7 Tips For Hiring An All-Star Property Manager
So, you’ve gone ahead and decided that owning some rental property would be a worthwhile investment and purchased your first property. The good news is, you’re right; for many people owning rental properties results in a steady stream of income, whether to supplement their current one or to stand-alone.
But have you given any thought to whether you should invest in someone to manage that property? A lot of new owners think that the maintenance of their property won’t be very time consuming, or that their tenants will mainly keep to themselves and sort out their own problems, but rarely is that ever the case. If you have more than one rental property, the burden of maintenance can become overwhelming quickly, and it’s here that the benefits of employing a great manager starts to become appealing.
If this is your first property or your fourth, below are 7 tips for ensuring you hire a highly reliable, all-star property manager that you can have faith in, leaving you with more time to kick back reap the benefits of your investment.
1. Don’t Hire The Competition
It might seem useful for your manager to also be someone who manages their own rental units as well, but for many property owners, this can become a real deal breaker. They think that because the manager understands what it’s like to be the property owner, they’ll better communicate with you and take care of your property as they would their own, but often that is not the case. The problem many investors run into is that their managers wind up putting their property needs above your own. A classic example of this is when both of your properties hold a vacancy at the same time. Whose property do you believe is going to be given preferential treatment? Likely not yours.
2. Do Your Due Diligence
If the candidate you are looking at manages multiple properties, use this to your advantage in the hiring process. Ask the candidate for the addresses to a few of the other properties that they take care of, get in your car, and go see them in person for yourself. If you really want to make sure you hire a responsible manager, their other properties should appear to be in good standing, even just from the street. If you drive by and see that landscaping is a mess and it’s in dire need of new shingles, you probably shouldn’t trust this particular candidate with your properties.
3. Find Out How Frequently They Will Perform In Person Inspections
For your property to be thoroughly maintained, you’ll want to make sure that a full inspection is conducted no less than once a year, and an exterior check occurs every quarter. Seasonal changes can be responsible for things like misplaced shingles or unexpected landscaping work, the regular checks will assist in catching these things before they become too difficult or costly to repair thereby keeping your tenant and you happy. On that same note, tenants aren’t always so forthcoming when something on the interior has been damaged, nor might they even be aware of things like moisture pools forming mold, so a yearly wellness check will catch anything that has gone unreported before it gets out of hand.
4. Inquire About Repair Procedure
Since you’re hiring someone to manage your property, it makes sense to have a detailed conversation about how repairs and maintenance are handled. Some companies or managers will ask to hold a reserve from your rental income to cover regular minor expenses such as new light bulbs or filters for the air conditioning unit. Alternatively, others might want to auto bill you the full amount of the repair costs on your next statement. It’s important that you also set a limit that you are comfortable with letting your manager charge on your behalf should pressing issues arise that you are unavailable to sign off on. You may also set restrictions as to when you must be notified of any expenses, or set a clause in place for when more serious action must be taken to protect your property and your tenants. If a hurricane comes through and your entire roof needs to be replaced but you’re out of town and can’t agree to re-shingling, but your manager deems it appropriate to proceed with the repair whilst expecting you to reimburse the cost, that should be clearly defined in your agreement.
5. Be Clear About Payment Timeframes
Managers and property owners sometimes have different ideas about how the monthly or yearly accounting of funds should be processed. For example, you might expect to receive January’s rent by the end of the month, but your manager might prefer to bill you a month later. If that’s the case, have it in writing why you’re being paid a month behind schedule and have your manager explain their reasoning behind this process. Always encourage your manager to keep detailed receipts for any maintenance checks and repairs. Remember, this is your investment property, so you always want to make sure you are wholly aware of where the money that investment is making is being allocated.
6. Get Everything In Writing
As mentioned above, due diligence is very important. When drafting your contract, review it thoroughly to ensure you crossed all your t’s and dotted all your I’s. Include everything you and your manager have agreed on in this contract and be sure to include the details of termination should it ever become necessary. Even if you’ve done all the things we’ve outlined in this post, it is possible that you still might not be completely happy with your hire. For this reason, it’s vital to define the reasons when you would be able to terminate your manager and the results of the action. This might mean that you decide your manager will have to be notified of termination at least one month in advance, or that should they choose to quit, they must give you a set time frame to find a replacement.
7. Do The Background Check
If this is your potential hires first property, they may not have much in the way of recommendations and references, but for those who do this regularly, there should be ample. Go through their other property listings and get references from similar properties to yours. One phone call could be the difference between getting the manager of your dreams and one with a known tendency to neglect properties such as yours. Additionally, when considering your recruit’s other units, you can determine if they already cater to a specific niche. If your rental property caters to those with low-income needs and their portfolio caters to high-end homes, they may not be the right fit for you.
Hiring somebody to manage your investment property is a great rule of thumb to follow whether you’re new to investment properties or a seasoned pro, and a property management company can help you find the right fit for your needs. It doesn’t take very long to follow our outlined tips, so do yourself a favor before your lock in your hire and make sure that you’re setting yourself up for success.