For many of us looking for financial freedom, our ultimate goal is to spend our time the way we want. The best way to protect your time is by making money renting real estate hire a property manager.
A good property manager can handle all of the intricacies of owning rental property without much intervention or micromanagement on your part, leaving you with more time to spend on your own terms. How do you find the right property manager?
What do you need from a property management company?
The first question to ask yourself when looking for a property manager is “What do I need from a property manager?” Like any other type of business, each property management company can have a unique list of service offerings, and it is important to know which services you need so that you can effectively match with the right company.
Here is a list of Services typically offered by real estate management companies:
- Renting and related tasks (preparing and signing rental agreements on behalf of a property owner, listing properties, checking prospective tenants, etc.)
- Preparation of properties and marketing for occupying vacant properties
- Collection of rent and other fees from tenants
- Property inspections or inspections
- Repairs and maintenance
- Act as contact person for tenants
- Track expenses and income
- Handling of the evacuation process if it becomes necessary
Not all companies do all of these tasks, and some companies charge additional services such as repairs and maintenance. Decide which of these tasks your management company absolutely has to take on and start looking for candidates based on your requirements.
Ask for recommendations
Not sure where to start looking for a property management company? Referrals are a great way to point you in the right direction. You can ask other investors who own properties in your area, your real estate agent, a local landlord or housing company, or another trusted real estate professional for recommendations.
You can also find certified property managers in your area by checking out the Search form on the National Association of Residential Property Managers (NARPM) website.
You wouldn’t hire anyone in your practice without verifying that the information on their résumé was truthful, and a property manager should be no different. It is important to check that their licenses are up to date and that they have the qualifications they indicate and are certified as property managers in your state. Otherwise, you will be vulnerable to legal repercussions if something goes wrong.
Check with the Better Business Bureau (BBB) about complaints against potential management companies and check with your state’s real estate commission.
The credentials required to manage properties vary from state to state. So it is important that you know what credentials are required for the location of your property. Here are the state requirements for property management Here.
If you don’t want to make these inquiries yourself, you can use the services of a background checking company that specializes in background checks for property managers. They know what credentials are required where you live and how to make sure your prospect has them.
Before hiring a property manager, you need to know what to expect from them and what they need from you in order to do their job well. An interview is a great way to sit down and discuss your expectations and expectations. It is also a great way to get a feel for your potential manager.
It is a good idea to not only ask a potential manager what services they offer, but also How they perform these services. What advertising methods do they use? Are there maintenance contacts in your area who could lead to problems being dealt with in a timely manner? This is also a good time to discuss the fee structure and possibly negotiate a contract that will serve both you and the property manager well.
When interviewing potential candidates, try to put yourself in the shoes of a potential tenant. Do you think the candidate would instill confidence in your tenants? Do they seem balanced (ie they don’t unnecessarily rub the tenants in the wrong direction)? Do you look professional and competent, like someone you can turn to if you have problems?
Working with a property management company to make it clear what you need and what to expect from them can save you a lot of hassle in the long run.
Ask for references
It’s so important to ask for testimonials from previous clients when hiring a property manager, but you can go a step further. Ask if you can walk through one or more of the properties they currently manage so you can get an idea of their dedication and attention to detail. If you’re not particularly skilled or don’t know much about building or home maintenance, bring a maintenance-friendly friend or your real estate agent with you so they can help you judge how well the property manager is doing based on the condition of the property.
Finding the perfect property management company can seem like a huge, scary ordeal. It is always a little daunting to hand over responsibility for a large investment to someone else.
Some are also put off by the thought of paying 5-10% of monthly rents to a property manager.
Since the whole point of paying a property manager is to reclaim your free time, this is a significant cost to doing business in my opinion. Your time should be better spent taking a shift or honest time with family and loved ones.
Hence, figuring out how to tune well in this area is important to keep you on the path to financial freedom, especially if you want to do that through directly owning rental properties.