Once an investment is made into a real estate property, the question of property management arises for investors – how will it be managed and by whom? Some investors choose to personally manage their own properties, while others choose to take on a professional property manager to handle the property instead.
Choosing the right property manager is essential for the success of your real estate investment. Before deciding whether working with a property manager is the right choice, it’s best to get more familiar with what a property manager does, how much they cost and to weigh whether it would be feasible to do the same job without hiring anyone at all. This is the New Silver guide to choosing the best property managers for your real estate project.
What is a Property Manager?
Property managers are professionals who oversee residential or commercial properties that produce income and help the investor maximize the property’s potential to earn. It’s often said that good property management can be the deciding factor in the success of a real estate investment. The responsibilities of a property manager vary greatly depending on the scale of management involved and the tasks that are expected of them – they can deal with filing taxes, property maintenance, daily administration, running normal operations of the property and more.
In most rental cases, property managers can assist with tenant management, including screenings, dealing with deposits and evictions, and can also help with filing taxes. With these types of properties, property managers can also handle multiple maintenance requests as one of the services they offer or oversee more than one property.
When To Hire One
With a clearer idea of what a property manager does, the next step is to determine if one needs to be hired for your project. Many rental investors choose self-management, especially if they are personally located close-by to their investment property. Without a professional property manager involved, the investor will need to cover bases such as readying the property, running inspections, determining the rental price, accepted payment methods, doing routine maintenance and more.
This may seem overwhelming, but there are plenty of online resources available to teach the investor the basics of property management. By personally managing your rental property, it’s possible to save the money that would have been paid to a property manager, but the trade-off is ultimately time and convenience – if that tenant phones at 3 AM due to a burst pipe or another issue, then you will be the one they awake.
Luckily, there is also a variety of property management software that can help you manage multiple properties, such as Buildium SimplifyEm, PropertyWare, Knox Financial and others. Modern property managers are increasingly utilizing new technological tools to change the way they work with real estate, and these tools are also available to individual investors.
Selecting a Property Manager
Not all property managers are top quality, and selecting the right one is a key for success. The first step is to determine what type of property manager is available in the area, and which properties they actively specialize in. This is where research and due diligence comes in – determining if licenses are needed, whether they have insurance, their track record and other factors need to be ascertained before any contracts are signed.
Then there is the cost involved with hiring one. Property managers can ask up to 10% of the property’s monthly income as their fee, but the average cost is highly dependent on the location and type of property. Finally, a legal agreement or contract will need to be signed by both the investor and property manager, covering all the details of the services which will be performed, the payments and other essentials.
The Property Manager Interview and Agreement
Any potential property managers will need to be interviewed for suitability to the project. It’s important here to ask questions about their knowledge of real estate laws, as well as their practices for finding and retaining tenants. Other information to be confirmed is the cost of services – the investor needs to gain a detailed idea of how the process will work.
Once property managers have been interviewed and the right candidate has been chosen, a property management agreement is then set up between all the involved parties. If it’s the investor’s first time working with a property manager, it’s best not to get tied up in a long contract until you can build trust, though the majority of operators will want to contract for at least 12 months. For this reason, it’s important to pay close attention to the contract’s termination clause, and negotiate an early termination in case of issues
Good property management can make or break an investment. Property managers oversee both residential and commercial properties and cover a variety of services.. Finding the right property manager is key to your long term success as a real estate investor, so use all of the available tools before making a final commitment.