How to Find and Hire the Right Property Management Team for Your Rental Properties
Becoming a property owner of rental property means that you are essentially going to become a landlord to enjoy the benefits of a passive income. This entails a lot of responsibility, and many real estate investors who have used the BRRRR strategy have absolutely no interest in taking on those responsibilities. However, they still want to enjoy the benefits of having rental properties, such as the real estate cash flow it can provide. To ensure that your property is properly cared for and that you have excellent tenants, it is in your best interest to consider hiring a property management company.
Why Hire a Property Management Company?
As a real estate investor, you are already very busy with the investing aspect of your business. You are looking for new places to buy, ways to increase cash flow, you are finding contractors for rehab, and you are thinking about how you are going to get financing for your future properties. You do not have time to take care of all of your tenants on top of all of that. Most likely, managing your properties alone is also not likely the best use of your time when you could be sourcing other projects. Not to mention, is saving some money every month really worth the time and frustration of the late night phone calls for broken toilets? This is where the property management company can help. They will be able to take care of a wide range of different tasks involving your property, so the only thing you have to do is collect your check each month.
A good property management company will be able to take care of marketing your property to potential renters. They will also be able to provide you with high-quality tenants by performing screenings to find those who will pay their rent on time, who are less likely to cause problems or damage the property, and who are more likely to rent long-term.
The property management company understands the field, and they can ensure that they handle all legal issues properly. This is true for the screening of tenants, unit inspections, leases, and handling rent and security deposits. Also, they can ensure a tenant eviction is done correctly and according to the law in your area, if it is needed. This last step alone with respect to evicting tenants could be a major issue for you if done incorrectly especially in States that have laws strongly favoring tenants in such processes.
The property management team will also have people who can take care of maintenance and repairs on the property. Instead of the tenant calling you in the middle of the night because of a plumbing problem, they will get in touch with the property management company.
Knowing the benefits of hiring a property management company for your rental properties is only half the battle, though. You also need to make sure that you understand how to find and hire the right property management team for your real estate portfolio.
Let’s take a closer look at how to do this and find the perfect solution for your real estate rental properties.
Where Can You Start Looking for the Right Property Manager?
Regardless of where you might live or where your rental properties are located, there is a good chance that there will be multiple property management companies available. However, not just any company or individual will do. You want your rental properties handled properly, and that means finding and working with the best in your real estate investing.
When you are first starting to look for property managers, there are several different places where you can look. First, you might want to speak with other rental property owners to see who they are using for their team. They might be able to provide you with a good recommendation. However, even if they do provide you with an excellent suggestion, you will still want to make sure you research the company independently to make sure they are the right choice.
You can also research property managers online to build your list of options. Make a list of the various companies that interest you and that manage properties similar to the ones that you have. Keep in mind that not all of these companies will work with the types of buildings that you own. Some might only work with apartment or condo complexes. Others might only work with single-family properties. Some might have a requirement that you need to have multiple properties for them to handle before they will work with you.
Get a better sense of what the property management company handles, and then narrow your list to those that are aligned with the types of real estate investments that you have.
Also, it is a good idea to look at some reviews of the company by other property owners and tenants. If you notice that the owners and the tenants are complaining about the company, it should raise some red flags. While there will always be some people who are not content with a service, you will want to look at some serious issues, such as reports of maintenance issues not being cared for, harassing the tenants, etc.
Interview the Property Management Companies
When you have narrowed your list, you will want to interview each of the companies you are considering to make sure the income you earn from your rental properties truly is passive income. You will want to make sure that they are licensed and insured, and you will want to know how long they have been in business. Those who have been in business for at least several years will have more experience and will be able to handle a wider variety of situations without trouble. Our Interview Tool provides a free resource for you so you can be assured you are asking candidates for property management the right questions and even allows you to compare multiple property managers side-by-side.
You will also want to get a sense of how many properties they are managing and how many properties each person on their staff has to handle. While you might think that choosing a company that is busy means they are the best, it might also mean they are overworked. If a single person is in charge of 100 properties, it means that those properties are not getting as much attention as they deserve. Ideally, you will want to choose a property management company that has 50 or fewer properties for each manager. This way, the manager can invest the appropriate amount of time needed for each of the rental properties.
You also want to know everything that the property manager will be able to do for you. What services do they offer? What types of tenants do they typically acquire for properties, and how long do the tenants usually stay? You will want to work with a property manager that has a record of people staying in the property and renewing their leases, as this will mean less vacancy time in the apartment. It is also prudent to ask them how long it usually takes to fill a vacancy.
Ask if they do property inspections, whether they offer online payment options for their tenants, and how they handle security deposits. Will the deposit be given to you or held by the company? How do they handle late payments and evictions? You will also want to know how and when you will be getting paid each month.
It is also essential that you talk with the company about their fees. The average cost of the management fee is 10% of the rent. Therefore, a rental that is $2,000 a month would likely have a management fee of $200. However, there are often other fees associated with property management that they might not always tell you about upfront. For example, you will want to know their fee for filling a property with new tenants or renewing the lease for a current tenant. Check to see if they have markups for repairs, for setting up your account, eviction fees, etc. Ask them about all of their fees, including hidden fees. Don’t be shy in asking, as you will be the one who has to pay if you don’t.
What happens if you decide that you no longer want to work with the company or you decide to sell the property? What are the terms of the contract, and what happens if you were to try to cancel your agreement early for one reason or another? Some companies might require an exclusive arrangement to broker your property. We recommend you go to your property manager with your own contract terms and how you want the relationship to work. Our solution for the Buy-Rehab-Rent-Refinance-Repeat (BRRRR) method investor can help you with this.
You want to learn as much as possible about the company before you hire them. It might mean having multiple interviews with each of the companies. Even though the interview process might take a bit of added time, knowing that you have the right property management team on your side can give you a lot of peace of mind.
Use the Right Real Estate Investing Tools to Help with Investment and Finding a Property Manager
To make your entire investing experience easier, you will want to consider checking out what BRRRRInvest.com has to offer for those following the BRRRR strategy. We will help you in many aspects of investing, including analyzing deals through our BRRRR calculator and real estate deal analyzer, generating offer letters and even editing and signing contracts prepared by professional attorneys. You will find that it can also help you on your journey to find the right property management team. You can edit and sign contracts with the property managers directly through our site, among other BRRRR investing tools. Get access to our Deal Analysis and Legal Solution and take advantage of our risk-free trial option with lifetime access! Learn more.