Investing in multi-family homes or multiple rental properties in a specific area can create a significant long-term income stream. However, protecting your investment and ensuring that the people who live within those homes continue to pay rent can be complex and time-consuming.
That's where a property manager comes in. According to Landlordology:
"A good property manager handles nearly every detail of running a rental property, from finding tenants to collecting rent...Your property manager can be your best asset and you’ll have more free time and less stress if you have the right manager. "
Why Hire a Property Manager?
Managing properties — whether they are single-family home rentals, large apartment buildings or commercial spaces — takes time and expertise.
- If your investments are not located near you, a property manager will give you "eyes and feet" on the streets where your properties are. They'll be familiar with local vendors and rates for repairs and upgrades, and can quickly and easily handle emergency situations.
- You'll free up your own hours to focus on other activities, including analysis of potential new real estate investments.
- The right property manager has expertise in managing properties like yours and can streamline processes, enabling you to earn the most from your investment.
How to Find the Right Property Manager
Before you begin your search, develop a clear picture of the services you'll need the manager to provide. They may include rent collection, marketing vacant properties, repairs, upgrades, managing landscaping and snow removal, handling tenant disputes, dealing with local groups and community associations on issues, and more. As with many business relationships, trust and expertise are the most important factors in finding the right property manager.
Word-of-mouth referrals are, of course, the best source. But you'll want to do your own homework. Experts suggest finding and interviewing several property management companies. Some real estate brokers also serve as property managers. The review process will not only give you options but also educate you about the different services and pricing available to you. Areas you should probe on include:
- Experience handling properties like yours. Check references.
- Specific state licenses and credentials. You'll want to be sure that they have experience in complying with housing regulations (such as the Americans with Disabilities Act) and local zoning rules. Property management credentials and licenses vary from state to state, so be sure you're hiring someone with the right qualifications for your property's location.
- Marketing savvy and approach to filling vacancies. This is especially important when you're investing in multi-unit residential or commercial properties.
- Pricing, which depends on the specific services you need. Ask about setup fees, ongoing management fees, leasing fees, lease-renewal fees, and maintenance fees. Ideally, you should have a good sense of these costs before investing in a property, because they ultimately have an impact on your long-term return. Fees are negotiable and, by speaking to several property management companies, you will get a sense of market pricing in a particular area.
- Size and qualifications of staff. Especially if your property is large and your tenants have complex needs, be sure that people are available to deliver exceptional service 24/7.
Daniel Fox, president of Realty Asset Advisors, says "Communication with and accountability to both you (the landlord) and your tenants are essential." He adds, "Accountability is especially important when managing costs, monthly reports, and due diligence when hiring contractors."
Even when you believe you've found the ideal rental property manager, you need a process for evaluating costs and performance. Review financials carefully — from the beginning and throughout the relationship. Have formal weekly or monthly reviews to stay close to and resolve issues. Poll your tenants to evaluate service satisfaction levels.
The right property manager can play a huge role in improving cash flow, keeping vacancy rates low, and making your investment property more appealing to new tenants — protecting and growing your investment for years to come.