Relationship - The first step is to feel comfortable with the person you’re doing business with. Remember, you’re hiring someone to shepherd your investment through good and bad, and to strengthen the value of your assets. Make sure that their goals are aligned with yours. They should promote their ability to increase rents, lower expenses, and limit your headaches - especially compared to managing the property yourself.
Communication - As with any relationship, communication is key to success. Ask the candidates how they communication with their clients, and how you can communicate with their owner, staff, on-site managers, and staff. It’s very important that the management candidates are well organized, work well with people, and understand the needs of owners - your needs specifically. Confidentially “shop” other properties that the company manages to determine how quickly they respond to you and how well they are trained. Ask them: “How quickly does the management company respond to service requests?” “Does the management company work well with residents?” Be sure to speak with a variety of on-site managers, and not just the ones at their best buildings.
Geography - It’s important that the management company both specializes in and is located in the same general neighborhood as your property. When maintenance issues arise, the management company needs to respond quickly. If the firm is in the South Bay and your buildings are the Valley, it’s too far. Make sure the management company has other buildings in your area, and maintenance crews are in the area several times a week. I would confirm this by asking for a list of other properties they manage in the area, and then drive by to see the condition of those buildings.
Fees - Management companies are competitive, and compensation varies from building-to- building. Typically, you can expect to pay 5% as a starting fee. If income at your property is low, or your building is small (under 25 units), you can expect a fee of $35-40 per unit per month. Management companies charge additional fees for repairs, renovation of units, advertisement, signage, and preparing of paperwork. You can work with the management company to establish a budget and even give the company the right to initiate repairs below certain thresholds without asking every time. Final tip: be sure to ask if the management company charges a fee on top of vendors’ invoices.
Accounting & Reports - Professional management companies typically use Yardi Voyager or AppFolio, both have powerful bookkeeping and accounting software package designed specifically for property management. Yardi Voyager or AppFolio allows you to go online and instantly access current rent rolls, income statements, profit and loss statements, and a variety of other reports. Depending on how the software is utilized, management companies can be very specific on reporting costs. Expenses can be broken down to specific categories, and shown on a gross, per-unit, or per-square foot basis. Before hiring a management company, make sure their reports are approved by your accountant who will be preparing your taxes.
Vacant units - Make sure to ask what services the management company will provide when you have a vacancy. How will they market the property, screen prospective tenants, and most importantly, ensure that your unit gets filled quickly and at top dollar? Most property management companies rely on Westside Rentals, Craigslist, Hot Pads, Rad Pad and management company websites, and banners. Check out the properties the companies have listed on these sites. Is the listed unit well described? Does it have multiple pictures of both the interior and exterior of the property? Strong online presentation is very important - many prospective renters make up their mind based on the pictures they see online.
Initial meeting - In your initial meeting, you should have prepared notes on your expectations and needs, and make sure that the candidates can satisfy them. Make sure to cover staff, field supervisors, maintenance crew, bookkeepers and on-site managers. Make sure to outline what level of involvement, if any, you want in the management of the property.Tip: During the walk-through of your property, a good property manager should notice things that are wrong with your building, and be quick to give advice and answers on how to resolve the issues, including estimated costs