Key traits of a good property management company
What are some key traits of a good property management firm?
I already know I will want to outsource this aspect of my rental property business but haven't started vetting PM companies. For those of you have the experience, what are you looking for in a property manager? What questions are you asking in the interview process? Is there anything about the terms of the agreement that I may need to think through in my analysis (beyond the percentage they require to manage the property)?
In reading reviews for some local companies, most tenants seem to dislike the PM and the owner experience seems to be a mixed bag of good and bad reviews.
I would look for people who were managing their own properties and then decided to create a property management company. The systems someone made for themselves and now want to sell to other people tend to work much better than the systems that people built using you and others as the test subjects. Property management is really really hard business, especially in lower rent markets. If someone has an "up for the challenge" attitude that will help a lot.
My property manager selects great tenants, is trustworthy, uses effective contractors for repairs, and deals with problems immediately. He also takes frequent random days/weeks off, starts work at 10am, takes a 2-hour lunch/gym break, stops work at 3pm, spends more time playing than working. He is also free, so there is that.
@Nathan Grabau you make a great point! I appreciate the feedback!
@Terrell Garren So are you your own property manager?
Quote from @J J Moody:
@Terrell Garren So are you your own property manager?
Yes. Would not have it any other way.
Hey JJ,
The way I sourced my PM team for the most part(I currently work with 3 different companies because of the markets I'm in) was by doing the research in the market, picking the top 3 based on my findings, and interviewing each one. Sometimes 1 or 2 in what you thought would be your top 3 dissapoints so greatly that you go back and add a 4/5th to interview(I actually found my favorite company because of this).
Online reviews can be helpful, but I won't automatically discredit a company solely based on this because negative reviews are more common, generally because of human nature. With that being said, use common sense if everything you can find says they are horrible.
Besides the obvious questions of monthly fee % and things like leasing/renewal fees, here are some examples of what I ask during my interviews(these questions are assuming you are already familiar with the market):
-Ask and gauge their experience level first. Then, let that free flow roll into the following questions.
-How many properties/type/doors are you currently managing?
-Do you outsource work or are all operations in-house?(maintenance, etc.)
-Do you collect on vacant units?
-What is your maintenance oversight/markup %?
-Required reserve?
-Average time to reach tenant occupancy when a door is ready to fill?
-Depth of your company/staff? Are they generalized in their duties or do they have specific/specialized roles?
-What is your typical tenant screening/eviction process?
-Any other services that are offered and/or things not covered that I should know?
-How often are properties inspected/charge?
-How do they process and send out the monthly statements? Is their an online portal? This question is only necessary if it matters to you. (For me, I do care about this because I want to know how easy or difficult it will be to handle accounting with their systems)
The last two things I'll throw in here:
Have them send you a copy of their PMA and read it thoroughly. You can compare the different terms and conditions against each company this way and have a better understanding of the works.
Finally, listen to your "gut feel" when you are interviewing and asking questions. That feeling is there for a reason and ignoring or suppressing it could set you up for a bad beginning.
Hope this helps!
I wholeheartedly agree with Scott's answer hear. I would probably piggyback on that and suggest reaching out to other local investors and seeing who they are using. They'll probably give you some honest feedback on what they like and don't like
#1 Tenant Screening Contributor
- Property Manager
- Honolulu, HI
Depending on what is typical for your market, IF they are full service and much of their business is Sales, you should make certain the PM handling your particular account has PM as top priority. If they are busy with Sales, which generate big commissions for them, they may not have the availability or focus that you desire, even if they have a big "team". They may also not have nearly the actual experience of someone that has been primarily managing a larger number of rental properties for many years. While we do provide full service, we do not advertise or "farm" for listings and sales...we only handle existing PM clients that are liquidating or adding properties. PM is always our primary driver.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,506
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Someone who is responsive at all times, investor friendly (doesn't hire the most expensive contractors). All property managers get bad reviews from their tenants, it's impossible to please tenants.
Quote from @J J Moody:
Everyone has their own list of what's important. I think communication and honesty are key. I respond to my owners within 24 hours, even if it's to let them know that I need more time. When I make a mistake, I admit it and pay for it. I am constantly seeking new ways to improve my service to clients, adding new features, improving communication and documentation, etc. I also improve things for my renters because a happy renter pays on time and stays longer. I'm also very honest with my clients about how their property is performing. If they would be better off selling it and investing in something different, I will show them the numbers and explain my thoughts.
@JJ: Make a copy of my Property Manager checklist, and review it with a prospective PM. Its alot of questions, so you can cherry-pick from them if you desire. I have only had one property manager balk at answering these questions, ever. I did not select them, as they could not make time for me (a telling signal). Often times, reviewing these questions with property managers helps them self-reflect on their business, including things they could be doing better. I even had one thank me for taking them through it!
@Scott Crowley wow, thank you so much for the in-depth response. All great questions and things to think about when deciding on a PM. Since I haven't worked with one before, I wouldn't know to inquire about some of the less obvious terms of the arrangement. Really helpful to see their PMA prior to moving forward.
I get that most people are not rushing to leave positive reviews so I do take that into consideration when I read negative reviews online.
Thanks again for the insight into your process!
Really great feedback from everyone.
This gives me quite a lot to think through should I transition from self-management into bringing on a property manager.
Thank you all so much!
@Scott Crowley really nailed it with the help, while I haven't hired one yet the one thing I have noticed is that if you do a basic google search you'll notice some big names have 4.5-5 star reviews. But if you read the reviews, those stars aren't coming from landlords but just from tenants. When you do a secondary search on how the landlords are liking it, you rarely see anything positive and just negative things. So google reviews is a bit skewed if you're going just off that.
#1 Tenant Screening Contributor
- Property Manager
- Honolulu, HI
Quote from @V.G Jason:
one thing I have noticed is that if you do a basic google search you'll notice some big names have 4.5-5 star reviews. But if you read the reviews, those stars aren't coming from landlords but just from tenants. When you do a secondary search on how the landlords are liking it, you rarely see anything positive and just negative things. So google reviews is a bit skewed if you're going just off that.
Aloha,
I started my work life in the restaurant biz, and my Manager then told me something I have always remembered:
If someone has a great and enjoyable meal, they tell a friend. If they have a bad meal, they tell ALL their friends!
Quote from @Richard F.:
Quote from @V.G Jason:
one thing I have noticed is that if you do a basic google search you'll notice some big names have 4.5-5 star reviews. But if you read the reviews, those stars aren't coming from landlords but just from tenants. When you do a secondary search on how the landlords are liking it, you rarely see anything positive and just negative things. So google reviews is a bit skewed if you're going just off that.
Aloha,
I started my work life in the restaurant biz, and my Manager then told me something I have always remembered:
If someone has a great and enjoyable meal, they tell a friend. If they have a bad meal, they tell ALL their friends!
This is true. It's just a warning for people that value Google Reviews. For me, I casually talked to one and they just told me they had 4.7 stars on Google, proof is in the pudding for their PM services. I told them, can you find me 3 of the reviews that were posted that were about PM and not being a tenant? No reply after that.
#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
- 3,639
- Votes |
- 7,029
- Posts
#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
Even if someone give you a referral, what meets their expectations, may not meet yours.
In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.
It's often a case of not doing enough research, as they don't know what they don't know!
Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.
So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.
EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!
This also leads owners to ASSUME simpler is better when it comes to management contracts.
The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!
We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.
We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:
We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.
EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!
P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊
Please send us any feedback via email, as we do not use the DM feature here.
@Drew Sygit
Thanks for taking the time to explain some of the ways you recommend vetting a property manager or firm. A critical point that you and others have made is that what is important to me and another investor is going to be different. I agree that it's key to review and assess all possible aspects of the relationship and agreement with any PM that I may bring on in this role. Certainly there is some level of control that I would be giving up, but this is where vetting the company, reviewing the agreement, and building trust comes in. Not to mention there is the ongoing management of that agreement and relationship that will ensure a better experience (hopefully) for all parties.
Thanks for linking the article!