Investing in real estate can be an arduous, full-time job if you self-manage your own rental properties. Not only do you need to collect rent from tenants, you need to keep up maintenance, conduct major repairs, and deal with tenant issues.
If you want your real estate to be a passive investment, or want to grow your business beyond just a few properties, you will need to work with a good property management company.
So, here are some tips for picking a great real estate management company to handle your investment properties.
Build a List of Potential Property Management Companies
Before you interview specific real estate management companies, make a list of potential candidates. Start by asking other investors which management companies they use. Then, search the Internet for local property management companies that have a professional looking website and great client reviews on various social media networks.
Lastly, narrow the list down to the top candidates, and check each of them for licensing and/or certifications required by state law.
Research Each Top Candidate
With your list of top property management candidates, start doing some ground level research on each company. Here’re a few things you can do to learn more about each company.
#1 Check Vacancy Rates and Eviction Rates
Call the management companies on your list and ask about their vacancy rates, eviction rates, and their method of advertising vacant properties.
With that information, conduct online research to verify that their vacancy and eviction rates are in line with local rates. If the management company has higher than average vacancy and eviction rates, look for possible reasons, which may lead you to conclude that they’re a poor management company.
#2 Call as a Prospective Tennant
In order to see how well a property management company does at renting out units they manage, call each agency as a potential renter. Rate each management company in regards to their responsiveness, their knowledge, and answers to questions you ask as a prospective tenant.
#3 Drive by Existing Properties
Drive by a few properties of each property management company, and pay attention to whether it’s well maintained. If the property is vacant, review the advertisement of the property.
If neighbors are outside, you may have an opportunity to chat and gain more insight about the management of the rental property, especially from the perspective of neighboring homeowners.
Interview the Top 3 Candidates
At this point, you’ll probably have an idea of which two or three management companies best suit your needs. Call these companies and set an appointment to seriously interview them.
Here are some questions to ask the prospective management companies, inspired by Mark Ferguson.
- How long have you been managing investment real estate?
- What licenses and certifications do you have?
- How many properties do you manage? How many of each property type?
- How many people work for you? What licenses and certifications do they possess?
- How much do you charge? Are there extra fees for leasing?
- Do you have any monetary agreements or affiliations with the contractors and subs you use?
- Many property managers receive commissions or referral fees as an extra source of income.
- Do you, the management company, or principles of the company own rental properties? If so, what kind and how many?
- If a property management company, or its principles, owns a large number of rentals, they may prioritize leasing and managing their own rentals before their clients.
- What type of insurance do you carry? How do you know that contractors and subs working on rental properties are insured?
Graystone Investment Group
Graystone Investment Group is an experienced Investment Group wholesaling properties in the Greater Tampa Bay market. Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing.
Though we are not a property management company, we help our real estate clients by coordinating with rehab and management companies we’ve worked with for years, at no extra charge.