Property management is considered to be a necessary evil by many multifamily property owners.
As the owner, you do not want to be in the property management business. It will cost you some of your net operating income (NOI) to hire property managers but your time is much better utilized in finding deals than in managing properties. Here are some guidelines to assist you in finding good property managers.
Your aspiration should be that of the position of the asset manager of the property. You want to add value to your property and implementing a good property manager is crucial in attaining your goal of adding value. Part of your role as asset manager will be to properly manage your property managers.
The first step you need to take is finding a property manager. You can start by driving by properties that look well-managed and then talk to the manager of that property. Referrals, brokers and colleagues that own apartment buildings are also all good places to start when looking for property managers.
Now that you have some candidates, you want to get someone who is experienced with the type of multifamily property that you have. You need to look for someone with depth and who has a system in place. You’re not looking for the Lone Ranger; you want someone who has a back-up for when he or she is on vacation or out for any other reason.
Next, you need some good, solid questions and tips to get the answers you need.
Here are thirteen to get you started:
1.) How long have you managed properties in this area? What area of the city or what class?
2.) Are you a certified property manager? What training have you had?
3.) Can I see a property that you currently manage?
4.) Do you have references (ask for at least 3)?
5.) What is the compensation model? How do you want to get paid?
6.) Ask to see a sample management contract – a proposed contract?
7.) How often are your management contracts renewable?
8.) Check them against the Chamber of Commerce and the Better Business Bureau and check with the real estate commission for any complaints.
9.) Ask if they have any Class C experience. It’s different managing a Class C property compared to a Class A property.
10.) Do you have any Section 8 experience?
11.) Have they managed a property this size? Just because they’ve managed fourplexes doesn’t mean they are ready to manage a 50 or 100 unit property.
12.) Request sample management reports. You want to see a report from property management software and not something done by hand. That’s a red flag that they have no systems in place.
13.) What are the marketing methods for leasing this property? This is the most important question. You want to see how their thought process works. You want a property manager that markets for the tenants.
Good property management is at the heart of a money-making property. It is imperative that you put the effort into hiring effective property managers to allow you to assume your role of asset manager. The questions and tips above will put you in the driver’s seat and assist you in hiring a good property manager.