Brenton Hayden is the founder and chairman of the board of Renters Warehouse. A Harvard Business School and MIT Sloan School of Business graduate, Brenton leads a team of over 140 employees and franchises in 21 states with a portfolio of managed properties valued at just under $1 billion.
What to Look for in a Property Manager
Property management companies make it easy for professional landlords and investors alike to own and manage rental properties. But it’s important to choose the right one.
February 9, 2015
It’s not enough to hire just any property management company. It’s important to find one that’s professional, reputable, and well established. We’ve all heard horror stories—such as this one about a property manager in Niagara Falls who dropped the ball on one of the rentals that he was supposed to be managing, allowing his buddy to crash in one of the units rent-free. Not only did this cause the landlord to miss out on valuable rental income each month, the freeloading friend attracted a number of unsavory types to the premises, and soon a steady stream of would-be criminals were frequenting the complex.
Despite the frightening stories, the reality is that many property management companies are solid and reputable. A good company will manage your properties efficiently, with a high level of care. But a great property management company will be able to help you to get the most out of your investment.
The good news is that finding a reliable property management company isn’t a matter of luck; it’s about knowing what to look for. Here are a few defining characteristics that all professional property management companies have in common.
A Solid Reputation
First and foremost, a professional property management company should have a solid reputation. These days, it’s easier than ever to conduct research on a company, so head online to do your homework before hiring anyone. Look up the company on the Better Business Bureau website and make sure they have a good rating. Research the state or local governing agencies for the industry in your area. Check out online review sites, and read what people are saying. Run a quick Google search to see if there are any negative blog posts or threads in forums. People talk, and they are especially inclined to share bad experiences online. Chances are, if the business is less than reputable, you will find evidence of that in your research.
Formal Tenant Screening Procedures
One bad tenant can cause a great deal of chaos for any landlord. A reputable company should have a solid tenant screening procedure in place to help prevent that situation. Find one that conducts background checks, reference checks, and credit checks. It’s also worth ensuring that it has airtight antidiscrimination policies in place to protect you in case a tenant alleges unfair treatment.
The average lifespan for property managers is only nine months in the business. Someone who’s new to the game could easily make mistakes that could end up costing you money. For example, an inexperienced property manager could end up calling in a professional electrician for minor maintenance issues that could have been better left for a handyman. These seemingly insignificant errors can quickly add up. Your best bet is to find a property management company that’s well established and that employs experienced professionals who are able to make smart decisions on your behalf.
A Track Record of Short Vacancy Periods
Watch out for property management companies with long vacancy times in between tenants. Ask them how fast are they able to get properties on the market. A property management company with an excellent vacancy rate will be happy to share this information with you, and they may even advertise it on their website.
A Large Client Base
Beware of the property manager with no clients. This could be a sign of someone who has trouble managing rentals and keeping tenants in units. It could also show laziness or disorganization. When vetting property management companies, don’t be afraid to ask for references, and look for one that has an extensive client base. Not only will this verify their capabilities, there’s also a good chance that this company will be well connected with local contractors and better able to find the best deals on maintenance and repairs.
Policies can tell you a lot about a company. Any legitimate company will have processes in place and will be happy to share many of them with you. Ask about their systems, and make sure they look solid. It’s also a good idea to find out if they offer any routine maintenance service for rentals because that can help to prevent minor issues from escalating into the need for major repairs. Ask about their system for collecting past-due rent, and what their protocol is for after-hours emergencies. Make sure their solutions are in line with your needs.
The Ability to Provide Written Contracts
An unwillingness to provide a written contract could be a sign of trouble or at least an indication that the company doesn’t have its act together. A reputable property management company will be more than happy to provide you with a contract outlining its terms and conditions as well as pricing and fees. This will help to keep both parties on the same page, and will outline clear expectations, so nobody is left in the dark.
It’s worth the time and effort to fully vet potential property management companies. After all, it’s not just about keeping yourself out of trouble. It’s about finding a company that can help you to get the most out of your rental property.
Have you had experience with property managers, good or bad alike? Share your experiences in the comments.