This is a very important topic. A bad property manager can destroy your investment. If you get stuck with a bad manager, you probably have a one year contract you need to find a way to break. Some managers have financial difficulties and borrow your funds. You will have to spend a fortune in legal fees to get them back.
The first place I look for property managers is from recommendations from local investment clubs. Other investors are a good source of this type of information. My local real estate investment club and my landlord association both are good sources of good referrals.
Other places to look are NARPM and IREM. Both of these organizations have courses to train property managers in proper management techniques.
Another place to look is Craigslist. Look for ads from property managers. Craigslist is free and a place where all tenants look but some property managers are stuck in the past and have not updated their business practices.
Ideally, you want to find a manager who is reasonably close to your property but this is not the most important thing.
Most importantly, you want a manager with the capacity to give your property the attention it deserves and to quickly fill vacancies. You want someone who is honest and efficient. You also want someone who doesn’t take too much crap from tenants and who knows landlord-tenant law inside out. You should read your landlord-tenant laws and be aware of what needs to happen to be able to hold back part of the deposit for repairs. In my state, notices have to be given out quite quickly after a tenant leaves or the tenant can recover damages from you if you do not return the deposit in time. While landlords have to pay attorneys for help, tenants have access to plenty of free lawyer help from law schools, clinics, legal aid agencies, and tenant advocate agencies.
After you’ve found some potential managers, be sure to ask for references from other clients. Checking references is the most important thing you can do. You will also want to ask for a copy of a management agreement and read it to see if it is fair. For example, if the manager can fire you for any reason with 30 days notice, you should not be stuck for one year. Call them on this kind of language and insert “either party” type language.
Save all your research and contact information as you may later need to switch managers.
I have had my best luck with new small property managers who also own their own units. They know the difficulties that owners face. I am not always keen on managers who also have real estate agents who sell, because the priority will be making commissions on sales. But some of these agencies have separate managers who do nothing but manage. Those organizations have been fine, in my experience. You have to be careful of the one person manager who is unable to hire. They can be fine at the start but might eventually end up with more units than they can handle. This is why keeping your research is important. A good manager today may be a burnt out manager tomorrow.
You also want to make sure that they maintain their properties. Some managers do not do much maintenance so they can give big checks to owners each month. Eventually, your property will deteriorate to the point where it is not rentable. Drive by some of their other managed properties and check.
Here are examples of questions you might want to ask (keeping in mind that checking references is the most important thing):
What are your fees? Do you charge a lease-up fee for finding a new tenant?
Please send a sample statement. On what date of the month do statements typically go out?
Do you require that I list with you when it is time to sell?
How many units do you currently manage? What percent are currently vacant?
Do you handle both long term and short term rentals or only one type?
Where do you advertise? Do you use Craigslist? If not, why not?
Where do you find most of your tenants?
What is the longest vacancy you had last year?
What tenant screening do you perform? Credit, criminal, or both? Do you contact prior landlords?
If a tenant moves out within a few months, will you waive the fee for the next tenant? If you have to evict a tenant; will you waive the lease-up fee?
Will there be any regular scheduled inspections of the property after it is rented?
What property management software do you use?
What are your typical turnover repairs?
How much time do you typically take to prepare a vacant unit for re-rent?
Do you have your own repair staff? If so, what work do they do and what do you sent to outside contractors? What do you charge for their time?
When you use outside contractors, do you charge a mark-up on their fees?
Who will be responsible for lawn care and snow removal?
What should the rent and deposit be for this type of unit? Do you ever let tenants pay the deposit over time?
How often do you typically raise rents?
Do you accept section 8 tenants? What has been your experience with them?
Are concessions necessary in the current market?
If a tenant has to be evicted, what will it cost me? How many evictions have you performed in the last year?
What do you do to recover costs and fees and unpaid rent from evicted tenants? Collection agency? Small claims court?
Do you typically use month-to-month tenancies or long term leases?
Do you allow tenants to pay their rent by automatic withdrawal and/or credit card? If so, what are the fees for this service, and who pays them?
What late fees will be charged to the tenants? Is that credited to me or you?