The Ultimate Guide to Choosing a Property Manager

Owning a cashflow-positive rental property appeals to those wanting long-term wealth, but handling the day-to-day requirements of being a landlord can be cumbersome. That’s why many investors rely on professional property managers to ease the burden. Property managers handle leasing, maintenance, billing, and more. However, outsourcing these components of owning a rental property is not without inherent risk; a bad property manager can end up degrading the value of your asset and spoiling your relationship with tenants. This article will explain everything you need to consider when looking for a top-quality property manager.

Starting the Search for a Property Management Company

Your search for a property management company generally begins online. Unless you have a referral from another investor in your market, you are likely going to search “property managers near me” and click through the results, but not all property management companies are created equal. Look for property managers that offer leasing, maintenance, and billing services within your specific market. Also, be sure to distinguish between management companies that specialize in short-term rentals versus long-term rentals. Short-term rentals usually have leases that are less than six months long, while long-term rentals are six months or longer. Property managers tend to specialize in one lease term, so be sure to ask if it’s unclear.

Vet Your Property Manager for Experience

Trust is critically important when working with a property manager. To that end, aim to work with a property manager who has multiple years of experience managing investment properties. As you vet potential options, look at their total number of years in business, the number of doors under current management, and their cumulative experience in your local market. A new property management company might offer exciting financial incentives but likely hasn’t been operating long enough to have ironed out smooth processes for resolving maintenance issues, communicating with residents, and billing logistics. You want to work with someone who’s seen it all, so they can keep pressure and stress off your plate.

Ask Clear Questions About Communication

The best property managers have developed incredible communication skills. After all, their role is to communicate with owners, residents, and vendors to create a streamlined process for everyone involved. As you evaluate potential property managers, ask clear questions about their communication preferences such as:

• How frequently do you communicate with residents and owners? 
• What forms of communication are you using? 
• How quickly can I expect to hear back from you when I reach out?

Evaluate for Execution Based on Referrals and Reviews

Every property manager will gladly tell you how great they are at managing rental properties, but to get an accurate gauge of their competency for execution, you need to hear from other clients. Start by reading their reviews to see what feedback customers and residents have left for the company. This will help you identify any possible red flags. 

If you need additional confirmation, ask if they can provide you with references who would be willing to speak on their behalf. You should also inquire about the company’s average vacancy rate to determine the efficiency of their leasing team, which is another strong indicator of the quality of their service.

Thoroughly Review the Management Agreement Terms

Once you have determined which property management companies you are the most interested in working with, request a copy of their management agreement so you can thoroughly review the terms. Ask clarifying questions and make sure you understand the fees and nuances of the commitment you’re making before you’re locked into a multi-year agreement. A top-quality property management company will not force you to sign a multi-year agreement or penalize you for vacancy, lease renewals, or rent increases.

How Is Maintenance Handled?

One of the primary benefits of hiring a professional property manager is having someone to assist with maintenance requests, no matter when they arise. When vetting a potential property manager, be sure to ask how they handle maintenance requests. 

Do they have in-house maintenance technicians, or do they work with third-party vendors? Do they work exclusively with licensed and insured contractors in your area? What types of fees are applied to maintenance work when it is remitted? A markup on labor and materials is standard, but look out for hidden fees that could eat into your profit margin.

Finding the Right Property Manager for You

Your real estate investment’s success hinges on finding the right property manager who will maintain the value and integrity of your rental property while also keeping your tenants happy. The effort that you exert on the front-end vetting a potential property management partner will pay off in the long run when you avoid costly logistical mishaps, like vacancy or eviction. Purchasing a rental property, through a platform like the Lennar Investor Marketplace, can be done with extra peace of mind knowing the right property management company can make your investment completely passive. 

For a limited time, rental property investors who purchase through the Lennar Investor Marketplace can enjoy four months of free property management with Evernest, a top-quality property management company with years of experience across the United States. Click here to learn more.