
Buying an investment property is a fun journey that shouldn’t be full of headaches, drama, and stress. In order to have great success though, you should put some thought into a few things before you jump into a relationship with a property manager. We’ll be releasing a series of helpful blogs that will tie into each other surrounding this topic, but for now, kick back and enjoy reading the 5 steps to pick a property manager!
Property Manager – A property manager is a person or firm charged with operating a real estate property for a fee, when the owner is unable to personally attend to such details, or is not interested in doing so.
Step 1: Decide if you the time & patience to self-manage
If so, you’ll always make more money cutting out the middle man. Owners pay property managers because we get to stay awake and take care of guests, answer their questions, and deal with vendors/follow-up/etc. If you don’t/can’t handle it yourself, then yes, of course you need a property manager.
- Do you have time to handle the booking process? From setting up the listing, answering inquiries/questions, to getting signed Rental Agreements…
- Do you have the ability to handle questions ranging from local recommendations to check in/out policies, how to get to the beach/nearest grocery, etc.
- Do you have time to setup and stay educated on licensing requirements, taxation rules, etc.
- Do you have the patience to learn the listing sites’ rules and ever-changing policies? You need to know your rights and what you lose with certain sites.
- How are you going to handle emergencies – from housekeeping to maintenance, check in issues, etc?
- How are you going to set and maintain your rates?
- Who is going to clean your property? And how will you know they are doing a good job?
- What vendors will you call with your issues? Do you have an established relationship with them, or will they put you at the bottom of their list?
Step 2: Decide on your goals for the property
Do you just want to have it as pure investment, heads-in-beds? Are you planning to use it more and care about experiences and property care? I’m not saying you cannot be profitable, but understanding your own expectations is going to help you in picking a manager that aligns with your views. How involved do you want to be?
- How much do you plan to use your property personally?
- How much do you plan to allow friends/family to use the property?
- If you go with a PM, do they restrict when you can stay or even penalize you?
- Do you have revenue needs to make this work? (BTW: If you go with a PM, this is something you NEED to discuss upfront)
- Is there a minimum nightly rate you are not willing to go beneath? (P.S. Most professional PMs will require rates to be managed by their teams)
- How are you going to re-invest into your property to keep in 5-star condition?
- Are you okay with 1 night rentals? 2? 3? Will you require weekly-only stays? Must they be Sat-Sat?
- Write down a list of things you want your property to be known for – can & how will your PM help you achieve those goals?
Step 3: Interview large AND small companies
We each have our advantages/disadvantages. Small companies generally have better, more consistent hands-on service. They know your property well, and they know their guests staying. We have smaller marketing spends/reach (hasn’t impacted income though); we may not have a live agent sitting at a desk waiting on a call to come in. We’re boots on the ground. Do you get prompt responses from us? Yes. Bigger companies on the other hand have more staff – they can spread themselves further. They may have cheaper rates because they operate in bulk. BUT, does that mean the quality is there? You have to do that research. Do you want to be a number… lost in the sea of fish… or do you want to stand out and pair with a smaller firm? There’s a management company out there for everyone!
- Is the business development person you are talking to the same person who you will have a relationship with after onboarding?
- As the Owner, what kind of reports/dashboard are made available to you?
- What does the guest experience look like?
- What amenities are left in your property? Quantity/Quality of sheets and terry?
- How are emergency calls handled (i.e. guest locked out, no AC)?
- What are guest policies regarding cancellations? Is travel insurance provided?
- Where will your property be listed and how does that impact you regarding cancellations/guest issues?
Step 4: Once you have 3-5 companies on your list, read their reviews & compare apples to apples
If they don’t post reviews on their Google or direct websites, that is a ginormous red flag. Any business development person can sell ice to an eskimo. It’s what they are hired to do….read what actual guests have to stay about actual experiences. That’s first-hand proof and no sales tactics involved.
The second part of this decision is comparing apples to apples on numbers. I always chuckle when I see folks scrounging for the bottom of the barrel on commissions. That doesn’t answer your full question of projecting NET value.
- Read their reviews – their website, Google, Facebook, etc.
- Who pays for the linen fee upfront & ongoing?
- Who pays for initial photography & retakes?
- Who pays for advertising and on what sites?
- What maintenance costs can you expect over the year (i.e. lightbulbs, ac filters, preventative maintenance, light maintenance)?
- How does the PM handle inventory replenishments (i.e. forks, cups, worn brooms, etc.)?
Step 5: Pick a property manager and enjoy the ride
Communicate. Ask questions, don’t assume. Stay involved with what you can be doing to help your property stay profitable. It’s like dating – honestly. You are in a relationship with your property manager. It involves a lot of learning, trust, and transparency. If you or he/she doesn’t communicate well, it’s a disaster in the making.