Owning rental property can make you good money. But managing it yourself? That’s a whole different story. Between late-night tenant calls, broken water heaters, and chasing rent payments, being a landlord eats up your time fast.
That’s where a property manager steps in. They handle all the day-to-day stuff so you don’t have to. But here’s the catch – not all property managers are created equal. Some will take great care of your investment. Others will drain your wallet with hidden fees and do the bare minimum.
Picking the right property manager is one of the most significant decisions you’ll make as a rental property owner. Choose well, and your property practically runs itself. Choose poorly, and you’ll end up with more headaches than when you started.
So how do you find a good one? Let’s walk through the nine most important things you need to think about.
1. Communication Style and Responsiveness
Good communication isn’t just nice to have – it’s everything when it comes to property management. Think about it. Your property manager is your eyes and ears on the ground. When something breaks, when a tenant complains, when rent is late – you need to know about it. And you need to know fast.
A great property manager keeps you in the loop without you having to chase them down. They send updates regularly. They answer your calls or texts within a reasonable time. They don’t leave you hanging for days, wondering what’s happening with your property.
Before you hire anyone, pay attention to how they communicate during the hiring process. Do they respond to your emails quickly? When you call, do they pick up or at least call you back the same day? If they’re slow to respond now, imagine how they’ll be once they have your business.
2. Fee Structure and Hidden Costs
Money matters, so let’s talk about what property managers actually charge. Most property managers take a percentage of your monthly rent. This usually runs between 8% and 12%, though it varies by location and property type. So if your place rents for $2,000 a month and they charge 10%, that’s $200 going to your manager each month.
But here’s where things get tricky. That monthly fee is just the beginning for some companies.
Many managers tack on extra charges for everything. They might charge you a “leasing fee” when they find a new tenant – sometimes as much as a full month’s rent. They might charge annual inspection fees, lease renewal fees, maintenance coordination fees, or even fees for receiving and forwarding your mail.
When you’re figuring out how to hire a property manager, always ask for the full fee breakdown in writing. Don’t just ask about the monthly percentage. Ask about every possible fee they might charge. Here are the questions you need answers to:
- What do you charge to find and place a new tenant?
- Are there fees for lease renewals?
- Do you charge for annual inspections?
- What about eviction fees if that becomes necessary?
- Do you mark up maintenance and repair costs?
- Are there any other fees I should know about?
3. Tenant Screening Process
Your tenants can make or break your rental property investment. Good tenants pay on time, take care of your place, and stay for years. Bad tenants? They’re a nightmare of late payments, property damage, and potential evictions.
That’s why tenant screening is probably the most critical job your property manager does.
A thorough screening process should include several things. First, they need to check the applicant’s credit history. This shows whether they pay their bills on time. Someone with terrible credit and lots of unpaid debts is probably a risk.
Next comes income verification. A good rule of thumb is that tenants should earn at least three times the monthly rent. If your place rents for $1,500, your tenant should make at least $4,500 a month.
When you’re learning how to hire a property management company, dig deep into their screening process. Ask them:
- What specific checks do you run on every applicant?
- What are your minimum requirements for approving a tenant?
- Do you verify employment and income?
- How far back do you check rental history?
- What would disqualify someone from renting?
Be careful of managers who seem too eager to fill vacancies quickly. Yes, empty units lose you money. But rushing to put any warm body in your property can cost you way more in the long run.
4. Experience and Track Record
Experience matters in property management. A lot.
Someone who’s been managing rentals for ten years has seen it all. They know how to handle difficult situations. They’ve dealt with every type of tenant problem imaginable. They understand local rental laws inside and out. They have relationships with reliable contractors and vendors.
Someone brand new? They’re learning on your dime.
That doesn’t mean you should automatically reject newer companies. But you do need to ask more questions and pay closer attention to everything else on this list.
When evaluating experience, ask about their track record:
- How long have they been managing properties?
- How many properties do they currently manage?
- What types of properties do they specialize in?
- Do they have experience with properties like yours?
Also, ask for references. Any decent property manager should be happy to connect you with current clients. Call these people. Ask them real questions:
- How long have you worked with this manager?
- Do they keep your property rented?
- How do they handle maintenance issues?
- Are there any problems or complaints?
- Would you hire them again?
Check online reviews too, but take them with a grain of salt.
5. Marketing and Vacancy Periods
Unoccupied rental houses cost a fortune. You are losing money every day that your place is empty. You still have mortgage, insurance, taxes and utilities to pay but there is no rent income to meet that. This is why being a good property manager involves having good marketing and the capacity to fill a vacancy in a very short time.
Enquire of the prospective managers regarding the average period of vacancy. What is the average time they take to acquire a new tenant? The response must be calculated in days or weeks but not months. Good performing managers might sometimes completely rehabilitate a property within a period of less than two weeks. They put it in the list before the tenant in possession vacates. They book appointments on the spot. They have a system to relocate swiftly and prepare your property for new tenants to make your move smooth and quick.
Determine their property advertisements. The most effective managers put their advertisements on various websites such as Zillow, Apartments.com, Craigslist and the MLS (Multiple Listing Service used by real estate agents). The more it is displayed in the places, the more potential tenants will be exposed to your property.
Enquire about their showing procedure, as well. Do they show them in person or simply issue lockbox codes so that people can see it themselves? Physical demonstrations are superior. Questions can be answered, features pointed out, and a sense of whether one is serious about renting can be gained by your manager.
A lot depends on good marketing pictures. Photos made on a poor phone will not be attractive to good tenants. Professional shots that will feature your property at best. Request to view some of their previous marketing experience with other properties.
In addition, enquire about the pricing strategy. A quality manager is aware of the local rental market. They will sell your house at a competitive price, not too high that it will not sell but not too low that they will be leaving money on the table.
6. Maintenance and Repair Handling
Stuff breaks in rental properties. That’s just reality. Water heaters die. Pipes leak. Air conditioners quit working in the summer. Appliances give out.
How your property manager handles these issues makes a huge difference in your stress level and your bottom line.
Find out their process for handling repair requests. When a tenant reports a problem, what happens next? How quickly do they respond? How do they decide if it’s a true emergency versus something that can wait?
Ask about their spending authority. Most management agreements give the manager approval to spend up to a certain amount without calling you first. This might be $200, $350, or $500, depending on the company.
For anything above that limit, they should contact you for approval unless it’s a true emergency, like a burst pipe flooding the property. You want someone who respects your money but can also act decisively when needed.
Some managers try to profit from maintenance. They mark up vendor charges or use their own in-house maintenance team that overcharges for simple work. This is a conflict of interest – they make more money when things break.
7. Legal Knowledge and Compliance
Rental property laws are complicated. And they’re different in every state, city, and even neighborhood sometimes.
Fair housing laws tell you who you can and can’t reject as tenants. Security deposit laws explain how much you can charge and where you must keep that money. Eviction procedures must be followed precisely, or a judge will throw out your case. Local ordinances might require certain safety features or rental licenses.
Mess up any of these legal requirements, and you could face lawsuits, fines, or severe financial losses.
That’s why understanding how to pick a property management company includes making sure they know the law cold.
Your property manager should be completely up-to-date on all landlord-tenant laws in your area. They should know:
- Fair housing regulations and how to avoid discrimination
- Proper security deposit handling
- Required disclosures for things like lead paint
- Correct eviction procedures
- Local rental ordinances and codes
- Recent changes to rental laws
Ask them if they have any legal knowledge. How do they keep abreast with the changing laws? Do they have an attorney to whom they can call on occasions? Has a tenant ever sued them and what outcome?
The lease agreement of a good property manager is also necessary. It must be in-depth, legally correct and matters that are updated due to changes in the laws. Request that they provide a copy of the lease they live by. Better still, have a lawyer of your own check it out before you put your signature to it. The information regarding some protections such as renters damage insurance is also included by many managers to mitigate the risks to both the owners and tenants.
There are states where property managers are supposed to have special licenses. Ensure that whoever you employ possesses the licenses and certifications that he/she requires. Working without a license is a signal that this individual is a corner cutter.
Also, ask about insurance. In the event that the management company makes an error or an omission that is costly to you then the company ought to have the errors and omissions insurance. You should also ensure that you have good landlord insurance for your property, your manager may be able to advise you on good policies in case you need them.
8. Technology and Reporting Systems
Property management has changed a lot in recent years. Technology makes everything easier – for you, for the manager, and for your tenants.
Modern property managers use online portals where you can log in anytime to check on your property. You can see financial statements, maintenance requests, lease documents, inspection reports, and more.
Maintenance requests work better with technology, too. Tenants can submit requests through an app or portal. You can see the request, when it was submitted, how the manager responded, and when it was resolved. Photos can be uploaded to show the problem.
Ask potential managers what technology they use. Do they have an owner portal? Can tenants pay rent online? How do they handle maintenance requests? Can you access information from your phone?
Some managers still do everything with paper, phone calls, and physical checks. This isn’t automatically bad – some small, local managers work this way and do a great job. But modern systems usually make life easier for everyone.
Also, ask about financial reporting. You should receive clear, detailed monthly statements showing:
- Rent collected
- Expenses paid
- Maintenance costs
- Their management fee
- Your net profit
- Account balance
These reports should be easy to understand. If you need to squint at messy spreadsheets trying to figure out where your money went, that’s a problem.
Good reporting helps at tax time, too. Your accountant will appreciate organized records showing all income and expenses for the year.
9. Contract Terms and Exit Strategy
Before you sign anything, read the entire management agreement carefully. We’re talking every single word, including the boring parts in small print.
Pay special attention to the contract length. Some managers want you locked in for a year or more. Others offer month-to-month agreements. Neither is automatically better – it depends on your situation.
More extended contracts might come with better rates. But they also mean you’re stuck if the manager turns out to be terrible. Shorter contracts give you flexibility but might cost a bit more.
Look for the termination clause. This explains how you can fire the property manager if things aren’t working out. You don’t want to be trapped with a manager who’s doing a poor job.
Ask what happens if you decide to sell your property or move back in yourself. Can you end the contract early without penalties in those situations?
Also, understand what happens with tenants if you switch managers. The lease your tenant signed should remain valid even if you change management companies. Your new manager just takes over where the old one left off.
Find out about the transition process. If you do decide to leave, how do they handle handing things over? They should transfer all tenant files, security deposits, keys, vendor contacts, and other important information to you or your new manager.
Conclusion
The selection of a property manager is a matter of concern. This decision should be taken slowly. Meet at least three managers during the interview. Compare their charges, services, communication, and style. You can not just pass by whoever appears to be the cheapest or whoever comes into your path first.
Trust your gut, too. There are times that you simply feel so well about a person. Or there are times when something does not sit well with you though you may not be able to pinpoint exactly what that is. They should listen to those instincts.
It is important to keep in mind that you have a partnership relationship with your property manager. You are handing over to this individual one of your largest investments. Regardless of whether you are an owner of rentals at present or you intend to buy a property in future, it is very necessary that you select an effective manager. They have the duty of securing your property and ensuring your property brings maximum income to you.
The owner of the rental property is nearly passive in the hand of the right manager. You will not have to worry about any day-to-day hassles, and collect checks every month. Your house remains tenanted, in good condition, and lucrative.
The inappropriate manager is a source of constant trouble and stress. Why you even employed someone at all, you will wonder.
It requires a little effort in identifying an excellent property manager. However, when you get a fit it is time to have rest knowing that your investment is safe in the right hands. Such companies as Real Estate Solutions (RES) have found their reputation on open pricing, superior communication and putting the owners of property first, which is exactly what you should seek in any manager that you can think about.
Consider these nine factors we have discussed here. Ask lots of questions. Get everything in writing. And will you not be satisfied before you have a person who answers all your boxes. It is the key to your rental property success.
