Screening your property manager

There is no shortage of horror stories out there about terrible tenants, but what about the property manager that allowed them in? In this blog post I will be sharing my experience based off of both managing property under a management firm and working with investors who hire a management company to take care of their portfolios. Selecting a good property manager is the bread and butter to making sure your rental property is successful. They are the frontline between you and your tenants, maintenance staff and (Hopefully) your local inspectors. I've come to find that, more often than not, the loudest voice in the room isn't necessarily the best. Take McDonald's for example, or Samsung, Wendy's and the iPhone are both CLEARLY better but more people around the globe know about Mickey D's and Samsung! Alright, that was an opinion… And you know what they say about opinions!

In my market (The Quad Cities / Davenport, IA), there is no question that there is a big dog in town that out numbers the amount of clients and properties other firms in the area have and manage. I won't go into detail, but all you need to do is read their reviews on Google to figure out what everyone thinks about them. If screening your tenants is so important, why is screening your property manager so overlooked? The answer is simple, they pay the most for advertisement and have amazing sales tactics. When you find this company in your region you should be very weary. It's possible the best in town also has a great sales team and advertises well, this is definitely not a blanket policy. Below is a quick breakdown of just some of the things you should look for in a management firm:

1. First and foremost, you want to find a LICENSED AND LEGAL FIRM! The reason this is important is because any Joe Blow firm that burns their name has no problem dissolving their LLC and doing business as normal for the measly $50 that it costs them to start another LLC. In Iowa, you must be a licensed broker to do just about anything when it come to managing real estate except for maintenance. If you are the owner of the property, this does not apply. Make sure you talk to the individual holding the brokerage license and get proof they are certified. Many management firms simply hang their hat on someone else's license for a partnership agreement. You want to make sure they have "Skin in the game".

2. Talk to other property owners and get references. Request to meet the whole team, from the maintenance staff to the leasing agent. Ask the prospective property manager for at least 3 owner and tenant references. A few things you may want to ask them include but are not limited to:

A. How is the maintenance? How easy is it to get ahold of the staff? (VERY important)

B. How long have you lived there or had this firm manage your property? How many employees have they had since you hired / rented from them? Numbers don't lie!

C. What are the addresses of all of the properties you manage? There are a few things you should do with this information. Here are a few of my suggestions...

-1. Drive by, how does it look?

-2. Talk to the tenants and neighbors if you can.

-3. Call the local city / county inspector and request the inspection reports for these properties. This is public information which is VERY helpful. If the inspector had a laundry list on their first inspection, did it get resolved by the time they came back? If not, this is indicative of bad maintenance and management.

-4. What kind of neighborhoods are the company managing? The lower the class of neighborhood, the busier the management company is going to be and this may be an indicator that they have less time to deal with your property.

3. What do their systems look like? This is something that is a judgement call for you to make. If you like old school paperwork, find a company that does things your way. If you like modern property management software, find a company that uses technology. Ask them to give you a crash course of their systems.

4. Search public court records for the firm and the owner. Have they been sued? If so, by who and why? This may be a no brainer, but make sure you also look them up on Google and Facebook.

5. How much do they cost? Bargains are for flea markets, NOT YOUR FUTURE!

6. Finally, make sure you have a secondary pair of boots on the ground if you don’t live nearby. You never know what the tenants and property managers are up to if you are halfway across the word.

This is my first blog post and these are just a few of the things to scratch the surface. I’m sure I missed all kinds of things, but if you execute these steps I guarantee you will be much better off than if you didn’t! I encourage you to reach out to me if you ever want my 2 cents or have any questions about finding the right property manager!