If you have a rental property, you need property management specialists to help. The benefits of property management are numerous, from providing in-house maintenance to dealing with tenants and ensuring your cash flow is positive and steady.
If you’re not sure how to find a property manager, we’re here to help. Keep reading for more information on the different types of property managers and property management companies and how to choose the best for your property.
Steps for Choosing a Property Management Company
Are you choosing a property manager to manage your rental home? Know that there are times when you should use a small manager over a large one when selecting a property manager.
Small vs. Big Property Management Company
Since small can be a relative term, let’s start by defining what a small property manager is.
A small property manager is a manager who typically manages less than 300 homes. In addition to the portfolio’s size, every person who works for that company, including the owner, is directly involved in daily working within the business.
Benefits of a Small Property Manager
As you can imagine, working with a small versus large property manager is all about preference. So let’s talk about the circumstances in which you might prefer working with a smaller management style over a larger company.
1. You Don’t Trust Very Easily
One of the cornerstones of property management is the idea of trust. You have to trust your property manager to manage your property correctly. If it is hard for you to trust, the idea of a smaller manager may be a better solution because there is a good chance you will be dealing with the same person during the length of that relationship.
Once you trust that person, you would be able to allow that person to handle all the crucial decisions regarding the management of the home.
2. You Want Control
If you don’t trust easily, it will be essential for you to have control. A small manager can take on the “a la carte” type requests you may ask them to do. Larger managers have systems and processes. Smaller managers are built to react. The idea behind choosing a smaller property manager is finding one that allows you to ‘manage’ along with them.
3. Specializations
Like real estate agents in specific neighborhoods and vacation home managers in certain places, some small property managers have learned to specialize in one particular area of town. This may be one condo complex or one subdivision or neighborhood. The bottom line is they are happy simply managing those homes and making a living doing what they know well. They have no goals to branch out into other areas or other types of homes.
Downsides of a Small Property Manager
While it is essential to look at all the good things you get with a smaller manager, it’s also good to point out a few of the challenges you might face.
1. You Are at the Mercy of One Person or a Few People
Being at the mercy of a limited number of people means that there may be nobody managing your home when someone gets sick.
Alternatively, larger managers have enough people that they shouldn’t skip a step when managing your home, and someone didn’t make it into work that day.
2. No Benefit of Scale to Lease Your Home Quickly
Larger managers, with more homes to lease, have more applications per house than smaller managers due to them being a reliable source for a place to live.
3. More Generalists in the Management of Your Home
Large managers have team members who specialize in leasing, property management, and maintenance versus the generalist who is responsible for all of these. Because, for instance, someone is only accountable for leasing homes, they should be able to lease your home faster and know better what to look for when finding a great tenant.
How to Select the Best Property Management Company
There are countless options available to you for property management help all over, but not all options are created equal. Here are tips you can follow to select the best property management company for your real estate portfolio.
1. Get Referrals
As always, asking around for referrals is always a great way to start your search for the best management company. If you have friends or family who own rental properties, you can start by asking them.
2. Understand Management Agreement Terms
Once you’ve got a few management companies you are looking at, make sure you go through the agreement terms and understand every piece of it. If ever you have questions, don’t be afraid to ask. Best of all, you’ll be able to get an idea of what their customer service is like by interacting with them more.
3. Ask for the Vacancy Rate
When choosing property management companies, the vacancy rate – the rate at which homes in the overall portfolio are without a tenant – is essential. Finding out the vacancy rate of the property managers you are considering is critical simply because you want your property to have a paying tenant.
The higher the vacancy rate, the more difficult it will be for that to happen. High vacancy rates can speak to various problems, such as marketing issues, poor maintenance, or poor customer service.
4. Track Inspections and Maintenance
Additionally, it helps to know how your home will be maintained. The best property management companies have in-house maintenance personnel, consisting of a crew that can respond promptly to tenant complaints and deal with whatever issue may arise. It’s better than relying on outside contractors, both for time purposes and financial reasons. See how your managers maintain their portfolio properties before making a choice.
5. Find an Around-the-Clock Manager
Finally, not all problems and issues arise from nine to five during the week. Many times, issues will emerge after hours or on the weekend. You need property managers whose full-time job is property management, who focus on nothing but property management. You can answer calls throughout the entire week and respond to any problem a tenant or you have. The more available your manager is, the better off you’ll be in the long run.
Find the Right Property Manager for You
All in all, whether you choose a small manager or a large manager, the goal is to find one who fits exactly what you are looking for. There are benefits to both, and they both carry their share of negatives. If you’re wondering how to find a property manager, it comes down to finding the right property manager for you.
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Matthew is the CEO of Evernest. He is a student of the book Good to Great and is passionate about building the best property management company on the planet (and maybe even the universe if Elon Musk will hurry up). You can usually find Matthew at the baseball field with his son, at a dance recital with his daughter, or at his favorite restaurant with his wife, when he’s not in the office. And if you can’t find him in any of those places, it probably means he’s traveling.
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