When investing in single-family rental properties, minimizing your operating costs can help you maximize your revenue. Consequently, you might choose to manage those properties yourself to eliminate the expense of having someone else do it. If you have the time, the expertise and a smaller portfolio, there is certainly nothing wrong with that approach.
On the other hand, if your days are busy, you don’t have experience in this area or you own many properties (or intend to), you may find it advantageous to hire a property manager. If that’s the case, you want to be sure that the person has all the skills needed to take property management tasks off your plate.
How To Find The Right Property Manager
The right property manager can be a valuable asset to your real estate operation. To determine if they can handle all the tasks you will be handing off to them, ask these seven questions:
1. How can you help me improve cash flow?
In a perfect world, your tenants would pay their rent on time, and you would get the best deals to minimize expenses. Unfortunately, there are no single-family rental properties for sale in a perfect world. Renters fall behind on their rent, you might not have access to the best pricing from vendors and even understanding things such as which garbage rate plan to use can save you significantly. It’s your property manager’s job to ensure timely rent payments and take appropriate action when tenants fall behind. A good property manager will also help you control expenses and help your business maintain positive cash flow.
2. Do you have experience handling all types of tenant interactions?
Dealing with tenant questions, comments and concerns on even one property can consume hours every month. If you own multiple properties, dealing with your renters can be a significant commitment of time that you would rather be spending on other activities. Having a property manager who can triage tenant issues and only bring to you those that require your attention can be very helpful.
3. Are you knowledgeable in the housing regulations that apply to my properties?
From changing laws to property damage that creates a code violation, there are many ways for you to find yourself in legal trouble. Your property manager should be able to monitor both the regulations in your area and the condition of your properties to ensure you remain in compliance.
4. How can you help me keep units occupied?
A good property manager gets to know your tenants and understands the market. Consequently, they may learn that a renter intends to leave well before they give notice and can leverage their industry connections and the marketing channels that work best in the local market to find new tenants and ensure that your units are never vacant for long.
5. Do you have experience in developing and maintaining vendor relationships?
Vendors tend to provide the best service to people they know and people who can give them consistent work. As a property owner, you might not have time to establish a personal connection with your electrician, landscaper or other tradesperson, and the occasional project on your small portfolio might not be enticing enough to give you the best rates. A helpful property manager has the time to build the relationships, and because they manage many portfolios, they have the volume to obtain favorable rates.
6. Can you help me set appropriate rents?
Setting rents for single-family homes is often more difficult than apartments because each unit is different and there are not as many comparables. However, a property manager can do more in-depth research to zero in on a rent that maximizes your revenue while still ensuring that the property is always occupied.
7. Are you comfortable connecting with me primarily by phone or email?
If you are managing your own properties while also having to tend to other business obligations, your units need to be relatively close to you geographically. If you have a property manager who is able to handle all the operational details for you, you can own properties anywhere in the country, but you want to know your property manager is easily reachable by the communication avenues you prefer.
Managing Your Portfolio As A Business
If you own single-family rentals because you enjoy the social aspect of being a landlord, then managing your own properties probably makes sense. If, however, you are in single-family rental real estate to make a profit, finding the right property manager can be a great way to decrease your stress, increase your revenue and free yourself to focus on your business strategy, your hobbies or that vacation you’ve been meaning to take.
Source: Alex Hemani