Whether you own a single rental home or an entire portfolio that has dozens of properties, partnering with a property manager can save you time, money, and stress. But there are likely many companies in your local market, so how do you select one from them all?
The best way to hire a property manager is to get on the phone and start asking them questions. In particular, we recommend the following five:
Question #1: What services do you offer?
Every property management company has its own flavor if you will. Some firms offer comprehensive services, while others limit their offerings to a pared-down menu.
It’s definitely true that you tend to get what you pay for, so it’s a good idea to ask up front in order to gauge whether the company will be a good fit.
Examples of services that property management companies provide include: tenant screening, bookkeeping and accounting, property marketing (including listing photography), rental collection, repair and maintenance, remodeling coordination, eviction services, 24/7 repair and support hotlines, and legal assistance.
Question #2: What makes you different from XYZ property management company?
As mentioned, rental property management companies can be a dime a dozen in large markets. So this raises the question, what makes one company different from the next?
If you’re aware of a popular company in your region, call up the other property managers and ask them what distinguishes their operation from the “big name.” Their answers may tell you a lot.
Take Green Residential, a property management company in San Antonio, as an example. When people ask them what makes their services different from everyone else in this crowded market, they have a simple response.
Reps for Green Residential simply walk prospective clients through their tenant placement guarantee, rental income guarantee, and satisfaction guarantee.
Every company should have something that makes them unique. If a property manager has any trouble giving you a reason, that’s a sign you should probably look elsewhere.
Question #3: What licenses, certifications, and insurance do you have?
Never assume a property management company has it all together. Just because they have a website and logo, this doesn’t mean they’re above board. Always inquire about the following:
- Certifications. A property manager should be able to confirm that they’re invested in continuing education and staying up to date on the latest laws and regulations.
- Almost every state requires a property manager to have some sort of license. If this is the case in your area, ask for proof of it.
- A good property management company will have adequate insurance. At a bare minimum, they should carry errors-and-omissions coverage for protection against snags like wrongful eviction.
If a property manager gives you any pushback on the above or tries to assure you they aren’t essential, that’s a sign they aren’t a firm you want to work with.
Question #4: How do you find tenants/deal with vacancies?
One of the biggest advantages of hiring a property management company is that they’ll help you find tenants and screen tenants. They’ll also lower turnover and reduce the amount of time your property sits vacant.
Always inquire about the company’s strategy for locating prospective tenants and keeping them over the long haul. They should be ready to do almost all of the heavy lifting here.
Question #5: How much do you charge for your services?
After you’ve discussed everything else, you should talk money. Generally speaking, a property management company is going to structure its fees in one of two ways.
“Most property management companies charge a monthly fee of between 8%-12% of the monthly rent collected,” Stessa explains. “If the rent on your home is $1,200 per month the property management fee would be $120 based on an average fee of 10%.”
Other businesses will charge clients a fixed property management fee. The fixed-rate is usually based on the property type and square footage.
Although this may be a more cost-effective approach, firms that operate on a fixed rate may be less motivated to maximize their income. That’s something to think about.
Making Your Final Decision
At a bare minimum, you should chat with three property management companies in your area, if possible. You’ll want to ask them these questions, then organize the information in one place so you can compare everything they have to offer.
By this point, one property manager should stand out from the others. If you’re still having trouble selecting, do further online research and ask for referrals. In the end, if the numbers don’t give you the answer, go with your gut feeling!