What To Look For When Hiring A Property Manager

Table of Contents

Introduction

Hiring a property manager is a big decision. You want to ensure you hire someone to help you run your business, not hinder it.

The right property manager can be the difference between you being profitable or not. It’s a decision that shouldn’t be taken lightly.

Property managers help you maximize your rental income and minimize headaches. After all, managing a property is not easy!

The following tips will help you find and hire the perfect property manager for your needs…

What is a property manager?

Property managers are the people who manage rental properties for owners. They’re in charge of ensuring your property is well-maintained, collecting rent from tenants, and dealing with any issues that may arise.

They provide support in all aspects of managing your rental property.

Property management companies can be expensive. A professional property management company will cost more than if you were to self-manage.

However, there are many advantages to hiring an experienced professional—including peace of mind and help with paperwork such as leases and tenant screening forms—that may make up for the higher price tag.

What does a property manager do?

When you hire a property manager, they are responsible for the following:

Assisting with landlord responsibilities and day-to-day management of the property. This includes:
Finding new tenants (hopefully good tenants 🙂)
Managing the tenant selection and screening process. They will screen tenants for credit, income, and references before signing them to a lease agreement. If a tenant has good credit scores but doesn’t make enough money to afford your rent prices or has bad credit, it’s best to pass on them entirely rather than risk getting stuck with delinquent payments down the road (which would affect your investment).
Collecting rent and making sure it is paid on time
Handling maintenance issues and repairs.

Who should hire a property manager?

Hiring a property manager is essential if you’re a property owner and don’t want to manage your property hands-on.

While landlords can manage their investments, many choose to hire a professional property manager. This can be due to time constraints or simply not wanting the headaches of handling tenants and dealing with repairs.

The right property management company will help grow your real estate investments while freeing up your time.

When is the right time to hire a property manager?

Hiring a property manager is similar to hiring a real estate agent. There are a few reasons you may want to hire a property manager:

You want to save money. Property managers can access many resources, including a network of suppliers and contractors who can help keep costs low.
You want to spend less time on maintenance. A good property manager can find qualified staff for all your needs, from cleaning services to landscaping companies. They also know how much work goes into each project and what supplies are necessary for each task, so hiring them means avoiding last-minute trips out to the hardware store because you forgot one thing or another (or even worse, not having everything on hand at all). Plus, they’ll handle all the communication with their subcontractors, so you don’t have to!
You want passive income.
Finally: sometimes life gets busy. Whether because of family commitments or simply wanting time away from day-to-day activities. We’ve all had moments when our responsibilities get overwhelming. Hiring someone else allows you freedom from worrying whether something will fall through the cracks. It saves you valuable time to spend with loved ones instead.

How much does a property manager typically cost?

The cost of hiring a property manager depends on the company and the number of units you have.

Call a few companies and build a benchmark range of prices. Expect lower prices for inexperienced managers with fewer resources and tools at their disposal. Conversely, more expensive managers typically have more experience and offer more services. This may include maintenance and repairs, tenant screening and background checks, and advertising your property online, etc.

Sometimes property managers charge a percentage instead and that’s typically 10% for a long-term rental investment property and can be as high as 30% of the monthly income for short-term rental property management companies.

There are ways to keep costs down while still hiring a competent property manager—or even doing it yourself! Here are some tips:

Be picky about who manages your rental units. Some landlords hire one person who handles everything from finding tenants to collecting rent every month. Others prefer having two people take these roles separately to focus on what they’re best at without feeling overwhelmed.
Find someone who will give you honest feedback without sugarcoating anything. This is important because it lets us know when we need different types of assistance with our properties or if our current plan isn’t working well enough.
Consider using multiple independent contractors instead of one big company.

Will they take a percentage of the rent or a flat rate?

When a property manager takes a percentage of the rent, that’s a commission. The commission they take depends on the contract and how much work they do for you. They may charge an additional fee on top of the commission if they’re responsible for screening tenants and preparing leases.

A flat rate means your property manager will charge what they say in their proposal without hidden fees.

However, some companies may offer lower flat rates for single services, so understand what’s included in each offer before choosing!

The property management company typically charges a percentage for short-term rentals, which varies greatly depending on the company. On the affordable side, the percentage begins at 10% and goes as high as 30%. Why the significant discrepancy?

Some property management companies handle all the minor maintenance requests, are on-call 24/7 for customer complaints, and are extremely quick to fix or replace anything that needs to be fixed. Others let you handle this on your own and only handle the bookings.

Property managers for short-term rental vs. long-term rental

If you’re a short-term rental host, you’ll want to pay special attention to the property manager’s experience with short-term rentals.

Figure out if you’ll be listed on Airbnb, VRBO, Booking.com, TripAdvisor, and all the other large travel websites. Ask what percentage of their bookings come from each platform and what a comparable rental unit profits under their management.

A property manager specializing in short-term rentals will likely know the legal requirements for managing a vacation rental property. This can be important if you rent your home on Airbnb or another platform.

How long has the property manager been in business?

Another important thing to know is how long they’ve been in business.

The longer a company has been around, the more likely it is to be able to handle any problems that arise. If you are considering a new property manager who doesn’t have much experience but seems like someone who could do well with your property, ask about their plans for growth and expansion.

You want to see that they have an established plan for growth. That way, when you’re ready to expand into other parts of town or open up another location elsewhere in your state, you can stick with the same property management company.

What are your tenant screening and application policies?

Your tenant screening and application policy will be the foundation of your management process. It should include a checklist of items you want to ensure are checked off before a tenant is approved, such as:

Reference checks
Credit report checks
Background checks (criminal and eviction)
Employment verification and income verification

What do you charge for late rent?

You should charge a fair and reasonable late fee. The amount you decide to charge for this is up to you, but it should be clearly stated in your lease agreement. If your late fee is too high, tenants could complain about it or even file a discrimination lawsuit against you if they feel the fee is being used to prejudice them against their race or gender (or another protected class).

It’s also crucial that your property managers charge consistent late fees across their properties. If one of your property managers charges significantly higher late fees than another, this could create an unfair playing field for both managers and tenants.

Do they offer free services, such as photography?

When looking for property managers, ask what they offer that others don’t. Do they provide in-person visits? Can they take photos of your property and post them on Craigslist or other sites? Do they have a team for maintenance coordination and rent collection?

If the answer is no, it may be time to find someone else who can handle those things for you. A great property manager can do all these things and more!

Will they be available during a crisis?

When it comes to property management, you need someone reliable and trustworthy. You want a property manager who can be counted on to be there for you at all times.

But what does that mean? In most cases, it means that your property manager should be willing to answer your calls at any time of day or night if needed.

A good rule of thumb is that if there’s an emergency with one of your tenants, they should be able to get in touch with you within an hour (or sooner).

This might require some advance planning—for example, ensuring someone has access to a key so they can visit the property when emergencies arise.

While you might be busy with work or family commitments during the week, your tenants may have an urgent problem arise over the weekend. They may need someone with experience dealing with tenant complaints and maintenance issues who can help fix their issue as soon as possible.

That’s why ensuring your property manager’s staff is around on weekends is so important!

What makes them different from the competition?

When hiring a property manager, you want to ensure they’re the best at what they do. This includes having a reputation for honesty and trustworthiness and a track record of success with clients. It’s best if they have a history of providing quality service in the area where your properties are located.

Do you trust them?

You must trust the person you hire to manage your property. You’ll be committing to work with them for many years, so it’s essential that you feel confident about their abilities and character.

Trust is built over time, but if you don’t have any prior experience working with someone in this role and can’t vouch for their reliability, research who they are before hiring them.

Do you like them?

Establishing a good relationship with your property manager is essential to the success of your rental. But it can be hard to know if you’re getting along.

Do they have a good personality? For example, do they seem friendly and approachable?
How are their communication skills? Is the person responsive and easy to talk with, or do they make excuses for not answering your questions promptly?
Does this person seem trustworthy? Are you confident that any information shared with them will remain private?