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You’ve decided to hire a property manager; now it's time to get to work and find one that brings you peace of mind and the most income for your property. Choosing the perfect fit will take some boots-on-the-ground research, but if you know your priorities and budget, the right property manager could take your rental business from surviving to thriving.
If you’re ready to go, we have a step-by-step guide for finding a property manager who will help your business reach the next level.
Define What You Need from a Property Manager
Part of running a profitable rental business is knowing your strengths and weaknesses as a property owner and delegating the work that you can’t efficiently complete. You definitely need this evaluation if you’re managing a property long distance like so many military members.
Before you start your property manager search, take inventory of what they can do for you and aim to fill in any gaps you struggle with. This way, you can decide if you need a full-service company or would rather use a la carte services if available.
Take a look at the tasks property managers often provide.
- Accurately calculate rent rates and conduct property evaluations
- Review interior and exterior conditions and suggest repairs for the best ROI
- Help you decide whether or not to accept pets
- Market and prepare the property for rent
- Clean the interior and boost curb appeal
- Find, communicate with, and screen tenants
- Schedule showings
- Manage and complete applications
- Create lease agreement and confirm move-in and move-out dates with tenants
- Maintain knowledge and adhere to local and federal landlord/tenant laws
- Review lease guidelines and discuss issues like the SCRA and military clause
- Account for rent, fees, payments, and other money coming in and out
- Keep track of all receipts, invoices, and tax documents
- Make payments for the owner: mortgage, HOA, insurance
- Conduct move-in and move-out inspections
- Schedule periodic inspections
- Oversee maintenance inside and out as needed, including emergencies
- Research and manage recommendations for large update projects
- Handle tenant move-out activities, including evictions
Even if you hire a property manager, you still need to keep up with your income property finances. Here’s how: Tips for Managing Your Rental Property's Finances.
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How Much Responsibility Are You Willing to Share?
After choosing activities you’d like your property manager to handle, you’ll need to decide how much responsibility to turn over to your property manager as your representative. If you’d like to sit back and add your two cents to the big matters like a renovation project or an eviction, that’s very different than wanting to know about each repair call made.
Your property manager does need some space to make judgment calls and won’t appreciate micromanagement. It's up to you to define the property manager's responsibilities and communicate clearly and regularly throughout the relationship, particularly if you’re a long-distance landlord.
If you haven’t quite decided to take on DIY property management or hire out, read over What You Need to Know Before Hiring a Property Manager or Becoming One Yourself for more information.
Choose an Individual Property Manager or Management Company
Of course, there are pros and cons to each, so you’ll have to settle on your priorities and research property managers in your area who can handle your needs. Keep in mind that you’re looking for a competent business partner and a company with people skills to smooth all the processes.
These are some things to consider when deciding between a person or a company to manage your rental property.
- Availability, ability to react quickly
- Readily available maintenance roster
- Strong organization and time management systems
- Bookkeeping and accounting knowledge
- Savvy with technology and software to manage money and forms
- Customized services, like digital marketing and social media
- Ability to disconnect personal feelings from difficult tenant situations
- Knowledge of basic home systems and major appliances
Not all property managers have experience working with military homeowners and military families. See Marketing Your Home for Rent to Military Families if you need more support.
How Much Does It Cost to Hire a Property Manager?
Before searching for a property manager, make sure you can afford your area’s going rates for their services. Most property managers charge a fee, usually between 8% and 12% of the rental income, plus necessary expenses. Keep in mind, that’s 8%-12% of the total rental income, not just your profit after the mortgage payment is made.
Their fees vary, but some management companies could charge a flat fee instead of a percentage, normally about $100 per month. They could also charge separately for:
- New tenant placement. If they find a tenant, screen, and complete the lease, you could pay a one-time fee of up to 50% of the first month’s rent.
- Vacant unit advertising. If your rental is empty, the property manager could ask for a month’s rent to run a strong advertising campaign and schedule showings for potential renters.
- Regular and emergency maintenance. Maintenance fees are often included in the property manager’s 8-12% monthly fee. However, with most property management companies, the cost of each repair or maintenance task comes from the reserve repair fund you set. On average, handymen charge $40 to $140 per hour for labor and that does not include materials or travel costs (if they apply).
- Eviction procedures. Evictions are emotional and time-consuming. Your property manager could file legal paperwork or even attend a court hearing depending on the circumstance. For these services, you pay between $200-$500, plus any associated court costs, to process an eviction.
Evictions are complicated. Learn about both party’s rights in What Landlords and Tenants Should Know Before the Eviction Notice.
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How to Find a Property Manager
The gold star standard for any service provider is a personal recommendation from someone you trust. As a real estate investor and military member, your network probably includes someone who works with an outstanding property manager.
If you don’t find a referral, there are a few other ways to find someone you can trust. But, don’t go for “one and done” and stick to one resource. Instead, use multiple resources to get a well-rounded picture of the property manager’s reputation.
- Talk with local real estate agents and other landlords in your area.
- Tap into your online real estate groups and social networks for recommendations.
- Read online reviews on popular sites like Yelp.
- If nothing pops up word of mouth or through online research, consider a company like All Property Management, an online property manager marketplace.
You can never know too much about investing in your rental business. Here’s more information: 3 Things to Know Before You Hire a Property Manager.
The Qualities of a Good Property Manager
The only way to ease your mind when searching for a property manager is to schedule an interview with a couple of candidates. The one-on-one time will help you decide if you can build a relationship with one of them. And they’ll have a chance to ask you questions about your investment and feel out your business personality. After you see a resume, you should ask more questions and identify certain qualities during your interview.
- Ask them about their best and worst property management experiences. You’re looking for how they implement management skills and financial strategies.
- See if they can discuss your target market’s real estate trends and relevant laws and regulations.
- Discuss their verifications like their broker’s license or another property management license. Then, you can follow up with your state’s real estate commission.
- Inquire about their experience, whether it's official training or on-the-job learning.
- Talk about their memberships with trade organizations like Community Associations Institute (CAI), Association of Residential Property Managers (NARPM), and Institute of Real Estate Management (IREM). Involvement shows dedication to their profession.
Reputable property managers are skilled in finance, laws and regulations, and general management. Every day, they oversee many moving parts to maintain your rental property and keep the tenants happy. Property managers could be the saving grace for your real estate investment business, especially if you’re just starting. If you know what to look for before hiring a property manager, you’ll enjoy a professional relationship that will add to your rental property income.
By Dawn M. Smith
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