Vetting Property Management Companies

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Vetting Property Management Companies

Brian Tschida
Rental Property Investor · San Francisco, CA · Member since 2019 · 10 posts · 4 votes

I am in the process of finding a property management company for my first out of state property (I live in California, property is in Houston). My biggest problem has been that my property is in a rougher part of town and many mgmt companies don't service the area. While I have found/talked to one I like (Stagecoach, the founder was on BP podcast #167) I wan't to make sure its a good fit since I am out of state. 

Besides asking what services they offer, their fees, and how long their properties are on market WHAT ELSE should I be asking? It's hard to find reviews one way or the other. Should I ask for references? Any tips, tricks or advice would be greatly appreciated.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
5y

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!

The DIY Landlord Book4.7247 Reviews
WebsiteView Page
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  • Charles Carillo
    Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Brian Tschida

    Listening to podcasts and searching for property mangers online is OK but, the best way of finding the right property manager for your property is by referral from an investor in your area with similar properties. You want to verify that the PM manages many units in that area and properties that are similar to yours. You do not want to be talking to a manager that specializes in 100+ unit properties when you have a 5 unit or that they do not manage any properties in your area and their office is 45+ minutes away. I want a manager that knows my city and my neighborhood, understands who the tenants are and how to deal with them. I want a list of the current properties they manage in my area and drive them. I want them to give me a complete list of fees. I would like to also know what deals they have with contractors and what I will be paying to use their handyman etc.

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    5y

    Check out our blog series here on BP about Screening a PMC better than a Tenant:)

    [email protected]248-209-6824
    Logical Property Management4.9460 Reviews
    WebsiteView Page
    0Reply
  • Peter TverdovBusiness Member
    Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
    5y

    If you're going to have properties in a rough area, your list of PMs will likely be limited.

    [email protected]732-289-3823
    0Reply
  • Jorge RicoPro Member
    Houston · Member since 2018 · 4 posts · 2 votes
    5y

    What part of Houston is your property in?

    0Reply
  • Daniel Stevens
    Investor · Houston, TX · Member since 2019 · 20 posts · 5 votes
    5y

    I use T&N Enterprises with Tawni. She's the owner and does class A to D.

    0Reply
  • Brian Tschida
    OP
    Rental Property Investor · San Francisco, CA · Member since 2019 · 10 posts · 4 votes
    5y

    @Charles Carillo Those are some great points. Thank you for the tips.

    @Jorge Rico property is in Sunnyside

    0Reply
  • Brian Tschida
    OP
    Rental Property Investor · San Francisco, CA · Member since 2019 · 10 posts · 4 votes
    5y

    @Drew Sygit I'll definitely check those out. Thank you! 

    0Reply
  • Jorge RicoPro Member
    Houston · Member since 2018 · 4 posts · 2 votes
    5y

    @Brian Tschida Oh man, Sunnyside is bad. Try to sell it. Some investors specialize in D- properties and if that is you go for it. Otherwise, I hope it works out.

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    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!

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    3Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    5y
    Originally posted by @Jorge Rico:

    @Brian Tschida Oh man, Sunnyside is bad. Try to sell it. Some investors specialize in D- properties and if that is you go for it. Otherwise, I hope it works out.

    My property in Sunnyside brings in about 40% of my total company bottom line profit despite being about 12% of my unit count. Would I ever buy a SFH there? No, not worth it. But for multifamily? Sure.

    0Reply
  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    5y

    Nathan's list is better then a good start. It never hurts to ask/negotiate, but if you find a manager that checks all the boxes you are looking for, I would not be concerned with whether one managers fees are higher. It can be expensive to save a few bucks. Also, a good property manager will know their value and may not be as willing to negotiate. Some other tips:

    1. Check the BBB score.

    2. Make sure they are operating under a Broker's License and Google the brokers name and see what comes up.

    3. Real the owners responses to negative reviews, this can tell you a lot about an individual's personality

    4. Ask what Software they are using; I would not use a company not utilizing professional, up to date software

    5. Ask about their rental payment to owner process . I am always leery of those who say, "we pay around the X of the month" instead of a set day

    6. I'm weird this way, but look at the outside of their building on google streets. The outside of one's office space or building is the first impression a tenant or property owner will see. I feel that presentation is an reflection of how one will operate their business. I will not eat at a restaurant if the parking lot has a lot of debris as I imagine the kitchen would look the same way. I know, this is picky.

    901-848-9028
    2Reply
  • Beth Vandroff
    Property Manager · Lakewood Ranch, FL · Member since 2020 · 13 posts · 4 votes
    5y

    As a BDM for a Property Management Company your headed in the right direction. I have many owners ask for references,they will check out tenant/owner feed back on websites and go though the BBB etc.for complaints. Check out their processes and how they handle from onboarding all the way though to inspections, vetting etc.

    0Reply
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