Hiring a Property Manager - 5 Essential Success Questions
Building success in the real estate investment industry requires surrounding yourself with professionals whom you can rely on to do their work well. Your real estate agent hunts down listings. Your mortgage broker secures the best loans. Your accountant manages your finances. When you first set out in the world of real estate, that may be enough. After all, keeping an eye on one or two properties while you search for new opportunities isn’t difficult.
If, however, you find yourself in the enviable position of having several properties in your portfolio, it may be time to add another critical member to your team: the property manager.
But first, if you would like to free up funds in your budget to afford a property management company or an independent manager, click the link below for a free strategy call to discuss lowering your monthly mortgage payments.
Why you may need a property manager
As you grow the number of properties under your belt, you’ll find yourself becoming slowly overwhelmed by the day-to-day workload. Whether you’re managing short-term and long-term tenants or flipping houses for a profit, there’s a certain amount of upkeep that’s expected in the world of real estate.
If you rent to long-term tenants, they’ll expect working appliances, heat and plumbing, to name a few necessities. They’ll also expect the place to remain pest-free. If you rent to short-term tenants, they’ll expect the same as well as a state of general cleanliness during their stay. Even if you don’t rent to tenants and you’re simply hoping to flip and sell the property, you’ll need to keep an eye on any maintenance you have performed, not to mention the comings and goings of prospective buyers. In other words, building a successful real estate portfolio is a day job.
If you’ve worked to the point that you have trouble juggling the daily tasks associated with property ownership while continuing to grow your list of properties, then it might be time to start interviewing prospective property managers.
Before you rush into the hiring process, make sure that hiring a property manager is worthwhile. First, determine how many hours a week you need help. Then, research an appropriate salary, including the associated costs and taxes that get tacked on top. You should move forward if your income remains positive even after you’ve subtracted the fees for keeping a property manager on staff from your annual profits from the previous fiscal year.
Once you know your budget, you’re ready to find the right person to help you manage your properties. Ask these questions when interviewing property managers to find the right fit for your business.
How would you handle evictions?
In a perfect world, a property owner would never encounter delinquent renters. Unfortunately, it happens, and as the person on the front lines, it falls to your property manager to figure out a way to remove failed tenants.
When responding to the question of eviction, look for an applicant who opts for a firm, but fair approach. For example, any evicted tenants should be notified of the specific mistakes they’ve made and given reasonable notice to either repair the problem or to remove themselves from the premises.
From that point forward, eviction cases are arduous legal affairs that require specific experience. If you’re not prepared to handle evictions yourself, your property manager should have a working knowledge of eviction procedures or be willing to learn.
When would you suggest raising the rent?
Some potential property managers would answer this question by suggesting that rent should only be raised when inflation and maintenance costs demand it or when new tenants are installed. That may seem even-handed – even generous – but that strategy has a massive drawback.
At the moment a property owner finds themselves losing money on their rental, they’ll need to raise the prices to compensate. That usually means a substantial rent hike, the kind that makes renters nervous about their financial situation and frustrated with their landlord.
The best answer, in this case, is instituting an annual rental raise that’s outlined in the rental agreement when the new tenant moves in.
Discover Residential Property Management With This Step By Step Guide
What steps would you take to limit vacancies?
On the surface, this question appears like a marketing query. It may even prompt some applicants to talk about Twitter and Facebook campaigns. Those tendencies are admirable, but the job of a property manager isn’t promotional, it’s organizational.
If you’re renting to long-term tenants, the best way for a property manager to play a role in limiting vacancies is to have an understanding of which leases are nearing their end and which tenants are planning to move on. Once those tenants are out, it’s the job of a property manager to ensure that the house or apartment in question is cleaned, repainted and prepped for new tenants as swiftly as possible.
Overall, the most essential role that a property manager plays in reducing vacancies is to keep the property ready to show or rent at a moment’s notice.
What preventative maintenance strategy would you implement?
The answer here is pretty straightforward. No matter how wonderful a potential renter maybe, they will be unlikely to perform general maintenance on your appliances and your property’s infrastructure. These jobs fall on the property manager to complete while maintaining your resident’s right to privacy.
You’ll want a prospective property manager to understand the importance of regularly scheduled pest inspections, HVAC maintenance and the like. What’s more, a property manager must be comfortable alerting your tenants of these plans and then following up with them until those plans are confirmed.
Patience is a virtue
The interview process is rarely fun for anyone involved on either side of the table. That said, when you’re hiring a property manager, you are essentially searching for a qualified person capable of treating your livelihood as if it were their own. Finding the right person to fulfill those lofty expectations may take some time. It’s important to be patient and wait for the right candidate to show up.
A great property manager can make a world of difference in your real estate business. With less time worrying about the day-to-day maintenance of your property, you’re free to find your next great opportunity.
Once again, if you would like to free up funds in your budget to afford a property management company or an independent manager, click the link below for a free strategy call to discuss lowering your monthly mortgage payments.