Hello @Benjamin Sulka,
We’ve operated a one-stop investor services business in Las Vegas for over 15 years. To provide all the necessary services, we assembled a team of experts in addition to our four core team members. Our expanded team includes:
- Property manager
- Renovation company
- property inspector
- Multiple trades like roofers and plumbers, which we call upon as needed
- Lenders
Not Just Rent Collectors
If your only expectation of a property manager is rent collection, you have extremely low expectations.
We expected the property manager to become integral to our core team. For example, the property manager we work with plays a key part in our property evaluation, in addition to managing our clients’ properties. See the diagram below.
Our core team manages everything until the renovation is complete. After renovation, the property manager takes over. She then does the most important task a property manager provides: markets the property and finds a reliable tenant. Our average tenant stay is over five years, while most other property manager tenants stay for two years or less. This is the difference a good property manager makes.
Our current property manager is our 5th. When property managers’ performance declined, we replaced them. After the first two replacements, being engineers, we developed a process for finding a property manager with the needed skills. This post contains an overview of this process. If anyone would like a free copy of the full guide, DM me.
List Your Requirements
“If you don’t know what you want, you will likely get something else.” paraphrased from Yogi Berra.
Start by listing the capabilities and services the property manager must have. Below are some of our requirements:
- Highly skilled at selecting reliable tenants
- They already manage many similar properties in the areas where our current and future properties are located.
- Already fully automated and has an owner portal.
- Will evaluate potential investment properties and provide estimated rent, time to rent, and renovation items in a timely manner.
- Will handle payment to the HOA and resolve issues between the tenant and the HOA.
- Practively manage property maintenance to keep maintenance costs low.
- Does NOT have an internal repair department. More on this later.
There are several more requirements, but these will give you a start on yours.
Once you have a list of requirements, it is time to find candidate property managers.
Finding Candidates
Search Engines
If you Google something like "Las Vegas Nevada property management companies," you may get too many hits to be practical. Also, ranking high on Google is more of a popularity/marketing contest than any measure of quality of service.
Yelp Reviews
Yelp and similar websites do not include reviews from individuals who benefit from a business's success, such as restaurant owners.
For property managers, other property owners are the clients, not tenants. However, only tenant reviews are typically included. A positive review from a tenant can be a negative review to the property owner.
Some examples.
- "The property manager agreed to replace all the faucets with better-looking ones at no charge!" - Including labor, faucets are about $150 each.
- "They let us stay an extra two weeks at no charge." - Our average rent is $2,200/Mo. Two weeks is $1,100.
- "They gave us back our entire security deposit despite our dog's damage to the rug.” Failing to deduct carpet damage from the security deposit takes money out of the owner’s pocket.
A negative tenant review can be a positive owner review:
- "I lost my job, and I asked the property manager for a couple of free months to find another job. They said no! XXX is a terrible property management company." The property manager did their job by protecting the owner from months of no income.
Always read property manager reviews through the eyes of the owner, not the tenant.
Networking
Reach out to people in your location on sites like Biggerpockets.com and others. Important: just because someone tells you that XXX is a great management company does not mean they will be a great management company for you. Do your due diligence.
Narrowing the Candidate List
Visit each candidate's website. If a website says they specialize in commercial properties and you want to buy residential, cross them off your list. Spending a few minutes on each website before the interviews will save you time.
Interview Questions
Select the best 5 or 10 property managers for an initial phone screen. Prepare 5 to 7 questions. I use one sheet of paper for each interview to take notes. After the interviews, I compared their responses. This helps me identify who knew what they were doing and who was guessing.
First Interview
Consider the chemistry between you and the property manager and their answers to your questions.
Below is a list of possible questions. Many more questions are listed in the guide.
- How long have you been exclusively managing properties? (No part-timers)
- How many properties are you currently managing?
- What is your mix of properties (single-family, condos, commercial, etc.)?
- What geographical area do you service?
- Do you have an internal maintenance department?
- Do you have a staff? How many are full-time?
- What are your fees?
Remove all property managers who did not perform well.
Second Interview
Select 5 to 7 additional questions that build on the initial questions. Again, record all answers for later comparison. Some important questions for this interview include:
- What is the average length of time your tenants stay in a property?
- What is your typical time-to-rent?
- How do you keep owners informed? (monthly statements, website, etc.)
A complete list of interview questions is in the full guide.
Based on this meeting, narrow the list to one or two property managers.
Third Interview
Hold the third meeting via Zoom. Use your previous meetings to guide your questions. Focus on any remaining important issues.
After this meeting, you should have a good property manager.
Additional Considerations
- Choosing the cheapest property manager may cost you more in the long run. A single tenant who doesn't pay rent or causes other problems can be more expensive than the slightly higher cost of a more experienced manager. Focus on the value you get, not just the lowest price.
- Never work with a property manager with an in-house repair staff. They often earn more from repairs than rent collection. Your unplanned maintenance costs shouldn't be another person's primary source of profit. The property managers we work with use services from independent providers for maintenance.
- Do not expect investment advice from a property manager. I've worked with many property managers, and none knew how to analyze a property. The best source of such analysis is an investment realtor (NOT an "investor friendly" realtor).
Summary
Your financial success hinges on your property manager's skills.
