Screening Property Managers
As someone who's built and now manages a substantial real estate portfolio, I've learned the importance of having a competent property manager by your side. If you’re looking to hire a property manager or want to ensure you're working with the best, it's crucial to ask the right questions. Inspired by Scott Trench from the BiggerPockets podcast, who shared his unfortunate experience of a property manager stealing $40,000 from him, I've compiled some vital questions to help you in your evaluation process.
The Importance of Occupancy Rates
The first critical question to ask is about the occupancy rate of the property manager's overall portfolio. A 90% or higher occupancy indicates efficiency in turning over units and filling vacancies promptly. At Emerson, we have a 93.7% occupancy rate as of July 2024, emphasizing our proficiency. High occupancy minimizes vacancy periods, ensuring you receive steady cash flow from your investments.
Written Tenant Qualifications
Inquire if the property management company has written qualifications for tenants. Property management is deregulated in some states, meaning anyone can claim to be a property manager without proper credentials. Written policies help prevent fair housing issues and assure systematic tenant processing. Should a company lack these qualifications, consider it a red flag.
Understanding Owner's Statements
Another essential question is about the owner's statement—something our sales team is prepared to provide upon request. Owner's statements should be clear and straightforward, enabling you to understand where your money goes. Hidden fees and complicated statements might be a strategy to obscure suspicious management practices, which Scott Trench warns can lead to significant financial loss.
Motivations in Property Management
It's equally crucial to understand why a company is in the property management business. Are they motivated by sustainable service or just profits? Private equity-driven firms might prioritize revenue over client satisfaction. For me, Emerson Property Management was born out of necessity—after not finding satisfactory management for my first property. With over a decade of experience, my focus remains on providing exceptional service rather than lining investors' pockets.
Transparency in Fee Structures
Finally, enquire about their fee structure. Some companies impose numerous fees for every minor transaction, which can quickly add up. Our fee structure at Emerson is transparent and flat—findable right on our website with no more than five to six distinct fees. For example, additional fees only apply in extraordinary circumstances, such as an eviction or specific customer requests.
Conclusion
Being thorough in your selection process can save you from costly mistakes. Scott Trench's costly lesson serves as a vital reminder to always do your due diligence when hiring a property manager. If you have questions or need advice, feel free to reach out. Until next week, continue to educate yourself and protect your investments wisely.
