to find than a good realtor! So you want to do your homework on this one. I could write dozens of pages on this subject but the questions below are a good foundation to get you started.

7 Golden Questions to Ask Potential Property Managers

1. Do they already manage property in the area where your house is located and manage the type of home you own?

If the management company has rentals under management in your specific area already (I’m talking the same neighborhood or close by not just the same city or town) they are much more likely to perform. If they don’t, I would suggest you move on. And make sure they manage your type of home. You don’t want a “high end” specialist managing a 1200 sq foot home in a “regular Joe” neighborhood or vice versa.

2. Do they own their own investment property?

Property Managers who have “skin in the game” have a better knowledge and almost always do a better job. Period.

The brokers/ owners of the property management companies we work with own several rental properties and it shows in the company performances.

3. How many houses does the company have under management?

If a property management company manages less than 100 properties and is in a market with a population of over 100,000 people, I consider them a very under developed management company. I suggest you move on to the next.

4. What is their rent collection & eviction policy/process?

If they can’t give you a direct response on this part of their job……

RUN AWAY!!!!!!!!!!! It will save you a lot of pain in the future.

A good management company has a very clear system and is no nonsense on rent collection and evictions. This might sound a little harsh but your mortgage payment is due every month no matter what happens.

Take it from a guy who lost a lot of money in the beginning of his investing career but letting his “heart get bigger than his head”. Unfortunately tenants can take advantage.  Charity is a great thing that I encourage but please don’t combine it with your rental portfolio!  Keep the two completely separate.

5. How will you get my property rented?

Make sure they have a strategy to fill your vacancies!

6. Fees?????

This is a big one. How do they earn their money?

A good management good company usually gets a one time fee for filling the property initially and then a percentage of collected rents.  If they are not collecting rents they shouldn’t be getting paid! In our area standard fees are 10-12% but can go as low as 8% and as high as 14%. I realize these fees can vary in different areas so again, do your homework on what is standard for your area.

Avoid a management company who uses maintenance or repairs as a profit center! They should take care of this as part of the job at par pricing, no add-on fees! Do not allow a management company to make a repair over $250 without your permission. Also, as far as marketing the property, they should not charge extra fees for marketing the property.

With all this said, I wouldn’t recommend just choosing whoever is the “cheapest” without weighing all of their skills! I made this mistake when first starting out as well!

7. How do I get my money/ statements?

A good management company should have auto-deposit available for you into whatever bank account you choose to receive your rental profits. They should have a specific date for depositing the rental profits and you should also receive a management statement every month to review the performance of the property. (We prefer email.)

If you ask these 7 questions, you are taking the time to do what most people don’t take the time to do and they get hurt because of it.

Remember:  The key to a “buy and hold” investment is good management so choose wisely!!

brian scrone, foreclosure, interviewing property managers, jim sheils, property management, property managers, questions to ask property manager, Real Estate, rental propeerty, tips