How do you tell if your property manager is going to be good?
This is something I get asked a lot as a broker by multifamily owners. Choosing the right property manager can make a significant difference in your investment, so it’s worth taking the time to vet them before you hire them.
Here are seven things to look for when evaluating a property management company.
1. Start with Referrals
The first thing to look for is referrals.
If another investor recommends their property management company, that’s usually a very good sign. It is not easy to be a great property manager, so when someone is willing to recommend theirs, they’re probably doing a great job.
If you don’t know other investors, ask someone who works in the industry, such as a broker, for recommendations.
2. Look for Experience with Similar Properties
Not every property manager is the right fit for every property.
If you own C-class apartments with a large number of Section 8 tenants, hiring a manager who primarily handles Class A properties may not be the best fit.
Instead, look for someone who already manages properties that are similar to yours. They’ll be much more familiar with the tenants, the maintenance needs, and the day-to-day challenges that come with that type of property.
3. Choose Experience
Experience matters.
You generally don’t want someone who is just starting out and building their first portfolio. You want a manager who has a proven track record.
An experienced property manager will already have relationships with contractors, code officials, and municipalities. Those relationships can make solving problems much easier and often much faster.
4. Ask About In-House Maintenance
This is one of the biggest factors to consider.
Many property managers are willing to manage additional properties, but they don’t have enough scale to keep maintenance costs under control.
Maintenance can eat you alive if it isn’t managed well.
Ideally, look for a property manager with at least 500 units under management and an in-house maintenance person who can handle smaller repair items. That can save a tremendous amount of money over time.
5. Make Sure They Have a Presence in the Market
When one of your units becomes vacant, you want as many prospective tenants as possible to see it.
Property managers with a large presence in the local market often have many listings available at the same time. That attracts more renters to their website and increases the chances they’ll also see your vacancy.
That visibility can help fill vacancies more quickly.
6. Understand Their Marketing Strategy
Simply putting a vacancy on the company website is not enough.
Your property manager should be advertising where tenants are actually looking. That often includes Facebook Marketplace, Zillow, HotPads, and similar rental websites.
The more effective their advertising, the faster vacancies are likely to be filled.
7. Understand the Total Cost
Finally, don’t focus only on the monthly management fee.
Make sure you understand the complete compensation structure.
Ask about renewal fees, maintenance markups, leasing fees, and any other charges that may apply throughout the year.
The cheapest management company isn’t always the best value. Understanding the full cost gives you a much better picture of what you’ll actually be paying.
Final Thoughts
Finding a good property manager is about much more than comparing management fees. Experience, referrals, maintenance capabilities, marketing, and understanding the full cost structure all play an important role in choosing the right company.
Many investors we work with appreciate taking the time to thoroughly evaluate property managers before turning over their investment. If you’re looking for investment properties in Pennsylvania or Maryland, reach out to us. We’re always happy to help you build the right team for your portfolio.