“I’d Rather Have an Average Property with an Excellent Property Manager than an Excellent Property with an Average Property Manager.”
Potential Consequences of a Bad Property Manager
The property manager is in control of your property on a day-to-day basis. He places the tenants and keeps an eye on them while they live there, he makes sure repairs are taken care of and the house stays in working order, and most importantly he stays in communication with you about the property. If your manager doesn’t know what he is doing, or isn’t overly concerned with how he is doing it, here are some negatives that can result.
- Higher Vacancy Rates: The property manager is the ones who select tenants. While no tenant is a sure thing, there are easy precautions to take in screening a potential tenant, such as their income-to-rent ratio, employment history, and their reason for renting. Credit scores these days have become horrible indicators of tenant quality, rental history can be easily forged when the tenant gives you their friend’s number who pretends to be their landlord, and criminal background checks often don’t show everything. All three of those are still worth checking, but they aren’t the big indicators anymore.
- Higher Repairs Cost: If your manager only calls a contractor for any maintenance request, you are going to continuously pay an arm and a leg for repairs. If he hires a handy guy who is cheap but doesn’t do the job right, guess who has to keep paying for the redo? If the management company wants to squeeze extra money out of you they can charge a ridiculous hourly rate for their handymen or create repairs that weren’t really necessary in the first place, as with my property above.
- Constant Stress: “Managing the manager” is horrible. I’ve done it, I don’t like it, and I can’t help but wonder what I’m paying a monthly fee for if I’m having to always be on top of my manager. There are plenty of managers that leave me stress-free and I definitely prefer that route. You may wonder how you will know if you need to be managing your manager or not. Trust me, you’ll know.
- Confusing Invoices and Pay: I think the property management software out now is worthless. It’s confusing, I can barely read the things, and if there is any anomaly such as the manager charged me maintenance incorrectly, the statement rarely reflects the change because it was created by the same computer that received the maintenance request, versus being created by the person I talked to about the request. If that makes any sense. I prefer mom-and-pop style invoices in Word or Excel, personally.
What Makes a Good Property Manager (and Don’t be Fooled into Thinking These Managers Don’t Exist!)
Feel free to add to this list as you go about your experience with property managers, but these are the key things that will make or break my relationship with a manager.
- Feeling of Trust: I want to feel confident that my manager will contact me if there are any issues. I also want to feel confident that if I fall off the face of the earth for any period of time and my manager can’t get a hold of me that he will handle my property not only smartly but he won’t rack up ridiculous expenses while doing it either. This feeling of trust isn’t hard and isn’t something that needs analysis. You either have it or you don’t. Go with your gut.
- Good and Quick Communication: Nothing gets under my skin more than if I can’t get in touch with my property manager or if I can’t get a question answered promptly. I’ve had managers I had to call daily for a week or more before I could get an answer to a simple question. My good managers however email me back the same day or by the next morning with a simple answer. What a concept!
- Proper Maintenance Doesn’t Break the Bank: This is a big one for me. Calling a contractor out for every maintenance request is unacceptable. Surprisingly, this is what most property managers do. I can call a contractor from 3,000 miles away. Why pay someone to do that for me? I want to know that if my tenant calls and says the toilet is messing up that the manager will go adjust the floaty ball himself and not charge me for such a minor issue. What about compensating his time to do that, you ask. That’s what I pay a monthly fee for!
- Knows the Importance of Tenant Quality: Any period of vacancy is stressful for an owner but being patient in finding the right tenant is key. My good managers may not place a tenant as quickly, but when they do finally place a tenant, the tenant is well-qualified and shows all the signs of holding up their end of the lease. In the long-run, having less turnover with good tenants will cost much less than saving vacancy time in the short-term and placing just anyone.
- How much do you charge for the following: monthly fee, tenant placement fee, re-leasing fee, maintenance labor?
- How do you handle maintenance calls: send a handyman, call a contractor, do it yourself?
- What are typical maintenance charges in terms of labor?
- What kind of statements will I receive each month?
- How accessible are you on email and/or phone? (not kidding, sad I even have to ask)
- Are there any times you won’t ask for my approval for maintenance repairs?
- How many properties do you currently manage? Do you have references?
- What are qualifications do you look for in tenants?
Admittedly, it is difficult to distinguish quality from average property management companies. At Neighborhood Property Management (managing condos, houses, and apartments in Fresno and Clovis) we encourage you to do your research and sit down see whether they truly care about the things that you value and that will help you succeed with your investment goals. Call us today for a no obligation assessment of your property's rental value and discuss methods of decreasing your stress while maximizing your asset. 559-270-6776 or firstname.lastname@example.org.