What to Look for in a Property Management Company

If you don’t want to deal with the headaches of being a landlord, then hiring a property management company may be a smart decision. But it’s important to understand that not all property managers are created equal.

Choosing the right company early on will save you a ton of time and money in the long run. On the flip side of that coin, a bad property manager will make your real estate investment a nightmare. By taking the time to do your homework, you can be sure that your chosen firm is a perfect fit for your needs.

Here are 9 things to look for as you begin comparing your options:

An established company with extensive experience

Why trust your property to someone who’s never managed a rental before? First-time property managers and startup management firms simply don’t have the experience or know-how to manage properties as effectively as the pros.

Sure, you might be okay hiring your niece who just graduated college to manage your property. Or, you might not be. Most likely, her lack of experience will quickly create problems that eat up your time and your bank account—which defeats the purpose of hiring a manager in the first place.

Save yourself the trouble by looking for a company that has extensive experience managing properties similar to yours.

What to check for:

  • Years in business
  • Number of properties under management
  • Number of clients
  • Properties similar to yours (size, location, etc.)

Thorough understanding of landlord/tenant laws

You trust your property management agency to know what’s best for you and your tenants. What if your lease is missing critical declarations that leave you vulnerable to lawsuit or government fines?

Imagine if your tenant created an illegal bedroom in your finished basement and someone got hurt in a fire, because your lease didn’t include any rules against such actions.

These kinds of nightmares can and do happen when inexperienced property managers lack an understanding of laws that apply to property rentals, landlords and tenants. You need to be sure you choose a company that knows these laws inside and out—not just because it’s the law, but because it protects both you and your tenants.

What to check for:

  • Company certifications
  • Ongoing training programs for new and changing laws
  • Sample leases with explanation of terms
  • Demonstrated commitment to understanding federal, state and local municipal law

Good rapport with tenants

If a property management company has tons of bad reviews on Google, Yelp or other sites, it’s probably a sign that something is wrong.

Don’t take this lightly. If tenants are unhappy with the company that collects their rent check each month, then they are probably not happy living at your property. Unhappy tenants have higher rates of turnover, among other problems, which ultimately costs you money.

Check third-party review sites to see how current and former tenants are rating your prospective managers. Weed out any company whose reviewers have reported unfair or incompetent practices. Additionally, ask companies if they can provide the contact information for 2-3 tenants who are willing to share their feedback.

What to check for:

  • Positive reviews/ratings on third-party websites
  • Direct tenant testimonials, if available
  • Any signs of questionable tactics by the property manager

Testimonials from other property owners

It’s not just the tenants who you need to hear from. It’s the clients: the property owners, like you, who have trusted the firm to manage their rentals.

You likely won’t find these types of reviews online, so consider asking the agency directly. Some will be happy to put you in touch with other landlords. Some won’t. Be wary of companies who claim outright that such communication is impossible. A good property management company will take the time to ask their clients if they’d be willing to speak with you.

What to check for:

  • Length of relationship between owner and property manager
  • Feedback about the agency’s responsiveness to problems (tenants’ and landlords’)

Contractor relationships

When something breaks, most landlords don’t have the time or patience to deal with it themselves. This is what property management companies are for. They will let you know that something is wrong, work with contractors to get it fixed, then update you when it’s done—so you never even have to see the problem, if you don’t want to.

Additionally, property managers with contractor relationships will save you money. That’s because the larger management companies often enjoy discounted pricing from the contractors they use most often (or, they use their own in-house maintenance teams).

As you compare your options, be sure to ask companies how they respond to property repairs and what kinds of relationships they maintain with contractors.

What to check for:

  • Types of contractors available
  • 24-hour emergency service
  • Discounts and/or fees for handling repairs through the agency

Rent payment processing

In a best-case scenario, your property management should be depositing your rent checks and transferring money into your bank account automatically, every month. But unfortunately, not all property managers offer this convenience.

Look for companies that make payment processing easy for both you and your tenants. The easier this process is for everyone, the more consistent your rental income will be. Don’t let little administrative obstacles stand in the way of getting your rent payments on time each month.

What to check for:

  • Online rent payments for tenants
  • Automatic ACH deposits into your bank account
  • Automatic calculation of late rent fees, etc.
  • Procedures for handling security deposits

Effective tenant screening

Much of your success as a landlord depends on how well you screen your prospective tenants. A bad tenant will miss rent, disrespect your property, disturb neighbors and make your life miserable.

This is why every property management company should use a thorough tenant screening process to identify red flags and mitigate the chances of things going awry down the road. Tenant screening is as much an art as a science—you can’t determine much from a single credit score. You need to consider all the factors together to make an accurate decision about a tenant.

Use a property management company that takes tenant screening seriously by using various background checks combined with the discerning eye of an actual human being who cares.

What to check for:

  • Variety of background checks performed (credit scores, foreclosures, evictions, etc.)
  • Verification of employment/income
  • Criminal history checks

Clean-out & painting services

When one tenant moves out, you want to fill the space again as quickly as possible. Otherwise, you’re losing money on your investment with each day it sits.

Most properties will need an extensive cleaning as well as fresh paint after a tenant moves out. Unless you enjoy doing those chores yourself, then you’re going to want a property management company that can do it for you, quickly and affordably.

Most property managers don’t include these services as part of the standard agreement, so you’ll need to pay a little extra, depending on the extensiveness of the work. But if you know they’ll do a good job and get your next tenant in there even faster, then it’s generally well worth the expense.

What to check for:

  • Availability of painting and cleaning service
  • Cost or price structure if repairs are needed
  • In-house vs outside contractors

Rental listings and viewings

A good property management firm will know the best ways to advertise your property, so that they can find your tenant quickly.

Additionally, once your rental is listed, you can expect to get calls and emails right off the bat. This is another huge advantage for using a management company—they will handle all the communication, scheduling and viewings for you, so you don’t have to lift a finger.

The question is: how good of a job will they do? As you compare various property managers, be sure to look for those with proven, efficient systems for finding tenants and managing the most time-consuming part of the rental process: viewings.

What to check for:

  • Advertising sources
  • Average response rate/time for rental listings
  • Process for scheduling and conducting viewings