The other day, one of my blog readers emailed me to say:
“I just turned 48. My husband and I have accumulated 26 rental units (single-family and duplexes) over the last 26 years, all with positive cash flow. The last two will be paid off in the next 2 years.
We’ve always managed our rental units ourselves. I have finally had enough. My goal now is to be location independent, as you are.
Can you tell me how to go about finding a property manager? How do you handle your rentals while traveling?”
First of all, WOW — I’m so proud this reader! Amassing (and paying down!) 26 rental units is a massive accomplishment and deserves a huge round of applause.
I’m thrilled she has a clear goal of becoming location independent. (For those of you unacquainted with this term, “location independence” means “you can travel anywhere on the planet, for any length of time, as often as you darn well please.” It’s a massive fringe benefit to both earning passive income via rental properties as well as running an online-based business, which are the two activities that fill my days.)
Given that this reader has 26 units, all so close to being paid-off, she’s in an ideal position to launch a location-independent lifestyle.
But of course, as long as she’s managing her rental properties herself, she’ll always be tied down to her town. So here are my top tips for finding a property manager:
1. Search for Quality, not Price.
Plenty of people will opt for the property manager who charges 8 percent instead of 10 percent, based solely on price. But in the property management world. quality is paramount. A top manager is worth the extra cash.
That doesn’t necessarily mean the best manager will be the most expensive. The old cliché “you get what you pay for” isn’t necessarily true. There is not necessarily a direct correlation between price and quality.
The main point is that if you face a trade-off between price and quality, shoot for the better performer.
2. Find a Licensed Property Manager.
In most states, the real estate association (the same group that licenses real estate agents) also has a designation in which they license property managers. (This is certainly the case in Georgia, the state with which I’m most familiar).
A licensed property manager must register their business with the state’s real estate association. They must also keep their paperwork and procedures compliant with the association’s policies.
I will only used licensed property managers, for three reasons:
- I know they’re running a “real” business. They’re not some fly-by-night operation.
- They’ve taken the time to learn the laws and regulations. They’re more likely to know their stuff.
- I’ll have better legal protection. If a tenant sues me, I can appear before the judge with confidence, knowing that I won’t have to make excuses if the judge asks me, “Why didn’t you choose a licensed manager?”
3. DO NOT Hire Friends or Family.
Just don’t do it. Enough said.
4. Pay Attention to Niches.
Look for property managers who specialize in your neighborhood. I chose one particular property manager largely because the bulk of the houses that she manages are in the same neighborhood as one of my rentals, which means she understands that neighborhood’s unique demographic.
5. Look for a Landlord.
I prefer that the property manager that I hire is also a landlord herself. It shows me that she understands my perspective. When I’m interviewing potential property managers, I always ask if they own any rental properties, and if so: How many, What type (Single-family? Multi-unit?), and in Which Neighborhoods? I look for a manager whose holdings align with my own.
Is there any other advice I should give this reader? Sound off in the comments!
Photo Credit: Saltatempo