3 Mistakes to Avoid When Hiring a Property Manager
There are many financial benefits to being a landlord and having rental properties under your ownership as a buy and hold real estate investor. However, long-term success doesn’t always come easy. One of the most common challenges is dealing with the day-to-day property management needs of your properties and your tenants. Some investors simply aren’t cut out for this part of the job. Others simply don’t have the time. That’s why hiring a property manager can be a very smart move.
A skilled property manager (or property management company) can take a lot of things off your plate and allow you focus on other important business activities. Your task is to hire a good property manager, which can also be easier said than done. Here are a few costly mistakes you will want to avoid:
1. Going Too Cheap
It’s very natural to want to save as much money as you can. Owning income property comes with plenty of ongoing expenses like insurance, property taxes and any loan payments you are making. Some investment property owners decide to save money when hiring a property manager. This could be a mistake because, as they say, sometimes “you get what you pay for.”
A cheaper property manager may save you some money upfront, but could end up costing you more in the long run. They may not be able to keep the unit filled or the tenants happy. They may make mistakes or be unresponsive when you need them most. We’re not saying you have to hire the most expensive service provider, but definitely shop around and find someone who best meets your specific needs. Cost should not be your top decision-making factor.
2. Not Shopping Around
Let’s expand on the importance of shopping around for a qualified property manager who will do great work for you. Ask for references from people you trust. Read reviews and do your research. Always ask a lot of questions. Don’t be afraid to ask about their rate structure and contract terms. Inquire about their eviction rates and vacancy rates. Test to see their responsiveness and get all the information you need to make a smart hiring decision.
3. Overlooking the Important Details
The property manager will be handling many key day-to-day details and helping with tasks such as filling the unit(s) with good tenants, taking care of tenant needs, communicating with you, handling evictions and rent increases, and managing rental contracts. These are all very important duties that you are trusting someone else to cover while you are busy doing other things to optimize your business. Read your contract carefully, as well as lease contracts and agreements with any tenants. Oversee the most important details yourself to make sure the property manager isn’t getting off-track. Don’t micromanage, but don’t let them run too freely. Also, you will want to make sure all the legal details are covered to avoid any costly lawsuits if there are issues with the tenant(s) or the property management company itself.
These are a few of the most common mistakes to avoid when hiring a property manager. For more helpful real estate investment resources, check out our Buyers Blog and consider joining the exclusive PropertyLark home buying network.