Property management is probably one of the most “screwed up” areas of real estate, more so than just about any other. This might sound like a bit of an overstatement, but probably not.
For example, take a property that is a marginal investment and add amazing property management. If you have a good property management team, you can overcome many of the obstacles that make it a less than ideal property.
On the other hand, you can have a stellar property and still fail miserably with poor property management.
The point is: no property is exempt from the trials of property management. This applies to multiple asset classes: self-storage, mobile home, single family home, commercial spaces, etc.
What Can A Property Manager Do?
Property managers are in charge of so many things:
- Screening tenants
- Inspections and maintenance
- Collecting rent
- Curbside appeal and upkeep
- HR issues (in the case of larger properties)
And most importantly, making sure your property maintains its value.
How Do I Screen For A Great Property Manager?
There are a number of things you want to ask your potential property manager, and I’m going to break those questions into several categories.
- What is their experience level in your asset class?
- Are they familiar with your market? Geographically? Demographically? Psychographically?
- Do they have references? Can you speak with other clients in your market who are satisfied?
- Discuss your budget. What fees may be lurking under the surface?
- How do they handle maintenance issues?
- Who takes care of things at 2 a.m. when there’s an emergency?
- Are they using high cost services? Low cost? Somewhere in between?
- For example: Are they using the people that advertise on local TV stations or do they have an established network of good contractors they can pull from?
- Are their maintenance services scalable? For example, if they’re working with other properties in your market and asset class that translate into savings for you, versus if you are the only self-storage client and they’re also managing 20 serviced apartments.
- Are they clear on your goals for the property?
- If you’re trying to raise the net operating income, do they know your expectations and timeline?
- Set benchmarks to make sure they are being achieved.
- Are employees incentivized to move the needle? (This is good because people will be more invested and sharing in the profit).
- How do they report profit and loss, operation costs, etc.? You’re going to need clear, transparent reports for investors. Ask for a standardized monthly reporting system.
- How good are they about returning calls and emails?
- Are they being communicative in the ways you need?
Remember, if they’re not good at communicating with you, they’re probably not good with clients either.
- Where are they advertising? This can say a lot about their clientele — i.e., advertising on TV, billboards, social media.
- How sophisticated are they with SEO, social media, digital marketing, etc. to increase awareness of your properties and brand?
- Are they tech savvy, and do they have people skills?
- Do they understand your market demographics, such as income and socioeconomic stats?
- Are they good at drilling down and setting market specific rates?
- Rates often change day to day, can they keep up and know the correct value?
Do you “click”?
- There must be a personal level of connection.
- Can they carry on a conversation? This will also be reflected in how they interact with clients.
If there’s one thing I hear most from real estate investors, it is overwhelmingly questions about property management. It is the biggest area of concern. Finding and keeping property management companies (you don’t want to hire an individual, especially in a business setting) should take time and consideration.
Don’t rush it! Ask all the questions and then some. Ask for references and vet them. Property management can truly make or break an investment, so take your time.
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