STEP 6: YOU WANT MAX PROFIT, THEN YOU NEED A GREAT PROPERTY MANAGER
To achieve financial success in real estate investing you need the same focus in selecting your team as a successful college sports team coach recruiting athletes.
Your real estate team includes: Property Manager; Successful Investment Real Estate Owners; Real Estate Agents; Home Inspector; Home Appraiser; Title Insurance Officer; Real Estate Attorney; Mortgage Lenders; and Contractors. Today’s blog focuses on finding a GREAT Property Manager rather than just an ok or good one.
The first step – utilize your network. Just like finding your next job, your network can deliver.
FINDING THAT GREAT RENTAL PROPERTY MANAGER
- Ask your team members for recommendations: {Successful Investment Real Estate Owners; Real Estate Agents; Home Inspector; Home Appraiser; Title Insurance Officer; Real Estate Attorney; Mortgage Lenders; and Contractors)
- Use social media for more than wishing a happy birthday to friends
- Join Real Estate Investors Social Media Groups, such as Facebook and LinkedIn and Request Referrals to Property Managers
- Research property managers and companies using social media
- Interview at least three managers
- Ask for and contact references
- Meet finalist
- Check Licenses and Certifications
- Trust your instincts – Hire the Best
- READ THE CONTRACT!
TARGET YOUR TEAM FOR RECOMMENDATIONS
Work with your existing team members for recommendations on a good property manager. Your team members may be willing to contact their network to find a potential property manager.
Also ask advice on firms or people you should steer clear of.
USE SOCIAL MEDIA GROUPS AND REQUEST RECOMMENDATIONS
Use social media to find investment owners in the areas you are buying. Recently I joined estate groups on LinkedIn and Facebook. Go to LinkedIn and Facebook and type in real estate groups. Or be more specific- NC Real Estate; Multiplex Real Estate etc. You can ask members for assistance finding a good property manager. Reminder-be a good member of any group you join and answer others questions. Help where you can and you will be repaid!
https://www.allpropertymanagement.com provide lists of property management companies that are active in your area. Just plug in the size of your property and location.
https://www.biggerpockets.com – Learn how to invest in real estate with educational resources, evaluate properties using expert tools, and connect with other investors. You can use this website to find property managers and see others comments.
RESEARCH POTENTIAL PROPERTY MANAGERS
Carefully review each property management company’s website, and social media accounts (Facebook, LinkedIn, Instagram, etc.) including their about page, mission/vision statements.
Look for reviews on sites like Yelp or Facebook. Go online and check out their reviews,
Review potential candidates on the Better Business Bureau’s website, to review complaints. https://www.bbb.org/search
INTERVIEW THREE OR MORE POTENTAIL CANDIDATES
See example interview questions in Appendix 1.0.
If possible, conduct the interview at their office and meet other staff members. Look at how organized or disorganized the space is. Get a feel for their team and efficiency. How do they answer the phone? How do they treat clients and tenants that are calling? Ask for an example of the monthly report you will receive. You must feel comfortable with this manager!
Request several at least six references.
CONTACT MINIMUM THREE REFERENCES
When you interview property managers request they send you a list of at least six references you can contact. Request clients who have had their properties under the property management company for an extended period. This is the best way to find out how this person really operates. Verify the responses to your interview questions with what their clients state. How well this property manager treats existing clients provides insight to how you and your tenants will be treated.
CHECK LICENSES AND CERTIFICATIONS
Some states require that property managers/management companies have a real estate broker’s license or a property management license to show vacant apartments. Check with the state’s Real Estate Commission to see if a candidate’s brokerage license is active.
Click below groups to 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)
The above organizations offer certification after completion of training programs.
HIRE THE BEST!
The human brain functions by comparing input data with experience. Listen to your gut. Maybe this property manager reminds you of your dead-beat brother in law! Select the manager you believe you can trust collecting and spending YOUR HARD-EARNED MONEY.
REVIEW YOUR MANAGEMENT AGREEMENT CONTRACT BEFORE YOU SIGN!
A management agreement is a binding contract between you and the property manager, so make sure you understand all its terms before signing. If needed have an attorney review prior to signing. Ask questions when uncertain. Request any changes you need to feel comfortable.
Ensure the agreement matches what you discussed during your interview and that you have a clear understanding of your responsibilities versus the property manager.
Ensure the contract covers:
- Agreement to comply with fair housing laws and any other applicable laws
- Hold harmless and cancellation clauses.
- The property management firm carries adequate insurance—errors and omissions coverage, general liability, and property-casualty, at a minimum.
- I carry $1 million per property, coupled with a $2 million umbrella policy.
CONCLUSION
One of the biggest lessons from my career is to take the required time to hire the right person. A dud team member seldom turns it around!
Hire SLOW and Fire FAST
UPCOMING TOPIC – COMPLETE RECRUITING YOUR CHAMPION REAL ESTATE TEAM!
APPENDIX 1.0 -PROPERTY MANAGERS INTERVIEW QUESTIONS
Are you a licensed property manager?
How long have you been in business?
How do you screen potential tenants?
How do you collect rent?
- Property managers should have a policy in place on how rent collection is handled. Do they pick it up, or do tenants mail it? Perhaps the tenants can take it right to the bank? Every lease should outline exactly when the rent is due, the amount due, and any late fees associated with a late payment.
- What date will rent be deposited in the property owners’ account?
What strategies do you use to fill vacant rentals?
- Your property manager should be advertising properties through a variety of channels. If they are still just placing newspaper ads and hoping for the best, then you should steer clear.
How many properties are you currently managing?
- This question will give you a clear idea on the company’s size and expertise. It will also help you determine if you think they can handle your property or if they would be stretching themselves too thin.
How do you handle maintenance work?
- One of the biggest responsibilities of a landlord is upkeep of the property. You will want to make sure the property management company has a clear process for handling maintenance requests.
Do you have references?
- Always ask for references and call them to see how other property owners liked the property management company.
What is your average vacancy rate?
- Consider whether this vacancy rate is above or below the area average.
How do you communicate with your clients?
- Determine what monthly reports are sent and the date of delivery?
- Do they have a secure web site you can review and post documents?
- What property management software they use?
What is your fee structure?
- What do you charge every month?
- Do you have a monthly fee for a vacant property?
- What is your tenant placement fee?
- Do you have a leasing renewal fee?
- Do you have administrative fees?
- Do you up-charge maintenance?
- Any other fees
PREVIOUS REAL ESTATE INVESTMENT BLOGS
STEP #1: IT’S ALL ABOUT THE LOCATION SILLY
STEP #2: BUYING THE BEST MONEY-MAKING INVESTMENT RENTAL PROPERTIES
STEP #3: TO FIND A GREAT INVESTMENT REAL ESTATE AGENT YOU SIMPLY NEED…
STEP #4: IS A PROPERTY MANAGER REALLY WORTH TEN PERCENT OF YOUR RENTAL INCOME?
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger, with a NC State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I had a desire for making a difference as a speaker and writer, to help others. I was blessed to be coached and mentored by strong women and men in both my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and happy to share my personal finance and investment lessons learned with you.
However, I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog, as recommendations for your personal situation. For individual finance advice please seek your own licensed CPA or fiduciary financialadvisors.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.
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