Once you own 100 properties, how do you effectively hire a manager? How do you screen management companies? How do you find a manager to do AirBnB's if you own 50 of them?
I worked in property management for several years, and my first question I would ask a property management company is how many of the employees of the company own their own rentals. If they say zero, or less than 40% of the employees own their own rentals, run away. I worked at a company with approximately 30 people, and I was the only one with several rental properties that I owned and managed on my own for many years (some people had equity positions in rental portfolios, and I believe one other person had 1 rental). It makes a huge difference in how the managers and leasing agents will treat your properties. You want people who know what it is like because you will get better management by far.
Once you find a PM who has employees who own their own properties, then you want to ask some of the following:
1. What types of properties do you typically manage? You want to find out if they are taking whatever they can get, or if they focus on a particular type of property, and make sure it aligns with what you have
2. What is your average vacancy rate? How many days does it take to fill a unit once it is vacant.
3. What processes and procedures do you have to ensure interior and exterior inspections are completed so that items of note are taken care of before they become large problems? Ask to see the checklists and systems they are using, don't just take their word for it.
4. What is your eviction percentage? If this is high, they may not be screening properly
5. What pre-screening and screening criteria do you use? Ask to see it.
6. What are you management fees? What fees are there for cancellation, evictions, renewals, marketing, account set up?
7. Do you do a la carte pricing (mix and match accounting, facilities and leasing), or do you only do full service management?
8. What does your lease look like?
9. What professional designations do the PM's have? Do any of them participate in education (attending professional organization meetings) outside of mandated continue ed?
Tell us a little more about your background and what motivated you to ask these questions...I am interested to hear...
First off conducting due diligence is key before hiring that person or company;
Hiring a property manager is an important decision, and can be an asset for a property investor, but can also be a detriment if not chosen carefully and without some due diligence. Here are 10 tips on hiring a professional property manager:
1. Make sure that your property manager is a licensed Realtor or Broker, look them up on DBPR, the department of business & professional regulation.
2. Make sure their office is relatively close to your rental property. The farther it is, the harder it is to manage, show, find tenants, get vendors and inspect
3. Look at the experience of the Property Manager. They may not know the Fair Housing laws, take too long to fill the vacancy, have licensed vendors. How many units do they manage, or are they just doing this “on the side” for extra income.
4. What is their policy for dealing with evictions?
5. Are you willing to give up control? Most Professional Property Managers do everything; collect rent, schedule maintenance, pay taxes, pay mortgages & HOA dues, process security deposit claims, marketing , leasing , on call 24/7, handle landlord-tenant conflict. Its exhausting.....
6. Examine their management agreement, check to see if there is an out clause if you are dissatisfied, make sure it spells out the responsibilities of the owner and the property manager
7. What type of fees do they charge? Most companies will charge a management fee, leasing or placement fee and renewal fee. Ask if there are any any additional fees for maintenance, advertising, evictions, etc... and make sure they are outlined in the agreement. Do your homework, don't be fooled by low or flat management fees.
8. When and how will you receive your money each month? Will I receive a monthly statement?
9. Do they perform property inspections? What kind and how often?
10. How do they handle maintenance complaints or emergencies from tenants?
Property managers are great as a third party buffer or middle man, this is a business to us, it's not personal. Tenants understand they are dealing with a professional
@Dorothy Butala @Patrick Philip Hello Patrick - Get your track shoes on because the advice Dorothy is offering is going to cause you to run away from every management company in the nation that could even contemplate handling your homes. "Worked at" is a past tense....and some of her advice does not fit Single Family Homes.
If you ran away from a large to medium sized management company that did not have 40% of their staff owning rental properties, that would be ALL of the management companies in the country. Completely bad advice - you should run away from that.
1. Vacancy Rate - In managing single family homes, the scope of what you manage and who you manage for is too different to even consider using this as a metric. Keep in mind, WE (the management company) does not set the rental rate.....it's the owner's final decision. If you, the owner, dictate price with no bending - it will kill a vacancy rate - if you were to even attempt to use it as a metric. PLUS - you have different homes all over town in all price ranges. This is not a figure that means anything in the single family home space.
Perhaps a better metric would be Average Days on Market giving you a number of days - not a percentage.
2. Eviction Percentage? First - define eviction? Sending a notice to vacate? Attending an eviction hearing? Filing a writ of possession? Conducting a sidewalk move out with the Sheriff? PLUS - it has nothing to do with proper screening - IF - you manage low end homes. This is another metric that means little if anything based on multi-family numbers, not single family property management.
A better question to ask would be how many writ of possessions do you have to enforce a month / year?
Here is another article on choosing a property management company:
Also - great advice by @Kim Meredith Hampton .
Good luck out there!
Originally posted by @Dorothy Butala :
@Brad Larsen @Patrick Philip I realized in my post I never said anything about him hiring his own manager, which was his first question. My answer was in favor of hiring and training his own manager vs using a property manager. My apologizes for leaving out that vital piece of info!
Do you train your own managers?
Does it work out better for you? What do you tell them? I once knew a guy who trained his own managers and required them to read some book that cost $10,000.
@Patrick Philip I have pieced out parts of the management, I have a book keeper, an assistant, a maintenance tech, a turn over crew and a construction crew. I still manage the leasing side of the business. I am working on the process and procedures I have created over the years, and putting them down on paper so I can build a training program to delegate the leasing aspect of my business in the next year. I feel no one will ever treat my "baby" like I will, so I want to control how it is managed by controlling the training of those who will manage the property for me in my absence. However, I will never be fully absent, and I will always check in and have metrics that will be used to understand how well or poorly my leasing staff is doing, so that I can always make sure they have the support needed to be successful.
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