How to Select a Property Manager

A good property manager can put more money in your pocket than you can. A strong manager makes up for the commission paid with good management practices and attention to detail. You will reap the benefits of rents that keep up with market conditions, limited vacancy, and connections to good vendors and repairpersons. Many landlords believe that limiting rent increases keeps good tenants in place. A good manager, on the other hand, will raise rents reasonably, increasing the owner's bottom line and keeping the good tenants happy with realistic rent increases. Managers are in touch with the rental market and know at what price to advertise a rental, thereby reducing the vacancy factor between tenants. Because of their connections to prospective tenants, a good manager will often facilitate a new tenant moving in as soon as the departing tenant moves out, eliminating vacancy altogether. Your manager knows which repairpersons to hire. She/he also knows which ones not to hire. The manager can save you time, money, and aggravation by getting the right person to your property to solve problems efficiently and inexpensively.

Give a large amount of weight to managers with experience of ten years or more. A manager who has been in the business for ten years has fought the landlord-tenant wars and elected to continue to make a living in property management. While none of us have "seen it all," the experienced manager has more than likely seen a lot, and has probably learned a lot from experience. Furthermore, property management should be the full-time job of the manager. Not long ago, It was rare to find licensed real estate brokers whose full time business was property management. Not so today. Many people make their full-time income in the property management business. A full-time property manager will be better able to focus attention on your property when it needs it, and will be more likely to keep up with the legal changes related to landlord-tenant law.

Membership in professional organizations is an indication of a manager's commitment to keeping up with trends in the industry. If your property is a single-family home, your manager should belong to the National Association of Residential Property Managers (NARPM), whose members specialize in the management of single-family properties. If you are hiring management for multiple residential units, your manager should belong to the National Apartment Association/California Apartment Association (NAA/CAA) or the Institute of Real Estate Management (IREM), which is applicable to both multi-family residential and commercial properties.

Certainly, you will want to understand the fees charged by the company. However, the amount of the fee is not the most important question to ask, nor should it be the pivotal answer on which you base your choice. You will likely find that fees do not vary greatly in a given market, but service will vary drastically, so don't let a few dollars prevent you from hiring the best manager for the job. A good manager will save you more than his/her commission by placing good tenants who will take good care of your property. Good management can reduce vacancy and minimize expenses, both of which add profit to your bottom line.

Some questions you may want to ask prospective managers:

• How to you determine the price at which to advertise a vacancy?

•  What is the current condition of the rental market, and how does that influence your advertising practices?

• How long would you anticipate that it will take to fill my vacancy?

• How do you screen prospective tenants?

• How do you stay up to date on changes to landlord-tenant law?

• Why should I hire your company as opposed to the many other options available?

How NOT to hire a property manager: Don't hire a manager by looking in the newspaper or the Yellow Pages to see who has the biggest ad. The size of the ad simply reflects the proportion of a manager's income that has been designated for advertising.

Ask yourself, "If the management at the advertised company is so great, why do they need to do so much advertising?" Superior property managers get most of their business by word of mouth, thus they do not need to advertise much, especially in a small community. As mentioned above, do not hire a property manager because his/her fees are the lowest available. In property management, as in most other arenas, you get what you pay for. It costs a certain amount to do business and make a reasonable profit in any given geographical area. If one company is offering service for a significantly reduced fee, it is likely that the company is cutting corners on service somewhere to account for the reduction in gross income.

Successful income property owners know how to acquire good income properties and what to do with the properties acquired. If you are not in a position to manage your property yourself or are not sure how to manage, spend the time and money to hire a good property manager. A good manager knows how to cause the properties to create the greatest net income to you.