When I think of Property Management, I think back to when I first started investing in real estate. It was 1989 and I was working full-time for a painting contractor, selling real estate on the side as a newly licensed agent, and to be quite honest, I don’t think I felt like I could afford to pay a property manager. You see I was trying to save every nickel I could to put it towards the next property I wanted to buy. At that time, a good property manager made more money than me and I don’t recall having a lot of money in reserves either, although I did have access to emergency money through credit. So what did I do? At the time, not much. In fact, I just kept plodding along for the next couple of years until I started to realize being a property manager just didn’t make sense anymore.
For some folks, especially those who have a good W-2 income or a decent paying job, a good property manager can make sense right out of the gate. Although I did my own management for several years before actually becoming a professional property manager at RE/MAX, I felt I had an edge at property management since my college degree was in management, I was a real estate agent, and I had taken many courses in property management on my way to studying for my broker’s license. After training and years of being a property manager it became more apparent when and why people would hire someone to manage their properties.
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Hiring a Property Manager: When and Why?
For me, it was when the time it took and the money I saved doing everything myself no longer made sense. The fact of the matter is; a residential property manager where my units were located was typically a $15 to $20/hour job. Now – even though I knew that, it took me so long to hire one because I was a property manager at RE/MAX (making 100% commission), working in the same exact area as all of my personal rental properties. So it wasn’t much of a struggle for me to handle my own properties…until the market crashed. Once that happened, the RE/MAX I worked for closed and the next brokerage firm I went to didn’t have a property management department for me to work at. Then it all became a hassle, especially when I wanted to focus on other parts of the industry (i.e. notes).
Some other reasons you may be looking into a property manager could include things like:
- Proximity to the property
- Number of units under management
- Time it’s taking you to turn over the unit
- Record keeping abilities
- Response rates (are you open 24/7/365?)
- Maintenance and repair systems
- Handling tenants’ collections, evictions, etc.
- STRESS! Did I mention the unnecessary stress of the job?
Also, this article wouldn’t be complete without a list of advantages of a good property manager (*note, I said GOOD property manager). These could include:
- Better screening and quality of tenants
- Better collections and accounting
- Better service and responses provided to residents
- Less turnover (no matter how many people you know, their rolodex is probably just as good if not better)
- Better repairs and maintenance systems (with all licensed and insured workers! So a lot less liability on your part)
- Better handling of legal issues
And the MOST important thing was freedom and more time. That, I’ve come to realize is priceless.
How to Find a Good Property Manager
Now that’s the good news if you get the right management company, but the bad news is if you don’t. So, what are some things to look for:
- of course you look at their fees, (most companies offer discounts for multiple units and recommendations),
- how they handle tenant and owner funds,
- policies on collecting and setting rents,
- how they handle inspections and repairs, tenant marketing, screening and retention,
- and examining the company size, staff, systems, experience, reputation, etc.
For example, the property manager I have that handles the majority of my properties has been in business over 25 years, manages well over 1000 units in my particular county, has a very competent staff and systems in place, and the broker owner is a district justice to boot. In fact, when you call in to their answering service you’ll hear things like, press #4 for no heat, press #5 for plumbing issues, so that gives you an idea how organized and automated they are. Plus I get detailed monthly statements from them, and all my contractors bill my property manager so I never have to stop to write a check!
What My Experience Tells Me
And finally, as a previous property manager, do I have any suggestions for you as an owner to make your experience better with your management company? Of course! You still have to manage these guys. But thinking back to my best clients, the guys who were the easiest to work with were the folks who listened, followed our advice, were reasonable, and above all took care of their properties, especially when we asked them to. The last one is key, if you don’t take care of your property or you aren’t attentive, then it doesn’t matter who your property manager is.
Looking back today hiring a property manager was one of the wisest things I’ve ever done. It enabled me the free time to start a new and even more successful business than I had ever had before. The skills I had learned from being a manager has helped tremendously in finding and managing good folks to manage for me, and hopefully reading this will help you on your journey to finding a good property manager.
So, now the question for you is when will you be taking things to the next level and hiring your property management company? (Unless you own a property management company there’s really no excuse!) As I get older, I know my family appreciates the fact that I’ve taken care of this chore for them in advance.
If you don’t have one yet when do you think your goal is to get one?
Leave me a comment below and let’s talk!