Finding Peak Apartment Performance in Property Management
You’ve probably heard that you make your money on the buy in real estate. While this holds true for multifamily, you maximize your investment and keep your money when you have a good manager in place. When selecting a property manager you want to look for a partner, not a vendor. The right firm will have your property operating like a well-oiled machine. Let’s now go through the questions you should be asking when sourcing the perfect property manager.
- How many units do you manage?
Economies of scale matter with property management as well. Look for a manager with a portfolio of at least 2,000 units in your market.
- Do you currently manage in this market?
If you manager has a big presence in your market, they are going to be familiar with the best vendors and marketing practices to keep your units occupied and in tip-top shape.
- What type of properties do you manage? (Class A, B, C, etc.)
Make sure they manage similar properties to what you are targeting.
- What properties do you manage in this market?
Visit a few of their sites and you’ll quickly find out what kind of manager they are. Is the property in good repair? Is the leasing staff friendly?
- What software do you use?
You’ll want to work with a manager who is leveraging the right technology to get the most out of your investment. Ask for a sample owner reporting package. If you are handed a copy of hand written notes, walk away.
- Can you help with due diligence on new acquisitions?
Your property manager will be a partner in your real estate business. You identified this market for a reason, and you may want to scale up in the near future. An experienced manager with a good local network is a valuable resource for identifying new opportunities.
- What are your fees?
Property management fees for assets 80 units or larger should be in the 3% to 5% range.
- Can you oversee capital improvement projects? How much do you charge?
At this point in the cycle it’s all about the value-add. You need to make sure that you partner with a property manager who can manage a renovation play, especially if you live a plane ticket away.
- Are you licensed, insured and bonded?
This seems like a no brainer, but you would be surprised. You should require that your manager is licensed and carries a bond that protects against employee theft.
- How many employees do you have and who will be my point of contact post-closing?
You want to make sure that your property manager is adequately staffed and is willing to schedule weekly or monthly calls with ownership.
- Will your accounting department interact directly with my accounting firm?
It’s all about streamlining operations. This will allow you to avoid the daily bookkeeping required on a property.
- What policies do you have regarding tenant screening, preventative maintenance, renewals and marketing?
A property is only as strong its tenants. You’ll also want to make sure your manager has good procedures in place to keep your investment performing as efficiently as possible when it comes to everything from rent renewals to energy/water efficiency practices.
- How does the property management contract read?
Keep an eye out for any additional fees. You also want to make sure there is a 30-day cancellation clause.
- Would you tour this potential acquisition for/with me and provide some general feedback on the location and my underwriting?
While you don’t want to burn out a new relationship and have your manager checking out every deal that comes across your desk, your manager should be able to give you some feedback on properties you are eyeing.
Summary
When screening a property manager, approach the process like you’re vetting a new business partner. Smooth daily property operations and a reputable track record are invaluable assets as you start to scale up a portfolio. If you are looking to take a more hands on approach in management — or perhaps gauge how your property manager addresses modern rental issues — be sure to check out our list of the 5 Crucial Considerations for Today’s Apartment Manager.
This post was produced in conjunction with Elite Apartment Coaching. Founded by Christopher Urso, Elite Apartment Coaching helps private real estate investors explode their net worth while protecting their nest egg. Urso is also the founder of URS Capital Partners, a real estate investment company that controls over $70 million worth of apartments throughout the U.S.