Posted 2 months ago

What to Look for In a Property Manager

This piece will explore the services that any respectable professional management firm should offer. Professional firms offer a full suite of services and provide their client with a single point of contact for anything from marketing and leasing the property to tenant screening, collecting rent, handling all maintenance (and even rehabs), dealing with tenant turnover and much more.

Any suitable firm will have the end goal of letting the landlord/investor be hands-off, while providing a high degree of transparency in order to build trust.

Property Analysis

Todays full service property management firms use advanced software and data mining to provide landlords with an in-depth analysis of what their property can rent for. These tools compare the subject home against similar homes within a given radius – i.e. those with similar square footage, # bedrooms, # bathrooms and so on. Without a thorough, data-driven analysis, a landlord has a good chance of either leaving money on the table or pricing the unit too high thus increasing the length of time the unit is vacant – both of which are bad for business.

There are some free online tools that can provide basic levels of analysis, but the free tools can often be inaccurate as they are watered down versions of the more robust tools. The best software to use are pay-to-play, but a full-service management company should incur this cost (and not pass on to a customer) as a part of their service.

Advertising Your {roperty

Though an option, this isn’t necessarily something that should be outsourced to a Realtor. While many Realtors are happy to lease, their primary focus is on buying and selling since these are the much more lucrative opportunities for them, therefore rentals often take a back seat when it comes to prioritization. At PMI Plymouth, we’re very happy to provide full leasing services and equally as happy to work with your trusted Realtor if you have an existing relationship.

The most successful property management firms market a property aggressively through a wide range of both traditional and digital marketing methods. By leveraging modern syndication technology, management companies can push pictures and videos out to dozens of sites with a single action. The best firms use professional photographers to take both still pictures, and some leverage video walkthroughs. There are hundreds of apartments for rent in the South Shore and surrounding areas every day. You can double or even triple the number of candidates with the right marketing approach of your property.

Lastly, it’s important that prospective tenants follow a streamlined process to go from interested, to seeing the vacant property. Technology such as TenantTurner, and ShowMojo help automate prospective tenant follow-up and scheduling ensuring lots of highly qualified tenants show up to see the vacant home.

This is just one example of technology used by management companies to ensure the largest number of qualified applicants see your property and view your home.

Tenant Screening

Once you have a large number of potential applicants, it’s important to make sure you’re only accepting those that are highly qualified (i.e. good credit, no criminal history, etc.).

So, what other factors go into identifying a “good” tenant? They need to pay rent on time, not engage in illicit behavior and treat your home like it’s their own. A professional management firm should conduct a thorough screening that goes much further than just checking a pay stub or running a credit check. Work history, references and a full criminal background check must also be completed. One should ask their management company what their eviction rate is. If it’s more than 2%, I’d think hard about if you have the right management company.

Rent Collection

Property management firms should be acutely focused on providing timely disbursements to their landlord clients. Ensuring high quality tenants is a great first step, but there are other important factors that follow.

First, management companies must be clear that rent is due on the 1st of the month - no exceptions. By leveraging software and good accounting practices, notices can be sent both to the portfolio manager within the management company, as well as the owner and tenant. If rent comes in past the 3rd, and your state allows it, management companies should have processes and automations in place to assess late fees. Rent needs to be paid on time, that’s just how it is.

Maintenance

This is what most people think of when they hear the words “Property Manager” - the guy in the truck. This is true to an extent, but it goes beyond that. Professional management companies have reliable property managers to fix minor issues, spot paint, change locks, etc. but they also go a step further and offer a full suite of contracted services, often at better rates and with less wait time than when a landlord contacts people on their own.

Your professional management company should be your first call when looking to update your kitchen or bathroom, repaint the outdated living room, repave the driveway, clean the gutters, or take care of a major mold removal project. Good property management companies have some of these professionals on staff and if not, have a long list of local contractors on speed dial.

Contractors LOVE to work with property managers since it’s a continuous, timely revenue stream and as such, offer them discounts not otherwise available to landlords or tenants.

Compliance and Legal

There’s a never-ending list of regulations and laws that management companies need to educate themselves and stay up to date on. Security deposit laws, section 8, safety issues (mold, asbestos, lead paint), Fair Housing, etc - the risk a landlord takes on trying to “wing it” just isn’t worth it. One lawsuit (often with triple damages being awarded), could greatly exceed the cost of having a company professionally manage your home. Good management firms have air tight leases and policies in place to ensure regulatory and legal compliance.

Tenant Turnover

Voluntary tenant turnover is fairly straight forward. Most firms ask their tenants for 60 days notice so they can begin aggressively marketing the property to insure adequate candidate flow and that ultimately a great new tenant is found moves in with no gap in cash flow.

Involuntary turnover (evictions) are a necessary evil of being a landlord and aren’t fun to deal with. By leveraging a professional management firm, owners can rest assured notices are sent on time and legal is engaged (on behalf of the landlord) to expedite the unfortunate process. While it doesn’t happen often, involuntary evictions do occur with any management company, and it’s important yours is well versed in how to handle.

Costs

Cost and cost structures vary widely depending on which of the above services are offered. In the South Shore for example, management companies are generally charging between 7%-10% of gross rent. Management firms that also do leasing generally charge a 1 month placement fee for finding a tenant. Much of this is meant to offset the costs and time associated with marketing the property (photos, advertisements, showings, etc).

Bottom line: With the reduced vacancy days, increased asking rent, and improved timeliness of tenant rent payment, actual landlord costs to leverage a professional management firm are often completely offset.


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