For passive investors the property manager is the most important person on your team. That said it is very underpaid and extremely difficult to find one and keep them. From a property manager’s standpoint, its not a really good business to be in because you get to see the worse side of owners and tenants, there are low margins, and turnover is high.
What do Property Managers Do?
- Advertising for tenants
- Screening tenants
- Inspections and maintenance
- Collecting rent
- Evictions or working with judges
- Takes trouble tickets from tenants and source out contractors
- Takes trouble tickets from owners
Here is the list of questions to interview a Property Manager
Dummy waring: don’t be a jerk when asking these questions. Let it guide a conversation instead of playing stump the chump. You need a good property manager more than a good property manager needs you… make sense?!?
Remember: There must be a personal level of connection. Can they carry on an intelligent conversation than give you the text book answer?
- How long have you been a property management company?
- What types of properties do you manage?
- What type of insurance do you carry? What happens if someone sues me?
- How many units are you currently managing?
- How many property managers and assistant property managers does your company have?
- What associations do you belong to?
- How many vacancies do you have right now?
- Avg. Time to fill a vacancy Lease Structure?
- Do you have a sample lease? Do you do a 1 year or 2 year initial lease?
- What is your late-rent policy?
- Do you keep late fees or owner?
- Perform regular property inspections? How often?
- What % of tenants do you evict?
- What is legal charge of eviction and process?
- What are management fees?
- Any other fees? (Cancelation, eviction, lease renewal ($200-500, or nothing), marketing, account set up)
- What do you charge for finding new tenant & leasing?
- Do you charge a fee when my units are vacant?
- If I decide to sell my property, do I have to list it with you?
- How do you market your properties?
- What is your repair process? And at what dollar amount am I notified for approval? How do you handle communication with me. Via a portal? Phone calls? Do I have a “point person” in case of larger stuff?
- How do you screen prospects?
- When will I receive my net income monthly?
- Do you do direct deposits? Can tenants pay rent electronically?
- References if available to talk
Where do I find a property manager:
- Referrals are the best way: BiggerPockets forums if you don’t have any network already but be careful with “Cheap Easy Free” options – make a simple request for property managers in that area or private message a few investors local to that area
- Google Reviews
- See who are the property managers on listing sites like Facebook Marketplace or Craigslist
Other discussion happening in our Passive Investor Accelerator & Mastermind
- Does anyone have opinions about these “tech-enabled” property management companies like mynd.co and greatjones.co? Has anyone used them? Would love feedback.
- Also, what are people typically paying for property management? 10%? or less?
- I was plugging in 10% into all my numbers. Some give discount for portfolios e.g. 9% when you have 5+ But recently when talking and analyzing stuff with ABC TK they have some PM in certain parts of country as low as 6%. 10 is the most I’ve seen and most common though.
- When I was looking at Turnkey’s, 8-10% was the range, with most being 10%. I think I’m paying 8% now, but that extra percentage point or two would not be a deciding factor for me on Turnkey management.
- The big thing is what the lease up fee. I’d rather pay 6% and 50% of the first months rent than 10% and 25-50% of the first month. Plus you have to think about the price of rents. When I had rentals in seattle I was paying 6%. And its good to not nickel and dime these guys too because they control your fate. Who cares if they take an extra few points if they are passive aggressive and upcharge/lazy bid your 200-600 on repairs every few months.