Hiring a property manager takes a lot of trust. You are handing them the key to what is probably your biggest investment, so it’s important to take time on the front end to vet them and identify the best one for you. Below are solutions to the four most common mistakes landlords make when it comes time to ire a property manager.
1. Ask the right questions. A few important questions you should ask a prospective property management firm are:
a. What is your lease renewal rate? Turnover is a huge expense for rental property owners so it’s vital that you know their average renewal rate. The industry average is 50% - you want a property manager who averages a 75% renewal rate. This rate may be dependent on the city location. For example, a professional property management company may find that properties have a much lower lease renewal rate on average then do rental properties in downtown Dallas or Fort Worth – where the population is more likely to be on the move.
b. What is your eviction rate? Low eviction rate means the company is doing a good job qualifying applications on the front end and has a strong collection process to get rent from tenants on time. Industry average is 5% - your goal is to find a property manager with an even lower rate.
c. What is your average response time? Fast isn’t an answer. What’s the standard response time to get back to a tenant? Or to an owner? Communication is key to any owner/property manager relationship. Since this person is the liaison between you and your tenants it’s imperative that they have a prompt response time.
2. Do your research
a. Start with google reviews. This will give you honest, unbiased reviews of the management company. Look at the negative reviews, some of them might actually be good for owners. If a past tenant is upset they didn’t get their security deposit back, that could mean the property management company was doing their job and upholding the rules set in place to protect the property owner.
b. Review any complaints on the Better Business Bureau.
c. Go to the Texas Real Estate Commission to check their licensing and find out if there have been any formal complaints filed against them.
3. Don’t fixate on cost.
a. Quality should be your highest concern, not cost. Understand what you’re paying for and make sure the property management company’s services align with your needs.
b. Keep in mind, property management should increase your rental rates and decrease your costs more than you could o yourself.
4. Read the fine print
a. Know your exit! How can you get out of the contract if you change your mind? Are there termination fees? Your goal is to find a company that is confident in their ability to earn your business and won’t charge you if you decide to walk away. Either way, its important to find these things out before you sign a contract.
Property management is based on trust! Ask the company you’re interested in, “If I decide not to hire you, who’s the second-best company to hire?” A reputable company want you to do your research and in doing so, help you avoid headaches down the road.
QUESTION: My real estate management company requires that I allow them to hold the security deposit money. Should I let them do it?
ANSWER: Texas state law requires that tenant security deposits be held in a separate security deposit trust account. NewGen Properties has 2 Trust Accounts. One is for tenant deposits, and the other is held in a trust for the owners.
Have questions? Give us a call, 469-731-5200
