Maximizing Accountability and Communication with Professional Property Managers
By Kerry Curry, Contributing Writer, B2R Finance
You know how important it is to do your homework in order to hire an ethical, smart and efficient property management company or individual.
Now that you’ve hired a professional to oversee your single-family rental investments, it’s time for the next step: Trust and Verify.
“Property owners are hiring us so that they can free up their time, so they really should have a good partner that they trust,” says Steve Rozenberg, owner of Houston-based Empire Industries Property Management and rental investor himself.
“Trust but verify is what I always tell owners,” says Rozenberg, whose company does significant business with out-of-state and foreign-based investors who need a local property management company to oversee their residential rental investments.
“Don’t stick your head in the sand and assume that your business is running smoothly,” says Rozenberg. “Do the due diligence and hire the right company, but back that up and verify it.”
Rental property investors are a diverse group, and some may want a fairly high-degree of communication with their property managers and detailed monthly reports. Others may prefer a more hands-off approach.
Hire a company that meshes with your investment style, but once the company is hired, here are a few pointers to consider:
- Establish clear communication channels. Make sure you understand the chain of command at the property management company. Is it a departmental or a portfolio-based firm? If it’s departmental, you’ll ask for the accounting department for an accounting question and the leasing department for a leasing question. A portfolio management process, meanwhile, puts a specific person in charge of your portfolio who will be your main point of contact. That person will reach out to a support staff to answer your questions. “Lack of communication is the biggest complaint against property management companies,” says Rozenberg. “They may say they communicate and at the end of the day, you may say you aren’t getting the communication you want.”
- Delinquent tenant follow-up. You’ll want to make sure your management company is efficiently addressing delinquencies and evictions. This may require some follow-up after the property manager is hired to ensure delinquencies are handled according to your expectations. Questions to ask after a delinquency notice is issued might include, “What is the time frame for the eviction process?” “Will the process begin immediately? If not, why not?” “Once the tenant is evicted, what’s the timeline for the make-ready?” “How long will it take to lease up?” and, “What is the current market rate?”
- Understand how your management company handles repairs and maintenance expenses. Rozenberg says investors may want to request a line-item bid, or multiple bids for major repairs. If you don’t understand something, ask.
- Tenant selection. This is one area where Rozenberg believes the property management company should be in complete control because it will have a clear understanding of all applicable laws such as the federal Fair Housing Act. That being said, it’s certainly within an investor’s right to learn about the firm’s process for marketing to and sourcing prospective tenants.
Once the property management company is hired, investors may discover it takes time to understand all the in’s and out’s of third-party management and become acquainted with individual property managers and their management styles. During this getting-to-know-you phase, never hesitate to raise concerns if you have them, or ask for more communication if you believe it’s needed.
B2R Finance offers rental investors innovative lending products to help unlock equity from existing portfolios and provide the cash needed to build rental portfolios nationwide. For more information about how B2R can help you obtain rental property financing, just call 800-227-8107 or visit http://www.b2rfinance.com/apply-now and follow us on Twitter @B2RFinance.
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