Selecting a Property Manager—Get the Inside Scoop!
Professional Property Management—Do you need it?
The quick answer is YES! You should not own rental properties without professional guidance if your goal is to achieve passive income from those rental properties. As the owner of a reputable full service property management company and real estate brokerage, I regularly advise investors to think about how property management can help their finances grow and lessen the risk associated with ownership. The right property manager will be an asset to your passive income goals. You should be able to see your expenses fall in line and your income grow. If you have property management services now and are losing money or perhaps you are self managing and your building has not reached its full income potential, it is time to seek expert help.
Here are some additional reasons to consider professional property management:
You are working full-time. Owning and managing an investment property is a full-time job. If you are already working 40+ hours a week, you probably do not have the time to maintain your property or address tenants’ concerns timely. Time is money — literally. Not attending to tenant’s needs as quickly as they come up or getting to maintenance items immediately will affect your future occupancy rates as well as turn into larger repairs if left unattended. If the free time you do have outside of work is being eaten up by managing your property, you no longer have the passive income you had hoped for.
You lack the proper connections. Having relationships with vendors for emergency maintenance or knowing the ins and outs of each municipality’s requirements is a skillset that a great property manager should bring to the table. It’s unlikely that you have all the connections needed to manage your property smoothly. Relationship building is key to owning successful investment properties. Being able to keep costs down, timely address issues, and get the support you need when you need it will be a driving force in your bottom line number.
You are losing money. If you are trying to manage a property on your own and your cash flow is not growing, it may be time to turn to the experts. A great property management company should always be increasing your financial gains. Having the right team on your side can help you determine market rates and if you should raise rents to get the most out of your property. They can help you decide if your property needs improvements and the right improvements to make so you avoid over-improving or under-improving your property. The right property management company has efficiencies built into their processes to help you turnover vacant units quickly, lease units in days — not months — and expedite rent collection and tenant retention.
Select the best property manager for YOU:
Step 1: Determine how involved you want to be.
Every property management company has their own level of involvement. You will want to be sure you understand what they will handle and not handle as a part of their services. If passive income is what you desire, you will want to look for full service options. If you desire to be hands on, a company that handles specific tasks would work.
Most companies will facilitate the day to day management duties — leasing, minor maintenance requests, collecting rent, etc. This type of service still requires a lot of your attention, so keep this in mind when shopping around. You would be the only one watching the financial health of your properties in this scenario.
If you are interested in truly passive income, you need a property management team that can think for you. You need someone on your team that understands the financial side of your investments and builds services around the goals you have for revenue. A full service property management company will gather details about issues and present you with a multitude of options. They will look for cost effective solutions to anything that arises and handle literally everything for you. Full service that is just that — full service.
When looking for the right partner — make sure you know exactly what you need and expect so that you can find the right team.
Step 2: Decide what kind of communication style you prefer.
Do you want to be notified every time something happens or do you want a property management company that can make decisions on your behalf? Let’s say a tenant has a simple issue with a light fixture or a leaky faucet. Do you want a company that will call you and ask what they should do — when the answer is obvious — or do you want a company that recognizes the problem needs to be fixed in a cost effective manner and just proceeds to do that?
Step 3: Select the best business partner for you.
I always tell potential management clients, “if I am not making them more money each year, they should fire me!” I am not here to simply lease your rental. I am your financial resource with extensive knowledge of the market — I give you the tools to know when to sell, when to buy, when to consider a 1031 exchange, and how to maximize cash flow.
There are many versions of property management. You just need to find the one that blends well with your goals and the time you intend to invest in the success of your property.
Take the blinders off!
If the first question you ask a potential property manager is “What do you charge?”, you are going about this in the absolute wrong way. The right property manager will make you money — not cost you money and that is a FACT! If you can’t afford a good quality manager, you likely bought a bad deal. Now more than ever, you need to call in the expert for some necessary clean up. Forget the spreadsheet and seek medical attention now!
The right time to find the expert is during acquisition, not after you own it — that’s like saying I bought a Toyota and I want you to make it into a Ferrari. A bad investment is a bad investment no matter how much makeup you put on it. Being successful in real estate investing requires the right team from the start. If you want to learn more about building the right team, schedule a private consultation with me today and I will get you on the path to achieving your real estate dreams!