These days, investors are flooding buyer’s markets throughout the country, honing in on properties in cities with healthy economies. If you purchase a rental home in a different state, you may find it quite difficult to adequately manage it yourself.
That’s why you’ll need to hire a responsible, trustworthy property manager who will not only collect rent and other fees on your behalf, but also handle day-to-day maintenance and respond to your renters’ needs. Hire a crook and he/she could easily steal the tenant’s security deposit, your rent and even the appliances from your home. Whether you go with a local independent contractor or a regional management company, follow these steps to find the right property manager for you.
The best way to find a reputable property manager is by referral. Who sold you your home? Does your real estate agent know any good property managers? Do you have friends with investments in the same area? Next, check the state’s Real Estate Commission and the Better Business Bureau to make sure your prospective property manager is licensed and has no complaints against them.
Once you have a short list of people you’re considering, interview each one.
Step 2: Note the first impression.
If possible, meet each candidate in person. Is the manager put together and well-spoken? Put yourself in a prospective tenant’s place. Would you want to rent a home from this person?
Step 3: Find out how the person handles advertising and vacancies. Ask these questions:
- Where does the property manager advertise vacant homes?
- What kind of signs do they put in front of the property?
- Do they advertise in newspapers, websites, at nearby colleges?
- How many vacancies does each property manager have?
- What’s the average length of time it takes to place a tenant?
- What kind of vacancies does the property manager have? For example, if you have a 2 bedroom condo and the manager only specializes in single-family homes, they may not know how to target the right demographic to search for tenants.
If the property manager has a website, take a careful look.
- Are you impressed with its look and features?
- As a prospective tenant, is it easy to find the rentals list?
- As an owner, are you able to login online to view your account and statements?
Step 4: Negotiate terms of the contract. Read through the Owner/Property Manager agreement and look for the following information:
- Who is your main contact and what is their information? Make sure you’re able to communicate with your property manager through various means, including phone and email.
- How much do they charge for their services? Make sure the monthly fee as well as the leasing fee for placing a tenant are documented. Is the fee within the average for other managers in the area? Beware if the fees are too low or high, as this may be a sign that the manager is not experienced or too good to be true.
- How many days notice does the property manager require to terminate the relationship? If you are not satisfied with your property manager’s services, it’s important to be able to terminate their services within 30-60 days, which will give you enough time to find a replacement.
- How are maintenance and repairs handled? For example, are repairs outsourced, and do they charge a percentage fee on top of the cost? How much of a retainer does the property manager require for emergency repairs? Will they only call you if the repair costs more than the retainer, and are you okay with that?
- When should you expect to receive the tenant’s rent each month? Is direct deposit an option, or will you receive a check in the mail?
- Will the property manager be responsible for keeping the tenant’s security deposit, or will you?
- How will the manager deal with a delinquent tenant? What are their eviction proceedings? Ask the manager to describe their process in detail.
Step 5: Review the manager’s tenant lease agreement. Ask these questions:
- How much of a security deposit is required of the tenant?
- What is the monthly rent and how long are the lease terms (i.e. months, years)? Ask the manager how they came up with the proposed rent amount and ask for comparables. Also do your own research on Craigslist and on other sites to see if the manager’s rent is on par with similar rentals in the area. While you want a good price for your property, if the manager is charging too much, it will sit empty for a long time.
- How are late rents handled? Is the process clearly written and will a tenant understand the consequences?
- Make sure the tenant’s responsibilities are clearly outlined. For example, who is responsible for keeping the lawn maintained, the tenant or the owner?
- What are the consequences of breaking the lease?
- Who will the tenant call with questions? Sometimes, property managers have different contacts for leasing questions versus maintenance issues.
Finding a property manager is not an easy task, but devoting extra effort in the beginning will save you hours of headaches later on. Make sure you do your due diligence, and your property manager will reward you with a worry-free investment.