Your rental property is your livelihood, so you'll want to take the proper steps to make sure you're hiring the best manager to oversee it. Hiring the wrong person can lead to increased vacancies and lost rent.
You wouldn't rent your property without screening the tenant first, and you should be just as thorough in choosing your property manager.
Ask Friends and Colleagues for Referrals
Talking to people you know and trust is a great way to begin your search for a property manager. Check with property owners, realtors, friends, your college network, your real estate investor network, and contractors.
But don't take their recommendations blindly. Ask questions about the strengths and weaknesses of the individuals. And if they parted ways, ask why.
It's important to get referrals from several different people. Just one point of view might not give you the full picture.
Research Property Managers Online
The next step is to do some research online. You can vet property managers you're already considering, as well as find new names.
Once you have a few names, check each management company's website, including mission statements. Look for reviews on sites like Yelp or Facebook.
Check the Better Business Bureau website for ratings and customer reviews. It will also tell you if any complaints have been filed against a company.
Visit Their Properties
Doing on-site visits can be a great way to evaluate a property manager. It's a red flag if there's trash or debris in or around the property, and you'll want to keep an eye out for any obvious necessary repairs.
You can also ask to speak to the tenants. Find out if they feel that their complaints are addressed, and how long it generally takes for a repair or maintenance issue to be resolved.
Ask if their buildings are quiet, if they have any problems with other tenants, and if they're planning on signing new leases. Find out why or why not.
Interview Several People
You'll want to interview several managers in person to find the best fit for your property. Organize your questions into three main categories:
- Experience and education, including knowledge of local and federal landlord/tenant law
- Fee structure
- Services, including how properties are maintained and how rent is collected and managed
You'll also want to find out how many properties they manage and how many hours a week they'll dedicate to yours. Managing 10 other properties in addition to giving you 10 hours a week probably means that a self-employed manager won't have the bandwidth to do the job—or at least to do it well. If it's a company with plenty of staff, however, a big clientele can be a sign of a thriving business.
Gauge each candidate's reaction to your questions. Look for someone who's receptive, not dismissive. Make note of any questions that seemed to make the candidate uncomfortable.
Check Licenses and Certifications
Most states require that property managers/management companies have a real estate broker’s license or a property management license in order to show vacant apartments. Check with your state's Real Estate Commission to see if a candidate's brokerage license is active.
You'll also want to know if the manager has been certified with a trade organization. Search online to verify credentials with groups including:
- The Institute of Real Estate Management (IREM)
- The National Apartment Association (NAA)
- The National Association of Residential Property Managers (NARPM)
- The Community Associations Institute (CAI)
These organizations offer certification after completion of tough training programs. It tells you something about their commitment level if the manager is willing to spend the time and money to attend continuing education courses.
Of course, you should also trust your instincts. Just because a property manager has paid money to take a class doesn’t mean they're putting into practice what they were taught.
Understand Management Agreement Terms
A management agreement is a binding contract between you and the property manager, so make sure you understand all its terms before signing. You might want to have a lawyer look over the contract to make sure you're protected.
Keep in mind the role of the property manager can be comprehensive or more narrow. Whatever the terms are, make sure the agreement matches what you discussed during your interview and that you have a clear understanding of your responsibilities as the property owner.
Check for compliance with fair housing laws, and for the terms of hold harmless and cancellation clauses. It's also a good idea to ask for an example of the monthly report you would receive. And make sure both of you carry adequate insurance—errors and omissions coverage, general liability, and property-casualty, at a minimum.
Finding a good property manager takes time and research. Your rental property is your livelihood and allowing someone else to manage it can make or break your investment. Referrals, independent research, site visits, and interviews can help you choose someone who will not only protect your investment but help it grow.