I’ve been managing my own real estate portfolio for over 35 years. Over that time I have hired 8-9 property managers. So when we started Full Service Property Management in 2011 (out of a failed property management experience), it came as no surprise that our business model would feature the strengths I had enjoyed and correct the shortcomings I had experienced at the hands of various PMs.
Fees mean absolutely nothing in property management
This is the first question I often get asked by “newbie” landlords. It should be the last. That is because the difference or savings in fees between one PM and another is a fraction of the cost of cleaning up what we affectionately call a “trash out” — where the tenant left the place an absolute mess. You can save hundreds of dollars a year with a cheaper PM, only to lose it all with one bad tenant. So what is the secret?
Tenant Screening is everything.
Owners who have done their homework, or maybe had a bad experience, will ask “What is your tenant screening method?” This is the paramount, all-important question. A goof follow up question is “How many evictions have you done in the past ___ years?”
35 years later I can tell you good property management boils down to just one thing — good tenant screening. Get it right and property management ain’t bad. Get it wrong and things go south quick. We put 90% of our tenant screening on the personal interview and verification of references. So should an owner on a prospective PM.
Good communication is critical.
Communication is important; but good communication is critical. The PM is the owner’s eyes and ears so it is imperative that the story be told exactly how it is. No gussing up. No pandering. Just straight talk. Or as Capt. Joe Friday used to say, “Just the facts, ma’am.” Good, accurate communication is at the heart of trust, and all property mananagement depends on trust.
The owner should be managing the manager, not the property. So if communication is going to the PM rather than coming from the PM then usually communication has broken down. Loss of trust is not far behind.
Maintenance is important, but it will take care of itself
Sure, it is important that the place not fall down. You need to preserve your asset. But if you have the first two then maintenance will take care of itself. A good tenant will report things that need to be addressed. And what the good tenant misses a good PM will catch and communicate. So don’t get too caught up in this aspect.
One important item, though, is who does the work. We prefer our own, in-house handymen so that we can control the cost and quality of the project. But that is not the only answer. Good, reliable contractors the PM knows can do just as well and sometimes better.
What is the portfolio size
Find out: 1) how many properties the company manages, and; 2) how many PMs they have managing those properties. Some quick math will tell you the size of the average portfolio. This speaks to the communication issue. The smaller the portfolio the more time the PM will have to communicate with the owner, vendor, tenants, everyone, and the better job will be done.
In summary, don’t go with fees at all. Concentrate on good tenant screening and communication and most of the rest will fall into place. We’ve put a video together on this subject in the Learning Center on our website — a video library on a variety of subjects to help the newly initiated. Best of luck.
Peter Nelson has been managing his own portfolio of single family houses, duplexes, and small apartment buildings for over 35 years. For the first 28 of those Peter screened his own tenants and refined his proprietary tenant screening method. He and his wife, Ruth, founded and run Full Service Property Management in 2011. In 8-1/2 years they have had one eviction (knock on wood).