1. Look for specialized experience
Property management is a complex industry. You want an investment property manager who is on top of current federal, state, and local laws. And you want someone who has a proven record of effectively handling the many variables that come with tenants and homes.
Look for a property management company with extensive experience caring for your particular type of investment. Companies that focus on commercial properties, for example, may not be equipped to properly manage residential properties.
Last, avoid real estate agents who moonlight as property managers to earn extra money on the side. If they haven’t acquired specialized training, they won’t know how to tend to your investment properly and they’re less likely to be up to date on relevant laws and codes.
Questions to ask:
How long have you managed rental homes?How many rental homes do you currently manage?
2. Verify professional licenses and certifications
In some areas, you might find people managing properties with only a real estate license, and a few states don’t require a license of any type. Competent property managers and management companies should be able to back up their technical expertise with proper licensing and professional certifications. Check with your state’s real estate commission to see if a property manager’s real estate broker's license is current. Any professional affiliations and certifications are a plus.
There are a number of trade organizations that offer certifications upon completion of rigorous training programs, exams, and portfolio and reference reviews:
Members of The National Association of Residential Property Managers (NARPM) generally focus on single-family homes and small residential properties.Managers who complete their initial training and vetting process receive the Residential Management Professional (RMP) designation.After taking additional classes, more experienced managers can attain the demanding Master Property Manager (MPM) designation.Companies that have demonstrated the highest levels of professionalism may also apply for the Certified Residential Management Company designation (CRMC).
Questions to ask:
Do you have a broker’s license?What additional training and certifications have you received?What certifications does the company have?
3. Check reviews and references
It almost goes without saying these days, but before you take time to meet with a property management company, read through its Yelp and Google reviews as well as the comments on its Facebook page. As always with these websites, keep in mind that some reviewers (say, an evicted tenant) may have an ax to grind that has no bearing on the quality of the company’s work. However, review sites can be a great first-line resource when comparing multiple companies.
It’s also a good idea to check with more traditional sources, such as the Better Business Bureau and Chamber of Commerce, for any complaints or positive affirmation.
"References can be a helpful way to assess whether you’re going to have a positive relationship with the property mangagement company"
When speaking to a potential investment property manager, ask for current client and tenant references, if available. Pick up the phone and talk to both groups about their experiences. Does the property manager promptly respond to owner inquiries? Are they proactive when it comes to maintenance issues and filling vacancies? Are their fees clear and transparent? Do checks arrive on time?
On the tenant reference side: Is the house well maintained? Are their repair requests addressed quickly? Do they plan on signing a new lease? Happy tenants are more likely to remain in the property, which reduces vacancy days and keeps rent checks flowing into your account.
4. Examine the property management agreement
The property management agreement outlines the business relationship between you and the property manager, and delineates the management team’s tasks and responsibilities. Given the seriousness of the contract, it’s incumbent upon you to read it carefully and make any necessary amendments before signing off. Confirm that it covers everything you want, and that there are no disagreeable clauses.
Typically, the property management agreement covers:
Services provided and fees: Typical services include resolving tenant needs and requests, maintenance of the home, marketing and filling vacancies, collecting rent, handling move-outs and evictions, and all other daily operational duties. To avoid any billing surprises down the road, all fees—as well as the process for approving any additional expenses—should be transparently outlined in the agreement. Make sure the contract stipulates how repairs are handled and expensed, including a set expense limit that you feel comfortable with.
Owner responsibilities: In addition to laying out the manager’s responsibilities, the agreement may cover your responsibilities as well. Keep in mind: If there are any tasks you don’t want to perform, discuss these and assign them to your property manager.
Contract duration and termination clauses: The agreement’s tenure should have a specific start and end date. Often, they’re signed on a one-year basis. It’s also important for the agreement to cover breach of contract rules as well as termination fees and timelines.
5. Make sure they have the appropriate insurance
Confirm that they have appropriate general liability insurance, property casualty insurance, and errors and omissions (E&O) policies. Your property management agreement may also mandate that you have sufficient insurance, which is beneficial protection for you, too. Feel free to ask your property manager more about necessary insurance protection.