Being a landlord isn't a simple matter of sitting back and collecting rent checks; it also means dealing with the ongoing duties of maintaining a property, collecting rent, and handling tenant issues.
In other words, being a landlord is a lot of work, and if you buy a rental property to supplement your income, you should be prepared to either give up a huge chunk of your free time, or hire yourself a property manager. The latter is a route many real estate investors take, but if you're going to pay for a property manager, it's imperative that you find the right one. Here are a few tips for choosing someone to oversee your investment property.
1. Find someone with local experience
A property manager who's been overseeing rental units for years has likely learned a thing or two along the way, like how to effectively deal with delinquent tenants and how to negotiate with contractors when maintenance and repairs arise. It's important to find a property manager with decent experience overseeing properties not just in general, but also in your specific neck of the woods. That way, he or she is likely to have a long list of professional contacts in the event of a property emergency. And he or she will, ideally, understand the local rental market and be well equipped to strategically advertise your property when open units need to be rented out.
2. Seek out a proven track record of filling vacancies
As a landlord, the last thing you want is a vacant rental unit, because that means one thing: no income. In your search for a property manager, look for someone who's historically been able to fill units quickly, and ask for details on how he or she managed to pull off that feat. You don't want a property manager who fills vacancies by offering ridiculously low rent; you want someone who can achieve that goal through solid marketing.
3. Focus on organization skills
Property managers typically have a lot on their plates. They need to deal with upkeep, address tenant complaints, and maintain solid financial records. All of this boils down to being organized, so find a property manager who clearly displays this quality. Furthermore, there are plenty of software programs out there designed to help property managers stay on top of their responsibilities such as Avail.co, so it pays to find someone who's up on that technology and uses it to his or her (and your) advantage.
4. Pick someone who’s good at communication
When you hire a property manager, you're trusting that person with your money one way or another. As such, that person should be someone who understands the importance of clear, ongoing communication. In your search for a property manager, aim to find someone who will proactively update you on a regular basis so you're never in the dark about potential problems with your units or tenants.
5. Make sure the fees you’re being charged are reasonable
The one downside to property managers is that they cost money. But that doesn't mean you have to overpay for a solid hire. Most property managers charge between 8% and 12% of the rent they collect for long-term leases (meaning a year or more). If you own a building with a larger number of units (usually 10 or more), you may get a discount. Make sure the property manager you're looking to hire charges a reasonable fee, because the more you pay, the more you eat into your profits. And if you are being quoted a higher fee than expected, make sure you're getting something valuable in return.
If you're going to hire a property manager, you might as well get your money's worth. Keep these points in mind as you go about your search, and with any luck, you'll find the ideal professional to oversee your investment.