How to search for a good property manager from distance?

6 Replies

Hi,

I just bought my first turnkey out of state property. I knew my next step will be finding a good property manager to taking care of the property, but how could I search for a good property manager from distance? How could I know if we know he/she is good or bad? and what "red flags" should I watch for when looking for one?

I greatly appreciate any advise.

Tony

Hi @Tony Zhang and congratulations on your OOS acquisition!

The best way to find a great PM is to engage your network and solicit referrals. You'll want to talk to long-time buy-and-hold investors with great things to say about their current management. You're also going to want to hear any horror stories about companies who performed poorly for their clients.

It appears from your profile page that this new property is in St. Louis, MO. I'd start by reaching out to local real estate investment associations (REIAs), as well as checking here on BiggerPockets, to identify STL landlords willing to give you the unfiltered truth about the property managers they are using or have used in the past.

Be sure to thank these investors generously once you've spoken to them: You'll likely be relying on them repeatedly for additional assistance and advice! (Pro Tip: Everyone loves an Amazon gift certificate!)

Hi Tony.  You should first look to see that there are no negative reports about them with Better Business Bureau or other local business complaint sites.  Look for complaints from owners versus tenants.  I'd be a bit careful about putting too much stock in negative feedback from tenants as sometimes tenants provide negative feedback on landlords who are simply enforcing the rules.  Oftentimes people only report their bad experiences and not their favorable ones.  Ask them about their current and YTD vacancy rates.  You should get a list of their current owner/clients and ask these people questions about ease of doing business, transparency of monthly and yearly reports, timeliness of handling tenant and maintenance related issues, how quickly your money is sent to you, etc.  For your future investments, you should try to find a turnkey provider who owns or is closely aligned with a property management company.  It will avoid all of the finger pointing if you cannot get the rent values that were assumed when buying the property.  Good luck and feel free to reach out with more questions.

You can try searching on Google or DuckDuckGo (stay away from Yelp, they're the devil). Also search on NARPM. They will give you a list of property managers in your area. Lastly, I would recommend calling up a reputable realtor in the area and asking them for a recommendation. 

Remember: cheaper doesn't mean you'll make more money.

You can start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. Regardless of how you find them, try to interview at least three managers

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!