It can be daunting looking for a property manager to run your rental unit if you don’t know what to look for. This guide offers five key factors to consider.
So you have a property you want to rent out. Maybe it’s your old family home or an investment property you bought to dip your toe into the rental business. Whatever property you have, you want someone to look after things for you.
Congratulations for that! Having a good property manager is key when running a rental property. You don’t want to do this on your own. That you’ve realized this puts you in a great position going forward.
But now you need to decide what property manager you want. You search online and there’s so many of them, all, it seems, offering the same service. How can you tell which property manager is the right one for you?
You can check out Yelp or the Better Business Bureau, but relying on review sites is missing the picture.
What you need to concentrate on are five factors to distinguish a great property manager from a not-so-great one.
Remember, these guys are here to give you peace of mind. They’re around to take care of your rental property so you don’t worry about it.
It’s worth taking the time now to find the best property manager for you.
And if they measure up to the five crucial factors listed below, you’ll be well on the way to a success as a landlord of a rental property.
Like everything in life, experience matters. Whether you’re looking for a plumber or a property manager, you want someone who knows what they’re doing. You want someone with the required experience to do the job at hand.
The first thing you need to realize is that property managers and real estate brokers are not the same!
This might sound obvious to you but some states require all property managers to possess a real estate license. This might make you think any real estate broker can act as a property manager. It’s true many realtors offer this service.
But state training curricula does not cover the ins and outs of property management well. It’s skirted over, meaning the training most realtors received in property management is rudimentary.
A real estate broker might be licensed but that doesn’t mean they know anything about being a landlord.
Although all property managers where we work are licensed realtors, that doesn’t mean all licensed real estate brokers have experience in property management.
Find a company specializing in property management rather than a realtor who might offer this service on the side.
The next thing to look at is the time a property manager has been in business. But wait! There’s a catch here. Although the number years in business is important, what’s more important is what your property manager has done during those years.
Put it this way, what would you prefer? A property manager in business for a long time but who manages a handful of properties or a guy in business for less time but with a larger portfolio?
If you have someone in business for 10 years but manages 50 properties and someone in business for 5 years but manages 500, who has more experience?
That’s right, it’s the 500-property-guy. They would have seen more and dealt with more situations over 5 years than the other guy would have in 10.
So although it’s worth checking how long a property manager has been in business, it’s also important to know how many properties they’ve managed during that time.
NARPM (the National Association of Residential Property Managers) uses a metric called “unit years of experience” to determine experience.
It’s simple. You multiply the number of units managed by the number of years in business. The result gives you a score to take into consideration when choosing your property manager.
Let’s take the guy in business for 10 years with his 50 properties: 50 x 10 = 500.
Now let’s check out his competitor down the road with 5 years and 500 properties: 500 x 5 = 2,500.
The scores of 500 for the first guy and 2,500 for the second guy suggest, according to NARPM, that the second guy is five times more experienced even though he’s been in business half the time.
Despite being in business for half the time, the guy with the higher score would have dealt with more issues, spent more time in court defending leases on behalf of his clients, and learned more along the way. This is the person you want to manage your property.
Bigger Is Better (Avoid One-Man Shows)
Another way to put this (to avoid offending smaller companies) is to find a property management company who manages a good number of properties.
We already mentioned the experience that comes with running more units, but there’s also another factor to consider. And that’s the more units a property management company has under their care, the bigger they’re likely to be.
You might not think this is important. Or you want a smaller, more boutique company where you deal with and build a relationship with one person who you’ll rely on to manage your property.
We understand your reasons for this, but think of it this way.
If you’re dealing with a one-man show, a guy running many properties single-handed, will he give you the attention you need? Also, what about if he’s on vacation or sick or unavailable for a while? Who’s looking after your property then?
What if the guy’s on vacation and something goes wrong in your property like a water heater rupturing and flooding the house?
Aside from the damage inflicted on your property, you’ll also have upset tenants trying to contact the property manager and getting nothing but voicemail. To the tenant, the property manager is the landlord (you) and so if they’re not around during an emergency, what are they supposed to do?
The whole thing reflects poorly upon you and can end up costing you money in the long term.
It’s always far better to use a larger company with more resources who can look after your place all the time because they employ more staff.
A company managing hundreds of units will almost always employ multiple people. When the unexpected happens (and it always does!), someone is there to help.
They might well have a 24/7 repair hotline for tenants, secure in the knowledge someone will get back to them ASAP.
So when you’re looking for your property manager, ask how many people work at the company. Ask if they have the resources to provide round-the-clock emergency maintenance. If they do, you’re on track to finding a good company to work with.
It’s far better for you to go on vacation than your property manager. And while you’re away, you know you need not worry about your rental property or your reputation.
NARPM (National Association of Residential Property Managers) Membership.
We bet you’ve never heard of NARPM before and this is the second time we’re bringing them up in the same article!
Yep, these are the guys who brought you the “unit years of experience” metric we discussed earlier.
But outside of basic arithmetic, NARPM membership is something you want to check for when you’re looking for a property manager. It’s like looking for a doctor – you’ll want him or her to be a member of the American Medical Association, right?
NARPM members are serious about property management. They network with other property managers and keep up to date with what’s going on in the industry. They are always learning and improving their businesses.
The most important thing about having a NARPM member as your property manager is that you know they abide by the NARPM Code of Ethics.
NARPM is serious about this code. It’s not something written to make people feel better.
NARPM members undergo ethics training to prove they understand and adhere to the Code of Ethics as a condition of continued membership.
You want an honest and ethical person running your property. NARPM membership goes a long way towards proving this for you, the potential client.
Up-to-date With Technology.
Did you know most home renters are young? It makes sense when you think about it. They haven’t gotten onto the property ladder yet, and they’re starting out in the world, renting their first homes. Many of them are still students.
We mention this because as the owner of a rental property, the chances are a millennial will rent your unit. That’s fine as long as they take care of the place and pay the rent, right?
There’s a little more to think about here, though.
You might be tech-savvy yourself, but a millennial is probably more so! If you’re renting your place out to them, you should speak their language. It helps to be up-to-date with the latest technology they use in their lives.
They won’t want to come down to the office to pay their rent or wait for a knock on the door. They don’t have the time for that. What they want is to do everything online in the seamless way they run the rest of their lives. Paying their rent and dealing with their landlord should be no different to ordering an Uber.
That’s why you want a property manager who stays up-to-date with technology.
Millennials (and many others) expect to run their lives through their smartphones, at their convenience and on their time. You might well expect the same thing yourself.
In 2019 it’s not unreasonable to expect not to have to look for or wait for your landlord to pay the rent. It’s not unreasonable to expect to fill in your tenant application online and to use e-signatures for contracts.
If your property manager uses the latest technology, it makes it easier for them to find better quality tenants for your home.
When you’re looking for a property manager, ask them about the technology they use and if they can do everything online.
Financially Serious & Insured.
This one might well go without saying but it needs mentioning. Any property management company you work with MUST TAKE YOUR MONEY SERIOUSLY.
Your property management company will handle your money for you. They will take security deposits from tenants, collect rent, and pay back security deposits.
It’s worth talking about security deposits here. This is the money put down by a tenant when moving into a rental property. It’s kept until the tenant leaves, and you pay it back or use it to pay for any damages incurred to the rental during the tenant’s time living there.
And security deposit disputes are THE BIGGEST sources of lawsuits in real estate.
A good property management company knows this and will always have the funds to cover any security deposit.
This means they will not send the deposit to you.
They will keep that money in a designated trust account at the bank on your behalf until the tenant leaves your property. That means you know where that money is and you need not scrabble around for it yourself when your tenant moves out.
Remember, if any security deposit dispute occurs, you – the owner – will be the one sued, not the property management company. You need to have that money on hand, all the time, looked after by the company.
If you’re worried about what the property management company does with your money, that’s great. You’re showing due diligence!
Ask them if they have an outside accounting company auditing their books. Transparency is always key. You want to know your tenants’ security deposit is safe inside a trust account and the company isn’t using it for other things.
Another thing to ask your potential property manager about is insurance.
What you’re looking for here is general liability insurance, professional liability insurance, and workers’ compensation insurance.
If someone working for the property management company is in your rental unit, for example, showing around a prospective tenant or fixing something, you want us covering them in case they have an accident. You want no one knocking on your door to pay their medical bills because the company they work for doesn’t provide workers’ compensation insurance for their employees.
It’s all about coverage so you don’t have to worry about anything.
What We Didn’t Mention.
The five factors above are the most important things to consider in a property manager.
Any property management company that does everything mentioned here is more than likely a good company. They’ll provide a great service to both you, the landlord, and your tenants.
You might notice we didn’t mention a few things, though. Maybe you expected us to talk about pricing or Yelp reviews or how a property management company markets itself. These things don’t matter. They are fluff compared to the real factors described above.
So How Does GTL Real Estate Measure Up?
It’s a fair question. We told you what you need in a property manager so it’s only fair we tell you how we measure up here at GTL.
- Experience. We measure up pretty well. We’ve been in business since 2008 and manage around 400 rental units. According to the NARPM “unit years of experience” metric described above, that gives us a score of 4,400. That’s a lot of experience!
- Company size. We’re no one-man show! We have 10 full-time staff members, including office staff and leasing agents. That’s enough to ensure year-round, round-the-clock service and our 24/7 maintenance and leasing hotlines reflect this. You don’t have to worry about no one being around when you work with us.
- NARPM Membership. Many property management companies sign up one person, usually the broker, for NARPM membership. At GTL, we sign up every single member of staff. That means whoever you speak to at GTL is a fully fledged NARPM member bound by the NARPM Code of Ethics.
- Technology. We’re serious about this. We stay as up-to-date as possible and experiment with the cutting edge when we can. An example of this is right now we’re experimenting with an AI (artificial intelligence) chatbot to speak with tenants 24/7. Stay tuned for more info on this!
- Financially Serious. We’re also serious about your money. Very serious! We use an outside accounting firm to audit our books each month. We have three different state-registered trust accounts at Bank of America for all tenant, owner, and sales money. Transparency is key and we hold that tenet dear.
So there’s your five things to look for in a property manager and how we at GTL measure up.
We measure up well but so do many other companies. You need not choose us. We recommend you use this guide as a checklist to see how the property manager you’re looking at stacks up. If they do well, use them. If not, shoot us an email.
Shoot us an email anyway, in fact. If you have questions about any aspect of property management and finding the right fit for you, contact us at email@example.com. We’ll be happy to answer you.
Until next time.