Choosing a Rental Property Management Company can be difficult.
More than likely you have Real Estate Rentals that you want assistance with. Or, it’s also possible you are wondering what to do with your first Rental Property after you purchase it. Maybe you are looking for help marketing your rental properties, assistance with maintenance, or just want to sit back while someone else manages your properties.
This guide will help you in deciding what you are looking for in a Rental Property Management Company. A Property Management job description can vary between companies, so you should make sure that you are getting everything you want out of the company that you choose.
Here are 11 key factors to consider when looking for a Rental Property Management Company:
- Do I really need a Rental Property Management Company?
- How much does Property Management charge?
- Marketing Ability
- Social Media Presence
- Retention Rate
- Handling Problems
- Market Experience
- Property Management Software
Let’s jump right into it.
1. Do I really need a Rental Property Management Company?
The first question i’d like you to ask yourself: Do I really need a Rental Property Management Company to manage my properties?
Here’s a secret most PMC’s won’t tell you. Property management companies definitely have their place, but many property owners could be better off managing their own properties!
At some point as you acquire more properties, the right property management company will help and is almost necessary. But, when you are starting out, you should try and hold off as long as you can to maximize your rental revenue. If you own 1 apartment building with a mortgage on it, you will be lucky to break even utilizing a Property Management Company.
How many Units do you want Managed?
Another thing to consider, Property Management Companies can have clients with 100’s if not 1000’s of units. I can speak from personal experience when I say that they give preferential treatment to their biggest clients. Your single home or even 20 plex will not be focused on nearly as much as the 100 plex will be. This lack of attention can range all the way from advertising to maintenance. It’s just a plain fact that a company will utilize their Property Management Services to keep the bigger fish a happy customer.
That is not to say that there aren’t great Property Management companies out there- there are. This article will help you discern what makes a great rental property management company, and what makes a sub par company.
It is definitely possible to find a cost effective company to manage just a few units for you. But the bottom line is, if you have a smaller collection of rental properties you would be better off handling things yourself. Nobody will work harder to make your real estate rentals profitable than you will.
Do It Yourself!
Side note- if you are looking to do everything yourself, our website has a huge collection of information and strategies to help you with every aspect of managing your own properties. Check out any of these useful articles below for targeted information relating to a number of different challenges you will come across.
Should I rent out or sell my house?
So you’ve decided you want help from a Property Management Company
After careful consideration you have decided that a Rental Property Management Company is best for you.
Perfect! Let’s look at some of the key factors you should be on the lookout for. There are many options when it comes to Rental Property Management Services, but listed below are some of the most important factors to consider when finding a PMC to fit your needs.
2. How much does Property Management Charge?
This is an easy question with a not-so-simple answer. Smaller towns with less competitive markets can usually offer their services for less. Bigger cities with lots of competition means higher costs on every front. Advertising will cost much more in a bigger city than it does in a smaller sized town with less than 100,000 population.
Some companies will offer their Property Management Services for a flat monthly fee, but in my experience this is rare. Usually I have seen them charge a percentage of rental revenue collected each month.
While I have seen the cost be as low as 5% of rental revenue to manage units, in extreme cases I have also seen prices as high as 20% of your rental revenue! As you can imagine, there are many factors to consider when evaluating just how much YOU should pay them. I suggest contacting as many companies in your area as you can to find the average percentage of revenue they would charge. Remember, each town and city will have different averages. After you get a ball park figure for your target area, then you can compare their services up against the following qualifications listed below.
Marketing is one of the most important Property Management Services a PMC can offer. What is their online presence like? Do they have good ratings on Google? Are they even listed on Google??
If they can’t market well, they will not fill your units. Good marketing in today’s society begins with an online presence. They will not fill your units consistently without a good marketing plan. If the PMC you are considering already has bad ratings on Google, (less than 3.5 stars) or has a track record of mediocre performance online, I would highly suggest looking elsewhere.
We are just now entering the beginning of the digital age. As time progresses, more and more people demand digital interaction. Does the Professional Property Management Company you are looking at have an excellent website? How is their social media presence? Do they have a reasonable amount of followers? Do they show up near the top of Google when doing a search query? All of these are questions you should be asking when considering the strength of their marketing.
Bad marketing equals empty units.
Find out the best way to market your own units here.
4. Social Media Presence
The number 1 way that I rented over 200 apartments in 1 year was through Social Media. Hands down this is the most effective way to reach potential renters and led to the highest conversion rate of leads to leases. If the Property Management Company you are looking at relies mostly on yard signs and billboards, they do NOT have a sustainable marketing model for the future.
While yard signs do have their place, the younger generation especially will avoid making a phone call at all costs. They would much rather text, email, or if possible, Instant Message the Property Management Company. The company you choose should have a robust marketing strategy covering every area of the internet. ESPECIALLY social media.
Check out how you can utilize Social Media to your personal advantage when marketing and renting out your own units!
Does the Property Management Company you are considering have a different web page for each property they manage? This is important because some companies lump all of their properties into one list and expect the tenants to call on the phone to discuss options.
Many tenants today would rather spend 2 hours searching through pictures and different apartments instead of spending 15 minutes on the phone discussing what units are available to rent. Your Management Company should cater to what the market wants. Even if you do manage to get them on the phone and have the ability to narrow down what the tenant is searching for, it is much more convenient for both parties to have pictures available for the tenant to look at online.
This is most easily accomplished by having a specific web page for each property. At minimum, they should have photos of each property and the ability to send a link for the tenant to view online before scheduling a showing. There have been many instances where I did not have pictures available to show the unit beforehand, scheduled a showing, and less than a minute later the potential renter left because the unit was not at all what they had in mind.
“A picture is worth 1000 words”Frederick R. Barnard- Marketing Genius
Speaking of pictures of your rental units, do their pictures look bright and professional, or dingy and sloppy?
Pictures are one of the most important factors in advertising your properties since it is the very first thing people notice when potential renters are looking up places to rent online. It is unrealistic in many cases to take pictures of each individual unit, but at the very least they should have example pictures of what the tenant can expect when they show up to view the apartment or house for rent.
Aside from having an up to date website, the Property Management Company you choose should have a number of different contact options that renters can reach them at. Current tenants, and especially potential new renters, will avoid contacting a Property Management Company if the website is annoying or difficult to use.
What good is having a Property Management Company if the tenant is calling your phone instead of the company you have hired?
Why Communication Matters
Here is an example of lack of communication going extremely wrong.
In a past experience I have seen tenants avoid contacting management about maintenance issues and ignoring problems that can potentially compound into even worse damages. A certain tenant had a leak that ended up being ignored for months. A simple leaky roof turned into ripping out an entire wall and ceiling- all because the website maintenance email was routed to the wrong email address.
How a simple fix turned into thousands of dollars
Instead of the tenant following up, the tenant ignored the situation and simply moved out a couple of months later. The leak eventually made its way down into the living room wall, and even started to grow mold. As you can imagine the cost of the repair skyrocketed, and also the unit was not rent ready for a month while the damages were repaired after the tenant left. A $25 fix turned into Thousands of dollars because of the contact issues.
Not only did the repairs cost way more, the tenant had a bad experience with the property. A person with a negative experience is 10x more likely to write a review online than a person with a positive experience. In a worst case scenario, negative online reviews can even damage the value of your property if they get bad enough, and bad reviews can even effect retention rate for the current tenants in your buildings. Make sure that your Rental Management Company is easy to talk to and diligent at solving all tenant issues.
7. Retention Rate
Speaking of retention rate, does the Real Estate Management Company you are looking at keep renters happy, or do they turn over units at the end of every lease? Most renters will re-sign a lease when the old one expires simply because no one enjoys moving. If their experience has been pleasant, there is no need for many renters to move out.
Your main focus as a Rental Owner is obviously keeping your units filled 100% and maximizing your rental income. If you turn over your properties to the wrong company, not only will you be paying them a percentage of your rental revenue every month, but they can drive your tenants away if they are bad enough.
Do your best to search online for tenant satisfaction rates of your Property Management Company before making your decision.
Probably the most useful of Property Management Services is that they can handle maintenance requests. Instead of having to go through the hassle of finding an Independent Contractor to replace the toilet in unit #203, a Property Management Companies maintenance team should be able to handle that for you.
Some questions to consider-
- Do they have an in house maintenance team? That is a good thing, but it might require that you pay more for their Management services.
- How responsive is the team to maintenance requests? Maintenance issues going unsolved will definitely lead to unhappy tenants. Make sure that the team is responsive, because slow repairs can affect your retention rate.
- How big is the Maintenance team? If the team is only 1 or 2 people, maintenance issues can snowball and the wait time on repairs can be longer than desired.
- Will they handle every aspect of an apartment renovation when it is time for the old tenant to move out? The maintenance team should be able to replace carpeting, flooring and doors, not just offer a simple drywall and painting service. Ask them If they will handle all of those issues for you. Will you be responsible for piecing out jobs to different contractors, or will the Management Company handle everything?
These factors are important to consider. Some Property Management Companies offer cheaper rates for their services if they do not offer a staffed maintenance team. You will have to decide for yourself how hands-on you wish to be with your rental properties.
Remember, If they do not offer a complete maintenance system, you might be responsible for hiring Independent Contractors to perform the necessary renovations and repairs to your rental units. This can save money in the long run, but obviously takes time away from your schedule. Weigh the pro’s and con’s of this situation and make sure you discuss and understand the maintenance options with your Property Management Company fully before making your decision.
Want to add value to your Rental Unit on your own? Check out 25 ways to improve your rentals for under $50
Let’s be candid. At some point there are inevitably going to be problems with some tenants. A Property Management Company should be up to the task of handling basically any issue you might face. They should handle collecting rent, tracking and collecting any late fees, showing and renting out your units, and they should even take care of evictions and any rental lawsuits you might have to face owning a rental property.
This is a huge benefit to having a Property Management Company handle your Rental units, because almost every problem should be their responsibility. You are paying to have someone in your corner and if the company is good, they will have experience lawyers on retainer for just such instances.
10. Buying and Selling New Real Estate Rental Opportunities
This is something that is overlooked by many Rental Property Owners when searching for the perfect Rental Company to manage their units. Do they have staff members actively buying and selling different rental properties within their company? If they do not, they will most likely lack key experience in certain areas and have a limited understanding of the current market in your area. This can amount to many issues including inaccurate pricing and a poor understanding of the direction of the rental market in your area. Units will stay vacant if prices are too high. Or, on the flip side, it can mean that your rental revenue is lower than it could be.
If your Property Management Company does not understand the market, they can guide you into making ill informed decisions on the properties you either purchase or manage. It’s very possible to over-renovate a unit. There are many instances of rental owners who have spent way too much on amenities in a unit only to find that no one will pay the rent price needed to reasonably cover the cost of renovations.
Even worse, some Owners have purchased rental properties at an incorrect valuation of projected rental revenue based off of uninformed opinions from their rental company. The real estate market in your area could be volatile at the time, and what seems like a good deal could quickly turn south.
In any case, it would be wise to make sure that your company has active members in purchasing rental real estate within the area you are renting from. This way you can be sure that you are working with a well rounded and experienced company and can depend on information from them.
11. Rental Property Management Company Software
Professional Rental Property Management Companies use cutting edge software that allows for organization and transparent sharing of information with owners. Your Management Company of choice should have Property Management Software that allows you to view data from your home or office very easily. This allows for transparency at all times, which is very important to protect your investments.
If the company you are considering does not have software specifically designed for easy information sharing, it can be a major hassle keeping track of occupancy rates and revenue projections. This problem can compound with more units, so make sure that your company uses a convenient system where you can monitor all information about a given unit at any time.
If you are considering Managing your own units, there is always the option to purchase your own Property Management software to organize things. There are a variety of options available, from software customized for smaller numbers all the way to 1000’s of units.
To be honest, most companies you would hire would use this type of software to organize your units for you, but you can always purchase your own to keep your properties organized.
Check out our article covering the Pro’s and Con’s of different Property Management software’s here.
Quick Recap on choosing the Best Rental Property Management Company in your area
- Contact as many companies in your area as you can to find the average percentage of revenue they would charge to manage your properties, then weigh the cost vs. reward.
- Google search them, and also search for them on social media to ensure they have a solid marketing strategy and a quality reputation
- Ask about their maintenance policies and turnaround times on making units rent ready after move out
- Find out what their vacancy rate is
- Make sure they have a lawyer on retainer to represent you in tenant/landlord disputes
- Ask if they buy and sell their own rentals to ensure they have knowledge of the market in your area
- Ask if they have software available for you to access your properties information they have on file
Follow the tips above and you will definitely find the Best Rental Property Management Company near you!