Need Help Finding a Qualified Property Manager?
Has your “turnkey” property manager become unsatisfactory? Are you weary of managing your properties by yourself? Did you inherit or purchase a property outside your area, and now need a manager for it? Then read on.
Searching for Candidates
In large population areas there are usually many property managers, so you can begin with an internet search. Read the websites. Consider that the “minimal-looking” websites might not be as equipped for the job, and possibly less professional. For the “polished” websites, the concern is that they might be marketing-oriented but less substantial as managers. So, interview those thoroughly, as you should, anyway.
In smaller populations, there might be just one, two, or no full-time property managers. Then the best approach is to ask local brokers who does property management in the area. Often it’s an agent who sells properties and manages part-time. Don’t be discouraged by this. Some of these are very good.
Organizations and Credentials
There are two national organizations that are concerned with property management. The first is the Institute of Real Estate Management (IREM). This is an affiliate of the National Association of Realtors®, and it has national and international chapters. It emphasizes professionalism by presenting courses, holding conventions, and providing four credentials that require coursework, degrees of experience, and ethical practices.
These credentials are:
Certified Property Manager (CPM)
Accredited Residential Manager (ARM)
Accredited Commercial Manager (ACoM)
Accredited Management Organization (AMO)
These are the “pro’s”, but that doesn’t mean the others are not. Less than 3% of managers have these credentials. But, if you find one, consider it a bonus. The second national organization with chapters is the National Association of Residential Property Managers (NARPM). This organization is oriented toward managers who manage many “smaller” properties for their clients. A member of NARPM should definitely be interviewed.
Attached is an appendix of Leading Questions that need to be asked at the interview. They should be sent a couple days beforehand so the potential manager can prepare properly. This also projects a businesslike image of the investor to the manager. This list of questions is not exhaustive as these will lead into others as the interview progresses.
Managing the Managers
Property managers typically charge 810% of collected rents. In other words, they don’t get paid during vacancies. This motivates them to get vacancies filled promptly. Some managers charge a “turnover” fee when they re-rent a unit. This is fair because it’s extra work for them.
Some investors see a challenge in grinding the manager on their pay. This is not an area to push the limits. Managers who feel well-paid will manage better. All it takes is one $6,000 damaged unit to wipe out any perceived savings. So, pay your managers well.
Another thing is to remember that the manager works for you. Some managers are firm with their clients about what they will and won’t do. (They try to treat you like a tenant!) When they try this, be polite but assertive. THEY WORK FOR YOU!
Talk to your manager about inspecting your unit(s) quarterly. They need to get inside, ask about needed repairs, and assess how the unit is being treated. You don’t want a $6,000 rehab in two years because the tenant paid well but ran the place down.
If possible, try to visit the manager from time to time. Drive by the property first. Try to find a scraggly lawn, broken window, inoperable car, or something to ask the manager about when you get to their office. This “surprise audit” will help keep them from going slack handling your account. Remember, they work for you, and you are paying them well.
A final issue is the report(s) you will receive monthly. Large management companies have professional reports which load easily into income tax preparation software. Parttime managers usually do not. So, you will need to set up an EXCEL spreadsheet or purchase your own software and load it monthly. Do not wait for “tax time” for this.
Bruce Kellogg has been a Realtor® and investor for 35 years. He has transacted about 500 properties for clients, and about 300 properties for himself in 12 California counties. These include 14 units, 5+ apartments, offices, mixed-use buildings, land, lots, mobile homes, cabins, and churches. He is available for listing, selling, consulting, mentoring, and partnering. Reach him at email@example.com, or (408) 489-0131.