As a property owner and investor, you have to do your homework when selecting the best tenants to place in your rental property. What you may not realize is that it is also important to make sure that your investment is safe and cared for when hiring a property manager. Hire the wrong one and you could be out more than money, so it’s a big issue to be aware of.
Property managers are typically individuals or companies who are hired to manage rental properties, seek out and screen acceptable tenants (and not break any applicable laws doing so), deal with the paperwork and legalities of renting a property, accept any rent monies and fees, take care of any maintenance requests or repairs, implement any eviction process that may be necessary (it can happen), and deal with any liability issues that arise with the property.
If you’ve weighed the pros and cons and decided to hire a property manager, then as with any hiring decision, the safety of your investment is in direct proportion to the amount of legwork you put in to making that decision. Hiring just any company off the internet will not cut it. You need to do your due diligence and your research when looking at the different property management companies that are available.
Here are a few crucial steps to take when considering a property manager or management company:
1. Always ask for personal referrals from your friends, colleagues, real estate contacts, and family members.
This is especially true if you are new to the landlord game – using a company that comes highly recommended is what you want to avoid any problems or liability issues. Personal referrals not only have a personal connection with the potential company, but they can also tell you the honest truth about how that property manager or company works. This is important feedback to have when hiring someone to oversee your investment property – you definitely want someone with a good reputation for doing excellent work.
2. Check reviews, both online and offline.
Online reviews may only tell half the story so it’s better to get some first-person reviews from actual clients. You want to hire someone who not only can manage the property and its maintenance needs but will also be honest and professional with the tenants themselves. How a PM treats people can be very telling – always check tenant reviews of managers as well as client reviews.
3. Check any references that you obtain from potential PMs.
Make sure they include both tenants and landlords so you can get the full picture of what the PM is like on a day-to-day basis. Don’t ever assume that just because they give you a list of references that they are a legitimate business; some of those references might be a relative who has been asked to give a good report to anyone who calls. Follow up on each reference for yourself so you can have a clear idea of what kind of person or company they are.
4. Whatever your expectations are, be very clear and upfront about what that entails when you hire a property manager.
It is always best to have a written document that outlines what your needs are and what the PM’s specific responsibilities will be. This will go a long way in avoiding confusion or causing conflict. If the management company or person does not have its own legal documents, you could get them online or consult your own attorney. Make sure all background checks are done and all signatures are in place before handing over the reins of any of the financial details.
5. Hiring a PM does NOT mean that you get to sit back and do nothing.
You are responsible for ensuring that your asset performs, which means to generate income and run like a business. It’s your task to make sure the PM is doing a good job. Stay in touch and keep track of what your PM is doing. As the owner and investor of a property, it is vital that you always stay in the loop, especially when it comes to any potential legalities. Again, how you do this will differ depending on what level of communication that you and the PM have agreed to. Just remember that it is your investment, not theirs. You can take a less involved approach by hiring a property management company to deal with the day-to-day tasks, but ultimately it is still your investment to watch over.
The right property manager can handle most of the daily tasks and will be a great resource, especially for the aspects of property management that are most important such as tenant screening and tenant retention (key to making your investment perform well), maintenance needs and repairs, and handling any emergencies. Property management plays a very important role in the world of rental investments so make sure you hire the best you can find.